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Edited Transcript of BPE.V earnings conference call or presentation 21-Apr-17 2:00pm GMT

Thomson Reuters StreetEvents

Q4 2016 BrightPath Early Learning Inc Earnings Call

MONTREAL Apr 24, 2017 (Thomson StreetEvents) -- Edited Transcript of BrightPath Early Learning Inc earnings conference call or presentation Friday, April 21, 2017 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Dale P. Kearns

BrightPath Early Learning Inc. - President, CFO and Corporate Secretary

* Mary Ann Curran

BrightPath Early Learning Inc. - CEO

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Conference Call Participants

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* Ben Jekic

GMP Securities L.P., Research Division - Director and Special Situations Analyst, Equity Research

* Brian D. Pow

Acumen Capital Finance Partners Limited, Research Division - VP of Research and Equity Analyst

* David McFadgen

Cormark Securities Inc., Research Division - Director of Institutional Equity Research

* Robert Elman

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen, and welcome to the BrightPath Early Learning Inc. Fourth Quarter and Fiscal Year-End 2016 Results Conference Call.

(Operator Instructions)

I would like to remind everyone that this conference call is being webcast and recorded today, Friday, April 21, 2017, at 10 a.m. Eastern daylight time.

Certain matters discussed in today's conference call or answers that may be given to questions asked could constitute forward-looking statements regarding the future growth, results of operations, performance and opportunities of the company. Forward-looking statements are not historical facts but reflect the company's current expectations regarding future results or events based on information currently available and what the company believes to be reasonable assumptions. All forward-looking statements are qualified by these cautionary statements. Forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied by such forward-looking statements. As such, the company gives no assurance that actual results will be consistent with these forward-looking statements. Readers should not place undue reliance on any such forward-looking statements. These forward-looking statements are made as of the date hereof. The company undertakes no obligation to publicly update or revise any such statement, reflect new information or reflect the occurrence of future events or circumstances except as required by securities laws. Throughout this call, management may refer to non-IFRS performance measures. These are defined within the company's MD&A. Any mention of EBITDA by management herein has the meaning of adjusted EBITDA.

I will now turn the conference over to Mary Ann Curran, CEO of BrightPath. Ms. Curran, please go ahead.

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Mary Ann Curran, BrightPath Early Learning Inc. - CEO [2]

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Thank you, operator, and good morning, everyone. On behalf of BrightPath Early Learning, I'd like to welcome you to the company's call to discuss the results for the fourth quarter and the full year ended December 31, 2016. I'm joined here, as on past calls, by Dale Kearns and Liz Nadeau. And please bear with me if I take a few extra water breaks along the way; I'm just recovering from a bit of a cold.

On this call, I will review BrightPath's financial and operational performance for the year and for Q4, which generated the best ever EBITDA and cash from operations in the company's history. I'll also provide an update on our growth strategy, highlighting our significant achievements in 2016. Furthermore, and as usual, I'll review the financial results and our priorities by region. Finally, we'll open the call for Q&A.

Before we dive in, I'd like to thank all of our educators and staff across the country who continue to deliver a superior early childhood learning experience that develops the mind, nourishes the bodies and inspires the souls of 8,200 children under our care. These competent and caring individuals, together with the corporate and regional teams that support them, are the heart and soul of the company and our success is due to them.

Our results and performance for 2016 were driven by our strategy to grow and diversify our operations across the country while improving margins at our centers. In particular, we focused on adding shareholder value through key acquisitions and investments. The company made 2 strategic and highly accretive acquisitions. The Lawrence Park School, acquired in June, provided strong fourth quarter contribution, with occupancy today at 96% on its 95 licensed spaces. The transformative Peekaboo acquisition, which added 20 sites with licensed capacity of almost 2,500 spaces, contributed to our 57% lift in revenue and more than doubling of EBITDA and FFO in Q4. This significant increase came despite the fall being the traditionally weakest quarter in the Ontario child care market due to children departing to begin full-day kindergarten.

Peekaboo's fourth quarter results met our expectations and support the upside anticipated to that business's performance with its integration onto BrightPath's ERP systems and other improvements in process. With this integration almost complete, we've now begun to optimize the business.

In addition to our acquisitions, the company is proud of our success with the 4 new developments opened in Alberta over the past 1.5 years, which are now substantially ramped up with respect to enrollments, and as of today, though not yet in the fourth quarter, are approaching stabilization with respect to their cost structures. Despite softness in the Alberta economy, our new centers are attracting significant demand, largely because of our strong reputation for delivering premium early childhood learning programs.

Cochrane, located northwest of Calgary, opened in 2015 in September. Although slower than some of the other developments to initially ramp up, as it followed more traditional industry ramp-up patterns, we are pleased to have now reached occupancy of over 86%. This center plays an important part in the community. In addition to its full day program, Cochrane services most schools in the town with its KidZone before and after school program.

Creekside, located in north Calgary, has experienced strong demand in an underserved market since its opening in November 2015. Though 98% occupied since September of 2016, pro forma profitability continues to take shape as the cost structure evolves to a stabilized level. In 2017, the center's economics continue to improve due to price improvements and labor and other cost efficiencies realized as the center matures.

West Henday, located in West Edmonton, opened in April 2016 and ramped up occupancy on its 247-space capacity more quickly than any benchmarks could have predicted or anticipated, in fact, much faster than any of us could even have hoped. Occupancy currently sits at 100% for its full-day program, with availability only in the before and after school room. With virtually full occupancy achieved, we continued through Q4 and now into 2017 to optimize our return on investment and are pleased with the quarter-over-quarter improvement in center EBITDA.

Sage Hill, a satellite location just 1.5 kilometers from our successful Creekside Center, opened in February 2017. Its smaller footprint of 130 licensed spaces is already 75% committed, with the residential and commercial development still underway in the immediate vicinity.

With the new center ramp up now behind us for Cochrane and Creekside and West Henday, we are realizing stronger contribution to center margins and EBITDA as labor hours and other costs are normalizing.

Turning now to our financial results for the full year. Revenue for the 12 months increased 28% to $69.2 million from $54.2 million the prior year. The growth reflects the strength in both the BC and Ontario markets, which increased occupancy by 3.4 and 2.5 percentage points respectively, offsetting the challenges in some regions of Alberta. The acquisitions of Peekaboo and Lawrence Park, which came online in June and September, 2016, also contributed to the increase in revenue and put us on track to achieve our target of 10,000 licensed spaces through growth achieved and in the pipeline.

Overall center margin increased by 19% to $17.6 million, while center margin as a percentage of revenue decreased 190 basis points to 25.5% from 27.4%. This decrease was due to continued moderate softness in Alberta's occupancy levels due to the economy and lower margins experienced as our new developments ramped up. Despite the drop in stabilized center enrollment by 4.1 percentage points, we improved stabilized center margins by $2.2 million or 15.2%, with the partial year contribution of Lawrence Park and Peekaboo of $1.7 million. Stabilized center margin also improved due to the profitability improvement of our newly stabilized development centers in Alberta and BC. Furthermore, in Ontario, our 15 original centers enjoyed improved occupancy from 71.6% to 76.2% and delivered a center margin increase of 13.3% on a year-over-year basis.

EBITDA grew by $1.2 million or 21% to $7 million, generating substantial momentum that we see continuing through 2017. This EBITDA growth reflects the benefits of scale to our business as well as management's continued focus on earnings growth through product and performance optimization. The strength of our business model is further reflected in our modest G&A expense increase of 1.7% despite a 27.8% increase in revenue. This also underscores the enormous value of our earlier investments in ERP and CRM business systems.

For the full year, FFO increased $400,000 to $5 million compared to $4.6 million in the prior year, while adjusted FFO increased $0.5 million to $4.8 million from $4.3 million.

Also noteworthy, reflected in the company's 2016 results, are $1.2 million of nonrecurring expenses to benefit the future. These include expenditures to complete BrightPath's 2 Ontario acquisitions, investment in the company's enhanced website and CRM system and, at our new developments, investment in short-term, nonoptimal labor metrics to support a swift build of enrollments and pre-accreditation wage top-ups.

Moving to the fourth quarter results, which maybe provide a better perspective on the impact of our recent activities, revenue increased 58% year-over-year to $21.8 million, largely due to having 55% more capacity but also due to tuition fee increases and occupancy improvements of 5.7 percentage points in our original Ontario centers. Q4 is BrightPath's first full quarter operating the 20 newly acquired Peekaboo centers and Lawrence Park in Ontario, but it's also the seasonally low enrollment period in Ontario. Excluding Peekaboo and Lawrence Park, portfolio revenue was higher by $1.6 million or 11.9%, despite the year-over-year decline in Alberta stabilized center occupancy. This increase was due to the strong enrollment in both BC and Ontario and strong performance by new locations in Alberta as well as moderate tuition increases. Center margin also improved by 55% to $5.6 million versus $3.6 million in the fourth quarter of 2015. This improvement is due to the same factors that improved revenue.

Adjusted EBITDA for the fourth quarter of 2016 was $2.7 million compared to $1.3 million in 2015, and FFO for the fourth quarter was -- of 2016 was $1.8 million compared to $900,000 in the fourth quarter of 2015. Both metrics were better than double the prior year. The improvement is due primarily, but not exclusively, to the acquisition and contribution of new centers. FFO per share for the fourth quarter of 2016 was $0.015 compared to less than half that for the same period in 2015.

The integration of Peekaboo is proceeding on schedule, as is the stabilization of new centers. All are on track to deliver additional benefits in coming quarters.

Turning to the financial results and priorities by region. I'll start as usual with Alberta. Alberta revenue was up 13.1% to $38.8 million for the year. It increased 13.5% to just under $10 million for the quarter. The increase in full year and Q4 revenue was primarily due to contribution from the new centers and moderate price increases. Despite the enrollment challenges in Alberta, each of full year and fourth quarter stabilized center revenue increased moderately over the prior year by 1%. However, full year stabilized center margin was below prior year by $560,000 or 5% due to the moderate enrollment erosion and the associated limited labor savings. But on a positive note, Q4 stabilized center margins increased $36,000 or 1.4% for the quarter over 2015, despite lower occupancy levels, due to fee increases and the contribution of Cochrane, which was requalified to stabilized for the fourth quarter.

As discussed, we are very pleased with the success of our recent openings. Cochrane now runs at 86% occupied and Creekside and West Henday are essentially full. Creekside and West Henday, which continue to be classified as nonstabilized as their cost infrastructure continues to improve, contributed $4.9 million in revenue for the year and delivered center margin of $773,000, with almost half of that center margin coming in the fourth quarter alone. These successful openings will benefit future results to an even greater extent than they did in Q4.

Although the total Alberta portfolio occupancy level has declined, we are encouraged that our stabilized center enrollment levels are well above 80% for the year. This is still our most profitable region. We have maintained stabilized center margin rates over 30% for the year in Alberta. And while we have seen continued softness in Alberta's enrollment levels in the first 3 months of 2017, we expect a modest economic recovery in the back half of the year. This is consistent with the Conference Board of Canada's economic outlook for Calgary, which forecasts a GDP improvement of 2% for this year. We continue to leverage our strong brand to open new centers with strong enrollments and to maximize occupancies at all of our centers. Our priorities for Alberta continue to be rebuilding enrollment in those centers that have seen declines due to the economic challenges. Our new website, together with our CRM and increase in presence on social media, improved our ability to target our clients with strong marketing messages. Next, we'll maintain strict controls over costs and manage labor tightly to maximize profitability through the period of lower occupancy. Third, realizing pro forma earnings from our 4 newest centers: Cochrane, Creekside, West Henday and Sage Hill. Quarter-over-quarter results are on a positive trajectory through today, and we are managing the business to continue this trend. Fourth, we must successfully open the Richmond center, applying the processes and learnings from the very effective recent launches. This new development in Southwest Calgary, which is modeled on the Creekside and West Henday 247-space facilities, adds another purpose-built flagship center to our portfolio. It is tracking to open the end of the second quarter this year. And lastly, finalizing development timelines for our Windermere location and getting that center underway.

Moving on to British Columbia. Revenue increased 15.8% or $1.1 million for the year, led by the continued ramp-up of our Clayton Hills Center. We saw margin growth in our other BC centers because of efforts to improve the portfolio, including certain capacity reconfigurations to create spaces for the age groups demonstrating the highest demand. Average occupancy in BC increased 9.9 percentage points to 83.6%. Accordingly, center margin increased by 36% or $0.5 million, which led to a center margin rate that improved by 3.4 percentage points over the prior year to 23.1%. Fourth quarter results achieved double-digit percentage increases in both revenue and center margin over 2015. Revenue increased 12.3% to $2.1 million, while center margin increased to 28.6% to $0.5 million. Total center margin rate increased from 21.7% to 24.9%. Our key operating imperatives for BC include: continuing to ramp up occupancy at Clayton Hills and Surrey, as it nears the almost 90% occupancy and reconfiguring our licensed capacity to further optimize utilization and economics. Secondly, finding opportunities to grow in BC with larger and newer centers, similar to Clayton Hills. And third, continuing to partner with local colleges and our staff to increase the availability of trained early childhood educators and infant/toddler specialists to ensure sufficient staff to support our intended growth.

Moving on to Ontario. This is now our largest market. And in Q4, our investment in Peekaboo and Lawrence Park generated returns for a full quarter. The integration activities are progressing according to plan and are continuing to drive margin improvement in this segment of the business. Overall, we're pleased with our results in Ontario, including the performance of Peekaboo to date.

Looking forward, our 2017 results will reflect the annualization of Peekaboo and Lawrence Park additions, plus improvements from the integration and optimization activities I'll discuss in more detail shortly.

For the full year, Ontario occupancy improved 2.5 percentage points over 2015 to 74.1%. Excluding Peekaboo and Lawrence Park, occupancy improved 4.6 percentage points to 76.2%. The Ontario child care market continues to strengthen, and our ability to reconfigure capacity into age groups with more demand has led us to improve enrollment in most centers on a year-over-year basis. As a result, total Ontario revenue, including Peekaboo, increased 74% or $9.4 million over 2015, and center margin improved 78% to $4.7 million.

In the fourth quarter, occupancy improved 5.7 percentage points to 74.7% over the fourth quarter of 2015. Without the effect of new centers, the improvement was 5.5 percentage points to 74.5%. Peekaboo occupancy was 73.6% in Q4. As noted earlier, fourth quarter enrollment in Ontario is relatively low due to seasonality. For the quarter, total revenue increased more than twofold to $9.7 million over 2015. Peekaboo and Lawrence Park contributed most of this gain, with a smaller yet commendable amount coming from enrollment gains and moderate price increases. Center margin improved by 208%, or $1.4 million, for the same reasons.

Our priorities in Ontario are threefold: integrating our Peekaboo acquisition onto the BrightPath business systems to drive enrollment and better manage costs. While Lawrence Park was quickly integrated over the past quarter and now uses all BrightPath's business systems, the Peekaboo integration is more complex but nearing completion. Billing, labor and business analytics systems are all now moved over. The company launched a new Peekaboo website early in April, leveraging our previous investment in the BrightPath site. And we are now beginning to roll out both the CRM and our parent engagement tool, BrightPath Connect. In addition to the revenue and labor productivity we will realize from these implementations, we have introduced a market-specific pricing strategy to optimize the price enrollment balance. Finally, office and staff consolidation will be completed in the second half of 2017. Secondly, we continue to focus on building enrollment levels and profitability at all Ontario centers. Moderate price increases were rolled out in January, 2017. Room reconfigurations better align our capacity with the market landscape and we will continue to watch trends, adjust as necessary and deploy our marketing efforts accordingly. And thirdly, cost containment has become increasingly important, given the economic pressures on electricity and food costs especially. Integration of food sourcing between the 35 centers now in Ontario will be an important initiative in the second half of 2017 and is another example of our focus on performance optimization.

In addition to our regional priorities, we are committed to our national product and performance initiatives. We believe our efforts in this regard are leading to optimal pricing, strong occupancies and cost control at all centers. They've also contributed to our recent successful center openings. This is an important part of our competitive advantage and our premium product has helped us maintain our strong presence in all markets. Examples of such initiatives include the following: the investment early in 2016 in our new BrightPath website, which has now been successfully rolled out nationally; the ease-of-use accessibility to relevant information by the visitor and tracking through the CRM system allows us to seamlessly manage our enrollment process. Research and experience tells us that the current generation of parents, that is the millennials, want and expect real time information and are prepared to make a quick decision once they've received the information they need. We continue to seek and adopt the most effective ways to target and work with these parents. We have now integrated our website, CRM and social platforms and they continue to work together to allow us to market to and enroll families in a more efficient manner. Peekaboo has just been moved onto the same platform and has launched the website at minimal cost. Those centers will soon benefit from the use of the CRM tool.

Second, BrightPath Connect integrates the Ontario ELECT framework, which supports children in discovering new concepts, provides developmentally appropriate programs for children, and assists educators with lesson plannings, developmental observations, online portfolios and development reports,. Differentiating us from other early childhood educators, we have integrated the milestones associated with this framework into BrightPath Connect. This enables educators to spend more time interacting with children and sharing children's learning with parents and less time on administration. The detailed reporting of a child's progress is available to parents at their fingertips. With -- this is very appealing to them and is another reason for them to select BrightPath over other early childhood educators and care providers. As we convert Peekaboo centers to this tool in Q2, we believe it will be very appealing to those families.

Third, new government programs are being released across Canada to promote physical literacy in children. Our proprietary WeeMove program incorporates physical literacy, including fundamental motor skills, physical activity, fitness and a positive attitude toward active play and movement into the curriculum. It engages children on multiple levels, facilitating active learning and promoting structured yet fun physical fitness. The rollout of WeeMove is now complete in all BrightPath centers and it has been very positively received by kids and parents. WeeMove will be rolled out and operational in the Peekaboo centers in September this year.

Fourth, our focus on inter-curricular programs and standardization of our core offering allows all BrightPath's children to partake in music and movement programming biweekly. This provides holistic, high-quality learning programs taught by specialists in the field. These program offerings, facilitated by BrightPath recreational instructors, offer well-rounded program experiences for children and are appealing to current and prospective parents.

And lastly, we continue to improve and expand our preauthorized debit program, so that even in Alberta's soft economy, we've experienced a 25% year-to-date improvement in our uncollectible accounts. Our day sales outstanding have dropped from 2.5 days a year ago to less than 1 day, excellent by any collection standard.

We have accomplished the above national priorities, the acquisition, integration and management of Peekaboo and Lawrence Park, and orchestrated the opening and ramp-up of several new developments while increasing our G&A costs by only $81,000 in the year and reducing G&A $20,000 in the fourth quarter. We committed to growth without significant increase in overhead costs and have delivered on that promise by increasing revenue 27.8% while growing G&A cost only 1.7% in 2016.

In closing, we ended 2016 with considerable momentum and a very favorable outlook. Our priorities in the near term are focused on improving occupancy in both stabilized and new centers, continuing to reduce labor and other costs and successfully integrating new development in acquisition centers into the BrightPath network. These priorities are consistent with the strategy that we have implemented over the past 2 years and one that is delivering success.

As a company that's strongly focused on growth, we're also actively engaged in further growth initiatives and look forward to discussing them as they're confirmed. And in addition, we continue to be on the lookout for more opportunities to develop or acquire centers in favorable markets, where we can leverage our powerful brand, superior product offering and operational expertise to increase value.

Furthermore, as evidenced by successful onboarding of Peekaboo and Lawrence Park and the successful openings of development centers, the BrightPath team is very competent in managing growth. We have effectively leveraged our infrastructure, technology, processes and knowledge to quickly integrate new and acquired operations. We'll continue to apply these skills to ensure the success of future growth.

We continue to see a disconnect, though, between the share price and the inherent value of the business. Steps to surface shareholder value are being assessed. We have continued with the NCIB, have progressed on the real estate monetization, have plans in progress to deal with the maturing $5 million convertible debenture, and as noted above, have other transactions underway that we expect will prove up shareholder value.

We look forward to reporting to you further on success when we meet again to discuss the 2017 first quarter results in just under a month from now. That concludes my prepared remarks, and I'd like to now turn things over to the operator to manage the Q&A session.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of David McFadgen from Cormark Securities.

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David McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [2]

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Few questions. So typically, early in the year, you guys put through a price increase. I was just wondering if you could give us an update on that.

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Mary Ann Curran, BrightPath Early Learning Inc. - CEO [3]

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Sure, David. We did put through a price increase, January 1. And across the combined company, it was just over 3%.

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David McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [4]

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Okay. Was it greater in, say, Ontario? Or any color there?

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Mary Ann Curran, BrightPath Early Learning Inc. - CEO [5]

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It was about the same across the country. Individual centers were more or less, but in -- regionally, it was about the same.

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David McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [6]

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Okay. So you talked a little bit about integrating Peekaboo and Lawrence Park. It looks like things are going well there. Could you give us an idea on the magnitude of any cost synergies that you think you'll be able to extract and were any of those prevalent in Q4?

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Dale P. Kearns, BrightPath Early Learning Inc. - President, CFO and Corporate Secretary [7]

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Hi, David, it's Dale. There is certainly a number out there and, I think we've said on earlier occasions, we've not been pressing that agenda initially, that service and product and getting things done is the key. But certainly, there are numbers that we're going to see next year. I don't want to be committed to a number, but closing their office, eliminating some executive overhead duplication, you can see that it's well into the hundreds of thousands of dollars without really having to try too hard.

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David McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [8]

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Okay. And then, what about the potential for revenue synergies? You talked about potentially increasing prices at Peekaboo. Are you in the -- up to market?

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Mary Ann Curran, BrightPath Early Learning Inc. - CEO [9]

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Yes, certainly. We look at pricing differently than it's been looked at there before. We look at it market-by-market, look at the competition, look at the occupancy, look at wait lists. So we definitely see opportunity for that as we move forward. And the other thing we're doing is putting in our curriculum, putting in our programming, our tools and such to manage the enrollment and manage the pricing. So when we get things like the CRM on, the customer relationship management tool on board, we certainly see opportunities for revenue improvement.

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David McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [10]

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Okay. You don't want to quantify it right now?

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Mary Ann Curran, BrightPath Early Learning Inc. - CEO [11]

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Not really.

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David McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [12]

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Okay. And then just keeping on with Peekaboo, I know there is the potential to acquire some of their franchises. I was just -- or maybe there's some other potential acquisitions. Can you comment on the probability of acquisitions in 2017?

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Dale P. Kearns, BrightPath Early Learning Inc. - President, CFO and Corporate Secretary [13]

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It's Dale. Well, 2-part question I guess. Certainly on the franchises where we've had discussions with the franchise holders, and I would say it's probable we'll transact with, let's say, the majority of those in the next while. In terms of other acquisitions, generally we always have a list, stuff that we're considering. Are we aggressively pursuing those at this moment? No. But certainly, there is -- there are some interesting candidates on that list.

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David McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [14]

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Okay. So when you talk about the next while, do you mean calendar 2017?

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Dale P. Kearns, BrightPath Early Learning Inc. - President, CFO and Corporate Secretary [15]

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I would say so, yes.

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David McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [16]

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Okay. And do you have the necessary bank facilities in place to be able to do that?

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Dale P. Kearns, BrightPath Early Learning Inc. - President, CFO and Corporate Secretary [17]

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We've certainly got -- I think, we quoted $20 million or so of dry powder, so that'll keep us going for a while.

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David McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [18]

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Okay. And that $20 million, can you use any of that to redeem the convertible debentures?

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Dale P. Kearns, BrightPath Early Learning Inc. - President, CFO and Corporate Secretary [19]

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You are an astute guy, David. That's certainly an alternative. We're in discussions with the holders of those. And of course, the position you'd like to be in is that, let -- make an offer or I'll pay you out, and that's kind of where it is right now.

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David McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [20]

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Okay. So then just -- can you give us an idea on the updates for the opening of Richmond and Windermere?

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Dale P. Kearns, BrightPath Early Learning Inc. - President, CFO and Corporate Secretary [21]

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So Richmond is first week of June, I would say. Don't tell the parents that, in case we slip a few days, but between us, that's our internal target. Windermere is more interesting. We -- given the situation in Alberta, we have not been pressing that agenda. But that's a project developed by The Harvard Group, also known as the Hill Family from Regina. They've actually remerchandised the entire site, which has made it more appealing to us than it was. So they're a little behind the play and we weren't objecting. So I think that one is going to take a little longer. We could go it alone and just kind of do our own thing there, but I think we'll wait a bit. So it's definitely next year's business unless we were to make a decision to go it alone. So I'm not going to go in circles here. We have options and we'll decide in the next few months whether we accelerate or leave it for a year.

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David McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [22]

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Okay. And then lastly, can you give us an idea on the seasonality of Peekaboo? Is it consistent with your general Ontario business? Or is the...

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Mary Ann Curran, BrightPath Early Learning Inc. - CEO [23]

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Yes, in Ontario, it's funny because the rest of the country that -- it's where we do have a slightly weaker summertime than we do fall, but in Ontario, we actually see Q3 being a little weaker. So we tend to keep the children through the summer. And then because now kids start full-day programs earlier in Ontario than they used to and than they do in the rest of the provinces we operate in, September is when we tend to see the drop-off, and then we start rebuilding from September onward.

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David McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [24]

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Okay. So it would -- I guess, relative to your general portfolio in Ontario, would it be similar, Peekaboo?

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Mary Ann Curran, BrightPath Early Learning Inc. - CEO [25]

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Yes, it would be similar. Put it in perspective though, sort of it's 70-ish and -- in September, and then it ramps up to sort of 82%, 83% now.

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Operator [26]

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(Operator Instructions) Your next question comes from Ben Jekic from GMP Securities.

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Ben Jekic, GMP Securities L.P., Research Division - Director and Special Situations Analyst, Equity Research [27]

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I wanted to ask just 2 quick questions. One is on Lawrence Park. My sense is that, that's a little bit of a different profile, at least the community profile, than you're used to. What has been the response? And what can you sort of assess for the future performance from that response?

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Mary Ann Curran, BrightPath Early Learning Inc. - CEO [28]

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Response has been very positive. We've continued to -- in fact, our enrollment levels are just slightly higher than they were this time last year. So we operate that center at 96%, I believe. So call it full. We did -- we made the decision to really not change that model at all. We've integrated Lawrence Park, sort of, from a back-office perspective, the administrative processes. But they continue to run with the programming that's always worked there. And you're right, it is quite a bit different. It's a -- frankly, it's a shorter day, with higher fees. And they have a number of optional programs. It tends to -- it's not about childcare there, I would say, at all. It's about the curriculum, It's about -- it's nursery school. It runs more on a 10-month program, like on the school calendar. So you're correct; it's different, it's unique, it ran very well and it's continuing to run well.

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Ben Jekic, GMP Securities L.P., Research Division - Director and Special Situations Analyst, Equity Research [29]

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Okay. And then can you just remind me, the first quarter, what are some of the -- without getting into guidance or anything, what are the some of the seasonal kind of factors to consider as we await for your first quarter results?

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Mary Ann Curran, BrightPath Early Learning Inc. - CEO [30]

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Well, I think, as we said, certainly, you certainly see enrollments build in Q1 over Q4 across all regions. We're going to see Creekside and West Henday, as we've talked about, their cost infrastructure comes more and more in line with the stabilizing of those centers. Trying to think of what else I can tell you. We will -- we're integrating Peekaboo more into the rest of the company, so we're seeing benefits from managing their enrollment, managing their costs, working more as one company with that staff. So I think we see all things on a positive trajectory.

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Operator [31]

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You're next question comes from Brian Pow from Acumen.

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Brian D. Pow, Acumen Capital Finance Partners Limited, Research Division - VP of Research and Equity Analyst [32]

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Just wanted to focus in on Richmond because I drive by it pretty well every day. Maybe just speak a little bit to enrollment, whether -- have you started enrollment there?

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Mary Ann Curran, BrightPath Early Learning Inc. - CEO [33]

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Yes. We are -- we just had a big open house. I'm sorry, I think the open house is this weekend, excuse me. So we'd like to have a firm opening date before we start broadcasting too widely. So really, that effort is just starting now. The board is up, you get inquiries, but we're a little bit more passive in our efforts until we move into this, sort of, big open house this weekend and we can kind of full-court press it when we're clear regarding the date.

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Brian D. Pow, Acumen Capital Finance Partners Limited, Research Division - VP of Research and Equity Analyst [34]

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I know we had spoken previously and you were just waiting for the signs to go up. I know I saw the signage go up. After that, did you get some pretty good interest right away with the signage up?

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Mary Ann Curran, BrightPath Early Learning Inc. - CEO [35]

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Yes, absolutely.

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Brian D. Pow, Acumen Capital Finance Partners Limited, Research Division - VP of Research and Equity Analyst [36]

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And what do you anticipate in terms of, sort of, age groups there and things like that? Have you got any sense on whether you'll be weighted more to infants, or what are you expecting there?

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Mary Ann Curran, BrightPath Early Learning Inc. - CEO [37]

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It will be the same as Creekside, that same model. So we'll have certainly more full-day care, but we will have a before and after school program as well.

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Operator [38]

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(Operator Instructions) Your next question comes from Robert Elman from Scotia Wealth.

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Robert Elman, [39]

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Well, having been an investor in this company since it was Edleun and way back when, having seen the transitions and with Mary Ann and Dale, it's been a real wonderful trip to see this evolution and the professionalism and the execution that you have brought to this company. It's -- it really warms my heart. We don't often see startup companies to be so well coordinated. So congratulations on that. It's just a great job. Now I know that this report came in late because of the audit of the Peekaboo, but any idea as to -- I realize you just launched Q4 but -- in terms of the report, but how far away are we from seeing Q1?

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Dale P. Kearns, BrightPath Early Learning Inc. - President, CFO and Corporate Secretary [40]

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So, Robert, it's Dale. So I think the tentative date is May 11, 12, in there somewhere.

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Mary Ann Curran, BrightPath Early Learning Inc. - CEO [41]

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In there somewhere, yes.

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Dale P. Kearns, BrightPath Early Learning Inc. - President, CFO and Corporate Secretary [42]

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And we'll zero on that pretty quickly, so you shouldn't have to wait too long.

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Robert Elman, [43]

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From the stock point of view, and I know you can't talk about it nor would I want you to talk about it, But I think that the Street has been sitting back and waiting to see the results and the delivery of the Peekaboo and Lawrence Park. And what you have reported today is really the first tranche of that -- of those results. I feel that each quarter as you go by -- as it goes by and we begin to see further referencing points of the positive execution, I think the market will certainly become very well aware of this wonderful opportunity.

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Operator [44]

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(Operator Instructions) We do not have any questions on the phone line at this time. I will turn the call over to the presenters.

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Mary Ann Curran, BrightPath Early Learning Inc. - CEO [45]

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Well, I think that wraps it up then. Thank you very much for joining us this morning, and we look forward to speaking to you soon about the 2017 first quarter results. Have a good day, everyone.

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Operator [46]

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Thank you for joining us this morning. This concludes today's conference call. You may now disconnect.