Corinthian Colleges Posts Profit, Grows Sales as High Unemployment Drives Student Enrollments

For-profit education company Corinthian Colleges Inc. on Tuesday posted a profit in its fiscal fourth quarter from a loss last year as higher unemployment drove student enrollments higher.

Its shares rose $2.16, or 12 percent, to $19.50 in premarket trading.

The Santa Ana, Calif., schools, which offer associate’s, bachelor’s and master’s degrees in health care, information technology, criminal justice and other areas said it earned $23.2 million, or 26 cents per share, in the three months ended June 30, compared with a loss of $620,000, or 1 cent per share, in the same period last year.

Sales rose 29 percent to $353.5 million.

Analysts polled by Thomson Reuters expected, on average, profit of 24 cents per share on sales of $342.9 million.

Impairment and severance charges of $4.4 million, related to personnel, facility closing and student-aid costs at schools that were shut down, weighed down operating profit.

The jump in revenue came from the higher tuition paid by new students. New enrollments during the quarter rose 26.8 percent to 29,188, while the total student population was up 24.4 percent to 86,088.

"The recession helped increase our growth momentum," said Corinthian CEO Peter Waller in a statement. "We expect continued high unemployment to contribute to overall growth."

The Federal Reserve and many private economists expect the unemployment rate to hit 10 percent in the coming months.

Corinthian was also able to cut its bad debt expense to 7.1 percent of sales from 9.1 percent of sales in the same time last year, even as more students poured into school halls and online classrooms.

The company said it expects earnings per share between 26 cents and 29 cents per share in the first quarter of 2010 on sales between $375 million and $385 million. For the 2010 fiscal year, Corinthian expects per-share profit between $1.30 and $1.36 per share. It projects sales between $1.58 billion and $1.60 billion and growth in new students to be 10 to 12 percent higher than in fiscal 2009.

For 2009, the company earned $68.8 million, or 79 cents per share, compared with $21.3 million, or 25 cents per share, in 2008. Sales rose to $1.31 billion from $1.07 billion.

WASHINGTON EXAMINER