BACKGROUND
Near the heart of Wall Street is the for profit college campus of OTC pink (EVCI) : “Technical Career Institutes, an urban college, offering diverse groups access to careers in technology by providing state-of-the industry curricula at the Associate’s degree level in technological fields and related subjects.
This mission is inspired by a one hundred year heritage of scientific and technological education that began with the Nobel-prize winning founder Guglielmo Marconi. It was continued during the school’s years as the RCA Institutes and is now carried forward by Technical Career Institutes, commonly known as TCI College.”
DISTRESS ISSUES
To my knowledge this was always a profitable operation until in 2005 an employee told a student (undercover NYSED agent) to lie about his income to qualify for government grants (reminiscent of the troubles Corinthian Colleges (COCO) is currently facing), this followed an investigation by the NYSED and EVCI was penalized by having to pay back $4.5 million in grants, and having enrolment caps placed on one of its campuses, they were also required to improve the drop out rate, in addition they were sued by shareholders in a class action.
RESTRUCTURING
COMVEST PARTNERS INVESTMENT, the fines imposed on EVCI had a negative financial impact and the company had to seek a source of funds which came in 2007 in the form of Comvest the private equity and turnaround specialist (www.comvest.com/), currently EVCI features in their equity portfolio.
The issue of the shareholder class action lawsuit was settled backed by insurance, the ‘offending’ campus (Interboro) was closed, improved corporate administration included adding Robert F.Kennedy, Jr as a director and chairman of the education oversight committee and replacing the Chairman, President and CEO of EVCI with John McGrath, you can read more in a 2013 business magazine here: www.tcicollege.edu/sites/default/files/top100_business_mag_2013.pdf
SHAREHOLDING PARADOX, Finances were improved by a capital injection by comvest partners who received nearly 25% of EVCI, they wanted to take a majority and a controlling
interest, which is what they do in their equity restructuring projects (there was a ‘taking the company private’ term in their financing deal which was later dropped under pressure from management.) it is important to mention here that the education sector is subject to specific rules that limit ownership : The NY State Educ. Dept has rules forbidding ownership of more than 49% without approval, furthermore the Dept. Education limits ownership to 24.9% by any entity and affiliations, to get more equity the Dept. Education will need to give its rare approval that Comvest wisely decided not to pursue.
The company delisted from Nasdaq and went dark in late 2007 to preserve capital resources, the stock price took a serious hit but since then the company has restructured and progressed dramatically, spreading operations in NY as far as I can make out.
EVCI is the holding company of TCI and Pennsylvania Business School, however in 2014 PBS closed down apparently to improve profitability margins.
The company appears to have campuses spread around N.Y:
1)A main campus with library in mid-town Manhattan, 320 West 31st Street NY
2) 56th street Annex (?) has a library and learning centre.
2) 35th street (?) has Reading room .
3) Classroom space on the sixth floor, 500 8th Avenue NY
4) 3rd And 4th floors, 232 West 40th Street NY, this site houses TCI career services and possibly admin. services, also has a library.
5) Classroom space , 940 8th Avenue NY
6) 1854 Amsterdam Ave (corner of 152nd street) Harlem. This site currently offers general first semester courses for students coming from the Bronx, Queens and Northern Manhattan thereby adding a level of convenience for first semester students, has learning centre.
7) 1360 Fulton St. Bedford-Stuyvesant Brooklyn (opened 2012) described as an “amazingly new, clean, state-of-the-art facility and learning environment.”
8) Online ‘virtual campus’ offering online tuition through main website and student intranet.
TCI is working to expand its offerings to baccalaureate degrees, according to an ex-professor of TCI Geoffrey B. Elliott sites.google.com/site/gelliottteaching/home/tci , in Nov 2013 an articulation agreement was signed between TCI and the PRATT institute to enable some graduate students of TCI to transfer their credits to the baccalaureate offered by PRATT.
The company is technologically advanced with a superb online library tcicollege.libguides.com/content.php, a lovely award winning website www.tcicollege.edu, I am not sure what happened to the student intranet at www.tcicampus.net/ perhaps it has moved to another URL, and the online tutorial service at tcicollege.tegrity.com/TegrityUtils/Login.aspx.
Student numbers rose from 3200 in 2007 to 4491 in 2012 at TCI, and fell from 400 in 2007 to 296 in 2012 in PBS which closed in 2014, the 2700 students at Interboro were lost when that campus closed.
VALUATION
Based on declared tuition by www.matchcollege.com/career-colleges/technical-career-institutes $12,000 to $14,000 x 4490 students (2011 figure) = $58.3 million turnover estimated for 2013.
Employees:
2012: TCI 513, of which 232 are faculty @ $66500 = $15M + 282 auxiliary staff costing $10M = estimated total $25M
I estimate a $25M to $30M profit after deducting $5M for rent etc. considering the outstanding shares to be the last known figure of 5.16M this would translate to a per share profit of $4.80+ using the industry P/E multiple of 6,86 (APOL) I value EVCI at $30 a share, not including the cash mountain EVCI must have accumulated since 2010, currently the shares are listed at $0.01.
The qualitative shift in EVCI over the years 2005 to 2014 has been extremely dramatic, the company has assumed a leadership role in the for profit colleges community on occasion representing the sector, the quality of teaching staff is impressive, the student body has improved, the colleges seem to be in the technological forefront and expanding operations in NY.
None of the information presented are insider privileged information to the best of my knowledge as the info is publicly available.
Disclosure: I am long EVCI, SWRL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
