Corinthian Colleges CEO Discusses F4Q12 Results - Earnings Call Transcript

Corinthian Colleges, Inc. (COCO)

F4Q12 Earnings Call

August 20, 2012 12:00 AM ET


Anna Marie Dunlap - SVP, IR

Jack Massimino - Chairman and CEO

Bob Owen - CFO


George Tong - Piper Jaffray

Gary Bisbee - Barclays

Trace Urdan - Wells Fargo

Paul Ginocchio - Deutsche Bank

Jeff Meuler - Robert W. Baird

James Samford - Citigroup

David Chu - Bank of America

Jeff Silber - BMO Capital Market

Jason Anderson - Stifel Nicolaus



Good day ladies and gentlemen and welcome to the fourth quarter fiscal 2012 Corinthian Colleges earnings conference call. My name is Sayed and I will be your conference coordinator for today. At this time, all participants are in a listen only mode. Later we will conduct the question-and-answer session. As a reminder, this conference call is being recorded for replay purposes. I would like to turn the conferred over to your host for today, Ms. Anna Marie Dunlap, Senior Vice President of Investor Relations. Please proceed ma'am.

Anna Marie Dunlap

Thanks Sayed and good day everyone. Thanks for joining us. I am here today with Jack Massimino, Chairman and Chief Executive Officer; Bob Owen, our Chief Financial Officer and Ken Ord our Chief Administrative Officer.

This call is being webcast and an audio version of the call on transcript will be available on Corinthian’s website for 30 days. In addition, a telephonic replay of this call will be available until Monday, August 27th. The details for accessing the replay are included in the press release we issued this morning.

Please note that during this conference call we may make projections or other forward-looking statements regarding a variety of issues. These statements are based upon current information and expectations. Our actual results may differ materially based on a number of risks, which we have identified in our filings with the SEC.

And with that, I'll turn it over to you Jack.

Jack Massimino

Thank you Anna Marie, and hello to everyone on the call. We made considerable operational progress in fiscal 2012 while continuing our transition to new federal regulations. We remain focused on student outcomes and achieved a slight increase in our placement rate company wide. A recent Associated Press study found that half of all [our recent] [ph] college graduates in the US are underemployed or can't find work at all. In light of this challenging economic environment, we are very pleased to report that more than two thirds of our nearly 49,000 graduates in calendar 2011 found jobs in the field for which they were trained.

During the year we also strengthened our financial position and balance sheet and better aligned expenses with revenue. We continue to improve the efficiency of administrative processes by implementing our common student information system at Heald bringing student financial aid processing in-house and furthering refining our cohort default prevention program. We implemented policies and procedures in response to new regulatory requirements in a number of areas primarily marketing, admissions and student finance.

We continue to focus on improving the student value proposition while complying with the 90/10 Rule. Finally, to help increase enrollment in the ground schools, we developed several new deployment programs and a GED program for the general public.

Our fourth quarter results were within our most recent guidance ranges for revenue and diluted earnings per share. Our new student enrollment increase of 8.4% was above guidance. As a reminder, our guidance is for continuing operations and excludes one time charges. In the quarter, we recorded an impairment and severance charge of $1 million. For the full year, diluted earnings per share for continuing operations were $0.32 excluding charges versus our guidance of $0.28 to $0.30 per share.

As we move through our discussion today, I'll review our fiscal year progress, enrollment trends, growth plan and regulatory issues. Bob will then review the fourth quarter operational and financial metrics in more detail and provide guidance for the first quarter of fiscal 2012.

I want to spend a few minutes now discussing some of our fiscal 2012 achievements starting with student outcomes. We continue to dedicate substantial resources over 700 employees and $50 million in fiscal 2012 alone to assist our graduates in finding employment. For students who graduated in calendar 2011, 68.1% or more than 33,000 graduates found employment in their field of study. This is up slightly from 67.6% the previous year and the current run rate for calendar 2012 grads is higher than in 2011.

To help our graduates find employment, in fiscal 2012 we signed 16 partnerships and 15 externship agreements with regional and national employers. In total, we signed 70 such agreement with large employers over the past few years. In addition, at the campus level, we have relationships with thousands of small to mid-sized employers.

Strong student completion remains an area of focus and in fiscal 2012, we kept completion essentially flat with the prior year. We also continued to monitor student achievement in our campus and take action as necessary to ensure that our standards are met. During the year, we completed the teach-out and closure of one campus and began to teach-out at two others which did not meet outcome standards. In addition, we closed seven programs which did not meet placement standards.

Every year, we conduct a survey of employee satisfaction and this year 86% of our workforce responded to the survey. Given a difficult year of cost cuts and layoffs we're pleased that overall employee satisfaction moved up slightly compared with the previous year. Employee turnover continued to improve as well, dropping from 29.5% in fiscal 2011 to 25.7% in fiscal 2012. In addition, Corinthian was recognized as a national top workplace in a survey of over 500,000 employees in companies across the US. The survey was jointly sponsored by 30 major newspapers.

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