ITT Educational Services Inc. (ESI, Financial) filed Quarterly Report for the period ended 2009-03-31.
ITT EDUCATIONAL SERVICES INC. is a leading proprietary provider of technical postsecondary degree programs in the United States based on student enrollment. The Co. offers associate's and bachelor's degree programs where authorized and to a lesser extent non-degree diploma programs to over 20000 students through a system of 54 ITT Technical Institutes located in 25 states. These programs are designed after consultation with employers to provide students with the knowledge and skills necessary for entry- level employment in technical positions in a variety of industries. ITT Educational Services Inc. has a market cap of $3.86 billion; its shares were traded at around $100.82 with a P/E ratio of 19.5 and P/S ratio of 3.8. ITT Educational Services Inc. had an annual average earning growth of 32.1% over the past 10 years. GuruFocus rated ITT Educational Services Inc. the business predictability rank of 5-star.
Operating income increased $31.4 million, or 45.8%, to $100.1 million in the three months ended March 31, 2009 compared to $68.7 million in the three months ended March 31, 2008. The operating margin was 34.8% in the three months ended March 31, 2009 compared to 29.3% in the three months ended March 31, 2008.
Interest income decreased $0.8 million, or 39.4%, to $1.2 million in the three months ended March 31, 2009 compared to $2.0 million in the three months ended March 31, 2008, primarily due to a decrease in investment returns in the overall market and a more conservative investment strategy. Interest expense decreased $1.3 million, or 87.3%, to $0.2 million in the three months ended March 31, 2009 compared to $1.5 million in the three months ended March 31, 2008, due to a decrease in the effective interest rate on our revolving credit facilities.
Cash and cash equivalents were $219.6 million as of March 31, 2009 compared to $226.3 million as of December 31, 2008 and $97.0 million as of March 31, 2008. We also had short-term investments of $146.1 million as of March 31, 2009 compared to $138.7 million as of December 31, 2008 and $212.1 million as of March 31, 2008. The increase in our cash and cash equivalents and the decrease in our short-term investments as of March 31, 2009 compared to March 31, 2008, were primarily due to the execution of a revised investment strategy focused on liquidity in response to uncertainty in the capital markets. In total, our cash and cash equivalents and short-term investments were $365.7 million as of March 31, 2009 compared to $365.0 million as of December 31, 2008 and $309.1 million as of March 31, 2008.
Investing. In the three months ended March 31, 2009, we spent $1.1 million to renovate, expand or construct buildings at eight of our locations, compared to $4.8 million for similar expenditures at 12 of our locations and $1.5 million to purchase a parcel of land on which we built a facility in the three months ended March 31, 2008. Capital expenditures, excluding facility and land purchases and facility construction, totaled $4.6 million in the three months ended March 31, 2009 compared to $2.5 million in the three months ended March 31, 2008. These expenditures consisted primarily of classroom and laboratory equipment (such as computers and electronic equipment), classroom and office furniture, software and leasehold improvements. We plan to continue to upgrade and expand current facilities and equipment throughout the remainder of 2009. Cash generated from operations is expected to be sufficient to fund our capital expenditure requirements.
Financing. We are a party to the Credit Agreement which provides that we may borrow up to $160.0 million under two revolving credit facilities: one in the maximum principal amount of $50.0 million; and the other in the maximum principal amount of $110.0 million. Borrowings under the Credit Agreement are used to allow us to continue repurchasing shares of our common stock while maintaining compliance with certain financial ratios required by the ED, the state education authorities that regulate our institutes and the accrediting agency that accredits our institutes.
Read the The complete ReportESI is in the portfolios of Andreas Halvorsen of Viking Global Investors LP, Wallace Weitz of Weitz Wallace R & Co.
ITT EDUCATIONAL SERVICES INC. is a leading proprietary provider of technical postsecondary degree programs in the United States based on student enrollment. The Co. offers associate's and bachelor's degree programs where authorized and to a lesser extent non-degree diploma programs to over 20000 students through a system of 54 ITT Technical Institutes located in 25 states. These programs are designed after consultation with employers to provide students with the knowledge and skills necessary for entry- level employment in technical positions in a variety of industries. ITT Educational Services Inc. has a market cap of $3.86 billion; its shares were traded at around $100.82 with a P/E ratio of 19.5 and P/S ratio of 3.8. ITT Educational Services Inc. had an annual average earning growth of 32.1% over the past 10 years. GuruFocus rated ITT Educational Services Inc. the business predictability rank of 5-star.
Highlight of Business Operations:
Cost of educational services increased $9.1 million, or 9.8%, to $101.1 million in the three months ended March 31, 2009 compared to $92.0 million in the three months ended March 31, 2008, primarily due to:Operating income increased $31.4 million, or 45.8%, to $100.1 million in the three months ended March 31, 2009 compared to $68.7 million in the three months ended March 31, 2008. The operating margin was 34.8% in the three months ended March 31, 2009 compared to 29.3% in the three months ended March 31, 2008.
Interest income decreased $0.8 million, or 39.4%, to $1.2 million in the three months ended March 31, 2009 compared to $2.0 million in the three months ended March 31, 2008, primarily due to a decrease in investment returns in the overall market and a more conservative investment strategy. Interest expense decreased $1.3 million, or 87.3%, to $0.2 million in the three months ended March 31, 2009 compared to $1.5 million in the three months ended March 31, 2008, due to a decrease in the effective interest rate on our revolving credit facilities.
Cash and cash equivalents were $219.6 million as of March 31, 2009 compared to $226.3 million as of December 31, 2008 and $97.0 million as of March 31, 2008. We also had short-term investments of $146.1 million as of March 31, 2009 compared to $138.7 million as of December 31, 2008 and $212.1 million as of March 31, 2008. The increase in our cash and cash equivalents and the decrease in our short-term investments as of March 31, 2009 compared to March 31, 2008, were primarily due to the execution of a revised investment strategy focused on liquidity in response to uncertainty in the capital markets. In total, our cash and cash equivalents and short-term investments were $365.7 million as of March 31, 2009 compared to $365.0 million as of December 31, 2008 and $309.1 million as of March 31, 2008.
Investing. In the three months ended March 31, 2009, we spent $1.1 million to renovate, expand or construct buildings at eight of our locations, compared to $4.8 million for similar expenditures at 12 of our locations and $1.5 million to purchase a parcel of land on which we built a facility in the three months ended March 31, 2008. Capital expenditures, excluding facility and land purchases and facility construction, totaled $4.6 million in the three months ended March 31, 2009 compared to $2.5 million in the three months ended March 31, 2008. These expenditures consisted primarily of classroom and laboratory equipment (such as computers and electronic equipment), classroom and office furniture, software and leasehold improvements. We plan to continue to upgrade and expand current facilities and equipment throughout the remainder of 2009. Cash generated from operations is expected to be sufficient to fund our capital expenditure requirements.
Financing. We are a party to the Credit Agreement which provides that we may borrow up to $160.0 million under two revolving credit facilities: one in the maximum principal amount of $50.0 million; and the other in the maximum principal amount of $110.0 million. Borrowings under the Credit Agreement are used to allow us to continue repurchasing shares of our common stock while maintaining compliance with certain financial ratios required by the ED, the state education authorities that regulate our institutes and the accrediting agency that accredits our institutes.
Read the The complete ReportESI is in the portfolios of Andreas Halvorsen of Viking Global Investors LP, Wallace Weitz of Weitz Wallace R & Co.
