Nobel Learning Communities, Inc. (NLCI)
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Nobel Learning Communities, Inc. (NLCI)
is focused on childrens education, wellness and preparation for advanced education
as well as preparation for life
CEOCFOinterviews: Mr. Bernstein, will you tell us how long you have been with the company, what attracted you to Nobel Learning Communities, Inc. and what changes have taken place since you have been there?
Mr. Bernstein: I have been with the company since August of 2003. The company is in the private education business. We are a leading provider of infant through eighth grade private education through schools and learning communities. We support the educational, enrichment and wellness needs of students and their families. We have become an education resource for parents, in terms of their childrens wellness, preparation for advanced education, and preparation for life.
CEOCFOinterviews: Do you have brick and mortar facilities?
Mr. Bernstein: We run 151 private schools; it is a bricks and mortar business at this point. We educate children in learning communities where we try to cluster three to four preschools around an elementary school, so we can provide a continuum of education and curriculum for parents as their children grow and need different educational products.
CEOCFOinterviews: What is your revenue model?
Mr. Bernstein: The vast majority of our revenue is private tuition.
CEOCFOinterviews: When you look at your revenues, how is that balancing with the cost of running the schools and covering the costs of your facilities?
Mr. Bernstein: We predominately lease our facilities. One of the major focuses of this company is to provide an alternative to the public school system for middle and upper-middle America. We believe that we offer exceptional value in terms of priced educational outcomes. Our standardized testing and our educational outcomes are significantly better than the public school system. We offer this program at a cost that is somewhere between the elite prep schools and the free public schools. We think we offer a significantly better and broader product that not only includes the typical educational products of reading, writing, arithmetic, and science, but also wellness programs, physical education, and arts programs, as well as social activities and sports programs. We also support a broader variety of family needs. Our customers have a need for their children to become educated and enriched during the school day; for working families we also fill this role in the morning prior to school starting and after school. We try to become one-stop shopping for our customers. We can educate their children during the day and enrich their children before and after school through arts programs, cultural programs, sports programs or academic enrichment programs, so that parents have a safe and nurturing school that cares for their children during the day when they are at work.
CEOCFOinterviews: Would you benefit from the presidents school voucher program?
Mr. Bernstein: Yes, we would benefit from school vouchers. However, we are not currently in many areas where there are voucher programs. One of the benefits that we have gotten through the current administration is under the No Child Left Behind program. It has opened the door to viewing the accountability of the public school system. Our belief is that the more education companies and public school systems are held accountable, the better it is for our business because we have tremendous educational outcomes through our curriculum and teaching methodologies.
CEOCFOinterviews: Being a for-profit educational system, before you go into a new community, what efforts do you take to make sure the community has the financial background to accommodate a learning center like what you offer?
Mr. Bernstein: We
look for communities where the average household income has enough disposable income to
invest in their childrens education. There are communities that are appropriate for
our product, and communities where our product may be appropriate for the population, but
economically, the product may not make sense based on other factors that those families
are facing whether they are just meeting their day-to-day living needs or whether they
have different alternatives to support their educational needs.
CEOCFOinterviews: Who does this research?
Mr. Bernstein: We do this research both internally as well as through the use of an outside firm. We also track inquiries we receive through our website to see where there seems to be demand.
CEOCFOinterviews: I imagine when you show up in a community it is a good sign for other companies!
Mr. Bernstein: The
word community is very important to us because our product, we believe, is to provide
learning communities to a market. By learning communities, we are talking about our
clusters of preschools, elementary schools and middle schools that allow children to
continue within one curriculum from the time they are very young, to the time they get out
of elementary or middle school. These communities allow students to continue in one
educational system with a consistent teaching methodology and a sense of security from a
long-term relationship with their teachers.
Our schools are part of the community. We offer year-round programs and camps that are open to our student population as well as open to other members of the community who may not utilize our school services during the school year. We hold community meetings and try to become part of the community by supporting the local businesses. We make sure that the community remains stable by giving the population an alternative to the public school system. Great schools help stabilize and grow a community.
CEOCFOinterviews: How do you attract good teachers and are your salaries competitive?
Mr. Bernstein: One
of the attractions to our schools is that as a private school, we are free from many of
the administrative requirements of a public school system and that gives teachers
additional freedom to be creative in their teaching methodologies. We do not teach to
standardized tests, which under the No Child Left Behind program, many of the
public school systems are doing. They are teaching to standardized tests so they can pass
the average yearly progress requirements to keep their funding. We teach to prepare
students for their high school and post secondary education as well as to prepare them for
being good citizens. We also have a more well rounded curriculum than some of our
competitors and many public schools, where we are able to teach to a well-rounded child as
opposed to just the specific reading, writing, arithmetic and science.
CEOCFOinterviews: What attracted you to the company?
Mr. Bernstein: I was attracted to this opportunity because it combines two of the things I am very interested in. One is multi-unit retail. It is what I did for fifteen years prior to coming to NLCI. We offer a service that impacts the most important things in peoples lives, their children. It is very similar to my previous experience at Pearle Vision, where we sold a product that impacted the second most important thing in a persons life, his or her health. I grew up in an education family and I still guest lecture every year at my Alma Mater. I am very interested in education, I love to teach, I love the multi-unit retail business and this is a combination of both of them.
Another element that attracted me to this opportunity
is it was very clear that we had a differentiateable product. We straddled two different
industries. We straddled a preschool business and the elementary and middle school
business. In a big picture view, many people view the preschool industry as childcare and
the K-8 industry as the education industry. We have competitors in the childcare business
and competitors in the education business, but very few, if any, straddle both businesses.
Of our eight publicly reportable corporate executives, five are women. It is very important to us that we match our management and our employee base with our customer base so that we understand how our customers think and we can provide appropriate service. The gatekeeper for our product tends to be mom. While it is a joint decision for both parents most of the time, the person who really does the homework and research on education tends to be mom. Our company is 95% women in part because women gravitate toward teaching and so we have tried to structure our management team to be consistent with our customer base.
CEOCFOinterviews: Who developed this concept for what you would need in your management team?
Mr. Bernstein: It was one of the things that we decided as we were putting the management team together; we knew we needed a wide variety of thought and style. We wanted to make sure that we had a team with styles that would work well together and challenge each other, but who also could think like our customer base.
CEOCFOinterviews: Is future growth going to come through your existing schools or from expansion?
Mr. Bernstein: Our future growth will be a combination of increasing enrollment at existing schools and growing our school base. As we grow our school base, the first thing we are going to do is add schools within our existing clusters. We have a strategy of opening preschools and elementary schools in clusters so that the preschools can feed students into the elementary schools, and ultimately as the elementary schools mature, they feed students into the middle schools. Filling those clusters to make sure we have the appropriate feeder schools is foremost on our agenda as we begin to open new schools. We believe we have the opportunity to grow considerably with our existing products before we need to turn to new complimentary products to supplement our preschools, elementary, and middle schools.
CEOCFOinterviews: Are you doing much advertising and how do you get the word out?
Mr. Bernstein: Our business is actually marketed at the local level. Our best advertising is word-of-mouth from our current customers, but the majority of our marketing is done at the local school level. Our customer does not buy our product because there is a larger company behind the local school, but because they believe in the local principal, the curriculum, the warmth and feeling of the school and learning community in their specific market.
CEOCFOinterviews: Are there any other states where you would like to be active?
Mr. Bernstein: There are many of them. We are currently in 13 states. As we grow and move from market-to-market, we look at where the population is growing and what kind of job growth we see in those areas. We do much better where we have professional and technical job growth. We also look at the legislative agenda. One of the things we are interested in is how will the state deal with issues such as universal Pre-K, which is where the states will determine whether or not they will be in the business of providing preschool. If so, will they provide preschool opportunities in partnership with private companies or will they do that through the public schools system? States that provide preschool opportunities in partnership with private companies, are an opportunity for NLCI.
CEOCFOinterviews: In closing, will you address the investment community and tell us if you are profitable, what is your current financial position and why investors should be confident in your company?
After our team was brought onboard, the first three things that we focused on were
strengthening our capital structure, bringing in a new banking relationship and building a
strong management team. It took the first eight months of my tenure to bring in capital,
strengthen our capital structure, and bring in a banking relationship. Our capital
structure is stable and strong. We have an excellent banking relationship and we have
significantly more financial flexibility now than we had fifteen months ago when I joined
the company. This was a turnaround and we are very satisfied with the progress that we are
making in moving the company towards being a very good performer in our industry. I think
we have many opportunities for investors.
We talked earlier about our teachers and whether it was difficult to attract good teachers; one of the things I would like to say is that the vast majority of our employees are here because they are passionate about what they do. They are passionate about preparing children for their future. We felt we needed to make certain our board understood this and could help us nurture that passion in our employees.
Investors who want to understand our current financial position and recent trends are welcome to review our recent 10-K and 10-Q filings.
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