ITT Educational Services, Inc. (ESI)

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ITT Educational Services Inc. (ESI)

Credit Suisse 15th Annual Global Services Conference

March 11, 2013 3:30 pm ET


Kevin M. Modany - Chairman and Chief Executive Officer


Kelly A. Flynn - Crédit Suisse AG, Research Division


Kelly A. Flynn - Crédit Suisse AG, Research Division

Okay. We're going to get started with the second half of the day. We're pleased to have Kevin Modany, the CEO of ITT, presenting today. And we'll follow this session with a breakout in the P&L room. I'll it turn over to Kevin. Thanks.

Kevin M. Modany

Thanks, Kelly. Let's get started with the forward-looking statement relative to any projections or estimates we may be talking about today. A quick outline for our conversation today, just a couple of things we want to talk about. We'll start briefly with an organizational overview and then talk about some focus areas for 2013 for the organization, touch on our strategic growth initiatives, a couple of curriculum things that we're doing that we'd like to talk to you a little bit about, and then close with a review of our internal goals for 2013.

Just for those of you that may not know the organization, over 40 years of success in the postsecondary environment, the company ITT Educational Services Inc. was formed in 1969, we did our IPO in 1994. We've got 149 locations currently, we are operating in 39 different states with about 61,000 students currently. We are degree-granting only and principally-associated degrees, with about 82% of our student population pursuing a 2-year degree in 1 of our 6 schools of study. We do have 2 brands currently, but principally, all of our students are at ITT Technical Institute. Daniel Webster College is an institution we purchased back in June of 2009 that has about 600 students in a resident campus up in Nashua, New Hampshire. But again, principal majority of our students currently are in ITT Technical Institute. And this just gives an outline of the different demographics that are the focus for each of the institutions, programmatic concentrations and whatnot. Again, current portfolio today.

These are the programs, again, I mentioned the 6 schools of study, and the fact that 82% of the census is pursuing an associate degree. You'll see our focus today is in STEM programs, Science, Technology, Engineering, the science principally being Health Sciences, and the degree level, again, currently concentrated in the associate area. I'd say, we're educating people who will ultimately be technicians at an entry-level. Daniel Webster College programs, you can see there hasn't been much change here, except recently, we received approval to begin offering programs online for Daniel Webster College, and we have approvals for the business management degree in the Masters of Business Administration.

This is a little overview of the programmatic focus, again we're talking about STEM disciplines at the technician level. We've got a couple of new programs that are either in development or we'll be rolling out, we expect these to be coming out in 2013. Software development technology is a new program we'll be rolling out, as well as industrial engineering technology. And again, these are the technician level. You can see our programmatic focus in the science technology and engineering levels and down below that, the corresponding employment opportunities. For us, as we've talked about extensively, our focus is on offering programs where there are jobs, where there is projected job growth, where there are good salaries and it presents a student with a good prospect for a solid return on their investment. This is something I think a lot of institutions are talking about today, but it's something that has been a core foundational focus for our organization for 40 years.

Recently Georgetown University put out a study that focused on different career opportunities in post-secondary education. Basically, the crux of their study was that at the 2-year level, there's a lot of demand for middle skills or technician skills and a lot of the areas that they highlighted in their report are areas that we're focused on. And again, there's no coincidence here. The programmatic selection process that we utilize focuses on areas where there are jobs, where there is job growth, where there are good salaries, where there's a good prospect for a solid return on investment. And a 2-year degree level at the technician level, again, presents a very good opportunity for people to see a good return on their educational investment. And again, that's the focus for a lot of people today.

One of the points we want to make today as well, something I may not be as well understood about ITT Technical Institute is the differentiator for our organizational. A lot of people ask us what is the single largest differentiator, and we think it's our employer network. We have an extremely strong employer network and, again, a lot of institutions are talking about this today. But it's something that you just don't build over a year or 2 period of time. This something that we've been working on for, again, over 40 years. And just some data points that I think are somewhat interesting that our program advisory committees at every school, every school of study, we have a program advisory committee made up of local employers, that advise us on our curriculum, advise us our employment opportunities, advise us on the different instructional methodologies that we use that lead to employer demand skills. And we had 2,600 employer representatives participating in the program advisory committee meeting just this past quarter.

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