Bright Horizons Family Solutions Reports Fourth Quarter and Full Year 2019 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 fourth quarter and full year of 2019 and provided guidance for 2020.

Fourth Quarter 2019 Highlights (compared to fourth quarter 2018):

  • Revenue increased 9% to $521 million
  • Income from operations increased 6% to $67 million
  • Net income increased 2% to $48 million and diluted earnings per common share increased 3% to $0.81

Non-GAAP measures

  • Adjusted income from operations* increased 6% to $67 million
  • Adjusted EBITDA* increased 8% to $100 million
  • Adjusted net income* increased 12% to $59 million and diluted adjusted earnings per common share* increased 12% to $1.01

Year Ended December 31, 2019 Highlights (compared to year ended December 31, 2018):

  • Revenue increased 8% to $2.1 billion
  • Income from operations increased 12% to $268 million
  • Net income increased 14% to $180 million and diluted earnings per common share increased 15% to $3.05

Non-GAAP measures

  • Adjusted income from operations* increased 11% to $268 million
  • Adjusted EBITDA* increased 11% to $395 million
  • Adjusted net income* increased 14% to $217 million and diluted adjusted earnings per common share* increased 14% to $3.67

We are pleased to report strong financial results for the fourth quarter and full year 2019, said Stephen Kramer, Chief Executive Officer. Our solid financial results in 2019 reflect the positive momentum across our business and the results from recent investments we have made in our people and systems to strengthen our market position.

As we look ahead to 2020 and beyond, we believe we are well positioned to deliver on our growth plans, added Mr. Kramer. Equally important, I am especially honored by the recent recognition we received from Bloomberg, Forbes and Fortune Magazine as leaders in creating inclusive workplaces for all of our employees. These awards help create real business value, validate our unique culture and reputation, and demonstrate to our clients the values of the Bright Horizons Family.

Fourth Quarter 2019 Results

Revenue increased $42.4 million, or 9%, in the fourth quarter of 2019 from the fourth quarter of 2018 on contributions from new and ramping full-service child care centers, average price increases of 3-4%, expanded sales of our back-up care and educational advisory services, and acquisitions.

Income from operations was $67.4 million for the fourth quarter of 2019, an increase from $63.7 million in the same 2018 period. Increases in revenue and gross profit reflect contributions from enrollment gains in new and ramping centers, as well as back-up care and educational advisory clients that have increased utilization levels or been added since the fourth quarter of 2018 and efficiencies in service delivery across the expanding customer base. These gains were partially offset by investments in marketing and technology to support our end-user experience, and costs incurred during the pre-opening and ramp-up phase of newer lease/consortium centers. Net income was $47.8 million for the fourth quarter of 2019 compared to net income of $46.7 million in the same 2018 period, an increase of $1.1 million, or 2%, attributable to the expanded income from operations, and offset by a higher effective tax rate for the fourth quarter of 2019. The tax rate for the fourth quarter of 2018 included a one-time benefit related to the finalization of tax positions for foreign tax filings. Diluted earnings per common share was $0.81 for the fourth quarter of 2019 compared to $0.79 in the fourth quarter of 2018.

In the fourth quarter of 2019, adjusted EBITDA increased $7.1 million, or 8%, to $100.4 million, and adjusted income from operations increased $3.7 million, or 6%, to $67.4 million from the fourth quarter of 2018 due primarily to the expanded gross profit. Adjusted net income increased by $6.3 million, or 12%, to $59.5 million on the expanded income from operations. Diluted adjusted earnings per common share was $1.01 compared to $0.90 in the fourth quarter of 2018.

As of December 31, 2019, the Company had more than 1,150 client relationships with employers across a diverse array of industries, and operated 1,084 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, the excess of lease expense over 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 expense (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 year ended December 31, 2019, the Company generated approximately $330.4 million of cash flow from operations compared to $294.7 million for the same period in 2018, and invested $189.1 million in fixed assets, acquisitions, and other investments compared to $158.5 million for the same period in 2018. Net cash used in financing activities totaled $149.1 million in the year ended December 31, 2019 compared to $134.2 million for the same period in 2018. The Company reported cash and cash equivalents of $27.9 million at December 31, 2019, an increase of $12.4 million during the year.

2020 Outlook

As described below, the Company is providing certain financial guidance. For the full year 2020, the Company currently expects:

  • Revenue growth in 2020 in the range of 8%-10%
  • Net income in the range of $201 million to $204 million and diluted earnings per common share in the range of $3.41 to $3.45
  • Adjusted net income in the range of $242 million to $246 million and diluted adjusted earnings per common share in the range of $4.11 to $4.18
  • Diluted weighted average shares of approximately 59 million shares

For a reconciliation of the non-GAAP measures to their most directly comparable GAAP measures, 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 to discuss the fourth quarter 2019, the Companys business outlook, its strategy and results. 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 March 5, 2020 at 1-844-512-2921 or, for international callers, at 1-412-317-6671, conference ID #13685056. 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 Companys 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 Companys 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 Companys intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, operating and growth prospects and plans, our market position, estimated effective tax rate and tax expense, estimates and impact of equity transactions and excess tax benefits, our investments, estimated occupancy costs, and our 2020 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, dependent care, and other workplace solutions, 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 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. 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, and other non-recurring costs, 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 Companys adjusted net income and diluted adjusted earnings per common share. The Company has provided reconciliations of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measure where possible without unreasonable effort.

About Bright Horizons Family Solutions Inc.

Bright Horizons is a leading global provider of high-quality child care and early education, back-up care, and workplace employee services. For over 30 years, Bright Horizons has been a champion for working families, designing and providing innovative solutions to help families, employers, and their employees better address the challenges of balancing work and family life. Operating approximately 1,100 child care centers in the United States, the United Kingdom, the Netherlands, Canada and India, and serving more than 1,150 of the worlds leading organizations, Bright Horizons child care centers, back-up child and elder care, tuition program management, education advising, and student loan repayment programs help employees succeed at every life and career stage, both at work and at home. For more information, go to www.brighthorizons.com.

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share data)

(Unaudited)

 

 

Three Months Ended December 31,

 

2019

 

%

 

2018

 

%

Revenue

$

520,615

 

 

100.0

%

 

$

478,241

 

 

100.0

%

Cost of services

389,467

 

 

74.8

%

 

357,607

 

 

74.8

%

Gross profit

131,148

 

 

25.2

%

 

120,634

 

 

25.2

%

Selling, general and administrative expenses

55,166

 

 

10.6

%

 

48,815

 

 

10.2

%

Amortization of intangible assets

8,535

 

 

1.6

%

 

8,092

 

 

1.7

%

Income from operations

67,447

 

 

13.0

%

 

63,727

 

 

13.3

%

Interest expensenet

(10,528

)

 

(2.1

)%

 

(12,049

)

 

(2.5

)%

Income before income tax

56,919

 

 

10.9

%

 

51,678

 

 

10.8

%

Income tax expense

(9,156

)

 

(1.7

)%

 

(5,021

)

 

(1.0

)%

Net income

$

47,763

 

 

9.2

%

 

$

46,657

 

 

9.8

%

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

Common stockbasic

$

0.82

 

 

 

 

$

0.80

 

 

 

Common stockdiluted

$

0.81

 

 

 

 

$

0.79

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Common stockbasic

57,891,192

 

 

 

 

57,726,263

 

 

 

Common stockdiluted

58,964,125

 

 

 

 

58,868,992

 

 

 

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share data)

(Unaudited)

 

 

Years Ended December 31,

 

2019

 

%

 

2018

 

%

Revenue

$

2,062,017

 

 

100.0

%

 

$

1,903,182

 

 

100.0

%

Cost of services

1,539,081

 

 

74.6

%

 

1,429,927

 

 

75.1

%

Gross profit

522,936

 

 

25.4

%

 

473,255

 

 

24.9

%

Selling, general and administrative expenses

221,496

 

 

10.7

%

 

201,591

 

 

10.6

%

Amortization of intangible assets

33,621

 

 

1.7

%

 

32,569

 

 

1.7

%

Income from operations

267,819

 

 

13.0

%

 

239,095

 

 

12.6

%

Interest expensenet

(45,154

)

 

(2.2

)%

 

(47,508

)

 

(2.5

)%

Income before income tax

222,665

 

 

10.8

%

 

191,587

 

 

10.1

%

Income tax expense

(42,279

)

 

(2.1

)%

 

(33,606

)

 

(1.8

)%

Net income

$

180,386

 

 

8.7

%

 

$

157,981

 

 

8.3

%

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

Common stockbasic

$

3.10

 

 

 

 

$

2.72

 

 

 

Common stockdiluted

$

3.05

 

 

 

 

$

2.66

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Common stockbasic

57,838,245

 

 

 

 

57,812,602

 

 

 

Common stockdiluted

58,947,240

 

 

 

 

59,000,669

 

 

 

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

December 31,

 

2019

 

2018

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

27,872

 

 

$

15,450

 

Accounts receivablenet

148,855

 

 

131,178

 

Prepaid expenses and other current assets

52,161

 

 

47,263

 

Total current assets

228,888

 

 

193,891

 

Fixed assetsnet

636,153

 

 

597,141

 

Goodwill

1,412,873

 

 

1,347,611

 

Other intangible assetsnet

304,673

 

 

323,035

 

Operating lease right-of-use assets (1)

700,956

 

 

 

Other assets

46,877

 

 

62,628

 

Total assets

$

3,330,420

 

 

$

2,524,306

 

LIABILITIES AND STOCKHOLDERS EQUITY

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

10,750

 

 

$

10,750

 

Borrowings under revolving credit facility

 

 

118,200

 

Accounts payable and accrued expenses

167,059

 

 

154,195

 

Current portion of operating lease liabilities (1)

83,123

 

 

 

Deferred revenue and other current liabilities

222,358

 

 

200,640

 

Total current liabilities

483,290

 

 

483,785

 

Long-term debtnet

1,028,049

 

 

1,036,870

 

Operating lease liabilities (1)

685,910

 

 

71,817

 

Deferred income taxes

58,940

 

 

71,306

 

Other long-term liabilities

102,963

 

 

81,051

 

Total liabilities

2,359,152

 

 

1,744,829

 

Total stockholders equity

971,268

 

 

779,477

 

Total liabilities and stockholders equity

$

3,330,420

 

 

$

2,524,306

 

(1)

The Company adopted Accounting Standards Codification No. 842, Leases (ASC 842), effective January 1, 2019. Upon adoption, the Company recognized operating lease right-of-use assets and liabilities for the rights and obligations created by lease arrangements. Lease obligations associated with deferred rent and lease incentives recorded under previous guidance were reclassified from other current liabilities and operating lease liabilities to the operating lease right-of-use assets. The Company adopted the new lease guidance using the modified retrospective approach and the transition method available in accordance with Accounting Standards Update 2018-11, Leases (Topic 842): Targeted Improvements, which provides the option to use the effective date as the date of initial application of the guidance. As a result, the comparative information for prior periods has not been adjusted and continues to be reported in accordance with the accounting standards in effect for those periods under the previously applicable guidance.

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Years Ended December 31,

 

2019

 

2018

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income

$

180,386

 

 

$

157,981

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

108,269

 

 

100,943

 

Stock-based compensation expense

17,283

 

 

13,811

 

Deferred income taxes

(11,344

)

 

(5,469

)

Other non-cash adjustmentsnet

(555

)

 

3,822

 

Changes in assets and liabilities

36,314

 

 

23,659

 

Net cash provided by operating activities

330,353

 

 

294,747

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Purchases of fixed assetsnet

(104,765

)

 

(90,665

)

Payments and settlements for acquisitionsnet of cash acquired

(53,425

)

 

(67,111

)

Purchases of debt securities and other investmentsnet

(25,015

)

 

(767

)

Purchase of equity method investment

(5,865

)

 

 

Net cash used in investing activities

(189,070

)

 

(158,543

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Revolving credit facilitynet

(117,858

)

 

(8,900

)

Principal payments of long-term debt

(10,750

)

 

(10,750

)

Purchase of treasury stock

(31,553

)

 

(126,679

)

Proceeds from issuance of common stock upon exercise of options and restricted stock upon purchase

26,559

 

 

22,933

 

Taxes paid related to the net share settlement of stock options and restricted stock

(11,326

)

 

(7,540

)

Payments of deferred and contingent consideration for acquisitions and other

(4,200

)

 

(3,257

)

Net cash used in financing activities

(149,128

)

 

(134,193

)

Effect of exchange rates on cash, cash equivalents and restricted cash

559

 

 

(103

)

Net (decrease) increase in cash, cash equivalents and restricted cash

(7,286

)

 

1,908

 

Cash, cash equivalents and restricted cashbeginning of year

38,478

 

 

36,570

 

Cash, cash equivalents and restricted cashend of year

$

31,192

$

38,478

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

SEGMENT INFORMATION

(In thousands)

(Unaudited)

 

Three months ended December 31, 2019

Full service

center-based

child care

 

Back-up care

 

Educational

advisory

services

 

Total

Revenue

$

416,317

 

 

$

81,528

 

 

$

22,770

 

 

$

520,615

 

Income from operations

35,693

 

 

25,132

 

 

6,622

 

 

67,447

 

Adjusted income from operations

35,693

 

 

25,132

 

 

6,622

 

 

67,447

 

As a percentage of revenue

9

%

 

31

%

 

29

%

 

13

%

 

 

 

 

 

 

 

 

Three months ended December 31, 2018

 

 

 

 

 

 

 

Revenue

$

392,529

 

 

$

65,513

 

 

$

20,199

 

 

$

478,241

 

Income from operations

36,149

 

 

21,255

 

 

6,323

 

 

63,727

 

Adjusted income from operations

36,149

 

 

21,255

 

 

6,323

 

 

63,727

 

As a percentage of revenue

9

%

 

32

%

 

31

%

 

13

%

 

Year ended December 31, 2019

Full service

center-based

child care

 

Back-up care

 

Educational

advisory

services

 

Total

Revenue

$

1,684,006

 

 

$

296,330

 

 

$

81,681

 

 

$

2,062,017

 

Income from operations

166,011

 

 

80,394

 

 

21,414

 

 

267,819

 

Adjusted income from operations (1)

166,204

 

 

80,827

 

 

21,414

 

 

268,445

 

As a percentage of revenue

10

%

 

27

%

 

26

%

 

13

%

 

 

 

 

 

 

 

 

Year ended December 31, 2018

 

 

 

 

 

 

 

Revenue

$

1,586,323

 

 

$

245,498

 

 

$

71,361

 

 

$

1,903,182

 

Income from operations

152,006

 

 

68,462

 

 

18,627

 

 

239,095

 

Adjusted income from operations (2)

153,921

 

 

68,462

 

 

18,627

 

 

241,010

 

As a percentage of revenue

10

%

 

28

%

 

26

%

 

13

%

(1)

Adjusted income from operations represents income from operations excluding expenses incurred related to completed acquisitions, which have been allocated to the full service center-based child care ($0.2 million) and back-up care ($0.4 million) segments.

(2)

Adjusted income from operations represents income from operations excluding expenses incurred in connection with the May 2018 amendment to the credit agreement, the March 2018 secondary offering, and completed acquisitions, which have been allocated to the full service center-based child care segment ($1.9 million).

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

NON-GAAP RECONCILIATIONS

(In thousands, except share data)

(Unaudited)

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

2019

 

2018

 

2019

 

2018

Net income

$

47,763

 

 

$

46,657

 

 

$

180,386

 

 

$

157,981

 

Interest expensenet

10,528

 

 

12,049

 

 

45,154

 

 

47,508

 

Income tax expense

9,156

 

 

5,021

 

 

42,279

 

 

33,606

 

Depreciation

19,307

 

 

17,705

 

 

74,648

 

 

68,374

 

Amortization of intangible assets (a)

8,535

 

 

8,092

 

 

33,621

 

 

32,569

 

EBITDA

95,289

 

 

89,524

 

 

376,088

 

 

340,038

 

As a percentage of total revenue

18.3

%

 

18.7

%

 

18.2

%

 

17.9

%

Additional adjustments:

 

 

 

 

 

 

 

Non-cash operating lease expense (b)

142

 

 

262

 

 

860

 

 

1,317

 

Stock-based compensation expense (c)

4,944

 

 

3,507

 

 

17,283

 

 

13,811

 

Transaction costs (d)

 

 

 

 

626

 

 

1,915

 

Total adjustments

5,086

 

 

3,769

 

 

18,769

 

 

17,043

 

Adjusted EBITDA

$

100,375

 

 

$

93,293

 

 

$

394,857

 

 

$

357,081

 

As a percentage of total revenue

19.3

%

 

19.5

%

 

19.1

%

 

18.8

%

 

 

 

 

 

 

 

 

Income from operations

$

67,447

 

 

$

63,727

 

 

$

267,819

 

 

$

239,095

 

As a percentage of total revenue

13.0

%

 

13.3

%

 

13.0

%

 

12.6

%

Transaction costs (d)

 

 

 

 

626

 

 

1,915

 

Adjusted income from operations

$

67,447

 

 

$

63,727

 

 

$

268,445

 

 

$

241,010

 

As a percentage of total revenue

13.0

%

 

13.3

%

 

13.0

%

 

12.7

%

 

 

 

 

 

 

 

 

Net income

$

47,763

 

 

$

46,657

 

 

$

180,386

 

 

$

157,981

 

Income tax expense

9,156

 

 

5,021

 

 

42,279

 

 

33,606

 

Income before income tax

56,919

 

 

51,678

 

 

222,665

 

 

191,587

 

Stock-based compensation expense (c)

4,944

 

 

3,507

 

 

17,283

 

 

13,811

 

Amortization of intangible assets (a)

8,535

 

 

8,092

 

 

33,621

 

 

32,569

 

Transaction costs (d)

 

 

 

 

626

 

 

1,915

 

Adjusted income before income tax

70,398

 

 

63,277

 

 

274,195

 

 

239,882

 

Adjusted income tax expense (e)

(10,912

)

 

(10,124

)

 

(57,591

)

 

(50,345

)

Adjusted net income

$

59,486

 

 

$

53,153

 

 

$

216,604

 

 

$

189,537

 

As a percentage of total revenue

11.4

%

 

11.1

%

 

10.5

%

 

10.0

%

 

 

 

 

 

 

 

 

Weighted average common shares outstandingdiluted

58,964,125

 

 

58,868,992

 

 

58,947,240

 

 

59,000,669

 

Diluted adjusted earnings per common share

$

1.01

 

 

$

0.90

 

 

$

3.67

 

 

$

3.21

 

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

NON-GAAP RECONCILIATIONS

(In thousands, except share data)

(Unaudited)

 

 

Forward Guidance (i)

 

Three Months Ended March 31, 2020

 

Year Ended December 31, 2020

 

Low

 

High

 

Low

 

High

Per common share information:

 

 

 

 

 

 

 

Diluted earnings per common share

$

0.81

 

 

$

0.83

 

 

$

3.41

 

 

$

3.45

 

Income tax expense (f)

0.20

 

 

0.20

 

 

1.00

 

 

1.02

 

Income before income tax

1.01

 

 

1.03

 

 

4.41

 

 

4.47

 

Stock-based compensation expense (c)

0.07

 

 

0.08

 

 

0.35

 

 

0.37

 

Amortization of intangible assets (a)

0.14

 

 

0.14

 

 

0.54

 

 

0.56

 

Nonrecurring costs (h)

0.01

 

 

0.01

 

 

0.06

 

 

0.06

 

Tax impact on adjusted income before income tax (g)

(0.29

)

 

(0.30

)

 

(1.25

)

 

(1.28

)

Diluted adjusted earnings per common share

$

0.94

 

 

$

0.96

 

 

$

4.11

 

 

$

4.18

 

(a)

Represents amortization of intangible assets, including approximately $3.3 million and $4.7 million for the three months ended December 31, 2019 and 2018, respectively, and $17.6 million and $18.9 million for the years ended December 31, 2019 and 2018, respectively, associated with intangible assets recorded in connection with our going private transaction in May 2008.

(b)

Represents the excess of lease expense over cash lease expense.

(c)

Represents non-cash stock-based compensation expense in accordance with Accounting Standards Codification Topic 718, Compensation-Stock Compensation.

(d)

Represents transaction costs incurred in connection with completed acquisitions, the March 2018 secondary offering, and the May 2018 amendment to the credit agreement.

(e)

Represents income tax expense calculated on adjusted income before income tax at an annual effective tax rate of approximately 21% in 2019 and 2018. The tax rate for 2019 represents a tax rate of approximately 26% applied to the adjusted income before income tax for the full year, less the effect of excess tax benefits related to equity transactions for the full year.

(f)

Represents estimated income tax expense calculated using an effective tax rate of approximately 23-24% for the year ended December 31, 2020, based on projected income before income tax, less the impact of excess tax benefits related to equity transactions, which the Company estimates will be in the range of $3.0 million to $4.0 million for the three months ended March 31, 2020 and of $8.0 million to $10.0 million for the year ended December 31, 2020. However, the timing and volume of the tax benefits associated with such future equity activity will affect these estimates and the estimated effective tax rate for the year.

(g)

Represents estimated tax on adjusted income before income tax using an effective tax rate of approximately 23-24%.

(h)

Represents estimated occupancy costs for office space during construction period in 2020, which represents duplicative cost for our new corporate headquarters.

(i)

Forward guidance amounts are estimated based on a number of assumptions and actual results could differ materially from the estimates provided herein.

 

Investors:

Elizabeth Boland

Chief Financial Officer – Bright Horizons

[email protected]

617-673-8125

Michael Flanagan

Senior Director of Investor Relations – Bright Horizons

[email protected]

617-673-8720

Media:

Ilene Serpa

Vice President – Communications – Bright Horizons

[email protected]

617-673-8044