Bright horizons family solutions reports first quarter of 2019
financial results
Watertown, mass.--(business wire)--bright horizons family solutions® inc. (nyse: bfam), a leading provider of high-quality child care, early education and other services designed to help employers, families and adult learners better address the challenges of work and family life, today announced financial results for the first quarter of 2019 and updated certain financial guidance for the full year 2019. first quarter 2019 highlights (compared to first quarter 2018): revenue increased 8% to $502 million income from operations increased 14% to $63 million net income increased 13% to $42 million and diluted earnings per common share increased 15% to $0.71 non-gaap measures adjusted income from operations* increased 14% to $63 million adjusted ebitda* increased 13% to $94 million adjusted net income* increased 12% to $48 million and diluted adjusted earnings per common share* increased 13% to $0.81 “we are pleased with the strong start to 2019, as we continue to grow each of our service offerings and expand our portfolio of client partners. we are privileged to support families so they can thrive and prosper at work and at home, and to help so many working adults grow and develop in their careers by advancing their education while they work,” said stephen kramer, chief executive officer. “we are also thrilled to have been named one of fortune magazine’s “100 best companies to work for” for the 18th time. this important recognition helps us continue to recruit and retain dedicated and talented professionals in our field, while demonstrating to our client partners our commitment to common values. creating a culture where women and men are proud to grow their careers while making a lasting difference in the lives of others is core to our ability to deliver on our mission and achieve excellence.” first quarter 2019 results revenue increased $38.1 million, or 8%, in the first quarter of 2019 from the first quarter of 2018 on contributions from new and ramping full service child care centers, average price increases of 3% to 4%, and expanded sales and utilization of our back-up care and educational advisory services. income from operations was $62.9 million for the first quarter of 2019, an increase from $55.3 million in the same 2018 period. increases in revenue and gross profit reflect contributions from enrollment gains in mature and ramping centers, new child care centers, back-up care and educational advisory clients that have increased utilization levels or been added since the first quarter of 2018, efficiencies in service delivery across the expanding customer base, and strong cost management. these gains were partially offset by investments in marketing and technology to support our customer user experience, service delivery and operating efficiency, and costs incurred during the pre-opening and ramp-up phase of newer lease/consortium centers. net income was $42.0 million for the first quarter of 2019 compared to net income of $37.3 million in the same 2018 period, an increase of $4.7 million, or 13%, attributable to the expanded income from operations. diluted earnings per common share was $0.71 for the first quarter of 2019 compared to $0.62 in the same 2018 period. in the first quarter of 2019, adjusted ebitda increased $10.6 million, or 13%, to $93.8 million, and adjusted income from operations increased $7.7 million, or 14%, to $63.3 million from the first quarter of 2018 due primarily to the expanded gross profit. adjusted net income increased by $5.2 million, or 12%, to $47.8 million on the expanded income from operations. diluted adjusted earnings per common share was $0.81 compared to $0.72 in the first quarter of 2018. as of march 31, 2019, the company operated 1,079 child care and early education centers with the capacity to serve approximately 120,000 children and their families. *adjusted ebitda, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share are non-gaap measures. adjusted ebitda represents earnings before interest, taxes, depreciation, amortization, non-cash lease expense, stock-based compensation expense, and transaction costs. adjusted income from operations represents income from operations before transaction costs. adjusted net income represents net income determined in accordance with gaap, adjusted for stock-based compensation expense, amortization expense, transaction costs and the income tax provision (benefit) thereon. diluted adjusted earnings per common share is a non-gaap measure, calculated using adjusted net income. these non-gaap measures are more fully described and are reconciled from the respective measures determined under gaap in “presentation of non-gaap measures” and the attached table “bright horizons family solutions inc. non-gaap reconciliations.” balance sheet and cash flow for the three months ended march 31, 2019, the company generated approximately $107.0 million of cash from operations compared to $105.8 million for the same 2018 period, and invested $60.6 million in fixed assets, acquisitions, and other investments compared to $29.5 million in the same 2018 period. net cash used in financing activities totaled $62.3 million in the three months ended march 31, 2019 compared to $79.6 million for the same 2018 period. the company reported a net increase in cash and cash equivalents of $4.7 million to $20.1 million as of march 31, 2019. 2019 outlook as described below, the company is updating certain financial guidance. for the full year 2019, the company currently expects: revenue growth in 2019 in the range of 8-10% net income in the range of $173 million to $176 million and diluted earnings per common share in the range of $2.93 to $2.97 adjusted net income in the range of $211 million to $214 million and diluted adjusted earnings per common share in the range of $3.58 to $3.64 diluted weighted average shares of approximately 59 million shares for a reconciliation of the non-gaap measures to their most directly comparable gaap measure, refer to the attached table “bright horizons family solutions inc. non-gaap reconciliations.” conference call bright horizons family solutions will host an investor conference call today at 5:00 pm et. interested parties are invited to listen to the conference call by dialing 1-877-407-9039 or, for international callers, 1-201-689-8470, and asking for the bright horizons family solutions conference call moderated by chief executive officer stephen kramer. replays of the entire call will be available through may 21, 2019 at 1-844-512-2921 or, for international callers, 1-412-317-6671, conference id #13685053. a link to the audio webcast of the conference call and a copy of this press release are also available through the investor relations section of the company’s web site, www.brighthorizons.com. forward-looking statements this press release includes statements that express the company’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” the company’s actual results may vary significantly from the results anticipated in these forward-looking statements, which can generally be identified by the use of forward-looking terminology, including the terms “believes,” “expects,” “may,” “will,” “should,” “seeks,” “projects,” “approximately,” “intends,” “plans,” “estimates” or “anticipates,” or, in each case, their negatives or other variations or comparable terminology. these forward-looking statements include all matters that are not historical facts. they include statements regarding the company’s intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth plan, strategies, our service offerings, our clients, our culture, estimated effective tax rate and tax expense, estimates and impact of equity transactions and excess tax benefits, our investments, and our 2019 financial guidance. by their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. the company believes that these risks and uncertainties include, but are not limited to, changes in the demand for child care and other dependent care services, including variation in enrollment trends and lower than expected demand from employer sponsor clients; the possibility that acquisitions may disrupt our operations and expose us to additional risk; our ability to pass on our increased costs; our indebtedness and the terms of such indebtedness; our ability to withstand seasonal fluctuations in the demand for our services; our ability to implement our growth strategies successfully; and other risks and uncertainties more fully described in the “risk factors” section of our annual report on form 10-k filed february 27, 2019, and other filings with the securities and exchange commission. these forward-looking statements speak only as of the time of this release and we do not undertake to publicly update or revise them, whether as a result of new information, future events or otherwise, except as required by law. presentation of non-gaap measures in addition to the results provided in accordance with u.s. generally accepted accounting principles (“gaap”) throughout this press release, the company has provided non-gaap measurements - adjusted ebitda, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share - which present operating results on a basis adjusted for certain items. the company uses these non-gaap measures as key performance indicators for the purpose of evaluating performance internally, and in connection with determining incentive compensation for company management, including executive officers. adjusted ebitda is also used in connection with the determination of certain ratio requirements under our credit agreement. we also believe these non-gaap measures provide investors with useful information with respect to our historical operations. these non-gaap measures are not intended to replace, and should not be considered superior to, the presentation of our financial results in accordance with gaap. the use of the terms adjusted ebitda, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures. adjusted ebitda, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share are reconciled from the respective measures under gaap in the attached table “bright horizons family solutions inc. non-gaap reconciliations.” guidance for non-gaap financial measures excludes stock-based compensation, amortization of intangible assets, expenses related to the completion of debt financing transactions, and expenses associated with completed acquisitions as well as tax effects associated with these items. these adjustments to net income and diluted earnings per common share in future periods are generally expected to be similar to the types of charges and costs excluded from adjusted net income and diluted adjusted earnings per common share in prior quarters, although we can provide no assurance as to the timing or magnitude of any such adjustments. the exclusion of these charges and costs in future periods will have an impact on the company’s adjusted net income and diluted adjusted earnings per common share. about bright horizons family solutions inc. bright horizons is trusted by families around the world to provide care and education for their children. operating approximately 1,100 child care centers, bright horizons cares for approximately 120,000 children annually in the united states, the united kingdom, the netherlands, canada and india. used by more than 1,100 of the world's best employers across industries, bright horizons back-up child and elder care, tuition program management, education advising, and student loan repayment programs support employees through every life and career stage, and help people succeed at work and at home. for more information, go to www.brighthorizons.com. condensed consolidated statements of income (in thousands, except share data) (unaudited) condensed consolidated balance sheets (in thousands) (unaudited) condensed consolidated statements of cash flows (in thousands) (unaudited) segment information (in thousands) (unaudited) full servicecenter-basedchild care back-upcare educationaladvisoryservices three months ended march 31, 2019 three months ended march 31, 2018 non-gaap reconciliations (in thousands, except share data) (unaudited) non-gaap reconciliations (in thousands, except share data) (unaudited)