Bright Horizons Family : Latest Investor Presentation

Investor Presentation

August 2020

Forward Looking Statements

Disclaimer

This presentation includes "forward-looking statements" within the meaning of, and made pursuant to, the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and generally contain words such as "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, effects of COVID-19 on our operations, current center openings, impact of temporarily closed center locations and timing to reopen, our response to COVID-19,back-up care growth, cost-saving initiatives, future financial performance, our competitive advantages, demographic trends, employer partnerships, and our growth strategy.

Our forward-looking statements are subject to risks and uncertainties. Numerous factors, many of which are beyond Bright Horizons Family Solutions Inc.'s (the "Company") control, could cause actual results to differ materially from those projected or implied by the forward-looking statements. These risks and uncertainties include, without limitation, prolonged disruptions to our operations as a result of required school and business closures and shelter-in-place mandates in response to the COVID-19 pandemic, including current conditions and future developments in the public health arena; the impact of COVID-19 on the global economy; the availability or lack of government supports; changes in the demand for child care, dependent care and other workplace solutions, including variation in enrollment trends and lower than expected demand from employer sponsor clients as well as variations in return to work protocols as the economy re-opens; increased costs resulting from recommended or mandated enhanced health and safety protocols and physical distancing; 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 hire and retain qualified teachers; our ability to withstand seasonal fluctuations in the demand for our services; our ability to implement our growth strategies successfully; and other risks and uncertainties.

Additional information concerning these and other risks and uncertainties are discussed in the Company's filings with the Sec urities and Exchange Commission including, without limitation, the Company's Annual Report on Form 10-K for the year ended December 31, 2019 as filed on February 27, 2020 and the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 as filed on August 8, 2020, under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Forward-looking statements are based on current expectations and assumptions and currently available data and are neither predictions nor guarantees of future events or performance. There can be no assurance that the Company will realize these expectations or that these beliefs will prove correct. You should not place undue reliance on forward-looking statements, which speak only as of the date hereof. We do not undertake to update or revise any forward-looking statements after they are made, whether as a result of new information, future events, or otherwise, except as required by applicable law.

Non-GAAP Measures

This presentation contains certain non-GAAP measures which are provided to assist in an understanding of the Bright Horizons Family Solutions Inc. business and its performance. These measures should always be considered in conjunction with the appropriate GAAP measure. Reconciliations of non-GAAP measures to the relevant GAAP measures are provided in our SEC filings.

2	© 2020 Bright Horizons Family Solutions LLC

A Family Of Solutions At Work

FULL SERVICE

Customized child care and early education centers at or near the work site

• 1,084 Centers
• ~120,000 Capacity
• 82% of Revenue

Notes: As of 12/31/2019.

3

BACK-UP

Family support services for dependents of all ages, meeting short-term and long-term needs

• 7.0M+ Lives Covered
• 950K+ Back-Up Days
• 14% of Revenue

ED ADVISORY

Advisory services for adult learners and prospective college students. Manage employer tuition assistance programs for cost efficiency and loan repayment programs.

• ~$1B of Tuition Managed for Ed Assist clients
• 3M Employees covered by College Advising services
• 4% of Revenue

© 2020 Bright Horizons Family Solutions LLC

Bright Horizons At A Glance

BY THE NUMBERS

$1,832	$337	18.4%	1,076	1,200+	33,000+
MM	MM
SALES	ADJUSTED	ADJUSTED	CENTERS	CLIENTS	EMPLOYEES
	EBITDA	EBITDA	GLOBALLY	SERVED
		MARGIN		GLOBALLY

HIGHLIGHTS

20+ years of sales growth and margin expansion

Long-termcontracts with blue chip customers that co-fund capital investment 95% employer-sponsored center client retention

New lines of business + international presence expand the growth opportunity Premier brand with focus on quality through all aspects of service experience

Notes: LTM as of 6/30/2020; see Summary of Adjustments for reconciliation of Adjusted EBITDA.

We have been named

A Great Place to Work

around the Globe!

19x Recipient

12x Recipient

UK	Netherlands
2019	2020
14x Recipient	5x Recipient

4	© 2020 Bright Horizons Family Solutions LLC

COVID-19 Update & Response

Operations

Safety

• Recently began a phased re-opening of temporarily closed centers in the US

and UK	~390

• Approximately 725 (65%) of our centers are open1 and anticipate more than 85% of centers will be open by the end of the third quarter

~265

• Back-UpCare experienced a significant increase in demand in 1H20

 Education Advisory operations broadly unaffected	61

• Social distancing procedures for pickup and drop-off
• Daily health checks for staff and children
• Use of face masks by all Bright Horizon staff
• Limited group sizes and center access
• Enhanced hygiene and cleaning practices

Liquidity

• Generated $51 million of operating cash flow in 1H20
• $270 million of cash on the balance sheet2
• Undrawn $400 million revolving credit facility2
• Temporarily suspended share repurchases

Notes: 1) As of 07/31/20; 2) As of 06/30/20.

5	© 2020 Bright Horizons Family Solutions LLC

Solving the Work/Life Challenge At All Life Stages

Parent

Expectant	Parent	of Toddler/ Parent of Parent of	Caregiver
Parent	of Infant	Preschooler School Ager Teenager	for a Senior Early Career Mid-CareerLate Career

Child Care Centers
Back-up Child &
Elder Care
College Advising
Special Needs
Resources
Tuition Assistance
Student Loan
Assistance
Return to Work
LIFE STAGES	CAREER STAGES

6	© 2020 Bright Horizons Family Solutions LLC

Diversified Blue Chip Base

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Customer End Markets

Representative Clients

(FYE '19 - All Segments)

Industrial

8%

Tech

8%

Professional Services + Other

10%

Gov't 6%

Education

12%

Consumer

10%

Financial Services

16%

Healthcare &

Pharmaceuticals

30%

1

	>1,200 Client Relationships		Largest Customer < 2% of Revenue
	>175 of Fortune 500		Top 10 Customers ~ 8% of Revenue
	Notes: Industry allocations based on client revenues only.
7		© 2020 Bright Horizons Family Solutions LLC

Significant Scale And Expanding

International Presence

U.S.

U.K.

Netherlands

Centers:	705	Centers:	308	Centers:	63
Capacity:	89,000	Capacity:	25,500	Capacity:	5,000

COMPETITIVE ADVANTAGES
Established track record of quality care, effective	6x more employer-sponsored centers in the U.S.
than next provider
management and sustainable growth
Consistent service, quality and scalability that's	Focus on accreditation
difficult to replicate	95% Parent + employer satisfaction
No other provider with matching suite of services	Employee retention 2x industry average

Notes: Two centers in Canada; grouped with U.S. Two centers in India; grouped with Netherlands.

8	© 2020 Bright Horizons Family Solutions LLC

Demographic Tailwinds

Support Our Service Offerings

60+%

FULL TIME WOMEN WORKING		TWO PARENT HOUSEHOLDS THAT
IN THE U.S.		ARE DUAL CAREER EARNERS

OVER THE PAST 20 YEARS IN THE U.S., BIRTH		NEARLY HALF OF ADULTS IN THEIR
RATES FOR WORKING MOMS OVER 35 HAVE		40'S & 50'S HAVE A PARENT OVER 65 WHILE
DRAMATICALLY INCREASED		CARING FOR A CHILD

*Bureau of Labor Statistics, Current Population Survey, "Table 3: Employment Status of the Civilian Non institutional Population by Age, Sex, and Race," Annual Averages 2012 (2013). **U.S. Census Bureau, Current Population Survey, 1968 to 2009 Annual Social and Economic Supplements.

9	© 2020 Bright Horizons Family Solutions LLC

Strength Of The Employer Partnership

HIGH QUALITY

EMPLOYER SPONSORSHIP AND

CAPITAL INVESTMENT

Sponsor ROI driven through retention, recruitment, productivity, and employee engagement levels

STRONG, STABLE

MODEL

• Work-sitelocations / built-in enrollment partner
• Industry leading teacher compensation, benefits, training and career opportunities
• More intensive ratios
• Premier purpose built facilities
• NAEYC accreditation
• Parent and family partnership
• Staff retention 2x industry
• Long-termcontracts with built-in escalators
• Recurring revenue stream with near-term forward visibility
• Predictable earnings model
• Limited capital investment (employer funding)
• Strong cash flow generation and operating leverage
• Childcare is a "sticky" benefit with high renewal rates

10	© 2020 Bright Horizons Family Solutions LLC

Diverse Center Operating Models

Support Capital Efficiency And

Mitigate Financial Risk

Client Sponsor Model

Cost Plus

• Client funds development / CAPEX / maintenance
• Located on client premises
• Facility built / operated to client specifications
• Enrollment exclusive to client sponsor
• Bright Horizons receives management fee, and client bears financial risk
• Client contract 3-5 years

Single Sponsor / Bottom Line

• Client funds development / CAPEX / maintenance
• Located on client premises
• Facility built / operated to client specifications
• Client receives priority enrollment
• • Center may be open to community and back-up customers
• Bright Horizons bears financial risk; client provides modest operating support through management fee and / or tuition subsidy
• Client contract 3-10 years

Consortium Lease

• Bright Horizons funds development / CAPEX / maintenance
• Located near office hub or residential / commuter corridor
• Open to Community, Back-up customers, and consortium of employers
• Bright Horizons bears financial risk
• Lease 10-15 years

Bright Horizons P&L Model

11	© 2020 Bright Horizons Family Solutions LLC

Client Funding Of Center Capital Drives High Returns On Investment

Full Service Child Care is delivered through the following center operating models:

		United States			Europe
		Single Sponsor	Consortium
($ in '000s)	Cost Plus	/ Bottom Line	Lease		Lease
% of Total Centers	~33%	~33%	~33%	~85%
Revenue / Center	$1,850	$1,500	$1,850	$1,200
Gross Margin	15-20%	17-25%	20-25%	15-25%
Average ROI	100%+	75%+	25%+	25%+
on Center Contribution
Contract Term	3-5y	3-10y	10-15y		10-15y

12	© 2020 Bright Horizons Family Solutions LLC

Adjacent Services Are High Growth Contributors

$ in millions

Back-Up Care - Revenue

350	CAGR
	296
300	13%
250

200 163

150 100 50 0

2014

2019

• Back-Upcontracts range from 2-5 yrs
• Clients purchase "basket of uses" that are center based / in-home
• Annual contract range from $50K - $4M
• Annual price escalators
• Opportunity to up-sell for expanded use

Educational Advisory - Revenue

90	CAGR	82
80
20%
70
60
50

40 33

30 20 10 0

2014

2019

• Ed Assist / College advising contracts 1-3 yrs
• Main service offerings (Network access, Administration, Counseling)
• Typical annual contract value: $125-$175K
• Annual price escalators
• Opportunity to up-sell for expanded use

13	© 2020 Bright Horizons Family Solutions LLC

Business Model Delivers Strong Adjusted EBITDA And Margin Growth

Multiple Drivers of Operating Leverage:

• Tuition rate increases coupled with efficient labor and other cost management
• High incremental margins on enrollment growth in ramping and mature P+L centers
• Contributions from higher margin services
• Mix of new centers, Acquisitions + Transitions
• Scale and growth of European operations
• Overhead productivity gains supported by investments in technology and scale

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

19.1% Adjusted

	EBITDA
	CAGR: 15%
	>1,000 bps Adj
8.8%	EBITDA Margin
Expansion
	Total Sales
	CAGR: 10%
2002	2019

Annual Adjusted EBITDA Margin

Note: See Summary of Adjustments for reconciliation of Adjusted EBITDA 2014-2019, prior periods please see Company's public filings.

14	© 2020 Bright Horizons Family Solutions LLC

GROWTH STRATEGY

Multiple Growth Channels

• Opportunity in every industry sector
• Addressable market of ~13,000 employers with >1,000 employees in the U.S. and U.K.

 1,200+ existing clients, 300+ clients buy > one service

 60+ clients sponsor > one full service center

New Client	Cross-Selling/
Relationships	Existing Clients

• 100+ suitable worldwide locations identified
• 10-20new locations targeted per year

16

Select New

Consortium/ Acquisitions

Lease

Locations

• Avg. 30 centers acquired annually last 15 years
• Expanded Back-Up + Ed Advisory thru tuck-in acquisitions

© 2020 Bright Horizons Family Solutions LLC

Long-Term Revenue Bridge

Organic

Growth =

8-10%

Notes: Excludes variation from potential foreign currency translation effects.

17	© 2020 Bright Horizons Family Solutions LLC

Lease Models

Lease Model Opportunities	Pro-forma Lease Model Gross Profit $
Sample	Core Criteria:
Geographies:	Total
 Greater London	 Urban Ring	Cash
Margin
 Amsterdam	 Proximity to Work
 Greater New York	Hubs / Residential
/ New Jersey	Corridors / Clients
 Chicago	 Young Professionals
 Seattle	/ Families
 Bay Area	 Supply / Demand

Imbalance

18

17

16

15

14

13

12

11

10

9

8

7

6

5

4

3

2

1

0

New Lease Model Center Openings

						 Capital:	$2.5M
						 Capacity:	125-175
13	16	15	11	12	17	 ROIC Maturity:	25-30%
			 Revenue Maturity:	$2.5M
2014	2015	2016	2017	2018	2019	 Breakeven:	12-18 months

Note: Pro-forma figures $ in millions.

18	© 2020 Bright Horizons Family Solutions LLC

Acquisitions

Licensed Centers by Geography

120

100

80

60

40

20

0

Geographic Mix: Recent Acquisitions

	114	100
42		57
27		36
	14
	5	7

2011 2012 2013 2014 2015 2016 2017 2018 2019

US UK NL

120	Acquisition History Ed Link	College
				Nannies
100				& Tutors
80
			Enter
60			Netherlands
		Work	Ed Assist
40	College
Options			My
	Coach
Enter UK	Group			Family
20					Care
0
2000		Multi-Site	Single-Site		2019
Sites Acquired: 17 10	53 27 17 45 19	4 14 34	2 42 27 114 5	57 100 14 36	7
Notes: As of 12/31/2019.
19				© 2020 Bright Horizons Family Solutions LLC

FINANCIAL HIGHLIGHTS

Performance Drivers

Long track record of growth and margin expansion

Diversified across services and geography

21

Sticky, recurring revenue base

High free cash flow conversion

© 2020 Bright Horizons Family Solutions LLC

Sales Growth And Margin

Expansion

$ in millions
Revenue	Adjusted EBITDA & Margin

	20 Yr
	CAGR
2,000	11%					2,062
1,800
1,600	1,353
1,400
1,200
1,000
800
600
400
200	11%	8%	8%	11%	9%	8%
Growth %
-
	2014					2019
Centers	884	932	1,035	1,038	1,082	1,084

20 Yr

CAGR

450 17%

400	395
350
300	19%

250 238

200 18%

150
100
50	14% 15% 10% 8%	10% 11%
Growth %
0
	2014	2019

25%

20%

9%10

15%

10%

5%

0%

Note: See Summary of Adjustments for reconciliation of Adjusted EBITDA. As of 12/31/2019. Growth rates are Y/Y comparison. CAGR figures reflected through FY 2019.

22	© 2020 Bright Horizons Family Solutions LLC

Diversified Business Adds

Earnings Velocity

• Legacy US Full Service business continues to grow and leverage operating margins
• Core growth augmented with acceleration from geographic expansion + adjacent business lines (Back-Up + Ed Advisory)

Ed	1
Advisory	21
International	4
Full Service	38
Back-Up	21
81
US Full Service	43

127

Operating CAGR Margin - EBIT

8%

26% 52%

4%

8% 34%

21%

27% 18%

7%

10% 15%

-	20	40	60	2019	80	100	120	140
			2010

Note: Operating income, $ in millions, excluding transaction costs.

23	© 2020 Bright Horizons Family Solutions LLC

Strong Cash Flow Generation Supports Leverage And Capital Allocation Strategy

300

250

200

150

100

50

-

FCF / ADJ. EBITDA %

5.0x

4.5x

LBO at May 20084.0x

Represented 7.2x

3.5x

3.0x

2.5x

2.0x

Adj. EBITDA

Free Cash Flow (Cash Flow Operations - Maintenance Capex)

				244	275
		174	194
142	136
2014	2015	2016	2017	2018	2019
60%	50%	58%	60%	68%	70%

Total Debt / Adj. EBITDA

3.9x	3.5x	3.6x	3.7x	3.3x
				2.6x
2014	2015	2016	2017	2018	2019
$238	$273	$299	$324	$357	$395

Note: Cash Flow Operations reflects Restricted Cash to be included with Cash and Cash Equivalents beginning in 2018 - see Form 10Q Notes to Consolidated Condensed Financial Statements for further explanation. Leverage figures are Total Debt / Adjusted EBITDA and exclude Cash and OID; see appendix for reconciliation of Adjusted EBITDA. 2016 Leverage inclusive of pro-forma adjustments for Acquisition of Asquith. FCF and Adj. EBITDA $ in millions.

24	© 2020 Bright Horizons Family Solutions LLC

APPENDIX

Recent Performance

($ millions)	Q2 2020	Q2 2019	% Change (QTR)
Full Service Center-Based	$ 137	$ 439	-69%
Child Care
Back-Up Care	136	70	+94%
Educational Advisory Services	21	19	+6%
Total Revenue	$ 294	$ 528	-44%
Gross Profit	$ 84	$ 140	-40%
% Margin	28.7%	26.4%	-
Adj. EBITDA	$ 60	$ 106	-43%
% Margin	20.4%	20.1%	-
Adj. Net Income	$ 26	$ 58	-55%
Adj. EPS	$ 0.44	$ 0.99	-56%

Note: See Form 10-Q for reconciliation of Adjusted EBITDA and Adjusted Net Income. Minor differences due to rounding.

26	© 2020 Bright Horizons Family Solutions LLC

Historical P&L

($ millions)	YR	YR	YR	YR	YR	YR	% Chg. % Chg. % Chg. % Chg.	% Chg. % Chg.
2014	2015	2016	2017	2018	2019	2014	2015	2016	2017	2018	2019
Full Service
Center-Based Child	$ 1,157	$ 1,236	$1,322	$1,458	$1,586	$1,684	+10%	+7%	+7%	+10%	+9%	+6%
Care
Back-Up Care	163	182	200	224	246	296	+12%	+11%	+10%	+12%	+10%	+21%
Educational	33	40	48	59	71	82	+38%	+20%	+20%	+23%	+21%	+14%
Advisory Services
Total Revenue	$ 1,353	$ 1,458	$ 1,570	$ 1,741	$1,903	$2,062	+11%	+8%	+8%	+11%	+9%	+8%
Gross Profit	$ 314	$ 358	$ 391	$ 431	$473	$523	+12%	+14%	+9%	+10%	+10%	+10%
% Margin	23.2%	24.5%	24.9%	24.7%	24.9%	25.4%	-	-	-	-	-	-
Adj. EBITDA	$ 238	$ 273	$ 299	$ 324	$357	$395	+14%	+15%	+10%	+8%	+10%	+11%
% Margin	17.6%	18.7%	19.1%	18.6%	18.8%	19.1%	-	-	-	-	-	-
Adj. Net Income	$ 97	$ 115	$ 131	$ 162	190	217	+24%	+19%	+14%	+24%	+17%	+14%
Adj. EPS	$ 1.45	$ 1.85	$ 2.16	$ 2.69	$3.21	$3.67	+22%	+28%	+17%	+25%	+19%	+14%

Note: See Form 10-K for reconciliation of historical Adjusted EBITDA and Adjusted Net Income.

27	© 2020 Bright Horizons Family Solutions LLC

Summary Of Adjustments To

EBITDA And Net Income

		Fiscal Year Ended December 31,		YTD
Adjustments to EBITDA ($M)	2014	2015	2016	2017	2018	2019	2020
EBITDA	$224.3	$260.2	$271.4	$300.2	$340.0	376.1	$107.3
Non-cash Operating Lease Expense	3.1	2.7	2.6	4.3	1.3	0.9	-
Stock-based Compensation Expense	7.9	9.2	11.6	12.1	13.8	17.2	9.4
Loss on Extinguishment of Debt	-	-	11.1	-	-	-	-
Offering, Acquisition, COVID-19 & Other Costs	2.7	0.9	2.5	7.0	1.9	0.6	24.8
Total Adjustments	$ 13.7	$12.8	$27.8	$23.4	$17.0	$18.8	$34.2
Adjusted EBITDA	$238.0	$273.0	$299.2	$323.6	$357.1	$394.9	$141.5
Adjustments to Net Income
Income (loss) before tax	$112.3	$140.1	$143.2	$161.4	$191.6	$180.4	$32.1
Stock Compensation Expense	7.9	9.2	11.6	12.1	13.8	17.2	9.4
Amortization	29.0	28.0	29.6	32.5	32.6	33.6	16.1
Loss on Extinguishment of Debt	-	-	11.1	-	-
Offering, Acquisition, COVID-19 & Other Costs	2.7	0.9	2.5	7.0	1.9	0.6	24.8
Tax Effect	(54.7)	(62.8)	(67.3)	(50.8)	(50.3)	(57.6)	(12.2)
Adjusted Net Income	$97.2	$115.4	$130.7	$162.2	$189.5	$216.6	$70.1

Note: See Form 10-K and 10-Q for reconciliation of historical year end and year to date Adjusted EBITDA and Adjusted Net Income.
.
28	© 2020 Bright Horizons Family Solutions LLC

Thank You!

Bright Horizons® provides an array of work/life benefits that helps employees be their most productive and present at work by ensuring they can manage their most pressing responsibilities at home.

For 30+ years, our services have helped leading employers in every industry meet strategic business objectives including:

• Recruitment
• Retention
• Employee engagement & productivity
• Reduced absenteeism

29	© 2020 Bright Horizons Family Solutions LLC