IBJNews

Profit tumbles 36 percent at ITT as enrollment craters

Back to TopCommentsE-mailPrintBookmark and Share

ITT Educational Services Inc. will not close any of its campuses in response to plummeting enrollment, but it likely will spend more of its own money to give scholarships to students, company officials said Thursday.

Those disclosures, made during an 11 a.m. conference call with investors, helped erase an 8.5-percent surge the company's stock had enjoyed after the company announced better-than-expected profits earlier Thursday. Instead, ITT's shares plunged, and closed the day at $22.69 each, a drop of 9.6 percent.

Carmel-based ITT is the latest operator of for-profit colleges to report large decreases in student enrollment. The declines sent ITT's profits plunging in the third quarter by 36 percent—although not as much as Wall Street analysts were expecting.

Last week, industry bellwether, Arizona-based Apollo Group Inc., said it plans to cut 800 jobs and close 115 campuses after student enrollment fell 14 percent in its most recent quarter.

ITT has no plans to eliminate campuses but would leave the option on the table, said its Chief Financial Officer Daniel Fitzpatrick, after the company's total enrollment fell by 17 percent in the most recent quarter.

"We will not hesitate to adjust the number of our campuses should it be operationally and financially appropriate to do so," Fitzpatrick told investors and analysts during a conference call Thursday morning.

ITT officials said inquiries at its schools have remained steady, but its rate of converting inquiries into enrollments has slipped. In response, ITT is testing a new communications program that provides an estimate of the number of grants and scholarships for which students would qualify—during their very first visit to an ITT campus. Also, ITT plans to spend more of its own money to fund scholarships for students, said CEO Kevin Modany.

The average cost of an ITT associate's degree program is $45,000, yet scholarships and grants reduce that cost on average to $27,000.

"We are trying to communicate to students that value proposition more clearly," Modany said during the ITT conference call.

In the three months ended Sept. 30, ITT earned $42.9 million, or $1.83 per diluted share. But Wall Street analysts were expecting earnings of just $1.76 per share, according to a survey by Thomson Reuters.

Shares of ITT's stock initially jumped by 8.5 percent on Thursday morning, rising as high as $27.29 per share.

Third-quarter revenue fell nearly 13 percent from a year ago to $315 million. Analysts were expecting $317 million, according to the survey by Thomson Reuters.

Declining dollars are a result of fewer students at ITT’s more than 140 campuses across the country. New student enrollments plummeted nearly 16 percent to 19,300 during the third quarter, compared with the same period a year ago.

ITT’s declines in new student enrollment had been moderating in recent quarters, totaling only 9.5 percent in its second quarter this year.

Most for-profit educators have been suffering similar fortunes. Enrollments have tumbled across the industry, in part because of a natural receding of the wave of students who entered for-profit colleges during the recession that ran from 2007 to 2009.

But more significantly, government investigations of the industry have exposed questionable recruiting practices, sky-high student debt loads and low graduation rates. New rules placed on for-profit colleges by the Obama administration threatened to yank federal student loans for programs whose students failed to pay down their debt loads.

Shares of ITT Educational had been in a nosedive since February, losing 67 percent of their value. The stock closed Wednesday at $25.11.

ADVERTISEMENT

  • Paper Mills
    Gigs up. These schools are nothing more than loan paper mills. Go to IvyTech ,save money and get an education.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Hello Dear Are you tired of Seeking Loans and Mortgages,have you Been Turned down constantly By your banks and Other Financial Institutions or Micro Finance scheme. This is let you know with 100% guarantee that we Offer loans ranging from $1,000 Minimum to $1,000,000.00 Maximum at 3% interest rate per Month. We give out LOANS for developing business. a competitive edge/business expansion. email address: michealscottloan124@gmail.com We offer the following kinds of loans and many more; * Personal Loans ( Unsecured Loan) * Business Loans ( Unsecured Loan) * Consolidation Loan * Combination Loan * Home Improvement * Xmas Loans for contact to seek for loan email this email address: michealscottloan124@gmail.com Thanks

  2. My name is Mr Henry Josh and i live in the USA California and life is worth living right now for me and my family and all this is because of one man sent by GOD to help me and my family, i once had a life filled with sorrow because my first SON needed a kidney transplant and all our savings were going towards his medications and this normally leaves us with no money to pay our bills or even put enough food on our table and our rent was due and no funds to pay these bills and life felt so unfair to me and every night my wife will cry herself to sleep every night until one day, i was browsing through yahoo answers and i saw a striking advert of a man that gives out personal loans and that the offer is opened to all and i have heard so many things about internet scams but at this point of my life, i was very desperate and ready to take any risk and at the end of the day, i applied for this loan and from one step to another, i got my loan within 12 hours through bank transfer and you know, it was all like a dream and i called Mr Daniel Jones A Man who is the GOD sent lender i found and said, i have received my loan and he smiled stating that to GOD be the glory and i was so shocked as i have never ever seen anyone with such a GOD fearing and kind heart and today, i am the happiest man on earth because by GOD’S grace, my SON kidney transplant was successful and today he is healthy, i and my family are living very comfortable and happy and if you are in my former situation or in serious and legitimate need of a loan, you can reach this GOD sent lender via fidelityloanfirm@outlook.com

  3. Greetings to everyone reading this comment!!! I am Greg William by name. I am out here to recommend the effort of Mark Oscar,I was in need of a consolidation loan amount of 50,000 and as soon as I got in contact with Mark Oscar Loan Firm on Wednesday last week and on Friday last week as well I receive an alert from my bank(Royal Bank of Scotland Group) that the fund was transferred,I want everybody on this site to contact Mark Oscar now via email on how to get a loan because I got my loan from them and I am very happy,so contact them now. Oscarloanfinance@hotmail.com Thanks!!!!!!

  4. Elected officials, like Mourdock, get vested in 8 years. It takes 10 years for all other public employees, most of whom make a lot less money. So much for the promise to finish out his term.

  5. Great state treasurer and a good man!! Just curious if the folks who didn't quite understand his quote would like to tell my daughter-in-law that God didn't intend her! Mourdock's comment was correct but twisted and the article didn't mention that his opponent and the press let the impression stand that Mourdock meant that the rape was intended. Stupid people!!

ADVERTISEMENT