CALGARY, May 5, 2015 /CNW/ - BrightPath Early Learning Inc. ("BrightPath" or the "Company") (TSX-V: BPE), the leading Canadian provider of high-quality, comprehensive early childhood education and care, announced today 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 to $12.7 million in 2014, an increase of 7.4%;
- Adjusted EBITDA of $1.8 million compared to $1.6 million in 2014, an increase of 16.6%;
- An 8.9% increase in centre margin to $3.9 million (28.9% of revenue) compared to $3.6 million (28.5% of revenue) in 2014;
- A significant increase of 24.1% in Funds from Operations ("FFO") and 30.0% increase in FFO per share to $1.6 million ($0.013 per share) compared to $1.3 million ($0.010 per share) in 2014;
- An 14.1% increase in Adjusted Funds from Operations ("AFFO") and 18.2% increase in AFFO per share to a record $1.5 million ($0.013 per share), compared to $1.3 million ($0.011 per share) in 2014; and
- Available capital of $25.2 million at quarter end to fund the Company's pipeline of growth initiatives, including the announced additional 870 licensed spaces, or 16.2% 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 multi-faceted 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."
Financial Review
($000's except where otherwise noted and per share amounts)
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| Q1 2015 | Q4 2014 | Q3 2014 | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 |
Revenue | $ | 13,647 | $ | 12,911 | $ | 12,013 | $ | 13,181 | $ | 12,703 | $ | 12,182 | $ | 11,211 | $ | 11,941 |
Centre margin | 3,949 | 3,741 | 2,782 | 3,670 | 3,626 | 3,209 | 2,592 | 3,216 |
Centre margin % | 28.9 | 29.0 | 23.2 | 27.8 | 28.5 | 26.3 | 23.1 | 26.9 |
Adjusted EBITDA | 1,819 | 1,889 | 801 | 1,704 | 1,560 | 926 | 226 | 923 |
FFO | 1,551 | 1,633 | 517 | 1,415 | 1,250 | 688 | (161) | 646 |
AFFO | 1,516 | 1,472 | 294 | 1,361 | 1,329 | 728 | (113) | 653 |
Net profit (loss) | 296 | (85) | (963) | 133 | (653) | (1,282) | (1,287) | (504) |
Per share amounts: |
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| FFO | 0.013 | 0.013 | 0.004 | 0.012 | 0.010 | 0.006 | (0.001) | 0.005 |
| AFFO | 0.013 | 0.012 | 0.002 | 0.011 | 0.011 | 0.006 | (0.001) | 0.005 |
| Net profit (loss) | 0.002 | (0.001) | (0.008) | 0.001 | (0.005) | (0.011) | (0.011) | (0.004) |
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% 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% compared to 28.5% 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% quarter over quarter.
Adjusted EBITDA for the first quarter of 2015 was $1,819 compared to $1,560 in the first quarter of 2014. Adjusted EBITDA improved 16.6% 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 enrollment or revenues in the first quarter of 2015 with enrollment at 91.3%. 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.
Adjusted EBITDA, AFFO and FFO
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| Q1 2015 | Q4 2014 | Q3 2014 | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 |
Centre margin for the period | 3,949 | 3,741 |
| 2,782 |
| 3,670 |
| 3,626 |
| 3,209 |
| 2,592 |
| 3,216 |
General and administrative expense | (1,192) | (903) | (1,138) | (1,170) | (1,276) | (1,518) | (1,610) | (1,547) |
Taxes, other than income taxes | (43) | (52) | (44) | (43) | (43) | (34) | (30) | (26) |
Operating lease expense | (895) | (897) | (799) | (753) | (747) | (731) | (726) | (720) |
Adjusted EBITDA | $ | 1,819 | $ | 1,889 | $ | 801 | $ | 1,704 | $ | 1,560 | $ | 926 | $ | 226 | $ | 923 |
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| Q1 2015 | Q4 2014 | Q3 2014 | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 |
Net profit (loss) for the period | 296 |
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| (963) |
| 133 |
| (653) |
| (1,282) |
| (1,287) | (504) |
Depreciation and certain other non-cash items | 941 | 948 | 847 | 852 | 853 | 929 | 851 | 843 |
Acquisition and development costs | 314 | 736 | 365 | 232 | 280 | 214 | 275 | 307 |
Restructuring costs | - | - | - | 198 | 770 | 827 | - | - |
Loss on disposition of development land | - | 34 | 268 | - | - | - | - | - |
FFO | $ | 1,551 | $ | 1,633 | $ | 517 | $ | 1,415 | $ | 1,250 | $ | 688 | $ | (161) | $ | 646 |
Stock based compensation | 78 | 107 | 108 | 93 | 103 | 76 | 176 | 129 |
Maintenance capital expenditure | (113) | (268) | (331) | (147) | (24) | (36) | (128) | (122) |
AFFO | $ | 1,516 | $ | 1,472 | $ | 294 | $ | 1,361 | $ | 1,329 | $ | 728 | $ | (113) | $ | 653 |
FFO for the first quarter of 2015 was $1,551 compared to $1,250 in the first quarter of 2014. The increase over the prior year amount of 24.1% is primarily due to higher centre margin and lower general and administrative expenses. FFO per share for the first quarter of 2015 was $0.013 compared to $0.010 for the same period in 2014, an increase of 30.0%.
AFFO for the first quarter of 2015 was a record $1,516 compared to $1,329 a year earlier. The year over year increase in AFFO of 14.1% 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 $0.013 compared to $0.011 for the first quarter of 2014, an increase of 18.2%.
Net profit for the first quarter of 2015 was $296 compared to 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 $0.002 (March 31, 2014 - $(0.005)).
Centre Portfolio Overview
For the Company's centre locations, number of licensed spaces and average occupancies are as shown in the table that follows. Centres typically have lower levels of attendance June through August due to seasonal factors. As well, new centre locations may exhibit lower occupancy levels during ramp up and adversely impact total portfolio occupancies.
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Stabilized Centres | Three months ended March 31, |
| 2015 |
| 2014 |
Alberta |
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Ending Centres # | 30 |
| 30 |
Ending Spaces # | 3,184 |
| 3,121 |
Avg. Occupancy % | 91.3 |
| 91.0 |
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British Columbia |
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Ending Centres # | 7 |
| 7 |
Ending Spaces # | 581 |
| 576 |
Avg. Occupancy % | 84.0 |
| 81.8 |
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Ontario |
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Ending Centres # | 12 |
| 12 |
Ending Spaces # | 1,289 |
| 1,316 |
Avg. Occupancy % | 75.6 |
| 76.8 |
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Non-stabilized Centres | Three months ended March 31, |
| 2015 |
| 2014 |
Alberta |
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Ending Centres # | - |
| - |
Ending Spaces # | - |
| - |
Avg. Occupancy % | - |
| - |
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British Columbia |
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Ending Centres # | 1 |
| - |
Ending Spaces # | 206 |
| - |
Avg. Occupancy % | 38.4% |
| - |
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Ontario |
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Ending Centres # | 2 |
| 2 |
Ending Spaces # | 118 |
| 118 |
Avg. Occupancy % | 67.4 |
| 72.1 |
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Total Portfolio (All Centres) | Three months ended March 31, |
| 2015 |
| 2014 |
Ending Centres # | 52 |
| 51 |
Ending Spaces # | 5,378 |
| 5,131 |
Avg. Occupancy % | 84.2 |
| 85.9 |
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Deferred Share Units ("DSUs")
Pursuant to the Employee DSU plan, election was made by employees to receive incentive compensation in the form of DSUs representing $0.08 million 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 $0.06 million fair value in respect of 181,248 DSUs. The DSUs were issued on April 24, 2015.
Outlook
The Company remains focussed 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 enrollment 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, began in February 2015. Opening is scheduled for the Fall of 2015 and BrightPath has received considerable interest to date with respect to enquiries and preregistrations reflecting strong demand in this community.
The expansion of BrightPath's Airdrie, Alberta centre from 50 licensed spaces to 111 and a new centre in Cochrane, Alberta, creating 120 spaces in leased premises, are 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, recently received its building permit and preliminary site work has begun. This centre is scheduled to open in early 2016.
The Company's Windermere centre, its second new development in Edmonton, Alberta, will consist of 13,500 square feet of leasehold area pursuant to a long-term lease and be comprised of approximately 190 licensed spaces.
The Company's investor presentation (available at www.brightpathkids.com/corporate) provides an analysis of net asset value per share ("NAV") 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% to 50% 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.
NON- IFRS PERFORMANCE MEASURES
The Company uses "centre margin" as an indicator of centre performance. Centre margin does not have a standardized meaning prescribed by IFRS and therefore may not be comparable with the calculation of similar measures by other entities. Centre margin is determined by deducting centre expenses from revenue. Centre expenses include labour and direct costs and exclude operating lease expense for leasehold properties and mortgage interest, if any, on those properties owned by the Company.
The Company also uses Adjusted EBITDA, FFO and AFFO as indicators of financial performance.
Adjusted EBITDA is calculated by deducting the following from centre margin: operating lease expense, general and administrative expenses, and taxes other than income taxes. FFO is calculated by adjusting the net loss to add back acquisition costs expensed as incurred, depreciation and certain other non-cash items. AFFO is calculated by adjusting FFO to add back stock based compensation and deduct maintenance capital expenditures. Maintenance capital expenditures consist of capital expenditures that are capitalized for accounting purposes but are considered to be recurring costs such as facilities and leasehold maintenance and the replacement of learning materials, toys, furniture, appliances and other equipment. Maintenance capital expenditures do not occur evenly over the course of the year with these activities typically occurring with greater intensity during the seasonally slower summer months.
Adjusted EBITDA, FFO and AFFO do not have standardized meanings prescribed by IFRS. The Company's method of calculating Adjusted EBITDA, FFO and AFFO may be different from other entities and, accordingly, may not be comparable to such other entities. Adjusted EBITDA, FFO and AFFO: (i) do not represent cash flow from operating activities as defined by IFRS; (ii) are not indicative of cash available to fund all liquidity requirements, including capital for growth; and (iii) are not to be considered as alternatives to IFRS-based net income for the purpose of evaluating operating performance.
Centre operating results are also analyzed based on Stabilized and Non-stabilized centres which may not be comparable with that used by other entities. Acquired and newly-developed centres are deemed to be stabilized after 24 months, or sooner if normalized occupancy levels are achieved.
Net profit/loss is impacted by, among other items, accounting standards that require centre acquisition and transaction costs to be expensed as incurred. As the Company executes its consolidation and development strategy in the Canadian market, it will routinely incur such expenses which will negatively impact the Company's reported net profit/loss, but not Adjusted EBITDA, FFO and AFFO.
QUARTERLY CONFERENCE CALL
BrightPath's quarterly results conference call is scheduled for Wednesday, May 6, 2015 at 10:00 am 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 at: http://event.on24.com/r.htm?e=987902&s=1&k=3A7CAE547B8230F58FFE99756858A095.
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 at the above website for 90 days.
The conference call will be archived for replay until Wednesday, 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 number 36369523 followed by the number sign.
ABOUT BRIGHTPATH EARLY LEARNING INC.
BrightPath Early Learning Inc. is a Canadian leader in child care and early education with 52 locations in major markets across the country. Meeting the highest standard in curriculum, nutrition, technology and recreational programing, BrightPath is committed to providing families with the very best child development and care programs Canada has to offer.
For more information on BrightPath, visit www.BrightPathKids.com/corporate (TSXV: BPE).
FORWARD-LOOKING STATEMENTS
Certain statements in this Release, which are not historical facts, may constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Any statements related to BrightPath's projected revenues, earnings, growth rates, revenue mix, staffing and resources, and product plans are forward-looking statements as are any statements relating to future events, conditions or circumstances.
The use of terms such as "believes", "anticipates", "expects", "projects", "targeting", "estimate", "intend" and similar terms are intended to assist in identification of these forward-looking statements. Readers are cautioned not to place undue reliance upon any such forward-looking statements. Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause the actual results, performance, achievements and/or developments of BrightPath to differ materially from the results, performance, achievements and/or developments expressed or implied by such forward-looking statements. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions. Except as required by law, BrightPath does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change.
The Company undertakes no obligation, except as required by law, to update publicly or otherwise any forward-looking information, whether as a result of new information, future events or otherwise, or the above list of factors affecting this information. Many factors could cause the actual results of BrightPath to differ materially from the results, performance, achievements and/or developments expressed or implied by such forward-looking statements.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
BrightPath Early Learning Inc. |
Consolidated Statements of Financial Position |
(Unaudited) |
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(CDN $000's) |
| March 31, 2015 | December 31, 2014 |
Assets |
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Non-current assets |
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| Property and equipment |
| $ | 45,859 | $ | 45,811 |
| Goodwill and definite life intangible assets |
| 30,053 | 30,074 |
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| 75,912 | 75,885 |
Current assets |
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| Cash |
| 4,195 | 3,455 |
| Accounts receivable |
| 1,493 | 1,983 |
| Prepaid and other expenses |
| 1,615 | 1,515 |
| Short term investments |
| 39 | 39 |
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| 7,342 | 6,992 |
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Total Assets |
| $ | 83,254 | $ | 82,877 |
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Liabilities |
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Non-current liabilities |
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| Provision for restructuring costs |
| $ | - | $ | 45 |
| Long term debt and financing leases |
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| 19,415 |
| 19,762 |
| Convertible debentures – liability component |
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| 4,454 |
| 4,355 |
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| 23,869 | 24,162 |
Current liabilities |
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| Accounts payable and accrued liabilities |
| 3,424 | 2,924 |
| Current portion of provision for restructuring costs |
| 250 | 290 |
| Deferred revenue |
| 754 | 878 |
| Current portion of debt and financing leases |
| 1,400 | 1,418 |
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| 5,828 | 5,510 |
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Total Liabilities |
| 29,697 | 29,672 |
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Shareholders' Equity |
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| Share capital |
| 65,832 | 65,871 |
| Convertible debentures – equity component |
| 342 | 342 |
| Equity settled share based compensation |
| 2,497 | 2,419 |
| Accumulated deficit |
| (15,114) | (15,427) |
Total Shareholders' Equity |
| 53,557 | 53,205 |
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Total Liabilities and Shareholders' Equity |
| $ | 83,254 | $ | 82,877 |
BrightPath Early Learning Inc. |
Consolidated Statements of Operations and Comprehensive Income (Loss) |
Three months ended March 31, 2015 and 2014 |
(Unaudited) |
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(CDN $000's) |
| March 31, 2015 | March 31, 2014 |
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Revenue |
| $ | 13,246 | $ | 12,363 |
Government grants |
| 401 | 340 |
Total revenue |
| 13,647 | 12,703 |
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Centre expenses |
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| Salaries, wages and benefits |
| 7,266 | 6,648 |
| Other operating expenses |
| 2,432 | 2,429 |
Centre margin |
| 3,949 | 3,626 |
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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 |
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| 3,657 | 4,285 |
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Profit (loss) before other income |
| 292 | (659) |
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Other income |
| 4 | 6 |
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Net Profit (Loss) and Total Comprehensive Income (Loss) |
| $ | 296 | $ | (653) |
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Net profit (loss) per share |
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| Basic and diluted |
| $ | 0.002 | $ | (0.005) |
BrightPath Early Learning Inc. |
Consolidated Statements of Changes in Shareholders' Equity |
Three months ended March 31, 2015 and 2014 |
(Unaudited) |
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(CDN $000's) |
| Share Capital | Convertible Debentures – Equity Component | Equity Settled Share Based Compensation | Accumulated Deficit | Shareholders' Equity |
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Balance at January 1, 2014 | $ | 66,030 | $ | 342 | $ | 2,026 | $ | (13,911) | $ | 54,487 |
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Stock-based compensation |
| - | - | 103 | - | 103 |
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Net loss and comprehensive loss |
| - | - | - | (653) | (653) |
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Balance at March 31, 2014 | $ | 66,030 | $ | 342 | $ | 2,129 | $ | (14,564) | $ | 53,937 |
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Balance at January 1, 2015 | $ | 65,871 | $ | 342 | $ | 2,419 | $ | (15,427) | $ | 53,205 |
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Stock-based compensation |
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| - | - |
| 78 |
| - |
| 78 |
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Shares purchased for cancellation |
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| (39) | - |
| - |
| 17 |
| (22) |
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Net profit and comprehensive income |
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| - | - |
| - |
| 296 |
| 296 |
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Balance at March 31, 2015 | $ | 65,832 | $ | 342 | $ | 2,497 | $ | (15,114) | $ | 53,557 |
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BrightPath Early Learning Inc. |
Consolidated Statements of Cash Flow |
Three months ended March 31, 2015 and 2014 |
(Unaudited) |
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(CDN $000's) |
| March 31, 2015 | March 31, 2014 |
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Cash provided by (used in): |
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Operating Activities |
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Net profit (loss) |
| $ | 296 | $ | (653) |
Items not affecting cash: |
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| Depreciation and amortization |
| 787 | 714 |
| Depreciation included in operating costs |
| 37 | 37 |
| Finance costs |
| 348 | 352 |
| Stock-based compensation |
| 78 | 103 |
Change in non-cash working capital |
| 726 | (352) |
Non-current portion of provision for restructuring costs |
| (45) | 132 |
Cash generated from operations |
| 2,227 | 333 |
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Finance costs paid |
| (229) | (215) |
Net cash generated by operating activities |
| 1,998 | 118 |
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Investing Activities |
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Property and equipment |
| (851) | (337) |
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| (851) | (337) |
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Financing Activities |
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Loan repayments |
| (327) | (286) |
Financing transaction costs |
| - | (17) |
Finance lease repayments |
| (64) | (60) |
Shares purchased for cancellation |
| (16) | - |
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| (407) | (363) |
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Change in Cash |
| 740 | (582) |
Cash at beginning of period |
| 3,455 | 3,940 |
Cash at end of period |
| $ | 4,195 | $ | 3,358 |
SOURCE BrightPath Early Learning Inc.
please contact Dale Kearns, President & Chief Financial Officer of BrightPath Early Learning Inc. at (403) 705-0362 ext. 406.