Shares of ITT Educational Services Inc. nearly doubled in value Friday morning after the company reported a 2014 profit more than three times higher than analysts expected and also said its CEO would stay on for another three months.
The Carmel-based chain of for-profit colleges said it earned $29.3 million during the 12 months ended Dec. 31, reversing a $27 million loss it sustained in 2013. Earnings per share last year were $1.23, compared with an average prediction of 36 cents per share, according to three stock analysts surveyed by Thomson Reuters.
The company’s report of its 2014 financial results had been delayed after the U.S. Securities & Exchange Commission ruled the company had to move two troubled student loan programs onto its balance sheets.
During 2014, ITT’s revenue fell 10 percent, to $962 million, as student enrollments fell because an advertising blunder and due to a drumbeat of bad news throughout the year.
Those declines have continued into 2015. ITT reported April 29 that it new-student enrollment was down 16 percent and its total student enrollment down 10 percent in the first quarter.
ITT Educational also reported that CEO Kevin Modany, who was due to leave the company on Friday, will now remain until Aug. 31.
And ITT won more time with its lenders to report its first-quarter financial results. It now has until June 15.
The news caused investors to bid up the company’s shares by as much as 90 percent Friday morning, to as much as $4.60 apiece. ITT’s shares had closed Thursday at $2.41 apiece, down by 86 percent over the previous year.
Earlier this month, ITT was sued by the SEC for allegedly deceiving both investors and its auditor about the extent of losses ITT was suffering from private student loan programs it created after the 2008 financial crisis froze up traditional sources of private student loans.
ITT struck a deal with new lenders that put the company at risk if defaults spiked, which they did. At the end of 2014, the balance of those two loan programs stood at $197.2 million.
ITT is on the hook for most of that debt, according to its financial report issued Friday. ITT reported that it expects to make $126.7 million in payments on those loan programs, nearly all of that by 2018, and only expects to recover about $6 million of those amounts from students.