* Q3 student sign-ups down 16 pct
* Sees 2012 adjusted EPS of $8-$8.10
* CEO says cannot predict when enrollments will grow
* Shares tumble 13 percent
By A. Ananthalakshmi
Oct 25 ITT Educational Services Inc said
it cannot predict when a nine-quarter slide in new student
enrollments will come to an end, spooking investors awaiting a
recovery in the for-profit education industry.
Shares of the company, which runs the ITT Technical
Institutes and Daniel Webster College and offers several online
courses, fell as much as 13 percent to a 10-year low of $21.82
ITT's shares, which have fallen about 55 percent since the
beginning of the year, had jumped 9 percent earlier in the day
after the company reported a profit that beat analysts'
"We cannot provide any specific predictions regarding when
we may return to year-over-year growth in new student
enrollments," Chief Executive Kevin Modany said on a conference
call with analysts.
ITT had said in July it expected enrollments to grow at some
point in 2012. Sign-ups for the recently-ended third quarter
fell 16 percent, with enrollments in online programs declining
at almost twice the rate of residential programs.
The company forecast another decline in the fourth quarter
and cut its full-year earnings forecast.
CEO Modany said ITT was finding it difficult to convert
student inquiries into enrollments and that the company was
redoubling its efforts to communicate effectively with potential
students worried about the cost of their education.
The company is also eyeing cost-saving measures, including
potential future campus closures.
"We will not hesitate to adjust the number of our campuses
should we believe it be operationally and financially
appropriate to do so," CFO Dan Fitzpatrick said on the call.
"However, we do not have any immediate plans to make any
material changes to our campus locations," he added. ITT
currently operates more than 140 campuses across the United
ITT has also been trimming its workforce to fall in line
with student enrollments, he said.
The for-profit education industry has struggled to attract
students since a U.S. government scrutiny revealed high student
debt loads and low graduation rates.
New federal rules that were put in place last year, weak
demand and negative publicity have also hurt enrollments.
A recovery in enrollments has proven to be far from smooth
as concerns about debt and the credibility of program offerings
have kept students away from for-profit colleges.
Market leader Apollo Group Inc last week said it
would cut about 800 jobs and shut down 25 campuses to save costs
amid declining profit and lower student enrollments.
ITT on Thursday lowered its full-year adjusted earnings
forecast to be between $8 and $8.10 per share. It had earlier
forecast earnings of up to $9 per share.
Net income fell to $42.9 million, or $1.83 per share, in the
third quarter, from $67.3 million, or $2.48 per share, a year
earlier. Revenue declined 13 percent to $314.7 million.
Analysts expected a profit of $1.76 per share, on revenue of
$317.1 million, according to Thomson Reuters I/B/E/S.