CARMEL, Ind., July 23 /PRNewswire-FirstCall/ -- ITT Educational Services, Inc. (NYSE: ESI), a leading provider of technology-oriented postsecondary degree programs, today reported that new student enrollment in the second quarter of 2009 increased 33.5% to 19,692 compared to 14,751 in the same period in 2008. Total student enrollment increased 26.2% to 69,127 as of June 30, 2009 compared to 54,793 as of June 30, 2008.
Earnings per share ("EPS") in the second quarter of 2009 increased 55.8% to $1.87 compared to $1.20 in the second quarter of 2008. Revenue in the three months ended June 30, 2009 increased 28.7% to $317.1 million compared to $246.4 million in the three months ended June 30, 2008. Operating margin increased 600 basis points to 37.0% in the second quarter of 2009 compared to 31.0% in the same period in 2008.
The company provided the following information for the three and six months ended June 30, 2009 and 2008:
Financial and Operating Data for the Three Months Ended June 30th,
Unless Otherwise Indicated
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(Dollars in millions, except per share and per student data)
2009 2008 Increase/(Decrease)
---- ---- -------------------
Revenue $317.1 $246.4 28.7%
Operating Income $117.3 $76.3 53.7%
Operating Margin 37.0% 31.0% 600 basis points
Net Income $71.9 $47.1 52.6%
Earnings Per Share (diluted) $1.87 $1.20 55.8%
New Student Enrollment(A) 19,692 14,751 33.5%
Continuing Students(A) 49,435 40,042 23.5%
Total Student Enrollment
as of June 30th (A) 69,127 54,793 26.2%
Quarterly Persistence Rate(A)(B) 75.3% 73.9% 140 basis points
Revenue Per Student $4,833 $4,547 6.3%
Cash and Cash Equivalents,
Restricted Cash and
Investments as of June 30th $284.8 $249.4 14.2%
Bad Debt Expense as a
Percentage of Revenue 5.9% 3.9% 200 basis points
Days Sales Outstanding as
of June 30th 20.0 10.8 9.2 days
Deferred Revenue as of
June 30th $126.9 $138.3 (8.3)%
Debt as of June 30th $150.0 $150.0
Weighted Average Diluted
Shares of Common
Stock Outstanding 38,425,000 39,167,000
Shares of Common Stock
Repurchased 622,200(C) --
Land and Building
Purchases and Renovations(D) $0.8(E) $6.9(F) (88.7)%
Number of New Colleges in
Operation 1(G) 2
Capital Expenditures, Net $7.4 $5.3 40.0%
Financial and Operating Data for the Six Months Ended June 30th
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(Dollars in millions, except per share and per student data)
2009 2008 Increase/(Decrease)
---- ---- -------------------
Revenue $605.2 $481.3 25.7%
Operating Income $217.4 $145.0 49.9%
Operating Margin 35.9% 30.1% 580 basis points
Net Income $133.9 $89.8 49.1%
Earnings Per Share (diluted) $3.45 $2.28 51.3%
Bad Debt Expense as a 190 basis points
Percentage of Revenue 5.4% 3.5%
Revenue Per Student $9,480 $8,976 5.6%
Weighted Average Diluted
Shares of Common
Stock Outstanding 38,742,000 39,339,000
Shares of Common Stock
Repurchased 1,150,033(H) 865,000(I)
Land and Building
Purchases and Renovations(D) $1.9(E) $13.2(J) (86.0)%
Number of New Colleges in
Operation 2(G) 5
Capital Expenditures, Net $12.0 $7.8 54.1%
(A) Excludes students enrolled at Daniel Webster College.
(B) Represents the number of Continuing Students in the academic quarter,
divided by the Total Student Enrollment in the immediately preceding
academic quarter.
(C) For approximately $60.0 million or at an average price of $96.39 per
share.
(D) Excludes all land and buildings of Daniel Webster College that the
company acquired.
(E) Represents costs associated with renovating, expanding or
constructing buildings at 10 of the company's locations.
(F) Represents costs associated with purchasing, renovating, expanding
or constructing buildings at 11 of the company's locations.
(G) Excludes Daniel Webster College.
(H) For approximately $124.3 million or at an average price of $108.11
per share.
(I) For approximately $71.8 million or at an average price of $83.01 per
share.
(J) 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 15 of the company's locations.
Kevin M. Modany, Chairman and CEO of ITT/ESI, said, "Interest in our programs across all six schools of study was incredibly strong during the second quarter of 2009, which led to an impressive increase in new student enrollment compared to the prior year. As we entered the third quarter of 2009, inquiries from prospective students for our high-quality, career-based programs of study remained robust, and we believe that the economic conditions that are stimulating this extraordinary demand may persist throughout the remainder of 2009."
Modany added, "As a result of our exceptional results in the second quarter of 2009 and our belief that favorable operating conditions will continue through the second half of 2009, we are raising our internal goal for 2009 EPS from the range of $7.00 to $7.25 to a revised range of $7.55 to $7.85."
Modany observed, "During the three months ended June 30, 2009, marketing expenditures increased 1% compared to the same quarter in 2008 as we continued to experience a buyer's market for advertising. We believe that these favorable conditions were due to a decline in the overall demand for advertising as a result of the recession, and are likely to persist throughout the remainder of 2009 and, potentially, into 2010."
Modany noted, "During the second quarter, we began operations at one college in Charlotte, NC. The addition of this college brings to two the number of ITT Technical Institutes operating in Charlotte and represents our second new college opening during the first six months of 2009. As a reminder, our goal is to open six to eight new locations in 2009."
Modany said, "We are pleased to report that we successfully completed the acquisition of Daniel Webster College in the second quarter of 2009 and look forward to integrating this high-quality institution into our organization. The operating information that we are reporting today for the second quarter of 2009 does not include any operating results of Daniel Webster College. The inclusion of this acquisition in our second quarter financial results had an immaterial impact."
Modany continued, "Our quarterly persistence rate increased 140 basis points in the second quarter of 2009 to 75.3% compared to 73.9% in the second quarter of 2008, primarily due to solid increases in student retention. We believe that our quarterly persistence rate in the third and fourth quarters of 2009 will be fairly consistent with the quarterly persistence rate in the same periods in 2008, excluding the impact of a year-over-year increase in the number of graduates in each of those quarters."
Modany commented that, "The period for measuring the employment success of our 2008 graduates ended in the second quarter.
