Bright Horizons Family Solutions Reports Fourth Quarter and Full Year 2018 Financial Results
WATERTOWN, Mass.--(BUSINESS WIRE)--Feb 12, 2019--Bright Horizons Family Solutions ® Inc. (NYSE: BFAM), a leading provider of high-quality child care and early education, back-up care and educational advisory services designed to help employers and families better address the challenges of work and family life, today announced financial results for the fourth quarter and full year of 2018 and provided guidance for 2019.
Fourth Quarter 2018 Highlights (compared to fourth quarter 2017):Revenue increased 9% to $478 million Income from operations increased 22% to $64 million Net income decreased 9% to $47 million and diluted earnings per common share decreased 8% to $0.79
Non-GAAP measuresAdjusted income from operations* increased 19% to $64 million Adjusted EBITDA* increased 14% to $93 million Adjusted net income* increased 22% to $53 million and diluted adjusted earnings per common share* increased 23% to $0.90
Year Ended December 31, 2018 Highlights (compared to year ended December 31, 2017):Revenue increased 9% to $1.9 billion Income from operations increased 16% to $239 million Net income increased 1% to $158 million and diluted earnings per common share increased 3% to $2.66
Non-GAAP measuresAdjusted income from operations* increased 14% to $241 million Adjusted EBITDA* increased 10% to $357 million Adjusted net income* increased 17% to $190 million and diluted adjusted earnings per common share* increased 19% to $3.21
“We are pleased to report strong financial results for the fourth quarter and full year 2018,” said Stephen Kramer, Chief Executive Officer. “Our solid financial results in 2018 reflect the positive momentum across our entire suite of solutions, and we are proud to continue to lead our field in developing and delivering solutions to working families and our client partners that address the challenges for today’s workforce. The results of our most recent Modern Family Index show that the need for these supports continues to grow as working mothers still face bias in the workplace that keeps them from advancing in their careers, even as they bring leadership skills that the workplace needs and that employers require to succeed.”
“As we look ahead to 2019 and beyond, we are well positioned to deliver on our growth plans,” continued Kramer. “The investments we have made in technology and in our employees are already making a meaningful impact. We are particularly excited about the success of our new Teacher Degree Program, which is creating a professional career path for teachers, while ensuring we continue to provide quality early education experiences in the classroom for generations to come.”
Fourth Quarter 2018 Results
Revenue increased $38.4 million, or 9%, in the fourth quarter of 2018 from the fourth quarter of 2017 on contributions from new and ramping full-service child care centers, average price increases of 3-4%, and expanded sales of our back-up care and educational advisory services.
Income from operations was $63.7 million for the fourth quarter of 2018, an increase from $52.3 million in the same 2017 period. Increases in revenue and gross profit reflect contributions from enrollment gains in mature and ramping centers, new child care centers, back-up care and educational advisory clients that have increased utilization levels or been added since the fourth quarter of 2017, and strong cost management. These gains were partially offset by investments in marketing and technology to support our customer user experience, service delivery and operating efficiency, and costs incurred during the pre-opening and ramp-up phase of newer lease/consortium centers. Net income was $46.7 million for the fourth quarter of 2018 compared to net income of $51.4 million in the same 2017 period, a decrease of $4.7 million, or 9%. The decrease is primarily attributable to the one-time reduction to tax expense of $22.3 million in the fourth quarter of 2017, offset by a reduction in the federal statutory income tax rate from 35% to 21% in 2018, both of which are associated with the application of the U.S. Tax Cuts and Jobs Act’s federal tax legislation, enacted in December 2017. Diluted earnings per common share was $0.79 for the fourth quarter of 2018 compared to $0.86 in the fourth quarter of 2017.
In the fourth quarter of 2018 adjusted EBITDA increased $11.2 million, or 14%, to $93.3 million, and adjusted income from operations increased $10.1 million, or 19%, to $63.7 million, from the fourth quarter of 2017 due primarily to the expanded gross profit. Adjusted net income increased by $9.5 million, or 22%, to $53.2 million on the expanded income from operations and a lower effective tax rate associated with the reduction in the federal statutory rate. Diluted adjusted earnings per common share was $0.90 compared to $0.73 in the fourth quarter of 2017.
As of December 31, 2018, the Company operated 1,082 child care and early education centers with the capacity to serve approximately 120,000 children and families.
*Adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share are non-GAAP measures. Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, straight line rent expense, stock-based compensation expense, and transaction costs. Adjusted income from operations represents income from operations before transaction costs. Adjusted net income represents net income determined in accordance with GAAP, adjusted for stock-based compensation expense, amortization expense, transaction costs and the income tax provision (benefit) thereon. Diluted adjusted earnings per common share is a non-GAAP measure, calculated using adjusted net income. These non-GAAP measures are more fully described and are reconciled from the respective measures determined under GAAP, in “Presentation of Non-GAAP Measures” and the attached table “Bright Horizons Family Solutions Inc. Non-GAAP Reconciliations.”
Balance Sheet and Cash Flow
For the year ended December 31, 2018, the Company generated approximately $294.7 million of cash flows from operations compared to $248.2 million for the same period in 2017 and invested $158.5 million in fixed assets and acquisitions compared to $105.3 million in the same 2017 period. Net cash used in financing activities totaled $134.2 million in the year ended December 31, 2018 compared to $123.9 million during the same 2017 period. During the year ended December 31, 2018, the Company’s cash and cash equivalents decreased $7.8 million to $15.5 million.
As described below, the Company is providing certain financial guidance. For the full year 2019, the Company currently expects:Revenue growth in 2019 in the range of 8-10% Net income in 2019 in the range of $170 million to $174 million and diluted earnings per common share in the range of $2.89 to $2.95 Adjusted net income in the range of $209 million to $214 million and diluted adjusted earnings per common share in the range of $3.57 to $3.63 Diluted weighted average shares of approximately 59 million shares
For a reconciliation of the non-GAAP measures to their most directly comparable GAAP measure, refer to the attached table “Bright Horizons Family Solutions Inc. Non-GAAP Reconciliations.”
Bright Horizons Family Solutions will host an investor conference call today at 5:00 pm ET. Interested parties are invited to listen to the conference call by dialing 1-877-407-9039 or, for international callers, 1-201-689-8470, and asking for the Bright Horizons Family Solutions conference call moderated by Chief Executive Officer Stephen Kramer. Replays of the entire call will be available through March 5, 2019 at 1-844-512-2921 or, for international callers, at 1-412-317-6671, conference ID #13678193. The webcast of the conference call, including replays, and a copy of this press release are also available through the Investor Relations section of the Company’s web site, www.brighthorizons.com.
This press release includes statements that express the Company’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” The Company’s actual results may vary significantly from the results anticipated in these forward-looking statements, which can generally be identified by the use of forward-looking terminology, including the terms “believes,” “expects,” “may,” “will,” “should,” “seeks,” “projects,” “approximately,” “intends,” “plans,” “estimates” or “anticipates,” or, in each case, their negatives or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They include statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth plan, strategies, our service offerings, our clients, estimated effective tax rate and tax expense, estimates and impact of excess tax benefits and equity transactions, our investments, including our Teacher Degree Program, and our 2019 financial guidance. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company believes that these risks and uncertainties include, but are not limited to, changes in the demand for child care and other dependent care services, including variation in enrollment trends and lower than expected demand from employer sponsor clients; the possibility that acquisitions may disrupt our operations and expose us to additional risk; our ability to pass on our increased costs; our indebtedness and the terms of such indebtedness; our ability to withstand seasonal fluctuations in the demand for our services; our ability to implement our growth strategies successfully; the impact of recently enacted tax legislation; and other risks and uncertainties more fully described in the “Risk Factors” section of our Annual Report on Form 10-K filed February 28, 2018, and other filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the time of this release and we do not undertake to publicly update or revise them, whether as a result of new information, future events or otherwise, except as required by law.
Presentation of Non-GAAP Measures
In addition to the results provided in accordance with U.S. generally accepted accounting principles (“GAAP”) throughout this press release, the Company has provided non-GAAP measurements - adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share - which present operating results on a basis adjusted for certain items. The Company uses these non-GAAP measures as key performance indicators for the purpose of evaluating performance internally, and in connection with determining incentive compensation for Company management, including executive officers. Adjusted EBITDA is also used in connection with the determination of certain ratio requirements under our credit agreement. We also believe these non-GAAP measures provide investors with useful information with respect to our historical operations. These non-GAAP measures are not intended to replace, and should not be considered superior to, the presentation of our financial results in accordance with GAAP. The use of the terms adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures. Adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share are reconciled from the respective measures under GAAP in the attached table “Bright Horizons Family Solutions Inc. Non-GAAP Reconciliations.”
Guidance for non-GAAP financial measures excludes stock-based compensation, amortization of intangible assets, expenses related to the completion of debt financing transactions, and expenses associated with completed acquisitions as well as tax effects associated with these items. These adjustments to net income and diluted earnings per common share in future periods are generally expected to be similar to the types of charges and costs excluded from adjusted net income and adjusted diluted earnings per common share in prior quarters, although we can provide no assurance as to the timing or magnitude of any such adjustments. The exclusion of these charges and costs in future periods will have an impact on the Company’s adjusted net income and adjusted diluted earnings per common share.
About Bright Horizons Family Solutions Inc.
Bright Horizons is trusted by families around the world to provide care and education for their children. Operating approximately 1,100 child care centers, Bright Horizons cares for approximately 120,000 children annually in the United States, the United Kingdom, the Netherlands, Canada and India. Used by more than 1,100 of the world’s best employers across industries, Bright Horizons back-up and elder care, education advising, tuition program management, and student loan repayment programs support employees through every life and career stage, and help people succeed at work and at home. For more information, go to www.brighthorizons.com.
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CFO - Bright Horizons
MD - Solebury Communications Group
VP - Communications - Bright Horizons
KEYWORD: UNITED STATES NORTH AMERICA MASSACHUSETTS
INDUSTRY KEYWORD: EDUCATION BABY/MATERNITY CHILDREN PARENTING PRESCHOOL CONSUMER
SOURCE: Bright Horizons Family Solutions Inc.
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PUB: 02/12/2019 04:23 PM/DISC: 02/12/2019 04:23 PM