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Leases | 9 Months Ended
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Jun. 30, 2022
Leases [Abstract] |
Leases | Leases As of June 30, 2022, we leased 11 of our 15 currently operating campuses, one future campus and our corporate headquarters under non-cancelable operating leases, some of which contain escalation clauses and requirements to pay other fees associated with the leases. The facility leases have original lease terms ranging from 8 to 20 years and expire at various dates through 2036. In addition, the leases commonly include lease incentives in the form of rent abatements and tenant improvement allowances. We sublease certain portions of unused building space to third parties, which as of June 30, 2022, resulted in minimal income. All of the leases, other than those that may qualify for the short-term scope exception of 12 months or less, are recorded on our condensed consolidated balance sheets. As previously discussed in Note 7, in February 2022 we purchased the 2611 entity which owns the Lisle Campus. While the lease for the Lisle Campus remains in place between the 2611 and UTI of Illinois, LLC entities, at the UTI, Inc consolidated level, the right-of-use asset and the operating lease liability for this campus were settled, resulting in a gain on settlement of $1.6 million which has been included within “Educational services and facilities” on our condensed consolidated statement of operations for the nine months ended June 30, 2022. Some of the facility leases are subject to annual changes in the Consumer Price Index (“CPI”). While lease liabilities are not remeasured as a result of changes to the CPI, changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. Many of our lease agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. There are no early termination with penalties, residual value guarantees, restrictions or covenants imposed by our facility leases. The components of lease expense are included in “Educational services and facilities” and “Selling, general and administrative” on the condensed consolidated statement of operations, with the exception of interest on lease liabilities, which is included in “Interest expense.” The components of lease expense during the three and nine months ended June 30, 2022 and 2021 were as follows:
|  | Three Months Ended June 30, |  | Nine Months Ended June 30,
Lease Expense |  | 2022 |  | 2021 |  | 2022 |  | 2021
Operating lease expense(1) |  | $ | 4,990 |  |  | $ | 5,547 |  |  | $ | 17,724 |  |  | $ | 17,137 |
Finance lease expense: |  |  |  |  |  |  |  |
Amortization of leased assets |  | 18 |  |  | 32 |  |  | 54 |  |  | 97 |
Interest on lease liabilities |  | 1 |  |  | 2 |  |  | 2 |  |  | 5 |
Variable lease expense |  | 1,586 |  |  | 947 |  |  | 4,059 |  |  | 2,804 |
Sublease income |  | (32) |  |  | (119) |  |  | (122) |  |  | (365) |
Total net lease expense |  | $ | 6,563 |  |  | $ | 6,409 |  |  | $ | 21,717 |  |  | $ | 19,678 |
(1) Excludes the expense for short-term leases not accounted for under ASC 842, which was not significant for the three and nine months ended June 30, 2022 and 2021. Supplemental balance sheet, cash flow and other information related to our leases was as follows (in thousands, except lease term and discount rate):
Leases |  | Classification |  | June 30, 2022 |  | September 30, 2021
Assets: |  |  |  |  |  |
Operating lease assets |  | Right-of-use assets for operating leases(1) |  | $ | 139,881 |  |  | $ | 159,075 |
Finance lease assets |  | Property and equipment, net(2) |  | 40 |  |  | 94 |
Total leased assets |  |  |  | $ | 139,921 |  |  | $ | 159,169 |
Liabilities: |  |  |  |  |  |
Current |  |  |  |  |  |
Operating lease liabilities |  | Operating lease liability, current portion(1) |  | $ | 13,197 |  |  | $ | 14,075 |
Finance lease liabilities |  | Long-term debt, current portion |  | 42 |  |  | 73 |
Noncurrent |  |  |  |  |  |
Operating lease liabilities |  | Operating lease liability(1) |  | 136,824 |  |  | 153,228 |
Finance lease liabilities |  | Long-term debt |  | — |  |  | 23 |
Total lease liabilities |  |  |  | $ | 150,063 |  |  | $ | 167,399 |
(1) As noted above, during the nine months ended June 30, 2022, our right-of-use assets and operating lease liability decreased due to the purchase of the Lisle Campus and the settlement of the existing lease. (2) Finance lease assets are recorded net of accumulated amortization of $0.2 million and $0.1 million as of June 30, 2022 and September 30, 2021, respectively.
Lease Term and Discount Rate |  | June 30, 2022 |  | September 30, 2021
Weighted-average remaining lease term (in years): |  |  |  |
Operating leases |  | 9.15 |  | 9.37
Finance leases |  | 0.57 |  | 1.32
Weighted average discount rate: |  |  |  |
Operating leases |  | 3.92 | % |  | 4.31 | %
Finance leases |  | 3.08 | % |  | 3.08 | %
|  | Nine Months Ended June 30,
Supplemental Disclosure of Cash Flow Information and Other Information |  | 2022 |  | 2021
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
Operating cash flows from operating leases |  | $ | 9,174 |  |  | $ | 13,546 |
Financing cash flows from finance leases |  | 55 |  |  | 96 |
Non-cash activity related to lease liabilities: |  |  |  |
Lease assets obtained in exchange for new operating lease liabilities (1) |  | $ | 7,899 |  |  | $ | 14,789 |
(1) Excludes the operating leases recorded for the MIAT acquisition discussed in Note 4. Maturities of lease liabilities were as follows:
|  | As of June 30, 2022
Years ending September 30, |  | Operating Leases |  | Finance Leases
Remainder of 2022 |  | $ | 2,214 |  |  | $ | 19 |
2023 |  | 19,853 |  |  | 23 |
2024 |  | 19,656 |  |  | — |
2025 |  | 19,917 |  |  | — |
2026 |  | 19,674 |  |  | — |
2027 and thereafter |  | 97,238 |  |  | — |
Total lease payments |  | 178,552 |  |  | 42 |
Less: interest |  | (28,531) |  |  | — |
Present value of lease liabilities |  | 150,021 |  |  | 42 |
Less: current lease liabilities |  | (13,197) |  |  | (42) |
Long-term lease liabilities |  | $ | 136,824 |  |  | $ | — |
Leases | Leases As of June 30, 2022, we leased 11 of our 15 currently operating campuses, one future campus and our corporate headquarters under non-cancelable operating leases, some of which contain escalation clauses and requirements to pay other fees associated with the leases. The facility leases have original lease terms ranging from 8 to 20 years and expire at various dates through 2036. In addition, the leases commonly include lease incentives in the form of rent abatements and tenant improvement allowances. We sublease certain portions of unused building space to third parties, which as of June 30, 2022, resulted in minimal income. All of the leases, other than those that may qualify for the short-term scope exception of 12 months or less, are recorded on our condensed consolidated balance sheets. As previously discussed in Note 7, in February 2022 we purchased the 2611 entity which owns the Lisle Campus. While the lease for the Lisle Campus remains in place between the 2611 and UTI of Illinois, LLC entities, at the UTI, Inc consolidated level, the right-of-use asset and the operating lease liability for this campus were settled, resulting in a gain on settlement of $1.6 million which has been included within “Educational services and facilities” on our condensed consolidated statement of operations for the nine months ended June 30, 2022. Some of the facility leases are subject to annual changes in the Consumer Price Index (“CPI”). While lease liabilities are not remeasured as a result of changes to the CPI, changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. Many of our lease agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. There are no early termination with penalties, residual value guarantees, restrictions or covenants imposed by our facility leases. The components of lease expense are included in “Educational services and facilities” and “Selling, general and administrative” on the condensed consolidated statement of operations, with the exception of interest on lease liabilities, which is included in “Interest expense.” The components of lease expense during the three and nine months ended June 30, 2022 and 2021 were as follows:
|  | Three Months Ended June 30, |  | Nine Months Ended June 30,
Lease Expense |  | 2022 |  | 2021 |  | 2022 |  | 2021
Operating lease expense(1) |  | $ | 4,990 |  |  | $ | 5,547 |  |  | $ | 17,724 |  |  | $ | 17,137 |
Finance lease expense: |  |  |  |  |  |  |  |
Amortization of leased assets |  | 18 |  |  | 32 |  |  | 54 |  |  | 97 |
Interest on lease liabilities |  | 1 |  |  | 2 |  |  | 2 |  |  | 5 |
Variable lease expense |  | 1,586 |  |  | 947 |  |  | 4,059 |  |  | 2,804 |
Sublease income |  | (32) |  |  | (119) |  |  | (122) |  |  | (365) |
Total net lease expense |  | $ | 6,563 |  |  | $ | 6,409 |  |  | $ | 21,717 |  |  | $ | 19,678 |
(1) Excludes the expense for short-term leases not accounted for under ASC 842, which was not significant for the three and nine months ended June 30, 2022 and 2021. Supplemental balance sheet, cash flow and other information related to our leases was as follows (in thousands, except lease term and discount rate):
Leases |  | Classification |  | June 30, 2022 |  | September 30, 2021
Assets: |  |  |  |  |  |
Operating lease assets |  | Right-of-use assets for operating leases(1) |  | $ | 139,881 |  |  | $ | 159,075 |
Finance lease assets |  | Property and equipment, net(2) |  | 40 |  |  | 94 |
Total leased assets |  |  |  | $ | 139,921 |  |  | $ | 159,169 |
Liabilities: |  |  |  |  |  |
Current |  |  |  |  |  |
Operating lease liabilities |  | Operating lease liability, current portion(1) |  | $ | 13,197 |  |  | $ | 14,075 |
Finance lease liabilities |  | Long-term debt, current portion |  | 42 |  |  | 73 |
Noncurrent |  |  |  |  |  |
Operating lease liabilities |  | Operating lease liability(1) |  | 136,824 |  |  | 153,228 |
Finance lease liabilities |  | Long-term debt |  | — |  |  | 23 |
Total lease liabilities |  |  |  | $ | 150,063 |  |  | $ | 167,399 |
(1) As noted above, during the nine months ended June 30, 2022, our right-of-use assets and operating lease liability decreased due to the purchase of the Lisle Campus and the settlement of the existing lease. (2) Finance lease assets are recorded net of accumulated amortization of $0.2 million and $0.1 million as of June 30, 2022 and September 30, 2021, respectively.
Lease Term and Discount Rate |  | June 30, 2022 |  | September 30, 2021
Weighted-average remaining lease term (in years): |  |  |  |
Operating leases |  | 9.15 |  | 9.37
Finance leases |  | 0.57 |  | 1.32
Weighted average discount rate: |  |  |  |
Operating leases |  | 3.92 | % |  | 4.31 | %
Finance leases |  | 3.08 | % |  | 3.08 | %
|  | Nine Months Ended June 30,
Supplemental Disclosure of Cash Flow Information and Other Information |  | 2022 |  | 2021
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
Operating cash flows from operating leases |  | $ | 9,174 |  |  | $ | 13,546 |
Financing cash flows from finance leases |  | 55 |  |  | 96 |
Non-cash activity related to lease liabilities: |  |  |  |
Lease assets obtained in exchange for new operating lease liabilities (1) |  | $ | 7,899 |  |  | $ | 14,789 |
(1) Excludes the operating leases recorded for the MIAT acquisition discussed in Note 4. Maturities of lease liabilities were as follows:
|  | As of June 30, 2022
Years ending September 30, |  | Operating Leases |  | Finance Leases
Remainder of 2022 |  | $ | 2,214 |  |  | $ | 19 |
2023 |  | 19,853 |  |  | 23 |
2024 |  | 19,656 |  |  | — |
2025 |  | 19,917 |  |  | — |
2026 |  | 19,674 |  |  | — |
2027 and thereafter |  | 97,238 |  |  | — |
Total lease payments |  | 178,552 |  |  | 42 |
Less: interest |  | (28,531) |  |  | — |
Present value of lease liabilities |  | 150,021 |  |  | 42 |
Less: current lease liabilities |  | (13,197) |  |  | (42) |
Long-term lease liabilities |  | $ | 136,824 |  |  | $ | — |

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=77888251 + Details
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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=77888251 + Details
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