Bright Horizons Family Solutions(BFAM) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Results & Highlights Bright Horizons reported strong Q2 2025 financial results and highlights, driven by effective execution and increased service utilization Overview and CEO Commentary Bright Horizons achieved strong Q2 2025 results, driven by disciplined execution and increased service utilization in education and care - Bright Horizons is a leading provider of high-quality early education and child care, family care solutions, and workforce education services[1] - CEO Stephen Kramer stated, "We generated strong results this quarter, driven by disciplined execution and a continued focus on delivering high-quality education and care"[2] - The continued increase in usage of services by client employees underpins the growth of the company's impact and financial performance[2] GAAP Financial Performance Summary Bright Horizons reported strong Q2 2025 GAAP performance with significant year-over-year growth in revenue, operating income, net income, and diluted EPS Q2 2025 GAAP Financial Performance (YoY) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :----------------------- | :----------------- | :----------------- | :--------- | | Revenue | $731.6 | $670.1 | 9% | | Income from operations | $86.1 | $69.1 | 25% | | Net income | $54.8 | $39.2 | 40% | | Diluted EPS | $0.95 | $0.67 | 42% | - Revenue increase was primarily due to enrollment gains and tuition price increases at centers, as well as increased utilization of back-up care[3] - The increase in net income was due to higher income from operations, lower interest expense, and a lower effective tax rate[4] Non-GAAP Financial Performance Summary Bright Horizons delivered strong Q2 2025 non-GAAP results, with significant growth in Adjusted EBITDA, adjusted income, and adjusted EPS Q2 2025 Non-GAAP Financial Performance (YoY) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :-------------------------------- | :----------------- | :----------------- | :--------- | | Adjusted EBITDA* | $115.6 | $102.6 | 13% | | Adjusted income from operations* | $86.1 | $69.1 | 25% | | Adjusted net income* | $61.5 | $51.3 | 20% | | Diluted adjusted EPS* | $1.07 | $0.88 | 22% | - Increases in adjusted EBITDA and adjusted income from operations were due to increased contributions from both the back-up care segment and full-service center-based child care segment[5] - Adjusted net income increased as a result of higher adjusted income from operations and lower interest expense[5] Operational Metrics Bright Horizons operated 1,020 centers serving 115,000 children, demonstrating strong cash generation and managed investments - As of June 30, 2025, the Company operated 1,020 early education and child care centers[6] - These centers have the capacity to serve approximately 115,000 children[6] Cash Flow from Operations and Net Investments (Six Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | | :----------------------------- | :---------------- | :---------------- | | Cash from operations | $220.4 | $225.8 | | Net investments | $38.0 | $64.1 | 2025 Financial Outlook Bright Horizons provided updated fiscal year 2025 guidance for revenue and diluted adjusted earnings per common share Fiscal Year 2025 Guidance Bright Horizons updated its FY2025 guidance, projecting revenue between $2.9 billion and $2.92 billion and diluted adjusted EPS of $4.15 to $4.25 Fiscal Year 2025 Financial Guidance | Metric | Range | | :-------------------------------- | :---------------------- | | Revenue | $2.9 billion to $2.92 billion | | Diluted adjusted EPS | $4.15 to $4.25 | - The company will provide additional information on its outlook during its earnings conference call[10] Company Information Bright Horizons is a leading global provider of education and care services, with investor and media contact information provided About Bright Horizons Family Solutions Inc. Bright Horizons is a leading global provider of early education, child care, and workforce education services, partnering with over 1,450 employers - Bright Horizons is a leading global provider of high-quality early education and child care, back-up care, and workforce education services[16] - For over 35 years, the company has partnered with employers to support workforces by providing services that help working families and employees thrive[16] - Bright Horizons operates more than 1,000 early education and child care centers in the United States, the United Kingdom, the Netherlands, Australia, and India, serving over 1,450 of the world's leading employers[16] Investor and Media Contacts Contact information is provided for investor relations, including CFO and Group VP, and for media inquiries with the VP of Communications - Investors can contact Elizabeth Boland (CFO) or Michael Flanagan (Group VP - Strategic Finance)[17] - Media inquiries can be directed to Ilene Serpa (VP - Communications)[17] Condensed Consolidated Financial Statements This section presents the company's condensed consolidated statements of income, balance sheets, and cash flows Statements of Income The condensed consolidated statements of income detail financial performance for the three and six months ended June 30, 2025 and 2024 Three Months Ended June 30 Condensed Consolidated Statements of Income (Three Months Ended June 30) | Metric | 2025 (Thousands) | % of Revenue | 2024 (Thousands) | % of Revenue | | :--------------------------------- | :--------------- | :----------- | :--------------- | :----------- | | Revenue | $731,570 | 100.0% | $670,059 | 100.0% | | Cost of services | $549,020 | 75.0% | $507,647 | 75.8% | | Gross profit | $182,550 | 25.0% | $162,412 | 24.2% | | Income from operations | $86,052 | 11.8% | $69,059 | 10.3% | | Net income | $54,775 | 7.5% | $39,174 | 5.8% | | Diluted EPS | $0.95 | - | $0.67 | - | Six Months Ended June 30 Condensed Consolidated Statements of Income (Six Months Ended June 30) | Metric | 2025 (Thousands) | % of Revenue | 2024 (Thousands) | % of Revenue | | :--------------------------------- | :--------------- | :----------- | :--------------- | :----------- | | Revenue | $1,397,097 | 100.0% | $1,292,768 | 100.0% | | Cost of services | $1,058,810 | 75.8% | $995,228 | 77.0% | | Gross profit | $338,287 | 24.2% | $297,540 | 23.0% | | Income from operations | $148,324 | 10.6% | $108,996 | 8.4% | | Net income | $92,824 | 6.6% | $56,163 | 4.3% | | Diluted EPS | $1.61 | - | $0.96 | - | Balance Sheets The condensed consolidated balance sheets present the company's financial position as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (Thousands) | Item | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :---------------- | | ASSETS | | | | Cash and cash equivalents | $179,222 | $110,327 | | Total current assets | $472,796 | $496,031 | | Fixed assets — net | $591,152 | $572,939 | | Goodwill | $1,824,479 | $1,762,683 | | Total assets | $3,919,797 | $3,850,319 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Current portion of revolving credit facility | $101,500 | — | | Total current liabilities | $839,102 | $779,399 | | Long-term debt — net | $796,956 | $918,449 | | Total liabilities | $2,520,676 | $2,571,923 | | Total stockholders' equity | $1,399,121 | $1,278,396 | | Total liabilities and stockholders' equity | $3,919,797 | $3,850,319 | - Cash and cash equivalents increased from $110.3 million at December 31, 2024, to $179.2 million at June 30, 2025[23] - Long-term debt (net) decreased from $918.4 million to $797.0 million[23] Statements of Cash Flows The condensed consolidated statements of cash flows detail cash generated from operating, investing, and financing activities for H1 2025 and 2024 Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, Thousands) | Activity | 2025 | 2024 | | :--------------------------------------- | :--------- | :--------- | | Net cash provided by operating activities | $220,374 | $225,750 | | Net cash used in investing activities | $(37,968) | $(64,132) | | Net cash used in financing activities | $(116,087) | $(106,757) | | Net increase in cash, cash equivalents and restricted cash | $73,364 | $54,138 | | Cash, cash equivalents and restricted cash — end of period | $197,079 | $143,589 | - Cash from operations slightly decreased from $225.8 million in 2024 to $220.4 million in 2025[25] - Net cash used in investing activities decreased significantly from $64.1 million in 2024 to $38.0 million in 2025[25] Segment Information This section details revenue and income from operations across the company's various business segments Three Months Ended June 30 All segments showed revenue growth in Q2 2025, with 'Full service center-based child care' leading revenue and 'Back-up care' demonstrating strong operating income margin Segment Revenue and Income from Operations (Three Months Ended June 30, 2025 vs 2024, Thousands) | Segment | 2025 Revenue | 2024 Revenue | 2025 Income from Operations | 2024 Income from Operations | | :-------------------------------- | :----------- | :----------- | :-------------------------- | :-------------------------- | | Full service center-based child care | $540,267 | $507,077 | $40,280 | $32,644 | | Back-up care | $162,670 | $136,490 | $40,923 | $31,593 | | Educational advisory services | $28,633 | $26,492 | $4,849 | $4,822 | | Total | $731,570 | $670,059 | $86,052 | $69,059 | - Back-up care segment's income from operations as a percentage of revenue was 25% in Q2 2025, up from 23% in Q2 2024, indicating strong profitability[27] - Full service center-based child care segment's income from operations as a percentage of revenue increased from 6% to 7% year-over-year[27] Six Months Ended June 30 All segments continued growth in H1 2025, with 'Full service center-based child care' leading revenue and 'Back-up care' maintaining a strong operating income margin Segment Revenue and Income from Operations (Six Months Ended June 30, 2025 vs 2024, Thousands) | Segment | 2025 Revenue | 2024 Revenue | 2025 Income from Operations | 2024 Income from Operations | | :-------------------------------- | :----------- | :----------- | :-------------------------- | :-------------------------- | | Full service center-based child care | $1,050,814 | $990,717 | $73,534 | $54,088 | | Back-up care | $291,282 | $251,162 | $67,307 | $47,576 | | Educational advisory services | $55,001 | $50,889 | $7,483 | $7,332 | | Total | $1,397,097 | $1,292,768 | $148,324 | $108,996 | - Back-up care segment's income from operations as a percentage of revenue increased from 19% in H1 2024 to 23% in H1 2025[27] - Full service center-based child care segment's income from operations as a percentage of revenue improved from 5% to 7% over the six-month period[27] Non-GAAP Financial Measures This section details the company's use and reconciliation of non-GAAP financial measures for performance evaluation Presentation and Definition of Non-GAAP Measures Bright Horizons uses non-GAAP measures like Adjusted EBITDA and Adjusted EPS for internal performance and compensation, with definitions and reconciliation provided - Non-GAAP financial measures are used as key performance indicators for evaluating internal performance and determining incentive compensation[13] - Adjusted EBITDA is defined as GAAP EBITDA adjusted for stock-based compensation expense and non-recurring costs[7] - The company does not provide forward-looking GAAP reconciliation for diluted adjusted EPS due to the unpredictability of certain items like tax benefits, impairments, and transaction costs[14] Non-GAAP Reconciliations Table This table reconciles GAAP net income to various non-GAAP measures, including EBITDA, Adjusted EBITDA, and Adjusted EPS, for Q2 and H1 2025 and 2024 Non-GAAP Reconciliations (Three and Six Months Ended June 30, Thousands, except share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------------------------- | :-------- | :-------- | :-------- | :-------- | | Net income (GAAP) | $54,775 | $39,174 | $92,824 | $56,163 | | EBITDA | $108,786 | $94,525 | $192,933 | $162,095 | | Adjusted EBITDA | $115,615 | $102,630 | $207,919 | $177,611 | | Adjusted income from operations | $86,052 | $69,059 | $148,324 | $108,996 | | Adjusted net income | $61,504 | $51,301 | $106,223 | $80,922 | | Diluted adjusted EPS | $1.07 | $0.88 | $1.84 | $1.39 | - Adjustments to GAAP net income include interest expense, income tax expense, depreciation, amortization of intangible assets, and stock-based compensation expense[29] - Other costs in 2025 include $0.6 million related to the April 2025 debt refinancing, impacting adjusted income before income tax[30] Additional Information This section provides conference call details and important disclosures regarding forward-looking statements and associated risks Conference Call Details Bright Horizons hosted an investor conference call on July 31, 2025, to discuss Q2 results and outlook, with replays available - An investor conference call was held on July 31, 2025, at 5:00 pm ET[11] - Replays of the call are available through August 14, 2025, via phone or webcast on the Investor Relations section of the company's website[11] Forward-Looking Statements This press release contains forward-looking statements subject to risks and uncertainties, including demand changes, labor conditions, and economic factors - This press release includes forward-looking statements that involve risks and uncertainties, which can cause actual results to vary significantly[12] - Key risks include changes in demand for child care, dependent care and other workplace solutions, constrained labor market for teachers and staff, and the impact of increased compensation and labor costs[12] - Other risks include competition, ability to pass on increased costs, indebtedness, seasonal fluctuations, general economic conditions, and cybersecurity incidents[12]