Bright Horizons Family Solutions Reports First Quarter of 2022 Financial Results

Bright Horizons Family Solutions^® Inc. (NYSE: BFAM), a leading provider of high-quality education and care solutions designed to help employers support employees across life and career stages, today announced financial results for the first quarter of 2022 and revised financial guidance for 2022.

First Quarter 2022 Highlights (compared to First Quarter 2021):

• Revenue of $460 million (increase of 18%)
• Income from operations of $31 million (increase of 127%)
• Net income of $19 million and diluted earnings per common share of $0.33 (increases of 172% and 175%, respectively)

Non-GAAP measures

• Adjusted income from operations* of $31 million (increase of 127%)
• Adjusted EBITDA* of $63 million (increase of 36%)
• Adjusted net income* of $28 million and diluted adjusted earnings per common share* of $0.47 (increases of 100% and 104%, respectively)

“We are pleased with our start to 2022, as we continue to make progress from the effects of the COVID-19 pandemic,” said Stephen Kramer, Chief Executive Officer. “Our growing list of client partners demonstrates the increasing focus and impact our services have on working parents, adult learners and the employers who rely on the talent and dedication of their diverse workforces.”

“With each month of the recovery, we see the unique strength and resilience of our business model, and our expanding service offerings are reaching a broader population of workers, thereby meeting the evolving needs of our clients,” Kramer continued. “We are privileged to support families so they can thrive and prosper at work and at home, and to help so many adult learners grow and develop in their careers by advancing their education while they work.”

First Quarter 2022 Results

Revenue increased $69.6 million, or 18%, in the first quarter of 2022 from the first quarter of 2021, primarily attributable to enrollment gains at our centers, and to a lesser extent, expanded sales and utilization of back-up care and other educational advisory services. While we continued to see steady gains in enrollment in our child care centers during the quarter, our centers are still operating below pre-COVID-19 enrollment levels during this re-ramping phase.

Income from operations was $31.2 million for the first quarter of 2022 compared to $13.7 million for the first quarter of 2021, representing a 127% increase. The increase in income from operations reflects improved gross profit contributions in the full service center-based child care segment arising from increased enrollment and a higher level of support from government programs compared to the prior year. This increase was partially offset by a reduction in income from operations in our back-up care services that reflects the shift in service delivery mix back towards pre-COVID-19 levels, with increasing utilization of traditional in-home and center-based care compared to the prior year. Net income was $19.4 million for the first quarter of 2022 compared to $7.1 million for the first quarter of 2021, an increase of 172% due to the increase in income from operations noted above, partially offset by a higher effective tax rate. Diluted earnings per common share was $0.33 for the first quarter of 2022 compared to $0.12 for the first quarter of 2021.

In the first quarter of 2022, adjusted EBITDA* increased $16.5 million, or 36%, to $62.8 million, and adjusted income from operations* increased $17.5 million, or 127%, to $31.2 million from the first quarter of 2021, due primarily to the increase in gross profit in the full service center-based child care segment, partially offset by reduced contributions from our back-up care services. Adjusted net income* increased by $13.9 million, or 100%, to $27.7 million, due to the increase in income from operations, partially offset by a higher effective tax rate. Diluted adjusted earnings per common share* was $0.47 for the first quarter of 2022 compared to $0.23 for the same period in 2021.

As of March 31, 2022, the Company had more than 1,350 client relationships with employers across a diverse array of industries, and operated 1,019 early education and child care centers with the capacity to serve approximately 114,500 children and their families, of which 989 early education and child care centers were open.

*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, stock-based compensation expense, and at times, non-recurring costs. Adjusted income from operations represents income from operations before non-recurring costs. Adjusted net income represents net income determined in accordance with GAAP, adjusted for stock-based compensation expense, amortization expense, and non-recurring 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,” respectively.

Balance Sheet and Liquidity

Bright Horizons has a strong balance sheet, with $257 million of cash and cash equivalents and $400 million available for borrowing under the revolving credit facility at March 31, 2022. In the three months ended March 31, 2022, we generated approximately $58.6 million of cash from operations, compared to $68.3 million for the same period in 2021, and made investments in fixed assets and other investments totaling $9.4 million, compared to $22.3 million for the same period in the prior year.

2022 Revised Outlook

Although the ongoing effects of the COVID-19 pandemic continue to affect our global operations, we remain focused on our strategic priorities to deliver high-quality education, care and workforce services. Based on current trends and expectations, we have revised 2022 guidance and we currently expect fiscal year 2022 revenue to be in the range of $2.0 billion to $2.1 billion, and diluted adjusted earnings per common share in the range of $3.05 to $3.25. The Company will provide additional information on its outlook during its earnings conference call.

Conference Call

Bright Horizons Family Solutions will host an investor conference call today at 5:00 pm ET to discuss the results for the first quarter of 2022, as well as the Company’s updated business outlook, its strategy and operating expectations. Interested parties are invited to listen to the conference call by dialing 1-877-407-9039 or, for international callers, 1-201-689-8323, 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 24, 2022 at 1-844-512-2921 or, for international callers, at 1-412-317-6671, conference ID #13726919. 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 forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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, including statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, operating expectations, the effects of the COVID-19 pandemic on our operations, our investments, impact of our services, our market position, our client relations and partners, our future opportunities and business model, our post-pandemic recovery, enrollment levels, long-term growth and value, estimated effective tax rate and tax expense and benefits, our care solutions and expanded service offerings, our ability to respond to changing demands, our future business and financial performance, and our 2022 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, prolonged disruptions to our operations as a result of the COVID-19 pandemic, including current conditions and future developments in the public health arena; the continued impact of COVID-19 on the global economy; developments in the persistence and treatment of COVID-19 and its variants; the approval, delivery, effectiveness and public acceptance of vaccines for adults and children; vaccine and workplace mandates; the availability or lack of government support; changes in the demand for child care, dependent care and other workplace solutions, including variations in enrollment trends and lower than expected demand from employer sponsor clients as well as variations in return to work protocols; the constrained labor market for teachers and staff and ability to hire and retain talent; the possibility that acquisitions may disrupt our operations and expose us to additional risk; increased costs resulting from recommended or mandated enhanced health and safety protocols and physical distancing; 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; changes in tax rates or policies or in rates of inflation; and other risks and uncertainties more fully described in the “Risk Factors” section of our Annual Report on Form 10-K filed February 25, 2022, and other factors disclosed from time to time in our 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.

With respect to our outlook for diluted adjusted earnings per common share, we do not provide the most directly comparable GAAP financial measure or corresponding reconciliation to such GAAP financial measure on a forward-looking basis. We are unable to predict with reasonable certainty and without unreasonable effort certain items such as the timing and amount of excess income tax benefits, transaction costs, non-recurring costs, as well as gains or losses from the early retirement of debt and the outcome from legal proceedings. These items are uncertain, depend on various factors outside our management’s control, and could significantly impact, either individually or in the aggregate, our future period earnings per common share as calculated and presented in accordance with GAAP.

For more information regarding adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share, please see the reconciliation of GAAP financial measures to the non-GAAP financial measures in the attached table “Bright Horizons Family Solutions Inc. Non-GAAP Reconciliations.”

About Bright Horizons Family Solutions Inc.

Bright Horizons^® is a leading global provider of high-quality early education and child care, back-up care, and workforce education services. For 35 years, we have partnered with employers to support workforces by providing services that help working families and employees thrive personally and professionally. Bright Horizons operates approximately 1,000 early education and child care centers in the United States, the United Kingdom, the Netherlands, and India, and serves more than 1,350 of the world’s leading employers. Bright Horizons’ early education and child care centers, back-up child and elder care, and workforce education programs help employees succeed at each life and career stage. For more information, go to www.brighthorizons.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220503006066/en/