TORONTO, Nov. 23, 2016 /CNW/ - BrightPath Early
Learning Inc. ("BrightPath" or the "Company") (TSX-V: BPE), a
leading Canadian provider of high-quality, comprehensive early
childhood education and care, with 8,580 spaces of licensed
capacity across 76 centres located in Alberta, Ontario and British
Columbia, announced today its operational and financial
results for the three and nine months ended September 30, 2016.
Financial performance highlights for the quarter ended
September 30, 2016, a period that is
adversely affected by seasonality, are as follows (all comparisons
are against the prior year period):
- Revenue increased 30.8% to a record $16.8 million, with higher revenue reported in
all three provincial markets served by the Company;
- Centre margin increased 12.5% to $3.7
million;
- Adjusted EBITDA was $1.0 million
compared to $0.9 million;
- Funds from Operations ("FFO") was $0.6
million ($0.005 per share)
compared to $0.7 million
($0.006 per share);
- Adjusted Funds from Operations ("AFFO") was $0.5 million ($0.004 per share) compared to $0.6 million ($0.005 per share); and
- The Company had available capital of $21.6 million at quarter end to fund the
Company's pipeline of growth initiatives through centres currently
under development and other pipeline initiatives not yet announced.
These initiatives include the announced 570 licensed spaces in
three centres currently under development, representing
approximately 7% of current capacity, which will bring BrightPath's
total licensed capacity to 9,150 spaces, almost double the total
number of Stabilized licensed spaces at the end of fiscal
2015.
Financial highlights for the nine months ended September 30, 2016 include:
- Revenue of $47.5 million, an
increase of 17.5%, with higher revenue reported across all
provincial markets;
- A 7.4% increase in centre margin to $12.0 million;
- Adjusted EBITDA of $4.4 million
compared to $4.5 million;
- FFO of $3.2 million ($0.026 per share) compared to $3.7 million ($0.030 per share); and
- AFFO of $3.0 million
($0.025 per share) compared to
$3.5 million ($0.029 per share).
Additional operational and significant events to date in 2016
include:
- During the third quarter of 2016, a period that is adversely
affected by seasonality, enrollment levels and revenue in
Ontario centres and new centres in
Alberta demonstrated considerable
growth, exceeding the Company's expectations. Stabilized centres in
Alberta continued to experience
pressure on enrollments from the effects of the economic downturn,
as anticipated. Recently, the Conference Board of Canada predicted a modest economic recovery in
2017;
- On August 31, 2016, the Company
completed the acquisition of Peekaboo Child Care Centre Inc. and
Peekaboo Adventures Ltd. (collectively "Peekaboo"), a portfolio of
20 early learning and care centres in the Greater Toronto Area comprising 2,471 licensed
spaces and franchise agreements with 11 affiliate centres. This
transformative acquisition, which contributed just one month of
results to the third quarter of 2016, increased BrightPath's total
capacity by approximately 40%, made Ontario BrightPath's largest
market and geographically balanced the Company's portfolio. The
acquisition was financed through the Company's credit facility on
the strength of underlying cash flows and the value of the
Company's real estate. Most significantly, the acquisition of
Peekaboo is anticipated to be highly and immediately accretive to
FFO per share and bolster the Company's growth in the future;
- In June 2016, BrightPath closed
the acquisition of The Lawrence Park School Ltd. ("Lawrence Park"),
a long-standing and successful early learning and care centre
located in the Lawrence Park suburb of Toronto with 95 licensed spaces;
- The Company's Cochrane,
Alberta centre opened in September
2015 with 120 licensed spaces. The Creekside centre in
Calgary opened in November 2015 with 247 licensed spaces and the
West Henday centre in Edmonton
opened in April 2016 with 247
licensed spaces. Collectively, these three centres achieved
82.8% average enrollment in the third quarter of 2016 and have
current combined enrollment of 95%, vastly exceeding the Company's
expectations of enrollment ramp up in these Alberta locations and significantly surpassing
standard industry metrics in spite of Alberta's current economic downturn;
- In August 2016, the third
expansion of the Airdrie centre
near Calgary was completed,
bringing the centre's total licensed capacity to 146 licensed
spaces, with 89% enrollment at present;
- Construction of the Sage Hill centre in Riocan REIT's Sage Hill
Crossing shopping centre in Calgary began. When completed in the first
quarter of 2017, the Sage Hill centre, for which BrightPath is
experiencing momentum in pre-registrations, will be comprised of
approximately 130 licensed spaces in a 10,000 square foot leasehold
facility;
- Construction of the Company's newest state-of-the-art early
learning and care centre, located in First Capital's London Place
West shopping centre in southwest Calgary, has commenced. Anticipated to open in
the second quarter of 2017, the Richmond Early Learning and Child
Care Centre will be comprised of 247 licensed spaces in a 20,000
square foot facility developed and owned by BrightPath on a
one-acre parcel of land; and
- In September 2016, BrightPath
announced the renewal of its normal course issuer bid ("NCIB") to
purchase up to a maximum five percent of its issued and outstanding
common shares to contribute to enhanced shareholder value and
liquidity. The Company purchased and cancelled 694,000 common
shares during the nine months ended September 30, 2016. Cumulatively to date since
the beginning of its NCIB program in September 2014, the Company has purchased and
cancelled 1,935,700 shares at an average price of $0.32 per share. The Company continues to believe
that the current price of the Company's shares does not adequately
reflect its operational and financial strength, as well as the
market value of its real estate portfolio.
"The anticipated benefits of acquiring Peekaboo and Lawrence
Park centres are only just beginning to be realized in the fourth
quarter. The addition of these centres, along with highly
successful new centre openings in Alberta and significant growth in comparable
Ontario centres, contributed to
strong increases in revenue and centre margin year over year,"
stated Mary Ann Curran, Chief
Executive Officer of the Company. "Additionally, BrightPath
continues to actively pursue enrollments while focusing on
operational initiatives and management of costs. The Company is
poised and ready for upward operational, financial and strategic
success going forward."
Integration of the Peekaboo portfolio is proceeding well and
substantially meeting targeted objectives. In particular, the
Company has identified opportunities to improve Peekaboo operations
and financial performance in several areas. Beginning with the
utilization of BrightPath's customer relationship management
("CRM") and Enterprise Resource Planning systems, the Company
believes there is potential for higher enrollments, optimization of
room configurations and age mixes, greater productivity in labour
hours, a shift away from uniform pricing across all centres to
market specific pricing strategies, elimination of duplication of
executive level personnel, office consolidation, food bulk
purchasing improvements and efficiencies through combination of
facilities maintenance personnel. In support of a greater value
proposition to families in the markets served, the introduction of
BrightPath's curriculum and programming will underscore the basis
for all of these improvements.
Dale Kearns, the Company's
President and CFO, added that, "In understanding and assessing the
Company's financial results, it is important to note that there
were a number of significant non-recurring expenses of future
benefit that were incurred in the quarter and year to date. These
include approximately $0.9 million
for: expenditures to complete BrightPath's two Ontario acquisitions; investment in more
centre staff than normal to support a swift build of enrollments;
pre-accreditation centre staff wage top-ups; and the Company's
enhanced website and CRM system that enable the potential for these
acquisitions and new developments. While IFRS requires us to
expense these costs in the periods incurred, the acquisitions and
investments will contribute to significant revenue increases and
profitability in coming quarters and years."
Financial Review
($000's except where otherwise noted and per share amounts)
|
|
|
|
|
|
|
|
|
|
Q3
2016
|
Q2
2016
|
Q1
2016
|
Q4
2015
|
Q3
2015
|
Q2
2015
|
Q1
2015
|
Q4
2014
|
Revenue
|
$
|
16,762
|
$
|
15,859
|
$
|
14,830
|
$
|
13,796
|
$
|
12,815
|
$
|
13,912
|
$
|
13,647
|
$
|
12,911
|
Centre
margin
|
|
3,672
|
|
4,249
|
|
4,102
|
|
3,629
|
|
3,265
|
|
3,976
|
|
3,949
|
|
3,741
|
Centre margin
%
|
|
21.9
|
|
26.8
|
|
27.7
|
|
26.3
|
|
25.5
|
|
28.6
|
|
28.9
|
|
29.0
|
Adjusted
EBITDA
|
|
1,039
|
|
1,757
|
|
1,575
|
|
1,306
|
|
915
|
|
1,781
|
|
1,819
|
|
1,889
|
FFO
|
|
575
|
|
1,345
|
|
1,230
|
|
877
|
|
696
|
|
1,436
|
|
1,551
|
|
1,609
|
AFFO
|
|
478
|
|
1,276
|
|
1,255
|
|
851
|
|
596
|
|
1,373
|
|
1,516
|
|
1,448
|
Net profit
(loss)
|
|
(1,139)
|
|
(264)
|
|
(182)
|
|
(560)
|
|
1,344
|
|
144
|
|
296
|
|
(85)
|
Per share
amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO
|
|
0.005
|
|
0.011
|
|
0.010
|
|
0.007
|
|
0.006
|
|
0.012
|
|
0.013
|
|
0.013
|
|
AFFO
|
|
0.004
|
|
0.011
|
|
0.010
|
|
0.007
|
|
0.005
|
|
0.011
|
|
0.012
|
|
0.012
|
|
Net profit
(loss)
|
|
(0.010)
|
|
(0.002)
|
|
(0.002)
|
|
(0.005)
|
|
0.011
|
|
0.001
|
|
0.002
|
|
(0.001)
|
For the quarter ended September 30,
2016, the Company reported record revenue of $16.8 million (September
30, 2015 - $12.8 million) and
centre margin of $3.7 million
(September 30, 2015 - $3.3 million). Revenue increased 30.8% due to
tuition from acquired centres in the Greater Toronto Area and new locations in
Cochrane, Calgary and Edmonton, Alberta, as well as moderate year
over year rate increases in tuition, partially offset by a decline
in Stabilized centres' average occupancy from 76.4% to 73.9% due to
lower enrollment levels in several centres in Alberta. Centre margin as a percentage of
revenue decreased to 21.9% compared to 25.5% a year earlier. The
Company's decision to invest in marketing and labour resources to
achieve swift enrollment increases, particularly in newly opened
centres and Ontario, has triggered
short-term inefficiencies in labour-to-revenue metrics that are
addressed as enrollments build and operations improve and
stabilize. As well, the decline reflected the limited ability to
realize labour savings on lower enrollment levels in Alberta due to regulated staff ratios and
operating cost pressures in Ontario from rising electricity rates and
national food price increases.
For the nine month period ended September
30, 2016, revenue was $47.5
million (September 30, 2015 -
$40.4 million) and centre margin was
$12.0 million (September 30, 2015 - $11.2
million). Centre margin as a percentage of revenue was 25.3%
compared to 27.7% in 2015. The reasons for the 17.5% increase in
revenue and erosion of centre margin as a percentage of revenue are
substantially the same as those discussed above for the three month
period.
Adjusted EBITDA, FFO and AFFO
|
|
|
|
|
|
|
|
|
|
Q3
2016
|
Q2
2016
|
Q1
2016
|
Q4
2015
|
Q3
2015
|
Q2
2015
|
Q1
2015
|
Q4
2014
|
Centre margin for the
period
|
|
3,672
|
|
4,249
|
|
4,102
|
|
3,629
|
|
3,265
|
|
3,976
|
|
3,949
|
|
3,741
|
General and
administrative
expense
|
|
(1,204)
|
|
(1,273)
|
|
(1,345)
|
|
(1,129)
|
|
(1,271)
|
|
(1,258)
|
|
(1,192)
|
|
(903)
|
Taxes, other than
income taxes
|
|
(37)
|
|
(28)
|
|
(38)
|
|
(41)
|
|
(40)
|
|
(44)
|
|
(43)
|
|
(52)
|
Operating lease
expense
|
|
(1,392)
|
|
(1,191)
|
|
(1,144)
|
|
(1,153)
|
|
(1,039)
|
|
(893)
|
|
(895)
|
|
(897)
|
Adjusted
EBITDA
|
$
|
1,039
|
$
|
1,757
|
$
|
1,575
|
$
|
1,306
|
$
|
915
|
$
|
1,781
|
$
|
1,819
|
$
|
1,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3
2016
|
Q2
2016
|
Q1
2016
|
Q4
2015
|
Q3
2015
|
Q2
2015
|
Q1
2015
|
Q4
2014
|
Net profit (loss) for
the period
|
|
(1,139)
|
|
(264)
|
|
(182)
|
|
(560)
|
|
1,344
|
|
144
|
|
296
|
|
(85)
|
Depreciation and
certain
other non-cash items
|
|
1,208
|
|
1,083
|
|
1,025
|
|
969
|
|
815
|
|
948
|
|
941
|
|
924
|
Acquisition and
development
costs
|
|
506
|
|
526
|
|
387
|
|
468
|
|
328
|
|
344
|
|
314
|
|
736
|
Loss on disposition
of
development land
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
34
|
Gain on sale and
leaseback
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1,791)
|
|
-
|
|
-
|
|
-
|
FFO
|
$
|
575
|
$
|
1,345
|
$
|
1,230
|
$
|
877
|
$
|
696
|
$
|
1,436
|
$
|
1,551
|
$
|
1,609
|
Share-based
compensation
|
|
110
|
|
114
|
|
117
|
|
272
|
|
63
|
|
153
|
|
78
|
|
107
|
Maintenance
capital
expenditures
|
|
(207)
|
|
(183)
|
|
(92)
|
|
(298)
|
|
(163)
|
|
(216)
|
|
(113)
|
|
(268)
|
AFFO
|
$
|
478
|
$
|
1,276
|
$
|
1,255
|
$
|
851
|
$
|
596
|
$
|
1,373
|
$
|
1,516
|
$
|
1,448
|
Adjusted EBITDA for the third quarter of 2016 was $1.0 million compared to $0.9 million in 2015. Enrollment pressures on
revenue in Stabilized Alberta centres were offset by occupancy and
revenue increases in Ontario
centres and new centres in Alberta
which demonstrated considerable increases. As noted, the Company's
investments to achieve swift enrollment increases, particularly in
newly opened centres and Ontario,
have triggered short-term inefficiencies in labour-to-revenue
metrics that improve as enrollments build and operations
stabilize.
Adjusted EBITDA for the nine months ended September 30, 2016 was $4.4 million compared to $4.5 million in 2015. Adjusted EBITDA decreased
$0.1 million primarily due to higher
general and administrative expenses, mainly due to inflationary
pressures and investments in the Company's enhanced website and CRM
system, and higher operating lease expenses from new and acquired
centres which offset higher centre margin period over period.
FFO for the third quarter of 2016 was $0.6 million compared to $0.7 million in 2015, due primarily to the
opening of new centres. FFO per share for the third quarter of 2016
was $0.005 compared to $0.006 in 2015. FFO for the nine months ended
September 30, 2016 was $3.2 million ($0.026 per share) compared to $3.7 million ($0.030 per share) for the same period in
2015.
AFFO for the third quarter of 2016 was $0.5 million ($0.004 per share) compared to $0.6 million ($0.005 per share) a year earlier, primarily due
to lower FFO. AFFO for the nine months ended September 30, 2016 was $3.0 million compared to $3.5 million in 2015. AFFO per share for the nine
months ended September 30, 2016 was
$0.025 compared to $0.029 for the nine months ended September 30, 2015.
Net loss for the third quarter of 2016 was $1.1 million compared to a net profit of
$1.3 million in the third quarter of
2015. Net loss for the nine months ended September 30, 2016 was $1.6 million compared to a net profit of
$1.8 million in 2015. Both periods in
2016 were impacted by the aforementioned investments in certain
non-recurring expenditures, costs of opening new centres and a
greater level of cost associated with acquisition and development
activity compared to 2015. Net profit reported in 2015 was
favourably impacted by a $1.8 million
gain on the sale and leaseback of the McKenzie Towne centre. Basic
and diluted net profit (loss) per share for the quarter ended
September 30, 2016 was $(0.010) (September 30,
2015 - $0.011 and $0.010). Basic and diluted net profit (loss) per
share for the nine months ended September
30, 2016 was $(0.013)
(September 30, 2015 - $0.015).
Occupancy for Alberta Stabilized centres in the three and nine
month periods ended September 30,
2016 averaged 78.1% (September 30,
2015 - 81.7%) and 83.0% (September
30, 2015 - 87.9%), respectively. As anticipated, BrightPath
experienced pressure on enrollments at its Stabilized centres in
Alberta from the effects of the
economic downturn and anticipates continued pressure through the
fourth quarter of 2016, with forecasts of a modest economic
recovery in 2017 based on a Conference Board of Canada outlook. In contrast, irrespective of
the economic challenges in Alberta, strong market demand for early
learning and care in newly opened centres continues, reflecting
pressing demand in newer suburban areas in Calgary and Edmonton. The Company's Cochrane, Creekside and West Henday centres
achieved notable average occupancies of 82.8% in the quarter ended
September 30, 2016 and 73.4% in the
nine months ended September 30, 2016,
well in advance of the typical 24-month period for enrollment ramp
up and centre stabilization. Currently, these centres are 95%
occupied on a combined basis.
With the acquisitions of Lawrence Park and Peekaboo completed,
Ontario is now BrightPath's
largest market, representing 46.2% of the Company's total licensed
capacity as at September 30, 2016.
Ontario occupancy levels for
comparable centres increased to 70.8% in the third quarter of 2016
from 64.3% in 2015. Including Lawrence Park and Peekaboo centres,
Ontario portfolio occupancy moved
to 69.6% for the quarter ended September 30,
2016 from 64.3% in the third quarter of 2015. Likewise, for
the nine months ended September 30,
2016, occupancy in comparable centres increased 4.3
percentage points on a year over year basis and overall,
Ontario portfolio occupancy moved
to 75.1% from 72.4% for the same period in 2015.
Peekaboo and Lawrence Park collectively achieved an average
occupancy of 67.6% during the three months ended September 30, 2016 and currently reflect an
average occupancy of 75%. The Peekaboo portfolio contributed just
one month of results to the fiscal quarter and the month of
September is Peekaboo's seasonally low month of occupancy. The
integration is proceeding well and substantially meeting targeted
objectives. Improved results are expected as the Company's skill
set and management systems are applied to the Peekaboo
portfolio.
Occupancy for British Columbia Stabilized centres in the three
and nine month periods ended September 30,
2016 averaged 79.2% (September 30,
2015 - 75.8%) and 84.1% (September
30, 2015 - 81.7%), respectively. The Surrey facility, which opened in September 2014 and is still considered
Non-stabilized, achieved improved average occupancy of 81.5% and
79.7% during the three and nine months ended September 30, 2016 compared to 53.5% and 45.1%
during the same periods in 2015, respectively.
Centre Portfolio Overview
The Company's centre locations, number of licensed spaces and
average occupancies are provided in the table that follows. Centres
typically experience lower levels of attendance June through
September 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.
|
|
|
|
|
|
Three months
ended
September 30,
2016
|
Three months
ended
September 30,
2015
|
Nine months
ended
September 30,
2016
|
Nine months
ended
September 30,
2015
|
Stabilized
Centres
Alberta
|
|
|
|
|
Ending Centres
#
|
30
|
30
|
30
|
30
|
Ending Spaces
#
|
3,236
|
3,238
|
3,236
|
3,238
|
Avg. Occupancy
%
|
78.1
|
81.7
|
83.0
|
87.9
|
|
|
|
|
|
British
Columbia
|
|
|
|
|
Ending Centres
#
|
7
|
7
|
7
|
7
|
Ending Spaces
#
|
558
|
577
|
558
|
577
|
Avg. Occupancy
%
|
79.2
|
75.8
|
84.1
|
81.7
|
|
|
|
|
|
Ontario
|
|
|
|
|
Ending Centres
#
|
35
|
14
|
35
|
14
|
Ending Spaces
#
|
3,966
|
1,408
|
3,966
|
1,408
|
Avg. Occupancy
%
|
69.6
|
64.3
|
75.1
|
72.4
|
|
|
|
|
|
Total Stabilized
Centres
|
|
|
|
|
Ending Centres
#
|
72
|
51
|
72
|
51
|
Ending Spaces
#
|
7,760
|
5,223
|
7,760
|
5,223
|
Avg. Occupancy
%
|
73.9
|
76.4
|
77.4
|
83.0
|
Non-stabilized
Centres
Alberta
|
|
|
|
|
Ending Centres
#
|
3
|
1
|
3
|
1
|
Ending Spaces
#
|
614
|
120
|
614
|
120
|
Avg. Occupancy
%
|
82.8
|
26.5
|
73.4
|
26.5
|
|
|
|
|
|
British
Columbia
|
|
|
|
|
Ending Centres
#
|
1
|
1
|
1
|
1
|
Ending Spaces
#
|
206
|
206
|
206
|
206
|
Avg. Occupancy
%
|
81.5
|
53.5
|
79.7
|
45.1
|
|
|
|
|
|
Ontario
|
|
|
|
|
Ending Centres
#
|
-
|
-
|
-
|
-
|
Ending Spaces
#
|
-
|
-
|
-
|
-
|
Avg. Occupancy
%
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Total
Non-stabilized Centres
|
|
|
|
|
Ending Centres
#
|
4
|
2
|
4
|
2
|
Ending Spaces
#
|
820
|
326
|
820
|
326
|
Avg. Occupancy
%
|
82.5
|
49.1
|
75.2
|
44.0
|
Total Portfolio
(All Centres)
|
|
|
|
|
Ending Centres
#
|
76
|
53
|
76
|
53
|
Ending Spaces
#
|
8,580
|
5,549
|
8,580
|
5,549
|
Avg. Occupancy
%
|
74.8
|
75.1
|
77.2
|
81.4
|
Deferred Share Units ("DSUs")
For the three months ended September 30,
2016, 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 120,000 DSUs. The DSUs were issued on October 14, 2016.
Outlook
Across all markets, the Company continues to actively monitor
and respond to enrollment challenges and opportunities through an
aggressive enrollment campaign. Additionally, the Company is
undertaking room consolidations and reconfigurations, variable cost
reductions and marketing efforts supported by its robust CRM system
and processes and redesigned and enhanced website.
As noted, despite the economic challenges in Alberta, strong market demand for early
learning and care spaces in newly opened centres continues. The
Cochrane centre, opened in
September 2015 with 120 licensed
spaces, the Creekside centre in Calgary, opened in November 2015 with 247 licensed spaces, and the
West Henday centre in Edmonton,
opened in April 2016 with 247
licensed spaces, have collectively achieved current enrollments of
95%. These notable enrollment levels were accomplished well in
advance of industry metrics which typically anticipate a two-year
period for enrollment ramp up and centre stabilization and
represents strong validation of both the quality of the Company's
product and its ability to effectively identify under-served
markets within major metropolitan areas.
These most recent successful developments, built upon similar
prior successes BrightPath has achieved, including its Chestermere and McKenzie Towne greenfield
centres in Calgary and
Clayton Hills centre in Surrey near Vancouver, leave the Company confident of the
potential for future success from the near-term openings of centres
in Riocan's Sage Hill Crossing shopping centre and First Capital's
London Place West shopping centre, currently under construction for
opening beginning early in 2017, as well as other pipeline
initiatives in all provincial markets which have yet to be
announced.
As noted on earlier occasions, notwithstanding some improvement
in the price of the Company's common shares during the quarter,
BrightPath's management and Board of Directors believe that the
price of the shares on the TSX Venture Exchange does not reflect
the Company's current value, operational performance, financial
results, strategic achievements, and growth prospects. This
disconnect has been further amplified and highlighted by the highly
accretive acquisition of Peekaboo. The Company further notes that
its owned real estate portfolio relative to its market
capitalization implies minimal valuation its business and hence, a
significant discount to net asset value. The Company continues to
work towards closing the gap between net asset value and market
capitalization by executing its strategic and operational business
initiatives successfully and pursuing further initiatives to
surface shareholder value.
QUARTERLY CONFERENCE CALL
BrightPath's quarterly results conference call is scheduled for
Tuesday, November 29, 2016 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=1309785&s=1&k=A0706C589120573AC584FB347FA222CC
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
Tuesday, December 13, 2016 at
midnight. To access the archived conference call, dial (416)
849-0833 or (855) 859-2056 and enter the reservation number
17577203 followed by the number sign.
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 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 share-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 profit (loss) 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 pro forma
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.
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", "should",
"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.
ABOUT BRIGHTPATH EARLY LEARNING INC.
BrightPath Early Learning Inc. is a Canadian leader in child
care and early education with 76 locations in major markets across
the country comprising 8,580 licensed spaces. Meeting the highest
standards in curriculum, nutrition, technology and recreational
programming, 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 or
contact Dale Kearns, President &
Chief Financial Officer of BrightPath Early Learning Inc. at (403)
705-0362 ext. 406.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in 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)
|
|
|
|
|
|
(CDN
$000's)
|
|
September
30, 2016
|
|
December
31, 2015
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
Property and
equipment
|
|
$
|
52,878
|
|
$
|
49,779
|
|
Goodwill and definite
life intangible assets
|
|
|
51,909
|
|
|
30,042
|
|
|
|
104,787
|
|
|
79,821
|
Current
assets
|
|
|
|
|
|
|
|
Cash
|
|
|
10,258
|
|
|
1,537
|
|
Accounts
receivable
|
|
|
2,036
|
|
|
1,958
|
|
Prepaid expenses and
deposits
|
|
|
1,917
|
|
|
1,716
|
|
Short term
investments
|
|
|
39
|
|
|
39
|
|
|
|
14,250
|
|
|
5,250
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
119,037
|
|
$
|
85,071
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
772
|
|
$
|
-
|
|
Long term debt and
financing leases
|
|
|
43,622
|
|
|
14,697
|
|
Convertible
debentures – liability component
|
|
|
-
|
|
|
4,304
|
|
|
|
44,394
|
|
|
19,001
|
Current
liabilities
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
|
10,997
|
|
|
5,198
|
|
Provision for
restructuring costs
|
|
|
-
|
|
|
45
|
|
Deferred
revenue
|
|
|
2,004
|
|
|
955
|
|
Current portion of
debt and financing leases
|
|
|
3,830
|
|
|
5,184
|
|
Convertible
debentures – liability component
|
|
|
4,570
|
|
|
-
|
|
|
|
21,401
|
|
|
11,382
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
65,795
|
|
|
30,383
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
|
|
Share
capital
|
|
|
64,997
|
|
|
65,374
|
|
Convertible
debentures – equity component
|
|
|
342
|
|
|
342
|
|
Equity settled
share-based compensation
|
|
|
3,326
|
|
|
2,985
|
|
Accumulated
deficit
|
|
|
(15,423)
|
|
|
(14,013)
|
Total
Shareholders' Equity
|
|
|
53,242
|
|
|
54,688
|
|
|
|
|
|
|
|
Total Liabilities
and Shareholders' Equity
|
|
$
|
119,037
|
|
$
|
85,071
|
BrightPath Early
Learning Inc.
|
Consolidated
Statements of Operations and Comprehensive Income
(Loss)
|
Three and nine
months ended September 30, 2016 and 2015
|
(Unaudited)
|
|
|
|
|
|
|
Three months
ended
September 30,
|
Nine months
ended September
30,
|
(CDN $000's except
per share amounts)
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
16,319
|
$
|
12,393
|
$
|
46,085
|
$
|
39,138
|
Government
grants
|
|
|
443
|
|
422
|
|
1,366
|
|
1,236
|
Total
revenue
|
|
|
16,762
|
|
12,815
|
|
47,451
|
|
40,374
|
|
|
|
|
|
|
|
|
|
|
Centre
expenses
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and
benefits
|
|
|
9,687
|
|
7,038
|
|
26,444
|
|
21,728
|
|
Other operating
expenses
|
|
|
3,403
|
|
2,512
|
|
8,984
|
|
7,456
|
Centre
margin
|
|
|
3,672
|
|
3,265
|
|
12,023
|
|
11,190
|
|
|
|
|
|
|
|
|
|
|
Operating
leases
|
|
|
1,392
|
|
1,039
|
|
3,727
|
|
2,827
|
Finance
costs
|
|
|
453
|
|
318
|
|
1,187
|
|
1,031
|
General and
administrative
|
|
|
1,204
|
|
1,271
|
|
3,822
|
|
3,721
|
Taxes, other than
income taxes
|
|
|
37
|
|
40
|
|
103
|
|
127
|
Acquisition and
development
|
|
|
506
|
|
328
|
|
1,419
|
|
986
|
Gain on sale and
leaseback
|
|
|
-
|
|
(1,791)
|
|
-
|
|
(1,791)
|
Share-based
compensation
|
|
|
110
|
|
63
|
|
341
|
|
294
|
Depreciation and
amortization
|
|
|
1,059
|
|
765
|
|
2,878
|
|
2,331
|
|
|
|
4,761
|
|
2,033
|
|
13,477
|
|
9,526
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) before
other income
(expense)
|
|
|
(1,089)
|
|
1,232
|
|
(1,454)
|
|
1,664
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
(50)
|
|
112
|
|
(131)
|
|
120
|
|
|
|
|
|
|
|
|
|
|
Net Profit (Loss)
and Total
Comprehensive Income (Loss)
|
|
$
|
(1,139)
|
$
|
1,344
|
$
|
(1,585)
|
$
|
1,784
|
|
|
|
|
|
|
|
|
|
|
Net profit (loss) per
share
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.010)
|
$
|
0.011
|
$
|
(0.013)
|
$
|
0.015
|
|
Diluted
|
|
$
|
(0.010)
|
$
|
0.010
|
$
|
(0.013)
|
$
|
0.015
|
BrightPath Early
Learning Inc.
|
Consolidated
Statements of Changes in Shareholders' Equity
|
Nine months ended
September 30, 2016 and 2015
|
(Unaudited)
|
|
|
|
|
|
|
(CDN
$000's)
|
Share
Capital
|
Convertible
Debentures –
Equity
Component
|
Equity Settled
Share-based
Compensation
|
Accumulated
Deficit
|
Shareholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January
1, 2015
|
$
|
65,871
|
$
|
342
|
$
|
2,419
|
$
|
(15,427)
|
$
|
53,205
|
|
|
|
|
|
|
|
|
|
|
|
Share-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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January
1, 2016
|
$
|
65,374
|
$
|
342
|
$
|
2,985
|
$
|
(14,013)
|
$
|
54,688
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
-
|
|
-
|
|
341
|
|
-
|
|
341
|
|
|
|
|
|
|
|
|
|
|
|
Shares purchased for
cancellation
|
|
(377)
|
|
-
|
|
-
|
|
175
|
|
(202)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss and
comprehensive loss
|
|
-
|
|
-
|
|
-
|
|
(1,585)
|
|
(1,585)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
September 30, 2016
|
$
|
64,997
|
$
|
342
|
$
|
3,326
|
$
|
(15,423)
|
$
|
53,242
|
BrightPath Early
Learning Inc.
|
Consolidated
Statements of Cash Flow
|
Three and nine
months ended September 30, 2016 and 2015
|
(Unaudited)
|
|
|
|
|
|
|
Three months
ended
September 30,
|
Nine months
ended September
30,
|
(CDN
$000's)
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Cash provided by
(used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
|
|
|
|
|
Net profit
(loss)
|
|
$
|
(1,139)
|
$
|
1,344
|
$
|
(1,585)
|
$
|
1,784
|
Items not affecting
cash:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
1,059
|
|
765
|
|
2,878
|
|
2,331
|
|
Depreciation included
in operating costs
|
|
|
-
|
|
38
|
|
-
|
|
113
|
|
Finance
costs
|
|
|
453
|
|
318
|
|
1,187
|
|
1,031
|
|
Gain on sale and
leaseback
|
|
|
-
|
|
(1,791)
|
|
-
|
|
(1,791)
|
|
Share-based
compensation
|
|
|
110
|
|
63
|
|
341
|
|
294
|
|
Change in fair value
of convertible
debenture redemption feature
|
|
|
52
|
|
(111)
|
|
132
|
|
(111)
|
Change in non-cash
operating
working capital
|
|
|
1,699
|
|
593
|
|
3,297
|
|
2,711
|
Change in non-current
portion of
provision for restructuring costs
|
|
|
-
|
|
-
|
|
-
|
|
(45)
|
Cash provided by
operations
|
|
|
2,234
|
|
1,219
|
|
6,250
|
|
6,317
|
|
|
|
|
|
|
|
|
|
|
Finance costs
paid
|
|
|
(319)
|
|
(188)
|
|
(931)
|
|
(789)
|
|
|
|
1,915
|
|
1,031
|
|
5,319
|
|
5,528
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
|
Property and
equipment
|
|
|
(897)
|
|
(4,512)
|
|
(6,370)
|
|
(9,230)
|
Acquisitions through
business
combinations, net of cash acquired
|
|
|
(16,683)
|
|
-
|
|
(17,427)
|
|
-
|
Net proceeds on sale
and leaseback
|
|
|
-
|
|
7,214
|
|
-
|
|
7,214
|
|
|
|
(17,580)
|
|
2,702
|
|
(23,797)
|
|
(2,016)
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
|
Loan
proceeds
|
|
|
22,868
|
|
934
|
|
29,309
|
|
934
|
Loan
repayments
|
|
|
(521)
|
|
(4,315)
|
|
(1,093)
|
|
(4,970)
|
Financing transaction
costs
|
|
|
(472)
|
|
-
|
|
(542)
|
|
(32)
|
Finance lease
repayments
|
|
|
(78)
|
|
(65)
|
|
(238)
|
|
(195)
|
Shares purchased for
cancellation
|
|
|
(22)
|
|
(146)
|
|
(237)
|
|
(176)
|
|
|
|
21,775
|
|
(3,592)
|
|
27,199
|
|
(4,439)
|
|
|
|
|
|
|
|
|
|
|
Change in
Cash
|
|
|
6,110
|
|
141
|
|
8,721
|
|
(927)
|
Cash at beginning of
period
|
|
|
4,148
|
|
2,387
|
|
1,537
|
|
3,455
|
Cash at end of
period
|
|
$
|
10,258
|
$
|
2,528
|
$
|
10,258
|
$
|
2,528
|
SOURCE BrightPath Early Learning Inc.