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ITT Educational Services, Inc. (ESI)
Q2 2008 Earnings Call Transcript
July 24, 2008 11:00 am ET
Kevin Modany – President and CEO
Dan Fitzpatrick – SVP and CFO
Jerry Herman – Stifel Nicolaus
Gary Bisbee – Lehman Brothers
Brandon Dobell – William Blair
Trace Urdan – Signal Hill
Corey Greendale – First Analysis
Mark Marostica – Piper Jaffray
Kevin Doherty – Banc of America Securities
Kelly Flynn – Credit Suisse
Suzi Stein – Morgan Stanley
Andrew Simon – JP Morgan
Previous Statements by ESI
» ITT Educational Services Q1 2009 Earnings Call Transcript
» ITT Educational Services, Inc Q4 2008 Earnings Call Transcript
» ITT Educational Services, Inc. Q3 2008 Earnings Call Transcript
Joining us today from the management team of ITT Educational Services we have Kevin Modany, President and Chief Executive Officer, and Dan Fitzpatrick, Senior Vice President and Chief Financial Officer.
Before we begin, ITT Educational Services, Inc. wishes to remind you that this conference call may include forward-looking information. Actual results may differ from the information presented during this call. For additional information please review the section on forward-looking information contained in today's news release or in the company’s public filings with the Securities and Exchange Commission. Thank you. Mr. Modany, you may begin.
Thank you. Good morning, ladies and gentlemen, and thank you for joining us on this conference call to review our operating and financial results for the second quarter and first six months of 2008.
With me on the call as usual is our Senior Vice President, Chief Financial Officer, Dan Fitzpatrick. Let me begin by providing a summary of what we will review with you on today’ call.
We'll start by expanding on the extremely strong second quarter operating results, and we reported to you on our press release earlier this morning. We’ll then provide an update regarding the progress made during the quarter and some of the growth initiatives. We'll touch briefly on the current student lending environment and provide an update on our efforts to address the disruptions in the financing market.
At that point, I will hand things over to Dan who will provide some additional detail regarding the outstanding second quarter financial results. Following the conclusion of his prepared remarks and a few summarizing remarks by me, we'll open up the phone lines for Q&A.
With the agenda for the call out of the way, let's get started. As you have already read in this morning’s press release we reported tremendous results for the second quarter of 2008. Our results exceeded our internal expectations and further demonstrate the commitment and resolve of our faculty, staff, and management to focus on student success as their top priority. Those excellent results coupled with the strong outlook that we have for our business as we enter the second half of the year, have caused us increase our internal 2008 EPS goal from the range of $4.10 to $4.60 to the revised range of $4.65 to $4.75.
As we reported in our press release this morning, we believe that we are incredibly well-positioned to achieve our operating and financial goals for fiscal 2008. In our April 2008 conference call we provided you with historical trending for several of our key performance measures and suggested that a consistent and strong performance of our prolonged period with an indication of the ability of our faculty, staff, and management team to effectively execute our business plan in a variety of operating environment in a phase of various disruptions in the market, be it student financing or otherwise. We believe the second quarter 2008 results further validate and reaffirm that view.
Let me reiterate some of the key performance trends for our organization updated to reflect our second quarter results. The 2008 second quarter increase in new student enrolment compared to the same period in 2007 marks our 24th consecutive quarter in which we reported a year-over-year increase in new students enrolling at the ITT Technical Institute.
The year-over-year increase in total student enrolment in the second quarter of 2008 represents the 50th consecutive quarter that we have posted a year-over-year increase in our total student census. And EPS increase in the three months ended June 30, 2008 compared to the same period in the prior year represents a 32nd consecutive quarter that we have reported a year-over-year increase in quarterly EPS. These are impressive and consistent results delivered by a talented group of employees who represent the very best of what the ITT Technical Institutes have to offer to our over 54,000 students attending one of our 111 facilities located in 35 states across our nation. To our 7000 plus employees, we would like to take this opportunity to thank each and every one of you for your contributions to our institution, your daily commitment and dedication to your students and to the employers who hired.
With that, I'll turn now to a review of our second quarter operating results. New student enrolment increased a very impressive 22.5% to 14,751 during the three months ended June 30, 2008 compared to 12,043 during the same period in the prior year. Demand for our program offerings was extremely strong in the second quarter, and as a result, we experienced a year-over-year increase in new student enrolment in all six schools of study. That strong level of interest in our program offerings continued as we began the third quarter of 2008.
The robust level of interest in our program offerings in the second quarter was generated by the efficient and effective execution of our marketing and advertising plans throughout the second quarter. Advertising expenditures during the second quarter increased at a less than planned rate of 2% over the same period in 2007, as we were able to take advantage of softness in general advertising market resulting from the disruptions in the overall economy.
We believe that advertising expenditures in the remainder of 2008 will be equal to or slightly below our originally planned year-over-year quarterly increases of between 10 and 15% as we look to continue to take advantage of the favorable advertising environment. We intend to continue our growth strategy by allocating incremental marketing expenditures at a sufficient level to support the opening of new colleges, and the introduction of new programs of study throughout the remainder of the year.