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ITT Educational Services, Inc. Reports 2013 First Quarter Results



      ITT Educational Services, Inc. Reports 2013 First Quarter Results

PR Newswire

CARMEL, Ind., April 25, 2013

CARMEL, Ind., April 25, 2013 /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 2013 decreased 3.6% to 17,412 compared to 18,067 in the same period
in 2012.  Total student enrollment decreased 14.2% to 61,039 as of March 31,
2013 compared to 71,123 as of March 31, 2012. 

The company provided the following information for the three months ended
March 31, 2013 and 2012:

Financial and Operating Data for the Three Months Ended March 31st, Unless
Otherwise Indicated
(Dollars in millions, except per share and per student data)
                              2013            2012              Increase/
                                                                (Decrease)
Revenue                       $287.7          $341.8            (15.8)%
Operating Income              $52.7           $100.6            (47.6)%
Operating Margin              18.3%           29.4%             (1,110) basis
                                                                points
Net Income                    $31.1           $61.1             (49.0)%
Earnings Per Share            $1.33           $2.38             (44.1)%
(diluted)
New Student Enrollment        17,412          18,067            (3.6)%
Continuing Students           43,627          53,056            (17.8)%
Total Student Enrollment      61,039          71,123            (14.2)%
as of March 31^st
Persistence Rate as of        71.5%           72.4%             (90) basis
March 31^st (A)                                                 points
Revenue Per Student           $4,712          $4,666            1.0%
Cash and Cash
Equivalents, Restricted       $210.7          $294.4            (28.4)%
Cash and  Investments as
of March 31^st
Bad Debt Expense as a         6.9%            4.6%              230 basis
Percentage of Revenue                                           points
Days Sales Outstanding as     32.6 days       14.5 days         18.1 days
of March 31^st
Deferred Revenue as of        $120.6          $180.1            (33.0)%
March 31^st
Debt as of March 31^st        $150.0          $175.0
Weighted Average Diluted
Shares of Common              23,481,000      25,636,000
Stock Outstanding
Shares of Common Stock        0               2,097,200   ^(B)
Repurchased
Number of New Colleges in     0               4
Operation
Capital Expenditures, Net     $1.4            $4.5              (68.6)%
^(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.

 

ITT Educational Services, Inc. will conduct a conference call with financial
analysts to discuss its 2013 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.

WEB SITE:
www.ittesi.com

 

ITT EDUCATIONAL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
                             As of
                             March 31, 2013  December 31, 2012  March 31, 2012
                             (unaudited)                        (unaudited)
Assets
Current assets:
     Cash and cash           $210,012        $246,342           $178,476
equivalents
     Short-term investments  0               0                  114,806
     Restricted cash         719             601                1,123
     Accounts receivable,    104,077         77,313             54,411
net
     Deferred income taxes   29,513          44,547             12,566
     Prepaid expenses and    18,651          16,162             17,832
other current assets
          Total current      362,972         384,965            379,214
assets
Property and equipment, net  184,123         189,890            198,493
Deferred income taxes        56,858          56,112             34,081
Other assets                 39,033          41,263             49,516
     Total assets            $642,986        $672,230           $661,304
Liabilities and
Shareholders' Equity
Current liabilities:
     Accounts payable        $63,713         $63,304            $77,664
     Accrued compensation    15,425          21,023             13,323
and benefits
     Other current           34,807          86,722             50,920
liabilities
     Deferred revenue        120,628         135,900            180,147
          Total current      234,573         306,949            322,054
liabilities
Long-term debt               150,000         140,000            175,000
Other liabilities            100,138         98,327             72,629
     Total liabilities       484,711         545,276            569,683
Shareholders' equity:
     Preferred stock, $.01
par value,
        5,000,000 shares     0               0                  0
authorized, none issued
    Common stock, $.01 par
value, 300,000,000 shares
                             371             371                371
      authorized, 37,068,904
issued
    Capital surplus          204,219         206,703            194,027
    Retained earnings        990,202         959,072            884,230
    Accumulated other        (7,835)         (7,930)            (9,316)
comprehensive (loss)
    Treasury stock,
13,706,781, 13,744,395 and
12,934,377                   (1,028,682)     (1,031,262)        (977,691)

      shares at cost
        Total shareholders'  158,275         126,954            91,621
equity
        Total liabilities    $642,986        $672,230           $661,304
and shareholders' equity

 

 

ITT EDUCATIONAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
                                               Three Months
                                               Ended March 31,
                                               (unaudited)
                                               2013        2012
Revenue                                        $287,711    $341,794
Costs and expenses:
Cost of educational services                   125,221     134,941
Student services and administrative expenses   106,282     106,266
Loss related to private student loan programs  3,464       0
Total costs and expenses                       234,967     241,207
Operating income                               52,744      100,587
Interest income                                34          681
Interest (expense)                             (1,152)     (547)
Income before provision for income taxes       51,626      100,721
Provision for income taxes                     20,496      39,650
Net income                                     $31,130     $61,071
Earnings per share:
     Basic                                     $1.33       $2.40
     Diluted                                   $1.33       $2.38
Supplemental Data:
Cost of educational services                   43.5%       39.5%
Student services and administrative expenses   36.9%       31.1%
Loss related to private student loan programs  1.2%        0.0%
Operating margin                               18.3%       29.4%
Student enrollment at end of period            61,039      71,123
Campuses at end of period                      147         145
Shares for earnings per share calculation:
     Basic                                     23,397,000  25,420,000
     Diluted                                   23,481,000  25,636,000
Effective tax rate                             39.7%       39.4%

 

 

ITT EDUCATIONAL SERVICES, INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
                                                           Three Months
                                                           Ended March 31,
                                                           (unaudited)
                                                           2013      2012
Cash flows from operating activities:
    Net income                                             $31,130   $61,071
    Adjustments to reconcile net income to net cash flows
        from operating activities:
           Depreciation and amortization                   7,292     7,420
           Provision for doubtful accounts                 19,885    15,601
           Deferred income taxes                           13,211    (3,742)
           Excess tax benefit from stock option exercises  0         (805)
           Stock-based compensation expense                3,093     4,483
           Settlement cost                                 (46,000)  0
           Other                                           294       (339)
           Changes in operating assets and liabilities:
               Restricted cash                             (118)     1,005
               Accounts receivable                         (46,649)  (21,906)
               Accounts payable                            409       (1,212)
               Other operating assets and liabilities      (10,693)  22,166
               Deferred revenue                            (15,272)  (46,396)
Net cash flows from operating activities                   (43,418)  37,346
Cash flows from investing activities:
     Facility expenditures and land purchases              (100)     (132)
     Capital expenditures, net                             (1,418)   (4,518)
     Proceeds from sales and maturities of investments and
repayment                                                  215       98,955

        of notes
     Purchase of investments and note advances             (1,241)   (63,545)
Net cash flows from investing activities                   (2,544)   30,760
Cash flows from financing activities:
     Excess tax benefit from stock option exercises        0         805
     Proceeds from exercise of stock options               0         4,668
     Debt issue costs                                      0         (1,525)
     Proceeds from revolving borrowings                    10,000    175,000
     Repayments of revolving borrowings                    0         (150,000)
     Repurchase of common stock and shares tendered for    (368)     (147,571)
taxes
Net cash flows from financing activities                   9,632     (118,623)
Net change in cash and cash equivalents                    (36,330)  (50,517)
Cash and cash equivalents at beginning of period           246,342   228,993
Cash and cash equivalents at end of period                 $210,012  $178,476

 

SOURCE ITT Educational Services, Inc.

Website: http://www.ittesi.com
Contact: Dana Stelsel, Communications Manager, (317) 706-9200
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