Mr. Dale Kearns reports

BRIGHTPATH FIRST QUARTER 2015 DELIVERS 30% INCREASE IN FFO PER SHARE AND 17% INCREASE IN ADJUSTED EBITDA

Brightpath Early Learning Inc. has released its operational and financial results for the three-month period ended March 31, 2015.

Portfolio performance highlights for the quarter ended March 31, 2015, are as follows (all comparisons are against the same period last year, and all amounts are in thousands except per share amounts, unless otherwise noted):

• Revenue of $13.6-million, a record level, compared with $12.7-million in 2014, an increase of 7.4 per cent;
• Adjusted earnings before interest, taxes, depreciation and amortization of $1.8-million compared with $1.6-million in 2014, an increase of 16.6 per cent;
• An 8.9-per-cent increase in centre margin to $3.9-million (28.9 per cent of revenue) compared with $3.6-million (28.5 per cent of revenue) in 2014;
• A significant increase of 24.1 per cent in funds from operations and a 30.0-per-cent increase in FFO per share to $1.6-million (1.3 cents per share) compared with $1.3-million (1.0 cent per share) in 2014;
• A 14.1-per-cent increase in adjusted funds from operations and an 18.2-per-cent increase in AFFO per share to a record $1.5-million (1.3 cents per share), compared with $1.3-million (1.1 cents per share) in 2014;
• Available capital of $25.2-million at quarter-end to finance the company's pipeline of growth initiatives, including the announced additional 870 licensed spaces, or 16.2-per-cent growth to the company's current portfolio of 5,378 spaces, and other initiatives not yet announced.

"Brightpath continues to focus on its product and service offering, growth initiatives, revenue optimization, and management of costs," noted Mary Ann Curran, chief executive officer of the company. "This multifaceted strategy has resulted in strong first quarter 2015 financial performance that has further bolstered our commitment and financial capacity to fund our growth pipeline, utilizing internal resources and available funding without diluting our shareholders."

For the three months ended March 31, 2015, the company reported revenue of $13,647 (March 31, 2014: $12,703) and centre margin of $3,949 (March 31, 2014: $3,626). The 7.4-per-cent increase in revenue year over year was primarily due to fee increases implemented in 2015 and the opening of the Surrey centre in the third quarter of 2014. Centre margin as a percentage of revenue increased to 28.9 per cent compared with 28.5 per cent a year earlier. Fee increases and efficiencies in operating costs were offset, in part, by wage rate increases, food and utility cost inflation, and reconfiguration of rooms to different age groups. Stabilized centre revenue increased 5.6 per cent quarter over quarter.

Adjusted EBITDA for the first quarter of 2015 was $1,819 compared with $1,560 in the first quarter of 2014. Adjusted EBITDA improved 16.6 per cent mainly due to higher centre margin and lower general and administrative expenses, offset, in part, by higher operating lease expense. In Alberta, the effects of recent oil price volatility did not result in any material impact on enrolment or revenues in the first quarter of 2015 with enrolment at 91.3 per cent. The company is closely monitoring the impact of market volatility and is experiencing localized increases in departures due to job loss in April and anticipates the same in May and June. Notwithstanding pressures that have surfaced, the Alberta market continues to represent an opportunity for selective new locations in several critically underserved markets.

Funds from operations for the first quarter of 2015 were $1,551 compared with $1,250 in the first quarter of 2014. The increase over the prior-year amount of 24.1 per cent is primarily due to higher centre margin and lower general and administrative expenses. FFO per share for the first quarter of 2015 was 1.3 cents compared with 1.0 cents for the same period in 2014, an increase of 30.0 per cent.

Adjusted funds from operations for the first quarter of 2015 were a record $1,516 compared with $1,329 a year earlier. The year-over-year increase in AFFO of 14.1 per cent was primarily due to increased centre margin and lower general and administrative expenses, offset by an increase in operating lease expense. AFFO per share for the first quarter of 2015 was 1.3 cents compared with 1.1 cents for the first quarter of 2014, an increase of 18.2 per cent. Net profit for the first quarter of 2015 was $296 compared with a net loss of $653 in the first quarter of 2014. Basic and diluted net profit per share for the three months ended March 31, 2015, was 0.2 cent (March 31, 2014: (0.5 cent)).

Deferred share units

Pursuant to the employee DSU plan, election was made by employees to receive incentive compensation in the form of DSUs representing $80,000 fair value in respect of 219,462 DSUs. The DSUs were issued on April 2, 2015. For the three months ended March 31, 2015, 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 in lieu of cash remuneration, representing $60,000 fair value in respect of 181,248 DSUs. The DSUs were issued on April 24, 2015.

Outlook

The company remains focused on delivering on its identified priorities for 2015:

• To generate substantially higher adjusted EBITDA and to optimize the return on capital invested through: continuous product advancement; disciplined management of enrolment and mix; market-based pricing of tuition fees; continuously improving management of all costs: labour, other operating, and general and administrative; and realizing the cash flow from development initiatives announced in 2014, as well as those in the pipeline but not yet announced;
• Construction of the Creekside greenfield centre, representing an additional 250 licensed spaces, beginning in February, 2015; opening is scheduled for the fall of 2015, and Brightpath has received considerable interest to date with respect to inquiries and preregistrations reflecting strong demand in this community;
• The expansion of Brightpath's Airdrie, Alta., centre from 50 licensed spaces to 111 and a new centre in Cochrane, Alta., creating 120 spaces in leased premises, on schedule to open in July and September, 2015, respectively;
• The company's first Edmonton greenfield development, on lands within Melcor Developments' West Henday Promenade Shopping Centre, representing 250 spaces, receiving its building permit, and preliminary site work having begun; this centre is scheduled to open in early 2016;
• The company's Windermere centre, its second new development in Edmonton, Alta., consisting of 13,500 square feet of leasehold area pursuant to a long-term lease and comprising approximately 190 licensed spaces.

The company's investor presentation provides an analysis of net asset value per share, which indicates a range of 63 to 88 cents based on various assumptions noted. As such, the recent trading price of the company's common shares indicates a 30-per-cent to 50-per-cent discount to this NAV range, due in part to the significant unrecognized market value of Brightpath's substantial owned real estate portfolio. Accordingly, with the company's announced accretive and non-dilutive growth pipeline adding to its portfolio constituting Canada's largest publicly listed provider of child development and care services, the company will be exploring initiatives and options to both recognize and surface value for its shareholders during 2015.

Quarterly conference call

Brightpath's quarterly results conference call is scheduled for May 6, 2015, 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. A live audio webcast of the conference call will be available on-line.

Please connect at least 10 minutes prior to the Web conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived for 90 days.

The conference call will be archived for replay until May 20, 2015, at midnight. To access the archived conference call, dial 1-416-849-0833 or 1-855-859-2056 and enter the reservation No. 36369523 followed by the number sign.

                                                                        
      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)     
                                      ($000s)
                                                 Three months ended March 31, 
                                                              2015      2014

Revenue                                                    $13,246   $12,363
Government grants                                              401       340
Total revenue                                               13,647    12,703
Centre expenses
Salaries, wages and benefits                                 7,266     6,648
Other operating expenses                                     2,432     2,429
Centre margin                                                3,949     3,626
Operating leases                                               895       747
Finance                                                        348       352
General and administrative                                   1,192     1,276
Taxes, other than income taxes                                  43        43
Restructuring costs                                             --       770
Acquisition and development costs                              314       280
Stock-based compensation                                        78       103
Depreciation and amortization                                  787       714
Total                                                        3,657     4,285
Profit (loss) before other income                              292      (659)
Other income                                                     4         6
Net profit (loss) and total comprehensive income (loss)       $296     $(653)
Net profit (loss) per share,
basic and diluted                                           $0.002   $(0.005)

We seek Safe Harbor.