June 15, 2019 - 10:16am EST by
2019 2020
Price: 0.68 EPS 0 0
Shares Out. (in M): 13 P/E 0 0
Market Cap (in $M): 9 P/FCF 0 0
Net Debt (in $M): 0 EBIT 0 0
TEV (in $M): 7 TEV/EBIT 0 0

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Learning Tree International (LTRE)

This idea is extremely illiquid and only appropriate for small personal accounts…or if blocks of stock can be located.

Learning Tree has an ev of $7 million and revenue around $65 million. Before the pitch two big risks: a) The company has gone dark/non-filer as of the end of 2018 b) limited profitability (slightly profitable for 4Q, but seasonally strong).

The company has been undergoing a transformation since July 2018 for the better... as :

A) a new insider bought 57% of the company  from the founder last July at $1.00 per share

B) New board and right CEO are taking the much overdue actions to position the company for success in growing end markets (IT Training: assessment, learning path, through both online and onsite)

C) we believe at scale LTRE can achieve north of 10% operating margins (in past did this 11 years between 1995-2008) ....if/when this happens the business would be at 1x EBIT for a business that is probably worth 8-12x

D) The old founder started the company in the early 1970’s and never left the business model from the 1990-to early 2000’s and of course the world changed...he was still mailing course catalogs and renting expense real estate to train in

E) The valuation is extraordinarily low at 0.1x depressed sales or about 1/90th the valuation of Pluralsight (PS) F) LTRE is in high demand services and focused on Enterprises and Government in areas like Agile, Cyber Security, and 40 other high value courses.

F) I think the play book is modernize offering (see website), grow/stablize, then sell: LTRE had bids for the company at about 8x the current valuation or at $5.25 and $5.80 in 2013: http://media.mofo.com/files/uploads/Images/UV-Learning-Tree-Mill-Road.pdf_ IT training companies typically sell for 1-2x sales. We believe the industry supports about 10-15% EBITDA margins. Therefore, right sizing the business implies at a 1.0x multiple of sales or $60 million is about 8-9x+ the current enterprise value.

G) We think one attractive angle is Learning Tree HQ being right next to Washington DC and a CEO with strong govt ties (former CIO of IRS and Homeland Security, see below). The govt will go through a big IT modernization improvement and we think LTRE could win a lot of govt contracts given quality of content and delivery options, location, connections (CEO former CIO of IRS and Homeland Security), and partnerships. While competitor Pluralsight (PS) is at 9x sales not everyone  is happy with a web only offering.

Learning tree International at the end of May was part of a 5 year contract w/ total contract value of $100 million (not sure what % LTRE will get of this but about 18,000 employees at FDA...but could be good sized boost for LTRE on $65 million in revs)




This contract has a five-year base with an estimated value of $100,000,000. The FDA Integrated Services BPA includes a full range of services and solutions necessary to support the FDA in the execution of its mission to protect public health.  The vehicle was specifically crafted to provide consistency in service to FDA Offices and Centers, improve agency capabilities, develop individual and team talents, promote organizational development, and enhance collaborative communities across FDA.

“Learning Tree is honored to be a team member with Suntiva on the FDA Integrated Services BPA contract,” said Richard A. Spires, Learning Tree CEO. “The FDA IS BPA includes a full range of services and solutions necessary to support the FDA and give its workforce the knowledge, skills, and abilities to aid its mission of protecting public health and better serving their employees. The vehicle aligns well with Learning Tree’s Learning Ecosystem and we will support FDA through providing best-in-class Training Support and Workforce Development Services in areas to include Program and Project Management, Agile, and IT disciplines.”

LTRE has also won contracts for the state of Texas and Tennessee.


Learning Tree trains: Individuals and large organizations: Private Team, Enterprise Learning, and Transformation Solutions (agile, digital, IT modernization)



New Owner and Chairman of LTRE: Kevin Gruenich bought 57% of the LTRE in July 2018 for $1.00 per share. Kevin's background: 

Mr. Kevin Gruneich serves as chairman at Learning Tree International, Inc. He served as an Equity Analyst of Bear Stearns Companies Inc., Research Division; Vermeulen-Raemdonck SA, Research Division; Oppenheimer & Co. Inc., Research Division and Crédit Suisse AG, Research Division. Mr. Gruneich served as Senior Managing Director, Senior Publishing/Information Analyst and Co-Head of the Global Media Research Group at The Bear Stearns Companies in New York. He served as Managing Director (highest designation) and Publishing/Information Analyst at CS First Boston for 14 years. During his career, Mr. Gruneich was named to Institutional Investor Magazine's All-America Research Team for 20 consecutive years and in many of those years was ranked number one in his sector. He is a member of Impact Partners, focused on social-impact documentary filmmaking. He serves as Director of Questar Assessment Inc. He serves on the Advisory Board of Ivy Asset Management. Mr. Gruneich sits on the Boards of The University of Iowa Foundation (as well as its Investment Committee), and Spy Hop Productions (one of the country's leading youth media arts programs). Mr. Gruneich graduated with an MBA in Finance from The Wharton School, University of Pennsylvania and earned a BBA (double major: Finance and Industrial Relations; minor: Political Science) from The University of Iowa.


LTRE CEO Richard Spires is impressive…and in previous roles was large buyer of LTRE services:

He was formerly the CIO of both IRS and deputy commissioner (over saw 12,000 people: IT, Finance, Human Capital, Data Privacy, and Real Estate)


LTRE CEO experience at Homeland Security:

Richard A. Spires was appointed in August 2009 to serve as the Department of Homeland Security’s (DHS) Chief Information Officer (CIO). In this capacity, Mr. Spires was responsible for the department’s $5.6 billion investment in Information Technology (IT). He led and facilitated development, implementation, and maintenance of the department’s IT architecture. Mr. Spires was the chairman of the DHS Chief Information Officer Council and the Enterprise Architecture Board. He strongly supports the Secretary’s goal of unifying and maturing DHS – one DHS, one enterprise, a shared vision, with integrated results-based operations.

Mr. Spires also served as the Vice Chair of the Federal CIO Council and as the Co-Chair of the Committee for National Security Systems (CNSS). He previously co-chaired the Federal Data Center Consolidation Task Force and the Federal CIO Council Best Practices Committee


LTRE CEO also serves on the Public Sector Advisory Committee  for Palo Alto Networks (PANW)

Palo Alto Networks is leading a new era in cybersecurity by protecting thousands of enterprise ,government, and service provider networks from cyber threats. Unlike fragmented legacy products, our security platform safely enables business operations and delivers protection based on what matters most in today's dynamic computing environments: applications, users, and content.


The business is turning into a blended learning company: in class, Live online, On Demand, Blended learning, live onsite.

Skills Assessment Exams: test to grade out how competent an IT professionals skills are and to set them on a learning path https://www2.learningtree.com/SkillsTree/Library.aspx

IT modernization, Agile Transformation, Cyber Security, Interpersonal Skills, Digital Transformations, and Software Development

Learning Tree creates learning paths such as how to be become a Certified Scrum Master (CSM) : https://www.learningtree.com/top14certs/


Learning Tree has 5,000+ hours of content.


We think Learning Tree could become more of a hybrid version of PluralSight (PS) offering online and onsite training. There is still big demand for multiple modalities of IT Training. 

The bull case: is over the next 3-4 years Learning Tree could hit $100 million in revenue (about 10-15% growth) and return to 10%+ operating margins with about 14 million shares out....large contracts and incremental margins. 

It is likely that the company will re-list or sell over the next 3 years.


There are certainly risks and uncertainties, but w a rational new 57% shareholder and the rest of the ownership Wynnefield, Mill Road, Osmium, MilFam.


Risks...are certainly there and significant as non-filer and marginal profitability for 4Q18. But the upside and catalysts are there as well. 


Disclosure: This does not constitute a recommendation to buy or sell shares of LTRE. We own shares in LTRE and we may buy or sell shares without updating this board.

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.


More large contract wins

Value: 0.1x sales or about 1/90th PS valuation

New products and services see: www.Learningtree.com

Strong tailwinds/demand for industry

Right sizing business…night and day improvements since new 57% owner took control last July

Two acquisition offers at 7x the price about 5-6 years ago

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