TORONTO, April 21, 2017 /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, with 8,570 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 twelve months ended December 31, 2016.
Financial performance highlights for the three months ended
December 31, 2016 (all compared to
the same period in the prior year) include:
- The Company's revenue increased 57.7% to $21.8 million, with higher revenue reported
across all provincial markets;
- The Company's centre margin increased 54.8% to $5.6 million versus $3.6
million;
- BrightPath's Adjusted EBITDA increased to $2.7 million compared to $1.3 million, an increase of $1.4 million or 92.3%;
- Funds from Operations ("FFO") and Adjusted Funds from
Operations ("AFFO") both increased to $1.8
million ($0.015 per share)
compared to $0.9 million
($0.007 per share), an increase of
107%; and
- Average occupancy of Stabilized centres of 78.3% compared to
80.3%, largely reflecting weakness in Alberta and partially offset by improvement in
Ontario and British Columbia markets.
Financial performance highlights for the year ended December 31, 2016 are as follows (all compared to
the prior year period):
- The Company's revenue increased 27.8% to a record $69.2 million, with higher revenue reported in
all three provincial markets currently served by the Company;
- The Company's centre margin increased 19.0% to $17.6. million, with all provincial markets
achieving higher centre margins;
- BrightPath's Adjusted EBITDA increased to $7.0 million compared to $5.8 million;
- FFO increased to $5.0 million
($0.041 per share) compared to
$4.6 million ($0.038 per share);
- AFFO increased to $4.8 million
($0.040 per share) compared to
$4.3 million ($0.036 per share); and
- The average occupancy of Stabilized centres was 78.2% compared
to 82.3%;
- The Company had available capital of $21.4 million at December
31, 2016 to fund the Company's pipeline of growth
initiatives, which includes 570 licensed spaces in three centres
under development and other pipeline initiatives not yet announced.
These will bring BrightPath's total licensed capacity to 9,140
spaces, almost double the total number of Stabilized spaces at the
end of fiscal 2015.
Significant events and trends for the year ended December 31, 2016 include:
- For the year ended December 31,
2016, enrollment levels and revenue in Ontario and British
Columbia centres and newly developed 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;
- In August 2016, the Company
completed the acquisition of the Peekaboo portfolio of centres
("Peekaboo"). This portfolio of 20 early learning and care centres,
located in the Regions of Peel and Halton, in the Greater Toronto Area ("GTA") of Ontario, is comprised of 2,439 licensed
spaces, and increased BrightPath's total capacity by approximately
40%, making Ontario BrightPath's largest market and, in doing so,
geographically balanced its portfolio. The Company has identified
significant operational and financial synergies from this
significant acquisition which will further contribute to
profitability in the near future;
- In June 2016, BrightPath acquired
The Lawrence Park School ("Lawrence Park"), an early learning and
care centre located in a leased facility in the Lawrence Park
suburb of Toronto, Ontario, adding
an additional 95 licensed spaces to the Company's capacity;
- In April 2016, the West Henday
centre in Edmonton, Alberta
opened, which is comprised of 247 licensed spaces in a 20,000
square foot facility developed by BrightPath on a 0.8 acre land
site within Melcor Developments' West Henday Promenade Shopping
Centre. Enrollment at this centre is currently 96%;
- In April 2016, the second
expansion of the Company's Airdrie
centre was opened, increasing this leased centre's licensed
capacity from 117 to 135;
- In August 2016, the third
expansion of the Airdrie centre
was completed, bringing the centre's total licensed capacity to 146
spaces;
- Construction of the Sage Hill centre in Riocan REIT's Sage Hill
Crossing development was commenced in the fourth quarter of 2016
and the centre was completed in February
2017. The Sage Hill centre will comprise of approximately
130 licensed spaces in a 10,000 square foot leasehold
facility;
- In December 2016, the
Cochrane centre located in
Cochrane, Alberta, which opened in
September 2015, achieved
stabilization. Enrollment at this 120 space centre is currently
86%;
- Construction of the Company's "purpose-built" Richmond Early
Learning and Care centre, located in First Capital's London Place
West shopping centre in southwest Calgary, commenced and is anticipated to open
in the second quarter of 2017. This 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 held pursuant to a
long-term ground lease;
- In July 2016, BrightPath launched
its redesigned and enhanced website, which is fully integrated into
its CRM system. The enhanced website platform is designed to
attract additional, and more relevant, visitors residing within an
appropriate vicinity of the Company's centres, thereby increasing
effectiveness and improving the Company's knowledge of prospective
clients;
- In August 2016, the financial
strength of the Company's operations and pipeline, the value
inherent in its owned real estate properties and its solid banking
relationship was underscored by the amended terms of its credit
facility with its bank lender, resulting in a $20.5 million increase in the credit facility to
$62.5 million. These funds were
primarily designated to finance the acquisition of Peekaboo;
and
- In September 2016, BrightPath
announced the renewal of the Company's normal course issuer bid
("NCIB"). During the three and twelve months ended December 31, 2016, the Company repurchased 25,000
and 719,000 shares, respectively, for cancellation, of which
694,000 had been cancelled at December 31,
2016. Cumulatively to date, the Company has purchased for
cancellation 2,024,400 shares under its NCIB program at an average
price of $0.33 per share.
"BrightPath has achieved record financial results during this
transformative year, attributable to the acquisition of Peekaboo
and Lawrence Park centres and the highly successful new centre
openings in Alberta, as well as
intense efforts to increases operating efficiencies. Despite the
challenging economic conditions in Alberta during 2016, there were impressive
increases in revenue and centre margin year over year; furthermore,
the anticipated benefits of the acquisitions and new centres were
only starting to be realized in the later part of 2016 year,
positioning us well to continue to deliver growth and profitability
in 2017," stated Mary Ann Curran,
Chief Executive Officer of the Company. "The Company continues to
be focused on delivering the highest quality and breadth of early
childhood education and care and to further improving enrollment
while effectively managing costs to enhance shareholder value in
Fiscal 2017 and beyond."
Integration of the Peekaboo portfolio is proceeding well and
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 ("ERP") 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 and 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 these improvements.
Financial Review
($000's except where otherwise noted
and per share amounts)
|
|
|
|
Year ended
December 31,
|
2016
|
2015
|
2014
|
Centres at end of
year (#)
|
76
|
54
|
52
|
Licensed spaces at
end of year (#)
|
8.570
|
5,790
|
5,372
|
Average occupancy
(%)
|
78.5
|
80.6
|
83.1
|
Ending occupancy
(%)
|
78.9
|
77.7
|
82.0
|
Revenue
($)
|
69,209
|
54,170
|
50,808
|
Centre margin
($)
|
17,639
|
14,819
|
13,819
|
Adjusted EBITDA
($)
|
7,035
|
5,821
|
5,954
|
FFO(1)
($)
|
4,971
|
4,560
|
4,693
|
FFO per
share(1) ($)
|
0.041
|
0.038
|
0.039
|
AFFO(1)
($)
|
4,808
|
4,336
|
4,334
|
AFFO per
share(1) ($)
|
0.040
|
0.036
|
0.036
|
Net profit (loss)
($)
|
(338)
|
1,224
|
(1,568)
|
Net profit (loss) per
share ($)
|
(0.003)
|
0.010
|
(0.013)
|
Total assets
($)
|
121,270
|
85,071
|
82,877
|
Total long-term
financial liabilities ($)
|
43,636
|
19,001
|
24,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4
2016
|
Q3
2016
|
Q2
2016
|
Q1
2016
|
Q4
2015
|
Q3
2015
|
Q2
2015
|
Q1
2015
|
Revenue
|
$
|
21,758
|
$
|
16,762
|
$
|
15,859
|
$
|
14,830
|
$
|
13,796
|
$
|
12,815
|
$
|
13,912
|
$
|
13,647
|
Centre
margin
|
5,616
|
3,672
|
4,249
|
4,102
|
3,629
|
3,265
|
3,976
|
3,949
|
Centre margin
%
|
25.8
|
21.9
|
26.8
|
27.7
|
26.3
|
25.5
|
28.6
|
28.9
|
Adjusted
EBITDA
|
2,664
|
1,039
|
1,757
|
1,575
|
1,306
|
915
|
1,781
|
1,819
|
FFO(1)
|
1,821
|
575
|
1,345
|
1,230
|
877
|
696
|
1,436
|
1,551
|
AFFO(1)
|
1,799
|
478
|
1,276
|
1,255
|
851
|
596
|
1,373
|
1,516
|
Net profit
(loss)
|
1,247
|
(1,139)
|
(264)
|
(182)
|
(560)
|
1,344
|
144
|
296
|
Per share
amounts:
|
|
|
|
|
|
|
|
|
|
FFO(1)
|
0.015
|
0.005
|
0.011
|
0.010
|
0.007
|
0.006
|
0.012
|
0.013
|
|
AFFO(1)
|
0.015
|
0.004
|
0.011
|
0.010
|
0.007
|
0.005
|
0.011
|
0.012
|
|
Net profit
(loss)
|
0.010
|
(0.010)
|
(0.002)
|
(0.002)
|
(0.005)
|
0.011
|
0.001
|
0.002
|
|
|
|
|
|
|
|
|
|
|
For the three months ended December 31,
2016, revenue was $21,758
(December 31, 2015 - $13,796), an increase of 57.7%, and centre margin
was $5,616 (December 31, 2015 - $3,629), an increase of 54.8%. Centre margin year
over year as a percentage of revenue was 25.8% compared to 26.3% in
2015. The reasons for the increase in revenue and slight reduction
of centre margin as a percentage of revenue was primarily caused by
two factors: (i) the decline in enrollment in Stabilized centres in
Alberta combined with operational
restraints on realizing labour savings on lower enrollment levels
due to regulated educator and staff ratios; and (ii) an aggressive
enrollment campaign to swiftly achieve high occupancy in
newly-opened centres in Alberta
resulted in near-term labour-to-revenue metrics that were
non-optimal. However, on a sequential quarter basis, Centre margin
improved to 25.8% from 21.9%, which reflects the impact of
acquisitions, improvement in new centre operating metrics and
seasonality.
For the year ended December 31,
2016, the Company reported record revenue of $69,209 (December 31,
2015 - $54,170) and centre
margin of $17,639 (December 31, 2015 - $14,819). Revenue increased 27.8% due to three
major factors: tuition from the acquired Peekaboo centres and
Lawrence Park, revenue from new locations in Cochrane, Calgary and Edmonton
Alberta, and moderate year over year increases in tuition
fees. These were partially offset by a decline in Stabilized
centres' occupancy due to lower enrollment levels in Alberta, but partially compensated for by
increased occupancy in Ontario and
British Columbia. Centre margin
decreased to 25.5% compared to 27.4% in 2015. The factors related
to centre margin were primarily the same as the two factors
discussed in the three months paragraph above.
Adjusted EBITDA, FFO and AFFO
|
|
|
|
|
|
|
|
|
|
Q4
2016
|
Q3
2016
|
Q2
2016
|
Q1
2016
|
Q4
2015
|
Q3
2015
|
Q2
2015
|
Q1
2015
|
Centre margin for the
period
|
5,616
|
3,672
|
|
4,249
|
|
4,102
|
|
3,629
|
|
3,265
|
|
3,976
|
3,949
|
General and
administrative expense
|
(1,109)
|
(1,204)
|
(1,273)
|
(1,345)
|
(1,129)
|
(1,271)
|
(1,258)
|
(1,192)
|
Taxes, other than
income taxes
|
(73)
|
(37)
|
(28)
|
(38)
|
(41)
|
(40)
|
(44)
|
(43)
|
Operating lease
expense
|
(1,770)
|
(1,392)
|
(1,191)
|
(1,144)
|
(1,153)
|
(1,039)
|
(893)
|
(895)
|
Adjusted
EBITDA
|
$
|
2,664
|
$
|
1,039
|
$
|
1,757
|
$
|
1,575
|
$
|
1,306
|
$
|
915
|
$
|
1,781
|
$
|
1,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4
2016
|
Q3
2016
|
Q2
2016
|
Q1
2016
|
Q4
2015
|
Q3
2015
|
Q2
2015
|
Q1
2015
|
Net profit (loss)
before taxes for the period
|
(454)
|
|
(1,139)
|
|
(264)
|
|
(182)
|
|
(560)
|
|
1,344
|
|
144
|
296
|
Depreciation and
certain other non-cash items
|
1,910
|
1,208
|
1,083
|
1,025
|
969
|
815
|
948
|
941
|
Acquisition and
development costs
|
365
|
506
|
526
|
387
|
468
|
328
|
344
|
314
|
Restructuring
costs
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Loss on disposition
of development land
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Gain on sale and
leaseback
|
-
|
-
|
-
|
-
|
-
|
(1,791)
|
-
|
-
|
FFO(1)
|
$
|
1,821
|
$
|
575
|
$
|
1,345
|
$
|
1,230
|
$
|
877
|
$
|
696
|
$
|
1,436
|
$
|
1,551
|
Share-based
compensation
|
106
|
110
|
114
|
117
|
272
|
63
|
153
|
78
|
Maintenance capital
expenditures
|
(128)
|
(207)
|
(183)
|
(92)
|
(298)
|
(163)
|
(216)
|
(113)
|
AFFO(1)
|
$
|
1,799
|
$
|
478
|
$
|
1,276
|
$
|
1,255
|
$
|
851
|
$
|
596
|
$
|
1,373
|
$
|
1,516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA for the fourth quarter of 2016 was $2,664 compared to $1,306 in 2015. Adjusted EBITDA increased
$1.4 million mainly due to
contribution from the Peekaboo portfolio, the impact of new centre
openings and net improvement in Stabilized centres across all three
provinces, including a modest pick up in Alberta centres where centre margin exceeded
prior year levels despite lower occupancy.
Adjusted EBITDA for the year ended December 31, 2016 was $7,035 compared to $5,821 in 2015, an increase of 20.9%. Adjusted
EBITDA for the year was favourably impacted by the acquisition of
the Peekaboo and Lawrence Park centres, although the fourth quarter
for these centres is a seasonally low period, and the opening of
new centres with very strong enrollment and revenue levels but
tempered by non-optimal expense levels pending the normalization
process we implement subsequent to all new centre openings.
Improvements in the balance of the Ontario and British
Columbia portfolio operations also favourably impacted
Adjusted EBITDA, offset by the effects of a decline in the Alberta
Stabilized centre occupancy owing to the economic challenges in
that province.
FFO for the fourth quarter of 2016 was $1,821 compared to $877 in the fourth quarter of 2015, due primarily
to the acquisition and contribution of new centres. FFO per share
for the fourth quarter of 2016 was $0.015 compared to $0.007 for the same period in 2015.
FFO for the year ended December 31,
2016 was $4,970 compared to
$4,560 for the year ended
December 31, 2015 reflecting,
primarily, Peekaboo portfolio contribution for four months, new
centre openings and Stabilized centre net improvements. FFO per
share for the year ended December 31,
2016 was $0.041 compared to
$0.038 for the same period in
2015.
AFFO for the fourth quarter of 2016 was $1,799 compared to $851 a year earlier. AFFO increased period over
period primarily due to the same factors noted above for the year
ended December 31, 2016. AFFO per
share for the fourth quarter of 2016 was $0.015 compared to $0.007 for the fourth quarter of 2015.
AFFO for the year ended December 31,
2016 was $4,808 ($0.040 per share) compared to AFFO of
$4,336 ($0.036 per share) for the year ended December 31, 2015. AFFO increased year over year
primarily due to higher FFO.
Net profit for the three months ended December 31, 2016 was $1,247 compared to a net loss a year earlier of
$560. A deferred income tax recovery
of $1,765 was reported in the fourth
quarter of 2016, favourably impacting net profit. Basic and diluted
net profit (loss) per share for the three months ended December 31, 2016 was $0.010 (December 31,
2015 - $(0.05)).
Net loss for the year ended December 31,
2016 was $338 compared to a
net profit of $1,224 for the year
ended December 31, 2015. Net profit
reported in 2015 was favourably impacted by a $1,791 million gain on the sale and leaseback of
the McKenzie Towne centre. Basic and diluted net profit (loss) per
share for the twelve months ended December
31, 2016 was $(0.003)
(December 31, 2015 - $0.010).
Both periods in 2016 were impacted by the cost of opening new
centres, a greater level of property acquisition and development
related costs, which, pursuant to IFRS accounting principles are
required to be expensed in the quarter incurred. However, the
economic returns of these expenditures will benefit the Company for
many future years.
For the year ended December 31,
2016, occupancy for Alberta Stabilized centres averaged
81.8% compared to 87.1% in the prior year. BrightPath experienced
continued pressure on enrollments at its Stabilized centres in
Alberta from the effects of the
economic downturn; more recently, however, this pressure is showing
signs of abating. In contrast to the Stabilized centres, newly
opened centres continued to benefit from strong market demand,
irrespective of the economic challenges in the province. The
Company's Creekside and West Henday centres that opened in
November 2015 and April 2016, respectively, achieved impressive
average occupancies of 96.1% in the fourth quarter of 2016, both
far exceeding the Company's pro forma expectations of enrollment
levels and the timeframe to achieve stabilization.
With the successful acquisitions of Lawrence Park and Peekaboo
completed in June 2016 and
August 2016, respectively,
Ontario has become BrightPath's
largest market, representing 45.9% of the Company's total licensed
capacity as at December 31, 2016.
Ontario occupancy levels for
comparable centres increased 4.5 percentage points to 76.1% on a
year over year basis. Likewise, in the fourth quarter, Ontario occupancy levels for comparable
centres increased to 74.5% from 69.0% in 2015. Including the
Lawrence Park and Peekaboo centres, Ontario portfolio occupancy increased to 74.7%
in the fourth quarter of 2016.
The Peekaboo portfolio contributed four months of results to the
2016 fiscal year. On a sequential quarter basis, average occupancy
improved 7.2% from 67.6% in the third quarter to 74.8% in the
fourth quarter, which reflects, primarily, seasonality and
improvement in centre operating metrics. The integration is
proceeding well and meeting targeted objectives. Improved results
are expected as the Company's operational, marketing and management
systems are applied to the Peekaboo portfolio.
Occupancy in British Columbia
centres increased to 83.6% for the year ended December 31, 2016 from 81.9% in 2015. For the
fourth quarter of 2016, centre occupancy increased to 85.6% from
82.5% a year earlier. The Surrey
facility, which opened in September
2014, was considered Stabilized as of October 2016, achieving average occupancy of
81.0% for the year ended December 31,
2016 compared to 50.6% a year earlier. Average occupancy at
Surrey for the fourth quarter
increased to 84.8% from 66.9% in 2015.
Centre Portfolio Overview
The Company's centre locations, number of licensed spaces and
average occupancies are provided in the following table. Centres
typically experience lower levels of attendance June through
October 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
December 31,
2016
|
Three months
ended
December 31,
2015
|
Year
ended
December 31,
2016
|
Year
ended
December 31,
2015
|
|
Alberta
|
|
|
|
|
|
Ending Centres
#
|
31
|
30
|
31
|
30
|
|
Ending Spaces
#
|
3,378
|
3,238
|
3,378
|
3,238
|
|
Avg. Occupancy
%
|
80.9
|
84.7
|
81.8
|
87.1
|
|
|
|
|
|
|
British
Columbia
|
|
|
|
|
|
Ending Centres
#
|
8
|
7
|
8
|
7
|
|
Ending Spaces
#
|
764
|
577
|
764
|
577
|
|
Avg. Occupancy
%
|
85.6
|
82.5
|
83.6
|
81.9
|
|
|
|
|
|
|
Ontario
|
|
|
|
|
|
Ending Centres
#
|
35
|
14
|
35
|
14
|
|
Ending Spaces
#
|
3,934
|
1,402
|
3,934
|
1,402
|
|
Avg. Occupancy
%
|
74.7
|
69.0
|
74.1
|
71.6
|
|
|
|
|
|
|
Total Stabilized
Centres
|
|
|
|
|
|
Ending Centres
#
|
74
|
51
|
74
|
51
|
|
Ending Spaces
#
|
8,076
|
5,217
|
8,076
|
5,217
|
|
Avg. Occupancy
%
|
78.3
|
80.3
|
78.2
|
82.3
|
Non-stabilized
Centres
|
|
|
|
|
Alberta
|
|
|
|
|
Ending Centres
#
|
2
|
2
|
2
|
2
|
Ending Spaces
#
|
494
|
367
|
494
|
367
|
Avg. Occupancy
%
|
96.1
|
49.5
|
83.2
|
46.7
|
|
|
|
|
|
British
Columbia
|
|
|
|
|
Ending Centres
#
|
-
|
1
|
-
|
1
|
Ending Spaces
#
|
-
|
206
|
-
|
206
|
Avg. Occupancy
%
|
-
|
66.9
|
-
|
50.6
|
|
|
|
|
|
Ontario
|
|
|
|
|
Ending Centres
#
|
-
|
-
|
-
|
-
|
Ending Spaces
#
|
-
|
-
|
-
|
-
|
Avg. Occupancy
%
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Total
Non-stabilized Centres
|
|
|
|
|
Ending Centres
#
|
2
|
3
|
2
|
3
|
Ending Spaces
#
|
494
|
573
|
494
|
573
|
Avg. Occupancy
%
|
96.1
|
56.8
|
83.2
|
49.5
|
Total Portfolio
(All Centres)
|
|
|
|
|
Ending Centres
#
|
76
|
54
|
76
|
54
|
Ending Spaces
#
|
8,570
|
5,790
|
8,570
|
5,790
|
Avg. Occupancy
%
|
79.3
|
78.2
|
78.5
|
80.6
|
|
|
|
|
|
Deferred Share Units ("DSUs")
For the three months ended December 31,
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 $0.07 million fair value
in respect of 161,929 DSUs. The DSUs were issued on January 12, 2017.
Outlook
The 2016 year was a very solid and transformational period for
BrightPath and positions the Company well to drive significant
additional growth and profitability in 2017.
For the year ended December 31,
2016, despite challenges in the Alberta market, the Company increased revenue
and centre margin on a year over year basis by 27.8% and 19.0%,
respectively, and reported Adjusted EBITDA of $7,035, an improvement of 20.9% over the prior
year. Fourth quarter FFO showed a 107% increase versus the prior
year.
The Company remains focused on generating substantially higher
Adjusted EBITDA and enhancing shareholder value through:
- integration of Peekaboo portfolio centres and realization of
pro-forma financial performance as a result;
- 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 cash flow from development initiatives, as well as
those in the pipeline but not yet announced;
- selective acquisitions;
- delivering a significant increase in EBITDA by harvesting the
financial returns from significant investments in acquisitions,
developments, the Peekaboo acquisition and operational systems the
Company has successfully implemented, as well as the additional
growth pipeline in 2017; and
- other measures to enhance shareholder value, including
monetization of select assets and the NCIB program.
For the year ended December 31, 2016, enrollment levels,
revenue and centre margin 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, however, there are signs that the Alberta economy is entering recovery mode and
management anticipates recovery of the modest enrollment losses as
employment rates improve.
Despite the economic challenges in Alberta, strong market demand for early
learning and care in newly opened centres in that province
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 at
enrollment levels well below that achieved by BrightPath centres).
This success provides validation of both the quality of the
Company's product and its ability to effectively identify
under-served markets within major metropolitan areas. At the
same time, however, it is important to note that swift enrollment
increases have triggered short-term inefficiencies in
labour-to-revenue metrics that are addressed as enrollments build
and operations improve, and as these centres achieve the provincial
Accreditation designation. As of February
2017, all of these centres have achieved Accreditation which
will enhance their profitability throughout 2017.
In British Columbia, the
Company continues to focus on building enrollments further and
managing labour and operating costs to continuously improve
earnings and cash flow. The Company is looking for opportunities to
grow and develop larger facilities, offering an appropriate scale
of operations, in the suburban markets surrounding Vancouver.
In Ontario, with a more stable
market landscape and clear understanding of the new demand patterns
for early learning and care, management has focused on building
enrollment levels and pursuing opportunities for growth in this
market. Occupancy in total Ontario
centres increased 5.7 and 2.5 percentage points for the three and
twelve months ended December 31,
2016, respectfully, on a year over year basis. Occupancy
levels for Ontario comparable
centres increased 5.5 percentage points to 74.5% in the fourth
quarter of 2016 and 4.5 percentage points to 76.1% for the year
ended December 31, 2016. The Company
continues to concentrate on becoming Ontario parents' provider of choice through
effective marketing of BrightPath's high quality curriculum and
programming. The Company also continues to pursue opportunities to
add capacity and grow BrightPath's base of centres. BrightPath's
completion of the transformative acquisition of Peekaboo further
augmented the accretive growth in the Ontario market. It is anticipated to be highly
and immediately accretive to FFO per share as a result of
Peekaboo's profitable operations.
Reflected in the Company's 2016 results are $1.2 million of non-recurring expenses of future
benefit, including expenditures to complete BrightPath's two
Ontario acquisitions, investment
in short term non-optimal labour metrics to support a swift build
of enrollments, pre-accreditation centre staff wage top-ups and
investment in the Company's enhanced website and CRM
system.
The significant growth in revenue, EBITDA and cash flow per
share BrighPath delivered in 2016 was achieved with a relatively
constant total General & Administration expense as compared to
2015 (including the one time expenditures noted herein). This
underscores both the value, and operational and financial leverage,
of BrighPath's current management platform and the financial upside
to shareholders through advancing incremental growth
initiatives.
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
current price of the Company's common shares on the TSX Venture
exchange increasingly does not appropriately or adequately reflect
the Company's current value, operational performance, financial
results and strategic achievements, or its near and longer term
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 to its
business and hence, a significant discount to net asset value. The
Company continues to work towards closing the gap between its net
asset value/private market value and its current market
capitalization by executing its strategic and operational business
initiatives successfully and advancing further near term
initiatives to surface shareholder value.
QUARTERLY CONFERENCE CALL
BrightPath's quarterly results conference call is scheduled for
Friday, April 21, 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
Friday, May 5, 2017 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
|
|
|
(CDN
$000's)
|
December
31, 2016
|
December
31, 2015
|
Assets
|
|
|
|
|
|
Non-current
assets
|
|
|
|
Restricted
cash
|
$
|
700
|
$
|
-
|
|
Property and
equipment
|
|
56,480
|
|
49,779
|
|
Goodwill and definite
life intangible assets
|
51,393
|
30,042
|
|
108,573
|
79,821
|
Current
assets
|
|
|
|
Cash
|
6,405
|
1,537
|
|
Restricted
cash
|
2,150
|
-
|
|
Accounts
receivable
|
2,282
|
1,958
|
|
Prepaid expenses and
deposits
|
1,821
|
1,716
|
|
Short term
investments
|
39
|
39
|
|
12,697
|
5,250
|
|
|
|
Total
Assets
|
$
|
121,270
|
$
|
85,071
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
Long term debt and
financing leases
|
$
|
42,936
|
$
|
14,697
|
|
Convertible
debentures – liability component
|
|
-
|
|
4,304
|
|
Other
liabilities
|
|
700
|
|
|
|
43,636
|
19,001
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
12,466
|
5,198
|
|
Provision for
restructuring costs
|
-
|
45
|
|
Deferred
revenue
|
1,900
|
955
|
|
Current portion of
debt and financing leases
|
3,717
|
5,184
|
|
Convertible
debentures – liability component
|
4,968
|
-
|
|
23,051
|
11,382
|
|
|
|
Total
Liabilities
|
66,687
|
30,383
|
Shareholders'
Equity
|
|
|
|
Share
capital
|
64,983
|
65,374
|
|
Convertible
debentures – equity component
|
342
|
342
|
|
Equity settled
share-based compensation
|
3,432
|
2,985
|
|
Accumulated
deficit
|
(14,174)
|
(14,013)
|
Total
Shareholders' Equity
|
54,583
|
54,688
|
|
|
|
Total Liabilities
and Shareholders' Equity
|
$
|
121,270
|
$
|
85,071
|
BrightPath Early Learning Inc.
Consolidated
Statements of Operations and Comprehensive Income
(Loss)
Three and twelve months ended December 31, 2016 and 2015
|
|
|
|
Three months
ended
December 31,
|
Year
ended December
31,
|
(CDN $000's except
for per share amounts)
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Revenue
|
$
|
21,224
|
$
|
13,271
|
$
|
67,309
|
$
|
52,409
|
Government
grants
|
|
534
|
|
525
|
|
1,900
|
|
1,761
|
Total
revenue
|
|
21,758
|
|
13,796
|
|
69,209
|
|
54,170
|
|
|
|
|
|
Centre
expenses
|
|
|
|
|
|
Salaries, wages and
benefits
|
12,276
|
7,500
|
38,720
|
29,228
|
|
Other operating
expenses
|
3,866
|
2,667
|
12,850
|
10,123
|
Centre
margin
|
5,616
|
3,629
|
17,639
|
13,700
|
|
|
|
|
|
Operating
leases
|
1,770
|
1,153
|
5,497
|
3,980
|
Finance
costs
|
884
|
303
|
2,071
|
1,334
|
General and
administrative
|
1,182
|
1,129
|
4,931
|
4,850
|
Taxes, other than
income taxes
|
73
|
41
|
176
|
168
|
Acquisition and
development
|
365
|
468
|
1,784
|
1,454
|
Gain on sale and
leaseback
|
-
|
-
|
-
|
(1,791)
|
Share-based
compensation
|
106
|
272
|
447
|
566
|
Depreciation and
amortization
|
1,615
|
808
|
4,493
|
3,139
|
|
5,922
|
4,174
|
19,399
|
13,700
|
|
|
|
|
|
Profit (loss) before
other income and income taxes
|
(306)
|
(545)
|
(1,760)
|
1,119
|
|
|
|
|
|
Other income
(expense)
|
(148)
|
(15)
|
(279)
|
105
|
Profit (loss)
before income taxes
|
(454)
|
(560)
|
(2,039)
|
1,224
|
|
|
|
|
|
Income tax recovery
(expense)
|
1,701
|
-
|
1,701
|
-
|
Net Profit (Loss)
and Total Comprehensive Income (Loss)
|
$
|
1,247
|
$
|
(560)
|
$
|
(338)
|
$
|
1,224
|
|
|
|
|
|
Net profit (loss) per
share
|
|
|
|
|
|
Basic
|
$
|
0.010
|
$
|
(0.005)
|
$
|
(0.003)
|
$
|
0.010
|
|
Diluted
|
$
|
0.010
|
$
|
(0.005)
|
$
|
(0.003)
|
$
|
0.010
|
|
|
|
|
|
BrightPath Early Learning Inc.
Consolidated
Statements of Changes in Shareholders' Equity
Years ended
December 31, 2016 and 2015
|
|
|
|
|
|
(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
|
|
-
|
-
|
566
|
-
|
566
|
|
|
|
|
|
|
|
Shares purchased for
cancellation
|
|
(497)
|
-
|
-
|
190
|
(307)
|
Net profit and
comprehensive income
|
|
-
|
-
|
-
|
1,224
|
1,224
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2015
|
$
|
65,374
|
$
|
342
|
$
|
2,985
|
$
|
(14,013)
|
$
|
54,688
|
|
|
|
|
|
|
|
Balance at January
1, 2016
|
$
|
65,374
|
$
|
342
|
$
|
2,985
|
$
|
(14,013)
|
$
|
54,688
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
-
|
-
|
|
447
|
|
-
|
|
447
|
|
|
|
|
|
|
|
|
|
|
Shares purchased for
cancellation
|
|
(391)
|
-
|
|
-
|
|
177
|
|
(214)
|
|
|
|
|
|
|
|
|
|
|
Net loss and
comprehensive loss
|
|
-
|
-
|
|
-
|
|
(338)
|
|
(338)
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2016
|
$
|
64,983
|
$
|
342
|
$
|
3,432
|
$
|
(14,174)
|
$
|
54,583
|
BrightPath Early Learning Inc.
Consolidated
Statements of Cash Flow
Three and twelve months ended
December 31, 2016 and 2015
|
|
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
(CDN
$000's)
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Cash provided by
(used in):
|
|
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
Net profit
(loss)
|
$
|
1,247
|
$
|
(560)
|
$
|
(338)
|
$
|
1,224
|
Items not affecting
cash:
|
|
|
|
|
|
Depreciation and
amortization
|
1,615
|
808
|
4,493
|
3,139
|
|
Depreciation included
in operating costs
|
-
|
41
|
-
|
154
|
|
Finance
costs
|
884
|
303
|
2,071
|
1,334
|
|
Gain on sale and
leaseback
|
-
|
-
|
-
|
(1,791)
|
|
Share-based
compensation
|
106
|
272
|
447
|
566
|
|
Change in fair value
of convertible debenture liability component
|
175
|
(5)
|
307
|
(116)
|
|
Income
taxes
|
(1,701)
|
-
|
(1,701)
|
-
|
Change in non-cash
operating working capital
|
(23)
|
(2,543)
|
4,024
|
168
|
Change in non-current
portion of provision for restructuring costs
|
-
|
-
|
-
|
(45)
|
Cash provided by
(used in) operations
|
2,303
|
(1,684)
|
9,303
|
4,633
|
|
|
|
|
|
Finance costs
paid
|
(626)
|
(338)
|
(1,557)
|
(1,127)
|
|
1,677
|
(2,022)
|
7,746
|
3,506
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
Property and
equipment
|
(1,837)
|
(1,444)
|
(8,207)
|
(10,674)
|
Acquisition through
business combinations, net of cash acquired
|
-
|
-
|
(21,027)
|
-
|
Net proceeds on sale
leaseback
|
-
|
-
|
-
|
7,214
|
|
(1,837)
|
(1,444)
|
(29,234)
|
(3,460)
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
Loan
proceeds
|
-
|
2,997
|
29,309
|
3,931
|
Loan
repayments
|
(763)
|
(277)
|
(1,856)
|
(5,247)
|
Financing transaction
costs
|
-
|
(4)
|
(542)
|
(36)
|
Finance lease
repayments
|
(78)
|
(86)
|
(316)
|
(281)
|
Shares purchased for
cancellation
|
(2)
|
(155)
|
(239)
|
(331)
|
|
(843)
|
2,475
|
26,356
|
(1,964)
|
|
|
|
|
|
Change in
Cash
|
(1,003)
|
(991)
|
4,868
|
(1,918)
|
Cash at beginning of
period
|
7,408
|
2,528
|
1,537
|
3,455
|
Cash at end of
period
|
$
|
6,405
|
$
|
1,537
|
$
|
6,405
|
$
|
1,537
|
SOURCE BrightPath Early Learning Inc.