CARMEL, Ind., April 29, 2016 /PRNewswire/ -- ITT Educational Services, Inc. (NYSE: ESI), a leading provider of technology-oriented postsecondary degree programs, today reported that diluted earnings per share in the first three months of 2016 decreased to $0.17 compared to $0.44 in the first three months of 2015. New student enrollment in the first quarter of 2016 decreased 16.4% to 11,788 compared to 14,104 in the same period in 2015. Total student enrollment decreased 15.4% to 43,293 as of March 31, 2016 compared to 51,201 as of March 31, 2015.

The company provided the following information for the three months ended March 31, 2016 and 2015:

Chief Executive Officer Kevin M. Modany noted, "We were disappointed with our new student enrollment results for the first quarter of 2016 and continue to experience a challenging new student recruitment environment. As of April 24, 2016, new student applications for academic periods that begin in the second quarter of 2016 were down 20% compared to the same period in the prior year, suggesting to us that we will experience similar year-over-year declines in new student enrollment in the second quarter of 2016."

Modany continued, "As we evaluate the relevant information, we have been unable to find any indication or trend in the data that suggests to us that the enrollment environment will materially improve for the remainder of 2016. As a result, we are adjusting our internal new student enrollment goals for 2016 from our original expectation for a decrease of 12% to 15% compared to 2015 to a revised range of a decrease of 15% to 20% compared to the prior year."

Chief Financial Officer Rocco Tarasi added, "While we continue to experience strong enrollment headwinds, we continue to have success in executing on our cost containment efforts to right size the business to account for our current and projected student census. As such, we are increasing our internal goal for earnings before interest, taxes, depreciation and amortization ("EBITDA") for the twelve months ended December 31, 2016 from the previous range of $50 million to $70 million to a revised range of $55 million to $75 million."

The projected new student enrollment, EBITDA and EBITDA component amounts are subject to various risks and uncertainties, and do not guarantee actual results for the period indicated. Factors, risks and uncertainties that could cause actual results to differ materially from those projected include those discussed in the documents that the company files with the U.S. Securities and Exchange Commission. The company undertakes no obligation to update or revise any of the projections, whether as a result of new information, future developments or otherwise.

EBITDA is not a measurement under generally accepted accounting principles in the United States ("GAAP") and may not be similar to EBITDA measures of other companies. Non-GAAP financial information should be considered in addition to, but not as a substitute for, information prepared in accordance with GAAP. The company believes that EBITDA provides useful information to management and investors as an indicator of the company's operating performance. A reconciliation of projected 2016 EBITDA to projected 2016 net income is included on Schedule A attached to this release.

Based on various assumptions, including the historical and projected performance and collection of the student loans held by the PEAKS Trust and the CUSO, the company reported that its current estimate of the payments it may have to make under the PEAKS guarantee and the CUSO risk sharing agreement (the "CUSO RSA"), in the aggregate, are approximately:

• $27.4 million in 2016 (of which $12.4 million was paid in the three months ended March 31, 2016);
• $12.6 million in 2017;
• $13.0 million in 2018; and
• $105.3 million in 2019 and later, which amount includes an approximately $10.3 million payment in 2020 under the PEAKS guarantee.

These estimated payment amounts are net of estimated aggregate recoveries of approximately $3.8 million under the CUSO RSA, which the company expects to offset against amounts due by it under the CUSO RSA over these periods. The company urges readers to review the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 when it is filed with the U.S. Securities and Exchange Commission, which report will contain additional information regarding these estimated payment amounts, including the assumptions used, the estimates of the type of payments, regular or discharge, and estimated recoveries, under the CUSO RSA.

ITT Educational Services, Inc. will conduct a conference call with financial analysts to discuss its 2016 first quarter earnings at 11:00 am (ET) this morning. The public is invited to listen to a live webcast of the conference call. The webcast may be accessed by following the "Live Webcast" directions on ITT/ESI's website at www.ittesi.com.

Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements are made based on the current expectations and beliefs of the company's management concerning future developments and their potential effect on the company. The company cannot assure you that future developments affecting the company will be those anticipated by its management. These forward-looking statements involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: the impact of adverse actions by the U.S. Department of Education ("ED") related to certain deficiencies; the action by the U.S. Securities and Exchange Commission against the company; issues or negative determinations related to the restatement of the company's financial statements; the company's failure to submit its 2013 audited financial statements and 2013 compliance audits with the ED by the due date; the impact of the consolidation of variable interest entities on the company and the regulations, requirements and obligations that it is subject to; the inability to obtain any required amendments or waivers of noncompliance with covenants under the company's financing agreement; the company's inability to remediate material weaknesses, or the discovery of additional material weaknesses, in the company's internal control over financial reporting; the company's exposure under its guarantees related to private student loan programs; the outcome of litigation, investigations and claims against the company; the failure of potential settlements to be approved and finalized on the terms proposed or initially agreed to; the effects of the cross-default provisions in the company's financing agreement; changes in federal and state governmental laws and regulations with respect to education and accreditation standards, or the interpretation or enforcement of those laws and regulations, including, but not limited to, the level of government funding for, and the company's eligibility to participate in, student financial aid programs utilized by the company's students; business conditions in the postsecondary education industry and in the general economy; the company's failure to comply with the extensive education laws and regulations and accreditation standards that it is subject to; effects of any change in ownership of the company resulting in a change in control of the company, including, but not limited to, the consequences of such changes on the accreditation and federal and state regulation of its campuses; the company's ability to implement its growth strategies; the company's ability to retain or attract qualified employees to execute its business and growth strategies; the company's failure to maintain or renew required federal or state authorizations or accreditations of its campuses or programs of study; receptivity of students and employers to the company's existing program offerings and new curricula; the company's ability to repay moneys it has borrowed; the company's ability to collect internally funded financing from its students; and other risks and uncertainties detailed from time to time in the company's filings with the U.S. Securities and Exchange Commission. The company undertakes no obligation to update or revise any forward-looking information, whether as a result of new information, future developments or otherwise.

Schedule A

EBITDA is not a measurement under GAAP and may not be similar to EBITDA measures of other companies. Non-GAAP financial information should be considered in addition to, but not as a substitute for, information prepared in accordance with GAAP. The company believes that EBITDA provides useful information to management and investors as an indicator of the company's operating performance.

Projected EBITDA is only an estimate and contains forward-looking information. The company has made a number of assumptions in preparing the projection, including assumptions as to the components of the projected EBITDA. These assumptions may or may not prove to be correct. In order to provide projections with respect to EBITDA, the company must estimate amounts for the GAAP measures that are components of the reconciliation of projected EBITDA. By providing these estimates, the company is in no way indicating that it is providing projections on those GAAP components of the reconciliation.

Projected EBITDA can be reconciled to the company's projected net income for the period indicated, as follows:

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SOURCE ITT Educational Services, Inc.