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Bright Horizons Family Solutions Reports Third Quarter of 2022 Financial Results

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 third quarter of 2022 and updated financial guidance for 2022.

Third Quarter 2022 Highlights (compared to Third Quarter 2021):

  • Revenue of $540 million (increase of 17%)
  • Income from operations of $39 million (decrease of 15%)
  • Net income of $18 million and diluted earnings per common share of $0.31 (decreases of 32% and 30%, respectively)

Non-GAAP measures

  • Adjusted income from operations* of $46 million (decrease of 1%)
  • Adjusted EBITDA* of $81 million (increase of 2%)
  • Adjusted net income* of $38 million and diluted adjusted earnings per common share* of $0.66 (decrease of 1% and increase of 3%, respectively)

“I am pleased with the progress we made in the third quarter,” said Stephen Kramer, Chief Executive Officer. “We saw solid growth in all our lines of business. We expanded our footprint, increased enrollment year-over-year, delivered a record number of traditional back-up care sessions, and supported more adult learners in their pursuit of higher education.”

“While we continue to navigate through this dynamic operating environment, I remain encouraged by the underlying trends we see across our business. I believe we have the right action plans in place that will allow us to navigate the current environment while executing on our long-term strategic initiatives.”

Third Quarter 2022 Results

Revenue increased $79.9 million, or 17%, in the third quarter of 2022 from the third quarter of 2021, primarily attributable to the acquisition of approximately 75 centers in Australia, enrollment gains at our existing centers, as well as expanded sales and utilization of back-up care and educational advisory services. These contributions were partially offset by lower foreign currency exchange rates for our United Kingdom and Netherlands operations.

Income from operations was $39.0 million for the third quarter of 2022 compared to $46.0 million for the third quarter of 2021, representing a 15% decrease. The decrease in income from operations reflects reduced gross profit contributions in the full service center-based child care segment arising from increased labor costs and acquisition-related transaction costs, partially offset by contributions from the back-up care and educational advisory services segments. Net income was $18.2 million for the third quarter of 2022 compared to $26.8 million for the third quarter of 2021, a decrease of 32%, due to the decrease in income from operations noted above and a higher effective tax rate. Diluted earnings per common share was $0.31 for the third quarter of 2022 compared to $0.44 for the third quarter of 2021.

In the third quarter of 2022, adjusted EBITDA* increased $1.5 million, or 2%, to $80.6 million, and adjusted income from operations* decreased $0.2 million, or 1%, to $45.7 million from the third quarter of 2021, due primarily to increased utilization of back-up and educational advisory services, offset by increased labor costs in the full service center-based child care segment. Adjusted net income* decreased $0.6 million, or 1%, to $38.1 million, due to the decrease in income from operations and a higher effective tax rate. Diluted adjusted earnings per common share* was $0.66 for the third quarter of 2022 compared to $0.64 for the same period in 2021.

As of September 30, 2022, the Company had more than 1,350 client relationships with employers across a diverse array of industries, and operated 1,081 early education and child care centers with the capacity to serve approximately 120,000 children and their families, of which 99% 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, and at times, non-recurring costs, such as loss on foreign currency forward contracts and transaction costs. Adjusted income from operations represents income from operations before non-recurring costs, such as transaction costs. Adjusted net income represents net income determined in accordance with GAAP, adjusted for stock-based compensation expense, amortization expense, and non-recurring costs, such as loss on foreign currency forward contracts and transaction 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,” respectively.

Balance Sheet and Liquidity

At September 30, 2022, Bright Horizons had $33 million of cash and cash equivalents and $282 million available for borrowing under our revolving credit facility. In the nine months ended September 30, 2022, we generated approximately $131.0 million of cash from operations, compared to $185.2 million for the same period in 2021, and made investments in acquisitions, fixed assets, and other investments totaling $250.9 million, compared to $62.7 million for the same period in the prior year.

2022 Updated Outlook

Based on current trends and expectations, we have updated 2022 guidance and we currently expect fiscal year 2022 revenue to be $2.0 billion and diluted adjusted earnings per common share to be in the range of $2.60 to $2.65. 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 third quarter of 2022, 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 November 22, 2022 at 1-844-512-2921 or, for international callers, at 1-412-317-6671, conference ID #13726921. 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, our investments, impact of our services, our market position, business trends, our future opportunities and business model, our recovery from the COVID-19 pandemic, enrollment and occupancy levels, long-term growth strategy and value, estimated effective tax rate and tax expense and benefits, our care solutions, quality and expanded service offerings, our ability to respond to changing demands, contributions from acquisitions, our future business and financial performance, and our updated 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, ongoing disruptions to our operations as a result of the COVID-19 pandemic; 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 constrained labor market for teachers and staff and ability to hire and retain talent; including the impact of increased compensation and labor costs; 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; the overall macroeconomic environment, including the impact of inflation and interest rate fluctuations; changes in tax rates or policies; and other risks and uncertainties more fully described in the “Risk Factors” section of our Annual Report on Form 10-K filed on February 25, 2022, 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 excess (shortfall) income tax benefits (expense), 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, please see 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 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 1,100 early education and child care centers in the United States, the United Kingdom, the Netherlands, Australia 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

(In thousands, except share data)

(Unaudited)

 

Three Months Ended September 30,

 

 

2022

 

 

%

 

 

2021

 

 

%

Revenue

$

540,215

 

 

100.0

%

 

$

460,333

 

 

100.0

%

Cost of services

 

411,406

 

 

76.2

%

 

 

340,068

 

 

73.9

%

Gross profit

 

128,809

 

 

23.8

%

 

 

120,265

 

 

26.1

%

Selling, general and administrative expenses

 

80,812

 

 

15.0

%

 

 

67,135

 

 

14.6

%

Amortization of intangible assets

 

8,948

 

 

1.6

%

 

 

7,140

 

 

1.5

%

Income from operations

 

39,049

 

 

7.2

%

 

 

45,990

 

 

10.0

%

Interest expense — net

 

(11,707

)

 

(2.1

) %

 

 

(9,153

)

 

(2.0

) %

Income before income tax

 

27,342

 

 

5.1

%

 

 

36,837

 

 

8.0

%

Income tax expense

 

(9,094

)

 

(1.7

) %

 

 

(10,018

)

 

(2.2

) %

Net income

$

18,248

 

 

3.4

%

 

$

26,819

 

 

5.8

%

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

Common stock — basic

$

0.32

 

 

 

 

$

0.44

 

 

 

Common stock — diluted

$

0.31

 

 

 

 

$

0.44

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Common stock — basic

 

57,664,895

 

 

 

 

 

60,218,090

 

 

 

Common stock — diluted

 

57,740,013

 

 

 

 

 

60,743,765

 

 

 

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share data)

(Unaudited)

 

Nine Months Ended September 30,

 

 

2022

 

 

%

 

 

2021

 

 

%

Revenue

$

1,490,965

 

 

100.0

%

 

$

1,292,651

 

 

100.0

%

Cost of services

 

1,123,572

 

 

75.4

%

 

 

985,046

 

 

76.2

%

Gross profit

 

367,393

 

 

24.6

%

 

 

307,605

 

 

23.8

%

Selling, general and administrative expenses

 

226,231

 

 

15.2

%

 

 

191,703

 

 

14.8

%

Amortization of intangible assets

 

23,127

 

 

1.5

%

 

 

22,192

 

 

1.8

%

Income from operations

 

118,035

 

 

7.9

%

 

 

93,710

 

 

7.2

%

Loss on foreign currency forward contracts

 

(5,917

)

 

(0.4

) %

 

 

 

 

%

Interest expense — net

 

(26,695

)

 

(1.8

) %

 

 

(27,749

)

 

(2.1

) %

Income before income tax

 

85,423

 

 

5.7

%

 

 

65,961

 

 

5.1

%

Income tax expense

 

(22,824

)

 

(1.5

) %

 

 

(13,195

)

 

(1.0

) %

Net income

$

62,599

 

 

4.2

%

 

$

52,766

 

 

4.1

%

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

Common stock — basic

$

1.06

 

 

 

 

$

0.87

 

 

 

Common stock — diluted

$

1.06

 

 

 

 

$

0.86

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Common stock — basic

 

58,624,221

 

 

 

 

 

60,454,855

 

 

 

Common stock — diluted

 

58,802,742

 

 

 

 

 

61,058,843

 

 

 

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

September 30, 2022

 

December 31, 2021

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

32,604

 

$

260,980

Accounts receivable — net

 

194,410

 

 

 

210,971

 

Prepaid expenses and other current assets

 

75,830

 

 

 

68,320

 

Total current assets

 

302,844

 

 

 

540,271

 

Fixed assets — net

 

561,233

 

 

 

598,134

 

Goodwill

 

1,674,466

 

 

 

1,481,725

 

Other intangible assets — net

 

254,729

 

 

 

251,032

 

Operating lease right-of-use assets

 

795,903

 

 

 

696,425

 

Other assets

 

126,955

 

 

 

72,460

 

Total assets

$

3,716,130

 

 

$

3,640,047

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

16,000

 

 

$

16,000

 

Borrowings under revolving credit facility

 

113,000

 

 

 

 

Accounts payable and accrued expenses

 

232,092

 

 

 

197,366

 

Current portion of operating lease liabilities

 

90,710

 

 

 

87,341

 

Deferred revenue and other current liabilities

 

238,214

 

 

 

321,468

 

Total current liabilities

 

690,016

 

 

 

622,175

 

Long-term debt — net

 

965,284

 

 

 

976,396

 

Operating lease liabilities

 

804,556

 

 

 

703,911

 

Deferred income taxes

 

55,830

 

 

 

48,509

 

Other long-term liabilities

 

206,688

 

 

 

109,780

 

Total liabilities

 

2,722,374

 

 

 

2,460,771

 

Total stockholders’ equity

 

993,756

 

 

 

1,179,276

 

Total liabilities and stockholders’ equity

$

3,716,130

 

 

$

3,640,047

 

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

Nine Months Ended September 30,

 

 

2022

 

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income

$

62,599

 

 

$

52,766

 

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

 

 

 

Depreciation and amortization

 

77,958

 

 

 

82,858

 

Stock-based compensation expense

 

21,282

 

 

 

16,735

 

Loss on foreign currency forward contracts

 

5,917

 

 

 

 

Deferred income taxes

 

(8,209

)

 

 

1,573

 

Other non-cash adjustments — net

 

1,894

 

 

 

3,369

 

Changes in assets and liabilities

 

(30,463

)

 

 

27,946

 

Net cash provided by operating activities

 

130,978

 

 

 

185,247

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Purchases of fixed assets — net

 

(37,772

)

 

 

(41,510

)

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

 

16,009

 

 

 

17,730

 

Purchases of debt securities and other investments

 

(13,838

)

 

 

(20,032

)

Settlement of foreign currency forward contracts

 

(5,917

)

 

 

 

Payments and settlements for acquisitions — net of cash acquired

 

(209,421

)

 

 

(18,914

)

Net cash used in investing activities

 

(250,939

)

 

 

(62,726

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Revolving credit facility — net

 

113,000

 

 

 

 

Principal payments of long-term debt

 

(12,000

)

 

 

(8,063

)

Payments of debt issuance costs

 

 

 

 

(2,057

)

Purchase of treasury stock

 

(182,570

)

 

 

(102,184

)

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

 

11,412

 

 

 

31,820

 

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

 

(5,432

)

 

 

(7,429

)

Payments of contingent consideration for acquisitions

 

(13,865

)

 

 

(196

)

Net cash used in financing activities

 

(89,455

)

 

 

(88,109

)

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

 

(4,018

)

 

 

(2,120

)

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

 

(213,434

)

 

 

32,292

 

Cash, cash equivalents and restricted cash — beginning of period

 

265,281

 

 

 

388,465

 

Cash, cash equivalents and restricted cash — end of period

$

51,847

 

 

$

420,757

 

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

SEGMENT INFORMATION

(In thousands)

(Unaudited)

Three Months Ended September 30, 2022

Full service

center-based

child care

 

Back-up care

 

Educational

advisory and

other services

 

Total

Revenue

$

380,556

 

 

$

128,606

 

 

$

31,053

 

 

$

540,215

 

Income (loss) from operations

 

(9,834

)

 

 

40,405

 

 

 

8,478

 

 

 

39,049

 

Adjusted income (loss) from operations (1)

 

(3,134

)

 

 

40,405

 

 

 

8,478

 

 

 

45,749

 

As a percentage of revenue

 

(1

) %

 

 

31

%

 

 

27

%

 

 

8

%

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2021

 

 

 

 

 

 

 

Revenue

$

333,883

 

 

$

99,197

 

 

$

27,253

 

 

$

460,333

 

Income from operations

 

10,070

 

 

 

31,823

 

 

 

4,097

 

 

 

45,990

 

Adjusted income from operations

 

10,070

 

 

 

31,823

 

 

 

4,097

 

 

 

45,990

 

As a percentage of revenue

 

3

%

 

 

32

%

 

 

15

%

 

 

10

%

(1)

For the three months ended September 30, 2022, adjusted loss from operations for the full service center-based child care segment represents loss from operations excluding transaction costs of $6.7 million related to acquisitions.

Nine Months Ended September 30, 2022

Full service

center-based

child care

 

Back-up care

 

Educational

advisory and

other services

 

Total

Revenue

$

1,105,804

 

 

$

301,164

 

 

$

83,997

 

 

$

1,490,965

 

Income from operations

 

17,049

 

 

 

85,982

 

 

 

15,004

 

 

 

118,035

 

Adjusted income from operations (1)

 

26,246

 

 

 

85,982

 

 

 

15,004

 

 

 

127,232

 

As a percentage of revenue

 

2

%

 

 

29

%

 

 

18

%

 

 

9

%

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2021

 

 

 

 

 

 

 

Revenue

$

958,629

 

 

$

257,036

 

 

$

76,986

 

 

$

1,292,651

 

Income (loss) from operations

 

(3,835

)

 

 

83,782

 

 

 

13,763

 

 

 

93,710

 

Adjusted income (loss) from operations

 

(3,835

)

 

 

83,782

 

 

 

13,763

 

 

 

93,710

 

As a percentage of revenue

 

%

 

 

33

%

 

 

18

%

 

 

7

%

(1)

For the nine months ended September 30, 2022, adjusted income from operations for the full service center-based child care segment represents income from operations excluding transaction costs of $9.2 million related to acquisitions.

BRIGHT HORIZONS FAMILY SOLUTIONS INC.

NON-GAAP RECONCILIATIONS

(In thousands, except share data)

(Unaudited)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net income

$

18,248

 

 

$

26,819

 

 

$

62,599

 

 

$

52,766

 

Interest expense — net

 

11,707

 

 

 

9,153

 

 

 

26,695

 

 

 

27,749

 

Income tax expense

 

9,094

 

 

 

10,018

 

 

 

22,824

 

 

 

13,195

 

Depreciation

 

18,349

 

 

 

20,326

 

 

 

54,831

 

 

 

60,666

 

Amortization of intangible assets (a)

 

8,948

 

 

 

7,140

 

 

 

23,127

 

 

 

22,192

 

EBITDA

 

66,346

 

 

 

73,456

 

 

 

190,076

 

 

 

176,568

 

As a percentage of revenue

 

12

%

 

 

16

%

 

 

13

%

 

 

14

%

Additional adjustments:

 

 

 

 

 

 

 

Stock-based compensation expense (b)

 

7,514

 

 

 

5,600

 

 

 

21,282

 

 

 

16,735

 

Other costs (c)

 

6,700

 

 

 

 

 

 

9,197

 

 

 

 

Loss on foreign currency forward contracts (d)

 

 

 

 

 

 

 

5,917

 

 

 

 

Total adjustments

 

14,214

 

 

 

5,600

 

 

 

36,396

 

 

 

16,735

 

Adjusted EBITDA

$

80,560

 

 

$

79,056

 

 

$

226,472

 

 

$

193,303

 

As a percentage of revenue

 

15

%

 

 

17

%

 

 

15

%

 

 

15

%

 

 

 

 

 

 

 

 

Income from operations

$

39,049

 

 

$

45,990

 

 

$

118,035

 

 

$

93,710

 

Other costs (c)

 

6,700

 

 

 

 

 

 

9,197

 

 

 

 

Adjusted income from operations

$

45,749

 

 

$

45,990

 

 

$

127,232

 

 

$

93,710

 

As a percentage of revenue

 

8

%

 

 

10

%

 

 

9

%

 

 

7

%

 

 

 

 

 

 

 

 

Net income

$

18,248

 

 

$

26,819

 

 

$

62,599

 

 

$

52,766

 

Income tax expense

 

9,094

 

 

 

10,018

 

 

 

22,824

 

 

 

13,195

 

Income before income tax

 

27,342

 

 

 

36,837

 

 

 

85,423

 

 

 

65,961

 

Amortization of intangible assets (a)

 

8,948

 

 

 

7,140

 

 

 

23,127

 

 

 

22,192

 

Stock-based compensation expense (b)

 

7,514

 

 

 

5,600

 

 

 

21,282

 

 

 

16,735

 

Other costs (c)

 

6,700

 

 

 

 

 

 

9,197

 

 

 

 

Loss on foreign currency forward contracts (d)

 

 

 

 

 

 

 

5,917

 

 

 

 

Interest on deferred consideration (e)

 

1,471

 

 

 

 

 

 

1,471

 

 

 

 

Adjusted income before income tax

 

51,975

 

 

 

49,577

 

 

 

146,417

 

 

 

104,888

 

Adjusted income tax expense (f)

 

(13,877

)

 

 

(10,907

)

 

 

(38,483

)

 

 

(22,522

)

Adjusted net income

$

38,098

 

 

$

38,670

 

 

$

107,934

 

 

$

82,366

 

As a percentage of revenue

 

7

%

 

 

8

%

 

 

7

%

 

 

6

%

 

 

 

 

 

 

 

 

Weighted average common shares outstanding — diluted

 

57,740,013

 

 

 

60,743,765

 

 

 

58,802,742

 

 

 

61,058,843

 

Diluted adjusted earnings per common share

$

0.66

 

 

$

0.64

 

 

$

1.84

 

 

$

1.35

 

(a)

Amortization of intangible assets represents amortization expense, including quarterly amortization expense of approximately $5.0 million 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 represent transaction costs incurred in connection with acquisitions.

(d)

During the nine months ended September 30, 2022, the Company entered into foreign currency forward contracts for the purchase of Australian dollars to satisfy the purchase price of an acquisition completed July 1, 2022.  The Company entered into the foreign currency forwards to lock the purchase price in US dollars at closing and mitigate the impact of any foreign currency fluctuations.  A loss of $5.9 million resulting from fluctuations in foreign currency rates was recognized during the nine months ended September 30, 2022 in relation to these contracts.

(e)

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.

(f)

Adjusted income tax expense represents income tax expense calculated on adjusted income before income tax at an effective tax rate of approximately 27% and 26% for the three and nine months ended September 30, 2022, respectively, and of approximately 22% for the three and nine months ended September 30, 2021.  The tax rate for 2022 represents a tax rate of approximately 28% applied to the expected adjusted income before income tax, less the estimated effect of excess (shortfall) tax benefit (expense) related to equity transactions.  However, the jurisdictional mix of the expected adjusted income before income tax for the full year, and the timing and volume of the tax benefits (expense) associated with future equity activity will affect these estimates and the estimated effective tax rate for the year.

 

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