ITT Educational Services, Inc. : Reports 2012 First Quarter Results
04/26/2012| 07:35am US/Eastern
Recommend:
CARMEL, Ind., April 26, 2012 /PRNewswire/ -- ITT Educational Services, Inc. (NYSE: ESI), a leading proprietary provider of postsecondary degree programs in the United States, today reported that new student enrollment in the first quarter of 2012 decreased 17.0% to 18,067 compared to 21,761 in the same period in 2011. Total student enrollment decreased 15.4% to 71,123 as of March 31, 2012 compared to 84,030 as of March 31, 2011.
The company provided the following information for the three months ended March 31, 2012 and 2011:
Financial and Operating Data for the Three Months Ended March 31st,Unless Otherwise Indicated
---------------------------------------------------------------------------------------------
(Dollars in millions, except per share and per student data)
2012 2011 Increase/
(Decrease)
---------
Revenue $341.8 $383.2 (10.8)%
Operating Income $100.6 $140.7 (28.5)%
Operating Margin 29.4% 36.7% (730) basis points
Net Income $61.1 $85.4 (28.5)%
Earnings Per Share (diluted) $2.38 $2.91 (18.2)%
New Student Enrollment 18,067 21,761 (17.0)%
Continuing Students 53,056 62,269 (14.8)%
Total Student Enrollment as of March 31st 71,123 84,030 (15.4)%
Persistence Rate as of March 31st (A) 72.4% 73.5% (110) basis points
Revenue Per Student $4,666 $4,525 3.1%
Cash and Cash Equivalents, Restricted Cash and $294.4 $342.4 (14.0)%
Investments as of March 31st
Bad Debt Expense as a Percentage of Revenue 4.6% 3.3% 130 basis points
Days Sales Outstanding as of March 31st 14.5 days 14.0 days 0.5 days
Deferred Revenue as of March 31st $180.1 $265.5 (32.2)%
Debt as of March 31st $175.0 $150.0
Weighted Average Diluted Shares of Common 25,636,000 29,312,000
Stock Outstanding
Shares of Common Stock Repurchased 2,097,200 (B) 2,000,000 (C)
Land and Building Purchases and Renovations $0.1 (D) $0.5 (E) (73.7)%
Number of New Colleges in Operation 4 0
Capital Expenditures, Net $4.5 $4.7 (3.9)%
((A) )Represents the number of Continuing Students in the academic term, divided by the Total Student Enrollment in the immediately preceding academic term.
((B)) For approximately $146.7 million or at an average price of $69.93 per share.
((C)) For approximately $139.1 million or at an average price of $69.55 per share.
((D)) Represents costs associated with renovating, expanding or constructing buildings at four of the company's locations.
((E)) Represents costs associated with renovating, expanding or constructing buildings at eight of the company's locations.
The Company adjusted its 2012 internal goal for earnings per share from the range of $7.50 to $8.50 to an adjusted range of $8.00 to $9.00.
ITT Educational Services, Inc. will conduct a conference call with financial analysts to discuss its 2012 first quarter earnings at 11:00 am (ET) this morning. The public is invited to listen to a live webcast of the conference call. The webcast may be accessed by following the "Live Webcast" directions on ITT/ESI's website at www.ittesi.com.
Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements are made based on the current expectations and beliefs of the company's management concerning future developments and their potential effect on the company. The company cannot assure you that future developments affecting the company will be those anticipated by its management. These forward-looking statements involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: changes in federal and state governmental laws and regulations with respect to education and accreditation standards, or the interpretation or enforcement of those laws and regulations, including, but not limited to, the level of government funding for, and the company's eligibility to participate in, student financial aid programs utilized by the company's students; business conditions and growth in the postsecondary education industry and in the general economy; the company's failure to comply with the extensive education laws and regulations and accreditation standards that it is subject to; effects of any change in ownership of the company resulting in a change in control of the company, including, but not limited to, the consequences of such changes on the accreditation and federal and state regulation of its campuses; the company's ability to implement its growth strategies; the company's failure to maintain or renew required federal or state authorizations or accreditations of its campuses or programs of study; receptivity of students and employers to the company's existing program offerings and new curricula; loss of access by the company's students to lenders for education loans; the company's ability to collect internally funded financing from its students; the company's exposure under its guarantees related to private student loan programs; the company's ability to successfully defend litigation and other claims brought against it; and other risks and uncertainties detailed from time to time in the company's filings with the U.S. Securities and Exchange Commission. The company undertakes no obligation to update or revise any forward-looking information, whether as a result of new information, future developments or otherwise.
ITT EDUCATIONAL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
As of
-----
March 31, 2012 December 31, 2011 March 31, 2011
-------------- ----------------- --------------
(unaudited) (unaudited)
Assets
Current assets:
Cash and cash equivalents $178,476 $228,993 $187,922
Short-term investments 114,806 148,488 152,612
Restricted cash 1,123 2,128 1,820
Accounts receivable, net 54,411 48,106 59,798
Deferred income taxes 12,566 9,759 5,402
Prepaid expenses and other current assets 17,832 18,814 24,388
------ ------ ------
Total current assets 379,214 456,288 431,942
Property and equipment, net 198,493 201,257 196,579
Deferred income taxes 34,081 33,267 28,125
Other assets 49,516 38,006 44,869
------ ------ ------
Total assets $661,304 $728,818 $701,515
======== ======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $77,664 $78,876 $72,689
Accrued compensation and benefits 13,323 21,438 19,345
Other current liabilities 50,920 18,190 61,321
Deferred revenue 180,147 226,543 265,540
------- ------- -------
Total current liabilities 322,054 345,047 418,895
Long-term debt 175,000 150,000 150,000
Other liabilities 72,629 64,972 52,151
------ ------
Total liabilities 569,683 560,019 621,046
------- ------- -------
Shareholders' equity:
Preferred stock, $.01 par value,
5,000,000 shares authorized, none issued 0 0 0
Common stock, $.01 par value, 300,000,000 shares 371 371 371
authorized, 37,068,904 issued
Capital surplus 194,027 189,573 177,594
Retained earnings 884,230 827,675 607,765
Accumulated other comprehensive (loss) (9,316) (9,479) (4,563)
Treasury stock, 12,934,377, 10,969,425 and (977,691) (839,341) (700,698)
8,999,196 shares, at cost
Total shareholders' equity 91,621 168,799 80,469
------ ------- ------
Total liabilities and shareholders' equity $661,304 $728,818 $701,515
======== ======== ========
ITT EDUCATIONAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
Three Months
Ended March 31,
(unaudited)
----------
2012 2011
---- ----
Revenue $341,794 $383,171
Costs and expenses:
Cost of educational services 134,941 137,926
Student services and administrative expenses 106,266 104,583
Total costs and expenses 241,207 242,509
------- -------
Operating income 100,587 140,662
Interest income 681 835
Interest (expense) (547) (557)
---- ----
Income before provision for income taxes 100,721 140,940
Provision for income taxes 39,650 55,554
------ ------
Net income $61,071 $85,386
======= =======
Earnings per share:
Basic $2.40 $2.94
Diluted $2.38 $2.91
Supplemental Data:
Cost of educational services 39.5% 36.0%
Student services and administrative expenses 31.1% 27.3%
Operating margin 29.4% 36.7%
Student enrollment at end of period 71,123 84,030
Campuses at end of period 145 130
Shares for earnings per share calculation:
Basic 25,420,000 29,085,000
Diluted 25,636,000 29,312,000
Effective tax rate 39.4% 39.4%
ITT EDUCATIONAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three Months
Ended March 31,
(unaudited)
----------
2012 2011
---- ----
Cash flows from operating activities:
Net income $61,071 $85,386
Adjustments to reconcile net income to net cash flows
from operating activities:
Depreciation and amortization 7,420 6,842
Provision for doubtful accounts 15,601 12,667
Deferred income taxes (3,742) (2,685)
Excess tax benefit from stock option exercises (805) (351)
Stock-based compensation expense 4,483 3,914
Other (339) (1,430)
Changes in operating assets and liabilities:
Restricted cash 1,005 (1,565)
Accounts receivable (21,906) (3,528)
Accounts payable (1,212) 4,769
Other operating assets and liabilities 22,166 56,922
Deferred revenue (46,396) 21,178
------- ------
Net cash flows from operating activities 37,346 182,119
------ -------
Cash flows from investing activities:
Facility expenditures and land purchases (132) (502)
Capital expenditures, net (4,518) (4,699)
Proceeds from sales and maturities of investments and repayment of notes 98,955 142,085
Purchase of investments and note advances (63,545) (158,589)
Net cash flows from investing activities 30,760 (21,705)
------ -------
Cash flows from financing activities:
Excess tax benefit from stock option exercises 805 351
Proceeds from exercise of stock options 4,668 3,028
Debt issue costs (1,525) 0
Proceeds from revolving borrowings 175,000 0
Repayments of revolving borrowings (150,000) 0
Repurchase of common stock and shares tendered for taxes (147,571) (139,650)
Net cash flows from financing activities (118,623) (136,271)
-------- --------
Net change in cash and cash equivalents (50,517) 24,143
Cash and cash equivalents at beginning of period 228,993 163,779
------- -------
Cash and cash equivalents at end of period $178,476 $187,922
======== ========
SOURCE ITT Educational Services, Inc.
Recommend :
