{"id":10749,"date":"2015-03-13T17:57:11","date_gmt":"2015-03-13T22:57:11","guid":{"rendered":"http:\/\/news.medill.northwestern.edu\/chicago\/?p=10749"},"modified":"2015-03-13T17:57:18","modified_gmt":"2015-03-13T22:57:18","slug":"change-of-auditor-delays-earnings-results-for-itt-educational","status":"publish","type":"post","link":"https:\/\/news.medill.northwestern.edu\/chicago\/change-of-auditor-delays-earnings-results-for-itt-educational\/","title":{"rendered":"Change of auditor delays earnings results for ITT Educational"},"content":{"rendered":"

By Lucy Ren<\/p>\n

Lagging behind in releasing its earnings for two consecutive quarters, ITT Educational Services Inc., one of the largest for-profit education providers in the country, is under a cloud that obscures its corporate outlook.<\/p>\n

Michael Tarkan, analyst at Compass Point Research & Trading, said his firm suspended its target price recommendation for ITT right before the second quarter earnings report, due to \u201clack of information\u201d from the company. \u201cThe Q2 earnings report was for several quarters ago,\u201d Tarkan said. \u201cTheoretically they should be reporting their fourth quarter 2014 results a couple of months ago.\u201d<\/p>\n

ITT has not reported its earnings for the quarters after June 30, 2014. Nicole Elam, vice president of\u00a0 government relations and external affairs, said, \u201cwe changed our auditor after Q2, and that is a contributing factor for the delay.\u201d<\/p>\n

\"Shares<\/a>
Shares of ITT dropped by $2.24, or 23.3 percent in the past year. (Bloomberg, Lucy Ren)<\/figcaption><\/figure>\n

PricewaterhouseCoopers LLP, ITT\u2019s former independent auditor, resigned in October. PwC effectively ended its engagement with ITT as it reported late, on Nov. 19, 2014, for the second quarter. PwC did not stand for reappointment to audit the company\u2019s financial statements for the fiscal year ended December 31, 2014.<\/p>\n

According to ITT\u2019s December 8-K filing, PWC amended its audit report for 2013 indicating the company is \u201csubject to risks and uncertainties including litigation, governmental investigations and increasing liquidity pressures\u201d that could affect amounts reported in the company\u2019s financial statements in future periods.<\/p>\n

ITT shareholders, at its 2014 annual meeting in December, ratified the appointment of Deloitte & Touche LLP as the company\u2019s independent auditor for\u00a0the fiscal year ended December 31, 2014.<\/p>\n

Elam said ITT is currently \u201cworking diligently\u201d with Deloitte on compiling the earnings for the quarter ended in September. \u201cWe haven\u2019t publicly provided any information about the release date yet,\u201d she declared.<\/p>\n

The Consumer Financial Protection Bureau filed a lawsuit<\/a> in February 2014 against ITT, accusing it of predatory student lending. According to CFPB\u2019s news release, ITT \u201cexploited its students and pushed them into high-cost private student loans that were very likely to end in default.\u201d<\/p>\n

\u201cI think the CFPB is potentially overstepping its bounds with this investigation,\u201d stated Alexander Paris, Jr., analyst at Barrington Research Associates Inc., in Chicago. \u201cIt\u2019s impossible to say what the outcome might be.\u201d<\/p>\n

Indiana-based ITT was not the only for-profit education company sued for predatory lending. In September CFPB sued Corinthian Colleges Inc.<\/a> for the same reason, resulting in $480 million in debt relief for current and future Corinthian students.<\/p>\n

\n

Related Stories<\/h1>\n

For-Profit College Agrees to Forgive Almost Half a Billion in Student Debt<\/a><\/p>\n<\/div>\n

\u201cActions speak louder than words,\u201d Paris said. \u201cThe development with regard to CFPB and Corinthian is a positive one for ITT.\u201d<\/p>\n

According to a note written by Wells Fargo analyst Trace Urdan after CFPB\u2019s announcement, the debt relief for Corinthian Colleges students means the CFPB lawsuit isn\u2019t an \u201cinsurmountable obstacle\u201d to asset sales by ITT.<\/p>\n

Urdan and Craig Sterling of EVA Dimensions declined to comment about the outlook for the company in 2015. Nonetheless, both have a \u201cbuy\u201d on the stock.<\/p>\n

Paris has a much more optimistic view about ITT\u2019s outlook. \u201cITT has gotten a lot of bad press, and they\u2019ve had a lot of negative regulatory legal actions,\u201d he said, \u201cbut at its core, it\u2019s a very high quality offering primarily in tech, but also in other areas. It\u2019s an educational program that\u2019s respected by employers and they create a lot of value for its graduates.\u201d<\/p>\n

\"Rec\"<\/a>Paris said he would \u201cexpect a slow recovery\u201d for ITT in 2015 and beyond \u201cfrom the troughs in the past few years.\u201d<\/p>\n

ITT reported in November an earnings per share of 0.2 cent for the quarter ended June 30, 2014, missing the analysts\u2019 estimate of 18 cents. Wall Street estimates the earnings per share to be 24 cents for the quarter ended in September.<\/p>\n

In December ITT refinanced $100 million in debt, secured by substantially all its current assets including its real estate.<\/p>\n

ITT will hold its 2015 annual meeting of shareholders on May 19.<\/p>\n

ITT operates more than 140 technical institutes in over 35 states. (Dwight Burdette\/Wikimedia Commons)<\/div>\n","protected":false},"excerpt":{"rendered":"

By Lucy Ren Lagging behind in releasing its earnings for two consecutive quarters, ITT Educational Services Inc., one of the largest for-profit education providers in the country, is under a cloud that obscures its corporate outlook. Michael Tarkan, analyst at Compass Point Research & Trading, said his firm suspended its target price recommendation for ITT […]<\/p>\n","protected":false},"author":29,"featured_media":10751,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27,243],"tags":[],"class_list":["post-10749","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-winter-2015"],"yoast_head":"\nChange of auditor delays earnings results for ITT Educational - Medill Reports Chicago<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/news.medill.northwestern.edu\/chicago\/change-of-auditor-delays-earnings-results-for-itt-educational\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Change of auditor delays earnings results for ITT Educational - Medill Reports Chicago\" \/>\n<meta property=\"og:description\" content=\"By Lucy Ren Lagging behind in releasing its earnings for two consecutive quarters, ITT Educational Services Inc., one of the largest for-profit education providers in the country, is under a cloud that obscures its corporate outlook. 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