Nobel Learning Communities, Inc. December, 2010 Exhibit 99.1 |
2 Nobel Learning Communities – Safe Harbor Except for historical information contained in this presentation, the information in this herein consists of forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward- looking statements. Potential risks and uncertainties include among others, the implementation and results of the Company’s ongoing strategic initiatives; the Company’s ability to compete with new or existing competitors; dependence on senior management and other key personnel; changes in general economic conditions; and the impact on our business and the price of our common stock caused by the concentration of ownership of our common stock. Other risks and uncertainties are discussed in the Company's filings with the SEC. These statements are based only on management's knowledge and expectations on the date of this presentation. The Company will not necessarily update these statements or other information in this press release based on future events or circumstances. In this presentation, financial measures are presented both in accordance with United States generally accepted accounting principles ("GAAP") and also on a non-GAAP basis. Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is commonly presented as a reconciliation starting with net income. Due to the number of non-operating related items included in net income, we present Adjusted EBITDA. The Company believes that the use of certain non- GAAP financial measures enables the Company and its investors and potential investors to evaluate and compare the Company's results from operations generated from its business in a more meaningful and consistent manner and provides an analysis of operating results using the same measures used by the Company's chief operating decision makers to measure the performance of the Company. Please see the financial summary at the end of this presentation for information reconciling non-GAAP financial measures to comparable GAAP financial measures |
3 NLCI Business Summary • Leading education provider as an operator of 184 schools – #4 private preschool operator (units) – #1 private K12 operator (units) • Portfolio of schools – Preschools – 148 – Elementary/Middle schools (29) and specialty schools (7) – Online K-12 Distance Learning School • Fully invested in people, curriculum, technology, real estate • Dual income families; high average household income • Primarily private pay customer • Revenue for fiscal year ended June 2010 increased 5.4% to $232mm |
4 Program Premier Portfolio of Local Brands Accreditations National Curricula Platform spans PreK-12 with proprietary curriculum and accredited programs 21 st Century Skills |
5 We operate 184 schools in 15 states Note: As 12/2/2010 184 total schools Arizona 1 California 37 Florida 8 Illinois 20 Maryland 1 Nevada 10 New Jersey 10 Oregon 3 Ohio 9 South Carolina 2 Texas 17 Virginia 19 Washington 5 District of Columbia 1 North Carolina 17 Pennsylvania 24 |
6 NLCI has a multi-channel growth strategy Organic Growth: Enrollment growth plus annual tuition increases in existing schools; open new ones Acquisition of K+ and Preschools Expand online and distance learning presence into new market segments; highly scalable |
7 Our platform strategy has dual tracks • Curriculum based preschools • Strong, Proprietary curriculum • Predictable cash flows • Opportunity for quick gains in economic recovery • Growth through new builds and acquisitions at attractive multiples Pure Play Preschool Track |
8 Preschool Operating Highlights Average preschool • 102 full-time equivalents • $1.25 million revenue • 9,000 square feet Staffing • 23 people (2 admins, 20 teachers, 1 other) Compensation • Principal salary range: $30,000 to $57,000 • Teachers (infant to K): $9 to $27 per hour Key operating metrics • Revenue, payroll, controllable expenses, contribution to fixed • Enrollment trends, occupancy, FTEs, inquiries, tours, sales conversions • Parent satisfaction scores |
9 Links to Learning – Preschool Product Overview • Preschool curriculum includes: – Teacher materials – Developmental Skills Sheet, Months at a Glance- monthly pacing guides, Weeks at a Glance- weekly pacing guides Daily Skills Sheet, LTL lesson plan template – Parent connections – Weekly lesson plans – Week-at-a-glance sheets – Parent friendly month-at-a-glance – Parent friendly Spanish poster with phonetic pronunciation (Beginner-PreK) – Developmental skills sheet – What We Did Today – Monthly letters explaining how to link learning from school with activities at home – End of Month folder |
10 • K-8 onsite schools and K-12 distance learning school • Private pay • Capability for multiple delivery modalities • Bring online opportunities to onsite schools • Develop blended model schools and partnerships • Strong growth opportunity, including international Integrated K-12 Track Our platform strategy has dual tracks |
11 K+ Operating Highlights Average K+ school • 153 full-time students • $1.7 million revenue • 4,000 to 40,000 square feet Staffing • 17 people (3 admins, 13 teachers, 1 other) Compensation • Principal salary range: $55,000 to $121,000 • Teacher salary range: $13 to $30 per hour • Teachers are contracted for 10 months Key operating metrics • Revenue, payroll, controllable expenses, contribution to fixed • Enrollment trends, occupancy, inquiries, tours, sales conversions • Educational outcomes and parent satisfaction scores |
12 Educational Platform: Curriculum and Curriculum Delivery |
13 Laurel Springs Overview • A private, distance learning K-12 College Prep school founded in 1991 • WASC accredited; NCAA approved; Univ. of CA A-G approved (non-lab courses) • Curriculum is combination of proprietary and licensed • Includes honors and AP courses • Gifted and Talented diploma program • Serves high-end, private pay markets focusing on college bound students • Excellent test scores (Terra Nova, AP, ACT, SAT, SATII) • Excellent placement record to selective universities • College planning and counseling services • Graduates receive over $1mm of scholarships annually • Mastery based • The most “high touch” and high service online school, featuring: • Learning styles assessment • Enrollment counselors • Academic advisors and college prep coaches • On site Prom, Graduation and Year Book |
14 Laurel Springs serves students in several profitable niche markets 15% 37% 8% 20% 20% Student Population Concurrent Enrollments "New" Home Schoolers International Elite Athlete Entertainment and Performing Arts 38% 22% 6% 34% Student Enrollment FT 9-12 PT 9-12 PT K-8 FT K-8 FY 2010 student distribution |
15 Business model relationship to the economy Preschool Track K-12 Strategy Track On – site On - line Relationship to Economy • Lagging Indicator • Local Economy • Lagging indicator • Local economy • Slight lagging indicator • National economy Largest Economic Factor(s) • Unemployment • Unemployment • Local public school funding • Local public school funding Growth Drivers • Job creation �� Program strength versus competitors • Job creation • Trend to multiple delivery modalities • Personalized learning • Rapid penetration of online education • International demand for U.S. diplomas |
16 Comparable School Revenue Versus Unemployment Rate NOTE: UR 25-34 and UR 35-44 data from BLS.gov |
17 October Achieved Positive Enrollments • September – 1 st month of positive comp school Revenue in 23 months • October – 1 st month of positive comp school Enrollment in 2 ½ years • Positive comparable school revenue and enrollments in October – Both preschools and K+ schools had positive enrollments |
18 Nobel Learning Communities, Inc. Financial Information |
19 Key characteristics of our Model • Sources of Strength – Revenue growth – tuition, enrollment, new facilities, acquisitions – Strong recurring revenues – high student retention rate – Highly attractive private pay demographic target – Proven acquirer with successful integration track record • Margin and Earnings Leverage – Comparable school revenue growth = Margin expansion – Distance learning online school delivers leverage with scalable platform • Attractive Cash Flow – Generate cash before services delivered – Modest capital requirements – real estate leased, not owned – Dry powder - $75mm revolving credit facility; over $50mm available |
20 Most Recent Performance: Q1, FY 2011 • Record Q1 revenue of $52.2mm, up 3.2% • Generated TTM adjusted EBITDA of $16.6 mm • EPS Q1 2011 = ($0.23) compared to Q1 2010 = ($0.14) • Q1 Performance Items – DOJ relate professional fees impacted EBITDA by ($275K) and EPS ($0.02) – Increased discounts (mostly retention oriented or agency related) over LY ($395K) – Controllable spend (bounceback, HVAC, new classrooms) ($500K) over LY – Comparable school payroll variance over LY ($300K) • Comparable school revenue and enrollment trending better in September and continued into October |
21 $18 $20 $21 $18 2007 2008 2009 2010 $181 $204 $220 $232 2007 2008 2009 2010 $8 $8 $7 $6 $12 $21 $7 $12 2007 2008 2009 2010 Acquisition spend Capex Four year performance Revenue growth 12.9% 7.8% $27 $31 $29 $29 2007 2008 2009 2010 % margin 15.1% 15.0% 13.2% EBITDA margin 9.9% 9.8% 9.8% 5.4% 12.5% 7.9% 13.1% Revenue ($ millions) Gross profit ($ millions) Adjusted EBITDA ($ millions) Capex and acquisition spend ($ millions) |
22 Non-GAAP information Financial information should be read in conjunction with Financial Statements and Notes thereto file with the SEC Trailing Twelve Months October 2, 2010 September 26, 2009 October 2, 2010 Net (loss) income (2,451) $ (1,432) $ 853 $ Interest expense 417 267 1,721 Tax (benefit) expense (1,602) (771) 877 Depreciation and amortization expense 2,507 2,300 10,201 EBITDA (1,129) $ 364 $ 13,652 $ Net loss from discontinued operations - net of depreciation 85 189 705 Stock compensation expense 286 305 1,089 DOJ litigation costs 275 158 1,077 Non-capitalizable transaction costs from acquisitions - 128 83 Adjusted EBITDA (483) $ 1,144 $ 16,606 $ Thirteen Weeks Ended Reconciliation of Non-GAAP Financial Measures |