BrightPath's Transformational Growth in 2016 Begins to Drive Significant Increases in Corporate EBITDA and Cash Flow Per Share

TORONTO, April 21, 2017 /CNW/ - BrightPath Early Learning Inc. ("BrightPath" or the "Company") (TSX-V: BPE), the leading Canadian provider of high-quality, comprehensive early childhood education and care, with 8,570 spaces of licensed capacity across 76 centres located in Alberta, Ontario and British Columbia, announced today its operational and financial results for the three and twelve months ended December 31, 2016.  

Financial performance highlights for the three months ended December 31, 2016 (all compared to the same period in the prior year) include:

  • The Company's revenue increased 57.7% to $21.8 million, with higher revenue reported across all provincial markets;
  • The Company's centre margin increased 54.8% to $5.6 million versus $3.6 million;
  • BrightPath's Adjusted EBITDA increased to $2.7 million compared to $1.3 million, an increase of $1.4 million or 92.3%;
  • Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO") both increased to $1.8 million ($0.015 per share) compared to $0.9 million ($0.007 per share), an increase of 107%; and
  • Average occupancy of Stabilized centres of 78.3% compared to 80.3%, largely reflecting weakness in Alberta and partially offset by improvement in Ontario and British Columbia markets.

Financial performance highlights for the year ended December 31, 2016 are as follows (all compared to the prior year period):

  • The Company's revenue increased 27.8% to a record $69.2 million, with higher revenue reported in all three provincial markets currently served by the Company;
  • The Company's centre margin increased 19.0% to $17.6. million, with all provincial markets achieving higher centre margins;
  • BrightPath's Adjusted EBITDA increased to $7.0 million compared to $5.8 million;
  • FFO increased to $5.0 million ($0.041 per share) compared to $4.6 million ($0.038 per share);
  • AFFO increased to $4.8 million ($0.040 per share) compared to $4.3 million ($0.036 per share); and
  • The average occupancy of Stabilized centres was 78.2% compared to 82.3%;
  • The Company had available capital of $21.4 million at December 31, 2016 to fund the Company's pipeline of growth initiatives, which includes 570 licensed spaces in three centres under development and other pipeline initiatives not yet announced. These will bring BrightPath's total licensed capacity to 9,140 spaces, almost double the total number of Stabilized spaces at the end of fiscal 2015.

Significant events and trends for the year ended December 31, 2016 include:

  • For the year ended December 31, 2016, enrollment levels and revenue in Ontario and British Columbia centres and newly developed centres in Alberta demonstrated considerable growth, exceeding the Company's expectations. Stabilized centres in Alberta continued to experience pressure on enrollments from the effects of the economic downturn, as anticipated;
  • In August 2016, the Company completed the acquisition of the Peekaboo portfolio of centres ("Peekaboo"). This portfolio of 20 early learning and care centres, located in the Regions of Peel and Halton, in the Greater Toronto Area ("GTA") of Ontario, is comprised of 2,439 licensed spaces, and increased BrightPath's total capacity by approximately 40%, making Ontario BrightPath's largest market and, in doing so, geographically balanced its portfolio. The Company has identified significant operational and financial synergies from this significant acquisition which will further contribute to profitability in the near future;
  • In June 2016, BrightPath acquired The Lawrence Park School ("Lawrence Park"), an early learning and care centre located in a leased facility in the Lawrence Park suburb of Toronto, Ontario, adding an additional 95 licensed spaces to the Company's capacity;
  • In April 2016, the West Henday centre in Edmonton, Alberta opened, which is comprised of 247 licensed spaces in a 20,000 square foot facility developed by BrightPath on a 0.8 acre land site within Melcor Developments' West Henday Promenade Shopping Centre. Enrollment at this centre is currently 96%; 
  • In April 2016, the second expansion of the Company's Airdrie centre was opened, increasing this leased centre's licensed capacity from 117 to 135;
  • In August 2016, the third expansion of the Airdrie centre was completed, bringing the centre's total licensed capacity to 146 spaces;   
  • Construction of the Sage Hill centre in Riocan REIT's Sage Hill Crossing development was commenced in the fourth quarter of 2016 and the centre was completed in February 2017. The Sage Hill centre will comprise of approximately 130 licensed spaces in a 10,000 square foot leasehold facility;
  • In December 2016, the Cochrane centre located in Cochrane, Alberta, which opened in September 2015, achieved stabilization. Enrollment at this 120 space centre is currently 86%;
  • Construction of the Company's "purpose-built" Richmond Early Learning and Care centre, located in First Capital's London Place West shopping centre in southwest Calgary, commenced and is anticipated to open in the second quarter of 2017. This centre will be comprised of 247 licensed spaces in a 20,000 square foot facility developed and owned by BrightPath on a one-acre parcel of land held pursuant to a long-term ground lease;
  • In July 2016, BrightPath launched its redesigned and enhanced website, which is fully integrated into its CRM system. The enhanced website platform is designed to attract additional, and more relevant, visitors residing within an appropriate vicinity of the Company's centres, thereby increasing effectiveness and improving the Company's knowledge of prospective clients;
  • In August 2016, the financial strength of the Company's operations and pipeline, the value inherent in its owned real estate properties and its solid banking relationship was underscored by the amended terms of its credit facility with its bank lender, resulting in a $20.5 million increase in the credit facility to $62.5 million. These funds were primarily designated to finance the acquisition of Peekaboo; and  
  • In September 2016, BrightPath announced the renewal of the Company's normal course issuer bid ("NCIB"). During the three and twelve months ended December 31, 2016, the Company repurchased 25,000 and 719,000 shares, respectively, for cancellation, of which 694,000 had been cancelled at December 31, 2016. Cumulatively to date, the Company has purchased for cancellation 2,024,400 shares under its NCIB program at an average price of $0.33 per share.

"BrightPath has achieved record financial results during this transformative year, attributable to the acquisition of Peekaboo and Lawrence Park centres and the highly successful new centre openings in Alberta, as well as intense efforts to increases operating efficiencies. Despite the challenging economic conditions in Alberta during 2016, there were impressive increases in revenue and centre margin year over year; furthermore, the anticipated benefits of the acquisitions and new centres were only starting to be realized in the later part of 2016 year, positioning us well to continue to deliver growth and profitability in 2017," stated Mary Ann Curran, Chief Executive Officer of the Company. "The Company continues to be focused on delivering the highest quality and breadth of early childhood education and care and to further improving enrollment while effectively managing costs to enhance shareholder value in Fiscal 2017 and beyond."

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

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





Year ended December 31,

2016

2015

2014

Centres at end of year (#)

76

54

52

Licensed spaces at end of year (#)

8.570

5,790

5,372

Average occupancy (%)

78.5

80.6

83.1

Ending occupancy (%)

78.9

77.7

82.0

Revenue ($)

69,209

54,170

50,808

Centre margin ($)

17,639

14,819

13,819

Adjusted EBITDA ($)

7,035

5,821

5,954

FFO(1) ($)

4,971

4,560

4,693

FFO per share(1) ($)

0.041

0.038

0.039

AFFO(1) ($)

4,808

4,336

4,334

AFFO per share(1) ($)

0.040

0.036

0.036

Net profit (loss) ($)

(338)

1,224

(1,568)

Net profit (loss) per share ($)

(0.003)

0.010

(0.013)

Total assets ($)

121,270

85,071

82,877

Total long-term financial liabilities ($)

43,636

19,001

24,162















Q4
2016

Q3
2016

Q2
2016

Q1
2016

Q4
2015

Q3
2015

Q2
2015

Q1
2015

Revenue

$

21,758

$

16,762

$

15,859

$

14,830

$

13,796

$

12,815

$

13,912

$

13,647

Centre margin

5,616

3,672

4,249

4,102

3,629

3,265

3,976

3,949

Centre margin %

25.8

21.9

26.8

27.7

26.3

25.5

28.6

28.9

Adjusted EBITDA

2,664

1,039

1,757

1,575

1,306

915

1,781

1,819

FFO(1)

1,821

575

1,345

1,230

877

696

1,436

1,551

AFFO(1)

1,799

478

1,276

1,255

851

596

1,373

1,516

Net profit (loss)

1,247

(1,139)

(264)

(182)

(560)

1,344

144

296

Per share amounts:










FFO(1)

0.015

0.005

0.011

0.010

0.007

0.006

0.012

0.013


AFFO(1)

0.015

0.004

0.011

0.010

0.007

0.005

0.011

0.012


Net profit (loss)

0.010

(0.010)

(0.002)

(0.002)

(0.005)

0.011

0.001

0.002











For the three months ended December 31, 2016, revenue was $21,758 (December 31, 2015 - $13,796), an increase of 57.7%, and centre margin was $5,616 (December 31, 2015 - $3,629), an increase of 54.8%. Centre margin year over year as a percentage of revenue was 25.8% compared to 26.3% in 2015. The reasons for the increase in revenue and slight reduction of centre margin as a percentage of revenue was primarily caused by two factors: (i) the decline in enrollment in Stabilized centres in Alberta combined with operational restraints on realizing labour savings on lower enrollment levels due to regulated educator and staff ratios; and (ii) an aggressive enrollment campaign to swiftly achieve high occupancy in newly-opened centres in Alberta resulted in near-term labour-to-revenue metrics that were non-optimal. However, on a sequential quarter basis, Centre margin improved to 25.8% from 21.9%, which reflects the impact of acquisitions, improvement in new centre operating metrics and seasonality.

For the year ended December 31, 2016, the Company reported record revenue of $69,209 (December 31, 2015 - $54,170) and centre margin of $17,639 (December 31, 2015 - $14,819). Revenue increased 27.8% due to three major factors: tuition from the acquired Peekaboo centres and Lawrence Park, revenue from new locations in Cochrane, Calgary and Edmonton Alberta, and moderate year over year increases in tuition fees. These were partially offset by a decline in Stabilized centres' occupancy due to lower enrollment levels in Alberta, but partially compensated for by increased occupancy in Ontario and British Columbia. Centre margin decreased to 25.5% compared to 27.4% in 2015. The factors related to centre margin were primarily the same as the two factors discussed in the three months paragraph above.

Adjusted EBITDA, FFO and AFFO











Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Centre margin for the period

5,616

3,672


4,249


4,102


3,629


3,265


3,976

3,949

General and administrative expense

(1,109)

(1,204)

(1,273)

(1,345)

(1,129)

(1,271)

(1,258)

(1,192)

Taxes, other than income taxes

(73)

(37)

(28)

(38)

(41)

(40)

(44)

(43)

Operating lease expense

(1,770)

(1,392)

(1,191)

(1,144)

(1,153)

(1,039)

(893)

(895)

Adjusted EBITDA

$

2,664

$

1,039

$

1,757

$

1,575

$

1,306

$

915

$

1,781

$

1,819




























Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Net profit (loss) before taxes for the period

(454)


(1,139)


(264)


(182)


(560)


1,344


144

296

Depreciation and certain other non-cash items

1,910

1,208

1,083

1,025

969

815

948

941

Acquisition  and development costs

365

506

526

387

468

328

344

314

Restructuring costs

-

-

-

-

-

-

-

-

Loss on disposition of development land

-

-

-

-

-

-

-

-

Gain on sale and leaseback

-

-

-

-

-

(1,791)

-

-

FFO(1)

$

1,821

$

575

$

1,345

$

1,230

$

877

$

696

$

1,436

$

1,551

Share-based compensation

106

110

114

117

272

63

153

78

Maintenance capital expenditures

(128)

(207)

(183)

(92)

(298)

(163)

(216)

(113)

AFFO(1)

$

1,799

$

478

$

1,276

$

1,255

$

851

$

596

$

1,373

$

1,516


















Adjusted EBITDA for the fourth quarter of 2016 was $2,664 compared to $1,306 in 2015. Adjusted EBITDA increased $1.4 million mainly due to contribution from the Peekaboo portfolio, the impact of new centre openings and net improvement in Stabilized centres across all three provinces, including a modest pick up in Alberta centres where centre margin exceeded prior year levels despite lower occupancy.

Adjusted EBITDA for the year ended December 31, 2016 was $7,035 compared to $5,821 in 2015, an increase of 20.9%. Adjusted EBITDA for the year was favourably impacted by the acquisition of the Peekaboo and Lawrence Park centres, although the fourth quarter for these centres is a seasonally low period, and the opening of new centres with very strong enrollment and revenue levels but tempered by non-optimal expense levels pending the normalization process we implement subsequent to all new centre openings. Improvements in the balance of the Ontario and British Columbia portfolio operations also favourably impacted Adjusted EBITDA, offset by the effects of a decline in the Alberta Stabilized centre occupancy owing to the economic challenges in that province.

FFO for the fourth quarter of 2016 was $1,821 compared to $877 in the fourth quarter of 2015, due primarily to the acquisition and contribution of new centres. FFO per share for the fourth quarter of 2016 was $0.015 compared to $0.007 for the same period in 2015. 

FFO for the year ended December 31, 2016 was $4,970 compared to $4,560 for the year ended December 31, 2015 reflecting, primarily, Peekaboo portfolio contribution for four months, new centre openings and Stabilized centre net improvements. FFO per share for the year ended December 31, 2016 was $0.041 compared to $0.038 for the same period in 2015.

AFFO for the fourth quarter of 2016 was $1,799 compared to $851 a year earlier. AFFO increased period over period primarily due to the same factors noted above for the year ended December 31, 2016. AFFO per share for the fourth quarter of 2016 was $0.015 compared to $0.007 for the fourth quarter of 2015.

AFFO for the year ended December 31, 2016 was $4,808 ($0.040 per share) compared to AFFO of $4,336 ($0.036 per share) for the year ended December 31, 2015. AFFO increased year over year primarily due to higher FFO.

Net profit for the three months ended December 31, 2016 was $1,247 compared to a net loss a year earlier of $560. A deferred income tax recovery of $1,765 was reported in the fourth quarter of 2016, favourably impacting net profit. Basic and diluted net profit (loss) per share for the three months ended December 31, 2016 was $0.010 (December 31, 2015 - $(0.05)). 

Net loss for the year ended December 31, 2016 was $338 compared to a net profit of $1,224 for the year ended December 31, 2015. Net profit reported in 2015 was favourably impacted by a $1,791 million gain on the sale and leaseback of the McKenzie Towne centre. Basic and diluted net profit (loss) per share for the twelve months ended December 31, 2016 was $(0.003) (December 31, 2015 - $0.010).    

Both periods in 2016 were impacted by the cost of opening new centres, a greater level of property acquisition and development related costs, which, pursuant to IFRS accounting principles are required to be expensed in the quarter incurred. However, the economic returns of these expenditures will benefit the Company for many future years.

For the year ended December 31, 2016, occupancy for Alberta Stabilized centres averaged 81.8% compared to 87.1% in the prior year. BrightPath experienced continued pressure on enrollments at its Stabilized centres in Alberta from the effects of the economic downturn; more recently, however, this pressure is showing signs of abating. In contrast to the Stabilized centres, newly opened centres continued to benefit from strong market demand, irrespective of the economic challenges in the province. The Company's Creekside and West Henday centres that opened in November 2015 and April 2016, respectively, achieved impressive average occupancies of 96.1% in the fourth quarter of 2016, both far exceeding the Company's pro forma expectations of enrollment levels and the timeframe to achieve stabilization.

With the successful acquisitions of Lawrence Park and Peekaboo completed in June 2016 and August 2016, respectively, Ontario has become BrightPath's largest market, representing 45.9% of the Company's total licensed capacity as at December 31, 2016. Ontario occupancy levels for comparable centres increased 4.5 percentage points to 76.1% on a year over year basis. Likewise, in the fourth quarter, Ontario occupancy levels for comparable centres increased to 74.5% from 69.0% in 2015. Including the Lawrence Park and Peekaboo centres, Ontario portfolio occupancy increased to 74.7% in the fourth quarter of 2016.

The Peekaboo portfolio contributed four months of results to the 2016 fiscal year. On a sequential quarter basis, average occupancy improved 7.2% from 67.6% in the third quarter to 74.8% in the fourth quarter, which reflects, primarily, seasonality and improvement in centre operating metrics. The integration is proceeding well and meeting targeted objectives. Improved results are expected as the Company's operational, marketing and management systems are applied to the Peekaboo portfolio.

Occupancy in British Columbia centres increased to 83.6% for the year ended December 31, 2016 from 81.9% in 2015. For the fourth quarter of 2016, centre occupancy increased to 85.6% from 82.5% a year earlier. The Surrey facility, which opened in September 2014, was considered Stabilized as of October 2016, achieving average occupancy of 81.0% for the year ended December 31, 2016 compared to 50.6% a year earlier. Average occupancy at Surrey for the fourth quarter increased to 84.8% from 66.9% in 2015.

Centre Portfolio Overview

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






Stabilized Centres

Three months
ended
December 31,
2016

Three months
ended
December 31,
2015

Year 
ended
December 31,
2016

Year 
ended
December 31,
2015


Alberta






Ending Centres #

31

30

31

30


Ending Spaces #

3,378

3,238

3,378

3,238


Avg. Occupancy %

80.9

84.7

81.8

87.1







British Columbia






Ending Centres #

8

7

8

7


Ending Spaces #

764

577

764

577


Avg. Occupancy %

85.6

82.5

83.6

81.9







Ontario






Ending Centres #

35

14

35

14


Ending Spaces #

3,934

1,402

3,934

1,402


Avg. Occupancy %

74.7

69.0

74.1

71.6







Total Stabilized Centres






Ending Centres #

74

51

74

51


Ending Spaces #

8,076

5,217

8,076

5,217


Avg. Occupancy %

78.3

80.3

78.2

82.3

Non-stabilized Centres





Alberta





Ending Centres #

2

2

2

2

Ending Spaces #

494

367

494

367

Avg. Occupancy %

96.1

49.5

83.2

46.7






British Columbia





Ending Centres #

-

1

-

1

Ending Spaces #

-

206

-

206

Avg. Occupancy %

-

66.9

-

50.6






Ontario 





Ending Centres #

-

-

-

-

Ending Spaces #

-

-

-

-

Avg. Occupancy %

-

-

-

-






Total Non-stabilized Centres





Ending Centres #

2

3

2

3

Ending Spaces #

494

573

494

573

Avg. Occupancy %

96.1

56.8

83.2

49.5

Total Portfolio (All Centres)





Ending Centres #

76

54

76

54

Ending Spaces #

8,570

5,790

8,570

5,790

Avg. Occupancy %

79.3

78.2

78.5

80.6







Deferred Share Units ("DSUs")

For the three months ended December 31, 2016, pursuant to the Board of Directors DSU plan, five members of the Board of Directors of BrightPath elected to receive board fees in the form of DSUs in lieu of cash remuneration, representing $0.07 million fair value in respect of 161,929 DSUs. The DSUs were issued on January 12, 2017.

Outlook

The 2016 year was a very solid and transformational period for BrightPath and positions the Company well to drive significant additional growth and profitability in 2017.

For the year ended December 31, 2016, despite challenges in the Alberta market, the Company increased revenue and centre margin on a year over year basis by 27.8% and 19.0%, respectively, and reported Adjusted EBITDA of $7,035, an improvement of 20.9% over the prior year. Fourth quarter FFO showed a 107% increase versus the prior year.

The Company remains focused on generating substantially higher Adjusted EBITDA and enhancing shareholder value through:

  • integration of Peekaboo portfolio centres and realization of pro-forma financial performance as a result;
  • continuous product advancement, enabling optimized pricing and occupancy levels;
  • disciplined management of enrollment and mix;
  • continuously improving management of all costs – labour, other operating and general and administrative;
  • realizing cash flow from development initiatives, as well as those in the pipeline but not yet announced;
  • selective acquisitions;
  • delivering a significant increase in EBITDA by harvesting the financial returns from significant investments in acquisitions, developments, the Peekaboo acquisition and operational systems the Company has successfully implemented, as well as the additional growth pipeline in 2017; and
  • other measures to enhance shareholder value, including monetization of select assets and the NCIB program.

For the year ended December 31, 2016, enrollment levels, revenue and centre margin in Ontario centres and new centres in Alberta demonstrated considerable growth, exceeding the Company's expectations. Stabilized centres in Alberta continued to experience pressure on enrollments from the effects of the economic downturn, as anticipated, however, there are signs that the Alberta economy is entering recovery mode and management anticipates recovery of the modest enrollment losses as employment rates improve.

Despite the economic challenges in Alberta, strong market demand for early learning and care in newly opened centres in that province continues. The Cochrane centre, opened in September 2015 with 120 licensed spaces, the Creekside centre in Calgary, opened in November 2015 with 247 licensed spaces, and the West Henday centre in Edmonton, opened in April 2016 with 247 licensed spaces, have collectively achieved current enrollments of 95%. These notable enrollment levels were accomplished well in advance of industry metrics which typically anticipate a two-year period for enrollment ramp up and centre stabilization (and at enrollment levels well below that achieved by BrightPath centres). This success provides validation of both the quality of the Company's product and its ability to effectively identify under-served markets within major metropolitan areas.  At the same time, however, it is important to note that swift enrollment increases have triggered short-term inefficiencies in labour-to-revenue metrics that are addressed as enrollments build and operations improve, and as these centres achieve the provincial Accreditation designation. As of February 2017, all of these centres have achieved Accreditation which will enhance their profitability throughout 2017.

In British Columbia, the Company continues to focus on building enrollments further and managing labour and operating costs to continuously improve earnings and cash flow. The Company is looking for opportunities to grow and develop larger facilities, offering an appropriate scale of operations, in the suburban markets surrounding Vancouver.

In Ontario, with a more stable market landscape and clear understanding of the new demand patterns for early learning and care, management has focused on building enrollment levels and pursuing opportunities for growth in this market. Occupancy in total Ontario centres increased 5.7 and 2.5 percentage points for the three and twelve months ended December 31, 2016, respectfully, on a year over year basis. Occupancy levels for Ontario comparable centres increased 5.5 percentage points to 74.5% in the fourth quarter of 2016 and 4.5 percentage points to 76.1% for the year ended December 31, 2016. The Company continues to concentrate on becoming Ontario parents' provider of choice through effective marketing of BrightPath's high quality curriculum and programming. The Company also continues to pursue opportunities to add capacity and grow BrightPath's base of centres. BrightPath's completion of the transformative acquisition of Peekaboo further augmented the accretive growth in the Ontario market. It is anticipated to be highly and immediately accretive to FFO per share as a result of Peekaboo's profitable operations.

Reflected in the Company's 2016 results are $1.2 million of non-recurring expenses of future benefit, including expenditures to complete BrightPath's two Ontario acquisitions, investment in short term non-optimal labour metrics to support a swift build of enrollments, pre-accreditation centre staff wage top-ups and investment in the Company's enhanced website and CRM system.  

The significant growth in revenue, EBITDA and cash flow per share BrighPath delivered in 2016 was achieved with a relatively constant total General & Administration expense as compared to 2015 (including the one time expenditures noted herein). This underscores both the value, and operational and financial leverage, of BrighPath's current management platform and the financial upside to shareholders through advancing incremental growth initiatives. 

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

QUARTERLY CONFERENCE CALL

BrightPath's quarterly results conference call is scheduled for Friday, April 21, 2016 at 10:00 am EST. The call details are as follows:

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

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

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

The conference call will be archived for replay until Friday, May 5, 2017 at midnight. To access the archived conference call, dial (416) 849-0833 or (855) 859-2056 and enter the reservation number 17577203 followed by the number sign.

NON- IFRS PERFORMANCE MEASURES

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

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

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

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

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

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

FORWARD-LOOKING STATEMENTS

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

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

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

ABOUT BRIGHTPATH EARLY LEARNING INC.

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

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

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

 

BrightPath Early Learning Inc.
Consolidated Statements of Financial Position





(CDN $000's)

December 31,
2016

December 31,
2015

Assets






Non-current assets




Restricted cash

$

700

$

-


Property and equipment


56,480


49,779


Goodwill and definite life intangible assets

51,393

30,042


108,573

79,821

Current assets




Cash

6,405

1,537


Restricted cash

2,150

-


Accounts receivable

2,282

1,958


Prepaid expenses and deposits

1,821

1,716


Short term investments

39

39


12,697

5,250




Total Assets

$

121,270

$

85,071






Liabilities






Non-current liabilities




Long term debt and financing leases

$

42,936

$

14,697


Convertible debentures – liability component


-


4,304


Other liabilities


700




43,636

19,001

Current liabilities




Accounts payable and accrued liabilities

12,466

5,198


Provision for restructuring costs

-

45


Deferred revenue

1,900

955


Current portion of debt and financing leases

3,717

5,184


Convertible debentures – liability component

4,968

-


23,051

11,382




Total Liabilities

66,687

30,383

Shareholders' Equity




Share capital

64,983

65,374


Convertible debentures – equity component

342

342


Equity settled share-based compensation

3,432

2,985


Accumulated deficit

(14,174)

(14,013)

Total Shareholders' Equity

54,583

54,688




Total Liabilities and Shareholders' Equity

$

121,270

$

85,071

 

BrightPath Early Learning Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
Three and twelve months ended December 31, 2016 and 2015





Three months ended
December 31,

Year ended
December 31,

(CDN $000's except for per share amounts)

2016

2015

2016

2015






Revenue

$

21,224

$

13,271

$

67,309

$

52,409

Government grants


534


525


1,900


1,761

Total revenue


21,758


13,796


69,209


54,170






Centre expenses






Salaries, wages and benefits

12,276

7,500

38,720

29,228


Other operating expenses

3,866

2,667

12,850

10,123

Centre margin

5,616

3,629

17,639

13,700






Operating leases

1,770

1,153

5,497

3,980

Finance costs

884

303

2,071

1,334

General and administrative

1,182

1,129

4,931

4,850

Taxes, other than income taxes

73

41

176

168

Acquisition and development

365

468

1,784

1,454

Gain on sale and leaseback

-

-

-

(1,791)

Share-based compensation

106

272

447

566

Depreciation and amortization

1,615

808

4,493

3,139


5,922

4,174

19,399

13,700






Profit (loss) before other income and income taxes

(306)

(545)

(1,760)

1,119






Other income (expense)

(148)

(15)

(279)

105

Profit (loss) before income taxes

(454)

(560)

(2,039)

1,224






Income tax recovery (expense)

1,701

-

1,701

-

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

$

1,247

$

(560)

$

(338)

$

1,224






Net profit (loss) per share






Basic

$

0.010

$

(0.005)

$

(0.003)

$

0.010


Diluted

$

0.010

$

(0.005)

$

(0.003)

$

0.010






 

BrightPath Early Learning Inc.
Consolidated Statements of Changes in Shareholders' Equity
Years ended December 31, 2016 and 2015







(CDN $000's)

Share Capital

Convertible
Debentures –
Equity
Component

Equity Settled
Share-based
Compensation

Accumulated
Deficit

Shareholders'
Equity








Balance at January 1, 2015

$

65,871

$

342

$

2,419

$

(15,427)

$

53,205








Share-based compensation


-

-

566

-

566








Shares purchased for cancellation


(497)

-

-

190

(307)

Net profit and comprehensive income


 

-

 

-

 

-

 

1,224

 

1,224










Balance at December 31, 2015

$

65,374

$

342

$

2,985

$

(14,013)

$

54,688








Balance at January 1, 2016

$

65,374

$

342

$

2,985

$

(14,013)

$

54,688











Share-based compensation


-

-


447


-


447











Shares purchased for cancellation


(391)

-


-


177


(214)











Net loss and comprehensive loss


-

-


-


(338)


(338)










Balance at December 31, 2016

$

64,983

$

342

$

3,432

$

(14,174)

$

54,583

 

BrightPath Early Learning Inc.
Consolidated Statements of Cash Flow
Three and twelve months ended December 31, 2016 and 2015





Three months ended
December 31,

Year ended
December 31,

(CDN $000's)

2016

2015

2016

2015






Cash provided by (used in):










Operating Activities





Net profit (loss)

$

1,247

$

(560)

$

(338)

$

1,224

Items not affecting cash:






Depreciation and amortization

1,615

808

4,493

3,139


Depreciation included in operating costs

-

41

-

154


Finance costs

884

303

2,071

1,334


Gain on sale and leaseback

-

-

-

(1,791)


Share-based compensation

106

272

447

566


Change in fair value of convertible debenture liability component

175

(5)

307

(116)


Income taxes

(1,701)

-

(1,701)

-

Change in non-cash operating working capital

(23)

(2,543)

4,024

168

Change in non-current portion of provision for restructuring costs

-

-

-

(45)

Cash provided by (used in) operations

2,303

(1,684)

9,303

4,633






Finance costs paid

(626)

(338)

(1,557)

(1,127)


1,677

(2,022)

7,746

3,506






Investing Activities





Property and equipment

(1,837)

(1,444)

(8,207)

(10,674)

Acquisition through business combinations, net of cash acquired

-

-

(21,027)

-

Net proceeds on sale leaseback

-

-

-

7,214


(1,837)

(1,444)

(29,234)

(3,460)






Financing Activities





Loan proceeds

-

2,997

29,309

3,931

Loan repayments

(763)

(277)

(1,856)

(5,247)

Financing transaction costs

-

(4)

(542)

(36)

Finance lease repayments

(78)

(86)

(316)

(281)

Shares purchased for cancellation

(2)

(155)

(239)

(331)


(843)

2,475

26,356

(1,964)






Change in Cash

(1,003)

(991)

4,868

(1,918)

Cash at beginning of period

7,408

2,528

1,537

3,455

Cash at end of period

$

6,405

$

1,537

$

6,405

$

1,537

 

SOURCE BrightPath Early Learning Inc.

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

RELATED LINKS
www.brightpathkids.com

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