Bright Horizons Family Solutions Reports Fourth Quarter and Full Year 2021 Financial Results

NEWTON, Mass,–(BUSINESS WIRE)–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 2021 and provided guidance for 2022.

Fourth Quarter 2021 Highlights (compared to fourth quarter 2020):

Revenue of $463 million (increase of 23%)

Income from operations of $35 million (increase of $27 million)

Net income of $18 million and diluted earnings per common share of $0.29 (increases of $15 million and $0.25, respectively)

Non-GAAP measures:

Adjusted income from operations* of $46 million (increase of 152%)

Adjusted EBITDA* of $79 million (increase of 49%)

Adjusted net income* of $39 million and diluted adjusted earnings per common share* of $0.65 (increases of 76% and 81%, respectively)

Year Ended December 31, 2021 Highlights (compared to year ended December 31, 2020):

Revenue of $1.8 billion (increase of 16%)

Income from operations of $129 million (increase of 142%)

Net income of $70 million and diluted earnings per common share of $1.15 (increases of 161% and 156%, respectively)

Non-GAAP measures:

Adjusted income from operations* of $140 million (increase of 53%)

Adjusted EBITDA* of $272 million (increase of 21%)

Adjusted net income* of $121 million and diluted adjusted earnings per common share* of $1.99 (increases of 30% and 28%, respectively)

“I am pleased to report a solid fourth quarter and overall financial performance for 2021,” said Stephen Kramer, Chief Executive Officer. “I am immensely proud of our global team’s resilience and focus on quality service delivery in what has been a challenging and dynamic operating environment.”

“Amid the ongoing COVID-19 disruption, we have continued to invest in our long-term success. We have taken important steps to extend our market position, deepen our global client relationships, and strengthen our employee value proposition. As we turn the page on 2021 and look ahead to 2022 and beyond, I remain confident that our critical services and durable business model will continue to deliver long-term growth and value as we deliver solutions that meet the changing needs of working parents and learners.”

Fourth Quarter 2021 Results

Revenue increased $85.6 million, or 23%, in the fourth quarter of 2021 from the fourth quarter of 2020, primarily attributable to enrollment gains at our centers, and to a lesser extent, expanded sales and utilization of back-up care services. While enrollment in our child care centers continues to improve, our centers are still operating below pre-COVID-19 enrollment levels.

Income from operations was $35.3 million for the fourth quarter of 2021 compared to $7.9 million for the same period in 2020. The increase in income from operations reflects improved gross profit contributions in the full service center-based child care segment resulting from higher enrollment compared to the prior period. The reduction in income from operations in our back-up care services reflects the shift in service delivery mix with increasing utilization of traditional in-home and center-based care compared to the prior year. Net income was $17.7 million for the fourth quarter of 2021 compared to $2.6 million in the same 2020 period, an increase of $15.1 million, due to the increase in income from operations, partially offset by a higher effective tax rate. Diluted earnings per common share was $0.29 for the fourth quarter of 2021 compared to $0.04 for the fourth quarter of 2020.

In the fourth quarter of 2021, adjusted EBITDA* increased $26.0 million, or 49%, to $78.8 million, and adjusted income from operations* increased $28.0 million, or 152%, to $46.5 million from the fourth quarter of 2020, 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 $16.8 million, or 76%, to $39.0 million, due to the increase in income from operations, partially offset by a higher effective tax rate. Diluted adjusted earnings per common share* was $0.65 for the fourth quarter of 2021 compared to $0.36 in the same period in 2020.

As of December 31, 2021, the Company had more than 1,350 client relationships with employers across a diverse array of industries, and operated 1,014 early education and child care centers with the capacity to serve approximately 114,000 children and their families, of which 977 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, impairment costs and other costs incurred due to the impact of COVID-19 including center closing costs, loss on extinguishment of debt, transaction costs, and duplicative corporate office costs. Adjusted income from operations represents income from operations before impairment costs and other COVID-19 related costs, transaction costs, and duplicative corporate office costs. Adjusted net income represents net income determined in accordance with GAAP, adjusted for stock-based compensation expense, amortization expense, impairment costs and other COVID-19 related costs, loss on extinguishment of debt, transaction costs, duplicative corporate office 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 Liquidity

Bright Horizons has a strong balance sheet, with $261 million of cash and cash equivalents and $400 million available for borrowing under the revolving credit facility at December 31, 2021. For the year ended December 31, 2021, we generated approximately $227.3 million of cash from operations, compared to $209.6 million for the same period in 2020, and made investments in fixed assets, acquisitions and other investments totaling $117.4 million, compared to $83.8 million for the same period in the prior year.

2022 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 currently expect fiscal year 2022 revenue to be in the range of $2.05 billion to $2.15 billion, and diluted adjusted earnings per common share in the range of $3.20 to $3.40. 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 fourth quarter 2021 and full year 2021 results, 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, 1-201-689-8470, 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 9, 2022 at 1-844-512-2921 or, for international callers, at 1-412-317-6671, conference ID #13721004. 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 ongoing COVID-19 pandemic on our operations, our investments, our value proposition, our market position, our client relations, our future opportunities and business model, our recovery, enrollment, our long-term growth and value, estimated effective tax rate and tax expense and benefits, our solutions and 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 ongoing 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 tight 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 March 1, 2021, 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 future impairment and other COVID-19 related costs, transaction costs, excess income tax benefits, 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 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 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 workplace 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.

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

Three Months Ended December 31,

 

 

2021

 

%

 

 

2020

 

%

 

(In thousands, except share data)

Revenue

$

462,656

 

100.0 %

 

$

377,078

 

100.0 %

Cost of services

 

355,250

 

76.8 %

 

 

301,795

 

80.0 %

Gross profit

 

107,406

 

23.2 %

 

 

75,283

 

20.0 %

Selling, general and administrative expenses

 

65,118

 

14.1 %

 

 

59,646

 

15.8 %

Amortization of intangible assets

 

6,980

 

1.5 %

 

 

7,771

 

2.1 %

Income from operations

 

35,308

 

7.6 %

 

 

7,866

 

2.1 %

Loss on extinguishment of debt

 

(2,571)

 

(0.5) %

 

 

 

— %

Interest expense — net

 

(8,350)

 

(1.8) %

 

 

(9,161)

 

(2.4) %

Income (loss) before income tax

 

24,387

 

5.3 %

 

 

(1,295)

 

(0.3) %

Income tax benefit (expense)

 

(6,694)

 

(1.5) %

 

 

3,850

 

1.0 %

Net income

$

17,693

 

3.8 %

 

$

2,555

 

0.7 %

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

Common stock — basic

$

0.29

 

 

 

$

0.04

 

 

Common stock — diluted

$

0.29

 

 

 

$

0.04

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Common stock — basic

 

59,886,195

 

 

 

 

60,373,284

 

 

Common stock — diluted

 

60,309,067

 

 

 

 

61,234,747

 

 

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

Years Ended December 31,

 

 

2021

 

%

 

 

2020

 

%

 

(In thousands, except share data)

Revenue

$

1,755,307

 

100.0 %

 

$

1,515,093

 

100.0 %

Cost of services

 

1,340,296

 

76.4 %

 

 

1,210,544

 

79.9 %

Gross profit

 

415,011

 

23.6 %

 

 

304,549

 

20.1 %

Selling, general and administrative expenses

 

256,821

 

14.6 %

 

 

219,563

 

14.5 %

Amortization of intangible assets

 

29,172

 

1.6 %

 

 

31,652

 

2.1 %

Income from operations

 

129,018

 

7.4 %

 

 

53,334

 

3.5 %

Loss on extinguishment of debt

 

(2,571)

 

(0.2) %

 

 

 

— %

Interest expense — net

 

(36,099)

 

(2.1) %

 

 

(37,682)

 

(2.5) %

Income before income tax

 

90,348

 

5.1 %

 

 

15,652

 

1.0 %

Income tax benefit (expense)

 

(19,889)

 

(1.1) %

 

 

11,340

 

0.8 %

Net income

$

70,459

 

4.0 %

 

$

26,992

 

1.8 %

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

Common stock — basic

$

1.16

 

 

 

$

0.45

 

 

Common stock — diluted

$

1.15

 

 

 

$

0.45

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Common stock — basic

 

60,312,690

 

 

 

 

59,533,104

 

 

Common stock — diluted

 

60,871,399

 

 

 

 

60,309,985

 

 

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

December 31,

 

 

2021

 

 

2020

 

(In thousands)

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

260,980

 

$

384,344

Accounts receivable — net

 

210,971

 

 

176,617

Prepaid expenses and other current assets

 

68,320

 

 

63,224

Total current assets

 

540,271

 

 

624,185

Fixed assets — net

 

598,134

 

 

628,757

Goodwill

 

1,481,725

 

 

1,431,967

Other intangible assets — net

 

251,032

 

 

274,620

Operating lease right-of-use assets

 

696,425

 

 

717,821

Other assets

 

72,460

 

 

49,298

Total assets

$

3,640,047

 

$

3,726,648

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

16,000

 

$

10,750

Accounts payable and accrued expenses

 

197,366

 

 

194,551

Current portion of operating lease liabilities

 

87,341

 

 

87,181

Deferred revenue and other current liabilities

 

321,468

 

 

238,332

Total current liabilities

 

622,175

 

 

530,814

Long-term debt — net

 

976,396

 

 

1,020,137

Operating lease liabilities

 

703,911

 

 

729,754

Deferred income taxes

 

48,509

 

 

45,951

Other long-term liabilities

 

109,780

 

 

116,195

Total liabilities

 

2,460,771

 

 

2,442,851

Total stockholders’ equity

 

1,179,276

 

 

1,283,797

Total liabilities and stockholders’ equity

$

3,640,047

 

$

3,726,648

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

Years Ended December 31,

 

 

2021

 

 

2020

 

(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income

$

70,459

 

$

26,992

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

 

 

 

Depreciation and amortization

 

108,830

 

 

111,662

Stock-based compensation expense

 

23,060

 

 

20,996

Impairment losses

 

10,582

 

 

28,355

Loss on extinguishment of debt

 

2,571

 

 

Deferred income taxes

 

(4,996)

 

 

(12,277)

Other non-cash adjustments — net

 

9,701

 

 

2,010

Changes in assets and liabilities

 

7,046

 

 

31,834

Net cash provided by operating activities

 

227,253

 

 

209,572

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Purchases of fixed assets — net

 

(57,662)

 

 

(72,834)

Purchases of debt securities and other investments

 

(29,912)

 

 

(25,705)

Proceeds from the maturity of debt securities and sale of other investments

 

24,080

 

 

22,968

Payments and settlements for acquisitions — net of cash acquired

 

(53,895)

 

 

(8,254)

Net cash used in investing activities

 

(117,389)

 

 

(83,825)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Extinguishment of long-term debt

 

(1,026,625)

 

 

Borrowings of long-term debt

 

992,298

 

 

Proceeds from stock issuance — net of issuance costs

 

 

 

249,790

Purchase of treasury stock

 

(213,830)

 

 

(32,658)

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

 

37,503

 

 

38,843

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

 

(8,662)

 

 

(12,173)

Principal payments of long-term debt

 

(8,063)

 

 

(10,750)

Payments for debt issuance costs

 

(2,057)

 

 

(2,818)

Payments of contingent consideration for acquisitions

 

(594)

 

 

(1,238)

Net cash provided by (used in) financing activities

 

(230,030)

 

 

228,996

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

 

(3,018)

 

 

2,530

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

 

(123,184)

 

 

357,273

Cash, cash equivalents and restricted cash — beginning of year

 

388,465

 

 

31,192

Cash, cash equivalents and restricted cash — end of year

$

265,281

 

$

388,465

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

SEGMENT INFORMATION

(Unaudited)

 

Full service

center-based

child care

 

Back-up care

 

Educational

advisory and

other services

 

Total

 

(In thousands)

Three months ended December 31, 2021

 

 

 

 

 

 

 

Revenue

$

338,579

 

$

94,067

 

$

30,010

 

$

462,656

Income (loss) from operations

 

(4,596)

 

 

31,391

 

 

8,513

 

 

35,308

Adjusted income from operations (1)

 

6,564

 

 

31,391

 

 

8,513

 

 

46,468

As a percentage of revenue

 

2 %

 

 

33 %

 

 

28 %

 

 

10 %

 

 

 

 

 

 

 

 

Three months ended December 31, 2020

 

 

 

 

 

 

 

Revenue

$

263,433

 

$

85,173

 

$

28,472

 

$

377,078

Income (loss) from operations

 

(39,898)

 

 

39,114

 

 

8,650

 

 

7,866

Adjusted income (loss) from operations (2)

 

(29,311)

 

 

39,114

 

 

8,650

 

 

18,453

As a percentage of revenue

 

(11) %

 

 

46 %

 

 

30 %

 

 

5 %

(1)

 

Adjusted income from operations in 2021 for the full service center-based child care segment represents loss from operations excluding impairment costs incurred due to the impact of COVID-19 on our operations of $10.6 million for fixed assets and operating lease right-of-use assets, and transaction costs of $0.6 million related to completed acquisitions.

(2)

 

Adjusted income (loss) from operations in 2020 for the full service center-based child care segment represents loss from operations excluding impairment costs incurred due to the impact of COVID-19 on our operations of $7.6 million for fixed assets and operating lease right-of-use assets, $1.5 million in costs primarily associated with the closure of centers, including related severance and facilities costs, and $1.4 million of occupancy costs incurred for our new corporate headquarters during the construction period, which represent duplicative corporate office costs in 2020.

 

Full service

center-based

child care

 

Back-up care

 

Educational

advisory and

other services

 

Total

 

(In thousands)

Year ended December 31, 2021

 

 

 

 

 

 

 

Revenue

$

1,297,208

 

$

351,103

 

$

106,996

 

$

1,755,307

Income (loss) from operations

 

(8,431)

 

 

115,173

 

 

22,276

 

 

129,018

Adjusted income from operations (1)

 

2,729

 

 

115,173

 

 

22,276

 

 

140,178

As a percentage of revenue

 

— %

 

 

33 %

 

 

21 %

 

 

8 %

 

 

 

 

 

 

 

 

Year ended December 31, 2020

 

 

 

 

 

 

 

Revenue

$

1,032,266

 

$

388,294

 

$

94,533

 

$

1,515,093

Income (loss) from operations

 

(155,382)

 

 

182,938

 

 

25,778

 

 

53,334

Adjusted income (loss) from operations (2)

 

(119,106)

 

 

185,066

 

 

25,778

 

 

91,738

As a percentage of revenue

 

(12) %

 

 

48 %

 

 

27 %

 

 

6 %

(1)

 

Adjusted income from operations in 2021 for the full service center-based child care segment represents loss from operations excluding impairment costs incurred due to the impact of COVID-19 on our operations of $10.6 million for fixed assets and operating lease right-of-use assets, and transaction costs of $0.6 million related to completed acquisitions.

(2)

 

Adjusted income (loss) from operations in 2020 for the full service center-based child care segment represents loss from operations excluding impairment costs incurred due to the impact of COVID-19 on our operations of $26.2 million for fixed assets and operating lease right-of-use assets, $6.6 million in costs primarily associated with the closure of centers, including related severance and facilities costs, and $3.5 million of occupancy costs incurred for our new corporate headquarters during the construction period, which represent duplicative corporate office costs in 2020. Adjusted income from operations for the back-up care segment represents income from operations excluding impairment costs incurred of $2.1 million related to an equity investment due to the impact of COVID-19.

 

Contacts

Investors:

Elizabeth Boland

Chief Financial Officer – Bright Horizons

eboland@brighthorizons.com
617-673-8125

Michael Flanagan

Senior Director of Investor Relations – Bright Horizons

michael.flanagan@brighthorizons.com
617-673-8720

Media:

Ilene Serpa

Vice President – Communications – Bright Horizons

iserpa@brighthorizons.com
617-673-8044

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