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ITT Educational Services, Inc.'s CEO Discusses Q1 2012 Results - Earnings Call Transcript

At that point I’ll turn the call over to Dan and he’ll comment on the financial results included in this morning’s press release. Additionally, Dan will provide you with an update on our efforts to facilitate additional third party private education loan options for our students. Upon the conclusion of Dan’s prepared remarks we’ll open up the call to your questions.

Let’s begin with a review of our third quarter advertising results. Advertising expenditures in the third quarter of 2011 increased approximately 12% compared to the same period in 2010. This was below our planned increase of 20% primarily due to our transition from traditional television sources to Internet based alternatives, and our efforts to eliminate sources that do not meet our hurdle rates for return on investments.

As we head into the fourth quarter we anticipate that advertising expenditures in the quarter will increase by approximately 15% to 20% as compared to the final quarter of 2010. Consistent with recent trends and primarily due to the adjustments in our advertising strategy, we experienced a decrease in the number of perspective students who expressed an interest in our programs of study during the third quarter of 2011 compared to the same period in the prior year.

Much of the year-over-year decrease in inquiries was caused by the purposeful elimination of advertising sources that generated perspective student inquiries that converted to new student enrollment at an unacceptable cost. The decrease in perspective student inquiries coincided with a managed reduction of approximately 20% of our recruiters at September 30, 2011 compared to the same date in the prior year. Recruiter productivity as measured by the number of new student enrollments per recruiter was higher in the third quarter of 2011 compared to the same period in 2010.

Additionally, the rate at which perspective student inquiries converted to new students increased in the third quarter of 2011 compared to the same period in the prior year. We believe that most of these trends are likely to continue throughout the remainder of 2011 and into the early part of the new year.

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