EX-99.1 2 dex991.htm PRESENTATION OF THE REGISTRANT'S YEAR-END RESULTS Presentation of the Registrant's year-end results
1
NOBEL LEARNING COMMUNITIES, INC.
Fall 2008 Investor Presentation
Exhibit 99.1

2
NOBEL LEARNING COMMUNITIES, INC. –
SAFE HARBOR
Except
for
historical
information
contained
in
this
presentation,
the
information
in
this
presentation
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
risks
and
uncertainties
arising
in
connection
with
Knowledge
Learning
Corporation’s
unsolicited
proposal
to
acquire
the
Company.
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
presentation
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
Net
Income
and
the
related
earnings
per
share
figures
and
EBITDA
in
this
presentation
are
non-GAAP
financial
measures.
Adjusted
Net
Income
and
EBITDA
exclude
the
special
items
described
elsewhere
in
this
release.
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
EBITDA
as
derived
from
the
operating
income
line
as
we
believe
this
provides
the
user
the
most
useful
and
comparable
information
on
an
operating
basis.
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
management
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
•
Premier operator in the for-profit private preschool,
elementary/middle school and specialty school market
–
Largest K-8 and # 4 preschool operator
–
Predominantly private pay
•
Education market expected to grow at 6.4% per year
–
Fragmented: provides rollup growth opportunity
–
Tuition increases of 3% to 5% per year
•
Excellent target market characteristics:
–
Dual income, high HH income families; professional and
technical employment
–
Existing portfolio in high growth markets
•
4 year Adjusted Net Income CAGR of > 27%

4
NLCI BUSINESS MODEL PRINCIPLES
•
Focus on three growing trends faced by families
–
Dual income and single parent households
–
Frustration with public schools
–
Assure
child’s
success
in
the
“21
st
Century
Economy“
•
Curriculum-based with standardized testing providing
excellent value for educational outcomes
•
“Cluster”
School Model
–
Feeder preschools support K-8 occupancy
–
Operating and marketing economies
•
Programs to meet family after school, summer needs

5
Our preschool curriculum connects parents to
what their child is learning in our schools

6
Our K-8 Schools are Differentiated 
Through Our Curriculum Delivery Model
•
Utilize national network of schools to create extraordinary
"distance" learning experiences and student interactions
•
Develop advanced skills to succeed in 21st century economy

7
WE OPERATE UNDER MULTIPLE BRANDS
East             West
Specialized
Individual Market Brands

8
SCHOOL LOCATIONS BY STATE

9
NLCI GROWTH STRATEGY

10
Growth Source
2006
2007
2008
2009 YTD
Comparable Schools
Tuition Increase
3.8%
3.8%
BTS
Enrollment Increase
0.6%
0.2%
BTS
Total
1.5%
4.4%
4.0%
BTS
New Schools - Open
1
2
5
3
New Schools - Pending
3
Acquisitions - Completed
Preschools
0
7
17
2
Elementary
0
1
2
1
NLCI GROWTH STRATEGY -
EXECUTION

11
NEW SCHOOL DEVELOPMENT IMPACTS
GROSS MARGIN LEVERAGE
Mature
Schools
New
Schools
Total
Company
# of Schools
165
12
177
Net Revenue
199,179
$  
7,035
$       
206,214
$  
Gross Profit
30,935
       
(398)
           
30,537
       
Fiscal 2008

12
•
Education is a growth market; private school segment growing even faster
•
Only public company in preschool and K-8 school space
•
Our school models compete in highly fragmented markets
•
Significant curriculum, technology and capital investment complete
•
Incremental enrollments leverage margin and earnings
•
Record of double-digit revenue and earnings growth
INVESTMENT HIGHLIGHTS

13
NOBEL LEARNING COMMUNITIES, INC.
Financial Results

14
Revenue Growth
•
Sources
of
growth
–
tuition,
enrollment,
new
facilities,
acquisitions
•
Strong
recurring
revenues
–
high
student
retention
rate
Margin and Earnings Leverage Opportunity
•
Comparable school revenue growth = Margin expansion 
•
$175,000 pretax income = $0.01 EPS
Attractive Cash Flow
•
Generate cash before services delivered
•
Modest capital requirements –
real estate leased, not owned
•
Dry powder -
$75,000,000 revolving credit facility, plus accordion
feature
–
Substantial availability remaining
–
Under 1x  EBITDA leverage
KEY BUSINESS  CHARACTERISTICS

15
DOUBLE-DIGIT REVENUE GROWTH
Net Revenue
$152
$158
$162
$183
$206
$-
$50
$100
$150
$200
$250
2004
2005
2006
2007
2008
Should be reviewed in conjunction with the Financial Statements and Notes thereto filed with the SEC.
Comparable School Revenue
Growth
3.7%
1.5%
4.4%
4.0%
2.8%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
2004
2005
2006
2007
2008
Revenue Growth   5.8%    3.9%   2.5%  13.0% 12.8%

16
STRONG GROSS PROFIT AND NET INCOME GROWTH
Gross Profit / Gross Margin
$20.4
$22.0
$23.0
$27.5
$30.5
$-
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
2004
2005
2006
2007
2008
Adjusted Net Income
$3.4
$4.5
$5.8
$7.1
$-
$1.4
$2.8
$4.3
$5.7
$7.1
$8.5
$9.9
2005
2006
2007
2008
Gross Margin      13.5%  14.0%  14.2%  15.0% 14.8%  
See non-GAAP reconciliation table at the end of this presentation

17
Comparable Schools
Number of
Schools
June 28, 2008
June 30, 2007
Increase
Percent
Increase
Revenue
149
176,933
$      
170,080
$      
6,853
$     
4.0%
Gross Profit
27,544
$        
25,172
$        
2,372
$     
9.4%
Gross Margin
15.6%
14.8%
0.8%
Fifty Two Weeks
COMPARABLE SCHOOL REVENUE DRIVES
GROSS MARGIN LEVERAGE

18
STRONG EARNINGS TRENDS
Adjusted Earnings Per Share
$0.35
$0.44
$0.55
$0.67
$-
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
2005
2006
2007
2008
See non-GAAP reconciliation table at the end of this presentation

19
LOW DEBT AND INCREASING CASH FLOW
Total Debt
$25.3
$15.5
$13.2
$0.0
$12.5
$-
$7.0
$14.0
$21.0
$28.0
2004
2005
2006
2007
2008
EBITDA
$18.1
$15.6
$11.4
$14.8
$20.0
$-
$5.0
$10.0
$15.0
$20.0
$25.0
2004
2005
2006
2007
2008
See non-GAAP reconciliation table at the end of this presentation

20
Most Recent Comparative Education Transaction
EBITDA Valuation Multiples
9.3
12.5
0
2
4
6
8
10
12
14
16
NLCI
BFAM
BFAM as of 5/28/2008 close of go private with Bain Capital  EBITDA
= TTM 12/31/2007
NLCI as of 9/22/2008 $17 per share unsolicited proposal EBITDA =
TTM 6/28/2008
NLCI - June
BFAM - December
2005
3.9%
13.3%
2006
2.5%
11.6%
2007
13.0%
11.0%
2008
12.8%
10.4%
(2)
NLCI - June
(1)
BFAM - December
2005
NM
31.7%
2006
25.7%
13.4%
2007
25.0%
13.8%
2008
21.8%
16.8%
(2)
(1)  Adjusted
(2)  Last analyst estimate
NLCI = Nobel Learning Communities, Inc.
BFAM = Bright Horizons Family Solutions
Revenue Growth
EPS Growth

21
NOBEL LEARNING COMMUNITIES, INC.

22
Non-GAAP Reconciliation
2008
2007
2006
2005
2004
Net income
7,678
$             
7,365
$             
4,479
$             
2,516
$             
(6,081)
$            
Loss on note receivable reserve
-
-
-
915
-
Goodwill and asset impairment, net of tax
-
-
-
-
3,398
Recovery of note receivable, net of tax
-
(2,013)
-
-
-
Gain on sale of seven schools, net of tax
-
(1,335)
-
-
-
Lease reserve established for closed schools, net of tax
-
1,242
-
-
2,169
Write off of unamortized loan fees upon refinancing, net of tax
-
343
-
-
-
Additional depreciation due to re-determination of useful life
depreciation, net of tax
-
208
-
-
-
Realization of gain contingency on lease contract net of related
property costs, net of tax
(572)
-
-
-
-
Total adjustments, net of tax
(572)
(1,555)
-
915
5,567
Adjusted net income
7,106
$             
5,810
$             
4,479
$             
3,431
$             
(514)
$                
Weighted average diluted shares outstanding
10,630
10,580
10,080
9,719
6,512
Adjusted net income per share
0.67
$                
0.55
$                
0.44
$                
0.35
$                
(0.08)
$              
Operating Income
12,021
$           
10,499
$           
9,524
$             
7,394
$             
2,598
$             
Items excluded from operating income to reconcile non-GAAP
operating income:
Loss on note receivable reserve
-
-
-
1,500
-
Goodwill and asset impairment
-
-
-
86
3,368
Stock based compensation
717
675
555
-
-
Depreciation and amortization
7,311
6,919
5,542
5,830
5,441
Total adjustments
8,028
7,594
6,097
7,416
8,809
EBITDA
20,049
$           
18,093
$           
15,621
$           
14,810
$           
11,407
$           
Fifty Two Weeks Ended