CEO Dave Lissy to Transition to Executive Chairman and 
President Stephen H. Kramer Appointed CEO Effective January 1, 2018

WATERTOWN, Mass., Aug. 01, 2017 (GLOBE NEWSWIRE) -- Bright Horizons Family Solutions^® Inc. (NYSE:BFAM), a leading provider of high-quality child care, early education and other services designed to help employers and families better address the challenges of work and family life, today announced financial results for the second quarter of 2017, updated certain financial guidance for the full year 2017, and announced the transition of CEO David Lissy to Executive Chairman and the appointment of President Stephen H. Kramer as CEO, both effective January 1, 2018.

Second Quarter 2017 Highlights (compared to second quarter 2016):

• Revenue increased 11% to $446 million
• Income from operations remained consistent at $57 million
• Net income increased 9% to $33 million and diluted earnings per common share increased 8% to $0.54

Non-GAAP measures

• Adjusted income from operations* increased 3% to $59 million
• Adjusted EBITDA* increased 7% to $87 million
• Adjusted net income* increased 21% to $44 million and diluted adjusted earnings per common share* increased 21% to $0.74

“We are pleased to report another strong quarter, as we continue to deliver on the plan that we had set out at the beginning of the year,” said David Lissy, Chief Executive Officer.  “I am especially proud of the manner in which we continue to execute across each of our services, and to deliver quality care, education, and support for those that we have the privilege to serve.  Our suite of solutions continues to be well received in the marketplace, and we are well positioned to continue our strong track record of growth over the rest of 2017 and beyond.”

Executive Chairman and Chief Executive Officer Transition

Also today, the Company announced that, effective January 1, 2018, Chief Executive Officer David Lissy will transition to the role of Executive Chairman of the Board, and current President Stephen Kramer will become Chief Executive Officer. In addition to his appointment as CEO, Kramer will also join the board of directors of the Company effective January 1, 2018.  Lissy will remain an officer of the Company and fully engaged in the successful growth of the Company.

“For the past 16 years, Dave has grown Bright Horizons with a commitment to excellence in all we do and to the people who do it, and he will make the perfect Executive Chairman for Bright Horizons. We are equally excited to have Stephen ready to step into the CEO role in the new year after more than a decade having successfully led every line of our business and having managed in every place we operate.  Dave and Stephen both have the full support and enthusiastic backing of the Board as they transition into their new roles,” said Bright Horizons co-founder and Chair of the Board Linda Mason.

“It has been the great privilege of my career to lead Bright Horizons as CEO for the past 16 years, and I look forward to remaining actively involved in supporting our growth and the enhancement of the services we provide around the world,” said Lissy, who marks his 20^th anniversary with the Company this year. “We have a tremendous opportunity to grow and thrive in the years ahead, and I couldn’t be more confident in Stephen, whom I have worked with directly for over a decade now. He is a talented leader with a proven ability to inspire teams and drive strong results in virtually every part of our organization. Stephen’s transition to the CEO role is the latest example of our thoughtful and deliberate internal succession planning strategy that has enabled us to assemble a long-tenured and high-functioning executive team. My number one priority as Executive Chairman will be to support his success as CEO and to help him and our team continue our long track record of achieving quality and excellence in all we do.”

Kramer joined Bright Horizons in 2006 when Bright Horizons acquired College Coach, the company he co-founded in 1998. Today, College Coach^® and EdAssist^® comprise the Company’s fast growing educational advising segment. Kramer started his career at Fidelity Investments and Arthur D. Little and holds a B.S. from Babson College and an MBA from Harvard Business School. Kramer has provided leadership for nearly all aspects of Bright Horizons’ business. He spent several years abroad leading the Company’s international operations, has overseen the educational advising and back-up care divisions, and has managed the Company’s global organic and acquisitions growth strategy as Chief Development Officer. He is dedicated to Bright Horizons’ unique culture, which has always been core to the Company’s success, and Kramer has been serving successfully as the Company’s President since January 2016.

“Over the course of the past 11 years, I have had the opportunity to stand alongside some of the world’s most dedicated and talented educators and caregivers, work in partnership with supportive clients, facilitate partnerships with other leading organizations, and to be a part of a team making a real and lasting impact on those we serve,” said Kramer.  “I am tremendously grateful for Dave’s mentorship over many years. His model of humble yet driven leadership, focus on quality in all that we do, and unwavering guardianship of our unique culture is something I will always aspire to maintain. We are well positioned to continue with our strong track record of achieving positive results, and I am humbled and honored to be named to serve as Bright Horizons’ next CEO.”

Second Quarter 2017 Results

Revenue increased $43.5 million, or 11%, in the second quarter of 2017 from the second quarter of 2016 on contributions from new and ramping full-service child care centers, average price increases of 3-4%, and expanded sales of back-up dependent care and educational advisory services.

Income from operations was $56.8 million for the second quarter of 2017 compared to $56.6 million in the same 2016 period, an increase of $0.2 million, primarily due to an increase in revenue and gross profit, partially offset by increases in selling, general and administrative expenses.  The increase in gross profit and income from operations reflects operating leverage from tuition increases and enrollment gains in mature and ramping centers, contributions from new child care centers, back-up dependent care and educational advisory clients that have been added since the second quarter of 2016, and strong cost management.  These gains were partially offset by the effect of lower foreign currency exchange rates for our United Kingdom operations which reduced income from operations by approximately 2%, costs incurred during the ramp-up of certain new lease/consortium centers opened during 2016 and 2017, investments in technology to support our service delivery and operating efficiency, costs incurred in relation to the amendment of debt and incremental costs associated with acquisitions, including one-time integration costs and amortization expense for intangible assets acquired.  Net income was $33.0 million for the second quarter of 2017 compared to net income of $30.4 million in the same 2016 period, an increase of $2.6 million, or 9%, due to improved operating performance as well as the tax benefit of $3.4 million related to the January 1, 2017 adoption of new accounting guidance for the treatment of excess tax benefits associated with certain equity transactions which are now included in the provision for income taxes.  In 2016, the excess tax benefit from stock-based compensation of $3.2 million was recorded to the balance sheet in accordance with previous guidance.  Diluted earnings per common share was $0.54 for the second quarter of 2017 compared to $0.50 in the same 2016 period, which would have been $0.54 had the same new accounting guidance applied to the 2016 period.

In the second quarter of 2017, adjusted EBITDA increased $5.7 million, or 7%, to $86.5 million, and adjusted income from operations increased $1.8 million, or 3%, to $58.8 million, from the second quarter of 2016 due primarily to the expanded gross profit.   Adjusted net income increased by $7.6 million, or 21%, to $44.5 million on the expanded income from operations and a lower effective tax rate.  Diluted adjusted earnings per common share was $0.74 compared to $0.61 in the second quarter of 2016.

As of June 30, 2017, the Company operated 1,047 early care and education centers with the capacity to serve 116,100 children and 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, straight line rent expense, stock-based compensation expense, expenses related to secondary offerings and debt financing transactions, and expenses associated with completed acquisitions.  Adjusted income from operations represents income from operations before expenses related to the completion of secondary offerings and debt financing transactions, and expenses associated with completed acquisitions.  Adjusted net income represents net income determined in accordance with GAAP, adjusted for stock-based compensation expense, amortization expense, secondary offering expenses, debt financing transaction expenses, expenses associated with completed acquisitions 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 Cash Flow

For the six months ended June 30, 2017, the Company generated approximately $167.6 million of cash flows from operations compared to $146.9 million for the same period in 2016, and invested $59.2 million in fixed assets and acquisitions compared to $29.7 million in the same 2016 period.  Net cash used in financing activities totaled $89.9 million in the six months ended June 30, 2017 compared to $82.6 million for the same 2016 period.  During the six months ended June 30, 2017, the Company’s cash and cash equivalents grew $19.7 million to $34.3 million.

2017 Outlook

As described below, the Company is updating certain financial guidance.  For the full year 2017, the Company currently expects:

• Revenue growth in 2017 in the range of 10-12%
• Net income growth and diluted earnings per common share growth in 2017 in the range of 35-39%
• Adjusted net income growth and diluted adjusted earnings per common share growth in 2017 in the range of 21-23%
• Diluted weighted average shares of approximately 60.5 million shares

For a reconciliation of the non-GAAP measures to their most directly comparable GAAP measure, 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.  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 David Lissy.  Replays of the entire call will be available through August 15, 2017 at 1-844-512-2921 or, for international callers, at 1-412-317-6671, conference ID #13656542.  The webcast of the conference call, including replays, 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 statements that express the Company’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.”  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.  They include statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies, our service offerings, future estimates and impact of excess tax benefits, our 2017 financial guidance, our executive and board appointments and leadership transition.  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 and other dependent care services, 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 March 1, 2017, and 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, expenses related to the completion of secondary offerings and debt financing transactions, and expenses associated with completed acquisitions as well as tax effects associated with these items.  The 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 adjusted diluted earnings per common share in prior quarters.  The exclusion of these charges and costs in future periods will have an impact on the Company’s adjusted net income and adjusted diluted earnings per common share.

About Bright Horizons Family Solutions Inc.

Bright Horizons Family Solutions^® is a leading provider of high-quality child care, early education and other services designed to help employers and families better address the challenges of work and family life.  The Company provides center-based full service child care, back-up dependent care and educational advisory services to more than 1,100 clients across the United States, the United Kingdom, Ireland, the Netherlands, Canada and India, including 150 FORTUNE 500 companies and more than 80 of Working Mother magazine’s 2016 “100 Best Companies for Working Mothers.”  Bright Horizons has been recognized 17 times as one of FORTUNE magazine’s “100 Best Companies to Work For” and is one of the U.K.’s Best Workplaces as designated by the Great Place to Work^® Institute.  Bright Horizons is headquartered in Watertown, MA.  The Company’s web site is located at www.brighthorizons.com.