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CARMEL, Ind., Oct. 22 /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 third quarter of 2009 increased 27.2% to 27,738 compared to 21,807 in the same period in 2008. Total student enrollment increased 28.7% to 79,208 as of September 30, 2009 compared to 61,556 as of September 30, 2008.
Earnings per share ("EPS") in the third quarter of 2009 increased 56.3% to $2.00 compared to $1.28 in the third quarter of 2008. Revenue in the three months ended September 30, 2009 increased 33.6% to $339.6 million compared to $254.3 million in the three months ended September 30, 2008. Operating margin increased 430 basis points to 36.1% in the third quarter of 2009 compared to 31.8% in the same period in 2008.
The company provided the following information for the three and nine months ended September 30, 2009 and 2008:
Financial and Operating Data for the Three Months Ended September 30th,
Unless Otherwise Indicated
(Dollars in millions, except per share and per student data)
2009 2008 Increase/
(Decrease)
Revenue $339.6 $254.3 33.6%
Operating Income $122.7 $80.8 52.0%
Operating Margin 36.1% 31.8% 430 basis
points
Net Income $75.4 $50.2 50.2%
Earnings Per Share (diluted) $2.00 $1.28 56.3%
New Student Enrollment 27,738 (A) 21,807 27.2%
Continuing Students 51,470 (B) 39,749 29.5%
Total Student Enrollment as of
September 30th 79,208 (C) 61,556 28.7%
Persistence Rate as of September
30th (D) 73.6% 72.5% 110 basis
points
Revenue Per Student $4,852 $4,641 4.5%
Cash and Cash Equivalents,
Restricted Cash and Investments as
of September 30th $280.8 $286.7 (2.0)%
Bad Debt Expense as a Percentage
of Revenue 6.8% 5.0% 180 basis
points
Days Sales Outstanding as of
September 30th 25.4 days 12.1 days 13.3 days
Deferred Revenue as of
September 30th $146.2 $142.0 2.9%
Debt as of September 30th $150.0 $150.0
Weighted Average Diluted
Shares of Common Stock Outstanding 37,763,000 39,195,000
Shares of Common Stock
Repurchased 827,842 (E) 184,700 (F)
Land and Building Purchases
and Renovations $0.7 (G) $3.9 (H) (83.2)%
Number of New Colleges in Operation 5 1
Capital Expenditures, Net $3.9 $4.3 (8.8)%
Financial and Operating Data for the Nine Months Ended September 30th
(Dollars in millions, except per share and per student data)
2009 2008 Increase/
(Decrease)
Revenue $944.8 $735.5 28.5%
Operating Income $340.2 $225.8 50.7%
Operating Margin 36.0% 30.7% 530 basis
points
Net Income $209.2 $140.0 49.5%
Earnings Per Share (diluted) $5.45 $3.56 53.1%
Bad Debt Expense as a Percentage
of Revenue 5.9% 4.0% 190 basis
points
Revenue Per Student $14,332 $13,617 5.3%
Weighted Average Diluted Shares
of Common Stock Outstanding 38,412,000 39,291,000
Shares of Common Stock
Repurchased 1,977,875 (I) 1,049,700 (J)
Land and Building Purchases and
Renovations $2.5 (K) $17.1(L)(85.3)%
Number of New Colleges in Operation 7 (M) 6
Capital Expenditures, Net $15.9 $12.1 31.5%
(A) Includes 223 students enrolled at Daniel Webster College.
(B) Includes 647 students enrolled at Daniel Webster College.
(C) Includes 870 students enrolled at Daniel Webster College.
(D) Represents the number of Continuing Students in the academic term,
divided by the Total Student Enrollment in the immediately preceding
academic term.
(E) For approximately $84.5 million or at an average price of $102.06 per
share.
(F) For approximately $16.0 million or at an average price of $86.47 per
share.
(G) Represents costs associated with renovating, expanding or
constructing buildings at nine of the company's locations, but it
excludes all land and buildings of Daniel Webster College that the
company acquired.
(H) Represents costs associated with renovating, expanding or
constructing buildings at 14 of the company's locations.
(I) For approximately $208.8 million or at an average price of $105.58
per share.
(J) For approximately $87.8 million or at an average price of $83.62 per
share.
(K) Represents costs associated with renovating, expanding or
constructing buildings at 15 of the company's locations, but it
excludes all land and buildings of Daniel Webster College that the
company acquired.
(L) Represents costs associated with purchasing a parcel of land on which
the company constructed a building, and purchasing, renovating,
expanding or constructing buildings at 17 of the company's locations
(M) Excludes Daniel Webster College.
ITT Educational Services, Inc. will conduct a conference call with financial analysts to discuss its third quarter 2009 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.
FOR FURTHER INFORMATION:
COMPANY:
Lauren Littlefield, Manager of Communications, (317) 706-9200
WEB SITE:
www.ittesi.com
ITT EDUCATIONAL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
As of
Sept. 30, Dec. 31, Sept. 30,
2009 2008 2008
(unaudited) (unaudited)
Assets
Current assets:
Cash and cash equivalents $130,971 $226,255 $136,698
Short-term investments 144,146 138,709 150,000
Restricted cash 5,723 10,405 17
Accounts receivable, net 93,819 29,779 33,309
Deferred income taxes 16,328 12,104 13,012
Prepaid expenses and other
current assets 19,106 13,793 12,980
Total current assets 410,093 431,045 346,016
Property and equipment, net 192,341 166,671 166,140
Direct marketing costs, net 27,222 22,973 22,694
Other assets 20,705 3,170 19,481
Total assets $650,361 $623,859 $554,331
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $150,000 $-- $--
Accounts payable 67,183 54,815 58,781
Accrued compensation and benefits 23,340 21,133 28,574
Accrued income taxes 7,917 14,976 1,753
Other accrued liabilities 15,884 11,423 12,274
Deferred revenue 146,203 162,206 142,044
Total current liabilities 410,527 264,553 243,426
Long-term debt -- 150,000 150,000
Deferred income taxes 4,092 1,504 10,108
Other liabilities 22,262 19,951 19,207
Total liabilities 436,881 436,008 422,741
Shareholders' equity:
Preferred stock, $.01 par value,
5,000,000 shares authorized,
none issued -- -- --
Common stock, $.01 par value,
300,000,000 shares authorized,
54,068,904 issued 541 541 541
Capital surplus 151,653 135,655 133,723
Retained earnings 929,907 732,107 670,073
Accumulated other
comprehensive (loss) (12,558) (13,384) (3,417)
Treasury stock, 17,123,838,
15,352,376 and 15,376,719
shares, at cost (856,063) (667,068) (669,330)
Total shareholders' equity 213,480 187,851 131,590
Total liabilities and
shareholders' equity $650,361 $623,859 $554,331
ITT EDUCATIONAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
Three Months Nine Months
Ended September 30, Ended September 30,
(unaudited) (unaudited)
2009 2008 2009 2008
Revenue $339,643 $254,273 $944,816 $735,533
Costs and expenses:
Cost of educational services 116,730 95,011 328,609 282,219
Student services and
administrative expenses 100,187 78,500 276,044 227,535
Total costs and expenses 216,917 173,511 604,653 509,754
Operating income 122,726 80,762 340,163 225,779
Interest income 716 1,565 2,827 4,774
Interest (expense) (191) (1,012) (593) (3,588)
Income before provision for
income taxes 123,251 81,315 342,397 226,965
Provision for income taxes 47,891 31,129 133,185 87,017
Net income $75,360 $50,186 $209,212 $139,948
Earnings per share:
Basic $2.02 $1.29 $5.51 $3.59
Diluted $2.00 $1.28 $5.45 $3.56
Supplemental Data:
Cost of educational services 34.4% 37.4% 34.8% 38.4%
Student services and
administrative expenses 29.5% 30.8% 29.2% 30.9%
Operating margin 36.1% 31.8% 36.0% 30.7%
Student enrollment at end
of period 79,208 61,556 79,208 61,556
Campuses at end of period * 112 103 112 103
Shares for earnings per share
calculation:
Basic 37,324,000 38,777,000 37,950,000 38,938,000
Diluted 37,763,000 39,195,000 38,412,000 39,291,000
Effective tax rate 38.9% 38.3% 38.9% 38.3%
* Does not include the Daniel Webster College campus.
ITT EDUCATIONAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three Months Nine Months
Ended September 30, Ended September 30,
(unaudited) (unaudited)
2009 2008 2009 2008
Cash flows from operating
activities:
Net income $75,360 $50,186 $209,212 $139,948
Adjustments to reconcile
net income to net cash flows
from operating activities:
Depreciation and
amortization 6,276 5,077 18,204 16,335
Provision for
doubtful accounts 23,183 12,839 56,012 29,457
Deferred income taxes 1,471 (1,948) (2,344) (7,251)
Excess tax benefit
from stock option
exercises (1,385) (686) (5,272) (773)
Stock-based
compensation expense 2,891 1,628 10,247 5,731
Other 113 -- (309) --
Changes in operating
assets and
liabilities, net of
acquisition:
Restricted cash (5,743) 181 2,581 6,039
Accounts
receivable (47,255) (16,950) (119,255) (47,634)
Direct marketing
costs, net (1,234) (731) (4,249) (2,127)
Accounts payable 4,763 4,375 10,819 13,661
Accrued income
taxes (2,432) (2,982) (1,308) (3,467)
Other operating
assets and
liabilities (377) 4,331 1,007 11,214
Deferred revenue 19,325 3,706 (17,631) (71,083)
Net cash flows from operating
activities 74,956 59,026 157,714 90,050
Cash flows from investing
activities:
Facility expenditures and
land purchases (664) (3,944) (2,516) (17,107)
Capital expenditures,
net (3,907) (4,286) (15,913) (12,103)
Acquisition of college,
net of cash acquired -- -- (20,792) --
Proceeds from sales and
maturities of investments 57,352 492,760 142,741 964,565
Purchase of investments (56,543) (472,260) (147,362) (811,205)
Issuance of note
receivable, net of
repayments (71) -- (13,991) --
Net cash flows from investing
activities (3,833) 12,270 (57,833) 124,150
Cash flows from financing
activities:
Excess tax benefit from
stock option exercises 1,385 686 5,272 773
Proceeds from exercise of
stock options 2,756 1,996 8,750 2,271
Repurchase of common stock
and shares tendered for
taxes (84,497) (15,971) (209,187) (87,774)
Net cash flows from financing
activities (80,356) (13,289) (195,165) (84,730)
Net change in cash and cash
equivalents (9,233) 58,007 (95,284) 129,470
Cash and cash equivalents
at beginning of period 140,204 78,691 226,255 7,228
Cash and cash equivalents at
end of period $130,971 $136,698 $130,971 $136,698
SOURCE ITT Educational Services, Inc.
Lauren Littlefield, Manager of Communications, +1-317-706-9200, of ITT Educational Services, Inc. |
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