BrightPath's Third Quarter 2016 Results - Transformative Acquisitions and New Centre Openings Contribute to Record Quarterly Revenue of $17 Million

TORONTO, Nov. 23, 2016 /CNW/ - BrightPath Early Learning Inc. ("BrightPath" or the "Company") (TSX-V: BPE), a leading Canadian provider of high-quality, comprehensive early childhood education and care, with 8,580 spaces of licensed capacity across 76 centres located in Alberta, Ontario and British Columbia, announced today its operational and financial results for the three and nine months ended September 30, 2016.  

Financial performance highlights for the quarter ended September 30, 2016, a period that is adversely affected by seasonality, are as follows (all comparisons are against the prior year period):

  • Revenue increased 30.8% to a record $16.8 million, with higher revenue reported in all three provincial markets served by the Company;
  • Centre margin increased 12.5% to $3.7 million;
  • Adjusted EBITDA was $1.0 million compared to $0.9 million;
  • Funds from Operations ("FFO") was $0.6 million ($0.005 per share) compared to $0.7 million ($0.006 per share);
  • Adjusted Funds from Operations ("AFFO") was $0.5 million ($0.004 per share) compared to $0.6 million ($0.005 per share); and
  • The Company had available capital of $21.6 million at quarter end to fund the Company's pipeline of growth initiatives through centres currently under development and other pipeline initiatives not yet announced. These initiatives include the announced 570 licensed spaces in three centres currently under development, representing approximately 7% of current capacity, which will bring BrightPath's total licensed capacity to 9,150 spaces, almost double the total number of Stabilized licensed spaces at the end of fiscal 2015.

Financial highlights for the nine months ended September 30, 2016 include:

  • Revenue of $47.5 million, an increase of 17.5%, with higher revenue reported across all provincial markets;
  • A 7.4% increase in centre margin to $12.0 million;
  • Adjusted EBITDA of $4.4 million compared to $4.5 million;
  • FFO of $3.2 million ($0.026 per share) compared to $3.7 million ($0.030 per share); and
  • AFFO of $3.0 million ($0.025 per share) compared to $3.5 million ($0.029 per share).

Additional operational and significant events to date in 2016 include:

  • During the third quarter of 2016, a period that is adversely affected by seasonality, enrollment levels and revenue in Ontario centres and new centres in Alberta demonstrated considerable growth, exceeding the Company's expectations. Stabilized centres in Alberta continued to experience pressure on enrollments from the effects of the economic downturn, as anticipated. Recently, the Conference Board of Canada predicted a modest economic recovery in 2017;
  • On August 31, 2016, the Company completed the acquisition of Peekaboo Child Care Centre Inc. and Peekaboo Adventures Ltd. (collectively "Peekaboo"), a portfolio of 20 early learning and care centres in the Greater Toronto Area comprising 2,471 licensed spaces and franchise agreements with 11 affiliate centres. This transformative acquisition, which contributed just one month of results to the third quarter of 2016, increased BrightPath's total capacity by approximately 40%, made Ontario BrightPath's largest market and geographically balanced the Company's portfolio. The acquisition was financed through the Company's credit facility on the strength of underlying cash flows and the value of the Company's real estate. Most significantly, the acquisition of Peekaboo is anticipated to be highly and immediately accretive to FFO per share and bolster the Company's growth in the future;      
  • In June 2016, BrightPath closed the acquisition of The Lawrence Park School Ltd. ("Lawrence Park"), a long-standing and successful early learning and care centre located in the Lawrence Park suburb of Toronto with 95 licensed spaces; 
  • The Company's Cochrane, Alberta centre opened in September 2015 with 120 licensed spaces.  The Creekside centre in Calgary opened in November 2015 with 247 licensed spaces and the West Henday centre in Edmonton opened in April 2016 with 247 licensed spaces.  Collectively, these three centres achieved 82.8% average enrollment in the third quarter of 2016 and have current combined enrollment of 95%, vastly exceeding the Company's expectations of enrollment ramp up in these Alberta locations and significantly surpassing standard industry metrics in spite of Alberta's current economic downturn;
  • In August 2016, the third expansion of the Airdrie centre near Calgary was completed, bringing the centre's total licensed capacity to 146 licensed spaces, with 89% enrollment at present;  
  • Construction of the Sage Hill centre in Riocan REIT's Sage Hill Crossing shopping centre in Calgary began. When completed in the first quarter of 2017, the Sage Hill centre, for which BrightPath is experiencing momentum in pre-registrations, will be comprised of approximately 130 licensed spaces in a 10,000 square foot leasehold facility;
  • Construction of the Company's newest state-of-the-art early learning and care centre, located in First Capital's London Place West shopping centre in southwest Calgary, has commenced. Anticipated to open in the second quarter of 2017, the Richmond Early Learning and Child Care Centre will be comprised of 247 licensed spaces in a 20,000 square foot facility developed and owned by BrightPath on a one-acre parcel of land; and
  • In September 2016, BrightPath announced the renewal of its normal course issuer bid ("NCIB") to purchase up to a maximum five percent of its issued and outstanding common shares to contribute to enhanced shareholder value and liquidity. The Company purchased and cancelled 694,000 common shares during the nine months ended September 30, 2016. Cumulatively to date since the beginning of its NCIB program in September 2014, the Company has purchased and cancelled 1,935,700 shares at an average price of $0.32 per share. The Company continues to believe that the current price of the Company's shares does not adequately reflect its operational and financial strength, as well as the market value of its real estate portfolio.

"The anticipated benefits of acquiring Peekaboo and Lawrence Park centres are only just beginning to be realized in the fourth quarter. The addition of these centres, along with highly successful new centre openings in Alberta and significant growth in comparable Ontario centres, contributed to strong increases in revenue and centre margin year over year," stated Mary Ann Curran, Chief Executive Officer of the Company. "Additionally, BrightPath continues to actively pursue enrollments while focusing on operational initiatives and management of costs. The Company is poised and ready for upward operational, financial and strategic success going forward." 

Integration of the Peekaboo portfolio is proceeding well and substantially meeting targeted objectives. In particular, the Company has identified opportunities to improve Peekaboo operations and financial performance in several areas. Beginning with the utilization of BrightPath's customer relationship management ("CRM") and Enterprise Resource Planning systems, the Company believes there is potential for higher enrollments, optimization of room configurations and age mixes, greater productivity in labour hours, a shift away from uniform pricing across all centres to market specific pricing strategies, elimination of duplication of executive level personnel, office consolidation, food bulk purchasing improvements and efficiencies through combination of facilities maintenance personnel. In support of a greater value proposition to families in the markets served, the introduction of BrightPath's curriculum and programming will underscore the basis for all of these improvements.

Dale Kearns, the Company's President and CFO, added that, "In understanding and assessing the Company's financial results, it is important to note that there were a number of significant non-recurring expenses of future benefit that were incurred in the quarter and year to date. These include approximately $0.9 million for: expenditures to complete BrightPath's two Ontario acquisitions; investment in more centre staff than normal to support a swift build of enrollments; pre-accreditation centre staff wage top-ups; and the Company's enhanced website and CRM system that enable the potential for these acquisitions and new developments. While IFRS requires us to expense these costs in the periods incurred, the acquisitions and investments will contribute to significant revenue increases and profitability in coming quarters and years."

Financial Review

($000's except where otherwise noted and per share amounts)











Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Revenue

$

16,762

$

15,859

$

14,830

$

13,796

$

12,815

$

13,912

$

13,647

$

12,911

Centre margin


3,672


4,249


4,102


3,629


3,265


3,976


3,949


3,741

Centre margin %


21.9


26.8


27.7


26.3


25.5


28.6


28.9


29.0

Adjusted EBITDA


1,039


1,757


1,575


1,306


915


1,781


1,819


1,889

FFO


575


1,345


1,230


877


696


1,436


1,551


1,609

AFFO


478


1,276


1,255


851


596


1,373


1,516


1,448

Net profit (loss)


(1,139)


(264)


(182)


(560)


1,344


144


296


(85)

Per share amounts:


















FFO


0.005


0.011


0.010


0.007


0.006


0.012


0.013


0.013


AFFO


0.004


0.011


0.010


0.007


0.005


0.011


0.012


0.012


Net profit (loss)


(0.010)


(0.002)


(0.002)


(0.005)


0.011


0.001


0.002


(0.001)

 

For the quarter ended September 30, 2016, the Company reported record revenue of $16.8 million (September 30, 2015 - $12.8 million) and centre margin of $3.7 million (September 30, 2015 - $3.3 million). Revenue increased 30.8% due to tuition from acquired centres in the Greater Toronto Area and new locations in Cochrane, Calgary and Edmonton, Alberta, as well as moderate year over year rate increases in tuition, partially offset by a decline in Stabilized centres' average occupancy from 76.4% to 73.9% due to lower enrollment levels in several centres in Alberta. Centre margin as a percentage of revenue decreased to 21.9% compared to 25.5% a year earlier. The Company's decision to invest in marketing and labour resources to achieve swift enrollment increases, particularly in newly opened centres and Ontario, has triggered short-term inefficiencies in labour-to-revenue metrics that are addressed as enrollments build and operations improve and stabilize. As well, the decline reflected the limited ability to realize labour savings on lower enrollment levels in Alberta due to regulated staff ratios and operating cost pressures in Ontario from rising electricity rates and national food price increases.

For the nine month period ended September 30, 2016, revenue was $47.5 million (September 30, 2015 - $40.4 million) and centre margin was $12.0 million (September 30, 2015 - $11.2 million). Centre margin as a percentage of revenue was 25.3% compared to 27.7% in 2015. The reasons for the 17.5% increase in revenue and erosion of centre margin as a percentage of revenue are substantially the same as those discussed above for the three month period.

  Adjusted EBITDA, FFO and AFFO











Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Centre margin for the period


3,672


4,249


4,102


3,629


3,265


3,976


3,949


3,741

General and administrative
expense


(1,204)


(1,273)


(1,345)


(1,129)


(1,271)


(1,258)


(1,192)


(903)

Taxes, other than income taxes


(37)


(28)


(38)


(41)


(40)


(44)


(43)


(52)

Operating lease expense


(1,392)


(1,191)


(1,144)


(1,153)


(1,039)


(893)


(895)


(897)

Adjusted EBITDA

$

1,039

$

1,757

$

1,575

$

1,306

$

915

$

1,781

$

1,819

$

1,889



















Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Net profit (loss) for the period


(1,139)


(264)


(182)


(560)


1,344


144


296


(85)

Depreciation and certain
other non-cash items


1,208


1,083


1,025


969


815


948


941


924

Acquisition and development
costs


506


526


387


468


328


344


314


736

Loss on disposition of
development land


-


-


-


-


-


-


-


34

Gain on sale and leaseback


-


-


-


-


(1,791)


-


-


-

FFO

$

575

$

1,345

$

1,230

$

877

$

696

$

1,436

$

1,551

$

1,609

Share-based compensation


110


114


117


272


63


153


78


107

Maintenance capital
expenditures


(207)


(183)


(92)


(298)


(163)


(216)


(113)


(268)

AFFO

$

478

$

1,276

$

1,255

$

851

$

596

$

1,373

$

1,516

$

1,448

 

Adjusted EBITDA for the third quarter of 2016 was $1.0 million compared to $0.9 million in 2015. Enrollment pressures on revenue in Stabilized Alberta centres were offset by occupancy and revenue increases in Ontario centres and new centres in Alberta which demonstrated considerable increases. As noted, the Company's investments to achieve swift enrollment increases, particularly in newly opened centres and Ontario, have triggered short-term inefficiencies in labour-to-revenue metrics that improve as enrollments build and operations stabilize.

Adjusted EBITDA for the nine months ended September 30, 2016 was $4.4 million compared to $4.5 million in 2015. Adjusted EBITDA decreased $0.1 million primarily due to higher general and administrative expenses, mainly due to inflationary pressures and investments in the Company's enhanced website and CRM system, and higher operating lease expenses from new and acquired centres which offset higher centre margin period over period.

FFO for the third quarter of 2016 was $0.6 million compared to $0.7 million in 2015, due primarily to the opening of new centres. FFO per share for the third quarter of 2016 was $0.005 compared to $0.006 in 2015. FFO for the nine months ended September 30, 2016 was $3.2 million ($0.026 per share) compared to $3.7 million ($0.030 per share) for the same period in 2015.  

AFFO for the third quarter of 2016 was $0.5 million ($0.004 per share) compared to $0.6 million ($0.005 per share) a year earlier, primarily due to lower FFO. AFFO for the nine months ended September 30, 2016 was $3.0 million compared to $3.5 million in 2015. AFFO per share for the nine months ended September 30, 2016 was $0.025 compared to $0.029 for the nine months ended September 30, 2015. 

Net loss for the third quarter of 2016 was $1.1 million compared to a net profit of $1.3 million in the third quarter of 2015. Net loss for the nine months ended September 30, 2016 was $1.6 million compared to a net profit of $1.8 million in 2015. Both periods in 2016 were impacted by the aforementioned investments in certain non-recurring expenditures, costs of opening new centres and a greater level of cost associated with acquisition and development activity compared to 2015. Net profit reported in 2015 was favourably impacted by a $1.8 million gain on the sale and leaseback of the McKenzie Towne centre. Basic and diluted net profit (loss) per share for the quarter ended September 30, 2016 was $(0.010) (September 30, 2015 - $0.011 and $0.010). Basic and diluted net profit (loss) per share for the nine months ended September 30, 2016 was $(0.013) (September 30, 2015 - $0.015).  

Occupancy for Alberta Stabilized centres in the three and nine month periods ended September 30, 2016 averaged 78.1% (September 30, 2015 - 81.7%) and 83.0% (September 30, 2015 - 87.9%), respectively. As anticipated, BrightPath experienced pressure on enrollments at its Stabilized centres in Alberta from the effects of the economic downturn and anticipates continued pressure through the fourth quarter of 2016, with forecasts of a modest economic recovery in 2017 based on a Conference Board of Canada outlook. In contrast, irrespective of the economic challenges in Alberta, strong market demand for early learning and care in newly opened centres continues, reflecting pressing demand in newer suburban areas in Calgary and Edmonton. The Company's Cochrane, Creekside and West Henday centres achieved notable average occupancies of 82.8% in the quarter ended September 30, 2016 and 73.4% in the nine months ended September 30, 2016, well in advance of the typical 24-month period for enrollment ramp up and centre stabilization. Currently, these centres are 95% occupied on a combined basis.

With the acquisitions of Lawrence Park and Peekaboo completed, Ontario is now BrightPath's largest market, representing 46.2% of the Company's total licensed capacity as at September 30, 2016. Ontario occupancy levels for comparable centres increased to 70.8% in the third quarter of 2016 from 64.3% in 2015. Including Lawrence Park and Peekaboo centres, Ontario portfolio occupancy moved to 69.6% for the quarter ended September 30, 2016 from 64.3% in the third quarter of 2015. Likewise, for the nine months ended September 30, 2016, occupancy in comparable centres increased 4.3 percentage points on a year over year basis and overall, Ontario portfolio occupancy moved to 75.1% from 72.4% for the same period in 2015.

Peekaboo and Lawrence Park collectively achieved an average occupancy of 67.6% during the three months ended September 30, 2016 and currently reflect an average occupancy of 75%. The Peekaboo portfolio contributed just one month of results to the fiscal quarter and the month of September is Peekaboo's seasonally low month of occupancy. The integration is proceeding well and substantially meeting targeted objectives. Improved results are expected as the Company's skill set and management systems are applied to the Peekaboo portfolio.

Occupancy for British Columbia Stabilized centres in the three and nine month periods ended September 30, 2016 averaged 79.2% (September 30, 2015 - 75.8%) and 84.1% (September 30, 2015 - 81.7%), respectively. The Surrey facility, which opened in September 2014 and is still considered Non-stabilized, achieved improved average occupancy of 81.5% and 79.7% during the three and nine months ended September 30, 2016 compared to 53.5% and 45.1% during the same periods in 2015, respectively.

Centre Portfolio Overview

The Company's centre locations, number of licensed spaces and average occupancies are provided in the table that follows. Centres typically experience lower levels of attendance June through September due to seasonal factors. As well, new centres typically exhibit lower occupancy levels during ramp up of enrollments, thereby adversely impacting total portfolio occupancies prior to achieving stabilization.







Three months
ended

September 30,
2016

Three months
ended

September 30,
2015

Nine months
ended

September 30,
2016

Nine months
ended

September 30,
2015

Stabilized Centres

 

Alberta





Ending Centres #

30

30

30

30

Ending Spaces #

3,236

3,238

3,236

3,238

Avg. Occupancy %

78.1

81.7

83.0

87.9






British Columbia





Ending Centres #

7

7

7

7

Ending Spaces #

558

577

558

577

Avg. Occupancy %

79.2

75.8

84.1

81.7






Ontario 





Ending Centres #

35

14

35

14

Ending Spaces #

3,966

1,408

3,966

1,408

Avg. Occupancy %

69.6

64.3

75.1

72.4






Total Stabilized Centres





Ending Centres #

72

51

72

51

Ending Spaces #

7,760

5,223

7,760

5,223

Avg. Occupancy %

73.9

76.4

77.4

83.0

Non-stabilized Centres

 

Alberta





Ending Centres #

3

1

3

1

Ending Spaces #

614

120

614

120

Avg. Occupancy %

82.8

26.5

73.4

26.5






British Columbia





Ending Centres #

1

1

1

1

Ending Spaces #

206

206

206

206

Avg. Occupancy %

81.5

53.5

79.7

45.1






Ontario 





Ending Centres #

-

-

-

-

Ending Spaces #

-

-

-

-

Avg. Occupancy %

-

-

-

-






Total Non-stabilized Centres





Ending Centres #

4

2

4

2

Ending Spaces #

820

326

820

326

Avg. Occupancy %

82.5

49.1

75.2

44.0

Total Portfolio (All Centres)





 

Ending Centres #

76

53

 

76

 

53

Ending Spaces #

8,580

5,549

8,580

5,549

Avg. Occupancy %

74.8

75.1

77.2

81.4

 

Deferred Share Units ("DSUs")

For the three months ended September 30, 2016, pursuant to the Board of Directors DSU plan, five members of the Board of Directors of BrightPath elected to receive board fees in the form of DSUs in lieu of cash remuneration, representing $0.06 million fair value in respect of 120,000 DSUs. The DSUs were issued on October 14, 2016.

Outlook

Across all markets, the Company continues to actively monitor and respond to enrollment challenges and opportunities through an aggressive enrollment campaign. Additionally, the Company is undertaking room consolidations and reconfigurations, variable cost reductions and marketing efforts supported by its robust CRM system and processes and redesigned and enhanced website.

As noted, despite the economic challenges in Alberta, strong market demand for early learning and care spaces in newly opened centres continues. The Cochrane centre, opened in September 2015 with 120 licensed spaces, the Creekside centre in Calgary, opened in November 2015 with 247 licensed spaces, and the West Henday centre in Edmonton, opened in April 2016 with 247 licensed spaces, have collectively achieved current enrollments of 95%. These notable enrollment levels were accomplished well in advance of industry metrics which typically anticipate a two-year period for enrollment ramp up and centre stabilization and represents strong validation of both the quality of the Company's product and its ability to effectively identify under-served markets within major metropolitan areas.

These most recent successful developments, built upon similar prior successes BrightPath has achieved, including its Chestermere and McKenzie Towne greenfield centres in Calgary and Clayton Hills centre in Surrey near Vancouver, leave the Company confident of the potential for future success from the near-term openings of centres in Riocan's Sage Hill Crossing shopping centre and First Capital's London Place West shopping centre, currently under construction for opening beginning early in 2017, as well as other pipeline initiatives in all provincial markets which have yet to be announced.

As noted on earlier occasions, notwithstanding some improvement in the price of the Company's common shares during the quarter, BrightPath's management and Board of Directors believe that the price of the shares on the TSX Venture Exchange does not reflect the Company's current value, operational performance, financial results, strategic achievements, and growth prospects. This disconnect has been further amplified and highlighted by the highly accretive acquisition of Peekaboo. The Company further notes that its owned real estate portfolio relative to its market capitalization implies minimal valuation its business and hence, a significant discount to net asset value. The Company continues to work towards closing the gap between net asset value and market capitalization by executing its strategic and operational business initiatives successfully and pursuing further initiatives to surface shareholder value.

QUARTERLY CONFERENCE CALL

BrightPath's quarterly results conference call is scheduled for Tuesday, November 29, 2016 at 10:00 am EST. The call details are as follows:

To access the conference call by telephone, dial (647) 427-7450 or (888) 231-8191. Please connect approximately 10 minutes prior to the beginning of the call.

A live audio webcast of the conference call will be available at: http://event.on24.com/r.htm?e=1309785&s=1&k=A0706C589120573AC584FB347FA222CC

Please connect at least 10 minutes prior to the web conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived at the above website for 90 days.

The conference call will be archived for replay until Tuesday, December 13, 2016 at midnight. To access the archived conference call, dial (416) 849-0833 or (855) 859-2056 and enter the reservation number 17577203 followed by the number sign.

NON- IFRS PERFORMANCE MEASURES

The Company uses "centre margin" as an indicator of centre performance. Centre margin does not have a standardized meaning prescribed by IFRS and therefore, may not be comparable with the calculation of similar measures by other entities. Centre margin is determined by deducting centre expenses from revenue. Centre expenses include labour and direct costs and exclude operating lease expense for leasehold properties and mortgage interest, if any, on those properties owned by the Company.

The Company also uses Adjusted EBITDA, FFO and AFFO as indicators of financial performance. 

Adjusted EBITDA is calculated by deducting the following from centre margin: operating lease expense, general and administrative expenses, and taxes other than income taxes. FFO is calculated by adjusting net profit (loss) to add back acquisition costs expensed as incurred, depreciation and certain other non-cash items. AFFO is calculated by adjusting FFO to add back share-based compensation and deduct maintenance capital expenditures. Maintenance capital expenditures consist of capital expenditures that are capitalized for accounting purposes but are considered to be recurring costs such as facilities and leasehold maintenance and the replacement of learning materials, toys, furniture, appliances and other equipment. Maintenance capital expenditures do not occur evenly over the course of the year with these activities typically occurring with greater intensity during the seasonally slower summer months.

Adjusted EBITDA, FFO and AFFO do not have standardized meanings prescribed by IFRS. The Company's method of calculating Adjusted EBITDA, FFO and AFFO may be different from other entities and, accordingly, may not be comparable to such other entities. Adjusted EBITDA, FFO and AFFO: (i) do not represent cash flow from operating activities as defined by IFRS; (ii) are not indicative of cash available to fund all liquidity requirements, including capital for growth; and (iii) are not to be considered as alternatives to IFRS-based net profit (loss) for the purpose of evaluating operating performance.

Centre operating results are also analyzed based on Stabilized and Non-stabilized centres which may not be comparable with that used by other entities. Acquired and newly-developed centres are deemed to be stabilized after 24 months, or sooner if pro forma occupancy levels are achieved.

Net profit (loss) is impacted by, among other items, accounting standards that require centre acquisition and transaction costs to be expensed as incurred. As the Company executes its consolidation and development strategy in the Canadian market, it will routinely incur such expenses which will negatively impact the Company's reported net profit (loss), but not Adjusted EBITDA, FFO and AFFO.

FORWARD-LOOKING STATEMENTS

Certain statements contained herein constitute forward-looking statements regarding the future growth, results of operations, performance and opportunities of the Company. Forward-looking statements can generally be identified by the use of, but not limited to, the following words: "plans", "expects" or "does not expect", "budget", "scheduled", "estimate", "forecast", "pro forma", "anticipate" or "does not anticipate", "believe", "intend", "inferred", "potential" and similar expressions or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements are not historical facts, but reflect the Company's current expectations regarding future results or events based on information currently available and what the Company believes to be reasonable assumptions. All forward-looking statements are qualified by these cautionary statements. 

Forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results or events to differ materially from those expressed, implied or projected include, but are not limited to, general economic conditions, the Company's ability to meet and maintain forecasted occupancy levels, general government policies, continued availability of government child care subsidies to parents, unexpected costs or liabilities related to acquisitions, construction, environmental matters, legal matters, changes in interest rates, credit spreads and the availability of financing. In addition, please refer to the Risks and Uncertainties section of the Company's annual Management's Discussion and Analysis. As such, the Company gives no assurance that actual results will be consistent with these forward-looking statements.

Readers should not place undue reliance on any such forward-looking statements. These forward-looking statements are made as of the date hereof. The Company undertakes no obligation to publicly update or revise any such statement, reflect new information or reflect the occurrence of future events or circumstances, except as required by securities laws.

ABOUT BRIGHTPATH EARLY LEARNING INC.

BrightPath Early Learning Inc. is a Canadian leader in child care and early education with 76 locations in major markets across the country comprising 8,580 licensed spaces. Meeting the highest standards in curriculum, nutrition, technology and recreational programming, BrightPath is committed to providing families with the very best child development and care Canada has to offer. 

For more information, visit www.BrightPathKids.com/corporate or contact Dale Kearns, President & Chief Financial Officer of BrightPath Early Learning Inc. at (403) 705-0362 ext. 406. 

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.


BrightPath Early Learning Inc.

Consolidated Statements of Financial Position

(Unaudited)






(CDN $000's)


September 30,
2016


December 31,
2015

Assets














Non-current assets








Property and equipment


$

52,878


$

49,779


Goodwill and definite life intangible assets



51,909



30,042




104,787



79,821

Current assets








Cash



10,258



1,537


Accounts receivable



2,036



1,958


Prepaid expenses and deposits



1,917



1,716


Short term investments



39



39




14,250



5,250








Total Assets


$

119,037


$

85,071








Liabilities














Non-current liabilities








Accounts payable and accrued liabilities


$

772


$

-


Long term debt and financing leases



43,622



14,697


Convertible debentures – liability component



-



4,304




44,394



19,001

Current liabilities








Accounts payable and accrued liabilities



10,997



5,198


Provision for restructuring costs



-



45


Deferred revenue



2,004



955


Current portion of debt and financing leases



3,830



5,184


Convertible debentures – liability component



4,570



-




21,401



11,382








Total Liabilities



65,795



30,383








Shareholders' Equity








Share capital



64,997



65,374


Convertible debentures – equity component



342



342


Equity settled share-based compensation



3,326



2,985


Accumulated deficit



(15,423)



(14,013)

Total Shareholders' Equity



53,242



54,688








Total Liabilities and Shareholders' Equity


$

119,037


$

85,071

 

BrightPath Early Learning Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss)

Three and nine months ended September 30, 2016 and 2015

(Unaudited)







Three months ended
September 30,

Nine months ended
September 30,

(CDN $000's except per share amounts)



2016


2015


2016


2015











Revenue


$

16,319

$

12,393

$

46,085

$

39,138

Government grants



443


422


1,366


1,236

Total revenue



16,762


12,815


47,451


40,374











Centre expenses











Salaries, wages and benefits



9,687


7,038


26,444


21,728


Other operating expenses



3,403


2,512


8,984


7,456

Centre margin



3,672


3,265


12,023


11,190











Operating leases



1,392


1,039


3,727


2,827

Finance costs



453


318


1,187


1,031

General and administrative



1,204


1,271


3,822


3,721

Taxes, other than income taxes



37


40


103


127

Acquisition and development



506


328


1,419


986

Gain on sale and leaseback



-


(1,791)


-


(1,791)

Share-based compensation



110


63


341


294

Depreciation and amortization



1,059


765


2,878


2,331




4,761


2,033


13,477


9,526











Profit (loss) before other income
(expense)



(1,089)


1,232


(1,454)


1,664











Other income (expense)



(50)


112


(131)


120











Net Profit (Loss) and Total
Comprehensive Income (Loss)


$

(1,139)

$

1,344

$

(1,585)

$

1,784











Net profit (loss) per share











Basic


$

(0.010)

$

0.011

$

(0.013)

$

0.015


Diluted


$

(0.010)

$

0.010

$

(0.013)

$

0.015

 

BrightPath Early Learning Inc.

Consolidated Statements of Changes in Shareholders' Equity

Nine months ended September 30, 2016 and 2015

(Unaudited)







(CDN $000's)

Share Capital

Convertible
Debentures –
Equity
Component

Equity Settled
Share-based
Compensation

Accumulated
Deficit

Shareholders'
Equity












Balance at January 1, 2015

$

65,871

$

342

$

2,419

$

(15,427)

$

53,205












Share-based compensation


-


-


294


-


294












Shares purchased for cancellation


(299)


-


-


110


(189)












Net profit and comprehensive income


 

-


 

-


 

-


 

1,784


 

1,784












Balance at September 30, 2015

$

65,572

$

342

$

2,713

$

(13,533)

$

55,094























Balance at January 1, 2016

$

65,374

$

342

$

2,985

$

(14,013)

$

54,688












Share-based compensation


-


-


341


-


341












Shares purchased for cancellation


(377)


-


-


175


(202)












Net loss and comprehensive loss


-


-


-


(1,585)


(1,585)












Balance at September 30, 2016

$

64,997

$

342

$

3,326

$

(15,423)

$

53,242

 

BrightPath Early Learning Inc.

Consolidated Statements of Cash Flow

Three and nine months ended September 30, 2016 and 2015

(Unaudited)







Three months ended
September 30,

Nine months ended
September 30,

(CDN $000's)



2016


2015


2016


2015











Cash provided by (used in):




















Operating Activities










Net profit (loss)


$

(1,139)

$

1,344

$

(1,585)

$

1,784

Items not affecting cash:











Depreciation and amortization



1,059


765


2,878


2,331


Depreciation included in operating costs



-


38


-


113


Finance costs



453


318


1,187


1,031


Gain on sale and leaseback



-


(1,791)


-


(1,791)


Share-based compensation



110


63


341


294


Change in fair value of convertible
debenture redemption feature



52


(111)


132


(111)

Change in non-cash operating
working capital



1,699


593


3,297


2,711

Change in non-current portion of
provision for restructuring costs



-


-


-


(45)

Cash provided by operations



2,234


1,219


6,250


6,317











Finance costs paid



(319)


(188)


(931)


(789)




1,915


1,031


5,319


5,528











Investing Activities










Property and equipment



(897)


(4,512)


(6,370)


(9,230)

Acquisitions through business
combinations, net of cash acquired



(16,683)


-


(17,427)


-

Net proceeds on sale and leaseback



-


7,214


-


7,214




(17,580)


2,702


(23,797)


(2,016)











Financing Activities










Loan proceeds



22,868


934


29,309


934

Loan repayments



(521)


(4,315)


(1,093)


(4,970)

Financing transaction costs



(472)


-


(542)


(32)

Finance lease repayments



(78)


(65)


(238)


(195)

Shares purchased for cancellation



(22)


(146)


(237)


(176)




21,775


(3,592)


27,199


(4,439)











Change in Cash



6,110


141


8,721


(927)

Cash at beginning of period



4,148


2,387


1,537


3,455

Cash at end of period


$

10,258

$

2,528

$

10,258

$

2,528

 

SOURCE BrightPath Early Learning Inc.

For further information: Dale Kearns, President & CFO, BrightPath Early Learning Inc., Office: (403) 705-0362 ext. 406, Toll Free: (888) 808-2252, http://www.brightpathkids.com; Joe Racanelli, Investor Relations, NATIONAL Equicom, (416) 586-1943, jracanelli@national.ca


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