Nobel to Expand into Southern California

Published July 1, 2001

A few days before posting record third-quarter revenues from its current operations, the nation’s largest non-sectarian operator of private schools, Nobel Learning Communities, Inc., announced plans to expand into the Southern California education market, opening a minimum of 12 schools within the next few years with a capacity to educate nearly 2,500 students. As well as its private school operations, Nobel also operates charter and special education schools.

“Nobel as a company is on the cutting-edge of the for-profit education industry,” said A. Jack Clegg, chairman and chief executive officer of Nobel, which is based in Media, Pennsylvania. “We are meeting the demands of two bottom lines: those of our investors and our parents. We believe this dual focus differentiates us in the marketplace and defines our company.”

Nobel Learning Communities currently educates more than 25,000 students and operates 170 private, special education, and charter schools in 15 states. It provides special education services to an additional 92 non-Nobel charter schools. The company’s students score nearly two grade levels above national norms on standardized tests.

Nobel’s new schools in California will be located in Orange, San Diego, Kern, San Luis Obispo, Riverside, Imperial, Santa Barbara, and San Bernardino Counties. Although the California Department of Education reports nearly 120,000 K-6 students already enrolled in private schools in those counties, Nobel believes the area has a shortage of affordable private education options.

“We have proven how successful our model can be in Northern California, and are confident that parents in Southern California will take advantage of our educational process in the same manner as their Northern counterparts,” said John Frock, the company’s executive vice president.

Frock said Nobel was working with a specialty real estate developer, Schoolhouse Development, to identify locations for building its first round of new pre-K and elementary schools, targeted to open in the summer of 2002. Schools built over the next few years will be pre-K stand-alone facilities and combination schools housing a pre-K, elementary, and special education school. The potential revenue from the new schools is expected to be in excess of $18 million annually.

“Our experience in the market has shown there is a growing demand for a high-quality, affordable alternative to the struggling California public elementary school system, and we plan on providing that alternative,” said Clegg.

Record Revenues

On May 14, Nobel reported record revenues of $108.91 million for the nine months ended March 31, 2001, an 18.4 percent increase over prior year revenues of $92 million. The company also reported record revenues of $38.96 million for the third quarter 2001, a 17.6 percent increase over the revenues of $33.13 million for the comparable quarter in the prior year.

For the nine months ended March 31, 2001, same-school operating profit rose 16.3 percent to $13.85 million from $11.91 million in the comparable nine-month period during the prior year. For the three months ended March 31, 2001, same-school operating profit rose 10 percent to $5.39 million from $4.91 million in the prior year.

For the three months ended March 31, 2001, total school operating profits increased an additional $1.12 million–a 27 percent increase over the preceding quarter, ended December 31, 2000. The company attributed the increase to improved efficiencies in existing schools and increased profit in the 26 new schools added this fiscal year.

Although school operating profit increased, net income for the nine months was $909,000 or $.12 per share, down from $1.47 million, $.20 a share, a year earlier. The fall was due primarily to an increase in interest costs and professional fees, plus new school startup costs in the latest quarter, including pretax expense of $824,000 as a continuing effect from two Arizona schools acquired from TesseracT. But after absorbing the new school start-up losses, the company now had a solid foundation for the next school year, noted Clegg.

“We worked hard during the quarter to put in place effective management programs that lowered costs across our network while delivering the highest value in education today,” said Clegg. “This is our mission and we are on course.”