Edleun confirms its profitable business model and prospects for
earnings growth
CALGARY,
Nov. 27, 2012 /CNW/ - Edleun
Group, Inc. ("Edleun" or the "Company") (TSXV:
EDU), the leading provider of quality early childhood education and
care in Canada, confirms that its
business model is profitable and takes issue with comments made by
a guest recently appearing on Business News Network.
The Company was founded in May, 2010 and
commenced operations with 1,100 licensed child care spaces in
Alberta. It has experienced
rapid growth and currently owns and operates 50 child care centres
in Alberta, British Columbia and Ontario providing 5,000 licensed child care
spaces.
"As demonstrated by our past performance, Edleun
is already a company that is cash flow positive with a sustainable
- and in fact leveragable - business model," said Dale Kearns, President of Edleun. "In spite of
statements to the contrary, the business model supports the
Company's current valuation and will support growth in the future.
The "same-centre" operating and financial performance of the
centres acquired by Edleun as detailed in quarterly financial
reports unequivocally demonstrates that our business model is not
only working, but frankly, generally delivering results at the
centre level better than expected."
The Company notes that:
- In six of the past eight quarters Edleun has recorded positive
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization). Adjusted EBITDA takes into account transaction
costs, that under IFRS are not capitalized to the acquisitions they
generate and which, in a growth-oriented company, can be
significant as these expenditures contribute to cash flow for many
years even though they are expensed upfront;
- The Company's recently released financial results for the third
quarter of 2012 are less representative of the Company's annual
financial performance because the summer quarter is most
significantly affected by seasonality. There is typically a
reduction in child care centre occupancies, particularly in the
recently-acquired Montessori schools, in the summer months.
Adjusted EBITDA in the most recent third quarter of 2012 was
significantly improved from the loss a year earlier;
- As the Company's recently released third quarter 2012 financial
report indicates, in the past year Edleun has invested
approximately $17 million to develop,
redevelop and open new state of the art child care centres which
have yet to contribute to the Company's profitability;
- There are at least four objective and independent research
analysts that closely cover and assess Edleun's performance that
reference the Company's strategy, market opportunity, valuation and
prospect for share price appreciation;
- According to public sources, Bright Horizons Family Solutions
Inc. ("Bright Horizons"), a large US-based company controlled by
Bain Capital LLC, recently acquired Huntyard Limited ("Huntyard"),
a UK-based owner, operator of child care centres for a price of
$110.8 million. According to the
November 9, 2012 preliminary
prospectus for the proposed Initial Public Offering of Bright
Horizons filed in the United
States, as at December
31st 2011, Huntyard owned and operated 27 child
care centres, generating $42.4
million of revenue and $7.4
million of Income from Operations (analogous to EBITDA). One
can independently apply the financial parameters underlying the
Bright Horizons acquisition of Huntyard to assess the valuation of
Edleun's common shares.
- The potential for Edleun's future growth is significant in the
fact that its current portfolio of 50 child care centres amounts to
less than 1% of the Canadian total availability of child care
spaces, while its peers in other developed countries are much
larger. For example, there are larger and more dominant peers in
other countries such as: Bright Horizons in the United States, which was privatized in
2008 and is now going public again; the Learning Care Group, which
was purchased by Morgan Stanley in 2008; and privately held
KinderCare Learning Centers, part of the Knowledge Learning
Corporation, the largest global owner and operator of early
learning and child care centres; and
- The prospect of the Company's profitability, as detailed in the
Company's recent financial reports, is underscored by a solid and
conservative balance sheet and financial position. Edleun remains
underleveraged with debt capital, has solid banking relationships
and has cash, positive cash flow and credit facilities to advance
its near term pipeline of growth initiatives.
"We continue to view Edleun's prospects for
earnings and cash flow growth as very positive," said Mary Ann Curran, Chief Executive Officer of
Edleun. "While it is typical in the industry that the ramp up in
enrollment to achieve stabilized occupancy can occur over a
24-month period, we believe, and our track record to date
indicates, that our generation of substantial positive cash flow
from our investments can occur much faster than industry averages.
In fact, the McKenzie Towne centre, which just opened in
Calgary in mid-October with 247
licensed child spaces (a size and financial impact of three to four
times greater than a typical acquired centre), is anticipated
to be fully enrolled in January 2013.
Market participants can now begin to model the additional
profitability that these investments are expected to generate for
Edleun. As we increase the occupancy from recent developments and
acquisitions, apply increased focus on operating effectiveness,
continue to pursue our growth strategy through acquisitions,
development, co-locations and ancillary revenues, and further
invest in programming, technology and people, we are confident that
we will deliver substantial returns to our investors and other
stakeholders."
About Edleun Group, Inc.
Edleun is the leading provider of high-quality,
community-based Early Learning & Care child care centres in
Canada offering early education
and child care services to children ages six weeks to 13 years.
Edleun is committed to preparing children for the next step in
their education and life, offering families and employers access to
and choice of quality early childhood education programs, as well
as enhanced opportunities and career advancement for Early
Childhood Educators.
Publicly traded on the Toronto Stock Exchange
(TSX-V:EDU), the Company's objectives include the acquisition and
subsequent improvement of existing child care centres and
developing new state-of-the-art Early Learning and Care Centres in
underserved Canadian communities.
The Company currently has a total of 50 operating centres in its
portfolio a representing approximately 5,010 licensed child care
spaces and seven in various stages of acquisition, development or
redevelopment representing an additional 918 spaces.
Forward-Looking Statements
Certain statements in this Release which are not
historical facts may constitute forward-looking statements or
forward-looking information within the meaning of applicable
securities laws ("forward-looking statements"). Any statements
related to Edleun's projected revenues, earnings, growth rates,
revenue mix, staffing and resources, and product plans are forward
looking statements as are any statements relating to future events,
conditions or circumstances. The use of terms such as "believes",
"anticipated", "expected", "projected", "targeting", "estimate",
"intend" and similar terms are intended to assist in identification
of these forward-looking statements. Readers are cautioned not to
place undue reliance upon any such forward-looking statements. Such
forward-looking statements are not promises or guarantees of future
performance and involve both known and unknown risks and
uncertainties that may cause the actual results, performance,
achievements or developments of Edleun to differ materially from
the results, performance, achievements or developments expressed or
implied by such forward-looking statements. Forward-looking
statements are based on management's current plans, estimates,
projections, beliefs and opinions. Except as required by law,
Edleun does not undertake any obligation to update forward-looking
statements should assumptions related to these plans, estimates,
projections, beliefs and opinions change.
The Company undertakes no obligation, except as
required by law, to update publicly or otherwise any
forward-looking information, whether as a result of new
information, future events or otherwise, or the above list of
factors affecting this information. Many factors could cause the
actual results of Edleun to differ materially from the results,
performance, achievements or developments expressed or implied by
such forward-looking statements.
Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE Edleun Group, Inc.