TORONTO, March 30, 2016 /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 5,790 spaces of licensed
capacity within 54 centres located in Alberta, British
Columbia and Ontario,
announced today its operational and financial results for the three
and twelve month periods ended December
31, 2015.
Portfolio performance highlights for the year ended December 31, 2015 are as follows (all comparisons
are against the prior year period):
- Revenue increased 6.6% to $54.2
million, with higher revenue reported across all provincial
markets;
- Centre margin rose to 27.4% of revenue compared to 27.2%, with
all provincial markets achieving higher centre margin;
- Adjusted EBITDA of $5.8 million
compared to $6.0 million;
- Funds from Operations ("FFO") of $4.6
million ($0.038 per share)
compared to $4.7 million
($0.039 per share);
- Adjusted Funds from Operations ("AFFO") of $4.3 million ($0.036 per share) compared to $4.3 million ($0.036 per share);
- Net profit of $1.2 million
compared to a net loss of $1.6
million;
- Average occupancy of Stabilized centres of 82.3% compared to
83.8%;
- Notwithstanding the recent economic challenges in the
Alberta market, the Company:
- Delivered year over year increases in revenue and centre margin
in all provincial markets; and
- Achieved high initial enrollment levels in new centre openings
from its growth pipeline, significantly exceeding both its pro
forma budgets and industry metrics; and
- Available capital of $23.6
million at year end to fund the Company's pipeline of growth
initiatives, including both the announced additional 814 licensed
spaces that represent a 14% increase in the Company's current
portfolio of 5,790 spaces, as well as other growth initiatives not
yet announced.
Highlights for the three months ended December 31, 2015 include:
- Revenue increased 6.9% to $13.8
million, with higher revenue achieved in all provincial
markets;
- Centre margin declined modestly to $3.6
million from $3.7 million,
with a decline in Alberta
offsetting higher centre margin reported in Ontario and British
Columbia;
- Adjusted EBITDA of $1.3 million,
a decrease of $0.6 million;
- FFO of $0.9 million ($0.007 per share) compared to $1.6 million ($0.013 per share);
- AFFO of $0.9 million
($0.007 per share) compared to
$1.4 million ($0.012 per share);
- Net loss of $0.6 million compared
to a net loss of $0.1 million;
and
- Average occupancy of Stabilized centres of 80.3% compared to
84.2%, largely reflecting weakness in Alberta.
Significant events for the year ended December 31, 2015 include:
- Construction of the Company's first new development in
Edmonton began in May 2015. The West Henday centre, comprising 247
licensed spaces in a 20,000 square foot facility developed by
BrightPath, will open in April
2016;
- In November 2015, following on
the enrollment success and market demand for the Creekside centre,
the Company announced plans to open a new centre nearby in Riocan
REIT's Sage Hill Crossing. When completed in early 2017, the Sage
Hill centre will offer approximately 130 licensed spaces in 10,000
square feet of leasehold premises;
- The Company announced plans to develop a new centre in an
underserved market in southwest Calgary. The Richmond Early Learning and Child
Care Centre will create 247 licensed spaces in a 20,000 square foot
facility on a one-acre land parcel within First Capital Realty
Inc.'s ("First Capital") London Place West shopping centre.
Construction of the facility is expected to begin in the second
quarter of 2016;
- In November 2015, the Creekside
centre in the Symons Valley area of northwest Calgary was opened, comprising 247 licensed
spaces in a 20,000 square foot facility developed by
BrightPath;
- In September 2015, a new centre
located west of Calgary in
Cochrane was opened, creating 120
licensed spaces in leased premises;
- The expansion of the Company's Airdrie centre, located in a suburban
community north of the city of Calgary, was opened in July 2015, increasing its licensed capacity from
57 licensed spaces to 117. Based on its success, a further
expansion to 147 licensed spaces to satisfy a wait list is
underway;
- In August 2015, BrightPath
completed the sale and leaseback of the real estate underlying its
McKenzie Towne location in southeast Calgary with an affiliate of First Capital for
gross proceeds of $7.5 million. This
transaction generated $3.2 million of
cash after repayment of indebtedness and fees and $4.0 million of additional bank financing
capacity to provide a total of $7.2
million of incremental growth capital to augment funding for
the Company's growth pipeline and share repurchase program;
and
- Under the Company's normal course issuer bid, during the three
and twelve months ended December 31,
2015, the Company purchased 364,500 and 916,200 shares,
respectively, for cancellation, of which 798,700 had been cancelled
at December 31, 2015. Cumulatively to
date, the Company has purchased for cancellation 1,701,200 shares
under its NCIB program at an average price of $0.33 per share.
"We are pleased with the Company's financial results, improving
operations in British Columbia and
Ontario, the resiliency of
operations in Alberta in light of
challenging economic conditions and successful openings of new
centres in Alberta during 2015,"
noted Mary Ann Curran, Chief
Executive Officer of the Company. "Delivering the highest product
and service offering, we are the early childhood education and care
provider of choice, resulting in enrollment levels above industry
standards. The Company is also managing costs and successfully
expanding BrightPath's capacity through new locations with
demonstrated high demand. We remain focused on realizing the
benefits from these same priorities and further enhancing
shareholder value in 2016."
Financial Review
($000's except where otherwise noted and per share amounts)
|
|
|
|
|
|
|
|
|
Year ended
December 31,
|
|
|
|
|
|
2015
|
2014
|
2013
|
Centres at end of
year (#)
|
|
|
|
|
|
54
|
52
|
51
|
Licensed spaces at
end of year (#)
|
|
|
|
|
|
5,790
|
5,372
|
5,137
|
Average occupancy
(%)
|
|
|
|
|
|
80.6
|
83.1
|
84.2
|
Ending occupancy
(%)
|
|
|
|
|
|
77.7
|
82.0
|
84.1
|
Revenue
($)
|
|
|
|
|
|
54,170
|
50,808
|
46,818
|
Centre margin
($)
|
|
|
|
|
|
14,819
|
13,819
|
12,176
|
Adjusted EBITDA
($)
|
|
|
|
|
|
5,821
|
5,954
|
3,048
|
FFO ($)
|
|
|
|
|
|
4,560
|
4,693
|
1,895
|
FFO per share
($)
|
|
|
|
|
|
0.038
|
0.039
|
0.016
|
AFFO ($)
|
|
|
|
|
|
4,336
|
4,334
|
1,986
|
AFFO per share
($)
|
|
|
|
|
|
0.036
|
0.036
|
0.016
|
Net profit (loss)
($)
|
|
|
|
|
|
1,224
|
(1,568)
|
(3,469)
|
Net profit (loss) per
share ($)
|
|
|
|
|
|
0.010
|
(0.013)
|
(0.028)
|
Total assets
($)
|
|
|
|
|
|
85,071
|
82,877
|
83,298
|
Total long-term
financial liabilities ($)
|
|
|
|
|
|
19,001
|
24,162
|
22,467
|
|
|
|
|
|
|
|
|
|
|
Q4
2015
|
Q3
2015
|
Q2
2015
|
Q1
2015
|
Q4
2014
|
Q3
2014
|
Q2
2014
|
Q1
2014
|
Revenue
|
$
|
13,796
|
$
|
12,815
|
$
|
13,912
|
$
|
13,647
|
$
|
12,911
|
$
|
12,013
|
$
|
13,181
|
$
|
12,703
|
Centre
margin
|
|
3,629
|
|
3,265
|
|
3,976
|
|
3,949
|
|
3,741
|
|
2,782
|
|
3,670
|
|
3,626
|
Centre margin
%
|
|
26.3
|
|
25.5
|
|
28.6
|
|
28.9
|
|
29.0
|
|
23.2
|
|
27.8
|
|
28.5
|
Adjusted
EBITDA
|
|
1,306
|
|
915
|
|
1,781
|
|
1,819
|
|
1,889
|
|
801
|
|
1,704
|
|
1,560
|
FFO
|
|
877
|
|
696
|
|
1,436
|
|
1,551
|
|
1,609
|
|
469
|
|
1,365
|
|
1,250
|
AFFO
|
|
851
|
|
596
|
|
1,373
|
|
1,516
|
|
1,448
|
|
246
|
|
1,311
|
|
1,329
|
Net profit
(loss)
|
|
(560)
|
|
1,344
|
|
144
|
|
296
|
|
(85)
|
|
(963)
|
|
133
|
|
(653)
|
Per share
amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO
|
|
0.007
|
|
0.006
|
|
0.012
|
|
0.013
|
|
0.013
|
|
0.004
|
|
0.011
|
|
0.010
|
|
AFFO
|
|
0.007
|
|
0.005
|
|
0.011
|
|
0.012
|
|
0.012
|
|
0.002
|
|
0.011
|
|
0.011
|
|
Net profit
(loss)
|
|
(0.005)
|
|
0.011
|
|
0.001
|
|
0.002
|
|
(0.001)
|
|
(0.008)
|
|
0.001
|
|
(0.005)
|
For the year ended December 31,
2015, the Company reported revenue of $54,170 (December 31,
2014 - $50,808) and centre
margin of $14,819 (December 31, 2014 - $13,819). The 6.6% increase in revenue year over
year included the positive impact of successful openings of new
centres in Surrey, British
Columbia, Cochrane and
Calgary, Alberta, the expansion of
the Company's centre in Airdrie,
Alberta and a 3.3% increase in Stabilized centre revenue.
The positive effect of fee increases in Stabilized centres was
partially offset by a decline in average occupancy from 83.8% to
82.3% primarily due to a decline in enrollments in Alberta. Notwithstanding the change in average
occupancy, centre margin as a percentage of revenue increased to
27.4% compared to 27.2% in 2014, with the increase mainly
attributable to fee increases and a sharp focus on managing
operating cost increases through improved procurement
processes.
For the three months ended December 31,
2015, revenue was $13,796
(December 31, 2014 - $12,911), an increase of 6.9%, and centre margin
was $3,629 (December 31, 2014 - $3,741), a decrease of 3.0%. The reasons for the
increase in revenue are substantially the same as those discussed
above for the fiscal year. Centre margin year over year was
relatively consistent and as a percentage of revenue decreased to
26.3% compared to 29.0% a year earlier. Centre margin erosion was
caused by limited labour savings on enrollment losses as centres
maintained staff ratios, as well as the impact of new centre
openings, which tend to operate less efficiently during enrollment
ramp up.
Adjusted EBITDA for the year ended December 31, 2015 was $5,821 compared to $5,954 in the same period in 2014. As noted, fee
increases and efficiencies in operating costs, resulting in an
increase in centre margin year over year, were offset by higher
general and administrative and operating lease expenses. General
and administrative expense increased $363 mainly due to non-recurring expense savings
in the latter part of 2014 and higher information technology costs
and professional fees incurred in 2015. The 24.5% increase in
operating lease expense was primarily due to the impact of the
McKenzie Towne centre sale and leaseback, the openings of the
Surrey, Cochrane and Creekside centres and the
Airdrie centre expansion.
Adjusted EBITDA for the fourth quarter of 2015 was $1,306 compared to $1,889 in the fourth quarter of 2014. Adjusted
EBITDA decreased $583 primarily due
to lower centre margin of $112, with
the balance mainly from the effect of incremental lease expense
incurred from the McKenzie Towne centre sale and leaseback and
prior year non-recurring general and administrative expense
savings.
In August 2015, the Company
completed a transaction for the sale and leaseback of its McKenzie
Towne centre location in Calgary,
Alberta for gross proceeds of $7,500. Net cash proceeds from the transaction
after repayment of indebtedness and transaction fees were
$3,211. In addition, $4,004 of bank financing capacity was created. In
total, this transaction generated approximately $7.2 million of incremental capital to augment
the Company's available capital for funding its growth pipeline and
other initiatives to create shareholder value. The transaction,
effected at a capitalization rate of 6.76%, serves to validate and
underscore not only the inherent strength of BrightPath's operating
and financial covenant as a tenant, but also the value of its real
estate portfolio.
Net profit for the year ended December
31, 2015 was $1,224 compared
to a net loss of $1,568 for the year
ended December 31, 2014. Included in
the 2015 results was a $1,791 gain on
the sale and leaseback of the McKenzie Towne centre. In 2014, the
loss included a loss on the disposition of development land of
$302 and non-recurring restructuring
costs of $968. Net loss for the
fourth quarter of 2015 was $560
compared to a net loss of $85 in the
fourth quarter of 2014. Basic net profit (loss) per share for
the three and twelve months ended December
31, 2015 was $(0.005) and
$0.010 (December 31, 2014 - $(0.001) and $(0.013)), respectively.
For the year ended December 31,
2015, Alberta Stabilized centre occupancies averaged 87.1%
compared to 89.7% in 2014. Stabilized centre occupancy during the
fourth quarter of 2015 was 84.7% compared to 90.6% a year earlier.
While the Company experienced enrollment losses primarily during
the fourth quarter of 2015 as a result of the economic downturn,
enrollment levels have shown signs of stabilizing during the first
quarter of 2016.
Attesting to both the need for space in certain areas of
Alberta and the acceptance by
consumers of the superior product offered by the Company in its new
state-of-the-art centres is the fact that BrightPath's newest
development in the Symons Valley area of Calgary, which opened in November 2015, has achieved 97% enrollment for
its full day care, with enrollment of before and after school care
spaces gaining momentum. The Company's next new centre in
Edmonton, scheduled to open in
April 2016, has achieved 69%
pre-enrollment for full day care spaces released to the market with
before and after school care spaces building more slowly as
expected in advance of the September school year. These new
developments, along with the successful openings of the
Cochrane centre and Airdrie centre expansion, have delivered high
enrollment levels that have significantly exceeded both the
Company's pro forma time frame and industry metrics which typically
anticipate a 24-month period for ramp up of enrollment and centre
stabilization. These high enrollment levels also underscore the
Company's long term strategy of taking advantage of significant
shortages of quality child care spaces in select Canadian markets,
and, despite the recent economic challenges in Alberta, delivery of these state-of-the-art
centres offering a superior product continues to be very well
received.
In Ontario, the Company has
focused on rebuilding occupancy, reconfiguring space and pursuing
opportunities to add capacity in line with the new patterns of
demand for early childhood development and care. As a result of the
adoption of full day kindergarten, the turnover of children in
centres is higher resulting in more time required to ramp up
enrollment when the new school year begins. For the year ended
December 31, 2015, Ontario portfolio occupancies averaged 71.6%
compared to 72.2% in 2014. Occupancy declined slightly to 69.0% in
the fourth quarter of 2015 from 70.4% in the fourth quarter in the
prior year. At present, the enrollment level in Ontario centres is 79% compared to 75% a year
ago, reflecting improved market conditions.
Occupancy in Stabilized centres in British Columbia increased to 81.9% for the
year ended December 31, 2015 from
80.5% in 2014. For the fourth quarter of 2015, Stabilized centre
occupancy increased to 82.5% from 82.2% in the fourth quarter of
2014. Occupancy at the Surrey
facility, opened in September 2014,
has steadily improved ahead of expectations and industry metrics
and is currently in excess of 80% of licensed capacity.
Adjusted EBITDA, AFFO and FFO
|
|
|
|
|
|
|
|
|
|
Q4
2015
|
Q3
2015
|
Q2
2015
|
Q1
2015
|
Q4
2014
|
Q3
2014
|
Q2
2014
|
Q1
2014
|
Centre margin for the
period
|
|
3,629
|
|
3,265
|
|
3,976
|
|
3,949
|
|
3,741
|
|
2,782
|
|
3,670
|
|
3,626
|
General and
administrative expense
|
|
(1,129)
|
|
(1,271)
|
|
(1,258)
|
|
(1,192)
|
|
(903)
|
|
(1,138)
|
|
(1,170)
|
|
(1,276)
|
Taxes, other than
income taxes
|
|
(41)
|
|
(40)
|
|
(44)
|
|
(43)
|
|
(52)
|
|
(44)
|
|
(43)
|
|
(43)
|
Operating lease
expense
|
|
(1,153)
|
|
(1,039)
|
|
(893)
|
|
(895)
|
|
(897)
|
|
(799)
|
|
(753)
|
|
(747)
|
Adjusted
EBITDA
|
$
|
1,306
|
$
|
915
|
$
|
1,781
|
$
|
1,819
|
$
|
1,889
|
$
|
801
|
$
|
1,704
|
$
|
1,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4
2015
|
Q3
2015
|
Q2
2015
|
Q1
2015
|
Q4
2014
|
Q3
2014
|
Q2
2014
|
Q1
2014
|
Net profit (loss) for
the period
|
|
(560)
|
|
1,344
|
|
144
|
|
296
|
|
(85)
|
|
(963)
|
|
133
|
|
(653)
|
Depreciation and
certain other non-cash items
|
|
969
|
|
815
|
|
948
|
|
941
|
|
924
|
|
799
|
|
802
|
|
853
|
Acquisition and
development costs
|
|
468
|
|
328
|
|
344
|
|
314
|
|
736
|
|
365
|
|
232
|
|
280
|
Restructuring
costs
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
198
|
|
770
|
Loss on disposition
of development land
|
|
-
|
|
-
|
|
-
|
|
-
|
|
34
|
|
268
|
|
-
|
|
-
|
Gain on sale and
leaseback
|
|
-
|
|
(1,791)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
FFO
|
$
|
877
|
$
|
696
|
$
|
1,436
|
$
|
1,551
|
$
|
1,609
|
$
|
469
|
$
|
1,365
|
$
|
1,250
|
Stock based
compensation
|
|
272
|
|
63
|
|
153
|
|
78
|
|
107
|
|
108
|
|
93
|
|
103
|
Maintenance capital
expenditure
|
|
(298)
|
|
(163)
|
|
(216)
|
|
(113)
|
|
(268)
|
|
(331)
|
|
(147)
|
|
(24)
|
AFFO
|
$
|
851
|
$
|
596
|
$
|
1,373
|
$
|
1,516
|
$
|
1,448
|
$
|
246
|
$
|
1,311
|
$
|
1,329
|
FFO for the year ended December 31,
2015 was $4,560 compared to
$4,693 for the year ended
December 31, 2014, reflecting the
factors affecting Adjusted EBITDA. FFO per share for the year ended
December 31, 2015 was $0.038 compared to $0.039 for the same period in 2014. FFO for the
fourth quarter of 2015 was $877
compared to $1,609 in the fourth
quarter of 2014. FFO per share for the fourth quarter of 2015 was
$0.007 compared to $0.013 for the same period in 2014.
AFFO for the year ended December 31,
2015 of $4,336 ($0.036 per share) was consistent with AFFO of
$4,334 ($0.036 per share) for the year ended December 31, 2014. AFFO for the fourth quarter of
2015 was $851 compared to
$1,448 a year earlier. AFFO per share
for the fourth quarter of 2015 was $0.007 compared to $0.012 for the fourth quarter of 2014.
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 August
due to seasonal factors. As well, new centres typically exhibit
lower occupancy levels during ramp up of enrollments, thereby
adversely impacting total portfolio occupancies prior to achieving
stabilization.
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
December 31,
2015
|
|
Three months
ended
December 31,
2014
|
|
Year
ended
December 31,
2015
|
|
Year
ended
December 31,
2014
|
Stabilized
Centres
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alberta
|
|
|
|
|
|
|
|
|
Ending Centres
#
|
|
30
|
|
30
|
|
30
|
|
30
|
Ending Spaces
#
|
|
3,238
|
|
3,178
|
|
3,238
|
|
3,178
|
Avg. Occupancy
%
|
|
84.7
|
|
90.6
|
|
87.1
|
|
89.7
|
|
|
|
|
|
|
|
|
|
British
Columbia
|
|
|
|
|
|
|
|
|
Ending Centres
#
|
|
7
|
|
7
|
|
7
|
|
7
|
Ending Spaces
#
|
|
577
|
|
581
|
|
577
|
|
581
|
Avg. Occupancy
%
|
|
82.5
|
|
82.2
|
|
81.9
|
|
80.5
|
|
|
|
|
|
|
|
|
|
Ontario
|
|
|
|
|
|
|
|
|
Ending Centres
#
|
|
14
|
|
14
|
|
14
|
|
14
|
Ending Spaces
#
|
|
1,402
|
|
1,407
|
|
1,402
|
|
1,407
|
Avg. Occupancy
%
|
|
69.0
|
|
70.4
|
|
71.6
|
|
72.2
|
|
|
|
|
|
|
|
|
|
Total Stabilized
Centres
|
|
|
|
|
|
|
|
|
Ending Centres
#
|
|
51
|
|
51
|
|
51
|
|
51
|
Ending Spaces
#
|
|
5,217
|
|
5,166
|
|
5,217
|
|
5,166
|
Avg. Occupancy
%
|
|
80.3
|
|
84.2
|
|
82.3
|
|
83.8
|
Non-stabilized
Centres
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alberta
|
|
|
|
|
|
|
|
|
Ending Centres
#
|
|
2
|
|
-
|
|
2
|
|
-
|
Ending Spaces
#
|
|
367
|
|
-
|
|
367
|
|
-
|
Avg. Occupancy
%
|
|
49.5
|
|
-
|
|
46.7
|
|
-
|
|
|
|
|
|
|
|
|
|
British
Columbia
|
|
|
|
|
|
|
|
|
Ending Centres
#
|
|
1
|
|
1
|
|
1
|
|
1
|
Ending Spaces
#
|
|
206
|
|
206
|
|
206
|
|
206
|
Avg. Occupancy
%
|
|
66.9
|
|
31.3
|
|
50.6
|
|
29.1
|
|
|
|
|
|
|
|
|
|
Ontario
|
|
|
|
|
|
|
|
|
Ending Centres
#
|
|
-
|
|
-
|
|
-
|
|
-
|
Ending Spaces
#
|
|
-
|
|
-
|
|
-
|
|
-
|
Avg. Occupancy
%
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Total
Non-stabilized Centres
|
|
|
|
|
|
|
|
|
Ending Centres
#
|
|
3
|
|
1
|
|
3
|
|
1
|
Ending Spaces
#
|
|
573
|
|
206
|
|
573
|
|
206
|
Avg. Occupancy
%
|
|
56.8
|
|
31.3
|
|
49.5
|
|
29.1
|
Total Portfolio (All
Centres)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Centres
#
|
|
54
|
|
52
|
|
54
|
|
52
|
Ending Spaces
#
|
|
5,790
|
|
5,372
|
|
5,790
|
|
5,372
|
Avg. Occupancy
%
|
|
78.2
|
|
82.1
|
|
80.6
|
|
83.1
|
Deferred Share Units ("DSUs")
For the three months ended December 31,
2015, pursuant to the Board of Directors DSU plan, five
members of the board of directors of BrightPath elected to receive
board fees in the form of DSUs in lieu of cash remuneration,
representing $0.06 million fair value
in respect of 194,334 DSUs. The DSUs were issued on January 18, 2016.
Outlook
For the year ended December 31,
2015, despite challenges in the Alberta market, the Company increased revenue
and centre margin on a year over year basis by 6.6% and 7.2%,
respectively, and reported net profit of $1,224.
The Company remains focused on generating substantially higher
Adjusted EBITDA and enhancing shareholder value through:
- continuous product advancement enabling optimized pricing and
occupancy levels;
- disciplined management of enrollment and mix;
- continuously improving management of all costs – labour, other
operating and general and administrative;
- realizing cash flow from development initiatives announced in
2014 and earlier in 2015, as well as those in the pipeline but not
yet announced; and
- other measures to enhance shareholder value, including
monetization of select assets and the NCIB program.
In Alberta, while the Company
experienced enrollment losses primarily during the fourth quarter
of 2015 as a result of the economic downturn, enrollment levels
have shown signs of stabilizing during the first quarter of 2016.
Confirming the need for space in certain areas of Alberta and the acceptance by consumers of the
superior product offered by the Company are the successful openings
of the Creekside and Cochrane
centres and Airdrie centre
expansion, as well as the achievement of high pre-enrollment at the
Company's next new centre in Edmonton to be opened in April
2016.
In British Columbia, the
Company continues to focus on building enrollments, managing labour
and operating costs and looking for opportunities to grow and
develop larger facilities offering an appropriate scale of
operations in the suburban markets surrounding Vancouver.
In Ontario, the multi-year
planned roll out of FDK was completed in 2014. The supply of
licensed spaces in Ontario
continues to adjust to the new patterns of demand for early
childhood development and care. The Company continues to
concentrate on becoming Ontario
parents' provider of choice through effectively marketing
BrightPath's brand and product and pursuing opportunities to add
capacity and grow BrightPath's base of centres.
As noted on earlier occasions, BrightPath's management and board
of directors believe that the current price of the Company's common
shares on the TSX Venture exchange 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. We have previously outlined
the disconnect between the price of the Company's shares and the
value of its increasingly profitable operations and owned real
estate portfolio with a gross book value of $45 million. As such, we were pleased to validate
the financial opportunity underpinning this disconnect with the
sale of real estate underlying the Company's McKenzie Towne centre
during the third quarter of 2015. This transaction created the
availability of an additional $7.2
million of capital to augment the funding already available
for the Company's pipeline of growth initiatives and the purchase
of the Company's common shares. The Company continues to initiate
and explore other opportunities to surface value for its
shareholders.
The Company believes that the undervaluation of its share price
is not only significant based on its current operations and real
estate holdings, but is also further highlighted by the future
growth of approximately 814 licensed spaces which have been
announced. The pro forma cash flow per share which will be
generated by this growth pipeline is highly accretive as it is
fully funded and can be delivered without any equity dilution to
shareholders. Furthermore, those centres can be operated without
any significant increase in general and administration overhead
expense.
NON- IFRS PERFORMANCE MEASURES
The Company uses "centre margin" as an indicator of centre
performance. Centre margin does not have a standardized meaning
prescribed by IFRS and therefore, may not be comparable with the
calculation of similar measures by other entities. Centre margin is
determined by deducting centre expenses from revenue. Centre
expenses include labour and direct costs and exclude operating
lease expense for leasehold properties and mortgage interest, if
any, on those properties owned by the Company.
The Company also uses Adjusted EBITDA, FFO and AFFO as
indicators of financial performance.
Adjusted EBITDA is calculated by deducting the following from
centre margin: operating lease expense, general and administrative
expenses, and taxes other than income taxes. FFO is calculated by
adjusting net profit (loss) to add back acquisition costs expensed
as incurred, depreciation and certain other non-cash items. AFFO is
calculated by adjusting FFO to add back stock based compensation
and deduct maintenance capital expenditures. Maintenance capital
expenditures consist of capital expenditures that are capitalized
for accounting purposes but are considered to be recurring costs
such as facilities and leasehold maintenance and the replacement of
learning materials, toys, furniture, appliances and other
equipment. Maintenance capital expenditures do not occur evenly
over the course of the year with these activities typically
occurring with greater intensity during the seasonally slower
summer months.
Adjusted EBITDA, FFO and AFFO do not have standardized meanings
prescribed by IFRS. The Company's method of calculating Adjusted
EBITDA, FFO and AFFO may be different from other entities and,
accordingly, may not be comparable to such other entities. Adjusted
EBITDA, FFO and AFFO: (i) do not represent cash flow from operating
activities as defined by IFRS; (ii) are not indicative of cash
available to fund all liquidity requirements, including capital for
growth; and (iii) are not to be considered as alternatives to
IFRS-based net income for the purpose of evaluating operating
performance.
Centre operating results are also analyzed based on Stabilized
and Non-stabilized centres which may not be comparable with that
used by other entities. Acquired and newly-developed centres are
deemed to be stabilized after 24 months, or sooner if normalized
occupancy levels are achieved.
Net profit (loss) is impacted by, among other items, accounting
standards that require centre acquisition and transaction costs to
be expensed as incurred. As the Company executes its consolidation
and development strategy in the Canadian market, it will routinely
incur such expenses which will negatively impact the Company's
reported net profit/loss, but not Adjusted EBITDA, FFO and
AFFO.
QUARTERLY CONFERENCE CALL
BrightPath's quarterly results conference call is scheduled for
Thursday, March 31, 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=1162575&s=1&k=90F1134349F91AC1FCBD157E278CD241
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
Thursday, April 14, 2016 at midnight.
To access the archived conference call, dial (416) 849-0833 or
(855) 859-2056 and enter the reservation number 78818487 followed
by the number sign.
ABOUT BRIGHTPATH EARLY LEARNING INC.
BrightPath Early Learning Inc. is a Canadian leader in child
care and early education with 54 locations in major markets across
the country. Meeting the highest standards in curriculum,
nutrition, technology and recreational 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
(TSXV: BPE).
FORWARD-LOOKING STATEMENTS
Certain statements contained herein constitute forward-looking
statements regarding the future growth, results of operations,
performance and opportunities of the Company. Forward-looking
statements can generally be identified by the use of, but not
limited to, the following words: "plans", "expects" or "does not
expect", "budget", "scheduled", "estimate", "forecast", "pro
forma", "anticipate" or "does not anticipate", "believe", "intend",
"inferred", "potential" and similar expressions or statements that
certain actions, events or results "may", "could", "would", "might"
or "will" be taken, occur or be achieved. Forward-looking
statements are not historical facts, but reflect the Company's
current expectations regarding future results or events based on
information currently available and what the Company believes to be
reasonable assumptions. All forward-looking statements are
qualified by these cautionary statements.
Forward-looking statements are subject to a number of risks,
assumptions and uncertainties that could cause actual results,
performance or events to differ materially from those expressed or
implied by such forward-looking statements. Factors that could
cause actual results or events to differ materially from those
expressed, implied or projected include, but are not limited to,
general economic conditions, the Company's ability to meet and
maintain forecasted occupancy levels, general government policies,
continued availability of government child care subsidies to
parents, unexpected costs or liabilities related to acquisitions,
construction, environmental matters, legal matters, changes in
interest rates, credit spreads and the availability of financing.
In addition, please refer to the Risks and Uncertainties section of
the Company's annual Management's Discussion and Analysis. As such,
the Company gives no assurance that actual results will be
consistent with these forward-looking statements.
Readers should not place undue reliance on any such
forward-looking statements. These forward-looking statements are
made as of the date hereof. The Company undertakes no obligation to
publicly update or revise any such statement, reflect new
information or reflect the occurrence of future events or
circumstances, except as required by securities laws.
BrightPath Early
Learning Inc.
|
|
|
|
|
|
|
|
Consolidated
Statements of Financial Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(CDN
$000's)
|
|
|
|
December
31,
2015
|
|
|
December
31,
2014
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
Property and
equipment
|
|
|
$
|
49,779
|
|
$
|
45,811
|
|
Goodwill and definite
life intangible assets
|
|
|
|
30,042
|
|
|
30,074
|
|
|
|
|
79,821
|
|
|
75,885
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
1,537
|
|
|
3,455
|
|
Accounts
receivable
|
|
|
|
1,958
|
|
|
1,983
|
|
Prepaid expenses and
deposits
|
|
|
|
1,716
|
|
|
1,515
|
|
Short term
investments
|
|
|
|
39
|
|
|
39
|
|
|
|
|
5,250
|
|
|
6,992
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
|
$
|
85,071
|
|
$
|
82,877
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
Provision for
restructuring costs
|
|
|
$
|
-
|
|
$
|
45
|
|
Long term debt and
financing leases
|
|
|
|
14,697
|
|
|
19,762
|
|
Convertible
debentures – liability component
|
|
|
|
4,304
|
|
|
4,355
|
|
|
|
|
19,001
|
|
|
24,162
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
|
|
5,198
|
|
|
2,924
|
|
Current portion of
provision for restructuring costs
|
|
|
|
45
|
|
|
290
|
|
Deferred
revenue
|
|
|
|
955
|
|
|
878
|
|
Current portion of
debt and financing leases
|
|
|
|
5,184
|
|
|
1,418
|
|
|
|
|
11,382
|
|
|
5,510
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
|
30,383
|
|
|
29,672
|
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
|
65,374
|
|
|
65,871
|
|
Convertible
debentures – equity component
|
|
|
|
342
|
|
|
342
|
|
Equity settled
share-based compensation
|
|
|
|
2,985
|
|
|
2,419
|
|
Accumulated
deficit
|
|
|
|
(14,013)
|
|
|
(15,427)
|
Total
Shareholders' Equity
|
|
|
|
54,688
|
|
|
53,205
|
|
|
|
|
|
|
|
|
Total Liabilities
and Shareholders' Equity
|
|
|
$
|
85,071
|
|
$
|
82,877
|
BrightPath Early
Learning Inc.
|
Consolidated
Statements of Operations and Comprehensive Income
(Loss)
|
Three and twelve
months ended December 31, 2015 and 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
December 31,
|
|
|
Year
ended December
31,
|
(CDN $000's except
for per share amounts)
|
|
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
13,271
|
$
|
12,471
|
|
$
|
52,409
|
$
|
49,258
|
Government
grants
|
|
|
525
|
|
440
|
|
|
1,761
|
|
1,550
|
Total
revenue
|
|
|
13,796
|
|
12,911
|
|
|
54,170
|
|
50,808
|
|
|
|
|
|
|
|
|
|
|
|
Centre
expenses
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and
benefits
|
|
|
7,500
|
|
6,920
|
|
|
29,228
|
|
27,007
|
|
Other operating
expenses
|
|
|
2,667
|
|
2,250
|
|
|
10,123
|
|
9,982
|
Centre
margin
|
|
|
3,629
|
|
3,741
|
|
|
14,819
|
|
13,819
|
|
|
|
|
|
|
|
|
|
|
|
Operating
leases
|
|
|
1,153
|
|
897
|
|
|
3,980
|
|
3,196
|
Finance
costs
|
|
|
303
|
|
348
|
|
|
1,334
|
|
1,449
|
General and
administrative
|
|
|
1,129
|
|
903
|
|
|
4,850
|
|
4,487
|
Taxes, other than
income taxes
|
|
|
41
|
|
52
|
|
|
168
|
|
182
|
Restructuring
costs
|
|
|
-
|
|
-
|
|
|
-
|
|
968
|
Acquisition and
development
|
|
|
468
|
|
736
|
|
|
1,454
|
|
1,613
|
Gain on sale and
leaseback
|
|
|
-
|
|
-
|
|
|
(1,791)
|
|
-
|
Loss on disposition
of development land
|
|
|
-
|
|
34
|
|
|
-
|
|
302
|
Share-based
compensation
|
|
|
272
|
|
107
|
|
|
566
|
|
411
|
Depreciation and
amortization
|
|
|
808
|
|
772
|
|
|
3,139
|
|
2,914
|
|
|
|
4,174
|
|
3,849
|
|
|
13,700
|
|
15,522
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) before
other income and income taxes
|
|
|
(545)
|
|
(108)
|
|
|
1,119
|
|
(1,703)
|
|
|
|
|
|
|
|
|
|
|
|
Other
income
|
|
|
(15)
|
|
23
|
|
|
105
|
|
135
|
Profit (loss)
before income taxes
|
|
|
(560)
|
|
(85)
|
|
|
1,224
|
|
(1,568)
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
|
-
|
|
-
|
|
|
-
|
|
-
|
Net Profit (Loss)
and Total Comprehensive Income (Loss)
|
|
$
|
(560)
|
$
|
(85)
|
|
$
|
1,224
|
$
|
(1,568)
|
|
|
|
|
|
|
|
|
|
|
|
Net profit (loss) per
share
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.005)
|
$
|
(0.001)
|
|
$
|
0.010
|
$
|
(0.013)
|
|
Diluted
|
|
$
|
(0.005)
|
$
|
(0.001)
|
|
$
|
0.010
|
$
|
(0.013)
|
BrightPath Early
Learning Inc.
|
Consolidated
Statements of Changes in Shareholders' Equity
|
Years ended
December 31, 2015 and 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(CDN
$000's)
|
|
Share
Capital
|
Convertible
Debentures –
Equity
Component
|
Equity Settled
Share-based
Compensation
|
Accumulated
Deficit
|
Shareholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January
1, 2014
|
|
$
|
66,030
|
$
|
342
|
$
|
2,026
|
$
|
(13,911)
|
$
|
54,487
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
|
-
|
|
-
|
|
411
|
|
-
|
|
411
|
Deferred share units
redeemed
|
|
|
18
|
|
-
|
|
(18)
|
|
-
|
|
-
|
Shares purchased for
cancellation
|
|
|
(177)
|
|
-
|
|
-
|
|
52
|
|
(125)
|
Net loss and
comprehensive loss
|
|
|
-
|
|
-
|
|
-
|
|
(1,568)
|
|
(1,568)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2014
|
|
$
|
65,871
|
$
|
342
|
$
|
2,419
|
$
|
(15,427)
|
$
|
53,205
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
BrightPath Early
Learning Inc.
|
Consolidated
Statements of Cash Flow
|
Three and twelve
months ended December 31, 2015 and 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
December 31,
|
|
|
Year ended
December 31,
|
(CDN
$000's)
|
|
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by
(used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
|
|
|
|
|
|
Net profit
(loss)
|
|
$
|
(560)
|
$
|
(85)
|
|
$
|
1,224
|
$
|
(1,568)
|
Items not affecting
cash:
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
808
|
|
772
|
|
|
3,139
|
|
2,914
|
|
Depreciation included
in operating costs
|
|
|
41
|
|
37
|
|
|
154
|
|
150
|
|
Finance
costs
|
|
|
303
|
|
348
|
|
|
1,334
|
|
1,449
|
|
Gain on sale and
leaseback
|
|
|
-
|
|
-
|
|
|
(1,791)
|
|
-
|
|
Loss on disposition
of development land
|
|
|
-
|
|
34
|
|
|
-
|
|
302
|
|
Share-based
compensation
|
|
|
272
|
|
107
|
|
|
566
|
|
411
|
|
Change in fair value
of convertible debenture liability component
|
|
|
(5)
|
|
(24)
|
|
|
(116)
|
|
(122)
|
Change in non-cash
working capital
|
|
|
(2,543)
|
|
(1,290)
|
|
|
168
|
|
(1,677)
|
Change in non-current
portion of provision for restructuring costs
|
|
|
-
|
|
(68)
|
|
|
(45)
|
|
(73)
|
Cash provided by
(used in) operations
|
|
|
(1,684)
|
|
(169)
|
|
|
4,633
|
|
1,786
|
|
|
|
|
|
|
|
|
|
|
|
Finance costs
paid
|
|
|
(338)
|
|
(400)
|
|
|
(1,127)
|
|
(1,232)
|
|
|
|
(2,022)
|
|
(569)
|
|
|
3,506
|
|
554
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
|
|
Property and
equipment
|
|
|
(1,444)
|
|
(636)
|
|
|
(10,674)
|
|
(3,509)
|
Net proceeds on sale
and leaseback
|
|
|
-
|
|
-
|
|
|
7,214
|
|
-
|
Net proceeds on
disposition of development land
|
|
|
-
|
|
718
|
|
|
-
|
|
718
|
|
|
|
(1,444)
|
|
82
|
|
|
(3,460)
|
|
(2,791)
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
|
|
Loan
proceeds
|
|
|
2,997
|
|
3,298
|
|
|
3,931
|
|
3,298
|
Loan
repayments
|
|
|
(277)
|
|
(311)
|
|
|
(5,247)
|
|
(1,166)
|
Financing transaction
costs
|
|
|
(4)
|
|
(21)
|
|
|
(36)
|
|
(68)
|
Finance lease
repayments
|
|
|
(86)
|
|
(63)
|
|
|
(281)
|
|
(247)
|
Shares purchased for
cancellation
|
|
|
(155)
|
|
(65)
|
|
|
(331)
|
|
(65)
|
|
|
|
2,475
|
|
2,838
|
|
|
(1,964)
|
|
1,752
|
|
|
|
|
|
|
|
|
|
|
|
Change in
Cash
|
|
|
(991)
|
|
2,351
|
|
|
(1,918)
|
|
(485)
|
Cash at beginning of
period
|
|
|
2,528
|
|
1,104
|
|
|
3,455
|
|
3,940
|
Cash at end of
period
|
|
$
|
1,537
|
$
|
3,455
|
|
$
|
1,537
|
$
|
3,455
|
SOURCE BrightPath Early Learning Inc.