7:33AM ITT Educational beats by $0.17, beats on revs; guides FY09 EPS above consensus (ESI) 114.55 : Reports Q4 (Dec) earnings of $1.61 per share, $0.17 better than the First Call consensus of $1.44; revenues rose 21.4% year/year to $279.8 mln vs the $269.5 mln consensus. Co issues upside guidance for FY09, sees EPS of $6.25-6.45 vs. $5.73 consensus. Co says "During the three months ended December 31, 2008, marketing expenditures increased 5% compared to the same period in the prior year, which was below our original estimated increase of between 10% and 15%. We continued to experience a very favorable advertising market as we entered the new year, which we believe was principally due to the significant overall decline in the demand for advertising in our primary media as a result of the current economic environment. Looking forward into 2009, we believe that the percentage increase in our marketing costs over those in 2008 will be approximately 10%. The number of our recruitment representatives as we began 2009 was approximately 15% more than at the beginning of 2008. As a result, we believe that we are very well positioned to service a far greater number of inquiries for our program offerings in 2009."
finance.yahoo.com
ITT Educational Services, Inc. Reports 2008 Fourth Quarter and Full Year Results
New Student Enrollment Increased 29.2%; EPS Increased 34.2% to $1.61
Last update: 7:30 a.m. EST Jan. 22, 2009
CARMEL, Ind., Jan 22, 2009 /PRNewswire-FirstCall via COMTEX/ -- ITT Educational Services, Inc., a leading provider of technology-oriented postsecondary degree programs, today reported that new student enrollment in the fourth quarter of 2008 increased 29.2% to 14,911 students compared to 11,542 in the same period in 2007. Total student enrollment increased 16.9% to 61,983 as of December 31, 2008 compared to 53,027 as of December 31, 2007.
Earnings per share ("EPS") in the fourth quarter of 2008 increased 34.2% to $1.61 compared to $1.20 in the fourth quarter of 2007. Revenue in the three months ended December 31, 2008 increased 21.4% to $279.8 million compared to $230.4 million in the three months ended December 31, 2007. Operating margin increased 290 basis points to 36.5% in the fourth quarter of 2008 compared to 33.6% in the same period in 2007.
The company provided the following information for the three and 12 months ended December 31, 2008 and 2007:
Financial and Operating Data For The Three Months Ended December
31st, Unless Otherwise Indicated
(Dollars in millions, except per share and per student data)
Increase/
2008 2007 (Decrease)
Revenue $279.8 $230.4 21.4%
Operating Income $102.1 $77.3 32.0%
Operating Margin 36.5% 33.6% 290 basis points
Net Income $63.0 $48.5 30.0%
Earnings Per Share (diluted) $1.61 $1.20 34.2%
New Student Enrollment 14,911 11,542 29.2%
Continuing Students 47,072 41,485 13.5%
Total Student Enrollment as 61,983 53,027 16.9%
of December 31st
Quarterly Persistence Rate (A) 76.5% 77.3% (80) basis points
Revenue Per Student $4,545 $4,293 5.9%
Cash and Cash Equivalents,
Restricted Cash and Investments
as of December 31st $375.9 $317.2 18.5%
Bad Debt Expense as a Percentage
of Revenue 4.9% 2.1% 280 basis points
Days Sales Outstanding as of
December 31st 9.8 days 6.0 days 3.8 days
Deferred Revenue as of
December 31st $162.2 $213.1 (23.9)%
Debt as of December 31st $150.0 $150.0
Weighted Average Diluted
Shares of Common Stock
Outstanding 39,100,000 40,278,000
Shares of Common Stock
Repurchased -- 300,300 (B)
Land and Building Purchases $1.0 (C ) $1.1 (D) (12.7)%
Number of New Colleges in Operation 2 2
Number of New Learning Sites
in Operation -- --
Capital Expenditures, Net $5.4 $4.2 28.9%
Financial and Operating Data For The 12 Months Ended December 31st
(Dollars in millions, except per share and per student data)
Increase/
2008 2007 (Decrease)
Revenue $1,015.3 $869.5 16.8%
Operating Income $327.9 $242.0 35.5%
Operating Margin 32.3% 27.8% 450 basis points
Net Income $203.0 $151.6 33.9%
Earnings Per Share (diluted) $5.17 $3.71 39.4%
Bad Debt Expense as a
Percentage of Revenue 4.3% 2.1% 220 basis points
Revenue Per Student $18,162 $17,508 3.7%
Weighted Average Diluted
Shares of Common Stock
Outstanding 39,243,000 40,883,000
Shares of Common Stock
Repurchased 1,049,700 (E) 2,659,300 (F)
Land and Building Purchases $18.1 (G) $12.6 (H) 43.7%
Number of New Colleges in Operation 8 10
Number of New Learning Sites
in Operation -- --
Capital Expenditures, Net $17.5 $15.5 13.1%
(A) Represents the number of Continuing Students in the academic quarter, divided by the Total Student Enrollment in the immediately preceding academic quarter.
(B) For approximately $36.9 million or at an average price of $122.93 per share.
(C ) Represents costs associated with purchasing, renovating, expanding or constructing buildings at 10 of the company's locations.
(D) Represents costs associated with purchasing, renovating, expanding or constructing buildings at 11 of the company's locations.
(E) For approximately $87.8 million or at an average price of $83.62 per share.
(F) For approximately $265.0 million or at an average price of $99.65 per share.
(G) Represents costs associated with purchasing one parcel of real estate on which the company built a facility for one of the company's colleges, and costs associated with purchasing, renovating, expanding or constructing buildings at 19 of the company's locations.
(H) Represents costs associated with purchasing one parcel of real estate on which the company built a facility for one of the company's colleges, and costs associated with purchasing, renovating, expanding or constructing buildings at 17 of the company's locations.
Kevin M. Modany, Chairman, CEO and President of ITT/ESI, said, "We would like to congratulate the approximately 8,000 faculty, management and staff at the 114 ITT Technical Institute locations across the nation for another outstanding year of contributions toward the continuing success of our organization and the students that we serve. More importantly, we would like to thank our dedicated employees for assisting our students in developing knowledge and skills for the 21st century workforce. As we entered 2009, demand for our programs of study remained incredibly strong as prospective students recognized the importance of learning new skills and enhancing their existing competencies through a high-quality postsecondary education in order to improve their career prospects."
Modany continued, "As a result of our terrific performance in the fourth quarter and optimistic outlook regarding the operating environment in 2009, we have set our internal goal for 2009 EPS in the range of $6.25 to $6.45."
Modany observed, "During the three months ended December 31, 2008, marketing expenditures increased 5% compared to the same period in the prior year, which was below our original estimated increase of between 10% and 15%. We continued to experience a very favorable advertising market as we entered the new year, which we believe was principally due to the significant overall decline in the demand for advertising in our primary media as a result of the current economic environment. Looking forward into 2009, we believe that the percentage increase in our marketing costs over those in 2008 will be approximately 10%. The number of our recruitment representatives as we began 2009 was approximately 15% more than at the beginning of 2008. As a result, we believe that we are very well positioned to service a far greater number of inquiries for our program offerings in 2009."
Modany noted, "During the fourth quarter of 2008, we began operations at our 104th college in Springfield, MO and 105th college in Huntington, WV, bringing to eight the total number of new colleges that we opened in 2008. Our goal in 2009 is to open between six to eight new locations."
Modany added, "In 2008, we added a total of 190 new degree programs throughout our network of 105 colleges and nine learning sites compared to 246 programs in 2007 and 142 programs in 2006. We have several new degree programs in various stages of research and development. During 2009, we plan to continue this important part of our growth strategy by offering a number of new technology and non-technology programs of study at the associate and bachelor degree levels that are taught both online and in residence. Our goal in 2009 is to add approximately 250 new programs across our network."
Modany commented, "Student persistence declined 80 basis points in the fourth quarter of 2008 to 76.5% compared to 77.3% in the fourth quarter of 2007, primarily due to a sizable increase in the number of graduates in the three months ended December 31, 2008 compared to the same period in 2007. Excluding the increase in the number of graduates, student persistence improved in the fourth quarter of 2008 as a result of higher student retention. We believe that student persistence will remain relatively flat in 2009 compared to 2008, excluding the impact of a year-over-year increase in the number of graduates during 2009 that we expect to occur."
Modany said, "We did not observe any further disruption in the ability of our students to access federal or private student financing during the fourth quarter of 2008. In addition, we do not expect any additional disruption in this area during 2009 that could have a significant adverse impact on the ability of our students to access the financing they need to pay the cost of their ITT Technical Institute educations."
Modany concluded, "We are entering the new year excited about our opportunity to build long-term shareholder value by continuing to execute on our proven growth strategy, and we believe that we are extremely well positioned to achieve our internal operating and financial goals for fiscal 2009."
Daniel M. Fitzpatrick, Senior Vice President and CFO of ITT/ESI, said, "The outstanding results for the fourth quarter and full year of 2008 once again exceeded our internal expectations and put us in a very good position to start the new year. Revenue increased an impressive 21.4% to $279.8 million in the three months ended December 31, 2008 compared to $230.4 million in the same period in 2007. This increase was due primarily to robust new student enrollment and higher student retention. The combined increases in new student enrollment and student retention led to an impressive 16.9% year-over-year increase in total student enrollment. Operating margin in the fourth quarter of 2008 increased 290 basis points to 36.5% compared to 33.6% in the fourth quarter of 2007, due to our ability to leverage fixed operating costs on a total student enrollment that was substantially higher as of December 31, 2008 compared to December 31, 2007."
Fitzpatrick continued, "Bad debt expense as a percentage of revenue increased 280 basis points to 4.9% in the three months ended December 31, 2008 compared to 2.1% in the same period in 2007. Days sales outstanding as of December 31, 2008 were 9.8 days, a 3.8 day increase compared to 6.0 days at the same point in 2007."
Fitzpatrick added, "Based on the information that we have obtained to date regarding the current underwriting standards used by the lenders that offer private education loans to our students, we believe that the amount of internally funded student financing that we may need to provide to our students in 2009 will be approximately $75 million. As a result, we believe that days sales outstanding in 2009 will range from 15 to 20 days and bad debt expense as a percentage of revenue in 2009 will be in the range of 4% to 6%."
Fitzpatrick further noted, "In the three months ended December 31, 2008, we did not repurchase any shares of our common stock. There are approximately 4.0 million shares of our common stock remaining to be repurchased under our current share repurchase program. Depending on market conditions, we intend to repurchase additional shares of our common stock during 2009. Cash and cash equivalents, restricted cash and investments as of December 31, 2008 increased 18.5% to $375.9 million compared to $317.2 million as of December 31, 2007, primarily due to the solid increase in cash flows from operating activities in the fourth quarter of 2008 compared to the same period in 2007."
Fitzpatrick closed by noting, "The financial condition and fundamentals of the company are incredibly strong, and we entered the new year with a great deal of optimism for a very favorable operating environment in 2009. We believe that we are well positioned to execute on our established growth plan with the goal of increasing shareholder value over the long-term." |
