WATERTOWN, Mass., Aug. 8, 2013 /PRNewswire/ -- Bright Horizons Family Solutions^® Inc. (NYSE: BFAM), a leading provider of high-quality child care and early education and other services designed to help employers and families address the challenges of work and life, today announced financial results for the second quarter of 2013.

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Second quarter 2013 highlights (compared to second quarter 2012):

• Revenue increased 15% to $311 million
• Adjusted EBITDA* increased 18% to $57 million
• Adjusted income from operations* rose 15% to $36 million
• Adjusted net income* increased 99% to $23 million
• Diluted adjusted earnings per pro forma common share* increased 59% to $0.35

Year to date June 30, 2013 highlights (compared to six months ended June 30, 2012):

• Revenue increased 12% to $591 million
• Adjusted EBITDA* increased 18% to $105 million
• Adjusted income from operations* rose 14% to $66 million
• Adjusted net income* increased 93% to $39 million
• Diluted adjusted earnings per pro forma common share* increased 58% to $0.60

"We are pleased with our results this past quarter and through the first half of the year," said David Lissy, Chief Executive Officer.  "We continue to execute on our plan to grow organically as well as through strategic acquisitions that enhance our leadership in our field.  Our full suite of solutions, including full service centers, back-up care and educational advisory services, continues to allow us to expand our relationships with the clients we serve and to help working families better integrate the challenges of work and life across key life stages.  In April, we continued to expand our footprint in the UK with the addition of Kidsunlimited and, in July, we announced the completion of our acquisition of Children's Choice, the third largest provider in the US employer-sponsored child care market.  Both of these additions have allowed us to expand our center footprint and add new employer client relationships, as well as to add talented professionals to our team in the US and in the UK."

Second quarter 2013 results
Revenue increased $39.4 million in the second quarter of 2013 from the second quarter of 2012 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.

In the second quarter of 2013, adjusted EBITDA increased $8.8 million and adjusted income from operations increased $4.7 million from the second quarter of 2012 primarily as a result of the $10.9 million increase in gross profit, partially offset by increases in selling, general and administrative expenses ("SG&A"), including investments in technology and marketing to support the growth of the business, and incremental overhead costs from Kidsunlimited.  Enrollment gains in mature and ramping centers, contributions from new child care centers, as well as back-up dependent care and educational advisory clients that have been added since the second quarter of 2012, coupled with strong cost management have driven gross margin improvement from 23.8% in the second quarter of 2012 to 24.3% in 2013.

In 2013, the Company incurred $1.8 million in transaction costs related to the acquisition of Kidsunlimited, including $0.3 million in the second quarter. In the second quarter of 2012, the Company recognized $15.1 million of stock compensation expense in connection with an exchange of existing stock options for replacement stock options. Income from operations was therefore $35.4 million for the second quarter of 2013 compared to $16.1 million in the same 2012 period, and net income was $24.5 million for the second quarter of 2013 compared to a net loss of $1.9 million in 2012.  Adjusted net income increased by $11.5 million, or 99%, to $23.1 million as compared to the second quarter of 2012, on expanded adjusted operating income and lower interest expense. Diluted adjusted earnings per pro forma common share was $0.35, compared to $0.22 in the second quarter of 2012, an increase of 59%.

As of June 30, 2013, the Company operated 830 early care and education centers with the capacity to serve 92,800 children and families, a 6% increase in capacity since June 30, 2012.

*Adjusted EBITDA, adjusted income from operations and adjusted net income are non-GAAP measures.  Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, straight line rent expense, stock compensation expense, expenses related to the IPO and refinancing that were completed in January 2013 (the "IPO and refinancing"), and the secondary offering that was completed in June 2013, expenses associated with completed acquisitions, and the Sponsor management agreement termination fee. Adjusted income from operations represents income from operations before expenses related to the completion of the IPO and secondary offering, and expenses associated with completed acquisitions. Adjusted net income represents net income determined in accordance with GAAP, adjusted for stock compensation expense, amortization expense, the Sponsor management agreement termination fee, IPO and refinancing expenses, secondary offering expense, expenses associated with completed acquisitions and the income tax provision (benefit) thereon. These non-GAAP measures are more fully described and are reconciled from the respective measures determined under GAAP in the table referred to below. Diluted adjusted earnings per pro forma common share is a non-GAAP measure, calculated using adjusted net income, and gives effect to the conversion of Class L common stock as if the conversion were completed at the beginning of the respective fiscal period. Please refer to "Non-GAAP Measures," "Bright Horizons Family Solutions Inc. Non-GAAP Reconciliations," and "Bright Horizons Family Solutions Inc. Diluted Adjusted Earnings per Pro Forma Common Share" for further detail.

Balance Sheet and Cash Flow
During the six months ended June 30, 2013, the Company generated approximately $98 million of cash flow from operations compared to $90 million for the same period in 2012 and invested $40 million in fixed assets and $64 million in acquired businesses.  Net cash provided by financing activities totaled $35 million in the six months ended June 30, 2013.  The Company raised $235 million of net proceeds from the IPO completed on January 30, 2013, and repaid all of its outstanding indebtedness under its senior notes, senior subordinated notes, Tranche B term loans, and Series C new term loans with the proceeds from the IPO and proceeds from the issuance of $790 million in new secured term loans. The Company did not sell any additional shares in the secondary offering completed in June 2013. During the six month period ending June 30, 2013, the Company's cash and cash equivalents increased by $29 million to $63 million and the net debt position declined $169 million to $704 million at June 30, 2013.

2013 Outlook
As described below, the Company is updating certain targets regarding its 2013 expectations to reflect its results through June 30, 2013.

• Overall revenue growth in 2013 in the range of 12-14%
• Adjusted EBITDA growth in 2013 in the range of 14-17%
• Adjusted net income in 2013 in the range of $77 to $79 million
• Diluted adjusted earnings per pro forma common share in 2013 in the range of $1.17 to $1.21

In addition, for the full year in 2013, the Company estimates that pro forma diluted weighted average shares will approximate 66 million shares, comprised of approximately 62.8 million shares for the first six months of 2013 and approximately 67 million shares for the remainder of 2013.  This includes the 11.6 million common shares issued in connection with the IPO in the first quarter of 2013 and assumes the conversion of the Class L shares into common shares as if that conversion occurred on January 1, 2013.

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 1-877-407-0784 or, for international callers, 1-201-689-8560, 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 16, 2013 at 1-877-870-5176 or, for international callers, at 1-858-384-5517, conference ID # 417237.  A webcast of the conference call will also be available through the Investor Relations section of the Company's web site, www.brighthorizons.com.  A copy of this press release is available on the web site.

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." Bright Horizons Family Solutions' 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 and the industries in which we and our partners operate. 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, the following: 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; changes in our relationships with employer sponsors; our substantial indebtedness and the terms of such indebtedness; our ability to withstand seasonal fluctuations in the demand for our services; significant competition within our industry; our ability to implement our growth strategies successfully; as well as those risks and uncertainties described in the "Risk Factors" section of our Annual Report on Form 10-K filed March 26, 2013. 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, unless required by law.

Non-GAAP Measures
In addition to the results provided in accordance with U.S. generally accepted accounting principles ("GAAP") throughout this document, the Company has provided non-GAAP measurements - adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per pro forma common share – which present operating results on a basis adjusted for certain items.  The Company uses these non-GAAP measures as key performance measures for the purpose of evaluating performance internally.  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 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 pro forma common share may differ from similar measures reported by other companies.  Adjusted EBITDA, adjusted income from operations, and adjusted net income are reconciled from the respective measures under GAAP in the attached table "Bright Horizons Family Solutions Inc. Non-GAAP Reconciliations".

On January 30, 2013, the Company completed its IPO in which 11.6 million shares of common stock were sold at a price of $22.00 per share (including the overallotment option which was exercised by the underwriters and completed on February 21, 2013). Prior to the IPO, on January 11, 2013, each share of the Company's Class L common stock converted into 35.1955 shares of common stock. The number of common shares used in the calculations of diluted adjusted earnings per pro forma common share for the six months ended June 30, 2013 and 2012 give effect to the conversion of all outstanding shares of Class L common stock at the conversion factor of 35.1955 common shares for each Class L share, as if the conversion was completed at the beginning of the respective fiscal period. The calculations of diluted adjusted earnings per pro forma common share also include the dilutive effect of stock options, using the treasury stock method. Shares sold in the IPO are included in the diluted adjusted earnings per pro forma common share calculations beginning on the date that such shares were actually issued. Diluted adjusted earnings per pro forma common share is calculated using adjusted net income, as defined above. See the attached table "Bright Horizons Family Solutions Inc. Diluted Adjusted Earnings per Pro Forma Common Share" for further detail.

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 life. The Company provides center-based full service child care, back-up dependent care and educational advisory services to more than 850 clients across the United States, the United Kingdom, Ireland, the Netherlands, Canada and India, including more than 130 FORTUNE 500 companies and more than 75 of Working Mother magazine's 2012 "100 Best Companies for Working Mothers".  Bright Horizons is one of FORTUNE magazine's "100 Best Companies to Work For" and is one of the UK'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.

Contacts:
Investors:
Elizabeth Boland
CFO – Bright Horizons
Eboland@brighthorizons.com
617-673-8125

Kevin Doherty
VP – Solebury Communications Group LLC
kdoherty@soleburyir.com
203-428-3233

Media:
Ilene Serpa
VP – Communications – Bright Horizons
iserpa@brighthorizons.com
617-673-8044

SOURCE Bright Horizons Family Solutions Inc.