Thread regarding ITT Educational Services Inc. layoffs

What difference would the Zhang's make? As a brand ITT Tech is in the toilet. Their loan portfolios are the worst in the industry. ACICS is gone whether they gank accreditation or not. Nobody else is going to accreditate them. The gainful employment rule is going to crucify them next year.

Can anyone confirm that the Zhangs have indeed toured a campus and become more than a passive or silent investor in the stock ?

@IBD38eG-2ike, ESI is still (supposedly) making a profit, but the profits are getting slimmer. They also have lots of debt burden from the student loan fiascos and the fines.

The Zhangs are keeping the stock price afloat.

https://www.linkedin.com/pulse/itt-techesi-faces-monumental-troubles-dahn-shaulis?trk=mp-author-card

So what exactly is the profit margins here, when most students are defaulting on loans and they are down into getting maybe a dozen new people a quarter? Seems like this place has to implode pretty soon?

....."With 50% drop in new enrollment estimated by the company, without factoring in adverse outcomes in ACICS accreditation drama, after a few quarters no one will be left at "small model" ....

Maybe it would be a big improvement...rather than a campus packed with 100 real student/learners and 300 fakers, it would be better to have 75 real students and 50 fakers. A person living in a car, in bad health, with no interest in school, probably has other things to worry about than homework.

"ITT is going before ACICS next week and if ITT loses acrediation how will DOE allow other people buy this school and allow it either without accreditation or allow it time be moved under Daniel Webster and their accreditation? "

@1yss. In the 2nd quarter financial documents ESI says it will appeal if action is taken against it by ACICS. In ACICS accreditation criteria, it says that institutions that file appeal will be automatically put into a "probation" mode while appeal is dealt with. Probation status may buy ITT-Tech some time, at least with ACICS, so it would not immediately be shut down.

I agree, a lot of questions are raised. Teach-outs of campuses would require 7 quarters, the length of associate degree program. Not clear how anyone can stall loss of accreditation to 100 campuses for that long. I suppose deals are being made fast and furious.

"the Yude's???" Do you mean the Zhangs? From SEC filings, "Mr. Zhifeng Zhang is a citizen of the People's Republic of China and Mr. Yude Zhang's father. "

Aha! @1yss, that would explain absence of statement by Modany when 2nd quarter financials released! Zhang is pushing out Modany??

Maybe there is slim chance that new management could save Daniel Webster from losing its regional accreditation. Daniel Webster is not subject to ACICS sideshow. No way existing ITT-Tech executives could pull off renewing Daniel Webster's accreditation renewal this fall (the college is due for a major inspection by regional accrediting agency this fall, first one let since ESI bought the college) let alone bring in branch campuses. Current ESI administration has proven it is incapable, time and time again of meeting even lax criteria with ITT-Tech institutions -- just read the thousands of posts on this forum.

One big question about ESI maintaining regional accreditation criteria, asked before on this board, is the criteria that most revenue go toward student services. The number of full-time salespeople at ITT- Tech used to substantially outnumber full-time academic affairs people, in addition to advertising campaign. Curiously, this situation is being remedied, with lay-offs of most sales staff, which is huge change in behavior for the company. Is this pressure from anti-Modany forces?

With 50% drop in new enrollment estimated by the company, without factoring in adverse outcomes in ACICS accreditation drama, after a few quarters no one will be left at "small model" campuses. So imagine the how much this enrollment drop will be if there is "bad news" about ACICS.

Face it, under Modany, 100 campuses are spiraling down into oblivion. No one wants to drown on his sinking ship. Interesting few months ahead.

@IBD38eG-1yss, I believe Daniel Webster also has also had problems with accreditation.

http://www.nashuatelegraph.com/news/1068800-469/daniel-webster-college-in-danger-of-losing.html

ITT is believed to be courting the Yude's. They were shown around the campus near the headquarters of ITT. It is believed that they will close almost a hundred campuses and the Yude's will bring in their schooling under Daniel Websters accreditation. How this will happen is a little out of our understanding. ITT is going before ACICS next week and if ITT loses acrediation how will DOE allow other people buy this school and allow it either without accreditation or allow it time be moved under Daniel Webster and their accreditation? It is all very strange.

All decisions are now made from HQ. Which has demonstrated they know nothing of how to run a school. Management focuses on %'s, ratios, and various other metrics on paper. No metric or reward system in place to recognize student achievement, success, improvements. Number 1 student complaint, "no one listens to us".

Bean counters run the show and can't get their heads out of their reports to see the reality of their failure. Their solution is reflected in their execution, dispose of staff, pump up the PR,

They are disconnected from reality and are a top down management monolith. No feedback loop from local schools, no investment in the classroom, equipment. PC's are outdated, electronics labs - outdated, curriculum outdated.

Whatever the metric they are using for recent cutbacks has nothing to do with improving student experience. Students see it, recognize it and are leaving. ITT HQ has let their staff and students down. As long as Modany can continue to drain cash from his ITT "ATM" he will. Ignore the public face, its clown makeup for the real problem. A lofty vision with sh--ty execution and sh--ty results, befitting a sh--ty corporate culture.

Enrollments don't lie, students vote with their feet which is a direct reflection of the "service" they receive.

The only upside to this ITT circus is that you might make a nickel buying the stock under $2 and play the volatility. If a company wanted to drive a business into the ground so they can sell off the bones, ITT, Modany and his clown committee board has shown how to do it.

Although it stings, former employees should be happy to have been given a life jacket and an escape hatch from this sinking ship.

"The company believes that these changes will lead to a smaller but more efficient postsecondary institution and, importantly, will enhance the company's focus on its students."

Any more rumors out there? What's the company's next move? No hint in the ESI press release today. No web conference given by CEO and CFO today, nor comments attributed to them -- first time I can remember that Modany did not say or write something with release of financial statement. Is Modany finally getting canned?

What are the other possibilities? "Smaller but more efficient" means cutting out something.

Very few full-time employees left to lay off, so "smaller" in terms of number of employees is unlikely.

Can adjunct faculty be cut, and students told to take online classes instead?

Maybe dropping of some programs? Especially those with historically low placement rates (Criminal Justice)? Or low licensure exam pass rates (nursing)? Or low starting salaries, compared to tuition paid for degree (bachelor programs)?

Teaching out of campuses, and closing as many as possible as soon as possible? Only way to really cut costs, isn't it? Merging campuses? Realistically, a 50% drop in new enrollments has to be serious threat to smaller campuses in near future.

Last but not least, the second quarter financial statement 8-K filed July 28, found on the company website, has a growing list of disclaimers about projections... "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 failure of the company to show cause to ACICS’ satisfaction that the Company’s institutions’ grants of accreditation should not be withdrawn or conditioned..." and dozens more issues are listed. ACICS state of mind will be revealed next week at their August council meeting.

Will company leadership step up and make statement soon to its remaining students and employees?

"The company believes that these changes will lead to a smaller but more efficient postsecondary institution and, importantly, will enhance the company's focus on its students."

Is ITT-Tech admitting it was focused mainly on something else besides it students, before these changes? Is ITT-Tech realizing that spending most of its revenue on marketing will hurt them in its accreditation battles? Is ITT-Tech hinting, for the first time, they know their business is a scam?

"As a result of the changes to its marketing and recruitment practices, the company now believes that new student enrollment in the second half of 2016 may decline by approximately 45% to 60% compared to the same period in 2015, which would result in a decline in full year 2016 new student enrollment of between approximately 30% and 40% compared to 2015. However, as a result of these operational changes, and assuming that new student enrollment for the second half of 2016 is in the range of the current expectations and that there are no material changes to student retention rates in the last six months of 2016 compared to the first six months of 2016, the company updated its internal goals for earnings before interest, taxes, depreciation and amortization ("EBITDA") for the year ending December 31, 2016 from the previous range of $55 million to $75 million to a revised range of $110 million to $125 million, which reflects projected net income in the range of $42 million to $48 million.

The company believes that these modifications to its marketing and recruitment strategy for the ITT Technical Institutes are appropriate and prudent given the current operating environment and the company's payment obligations under U.S. Department of Education (the "ED") surety requirements, its financing agreement, its private loan program guarantees and other obligations. The company believes that these changes will lead to a smaller but more efficient postsecondary institution and, importantly, will enhance the company's focus on its students."