It’s been a year to remember for all the wrong reasons at Corinthian Colleges Inc.
The Santa Ana-based operator of for-profit colleges has run into some roadblocks this past year with lower enrollment, regulatory inquires and some operations challenges.
Still, the company’s heady revenue gains during the past few years placed Corinthian Colleges at No. 10 on the list of Orange County’s fastest-growing companies.
The company has posted annual sales growth of more than 200% in the past three years. Sales have jumped from $310 million for the 12 months ended June 30, 2002 to $949 million in this year’s period.
Corinthian faces some challenges. Recent earnings results are on the decline and its stock price is off sharply from its year high.
The company’s schools offer degrees in healthcare, business, criminal justice, technology and other fields.
The earnings warnings started in April, when Corinthian lowered its second-quarter profit expectations. Then, as the quarter came to an end, Corinthian said that its profits would be even lower for the period than its revised forecast.
September saw Corinthian again lower its outlook for future quarters.
The company said it expected to earn about $9 million in the September quarter, half of what analysts were expecting. For the 12 months through next June, the company said it expects to earn about $62 million, versus expectations of $77 million.
The company blamed the poor numbers on lower enrollment.
“Although we are making progress, we continue to experience lower productivity among new admission personnel and inefficient processing of Internet leads,” said Jack Massimino, Corinthian’s chief executive.
Massimino took over late last year from David Moore, who stayed on as chairman. Meanwhile, Corinthian Chief Financial Officer Dennis Beal retired.
The company has negotiated several regulatory inquiries in the past year.
Late last year, the Department of Education restored Corinthian’s ability to receive advanced financial aid funding after looking into problems at its San Jose campus.
Then in April, Corinthian said the Securities and Exchange Commission had completed its review of the company’s 2004 financial report. Corinthian said it agreed to the SEC’s request to include more disclosure in how it values some intangible assets.
And in August, Corinthian said it was restating revenue for the year ended June 2001 through the quarter ended March 31. The college operator said the restatement was necessary after it changed its methods for tracking revenue for some diploma programs.
There have been some challenges beyond its control. Corinthian’s Bryman College campus in New Orleans was heavily damaged by Hurricane Katrina, which caused flooding on lower floors and destroyed an air conditioning cooling tower.
More than 519 students and 70 employees were displaced because of Katrina. The company could lose roughly $6 million if the campus remained closed for a year and the students can’t find openings at other campuses, spokeswoman Anna Marie Dunlap said.
“We’ve started to look at other real estate in other parts of the city and state,” Dunlap said.
The company is hoping for a better 2006.
“During the year we made several key management changes, focused critical company assets on Sarbanes-Oxley compliance, and launched marketing and other initiatives to position the company for long-term success,” Massimino said.
Last month, Corinthian Colleges sold off its corporate training unit in Canada,Toronto-based CDI Education,for about $16 million to Halifax, Nova Scotia-based CrossOff Inc.
Corinthian bought a 90% stake in Toronto-based CDI Education in late 2003 for about $32 million. The unit contributed about $32 million in revenue to Corinthian last year.
The sale of the company stake “will allow Corinthian to focus exclusively on its core diploma and degree-granting programs,” Massimino said.
Shares of Corinthian recently traded at $12.65, down from a 52-week high of $20.25.
THE NUMBERS
Employees: 8,800
Market value: $1.2 billion
3-year sales growth: 206%
Annual sales through June 30: $949 million
Annual loss: $80.4 million
Company: college operator
