Bright Horizons Family Solutions Reports Fourth Quarter and Full Year 2023 Financial Results

Published

NEWTON, Mass.--(BUSINESS WIRE)-- Bright Horizons Family Solutions® Inc. (NYSE: BFAM) today announced financial results for the fourth quarter and full year of 2023 and provided guidance for 2024. Bright Horizons is 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.

Fourth Quarter 2023 Highlights (compared to Fourth Quarter 2022):

  • Revenue of $616 million (increase of 16%)
  • Income from operations of $28 million (decrease of 29%)
  • Net income of $6 million and diluted earnings per common share of $0.09 (decreases of 69% and 71%, respectively)

Non-GAAP measures:

  • Adjusted income from operations* of $64 million (increase of 15%)
  • Adjusted EBITDA* of $99 million (increase of 10%)
  • Adjusted net income* of $48 million and diluted adjusted earnings per common share* of $0.83 (increases of 9% and 8%, respectively)

Year Ended December 31, 2023 Highlights (compared to Year Ended December 31, 2022):

  • Revenue of $2 billion (increase of 20%)
  • Income from operations of $171 million (increase of 9%)
  • Net income of $74 million and diluted earnings per common share of $1.28 (decreases of 8% and 7%, respectively)

Non-GAAP measures:

  • Adjusted income from operations* of $213 million (increase of 16%)
  • Adjusted EBITDA* of $352 million (increase of 11%)
  • Adjusted net income* of $164 million and diluted adjusted earnings per common share* of $2.84 (increases of 8% and 9%, respectively)

“I am pleased to report solid financial results for the fourth quarter of 2023,” said Stephen Kramer, Chief Executive Officer. “Performance in our Full Service segment was strong, with continued enrollment gains and 15% revenue growth, while our Back-Up Care segment well outpaced our expectations growing revenue 24% year-over-year in the fourth quarter and surpassing $500 million in 2023. We closed out the year on a positive note and I am encouraged by our recent performance and the opportunity for growth as we look ahead to 2024.”

Fourth Quarter 2023 Results

Revenue increased $86.1 million, or 16%, in the fourth quarter of 2023, from the fourth quarter of 2022, based on enrollment gains and price increases at our centers, as well as expanded sales and increased utilization of back-up care.

Income from operations was $28.2 million for the fourth quarter of 2023 compared to $39.6 million for the fourth quarter of 2022, a decrease of 29%. The decrease in income from operations is primarily related to incremental impairment losses of $21.8 million, as well as reduced funding from pandemic-related government support programs, partially offset by incremental gross profit contributions from enrollment growth and price increases in our full service child care centers, and higher utilization of back-up care services. Net income was $5.5 million for the fourth quarter of 2023 compared to $18.0 million for the fourth quarter of 2022, a decrease of 69%, due to the decrease in income from operations noted above, higher interest expense and a higher effective tax rate. Diluted earnings per common share was $0.09 for the fourth quarter of 2023 compared to $0.31 for the fourth quarter of 2022.

In the fourth quarter of 2023, adjusted EBITDA* increased by $8.7 million, or 10%, to $99.2 million, and adjusted income from operations* increased by $8.1 million, or 15%, to $63.6 million from the fourth quarter of 2022, due to contributions from the full service center-based child care and back-up care segments. Adjusted net income* increased by $3.8 million, or 9%, to $48.0 million, as a result of the increase in adjusted income from operations, partially offset by higher interest expense and a higher effective tax rate. Diluted adjusted earnings per common share* was $0.83 for the fourth quarter of 2023 compared to $0.77 in the same period in 2022.

As of December 31, 2023, the Company had more than 1,450 client relationships with employers across a diverse array of industries, and operated 1,049 early education and child care 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, stock-based compensation expense, and non-recurring costs, such as impairment losses, value-added tax expense related to prior periods, transaction costs, loss on foreign currency forward contracts, and net costs incurred in relation to a cybersecurity incident. Adjusted income from operations represents income from operations before non-recurring costs, such as impairment losses, value-added tax expense related to prior periods, transaction costs, and net costs incurred in relation to a cybersecurity incident. Adjusted net income represents net income determined in accordance with GAAP, adjusted for stock-based compensation expense, amortization, and non-recurring costs, such as impairment losses, value-added tax expense related to prior periods, transaction costs, loss on foreign currency forward contracts, net costs incurred in relation to a cybersecurity incident, and interest on deferred consideration. Diluted adjusted earnings per common share is calculated using adjusted net income. These non-GAAP measures are more fully described and are reconciled from the respective most directly comparable measure 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

At December 31, 2023, the Company had $71.6 million of cash and cash equivalents and $380.7 million available for borrowing under our revolving credit facility. In the year ended December 31, 2023, we generated approximately $256.1 million of cash from operations, compared to $188.5 million for the same period in 2022, and made net investments primarily in fixed assets and acquisitions totaling $126.9 million, compared to $278.0 million for the same period in the prior year.

2024 Outlook

Based on current trends and expectations, we currently expect fiscal year 2024 revenue to be in the range of $2.6 billion to $2.7 billion and diluted adjusted earnings per common share to be in the range of $3.00 to $3.20. 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 fourth quarter of 2023, 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 March 5, 2024 at 1-844-512-2921 or, for international callers, at 1-412-317-6671, conference ID #13736589. 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, impact 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 28, 2023, 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 accounting principles generally accepted in the United States (“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 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 impairments, net excess income tax benefits, transaction costs, and other non-recurring costs, as well as 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 approximately 1,050 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 December 31,

 

2023

 

%

 

2022

 

%

Revenue

$

615,648

 

 

100.0

%

 

$

529,522

 

 

100.0

%

Cost of services

 

499,746

 

 

81.2

%

 

 

418,262

 

 

79.0

%

Gross profit

 

115,902

 

 

18.8

%

 

 

111,260

 

 

21.0

%

Selling, general and administrative expenses

 

79,145

 

 

12.9

%

 

 

62,925

 

 

11.9

%

Amortization of intangible assets

 

8,517

 

 

1.3

%

 

 

8,785

 

 

1.7

%

Income from operations

 

28,240

 

 

4.6

%

 

 

39,550

 

 

7.4

%

Interest expense — net

 

(14,252

)

 

(2.3

)%

 

 

(12,791

)

 

(2.4

)%

Income before income tax

 

13,988

 

 

2.3

%

 

 

26,759

 

 

5.0

%

Income tax expense

 

(8,464

)

 

(1.4

)%

 

 

(8,717

)

 

(1.6

)%

Net income

$

5,524

 

 

0.9

%

 

$

18,042

 

 

3.4

%

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

Common stock — basic

$

0.10

 

 

 

 

$

0.31

 

 

 

Common stock — diluted

$

0.09

 

 

 

 

$

0.31

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Common stock — basic

 

57,791,646

 

 

 

 

 

57,506,602

 

 

 

Common stock — diluted

 

58,069,824

 

 

 

 

 

57,554,377

 

 

 

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share data)

(Unaudited)

 

 

Years Ended December 31,

 

2023

 

%

 

2022

 

%

Revenue

$

2,418,257

 

 

100.0

%

 

$

2,020,487

 

 

100.0

%

Cost of services

 

1,886,533

 

 

78.0

%

 

 

1,541,834

 

 

76.3

%

Gross profit

 

531,724

 

 

22.0

%

 

 

478,653

 

 

23.7

%

Selling, general and administrative expenses

 

327,068

 

 

13.5

%

 

 

289,156

 

 

14.3

%

Amortization of intangible assets

 

33,415

 

 

1.4

%

 

 

31,912

 

 

1.6

%

Income from operations

 

171,241

 

 

7.1

%

 

 

157,585

 

 

7.8

%

Loss on foreign currency forward contracts

 

 

 

%

 

 

(5,917

)

 

(0.3

)%

Interest expense — net

 

(51,609

)

 

(2.2

)%

 

 

(39,486

)

 

(1.9

)%

Income before income tax

 

119,632

 

 

4.9

%

 

 

112,182

 

 

5.6

%

Income tax expense

 

(45,409

)

 

(1.8

)%

 

 

(31,541

)

 

(1.6

)%

Net income

$

74,223

 

 

3.1

%

 

$

80,641

 

 

4.0

%

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

Common stock — basic

$

1.28

 

 

 

 

$

1.38

 

 

 

Common stock — diluted

$

1.28

 

 

 

 

$

1.37

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Common stock — basic

 

57,717,102

 

 

 

 

 

58,344,817

 

 

 

Common stock — diluted

 

57,932,574

 

 

 

 

 

58,490,652

 

 

 

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

December 31,

 

2023

 

2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

71,568

 

$

36,224

Accounts receivable — net

 

281,710

 

 

217,170

Prepaid expenses and other current assets

 

93,621

 

 

94,316

Total current assets

 

446,899

 

 

347,710

Fixed assets — net

 

579,296

 

 

571,471

Goodwill

 

1,786,405

 

 

1,727,852

Other intangible assets — net

 

216,576

 

 

245,574

Operating lease right-of-use assets

 

774,703

 

 

801,626

Other assets

 

92,265

 

 

104,636

Total assets

$

3,896,144

 

$

3,798,869

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

18,500

 

$

16,000

Borrowings under revolving credit facility

 

 

 

84,000

Accounts payable and accrued expenses

 

259,077

 

 

230,634

Current portion of operating lease liabilities

 

100,387

 

 

94,092

Deferred revenue

 

272,891

 

 

222,994

Other current liabilities

 

148,578

 

 

138,574

Total current liabilities

 

799,433

 

 

786,294

Long-term debt — net

 

944,264

 

 

961,581

Operating lease liabilities

 

796,701

 

 

810,403

Deferred income taxes

 

33,155

 

 

50,739

Other long-term liabilities

 

109,915

 

 

109,399

Total liabilities

 

2,683,468

 

 

2,718,416

Total stockholders’ equity

 

1,212,676

 

 

1,080,453

Total liabilities and stockholders’ equity

$

3,896,144

 

$

3,798,869

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Years Ended December 31,

 

2023

 

2022

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income

$

74,223

 

 

$

80,641

 

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

 

 

 

Depreciation and amortization

 

110,681

 

 

 

106,142

 

Stock-based compensation expense

 

28,834

 

 

 

28,111

 

Impairment losses

 

35,903

 

 

 

14,061

 

Loss on foreign currency forward contracts

 

 

 

 

5,917

 

Deferred income taxes

 

(11,716

)

 

 

(9,644

)

Non-cash interest and other — net

 

12,496

 

 

 

3,419

 

Changes in assets and liabilities

 

5,719

 

 

 

(40,176

)

Net cash provided by operating activities

 

256,140

 

 

 

188,471

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Purchases of fixed assets — net

 

(90,795

)

 

 

(60,009

)

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

 

19,538

 

 

 

23,392

 

Purchases of debt securities and other investments

 

(16,050

)

 

 

(25,106

)

Payments and settlements for acquisitions — net of cash acquired

 

(39,629

)

 

 

(210,409

)

Settlement of foreign currency forward contracts

 

 

 

 

(5,917

)

Net cash used in investing activities

 

(126,936

)

 

 

(278,049

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Revolving credit facility — net

 

(84,000

)

 

 

84,000

 

Principal payments of long-term debt

 

(16,000

)

 

 

(16,000

)

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

 

11,184

 

 

 

13,235

 

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

 

(2,592

)

 

 

(6,138

)

Purchase of treasury stock

 

 

 

 

(182,570

)

Payments of contingent consideration for acquisitions

 

(225

)

 

 

(13,865

)

Net cash used in financing activities

 

(91,633

)

 

 

(121,338

)

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

 

(14

)

 

 

(2,471

)

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

 

37,557

 

 

 

(213,387

)

Cash, cash equivalents and restricted cash — beginning of year

 

51,894

 

 

 

265,281

 

Cash, cash equivalents and restricted cash — end of year

$

89,451

 

 

$

51,894

 

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

SEGMENT INFORMATION

(In thousands)

(Unaudited)

 

 

Full service

center-based

child care

 

Back-up care

 

Educational

advisory and

other services

 

Total

Three months ended December 31, 2023

 

 

 

 

 

 

 

Revenue

$

447,146

 

 

$

134,558

 

 

$

33,944

 

 

$

615,648

 

Income (loss) from operations

 

(19,097

)

 

 

37,428

 

 

 

9,909

 

 

 

28,240

 

Adjusted income from operations (1)

 

12,661

 

 

 

40,991

 

 

 

9,909

 

 

 

63,561

 

As a percentage of revenue

 

3

%

 

 

30

%

 

 

29

%

 

 

10

%

 

 

 

 

 

 

 

 

Three months ended December 31, 2022

 

 

 

 

 

 

 

Revenue

$

387,954

 

 

$

108,390

 

 

$

33,178

 

 

$

529,522

 

Income (loss) from operations

 

(4,112

)

 

 

32,806

 

 

 

10,856

 

 

 

39,550

 

Adjusted income from operations (2)

 

11,847

 

 

 

32,806

 

 

 

10,856

 

 

 

55,509

 

As a percentage of revenue

 

3

%

 

 

30

%

 

 

33

%

 

 

11

%

(1)

For the three months ended December 31, 2023, adjusted income from operations represents income from operations excluding impairment losses of $35.9 million for fixed assets and operating lease right-of-use assets, of which $32.0 million related to the full service center-based child care segment and $3.9 million related to the back-up care segment, and a reduction in value-added tax expense of $0.6 million related to prior periods, of which $0.3 million was associated with the full service center-based child care segment and $0.3 million was associated with the back-up care segment.

(2)

For the three months ended December 31, 2022 adjusted income from operations for the full service center-based child care segment represents loss from operations excluding impairment losses of $14.1 million for fixed assets and operating lease right-of-use assets, and costs incurred in relation to a cybersecurity incident of $1.9 million.

 

Full service

center-based

child care

 

Back-up care

 

Educational

advisory and

other services

 

Total

Year ended December 31, 2023

 

 

 

 

 

 

 

Revenue

$

1,780,615

 

 

$

516,408

 

 

$

121,234

 

 

$

2,418,257

 

Income from operations

 

9,396

 

 

 

133,391

 

 

 

28,454

 

 

 

171,241

 

Adjusted income from operations (1)

 

42,898

 

 

 

141,250

 

 

 

28,454

 

 

 

212,602

 

As a percentage of revenue

 

2

%

 

 

27

%

 

 

23

%

 

 

9

%

 

 

 

 

 

 

 

 

Year ended December 31, 2022

 

 

 

 

 

 

 

Revenue

$

1,493,758

 

 

$

409,554

 

 

$

117,175

 

 

$

2,020,487

 

Income from operations

 

12,937

 

 

 

118,788

 

 

 

25,860

 

 

 

157,585

 

Adjusted income from operations (2)

 

38,093

 

 

 

118,788

 

 

 

25,860

 

 

 

182,741

 

As a percentage of revenue

 

3

%

 

 

29

%

 

 

22

%

 

 

9

%

(1)

For the year ended December 31, 2023, adjusted income from operations represents income from operations excluding impairment losses of $35.9 million for fixed assets and operating lease right-of-use assets, of which $32.0 million related to the full service center-based child care segment and $3.9 million related to the back-up care segment, and value-added tax expense of $5.5 million related to prior periods, of which $4.0 million was associated with the back-up care segment and $1.5 million was associated with the full service center-based child care segment.

(2)

 

For the year ended December 31, 2022, adjusted income from operations for the full service center-based child care segment represents income from operations excluding impairment losses of $14.1 million for fixed assets and operating lease right-of-use assets, transaction costs of $9.2 million related to acquisitions, and costs incurred in relation to a cybersecurity incident of $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,

 

2023

 

2022

 

2023

 

2022

Net income

$

5,524

 

 

$

18,042

 

 

$

74,223

 

 

$

80,641

 

Interest expense — net

 

14,252

 

 

 

12,791

 

 

 

51,609

 

 

 

39,486

 

Income tax expense

 

8,464

 

 

 

8,717

 

 

 

45,409

 

 

 

31,541

 

Depreciation

 

19,432

 

 

 

19,399

 

 

 

77,266

 

 

 

74,230

 

Amortization of intangible assets (a)

 

8,517

 

 

 

8,785

 

 

 

33,415

 

 

 

31,912

 

EBITDA

 

56,189

 

 

 

67,734

 

 

 

281,922

 

 

 

257,810

 

As a percentage of revenue

 

9

%

 

 

13

%

 

 

12

%

 

 

13

%

Additional adjustments:

 

 

 

 

 

 

 

Impairment losses (b)

 

35,903

 

 

 

14,061

 

 

 

35,903

 

 

 

14,061

 

Stock-based compensation expense (c)

 

7,680

 

 

 

6,829

 

 

 

28,834

 

 

 

28,111

 

Other costs (d)

 

(582

)

 

 

1,898

 

 

 

5,458

 

 

 

11,095

 

Loss on foreign currency forward contracts (e)

 

 

 

 

 

 

 

 

 

 

5,917

 

Total adjustments

 

43,001

 

 

 

22,788

 

 

 

70,195

 

 

 

59,184

 

Adjusted EBITDA

$

99,190

 

 

$

90,522

 

 

$

352,117

 

 

$

316,994

 

As a percentage of revenue

 

16

%

 

 

17

%

 

 

15

%

 

 

16

%

 

 

 

 

 

 

 

 

Income from operations

$

28,240

 

 

$

39,550

 

 

$

171,241

 

 

$

157,585

 

Impairment losses (b)

 

35,903

 

 

 

14,061

 

 

 

35,903

 

 

 

14,061

 

Other costs (d)

 

(582

)

 

 

1,898

 

 

 

5,458

 

 

 

11,095

 

Adjusted income from operations

$

63,561

 

 

$

55,509

 

 

$

212,602

 

 

$

182,741

 

As a percentage of revenue

 

10

%

 

 

11

%

 

 

9

%

 

 

9

%

 

 

 

 

 

 

 

 

Net income

$

5,524

 

 

$

18,042

 

 

$

74,223

 

 

$

80,641

 

Income tax expense

 

8,464

 

 

 

8,717

 

 

 

45,409

 

 

 

31,541

 

Income before income tax

 

13,988

 

 

 

26,759

 

 

 

119,632

 

 

 

112,182

 

Amortization of intangible assets (a)

 

8,517

 

 

 

8,785

 

 

 

33,415

 

 

 

31,912

 

Impairment losses (b)

 

35,903

 

 

 

14,061

 

 

 

35,903

 

 

 

14,061

 

Stock-based compensation expense (c)

 

7,680

 

 

 

6,829

 

 

 

28,834

 

 

 

28,111

 

Other costs (d)

 

(582

)

 

 

1,898

 

 

 

5,458

 

 

 

11,095

 

Loss on foreign currency forward contracts (e)

 

 

 

 

 

 

 

 

 

 

5,917

 

Interest on deferred consideration (f)

 

1,478

 

 

 

1,486

 

 

 

5,890

 

 

 

2,957

 

Adjusted income before income tax

 

66,984

 

 

 

59,818

 

 

 

229,132

 

 

 

206,235

 

Adjusted income tax expense (g)

 

(18,956

)

 

 

(15,553

)

 

 

(64,869

)

 

 

(54,036

)

Adjusted net income

$

48,028

 

 

$

44,265

 

 

$

164,263

 

 

$

152,199

 

As a percentage of revenue

 

8

%

 

 

8

%

 

 

7

%

 

 

8

%

 

 

 

 

 

 

 

 

Weighted average common shares outstanding — diluted

 

58,069,824

 

 

 

57,554,377

 

 

 

57,932,574

 

 

 

58,490,652

 

Diluted adjusted earnings per common share

$

0.83

 

 

$

0.77

 

 

$

2.84

 

 

$

2.60

 

(a)

Amortization of intangible assets represents amortization expense, including quarterly amortization expense of $5.0 million associated with intangible assets recorded in connection with our going private transaction in May 2008.

(b)

Impairment losses represent impairment costs for long-lived assets as a result of center closures and reduced operating performance at certain centers due to the impact of a challenging labor market and current macroeconomic conditions on our operations. For the three and twelve months ended December 31, 2023, impairment costs totaled $35.9 million for fixed assets and operating lease right-of-use assets, of which $32.0 million related to the full service center-based child care segment and $3.9 million related to the back-up care segment. For the three and twelve months ended December 31, 2022, impairment costs totaled $14.1 million related to the full service center-based child care segment.

(c)

 

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

(d)

Other costs in the three months ended December 31, 2023 consist of a reduction in value-added tax expense of $0.6 million related to prior periods, of which $0.3 million was associated with the full service center-based child care segment and $0.3 million was associated with the back-up care segment. Other costs in the twelve months ended December 31, 2023 consist of value-added tax expense of $5.5 million related to prior periods, of which $4.0 million was associated with the back-up care segment and $1.5 million was associated with the full service center-based child care segment. Other costs in the three and twelve months ended December 31, 2022 consist of costs incurred in relation to a cybersecurity incident of $1.9 million, and other costs in the year ended December 31, 2022 also consist of transaction costs incurred in connection with acquisitions of $9.2 million.

(e)

 

During the year ended December 31, 2022, the Company entered into foreign currency forward contracts for the purchase of Australian dollars to satisfy the purchase price of an acquisition completed on July 1, 2022. A loss of $5.9 million resulting from fluctuations in foreign currency rates was recognized in the year ended December 31, 2022 in relation to these contracts.

(f)

 

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.

(g)

 

Adjusted income tax expense represents income tax expense calculated on adjusted income before income tax at an effective tax rate of approximately 28% for the three and twelve months ended December 31, 2023 and of approximately 26% for the three and twelve months ended December 31, 2022.

 

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

Source: Bright Horizons Family Solutions Inc.

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