ITT’s CEO staying, CFO leaving after disappointing quarter

ITT Educational Services headquarters

The CEO is staying longer than planned, but the chief financial officer is leaving earlier than expected after ITT Educational Services Inc. reported a second-quarter profit way below Wall Street's expectations.

The Carmel-based operator of for-profit colleges said Thursday morning that Kevin Modany remain CEO until year's end under a new agreement with the company. He originally had been slated to step down in May, but the company extended his tenure until August. Now he'll stay another four months.

CEO Dan Fitzpatrick has little more than a month left as an ITT employee, the company disclosed. He will step down as CFO once the company files its 10-Q form for its second quarter with the U.S. Securities and Exchange Commission. After that, Fitzpatrick will remain an ITT employee for 30 days to help his replacement, Rocco F. Tarasi, get up to speed. He will then be a consultant to ITT for 18 months.

In April, ITT announced that Fitzpatrick, its CFO since 2005, would leave at the end of October and then act as a consultant for 18 months.

Tarasi, 43, has been president of ITT's Center for Professional Development since January 2013 and before that was ITT's vice president of finance.

ITT turned a modest profit of $716,000 in the three months ended June 30. That was up by 83 percent from the same quarter a year ago, but totaled just 3 cents per share.

Wall Street analysts were expecting earnings of 10 cents per share, according to a survey by Thomson Reuters.

ITT's revenue declined 10 percent in the quarter from a year ago, to $214.2 million, as student enrollment fell sharply at ITT Technical Institutes around the country.

Enrollment of new students shrank by nearly 19 percent in the quarter, compared with the same period last year, to 12,638. Enrollment of continuing students also fell nearly 12 percent over the past year, to 35,236.

In spite of those declines, ITT's revenue beat the expectations of analysts, who predicted revenue of $211.6 million.

ITT shares fell 23.8 percent in earlly trading Thursday, to $4.33 each.

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