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Childtime Learning Centers Inc. (CTIM) |
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CEOCFO Current
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This is a printer friendly page! Having
successfully integrated its Tutor Time® acquisition Childtime Learning Centers is now
focused on aggressively growing revenues using a combination corporate and franchise model
Childtime Learning Centers, Inc. (CTIM – Nasdaq)
of Novi, MI and its subsidiary, Tutor Time Learning Centers® (Tutor Time®) is one of the
nation's largest publicly-traded childcare providers offering preschool educational
services. With operations in 30 states, the District of Columbia and internationally,
Childtime Learning Centers, Inc. has over 7,500 employees and licensed capacity to provide
education and care for over 50,000 children daily in over 470 corporate and franchise
centers worldwide. This capacity includes the Company’s Tutor Time Learning Centers®
brand which serves nearly 26,000 children in 20 states and includes a Franchise business
model. Tutor Time® is also located internationally in Canada, Indonesia, Hong Kong and
the Philippines. Tutor Time®, a leader in childhood education, is licensed under the
regulation of all applicable state and local childcare agencies. “The
biggest change that has taken place since I’ve joined Childtime has been a change in
the culture of the company.” Offers Mr. William Davis,
president and CEO of Childtime Learning Centers, “We currently
have 7500 employees and are growing steadily. Our focus is on channeling the
excitement of our team members in innovative ways, and to develop the tools necessary for
them to achieve success. Leading this change is an entirely new senior management
team that brings a wealth of leadership skills and business acumen to our organization.
Another significant change for us was the new business model we obtained in our Tutor
Time® acquisition. In addition to corporate locations, which we were used to
running, Tutor Time’s® model combined both corporate and franchise centers. We
now have a franchise division, as well as corporate schools, and although this raises new
challenges, it has given us the ability to grow in new directions.” Asked if
Childtime does much advertising Mr. Davis responds, “In the first year after the Tutor Time® acquisition, we were
heavily focused on developing a quality product. Now we are moving more toward
aggressively growing revenues and marketing is a big piece of that. Right now, our
marketing department is gearing up to be more aggressive in our outreach marketing
programs using a number of different vehicles. Our largest marketing device is the Yellow
Pages, but we also do direct mail; ADVO, Val-Pack, free standing displays, radio,
billboards, print, and center signage. The location of the school and the individual
market drive our decision as to which vehicles to use.” Sharing some thoughts
on Childtime’s competitive advantages Mr. Davis says, “We believe that our focus on excellence along with our proprietary
curriculum gives us a competitive advantage in the market place. We also are the
only national childcare chain with a model that includes both corporate and franchise
locations. This allows us to leverage our infrastructure to provide our franchisees
more support than in a pure franchising operation. The corporate/franchise model also
gives us more growth potential than a normal corporate operation because we have the
ability to have individual owner/operators expanding in markets.” Childtime's curriculum is designed to foster
self-esteem, self-confidence, competence in self-help skills and the language abilities
necessary for effective social interaction. The process of learning and discovery is
stressed rather than the end result and children are encouraged to feel good about
themselves as a consequence of their own achievements. Tutor Time offers a strong educational curriculum
within a stimulating environment that maximizes development and school readiness. Tutor
Time believes in fostering the growth of the whole child - emotionally, physically,
socially and intellectually. Each program is designed to address the natural stages
of children’s development and encourage growth and progress toward achieving key
developmental milestones. In addition to the content-rich core curriculum,
Tutor Time has developed a range of proprietary systems and features designed to enhance
children’s educational experiences, including Tutor Towne Village and Safe N Sound,
an innovative system that provides instant access to a wide range of child status
information. Tutor Time offers a strong educational curriculum
within a stimulating environment that maximizes development and school readiness. Tutor
Time believes in fostering the growth of the whole child - emotionally, physically,
socially and intellectually. Each program is designed to address the natural stages
of children’s development and encourage growth and progress toward achieving key
developmental milestones. In addition to the content-rich core curriculum, Tutor Time has developed a range of proprietary systems and features designed to enhance children’s educational experiences, including Tutor Towne Village and Safe N Sound, an innovative system that provides instant access to a wide range of child status information. CEOCFOinterviews: Mr.
Davis, how has Childtime changed since you have been CEO? Mr. Davis: “The biggest change that has taken place since I’ve joined Childtime has been a change in the culture of the company. We currently have 7500 employees and are growing steadily. Our focus is on channeling the excitement of our team members in innovative ways, and to develop the tools necessary for them to achieve success. Leading this change is an entirely new senior management team that brings a wealth of leadership skills and business acumen to our organization. Another significant change for us was the new business model we obtained in our Tutor Time® acquisition. In addition to corporate locations, which we were used to running, Tutor Time’s® model combined both corporate and franchise centers. We now have a franchise division, as well as corporate schools, and although this raises new challenges, it has given us the ability to grow in new directions.” CEOCFOinterviews: What is the break down between corporate and franchise? Mr.Davis: “We operate under two brand names, Childtime and Tutor Time® and we have 336 corporate schools. Eighty percent are Childtime and twenty percent are Tutor Time®. In addition, we have 136 Tutor Time® franchise locations in the U.S. including 12 international franchise centers located in Hong Kong, Indonesia, the Philippines, Portugal and Canada.” CEOCFOinterviews: What is corporate, what is franchise and why is it the way it is? Mr. Davis: “The original Childtime organization was purchased from Gerber Baby Foods and operated corporately owned schools. They grew in the 90’s by acquiring small regional childcare companies and eventually went public in 1996. Subsequent to that, the acquisition of Tutor Time® in 2002 made it advantageous to create a regional structure to provide facilities, human resources, marketing and training support throughout the United States for both franchise and corporate locations.” CEOCFOinterviews: Is there a difference between a Childtime school and Tutor Time®? Mr. Davis: “They
are different; Tutor Time was founded in 1990, so all of the Tutor Time® schools are less
than 15 years old. From day one, the design of each location was standardized so
there is a consistency in the look and feel and, for the most part, size of the buildings.
In addition, there are a number of components that lend themselves to the trade marking of
the building design itself including a miniature village, which is tied into our
curriculum. On the other hand, Childtime grew through acquisitions and, as a result, is
made up of a wide variety of building shapes, sizes, and interior design. Each
center offers its own unique, home-like environment. CEOCFOinterviews: Who goes to your schools? Mr. Davis: “Our target customers are smart, educationally-minded parents, looking for a safe, caring and clean environment for their children. They are in their early twenties to late thirties, with a family income of 60+ thousand dollars a year. This demographic is aware of the benefits of early childhood education and choose environments which will support this development in their children. CEOCFOinterviews: Do you do much advertising? Mr. Davis: “In the first year after the Tutor Time® acquisition, we were heavily focused on developing a quality product. Now we are moving more toward aggressively growing revenues and marketing is a big piece of that. Right now, our marketing department is gearing up to be more aggressive in our outreach marketing programs using a number of different vehicles. Our largest marketing device is the Yellow Pages, but we also do direct mail; ADVO, Val-Pack, free standing displays, radio, billboards, print, and center signage. The location of the school and the individual market drive our decision as to which vehicles to use.” CEOCFOinterviews: Is
there room for expansion? CEOCFOinterviews: How do you attract the staff for your centers and how do you motivate them? Mr. Davis: “We want all of our team members to feel excited about coming to work everyday. Most of our staff members are with us because of their love for children and their passion for early childhood education. Compensation levels are not the main reason that they are in this business, so finding and attracting teachers that are truly excited and motivated to provide a great experience is critical. Career an educational opportunities, a competitive compensation program and other motivational programs will be key. For example, we have increased the size of our training department in order to dramatically expand the quality and quantity of training programs for our directors and our staff members.” CEOCFOinterviews: Is turnover a problem for you? Mr. Davis: “Turnover is a problem in our entire industry. By focusing on our recruiting practices, our compensation and benefit packages as well as better review cycles and communication, we have been successful in reducing our turnover statistics. The trends are now heading in the right direction.” CEOCFOinterviews: Where would you like to be geographically, and are your work centers a growing area for you? Mr. Davis: “We would like to do more in that area; it hasn’t been a focus of the company in the past but clearly, there is a demand and there will continue to be a demand for workplace locations and we will be going after those opportunities where we have strong management in place. As far as expanding our geography, New England is an area where we have very few schools, so that would be an area that has potential for growth. We are currently in most of the major metropolitan markets throughout the country. Our near-term focus will be to build out and expand in markets where we already have a presence.” CEOCFOinterviews: Are you competing with other schools with similar programs, or is it a matter of getting people to understand the superior quality of what you do? Mr. Davis: “Our major focus is to execute and deliver a product consistently and to communicate what we do well to our existing customers because referrals are one of the best ways to get new customers. Our Center Directors know that delivering a superior product today will translate over time into more new customers. We believe that our focus on excellence along with our proprietary curriculum gives us a competitive advantage in the market place. We also are the only national childcare chain that has a model that includes both corporate and franchise locations. This allows us to leverage our infrastructure in providing our franchisees more support than in a pure franchising operation. The corporate/franchise model also gives us more growth potential than a normal corporate operation because we have the ability to have individual owner/operators expanding in markets. As we have reported in our most current filings, our franchisees have a comparable revenue growth rate this is much higher than other industry players, so we think we have developed one of the best models in the industry.” CEOCFOinterviews: Are many of your students staying with you past the preschool range? Mr.
Davis: "Many of our centers offer private kindergarten programs and therefore,
retain many students until they begin the first grade. In fact one of our schools has a
private first grade and we are currently testing a tutoring program. In addition, we have
before and after school programs and summer camps for school-age children. As we develop
relationships with our customers it makes sense for us to continue developing products for
customers beyond the kindergarten age. We have utilization times of both nights and
weekends and our summer camps are a great opportunity to offer some cutting-edge
programs." CEOCFOinterviews: Can you tell us about the industry and government support? Mr. Davis: “The research that has been done about early childhood education and about its impact on success in later years shows that our programs facilitate the development of successful young adults. That is why there is so much emphasis on the No Children Left Behind’ and government funded pre-K programs. We have the backdrop of an industry that is heavily supported with lots of research. The trend toward two working spouses continues, so we see more and more category and industry growth over time. The industry is highly fragmented, and I could be off a little bit but the top six national childcare companies only represent about five percent of the industry, so there is a tremendous opportunity for the right model to have expansion capabilities. As boundaries are torn down between countries, we also see a real opportunity for our product to be expanded internationally.” CEOCFOinterviews: What do you see as the biggest challenges you are facing and how are you ready? Mr. Davis: “Regional and local licensing requirements vary by state and many of the government subsidy programs and mandates that I referred to earlier are now being implemented on a state by state level. Unfortunately, that makes dealing with individual state changes in regulations and funding a huge challenge. Between Head Start, government grants for subsidizing childcare and federal food programs, there is about eighteen billion dollars being spent on early education childcare. I think the biggest challenge in the industry is to make sure those dollars are being spent most efficiently. I know that as an industry, we are involved more than we have ever been in trying to figure out and participate in state legislations, and legislative activities that will dictate how these monies will be spent going forward.” CEOCFOinterviews: Will you tell us about the financial condition of Childtime? Mr. Davis: “Childtime is a publicly traded company. We are very pleased with the progress we’ve made in strengthening our balance sheet and creating liquidity. In May of 2003, we finished a stock rights offering where we raised approximately fifteen million dollars, and approximately twelve million dollars of that was used to pay down debt. In addition, we are just completing some sale-leaseback transactions to create some liquidity on our balance sheet. We have also been focusing on operating performance and improvements quarter-over-quarter. We have communicated to our shareholders in our last SEC filing, that we expect to be profitable in this quarter, which is the first time the company has been profitable in eleven quarters.” CEOCFOinterviews: In closing, as CEO how involved are you in the day-to-day operations of the centers and franchises? Mr. Davis: “I travel a lot and have made a point over the last eighteen months to visit as many of our centers as I can, which I think has been key in the success of our turn around. Being able to hear and see first hand how we are doing and talking with our employees who are responsible for delivering our product is invaluable in figuring out how we can support them better. I am very hands-on in making sure that all of the functional areas of the company have the tools that they need to accomplish their individual priorities. I also spend time making sure that there are no roadblocks in the way of our getting projects accomplished. I spend much of my day on the phone talking to franchisees, individual staff members and thanking them for what they have done and creating a very optimistic environment.” disclaimers |
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