Bright Horizons Family Solutions® Inc. (NYSE: BFAM), a leading
provider of high-quality early education and child care, family
care solutions, and workforce education services designed to
support working families and client employees across life and
career stages, today announced financial results for the second
quarter of 2024 and updated financial guidance for 2024.
Second Quarter 2024 Highlights (compared to Second Quarter
2023):
- Revenue of $670 million (increase of 11%)
- Income from operations of $69 million (increase of 52%)
- Net income of $39 million and diluted earnings per common share
of $0.67 (increases of 90% and 91%, respectively)
Non-GAAP financial measures
- Adjusted EBITDA* of $103 million (increase of 25%)
- Adjusted income from operations* of $69 million (increase of
52%)
- Adjusted net income* of $51 million and diluted adjusted
earnings per common share* of $0.88 (increases of 39% and 38%,
respectively)
“We had a strong second quarter of 2024,” said Stephen Kramer,
Chief Executive Officer. “We continued to execute well and
delivered solid top and bottom-line growth in the quarter,
highlighted by 11% full-service revenue growth, 15% back-up care
revenue growth and 38% adjusted EPS growth. With the strong
first-half results and the positive momentum we see in our
business, we are increasing our full-year outlook for both revenue
and adjusted EPS.”
Second Quarter 2024 Results
Revenue increased by $66.8 million, or 11%, in the second
quarter of 2024 from the second quarter of 2023, due to enrollment
gains and tuition price increases at our centers, as well as
increased utilization of back-up care services.
Income from operations was $69.1 million for the second quarter
of 2024 compared to $45.5 million for the second quarter of 2023,
an increase of 52%. The increase in income from operations is
primarily related to incremental gross profit contributions
resulting from enrollment growth and improving operating leverage
in our full service center-based child care segment, as well as
higher utilization of back-up care services in our back-up care
segment. These contributions were partially offset by a decrease of
$9.3 million in funding received from pandemic-related government
support programs and incremental overhead costs to support expanded
service delivery. Net income was $39.2 million for the second
quarter of 2024 compared to $20.6 million for the second quarter of
2023, an increase of 90%, due to the increase in income from
operations noted above, as well as a lower effective tax rate.
Diluted earnings per common share was $0.67 for the second quarter
of 2024 compared to $0.35 for the second quarter of 2023.
In the second quarter of 2024, adjusted EBITDA* increased by
$20.7 million, or 25%, to $102.6 million, and adjusted income from
operations* increased by $23.5 million, or 52%, to $69.1 million
from the second quarter of 2023, due primarily to the increase in
gross profit in the full service center-based child care segment.
Adjusted net income* increased by $14.5 million, or 39%, to $51.3
million, as a result of the increase in adjusted income from
operations. Diluted adjusted earnings per common share* was $0.88
for the second quarter of 2024 compared to $0.64 for the second
quarter of 2023.
As of June 30, 2024, the Company operated 1,032 early education
and child care centers with the capacity to serve approximately
115,000 children.
*Adjusted EBITDA, adjusted income from operations, adjusted net
income and diluted adjusted earnings per common share are financial
measures that are not calculated in accordance with generally
accepted accounting principles in the United States (“GAAP”), which
are commonly referred to as “non-GAAP financial measures.” Adjusted
EBITDA represents EBITDA (which is net income, as determined in
accordance with GAAP, before interest expense, income tax expense,
depreciation, and amortization) adjusted to exclude stock-based
compensation expense and non-recurring costs, such as value-added
tax expense related to prior periods and at times, other
non-recurring costs, such as transaction costs and impairment
costs. Adjusted income from operations represents income from
operations, as determined in accordance with GAAP, adjusted to
exclude non-recurring costs, such as value-added tax expense
related to prior periods and at times, other non-recurring costs,
such as transaction costs and impairment costs. Adjusted net income
represents net income, as determined in accordance with GAAP,
adjusted to exclude amortization, stock-based compensation expense,
and non-recurring costs, such as value-added tax expense related to
prior periods, interest on deferred consideration, and the income
tax provision (benefit) thereon, and at times, other non-recurring
costs, such as transaction costs and impairment costs. Diluted
adjusted earnings per common share is calculated using adjusted net
income. These non-GAAP financial measures are more fully described
and are reconciled from the respective measures determined under
GAAP in “Presentation of Non-GAAP Financial Measures” and the
attached table “Bright Horizons Family Solutions Inc. Non-GAAP
Reconciliations,” respectively.
Balance Sheet and Liquidity
At June 30, 2024, the Company had $140.2 million of cash and
cash equivalents and $389.8 million available for borrowing under
our revolving credit facility. In the six months ended June 30,
2024, we generated $225.8 million of cash from operations, compared
to $180.0 million for the same period in 2023, and made net
investments totaling $64.1 million, compared to $68.7 million for
the same period in the prior year. Additionally, during the six
months ended June 30, 2024, the Company paid deferred and
contingent consideration related to acquisitions, including $106.5
million related to its 2022 acquisition of Only About Children, a
child care operator in Australia.
2024 Outlook
Based on current trends and expectations, we currently expect
fiscal year 2024 revenue to be in the range of $2.65 billion to
$2.7 billion and diluted adjusted earnings per common share to be
in the range of $3.30 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 results for the
second quarter of 2024, as well as the Company’s updated business
outlook, 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 August 15, 2024 at
1-844-512-2921, or for international callers, at 1-412-317-6671,
conference ID #13744696. 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, execution and delivery of our services and
solutions, business trends, our future growth opportunities,
enrollment and occupancy levels, back-up care utilization,
long-term growth strategy, estimated effective tax rate, tax
expense, our future business and financial performance, and our
2024 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
variations in enrollment trends and lower than expected demand from
employer sponsor clients as well as variations in workforce
demographics and work environments; the constrained labor market
for teachers and staff and ability to hire and retain talent,
including the impact of increased compensation and labor costs; the
availability or lack of government support and impact of government
child care benefit programs; our ability to respond to changing
client and customer needs; 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; changes in general
economic, political, business and financial market conditions,
including the impact of inflation and interest rate fluctuations;
fluctuations in currency exchange rates; the effects of a
cyber-attack, data breach or other security incident on our
information technology system or software or those of our third
party vendors; changes in tax rates or policies; impacts to our
brand or reputation; and other risks and uncertainties more fully
described in the “Risk Factors” section of our Annual Report on
Form 10-K filed on February 27, 2024, 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 Financial Measures
In addition to the results provided in accordance with GAAP
throughout this press release, the Company has provided certain
non-GAAP financial measures that present operating results on a
basis adjusted for certain items. The Company uses these non-GAAP
financial 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 believe that these non-GAAP
financial measures provide investors with useful information with
respect to our historical operations. These non-GAAP financial
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 net excess income
tax benefits, future impairments, transaction costs, and other
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, refer to 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 more than 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 more than 1,000 early
education and child care centers in the United States, the United
Kingdom, the Netherlands, Australia and India, and serves more than
1,450 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
(In thousands, except share
data)
(Unaudited)
Three Months Ended June
30,
2024
%
2023
%
Revenue
$
670,059
100.0
%
$
603,216
100.0
%
Cost of services
507,647
75.8
%
466,653
77.4
%
Gross profit
162,412
24.2
%
136,563
22.6
%
Selling, general and administrative
expenses
87,499
13.1
%
81,899
13.6
%
Amortization of intangible assets
5,854
0.8
%
9,132
1.5
%
Income from operations
69,059
10.3
%
45,532
7.5
%
Interest expense — net
(12,013
)
(1.8
)%
(12,219
)
(2.0
)%
Income before income tax
57,046
8.5
%
33,313
5.5
%
Income tax expense
(17,872
)
(2.7
)%
(12,719
)
(2.1
)%
Net income
$
39,174
5.8
%
$
20,594
3.4
%
Earnings per common share:
Common stock — basic
$
0.68
$
0.36
Common stock — diluted
$
0.67
$
0.35
Weighted average common shares
outstanding:
Common stock — basic
57,971,350
57,707,565
Common stock — diluted
58,438,186
57,905,424
BRIGHT HORIZONS FAMILY
SOLUTIONS INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(In thousands, except share
data)
(Unaudited)
Six Months Ended June
30,
2024
%
2023
%
Revenue
$
1,292,768
100.0
%
$
1,156,822
100.0
%
Cost of services
995,228
77.0
%
898,645
77.7
%
Gross profit
297,540
23.0
%
258,177
22.3
%
Selling, general and administrative
expenses
175,045
13.5
%
164,670
14.2
%
Amortization of intangible assets
13,499
1.1
%
17,330
1.5
%
Income from operations
108,996
8.4
%
76,177
6.6
%
Interest expense — net
(25,694
)
(2.0
)%
(25,135
)
(2.2
)%
Income before income tax
83,302
6.4
%
51,042
4.4
%
Income tax expense
(27,139
)
(2.1
)%
(22,322
)
(1.9
)%
Net income
$
56,163
4.3
%
$
28,720
2.5
%
Earnings per common share:
Common stock — basic
$
0.97
$
0.50
Common stock — diluted
$
0.96
$
0.50
Weighted average common shares
outstanding:
Common stock — basic
57,924,875
57,655,715
Common stock — diluted
58,374,296
57,807,667
BRIGHT HORIZONS FAMILY
SOLUTIONS INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
June 30, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
140,246
$
71,568
Accounts receivable — net
184,987
281,710
Prepaid expenses and other current
assets
70,785
93,621
Total current assets
396,018
446,899
Fixed assets — net
578,925
579,296
Goodwill
1,788,166
1,786,405
Other intangible assets — net
203,930
216,576
Operating lease right-of-use assets
756,215
774,703
Other assets
114,145
92,265
Total assets
$
3,837,399
$
3,896,144
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Current portion of long-term debt
$
23,500
$
18,500
Accounts payable and accrued expenses
282,760
259,077
Current portion of operating lease
liabilities
100,934
100,387
Deferred revenue
258,896
272,891
Other current liabilities
46,396
148,578
Total current liabilities
712,486
799,433
Long-term debt — net
931,857
944,264
Operating lease liabilities
775,324
796,701
Other long-term liabilities
104,702
109,915
Deferred income taxes
29,809
33,155
Total liabilities
2,554,178
2,683,468
Total stockholders’ equity
1,283,221
1,212,676
Total liabilities and stockholders’
equity
$
3,837,399
$
3,896,144
BRIGHT HORIZONS FAMILY
SOLUTIONS INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended June
30,
2024
2023
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income
$
56,163
$
28,720
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
53,099
56,229
Stock-based compensation expense
15,516
13,313
Deferred income taxes
(3,921
)
(4,250
)
Non-cash interest and other — net
7,411
5,434
Changes in assets and liabilities
97,482
80,596
Net cash provided by operating
activities
225,750
180,042
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of fixed assets — net
(42,016
)
(40,115
)
Purchases of debt securities and other
investments
(36,281
)
(8,956
)
Proceeds from the maturity of debt
securities and sale of other investments
17,713
11,227
Payments and settlements for acquisitions
— net of cash acquired
(3,548
)
(30,884
)
Net cash used in investing activities
(64,132
)
(68,728
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Revolving credit facility — net
—
(84,000
)
Principal payments of long-term debt
(8,000
)
(8,000
)
Proceeds from issuance of common stock
upon exercise of options
6,901
7,382
Taxes paid related to the net share
settlement of stock options and restricted stock
(1,786
)
(1,629
)
Payments of deferred and contingent
consideration for acquisitions
(103,872
)
(225
)
Net cash used in financing activities
(106,757
)
(86,472
)
Effect of exchange rates on cash, cash
equivalents and restricted cash
(723
)
(330
)
Net increase in cash, cash equivalents and
restricted cash
54,138
24,512
Cash, cash equivalents and restricted cash
— beginning of period
89,451
51,894
Cash, cash equivalents and restricted cash
— end of period
$
143,589
$
76,406
BRIGHT HORIZONS FAMILY
SOLUTIONS INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited)
Full service
center-based
child care
Back-up care
Educational
advisory services
Total
Three Months
Ended June 30, 2024
Revenue
$
507,077
$
136,490
$
26,492
$
670,059
Income from operations
32,644
31,593
4,822
69,059
Adjusted income from operations
32,644
31,593
4,822
69,059
As a percentage of revenue
6
%
23
%
18
%
10
%
Three Months Ended
June 30, 2023
Revenue
$
458,531
$
118,838
$
25,847
$
603,216
Income from operations
13,070
27,470
4,992
45,532
Adjusted income from operations
13,070
27,470
4,992
45,532
As a percentage of revenue
3
%
23
%
19
%
8
%
Full service
center-based
child care
Back-up care
Educational
advisory services
Total
Six Months Ended
June 30, 2024
Revenue
$
990,717
$
251,162
$
50,889
$
1,292,768
Income from operations
54,088
47,576
7,332
108,996
Adjusted income from operations
54,088
47,576
7,332
108,996
As a percentage of revenue
5
%
19
%
14
%
8
%
Six Months Ended
June 30, 2023
Revenue
$
888,722
$
217,968
$
50,132
$
1,156,822
Income from operations
21,503
45,243
9,431
76,177
Adjusted income from operations (1)
23,247
49,539
9,431
82,217
As a percentage of revenue
3
%
23
%
19
%
7
%
(1)
For the six months ended June 30,
2023, adjusted income from operations represents income from
operations excluding value-added-tax expense of $6.0 million
related to prior periods, of which $4.3 million was associated with
the back-up care segment and $1.7 million was associated with the
full service center-based child care segment.
BRIGHT HORIZONS FAMILY
SOLUTIONS INC.
NON-GAAP
RECONCILIATIONS
(In thousands, except share
data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net income
$
39,174
$
20,594
$
56,163
$
28,720
Interest expense — net
12,013
12,219
25,694
25,135
Income tax expense
17,872
12,719
27,139
22,322
Depreciation
19,612
19,787
39,600
38,899
Amortization of intangible assets (a)
5,854
9,132
13,499
17,330
EBITDA
94,525
74,451
162,095
132,406
As a percentage of revenue
14
%
12
%
13
%
11
%
Additional adjustments:
Stock-based compensation expense (b)
8,105
7,463
15,516
13,313
Other costs (c)
—
—
—
6,040
Total adjustments
8,105
7,463
15,516
19,353
Adjusted EBITDA
$
102,630
$
81,914
$
177,611
$
151,759
As a percentage of revenue
15
%
14
%
14
%
13
%
Income from operations
$
69,059
$
45,532
$
108,996
$
76,177
Other costs (c)
—
—
—
6,040
Adjusted income from operations
$
69,059
$
45,532
$
108,996
$
82,217
As a percentage of revenue
10
%
8
%
8
%
7
%
Net income
$
39,174
$
20,594
$
56,163
$
28,720
Income tax expense
17,872
12,719
27,139
22,322
Income before income tax
57,046
33,313
83,302
51,042
Amortization of intangible assets (a)
5,854
9,132
13,499
17,330
Stock-based compensation expense (b)
8,105
7,463
15,516
13,313
Other costs (c)
—
—
—
6,040
Interest on deferred consideration (d)
—
1,471
—
2,925
Adjusted income before income tax
71,005
51,379
112,317
90,650
Adjusted income tax expense (e)
(19,704
)
(14,540
)
(31,395
)
(25,536
)
Adjusted net income
$
51,301
$
36,839
$
80,922
$
65,114
As a percentage of revenue
8
%
6
%
6
%
6
%
Weighted average common shares outstanding
— diluted
58,438,186
57,905,424
58,374,296
57,807,667
Diluted adjusted earnings per common
share
$
0.88
$
0.64
$
1.39
$
1.13
(a)
Amortization of intangible assets
represents amortization expense, including amortization expense of
$3.3 million and $5.0 million for the three months ended June 30,
2024 and 2023, respectively, and of $8.3 million and $10.0 million
for the six months ended June 30, 2024 and 2023, respectively,
associated with intangible assets recorded in connection with our
going private transaction in May 2008.
(b)
Stock-based compensation expense
represents non-cash stock-based compensation expense in accordance
with Accounting Standards Codification Topic 718,
Compensation-Stock Compensation.
(c)
Other costs in the six months
ended June 30, 2023 consist of value-added tax expense of $6.0
million related to prior periods, of which $4.3 million was
associated with the back-up care segment and $1.7 million was
associated with the full service center-based child care
segment.
(d)
Interest on deferred
consideration represents the imputed interest on the deferred
consideration issued in connection with the July 1, 2022
acquisition of Only About Children, a child care operator in
Australia. The deferred consideration was paid in January 2024.
(e)
Adjusted income tax expense
represents income tax expense calculated on adjusted income before
income tax at an effective tax rate of approximately 28% for both
the three and six months ended June 30, 2024 and 2023. The
jurisdictional mix of the expected adjusted income before income
tax for the full year will affect the estimated effective tax rate
for the year.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240801456916/en/
Investors: Elizabeth Boland Chief Financial Officer - Bright
Horizons eboland@brighthorizons.com 617-673-8125
Michael Flanagan Vice President - 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
Bright Horizons Family S... (NYSE:BFAM)
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