UPDATE 1-ITT's 2013 student sign-ups could rise on new scholarship

Thu Jan 24, 2013 2:44pm EST

* Change in student sign-ups for 2013 to be between 5 pct rise or 5 pct fall

* To exceed cost savings plan of $50 million in 2013

* Shares rise more than 11 percent

Jan 24 (Reuters) - For-profit education provider ITT Educational Services Inc said student enrollments could increase in 2013 for the first time in nearly three years, helped by a new scholarship program that was attracting more students.

ITT's shares rose more than 11 percent to $15.94 on the New York Stock Exchange on Thursday afternoon. They earlier fell 10 percent, after the company reported a quarterly loss.

The rate of change in new student enrollments would be between a 5 percent rise and a 5 percent decline, ITT said.

The company, introduced the new program in fourth quarter at 24 campuses, Chief Executive Kevin Modany said on a post-earnings conference call.

Students enrollments at the campuses testing the program - which effectively reduces tuition fee for students - fell only 6 percent compared with a 13 percent decline in non-participating colleges, Modany said.

ITT plans to expand the program to 101 more campuses from March, and to all campuses by the end the year.

Since the program reduces students' need for loans, ITT will discontinue efforts to secure additional private student loan programs for students, the CEO said.

He also said the company will likely exceed its $50 million cost-savings plans in 2013.

The for-profit education industry has struggled to attract students after a U.S. government scrutiny revealed high student debt and low graduation rates.

ITT, which runs the ITT technical institutes and Daniel Webster College, said new enrollments fell 11 percent in the fourth quarter - the tenth straight quarter of enrollment declines.

The Carmel, Indiana-based company, whose stock has fallen more than 75 percent over the last year, reported a net loss of $9.5 million, or 41 cents per share, compared with net profit of $76.0 million, or $2.87 per share, a year earlier.

Revenue fell 18 percent to $300.8 million.

ITT said it aims to earn between $3.50 and $4.00 per share for 2013, while analysts on average were expecting $4.53 per share, according to Thomson Reuters I/B/E/S.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.