Last week, Santa Ana-based Corinthian Colleges Inc. stood out in what’s shaping up to be a dismal earnings season.
The vocational school operator reported December-quarter results that beat Wall Street’s expectations. What’s more, Corinthian upped its outlook for the current quarter.
“The recession is helping growth,” Chief Executive Jack Massimino said in a conference call.
Corinthian is one of several businesses that are doing well because of the down economy. As workers are laid off, many are turning to the company’s schools to get training for new jobs.
Others are seizing opportunities created by the downturn, too. Call them the recessionaires. They include real estate investors, a retail liquidator and a bank consultant turned consolidator.
“I want to take advantage of the downturn while it’s here,” said Steve Cameron of Irvine’s Foremost Communities Inc., which is buying land from homebuilders eager to shore up their balance sheets.
The recessionaires show how business goes on,and even thrives,during a down economy. We take a look at some in this week’s issue.
CORINTHIAN COLLEGES
Santa Ana-based Corinthian Colleges Inc. practically is made for a recession.
The company runs more than 100 schools in the U.S. and Canada that offer degrees and certificates in healthcare, automotive technology, criminal justice, technology and other areas.
Rising unemployment is sending more students to Corinthian’s schools for training they hope will lead to new work.
It’s one of the truisms of any recession, according to Chief Executive Jack Massimino: “As unemployment rises, more people seek post-secondary education and training,” he said.
Corinthian has the numbers to prove it.
Last week, the company reported results for the December quarter that beat its own expectations and those of Wall Street. For the current quarter, Corinthian upped its profit and revenue outlook.
New student starts,a measure of students who enroll and then show up for class,rose 16.2% in the December quarter. They’re expected to grow 12% to 14% in the three months through March.
“Although difficult to quantify, current trends indicate that the recession has helped increase marketing leads and student enrollment,” Massimino said.
The news sent Corinthian’s shares up 10% last week on a market value of $1.8 billion.
The company is faring better than most on Wall Street. Its stock has more than doubled in the past year, versus a 38% decline for Standard & Poor’s 500 index.
“In a declining economy, certain job areas are still growing and people out of work go back to school to expand their own career opportunities,” Massimino said. “The weak economy has helped (our) industry.”
The company is gearing up for more growth, according to Massimino.
Corinthian is spending some $50 million on expanding its schools with new programs and better equipment.
The company, which employs some 10,000 full- and part-time employees, could have to hire more, Massimino said.
Corinthian has felt some fallout from the economic downturn. The tight credit market has been a challenge for vocational schools as students have trouble getting loans.
So Corinthian has started offering its own student loans.
“We’re not in the credit business, but the program has been successful in giving students the opportunity to come to school, because without it they would not have that opportunity,” Massimino said.
The Obama administration’s stimulus bill should provide some relief for school operators as it could free up more federal loans for students.
The Obama administration’s public works plan also could help boost the need for workers in trade areas, which could bolster enrollment at Corinthian’s vocational schools, Massimino said.
Corinthian hopes to see more growth as students look to for-profit schools for degrees and certificates as government budget woes squeeze state universities, he said.
“There’s a large budget deficit, but Corinthian is going to spend $50 million expanding its schools,” he said. “The company is doing a lot of the things that state schools can’t do in an environment where people are going back to school.”
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Jessica C. Lee
