CALGARY, Nov. 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 and nine month periods ended September 30, 2015.
Portfolio performance highlights for the quarter ended
September 30, 2015, which reflect the
seasonally weak summer season, are as follows (all comparisons are
against the same period in prior year):
- A 6.7% increase in revenue to $12.8
million;
- Adjusted EBITDA of $0.9 million,
an increase of 14.2%;
- Improved centre margin of 25.5% of revenue compared to
23.2%;
- Average occupancy of Stabilized centres was 76.4% compared to
77.9%;
- Funds from Operations ("FFO") of $0.7
million ($0.006 per share), an
increase of 48.4%;
- A 142.3% increase in Adjusted Funds from Operations ("AFFO") to
$0.6 million ($0.005 per share); and
- Available capital of $27.3
million at quarter end to fund the Company's pipeline of
growth initiatives, including both the announced additional 815
licensed spaces that represent a 14% increase in the Company's
current portfolio of 5,796 spaces, as well as other growth
initiatives not yet announced.
Highlights for the nine months ended September 30, 2015 include:
- Revenues of $40.4 million, an
increase of 6.5%;
- Adjusted EBITDA of $4.5 million,
an increase of 11.1%;
- Higher centre margin of 27.7% of revenue compared to
26.6%;
- A 19.4% increase in FFO to $3.7
million ($0.030 per share);
and
- AFFO of $3.5 million
($0.029 per share), an increase of
20.8%.
Significant events to date in 2015 include:
- Following the quarter end, the Creekside greenfield centre in
the Symons Valley area of northwest Calgary was opened, comprising 247 licensed
spaces in a 20,000 square foot facility on a 0.9 acre parcel of
land;
- The expansion of the Company's Airdrie centre, located in a suburban
community north of the city of Calgary, was opened in July 2015, increasing its licensed capacity from
57 licensed spaces to 117;
- In September 2015, the Company's
new centre located west of Calgary
in Cochrane was opened, creating
120 licensed spaces in leased premises;
- In August 2015, BrightPath
completed the sale and leaseback of the real estate housing its
McKenzie Towne location in southeast Calgary with an affiliate of First Capital
Realty Inc. ("First Capital") for gross proceeds of $7.5 million. This transaction generated
$3.2 million of cash, after repayment of indebtedness and
fees, and $4.0 million of additional
bank financing capacity to augment funding for the Company's growth
pipeline and share repurchase program;
- Construction of the Company's first Edmonton greenfield development, the West
Henday centre, with approximately 250 licensed spaces, began in
May 2015. This facility is scheduled
to open in early 2016;
- The Company announced plans to develop a greenfield centre in
an underserved market in southwest Calgary. Located nearby
the planned ring road, the Richmond Early Learning and Child Care
Centre will create approximately 245 licensed spaces in a
newly-developed 20,000 square foot facility on a one acre land
parcel within First Capital's London Place West shopping centre.
Construction of the facility is expected to begin in early
2016;
- In November, following on the enrollment success and market
demand for the Creekside centre, the Company announced plans to
open a new centre nearby in Riocan REIT's Sage Hill Crossing.
When completed, the Sage Hill centre will offer approximately 130
licensed spaces in 10,000 square feet of leasehold premises;
and
- The TSX Venture Exchange accepted the renewal of the Company's
notice of intention to make a normal course issuer bid ("NCIB") in
September 2015 to purchase up to a
maximum five percent of the issued and outstanding common shares to
contribute to enhanced shareholder value and liquidity. During the
three and nine months ended September 30,
2015, the Company purchased 412,200 and 551,700 shares for
cancellation, respectively, of which 512,200 had been cancelled at
September 30, 2015. Cumulatively to
date, the Company has purchased for cancellation 1,012,700 shares
under its NCIBs at an average price of $0.35 per share.
"BrightPath's third quarter of 2015 operating results were
strong despite select challenges in the market, particularly in
Alberta. The Company managed to
achieve stronger margins and better financial results versus the
prior year by maintaining occupancy levels at the highest possible
levels and tightly managing its operating costs," noted
Mary Ann Curran, Chief Executive
Officer of the Company. "The recent openings of our new Creekside
and Cochrane centres and the
expansion at Airdrie, as well as
the strong pipeline of developments underway, together with the
additional capital funding created through the sale and leaseback
of BrightPath's McKenzie Towne centre, all validate our commitment
to growing profitably and aggressively, and to enhancing value for
our shareholders."
Financial Review
($000's except where otherwise noted and per share amounts)
|
|
|
|
|
|
|
|
|
|
Q3
2015
|
Q2
2015
|
Q1
2015
|
Q4
2014
|
Q3
2014
|
Q2
2014
|
Q1
2014
|
Q4
2013
|
Revenue
|
$
|
12,815
|
$
|
13,912
|
$
|
13,647
|
$
|
12,911
|
$
|
12,013
|
$
|
13,181
|
$
|
12,703
|
$
|
12,182
|
Centre
margin
|
3,265
|
3,976
|
3,949
|
3,741
|
2,782
|
3,670
|
3,626
|
3,209
|
Centre margin
%
|
25.5
|
28.6
|
28.9
|
29.0
|
23.2
|
27.8
|
28.5
|
26.3
|
Adjusted
EBITDA
|
915
|
1,781
|
1,819
|
1,889
|
801
|
1,704
|
1,560
|
926
|
FFO
|
696
|
1,436
|
1,551
|
1,609
|
469
|
1,365
|
1,250
|
650
|
AFFO
|
596
|
1,373
|
1,516
|
1,448
|
246
|
1,311
|
1,329
|
690
|
Net profit
(loss)
|
1,344
|
140
|
296
|
(85)
|
(963)
|
133
|
(653)
|
(1,282)
|
Per share
amounts:
|
|
|
|
|
|
|
|
|
|
FFO
|
0.006
|
0.012
|
0.013
|
0.013
|
0.004
|
0.011
|
0.010
|
0.005
|
|
AFFO
|
0.005
|
0.011
|
0.012
|
0.012
|
0.002
|
0.011
|
0.011
|
0.006
|
|
Net profit
(loss)
|
0.011
|
0.001
|
0.002
|
(0.001)
|
(0.008)
|
0.001
|
(0.005)
|
(0.011)
|
For the three months ended September 30,
2015, which reflect the seasonally weak summer season, the
Company reported revenue of $12,815
(September 30, 2014 - $12,013) and centre margin of $3,265 (September 30,
2014 - $2,782). The 6.7%
increase in revenue year over year included the beneficial impact
of new centre openings in Surrey
and Cochrane, the expansion of the
Company's Airdrie centre and a
3.6% increase in Stabilized centre revenue. The positive effect of
fee increases and improved operating metrics in the Stabilized
centres was offset, in part, by a decline in average occupancy from
77.9% in the third quarter of 2014 to 76.4% in the third quarter of
2015 due to weakness in the Alberta economy as anticipated by the Company.
Notwithstanding the decline in average occupancy, centre margin as
a percentage of revenue increased to 25.5% compared to 23.2% a year
earlier. Fee increases and efficiencies in labour and operating
costs were only partially offset by wage rate increases to centre
staff and non-optimal labour ratios in certain centres while
occupancies build partially from the reconfiguration of rooms to
younger age groups in Ontario.
For the nine month period ended September
30, 2015, revenue was $40,374
(September 30, 2014 - $37,897) and centre margin was $11,190 (September 30,
2014 - $10,078). The reasons
for the increase in revenue are substantially the same as those
discussed above for the three month period. Stabilized centre
revenue increased 4.0% period over period. Centre margin as a
percentage of revenue increased to 27.7% compared to 26.6% in 2014,
also for substantially the same reasons as the third quarter.
Adjusted EBITDA for the third quarter of 2015 was $915 compared to $801 in the third quarter of 2014. Adjusted
EBITDA improved 14.2% mainly due to higher centre margin offset, in
part, by higher general and administrative and operating lease
expenses and rent associated with the sale and leaseback of the
McKenzie Towne centre.
Adjusted EBITDA for the nine months ended September 30, 2015 was $4,515 compared to $4,065 in the same period in 2014, an increase of
11.1%.
In August 2015, the Company
completed a transaction for the sale and leaseback of its McKenzie
Towne centre location in Calgary,
Alberta for gross proceeds of $7,500. Net cash proceeds from the transaction,
after repayment of indebtedness and transaction fees, were
$3,211. In addition, $4,004 of bank financing capacity was created to
be used toward initiatives to create shareholder value. The
transaction, effected at a capitalization rate of 6.76%, not only
serves to validate and underscore the inherent strength of
BrightPath's operating and financial covenant as a tenant, but also
the value of its real estate portfolio embedded in its 25 owned
properties.
Net profit for the third quarter of 2015 was $1,344 compared to a net loss of $963 in the third quarter of 2014. The third
quarter of 2015 includes the gain on the sale and leaseback of the
McKenzie Towne centre of $1,791,
whereas the third quarter of 2014 reflects a loss on the
disposition of development land of $268. Basic and diluted net profit per share for
the three months ended September 30,
2015 was $0.011 and
$0.010, respectively (September 30, 2014 - $(0.008) and $(0.008), respectively).
Net profit for the nine months ended September 30, 2015 was $1,784 compared to a net loss of $1,483 for the nine months ended September 30, 2014. Basic and diluted net profit
per share for the nine months ended September 30, 2015 was $0.015 (September 30,
2014 - $(0.012)).
In Alberta, stabilized centre
occupancy declined to 81.7% in the third quarter of 2015 from 85.6%
in the third quarter of 2014. While both quarters' occupancy levels
reflect the weak seasonality of the summer months, the third
quarter of 2015 began to reflect pressure on enrollment levels due
to the downturn in the Alberta
economy. The Calgary market has
experienced the most softening, whereas the Edmonton market has remained stronger due to
its substantial government, banking, and insurance employment base.
With unemployment levels in Alberta anticipated in the 6% range, the
Company anticipates continued pressure on enrollment through the
fourth quarter. To date, the Company has been successful at
managing and growing its business through optimizing fee levels,
improving labour hour efficiency and reducing variable costs, while
continuing to provide competitive wages, which together more than
offset the effect of the decline in enrollments. The Company will
continue to utilize these measures to manage through the economic
challenges.
In recent years, the Company has focused on the development of
state-of-the-art centres in under-served markets in major cities in
Western Canada that provide a
breadth of superior child care services while achieving greater
profitability through economies of scale. These centres continue to
receive an enthusiastic reception. This is underscored by the
notable enrollment success of the Creekside greenfield centre,
located in Canadian Real Estate Investment Trust's Creekside
shopping centre in northwest Calgary with 247 licensed spaces, opened this
week. In the face of a weakening Alberta economic climate, virtually all of the
full day spaces are booked for enrollment over the next two months,
thereby significantly surpassing the Company's anticipated pro
forma which included a 24 month stabilization period, an industry
norm for projects of this size. The success of this project
underscores the severe shortage of quality licensed spaces in
recently-developed suburbs of many Canadian cities and the ability
of BrightPath to identify and execute its growth strategy to serve
these communities. Similarly, the Surrey facility, opened in September 2014 with 206 licensed spaces, is now
67% occupied and should readily achieve stabilization well within
the 24 month period expected for centres of this scale.
In Ontario, the Company is
focused on rebuilding occupancy, reconfiguring space and pursuing
opportunities to add capacity. Occupancy in Ontario centres improved to 64.3% in the third
quarter of 2015 from 62.6% in the third quarter of 2014.
Occupancy in Stabilized centres in British Columbia increased to 75.8% in the
third quarter of 2015 from 74.6% in the third quarter of 2014.
Adjusted EBITDA, AFFO and FFO
($000's)
|
|
|
|
|
|
|
|
|
|
Q3
2015
|
Q2
2015
|
Q1
2015
|
Q4
2014
|
Q3
2014
|
Q2
2014
|
Q1
2014
|
Q4
2013
|
Centre margin for the
period
|
3,265
|
3,976
|
3,949
|
3,741
|
2,782
|
3,670
|
3,626
|
3,209
|
General and
administrative expense
|
(1,271)
|
(1,258)
|
(1,192)
|
(903)
|
(1,138)
|
(1,170)
|
(1,276)
|
(1,518)
|
Taxes, other than
income taxes
|
(40)
|
(44)
|
(43)
|
(52)
|
(44)
|
(43)
|
(43)
|
(34)
|
Operating lease
expense
|
(1,039)
|
(893)
|
(895)
|
(897)
|
(799)
|
(753)
|
(747)
|
(731)
|
Adjusted
EBITDA
|
$
|
915
|
$
|
1,781
|
$
|
1,819
|
$
|
1,889
|
$
|
801
|
$
|
1,704
|
$
|
1,560
|
$
|
926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3
2015
|
Q2
2015
|
Q1
2015
|
Q4
2014
|
Q3
2014
|
Q2
2014
|
Q1
2014
|
Q4
2013
|
Net profit (loss) for
the period
|
1,344
|
144
|
296
|
(85)
|
(963)
|
133
|
(653)
|
(1,282)
|
Depreciation and
certain other non-cash items
|
815
|
948
|
941
|
924
|
799
|
802
|
853
|
891
|
Acquisition and
development costs
|
328
|
344
|
314
|
736
|
365
|
232
|
280
|
214
|
Restructuring
costs
|
-
|
-
|
-
|
-
|
-
|
198
|
770
|
827
|
Loss on disposition
of development land
|
-
|
-
|
-
|
34
|
268
|
-
|
-
|
-
|
Gain on sale and
leaseback
|
(1,791)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
FFO(1)
|
$
|
696
|
$
|
1,436
|
$
|
1,551
|
$
|
1,609
|
$
|
469
|
$
|
1,365
|
$
|
1,250
|
$
|
650
|
Stock based
compensation
|
63
|
153
|
78
|
107
|
108
|
93
|
103
|
76
|
Maintenance capital
expenditure
|
(163)
|
(216)
|
(113)
|
(268)
|
(331)
|
(147)
|
(24)
|
(36)
|
AFFO(1)
|
$
|
596
|
$
|
1,373
|
$
|
1,516
|
$
|
1,448
|
$
|
246
|
$
|
1,311
|
$
|
1,329
|
$
|
690
|
(1)
|
Certain non-IFRS
measures in prior periods have been adjusted.
|
FFO for the third quarter of 2015 was $696 compared to $469 in the third quarter of 2014, an increase of
48%. FFO per share for the third quarter of 2015 was $0.006 compared to $0.004 for the same period in 2014. FFO for the
nine months ended September 30, 2015
was $3,683 compared to $3,084 for the nine months ended September 30, 2014, an increase of 19%. FFO per
share for the nine months ended September
30, 2015 was $0.030 compared
to $0.025 for the same period in
2014.
AFFO for the third quarter of 2015 was $596 compared to $246 a year earlier, an increase of 2.5 times.
AFFO per share for the third quarter of 2015 was $0.005 compared to $0.002 for the third quarter of 2014. AFFO for
the nine months ended September 30,
2015 was $3,485 compared to
$2,886 in the same period of 2014, an
increase of 21%. AFFO per share for the nine months ended
September 30, 2015 was $0.029 compared to $0.024 for the same period in 2014.
Centre Portfolio Overview
A summary of the Company's number of centres and licensed
spaces, as well as average occupancies by region are provided in
the table that follows. Centres typically experience lower levels
of attendance June through August due to seasonal factors. As well,
new centres typically exhibit lower occupancy levels during ramp up
of enrollments, thereby adversely impacting total portfolio
occupancies prior to achieving stabilization.
|
|
Stabilized
Centres
|
Three months ended
September 30,
|
|
2015
|
|
2014
|
Alberta
|
|
|
|
Ending Centres
#
|
30
|
|
30
|
Ending Spaces
#
|
3,238
|
|
3,163
|
Avg. Occupancy
%
|
81.7
|
|
85.6
|
|
|
|
|
British
Columbia
|
|
|
|
Ending Centres
#
|
7
|
|
7
|
Ending Spaces
#
|
577
|
|
581
|
Avg. Occupancy
%
|
75.8
|
|
74.6
|
|
|
|
|
Ontario
|
|
|
|
Ending Centres
#
|
14
|
|
14
|
Ending Spaces
#
|
1,408
|
|
1,440
|
Avg. Occupancy
%
|
64.3
|
|
62.6
|
|
|
|
|
Total Stabilized
Centres
|
|
|
|
Ending Centres
#
|
51
|
|
51
|
Ending Spaces
#
|
5,223
|
|
5,184
|
Avg. Occupancy
%
|
76.4
|
|
77.9
|
Non-stabilized
Centres
|
Three months ended
September 30,
|
|
2015
|
|
2014
|
Alberta
|
|
|
|
Ending Centres
#
|
1
|
|
-
|
Ending Spaces
#
|
120
|
|
-
|
Avg. Occupancy
%
|
26.5
|
|
-
|
|
|
|
|
British
Columbia
|
|
|
|
Ending Centres
#
|
1
|
|
1
|
Ending Spaces
#
|
206
|
|
206
|
Avg. Occupancy
%
|
53.5
|
|
22.3
|
|
|
|
|
Ontario
|
|
|
|
Ending Centres
#
|
-
|
|
-
|
Ending Spaces
#
|
-
|
|
-
|
Avg. Occupancy
%
|
-
|
|
-
|
|
|
|
|
Total
Non-stabilized Centres
|
|
|
|
Ending Centres
#
|
2
|
|
1
|
Ending Spaces
#
|
326
|
|
206
|
Avg. Occupancy
%
|
49.1
|
|
22.3
|
Total Portfolio
(All Centres)
|
Three months ended
September 30,
|
|
2015
|
|
2014
|
Ending Centres
#
|
53
|
|
52
|
Ending Spaces
#
|
5,549
|
|
5,390
|
Avg. Occupancy
%
|
75.1
|
|
77.2
|
Deferred Share Units ("DSUs")
For the three months ended September 30,
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 164,519 DSUs. The DSUs were issued on October 23, 2015.
Outlook
The Company remains focused on delivering on its identified
priorities for 2015, which have been:
- To generate substantially higher Adjusted EBITDA and enhance
shareholder value through:
- continuous product advancement enabling optimized pricing and
occupancy levels;
- disciplined management of enrollment and mix;
- continuously improving management of all costs – labour, other
operating and general and administrative;
- realizing the cash flow from development initiatives announced
in 2014 and earlier in 2015, as well as those in the pipeline but
not yet announced; and
- measures to enhance shareholder value, including monetization
of select assets and the NCIB program.
With unemployment levels in Alberta anticipated in the 6% range, the
Company anticipates continued pressure on enrollment through the
fourth quarter. To date, the Company has been successful at
managing its business through optimizing fee levels, improving
labour hour efficiency and reducing variable costs, while
continuing to provide competitive wages, which together have more
than offset the effect of the decline in enrollments.
In Ontario, the multi-year
planned roll out of FDK was completed in 2014. The supply of
licensed spaces in Ontario
continues to adjust to a new addressable market, with a focus on
younger children and expanded programing. This programing supports
child development thus providing market advantage vis a vis those
centres providing child care with more limited services, education
and programing.
It is noteworthy that recent new centre openings reflect a 70%
enrollment level, demonstrating the demand for BrightPath services
and its success in executing its growth strategy. As such, the
Company is confident that the 427 additional licensed spaces in
select markets in Alberta that
have recently come online are in demand, as are the additional 815
licensed spaces under development. With respect to future
opportunity, the British Columbia Lower Mainland market represents
a significant opportunity while the Southern Ontario market offers select
opportunities.
As noted on earlier occasions, BrightPath's management and board
of directors believe that the current price of the Company's common
shares on the TSX Venture does not appropriately or adequately
reflect the Company's current value, operational performance,
financial results, strategic achievements and its near and longer
term prospects. We have previously outlined the disconnect between
the price of the Company's shares and the value of its increasingly
profitable operations and owned real estate portfolio with a gross
book value of $45 million. As such,
we were pleased to validate the financial opportunity underpinning
this disconnect with the announcement of the sale of real estate
underlying the Company's McKenzie Towne centre. This transaction
created the availability of an additional $7.3 million of capital, a significant sum
compared to the total equity market capitalization of the Company
as of today of approximately $40
million. The capital surfaced from this transaction is
anticipated to augment the funding already available for the
Company's pipeline of growth initiatives and the purchase of the
Company's common shares.
Real estate monetization represents just one of several
initiatives management is initiating and exploring to surface value
for its shareholders.
The Company believes that the undervaluation of its share price
is not only significant based on its current operations and real
estate holdings, but is also further highlighted by the future
growth of approximately 815 licensed spaces which have been
announced. The pro forma cash flow per share which will be
generated by this growth pipeline is highly accretive as it is
fully funded and can be delivered without any equity dilution to
shareholders. Furthermore, those centres can be operated without
any significant increase in general and administration overhead
expense.
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 profit/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
Friday, November 6, 2015 at
10:00 am EST. The call details
are as follows:
To access the conference call by telephone, dial (647) 427-7450
or (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=1074679&s=1&k=7AB16B9A6777A0AD6EB397751E0C4BBA
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
Friday, November 20, 2015 at
midnight. To access the archived conference call, dial (416)
849-0833 or (855) 859-2056 and enter the reservation number
61188666 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 54 locations in major markets across
the country. Meeting the highest standards in curriculum,
nutrition, technology and recreational programing, BrightPath is
committed to providing families with the very best child
development and care Canada has to
offer.
For more information, visit www.BrightPathKids.com/corporate
(TSXV: BPE).
FORWARD-LOOKING STATEMENTS
Certain statements contained herein constitute forward-looking
statements regarding the future growth, results of operations,
performance and opportunities of the Company. Forward-looking
statements can generally be identified by the use of, but not
limited to, the following words: "plans", "expects" or "does not
expect", "budget", "scheduled", "estimate", "forecast", "pro
forma", "anticipate" or "does not anticipate", "believe", "intend",
"inferred", "potential" and similar expressions or statements that
certain actions, events or results "may", "could", "would", "might"
or "will" be taken, occur or be achieved. Forward-looking
statements are not historical facts, but reflect the Company's
current expectations regarding future results or events based on
information currently available and what the Company believes to be
reasonable assumptions. All forward-looking statements are
qualified by these cautionary statements.
Forward-looking statements are subject to a number of risks,
assumptions and uncertainties that could cause actual results,
performance or events to differ materially from those expressed or
implied by such forward-looking statements. Factors that could
cause actual results or events to differ materially from those
expressed, implied or projected include, but are not limited to,
general economic conditions, the Company's ability to meet and
maintain forecasted occupancy levels, general government policies,
continued availability of government child care subsidies to
parents, unexpected costs or liabilities related to acquisitions,
construction, environmental matters, legal matters, changes in
interest rates, credit spreads and the availability of financing.
In addition, please refer to the Risks and Uncertainties section of
the Company's annual Management's Discussion and Analysis. As such,
the Company gives no assurance that actual results will be
consistent with these forward-looking statements.
Readers should not place undue reliance on any such
forward-looking statements. These forward-looking statements are
made as of the date hereof. The Company undertakes no obligation to
publicly update or revise any such statement, reflect new
information or reflect the occurrence of future events or
circumstances, except as required by securities laws.
BrightPath Early Learning Inc.
Consolidated
Statements of Financial Position
(Unaudited)
|
|
|
|
|
|
|
|
(CDN
$000's)
|
|
September
30, 2015
|
December
31, 2014
|
Assets
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
Property and
equipment
|
|
$
|
47,205
|
$
|
45,811
|
|
Goodwill and definite
life intangible assets
|
|
30,043
|
30,074
|
|
|
77,248
|
75,885
|
Current
assets
|
|
|
|
|
Cash
|
|
2,528
|
3,455
|
|
Accounts
receivable
|
|
1,594
|
1,983
|
|
Prepaid and other
expenses
|
|
1,896
|
1,515
|
|
Short term
investments
|
|
39
|
39
|
|
|
6,057
|
6,992
|
|
|
|
|
Total
Assets
|
|
$
|
83,305
|
$
|
82,877
|
|
Liabilities
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
Provision for
restructuring costs
|
|
$
|
-
|
$
|
45
|
|
Long term debt and
financing leases
|
|
|
14,886
|
|
19,762
|
|
Convertible
debentures – liability component
|
|
|
4,376
|
|
4,355
|
|
|
19,262
|
24,162
|
Current
liabilities
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
5,481
|
2,924
|
|
Current portion of
provision for restructuring costs
|
|
114
|
290
|
|
Deferred
revenue
|
|
1,213
|
878
|
|
Current portion of
debt and financing leases
|
|
2,141
|
1,418
|
|
|
8,949
|
5,510
|
|
|
|
|
Total
Liabilities
|
|
28,211
|
29,672
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
Share
capital
|
|
65,572
|
65,871
|
|
Convertible
debentures – equity component
|
|
342
|
342
|
|
Equity settled share
based compensation
|
|
2,713
|
2,419
|
|
Accumulated
deficit
|
|
(13,533)
|
(15,427)
|
Total Shareholders'
Equity
|
|
55,094
|
53,205
|
|
|
|
|
Total Liabilities
and Shareholders' Equity
|
|
$
|
83,305
|
$
|
82,877
|
BrightPath Early Learning Inc.
Consolidated Statements of Operations and Comprehensive Income
(Loss)
Three and nine months ended September 30,
2015 and 2014
(Unaudited)
|
|
|
|
|
|
|
Three months
ended September
30,
|
Nine months
ended September
30,
|
(CDN
$000's)
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
Revenue
|
$
|
12,393
|
$
|
11,633
|
$
|
39,138
|
$
|
36,787
|
Government
grants
|
|
422
|
|
380
|
|
1,236
|
|
1,110
|
Total
revenue
|
|
12,815
|
|
12,013
|
|
40,374
|
|
37,897
|
|
|
|
|
|
Centre
expenses
|
|
|
|
|
|
Salaries, wages and
benefits
|
7,038
|
6,611
|
21,728
|
20,087
|
|
Other operating
expenses
|
2,512
|
2,620
|
7,456
|
7,732
|
Centre
margin
|
3,265
|
2,782
|
11,190
|
10,078
|
|
|
|
|
|
Operating
leases
|
1,039
|
799
|
2,827
|
2,299
|
Finance
|
318
|
361
|
1,031
|
1,101
|
General and
administrative
|
1,271
|
1,138
|
3,721
|
3,584
|
Taxes, other than
income taxes
|
40
|
44
|
127
|
130
|
Restructuring
|
-
|
-
|
-
|
968
|
Acquisition and
development
|
328
|
365
|
986
|
877
|
Gain on sale and
leaseback
|
(1,791)
|
-
|
(1,791)
|
-
|
Loss on disposition
of development land
|
-
|
268
|
-
|
268
|
Stock-based
compensation
|
63
|
108
|
294
|
304
|
Depreciation and
amortization
|
765
|
715
|
2,331
|
2,142
|
|
2,033
|
3,798
|
9,526
|
11,673
|
|
|
|
|
|
Profit (loss) before
other income
|
1,232
|
(1,016)
|
1,664
|
(1,595)
|
|
|
|
|
|
Other
income
|
112
|
53
|
120
|
112
|
|
|
|
|
|
|
|
|
|
Net Profit (Loss)
and Total Comprehensive Income (Loss)
|
$
|
1,344
|
$
|
(963)
|
$
|
1,784
|
$
|
(1,483)
|
|
|
|
|
|
Net profit (loss) per
share
|
|
|
|
|
|
Basic
|
$
|
0.011
|
$
|
(0.008)
|
$
|
0.015
|
$
|
(0.012)
|
|
Diluted
|
$
|
0.010
|
$
|
(0.008)
|
$
|
0.015
|
$
|
(0.012)
|
BrightPath Early Learning Inc.
Consolidated
Statements of Changes in Shareholders' Equity
Nine months
ended September 30, 2015 and
2014
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
(CDN
$000's)
|
|
Share
Capital
|
Convertible
Debentures
–
Equity
Component
|
Equity
Settled
Share
Based
Compensation
|
Accumulated
Deficit
|
Shareholders'
Equity
|
|
|
|
|
|
|
|
Balance at January
1, 2014
|
$
|
66,030
|
$
|
342
|
$
|
2,026
|
$
|
(13,911)
|
$
|
54,487
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
-
|
-
|
304
|
-
|
304
|
|
|
|
|
|
|
|
Deferred share units
redeemed
|
|
18
|
-
|
(18)
|
-
|
-
|
|
|
|
|
|
|
|
Net loss and
comprehensive loss
|
|
-
|
-
|
-
|
(1,483)
|
(1,483)
|
|
|
|
|
|
|
|
Balance at
September 30, 2014
|
$
|
66,048
|
$
|
342
|
$
|
2,312
|
$
|
(15,394)
|
$
|
53,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January
1, 2015
|
$
|
65,871
|
$
|
342
|
$
|
2,419
|
$
|
(15,427)
|
$
|
53,205
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
-
|
-
|
|
294
|
|
-
|
|
294
|
|
|
|
|
|
|
|
|
|
|
|
Shares purchased for
cancellation
|
|
|
(299)
|
-
|
|
-
|
|
110
|
|
(189)
|
|
|
|
|
|
|
|
|
|
|
|
Net profit and
comprehensive income
|
|
|
-
|
-
|
|
-
|
|
1,784
|
|
1,784
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
September 30, 2015
|
$
|
65,572
|
$
|
342
|
$
|
2,713
|
$
|
(13,533)
|
$
|
55,094
|
BrightPath Early Learning Inc.
Consolidated
Statements of Cash Flow
Three and nine months ended
September 30, 2015 and 2014
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three months
ended September
30,
|
Nine months
ended September
30,
|
(CDN
$000's)
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
|
Cash provided by
(used in):
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
|
Net profit
(loss)
|
|
$
|
1,344
|
$
|
(963)
|
$
|
1,784
|
$
|
(1,483)
|
Items
not affecting cash:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
765
|
715
|
2,331
|
2,142
|
|
Depreciation included
in operating costs
|
|
38
|
38
|
113
|
113
|
|
Finance
costs
|
|
318
|
361
|
1,031
|
1,101
|
|
Gain on sale and
leaseback
|
|
(1,791)
|
-
|
(1,791)
|
-
|
|
Loss on disposition
of development land
|
|
-
|
268
|
-
|
268
|
|
Stock-based
compensation
|
|
63
|
108
|
294
|
304
|
|
Change in fair value
of convertible debenture liability component
|
|
(111)
|
(48)
|
(111)
|
(98)
|
Change in non-cash
working capital
|
|
593
|
643
|
2,711
|
(387)
|
Change in non-current
portion of provision for restructuring costs
|
|
-
|
(68)
|
(45)
|
(5)
|
Cash generated by
operations
|
|
1,219
|
1,054
|
6,317
|
1,955
|
|
|
|
|
|
|
Finance costs
paid
|
|
(188)
|
(230)
|
(789)
|
(832)
|
Net cash generated by
operating activities
|
|
1,031
|
824
|
5,528
|
1,123
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
Property and
equipment
|
|
(4,512)
|
(1,695)
|
(9,230)
|
(2,873)
|
Net proceeds on sale
and leaseback
|
|
7,214
|
-
|
7,214
|
-
|
|
|
2,702
|
(1,695)
|
(2,016)
|
(2,873)
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
Loan
proceeds
|
|
934
|
-
|
934
|
-
|
Loan
repayments
|
|
(4,315)
|
(282)
|
(4,970)
|
(855)
|
Financing transaction
costs
|
|
-
|
-
|
(32)
|
(47)
|
Finance lease
repayments
|
|
(65)
|
(63)
|
(195)
|
(184)
|
Shares purchased for
cancellation
|
|
(146)
|
-
|
(176)
|
-
|
|
|
(3,592)
|
(345)
|
(4,439)
|
(1,086)
|
|
|
|
|
|
|
Change in
Cash
|
|
141
|
(1,216)
|
(927)
|
(2,836)
|
Cash at beginning of
period
|
|
2,387
|
2,320
|
3,455
|
3,940
|
Cash at end of
period
|
|
$
|
2,528
|
$
|
1,104
|
$
|
2,528
|
$
|
1,104
|
|
|
|
|
|
|
|
|
SOURCE BrightPath Early Learning Inc.