02:56:00 EDT Fri 29 Mar 2024
Enter Symbol
or Name
USA
CA



Brightpath Early Learning Inc
Symbol BPE
Shares Issued 121,719,316
Close 2014-07-30 C$ 0.40
Market Cap C$ 48,687,726
Recent Sedar Documents

Brightpath earns $133,000 in Q2

2014-07-31 21:52 ET - News Release

Mr. Dale Kearns reports

BRIGHTPATH REPORTS ANOTHER RECORD-SETTING QUARTER AND EXPANDED GROWTH PROGRAM

Brightpath Early Learning Inc. has released its operational and financial results for the three- and six-month periods ended June 30, 2014. The financial results demonstrate continuation of a successful implementation of the profitable growth strategy enunciated last year and significant progress toward the operating and financial goals set for 2014.

Portfolio performance highlights for the three months ended June 30, 2014, are as follows (all comparisons are with the same period last year, and all amounts are in thousands except per-share amounts, unless otherwise noted):

  • The highest quarterly revenue in the company's history was at $13.2-million, an increase of 10.4 per cent.
  • Adjusted earnings before interest, taxes, depreciation and amortization set a new quarterly record at $1.7-million, an increase of 84.6 per cent.
  • Funds from operations were $1.4-million (1.2 cents per share), an increase of 119.0 per cent.
  • Adjusted funds from operations increased $700,000 or 108.4 per cent to a new quarterly record of $1.36-million (1.1 cents per share).
  • Improved centre margin rose to 27.8 per cent of revenue compared with 26.9 per cent.
  • Average occupancy was 87.3 per cent.
  • Following a restructuring that included both a reduction in corporate overhead and a cost-effective relocation of certain accounting and operational functions, general and administrative costs decreased 24.4 per cent to $1.2-million, the third consecutive quarterly decline.
  • The Alberta portfolio generated 72 per cent of centre margin (with 61 per cent of the company's licensed spaces) in the second quarter due in part to an emphasis on new, larger developments that have delivered very strong operational and financial performance. These developments serve as a template for over 800 of the additional 920 spaces, which the company has announced to expand its platform in Western Canada, as well as additional pipeline opportunities, all of which will be financed from the company's existing financial resources.

Significant events in 2014 include the following:

  • The company announced plans to open a new child care centre in Cochrane, Alta., creating 120 spaces in leased premises in this rapidly growing, underserviced community in close proximity to Calgary.
  • Brightpath announced its intention to develop a greenfield centre in the Symons Valley area of northwest Calgary in the Creekside commercial development, developed by Hopewell Developments in conjunction with Canadian Real Estate Investment Trust, representing an additional 250 licensed child care spaces modelled on the highly successful and well-received McKenzie Towne development in southeast Calgary.
  • The company's first Edmonton greenfield development, on lands within Melcor Developments Ltd.'s West Henday promenade shopping centre, representing 250 spaces, was announced.
  • The company initiated the process of expanding its Airdrie, Alta., centre from 50 licensed spaces to 111, with completion scheduled for late 2014.
  • Construction of the Surrey centre achieved substantial completion with the scheduled opening of 200 child care spaces in the fall of 2014.

"Results for the second quarter continue to demonstrate the successful execution of the company's plan to deliver significant increases to its reported financial results and to grow profitably, most immediately in Western Canada," said Mary Ann Curran, chief executive officer of Brightpath. "The fundamentals of the business model are being optimized through an unwavering commitment to product quality and improvement and tenacity with respect to revenue optimization and cost reduction. The active pursuit of substantial accretive growth leverages this solid business base for very significant growth in profitability."

Financial review (thousands of dollars, except where otherwise noted and per-share amounts)

Selected quarterly information

For the three months ended June 30, 2014, the company reported revenue of $13,181 (June 30, 2013: $11,941) and centre margin of $3,670 (June 30, 2013: $3,216). The year-over-year increase in revenue was primarily due to fee increases implemented, for the most part, effective Jan. 1, 2014, offset by a slight decrease in average child enrolments of 0.4 percentage point. Centre margin as a percentage of revenue increased to 27.8 per cent compared with 26.9 per cent a year earlier, with the increase mainly attributable to utilizing the information now available through the company's ERP system to optimize labour efficiency and costs.

Adjusted earnings before interest, taxes, depreciation and amortization for the second quarter of 2014 were $1,704 compared with $1,560 in the first quarter of 2014 and $923 in the second quarter of 2013. Adjusted EBITDA improved on a sequential quarter basis and compared with the second quarter of 2013, due primarily to higher centre margin and lower general and administrative expenses.

Funds from operations for the second quarter of 2014 were $1,415 compared with $1,250 in the first quarter of 2014 and $646 in the second quarter of 2013. The increase over prior quarter amounts is primarily due to higher centre margin and lower general and administrative expenses. FFO per share for the second quarter of 2014 was 1.2 cents compared with 0.5 cent for the second quarter of 2013.

Adjusted funds from operations for the second quarter of 2014 were $1,361 compared with $1,329 in the first quarter of 2014 and $653 in the second quarter of 2013. AFFO increased on a sequential quarter basis primarily due to increased centre margin and lower general and administrative expenses, offset by an increase in maintenance capital expenditures, which typically occurs with greater intensity during the seasonally slower summer months. AFFO increased by $708 compared with the second quarter of 2013 primarily due to increased centre margin and lower general and administrative expenses, partially offset by increased finance costs, operating lease expense and maintenance capital expenditures. AFFO per share for the second quarter of 2014 was 1.1 cents compared with 0.5 cent for the second quarter of 2013.

For the three months ended June 30, 2014, comparable centre revenue increased year over year 9.3 per cent in Alberta, 13.6 per cent in British Columbia and 0.8 per cent in Ontario. Comparable centre margin rose by 10.4 per cent in Alberta and 32.2 per cent in British Columbia, and declined 1.9 per cent in Ontario. Comparable centre occupancies improved in Alberta and British Columbia, while Ontario occupancy declined compared with the prior-year period due to the rollout of full-day kindergarten. The decrease in centre margin in Ontario reflects a shift toward younger children who generate lower margins than older children affected by FDK. As a result of the completion of implementation of the company's enterprise resource planning system, the management of costs, particularly labour, has been considerably more effective than in previous periods.

There was a delay by one quarter in realizing the cost savings related to food procurement and other goods and services consumed in Alberta due to unforeseen personnel and implementation challenges. The impact of the savings of approximately $100,000 quarterly will be realized beginning in the third quarter. As well, earlier this year, there was a delay implementing the company's planned services and programming for ancillary revenue. The company has recently obtained the permits, consents and regulatory approvals to proceed on a pilot program basis commencing in September. As such, incremental revenues related to this initiative will commence in the third quarter.

Included in comparable centres are two newly developed centres. Enrolments at these centres continue to show strength demonstrating the pent-up demand for quality child care, which underpins the company's growth strategy.

New locations

Situated in the West Henday promenade, the company's first new development in the Edmonton market will be located at the access point to Lewis Estates and central to several other high-growth master-planned communities. Across from a major public transit hub and adjacent to Anthony Henday Drive (Edmonton's major ring road), the primary trade area consists of more than 25,000 residents, with projected housing starts indicating a doubling of the population by 2018. Current information on the supply of child care spaces indicates fewer than 700 licensed spaces available to address existing market demand. Modelled on the highly successful McKenzie Towne and Chestermere newly built day care centres in Calgary, the West Henday centre will comprise approximately 250 licensed child care spaces in a 20,000-square-foot facility constructed on a 0.8-acre parcel of land.

The company is securing the Edmonton land site through a long-term ground lease arrangement with Melcor Developments. Brightpath will commence construction upon satisfaction of conditions and receipt of a development permit.

The company's most recently announced Calgary greenfield location is located in the Symons Valley area central to five master-planned residential communities and adjacent to Evanston, the fastest-growing residential community in the city. The primary trade area consists of more than 50,000 residents, with projected housing starts indicating almost twice the population by 2017. Current information on the supply of child care spaces indicates fewer than 300 licensed spaces to address existing market demand. When completed, the Symons Valley centre will house approximately 250 licensed child care spaces in a 20,000-square-foot facility on a 0.9-acre parcel of land acquired through a long-term ground lease agreement. The Symons Valley centre is the company's first project involving Hopewell Developments and CREIT.

In Cochrane, Alta., the company has entered into a premises lease for space to accommodate approximately 120 licensed child care spaces to meet the demand for child care in this market. The company's centre in Cochrane will be conveniently located adjacent to Highway 1A, the arterial road that intersects with Crowchild and Stoney Trail in Calgary, reinforcing Cochrane as an increasingly desirable place to live based on its proximity to the latest generation of transportation links. The primary trade area, which consists of more than 20,000 residents, has experienced over 700 residential construction starts since 2013 and is projected to benefit from continued rapid population growth. Current information on the supply of child care indicates fewer than 470 licensed spaces.

Deferred share units

For the three months ended June 30, 2014, pursuant to the board of directors' DSU plan, five members of the board of directors of Brightpath elected to receive board fees in the form of DSUs representing $67 in fair value in respect of 190,177 DSUs. The DSUs were issued on July 15, 2014.

Executive options and announcement

The company is pleased to announce the appointment of Elizabeth (Liz) Bradbeer to the position of chief operating officer. Ms. Bradbeer has recently served as vice-president, operations, and brings more than 20 years of experience in large multichannel retail enterprises. She holds a CPA designation and a master of accounting from the University of Waterloo.

On July 31, 2014, the board of directors ratified the issuance of stock options to Mary Ann Curran, Dale Kearns and Ms. Bradbeer for 150,000, 75,000 and 50,000 shares, respectively. The options are priced at 55 cents per share, vest over a period of three years and have a term of five years. Likewise, options to purchase 75,000 common shares were granted to each of Mr. Clarke, Mr. Gallivan, Mr. Goodman and Mr. Olin, who are directors of the company. The options have a term of five years, vest over six months and are exercisable at 55 cents per share.

Outlook

As the company completes its first half of operations for 2014, it is well positioned to take advantage of growth both from operating leverage and through its announced development program and pipeline opportunities. These initiatives are anticipated to deliver an increase of approximately 25 per cent of licensed child care spaces commencing in the current quarter with the opening of the company's first new leasehold development in the Vancouver area. In summary, the company remains focused on the following objectives:

  • To generate substantially higher EBITDA through optimizing a return on capital invested, through improved management of enrolment and mix, market-based pricing of fees, and management of all costs, labour, other operating, and general and administrative;
  • To improve upon its earlier success with new locations developed by the company that layer on substantial, accretive growth. At quarter-end, the company has available capital of $26-million to fully finance both its announced and near-term pipeline growth plans.

As the company moves forward in 2014, the company will continue to demonstrate its commitment to these objectives.

The company has believed for several quarters that its common shares remain substantially undervalued. This is particularly the case in consideration of its established record, significant improvement in the company's financial performance, profitability, free cash flow and its growth program. In this light, the company's board of directors has begun to consider various options to enhance shareholder value and liquidity, including its approval today, subject to, among other things, regulatory approval, of the implementation of a normal course issuer bid.

Quarterly conference call

Brightpath's quarterly results conference call is scheduled for Aug. 1, 2014, at 10 a.m. EST. The call details are as follows:

To access the conference call by telephone, dial 1-647-427-7450 or 1-888-231-8191. Please connect approximately 10 minutes prior to the beginning of the call. The conference call will be archived for replay until Aug. 15, 2014, at 12 a.m. To access the archived conference call, dial 1-416-849-0833 or 1-855-859-2056 and enter the reservation passcode 74649606 followed by the number sign.

A live audio webcast of the conference call will be available on-line. Please connect at least 10 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived at the above website for 90 days.

                   CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
                                            ($000s (Cdn))
                                                              Three months ended        Six months ended 
                                                                    June 30,                 June 30,
                                                                2014        2013        2014        2013

Revenue                                                     $ 12,791   $  11,605   $  25,154    $ 22,796
Government grants                                                390         336         730         629
Total revenue                                                 13,181      11,941      25,884      23,425
Centre expenses
Salaries, wages and benefits                                   6,828       6,369      13,476      12,491
Other operating expenses                                       2,683       2,356       5,112       4,559
Centre margin                                                  3,670       3,216       7,296       6,375
Operating leases                                                 753         720       1,500       1,405
Finance                                                          388         291         740         584
General and administrative                                     1,170       1,547       2,446       3,000
Taxes, other than income taxes                                    43          26          86          74
Restructuring costs                                              198          --         968          --
Acquisition and development costs                                232         307         512         690
Stock-based compensation                                          93         129         196         190
Depreciation and amortization                                    713         715       1,427       1,367
Total                                                          3,590       3,735       7,875       7,310
Profit (loss) before other income                                 80        (519)       (579)       (935)
Other income                                                      53          15          59          35
Net profit (loss) and total comprehensive income (loss)     $    133   $    (504)  $    (520)    $  (900)
Net profit (loss) per share,
basic and diluted                                           $  0.001   $  (0.004)  $  (0.004)    $(0.007)

We seek Safe Harbor.

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