Embattled for-profit educator ITT Educational Services Inc.
reported on Friday a jump in profit in its March quarter as its
shrinking footprint translated into lower expenses, sending shares
soaring in morning trading.
Shares of the company, down 43% this year, jumped 31% to $5.45 a
share.
ITT said the delayed filing brings it up-to-date on its required
reports with the Securities and Exchange Commission.
For the quarter ended March 31, ITT reported a profit of $10.4
million, or 44 cents a share, up from $3.6 million, or 15 cents a
share, a year earlier.
Through its legal fees and a provision for loan losses increased
in the quarter, total expenses fell 10%.
ITT said it had fewer employees to compensate, fewer physical
locations and reduced media advertising expenses in the quarter,
among other things.
Operating margin more than doubled to 12% from 5.5% a year
earlier.
Revenue in the period edged down 3.3% to $230 million as total
student enrollment declined 10.4% from a year earlier.
The results come a month after the SEC announced fraud charges
against ITT and two of its top executives, alleging that they
misled investors about the looming financial impact of two
badly-performing student-loan programs.
The loan programs, which ITT formed to provide off-balance-sheet
loans for students in the wake of the financial crisis, performed
so poorly by 2012 that it triggered ITT's guarantee obligations,
the SEC said. The SEC alleges that ITT didn't disclose to its
investors that it projected paying hundreds of millions of dollars
on its guarantees and instead tried to create the appearance that
its exposure was more limited.
ITT has fought back, calling the SEC charges a "mistaken"
decision.
The for-profit college industry has come under increasing
government scrutiny lately. Operators have been criticized as
driving student debt and recruiting aggressively to boost profits
while providing a poor-quality education to students.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
Access Investor Kit for ITT Educational Services, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US45068B1098
Subscribe to WSJ: http://online.wsj.com?mod=djnwires