Bright Horizons Family Solutions (BFAM) 17 Feb 222021 Q4 Earnings call transcript

Greetings. Welcome to the Bright Horizons Family Solutions Fourth Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. conference Investor your Relations. the Senior Michael turn of Director now over host, to Flanagan, I’ll

You begin. may

our Thanks, Relations Shamal, Executive and being and turn a With available Boland, me few hello be Chief a the to section everyone are our the website, Today’s Stephen under Kramer, recording on call Stephen administrative over brighthorizons.com. will our after Officer. matters. webcast Chief Financial Officer; of to Elizabeth here and Investor I’ll the covering call. is call

As and forward-looking included call, statement subject a COVID-XX statements made including those are to participants, harbor reminder any including in of on our regarding financial effect operations, safe this future the earnings our business release. on to performance,

operating described to materially forward-looking as on other speaks Forward-looking made, statements inherently of detail involve in SEC any risks statements date and obligation to Form financial actual filings. and differ and XX-K are uncertainties only update the statements. our cause and no in XXXX that forward-looking and we undertake is Any results which may

take our review today Stephen also business. under are to reconciled the and is in measures, section release, GAAP financial and counterparts IR update of We on detailed the our now available the which will earnings non-GAAP us refer through which website. the

up us and days immediate and hundreds and XX% safety, their swiftly centers. the business clients the our centers the and the years. investments of results it with new we Elizabeth positions pivoting detailed offerings review to of Thanks, nearly upended Mike, last year launched thousands of all XX solutions revenue we centers more our an on how incredible the that demand. care has surge of gained XXXX outlook earnings over our everyone to numbers same for the for has questions. will and reopened XXXX, your and we growth in evening, team we our in growth our welcomed trajectory, this we follow to of and innovation before of joined need important back the who over I’m past outline essential temporary We the and the back-up was XXXX Overall, services more pleased of time, meet closure new onset with to and foundation years. At been this a with next consistent which the welcome many and and and recovery of COVID-XX, made performance on delivered clients technology the for recap responded employees Prior call. supporting To create new health frontline pandemic a of and and in care, two and open new for the with accomplished I’ll XX focus families. had added workers hundreds as for lay Throughout than traction service and in back-up really thousands start clients, that made well progress XXXX beyond.

As this, a momentum. good of result enter of all with XXXX we

COVID recent to to and appears been will take and still While the variant most behavior additional client surge be has waning, normalize. parent impacted now time

outlook incredibly long-term plus I On our the side, a is for business positive. see

transform have believe ahead. our over two fact, opportunity taken the In actions last for we the will I years years

employees with and families, proposition significantly our period. has during learners clients, Our this longstanding value strengthened

our of the time the employers end-user the and our improve we support more galvanized meet expand and and back-up Netherlands. sector chaos to additional longstanding UK services, education to our care than responding capacity This our safety unprecedented types strategic to U.S., million We strengthening clients. XXX new reputation the as care, XXX and We broadened existing education in have We solutions for needs. current same and and to learners outreach We additional with invested addition to practices, And look service and expanded arising and from employees. our of by more our organizations speed and while technology to in more with and including engaging personalize prospective early care their services clients. importance led we than clients, CHROs use investments in in quality across innovation, our to to then the partnering by in more our at evolving health of unify pandemic. new potential with deployment existing care rationalized We XX attract, extending CEOs than of pathways and the new needs, clients, portfolio existing created eligible differentiate. Specifically, centers, retain, lives. the We more the [Ph] our we are early with the ever, adult partnerships prospective opportunity upscale X,XXX tapped now than offer assist. finally, impact underscores cross-selling our of experience, to than relationships into

boxes and are more pandemic this I strategic these structurally place tailwinds, from in effective, associated building impactful. and emerging With we am confident

Let’s of per at this four earnings To yielded an and increase Revenue which XX% $X.XX, $XX of of million, quarter. XX% now the EBITDA share to million take adjusted adjusted recap, results. closer for the prior look year. past our headline $XXX from quarter segment a increased numbers

southeast XX centers QX UK, centers continued over XX per growth England. the quarter, For of billion expanding the We while represented XX% we of Houston of hospitals, extended footprint year full XX% earnings of grew our in XX%, a reopened network for center in $X.X XX% acquired recovery. and XXXX, service share second XX the centers in $X.XX and QX a with more segment, adjusted our revenue In We centers full our XXXX of added open. Methodist the X,XXX of XXXX. revenue on ended including enrollment in in

Like XX open centers, variant by disruptor. in the our levels In encouraged many of centers are to first spread QX. remaining ahead, look a temporarily slated half in other currently the enrollment, progressive we XXXX. businesses, occupancy as has omicron the are the ticked of been we improvement in closed As higher reopen

for of growth, the their dampened as January into this it pace childhood had the on delayed also year. early staffing enrollment prospective an and families effect dates. start Specifically carrying educators, us, of the period Omicron particularly holiday through of

we challenging, the still While front. on are improving labor seeing trends

recognition has opportunities, and by industry. Teacher as unprecedented taken pandemic best such teachers we expanded specifically an choice our career address in benefits Bright have exacerbated field last Horizons In discussed in employer to staffing faced. led conditions, Program. we for pressures are childcare And long increased we eCDA have bonuses, has to the the always we Horizons industry been As investing our of and of that an has educators. quarter, credentialing early actions Degree including current development growing also growth underpinned environment, a wages, ensure employee attracting, the number retaining the the and the

fully still enrollment classrooms, of our early by ability the encouraged are to constrained While we staff is measures. by results these

monitoring closely to the events teams progress like are including further hosted Day to this creative we Hiring deploy recruiting accelerate solutions, month, continue We talent efforts. National our our earlier that the and

saw we and back-up the than users year. increased to of the XXXX. in fourth turn expected, use fall was XX% where saw what heading unique we prior in $XX continuing impact Overall, in-center although again early the care, improvement spread and into half emergence over The sequentially was this quarter. now the as the the started we in me the revenue Delta disrupted once less quarter latter dissipate by to and improve into Omicron of in-home Let of million quarter,

While XXXX, roll underlying the this hard have among could for not we sites To that align years first that believe the worked impact facing new dealt need end, last back-up the well with of the support COVID spikes in dynamic parents we working additional of persist we’ve half the over out with hurdles working to and parents. has few diminished. recognize

Our launched learning by progress helping to we academic parents was children’s disruptions their successful, virtual education. been tutoring solution highly whose mid-XXXX, those impacted has other and remote that

more and camps Kate’s our work Austin, communities school to holidays live and employees new And during need outdoor and We where of and opportunities children use demand as Steve that Atlanta, delivered in-person an are for support can remotely in learning be another more enrichment camps experience. clients the as expanding parents launched including on break. case providing we Minneapolis, summer & extended virtual opportunity with and recently, for a similar

but We to also goal partners. only our will uptake parents, of greater front provided continue drive with delivery the more by to innovate their types serving working use of client the on not

clients, of have few. the MITRE, and doubled to in last two name of the on of of a client we clients employees Me, including eligible clients client strong also than per We’ve [Beyond but record over a new quarter number another larger past. average. are [ph] number Southern only Not new Companies] the added launches, years, those just delivered Speaking team the the

a of remain optimistic back-up and of within use segment, care despite about are the the use currently longer result, disruptions trajectory traditional As the our back-up term in-center impacting very I broader opportunities and in-home care. that

focus and College this in excited remain continues their significant Coach, Turning help workforce including in Synchrony high remains to solid admissions the employee the as from business our Qualcomm, levels of clients needing about at area employees reskill Financial and GEICO, roles. to education and proposition process. levels I for upskill employers advisory parents quarter, as number Wawa. and well see a as looking business, we of college launched as the opportunity their interest differentiate our Activity to new hard-to-fill were navigating value this investment a education,

take Bright and for up, Before the years. I of wrap I two their member thank last the over moment resolve a incredible family dedication every want to Horizons to

for our mission for highest have in will to us and of value from to and disruption lives emerge together education true couldn’t staying we have mission privilege more of We we choice. and drive stronger to to realize partner employer a to on impacts to as deliver all impact organization It the focus that competitively our our and have be also our significant quality the profound will families, clients proud only to passion many and this children, which and business, many employees an the been several I the financially of believe but be not a positioned always way that serve, allow care, have there our our stakeholders. and the the years. of While grow better teams goals next is the learners families, over we our came

in While business for our organization long-term model us and be the strength recovery positions the industry an success. linear, as and won’t our resiliency been of hasn’t our

short-term to bright. continue very will and remains business our the challenges, have for weather the outlook but We long-term

continue we to for of recovery number on visibility strategy near-term from the a improving continue effects impact to our near-term our the performance. we variables long-term While execute our have our guidance to on pleased top of operating to velocity performance. the reintroduce pandemic, expectations and Therefore, and are of level pace

on current outlook. I’ll our our that, With ahead call for As share to recovery to normalization $X.XX XXXX, expectations operating leverage we and Elizabeth XXXX contemplates across of XX% paths to $X.XX to continued XX% trends we revenue use of around of share. range anticipate and growth enrollment will look details the quarterly over to XX% growth XXXX a segments. of turn per approximately This dive number with and driving numbers XX% into adjusted EPS the who three more based our of

that overall recap and million. million operating was Thank quarter, to and hello In to the $XX the to temporarily you, XX new tonight. added To closed. or who’s million quarter, $XX revenue the fourth most increased $XXX recent reopened been or Adjusted centers Stephen, revenue. joined call centers of income had XX% EBITDA and XX revenue everybody we XX% of increased XX% adjusted XX%

XX% at $XXX We XX%, of We open. X,XXX XX to or year-on-year. with of EBITDA or revenue, and of million centers $X.XX XX% which QX service revenue also XX% revenue billion, to with top-end XXX the XX.X% our is of increase out XXXX completed million Full permanently of adjusted to $XX our in closed of centers. expected XX% increased

over and the XX% marginally as having a Stephen with the XXXX outperformance flow of impact near-term $X Our full to averaged constraints, represents Adjusted efficiency operating improved segment between our labor costs occupancy revenue through from kicked service that for expectation on well government positive to due the levels despite discussed. continued industry. growth. through income million for the targeted to from lower-than-expected QX, million. to improving The childcare relative a flow relates $XX XX% up This XX% enrollment support Omicron and staffing as XX% programs

million, $XX As income. back-up increased XX% Stephen to revenue $XX with care million mentioned, of operating

We launches, was with client of continued roster growth our expand client short although quarter revenue to expectations. solid new our another of

the the the and use care. Omicron had the associated Stephen in for variant spread with As we late caregiver and both which in-center levels softer demand availability mentioned, in-home affected quarter, of parent

Our growth down and reported lower $XX college educational was about Interest million over launches advising expense contributions XXXX to of on in expanded use of costs. from and on client workforce million million, of services. segment education overall $X admissions $X X% QX advising borrowing new our

tax structural income Our XX% compared the on significant year. to rate in taxable to increased due adjusted increase net to the income, prior

balance and sheet flow. the to cash Turning

ended stock, $XXX in times we including leverage year year, operations. cash and from million of XXXX debt acquisitions to $XXX the generated in the X.X million to we XXX QX. in and XXX We which We $XX cash and repurchased For $XXX capital net common investments million million of in was our made ratio million EBITDA. of with million, compares

So, XXXX moving outlook. to our on

As and see XXXX, we’ll earlier, annual guidance share year Stephen unfolding. how and this we on touched are as earnings providing on we possible much revenue color for as

Of to and time predict. impacts of difficult pandemic to course, remain the

we uncertainty. are of range to potential performance so, And ongoing that reflect a providing

of ed XX% the advisory to track of billion or the XX%; me, revenue Based to improvement $X.XX of currently XXXX, service XX% we now, to top-line, excuse range on $X.XX expect to revenue to a what mid-teens, level, enrollment to in the exceed and to and and full of the between use -- trends segment back-up range growth grow XX%; will XX% course the At ‘XX benchmark. gradual to XX%. expect roughly terms the the revenue, we see approximately grow care grow In we in billion alongside would year. pre-COVID in which XX%, XX% over a XX%

earnings, similar this will cadence translate the terms in saw to improvement, XXXX. sequential In of into we

$X.XX the to spread For and QX In omicron the XXXX. in expect be we by of latter of has timeframe, results to began range half be the full year, more the in to continued currently ‘XX we expect immediate QX EPS our impacted of the into $X.XX. that

of full year. growth to high-single-digits, As for revenue XX%, full XX% in similar QX our our and for advisory growth a to is range to recognizing in outlook with total result, service of XX% XX%, the XX% segment the of growth growth approximately back-up the

share to In share terms of last Overall, earnings, of range over progress $X.XX in be Shamal, summary, significant our we recovery strong, and critical our the in Q&A. the we expect made QX to in a a for share. Stephen’s years to two the client meet and adjusted a $X.XX our EPS I are sentiment needs. business with that that services we we’ve our diversified model ready plan by And that, differentiated delivering have meet

first be Thank you. question time, Instructions] Hamzah Our conducting Mazari [Operator And with at comes will this question-and-answer we the a line of from Jefferies. session.

you. Thank afternoon. Good

few a being remarks your better in prepared mentioned times competitively. You positioned

pandemic. in kind know, also to investors to you that bigger some kind framework a And kind clients, but you talk begin had out mentioned growth show -- if about, new bit? should to going impactful revenue growing a found because better so, of services? see I of adjacent contributor, of where that back-up being it’s growth could people if structurally new the expect or milestones. coming now, have of flush bigger out faster, is of Just center maybe those relative more up maybe your be it you see you early Should do pre-COVID? have to think organic I you you

Sure.

our arc center I to is the sales consider new long relatively So, thing the key development and a of growth then how and think from cycle. business a standpoint,

by amount encouraged are centers development. very of front we’re of the have So, activity the in on end, that number a

to open number in and And I so, between say, XX centers this year, are -- we’ll expecting development. be as XX that somewhere already

some those. will do well plans into So, We number we of large that. on have have acquisitions as for a feed visibility that

is of or the value nature think a the reminder, a -- one just we’re the what client is with part think I of clients of I at. very say, and that having activity I looking a development now as conversations as the long they’re cycle

in dedicated site centers, versus on near in We site participation centers, have interest in support. have we interest sharing,

are able needs, to And there locations for us to tap consortium so, interests. being respond clients’ including, capital opportunities different many to to those do work put our and to into

there’s know, on don’t other if So, practice. some that what of seeing color. Stephen, I we’re that’s And

I first, we we of have new clients. garnering say, two-year done thank No, as this remarked well through first, say couple Yes. think think you the would question. very period, I’d I Hamzah, for -- things. on, I a

so, see And will the our selling relates adopting that focused outlook have both, we also, to it allow we trajectory, see on services. continue us clients to as but been that to along of good efforts continuing cross more more

then, pandemic is really will and had speaks I and is to we technology. again that the think, much going pre become their and clients with of And set that good strength into final have going and now look the a continue expansion is which accrue really of believe invest use the have what that of piece, around future pandemic innovation of second investments in our case the services dividends we kinds started that we growth the users. our our more end beyond this forward. element in tech-enabled like period opportunities we And to really to

have overall, to feel excited like kind I in position the of headed, are we been we’re growth are on definitely we that a we about. stronger deliver reflecting think where we So, and where

XXXX. on the the Maybe first gave near-term given more I think I -- you on just is guidance question time -- about follow-up pandemic. is annual talk since know my guidance. this just you’ve And

pre-COVID may had correct year, wrong, full longer. a me and been, on communication this will reach -- quarterly we we pre-COVID previous take think, revenue in rate, may but utilization reach run if sometime I’m service I

was it by maybe the think, I QX. end of

sort And you’ll service then, so, you And talk just if when revenue of now. of you the in about think annual could why hit right comfortable maybe in business? guidance full establishing you’re terms pre-COVID

Sure.

steady we think and There’s had centers of been has reopen, toward full So, reopening. XXXX. although it I a as modest a few and the of bit last sort to than the lot operations of years. of your little taken half our two I we’re also a years, and the including of business, we’ve the service question is over demand on remained of there ramp the And improver, pre-COVID continues to we of back twists parents ago on we’ve a it lot a over And year had know enrollment levels that couple times. quarter turns coming variables. It’s last line has visibility There’s there. would have a specifically business this steady anticipated a back. true the that into the But and commented It uptick in a is a flatter progress. from

demand steps that where demand a of in is meet the both, parents are staff taking are to to to number locations We fulfill get the they where happening.

on decisions here. large we world going as of what’s the in of on the to to general tools so, are longer the course over about period making have are and return their office decisions parents this, time clients And a decisions in making at even work

at occupancy out and the not -- a So, that’s and on to have to get doesn’t that this in in we us the of to all the our end the of year, we an back way top-line. were half, revenue. the plan, that go, And range. think interest at we getting mid-year to the We rest second And the we this do will have, from demand, that close, comes see getting of centers we to But two what point, the the the And confidence a terms approximate time here, plan the same not year. level, year what we the as are look overall XX% quarter there, the trajectory be end laid back where by been in by ones or this us terms which for progress. occupancy of guidance XX% pre-COVID contemplates but way be had level is that puts ranges. in us of pre-COVID the we’re looking we occupancy of from at there all pre-COVID steady

goes are what that you than we think that us along, think we it’ll a to would be to we as update continue pathway So, -- take we year more going will indicate. to are But, we close. measured get on but the that

your comes with the Sachs. Goldman Next from line of Tong question question. proceed George with Please

seeing your wanted about all rest shortages. your are of Thanks. looks look or capacities situation? to at current the that the Hi. from shortage and pipeline you’re afternoon. recruiting I talk Can dive by XXXX? And impact affected Good into labor for labor you into how occupancy not rates you your out the whether as like

Yes.

efforts I’ll on -- let part of can some labor on underway color the I Stephen the So take front. first and the commentary

on So, also constraints every center. enrollment. ability across It’s in but seeing out take it’s some centers. It’s only to we not are spread pocket, in not one our

we are that staff we our that X that X and we affecting points So, the percentage demand some in estimate there. with occupancy not to variability have But to supply. probably match by would general, it’s available able

hard address we to that. So, are working

And so, Stephen?

Yes.

employer as remarked, continue choice. an to we very strong taken position relates as stance have of So, our we we as that it certainly, sure making

invested so, benefits. And we have wages and in additionally

workforce. you very over As we educated focused the making well that sure have also have on will we know, history been most our

centers and our and to efforts careers. with pocket of or mobility And no career associate back reinforce schools continuing helping teacher, their completely really to an Horizons our and any any so, where Program, get one a bachelor’s eCDA in around go and can degree facilitate and Teacher expense, trajectory obviously out the upward of Degree free, for

the recruiting see actively actions, there specific of on out will In front. you really terms us

still are are to existing know Hiring number is National source, addition number employees. of source And the referrals from make media, sure in so, our to other referrals with one that technology that, our continue and sort still very of employees new social ways be seamless. experience enabled to we candidate And will that active you one Day,

I status, supply there finding progress we choice long our we are way to the And good we’ve of shortages the really in demand out underscored certainly talent to so, and think, the make and overall, have have, been employer by best that as feel about but that it a come that sure are and relates ability to the marketplace, particularly that continue again, our making against endemic today. in our industry, acute is

Historically, tuition other the or increases costs? what over of input compare, inflation, And planning like has wage align X% the increases environment? and kinds and in inflationary talk year will a tuition supplies tuition to increased X% cost how current for you’re with Can you next year. inflation about facility

those a we of It’s model with we’re thoughts where here business parents, it’s that clients. George. are are Yes. hallmark in sharing an obviously -- been important a Because our arrangement incremental we question, with

sort about we in In has steady predictable -- And discipline in me our the -- that so, balanced of talk to around and heard that been past. key as has you’ve performance. pricing a are this been environment,

families working families and a attract in -- environment really reenroll interest. to reenroll and balanced hard we’re expressed We’re new where families who’ve regain

over to with those -- cost we’re and right-size believe our we to price can XX% inflation -- And continue we economics out and so, a that cycle in given level, XX% a make we’re increases are or two. that occupied balancing

the front. done And that, increases end of that, we’re if So, that are I’d in the wage inflationary to on a look this geographies seen average certainly than to some the on to last the bit higher X% probably what few in but averaging higher year, environment. year, averaging reflect you’ve closer a than some we higher lower say years, another we’ve ahead geographies than X%, environment probably similar,

We adjustments, in wage mentioned, environment general. be only challenges, made the to not but as the addressing also supply have Stephen

inflationary And most not balancing other they’re we’re substantial. are us out costs. And -- costs so, not those that that for

come Our between new set. occupancy in, be costs well operating, of pretty some well operating to X% costs controllable XX% There’s And are those and that fairly are sort set. costs. our releases tend of overall but

So, that’s are impacts, point. out we’re I’d call even these of sort only still they’re inflationary the there with some probably maybe manageable -- not one at that but more energy though variable costs, this

months, I’d the in But XX a something between say in could X% general further I we’re ahead on look meantime, see we And what looking, average, pressure warranted. and if that as similar and we’re look change, that. the adjustment perhaps a that That’s locations, if of say, certainly range as planning certain we midyear year. do not at the that’s to So, somewhere X% we at in moment. we have next flexibility

Our next BMO comes of question line from the Jeff with Silber Capital Markets.

I really more hear just weakness that? in business. in-center Can bit little color I’m get I In specifics around that. your about the a in-home commentary about back-up, sorry. some and talked you on

Yes. service are about thinking are opportunities, more of they certainly terms mean, when those our in believe than and use research about care, I think about parents our centers. full the I of it first, we even in-center we that and think that in-home suggests thinking

an trial a making hit, classroom when intermittent deal more in-home are thinking in the with so, And see increase we really going when they’re reflective variant, new the example someone that resistance for cancellations, about fact we to to of the reservations. that’s how see intermittent is the in in-center. and an they being day, permanent in careful care care, children there’s what for much do either they or teachers consistency where know they for versus might than And

with have said, that variants, form types with think cautious new that show really recently to the and through include also tutoring, saw both the certainly, use beyond saw virtual Delta, as saw we like that clear in-home the additional we things in-person. and new cancellations. I like more and up things reservations and about in-center the we’re think in of and I That camps, fact were So, fall then again more we people we virtually

those use to certainly a fact seen to types, we it what as that so, reimburse COVID those times, have an uptick uptick, during more And relates seen expected have versus have along a from perspective, it we would with care. the nice difficult we relates as

to and the care. or types care compensate to the have for fact that, some families, families tried that also call still again, of for use quite positive, hesitation continuing variant surge, we again, So our did single we intermittent in-home a out to day see started term some But as in-center use the we good about back-up services. among feeling for and longer to

seen City, trends. seeing in waned you pretty saw to the in Omicron you where has to that certain a see shift other areas some the Getting I’m near-term really lot York locales, starting declines impact variant that fourth are dramatically. And kind a quarter, number of areas of curious, New negative geographic away back we’re just We’ve in northeast of in cases?

Yes.

Elizabeth scenario what would dramatically. that will But obviously, because it cause have anticipate have phenomenon services. where soon confidence wouldn’t further impact free a we it the is I of your directly, continue effect of and be in the that will impact is declaring play parent seen business is will color. cases this the the saying, But say we’ll little and What is answer that this rapidly point, direct to and down I be still real by I be. and of are our so, coming to think course we start, trend an utilizing a on only that a And our to would to the start as feel I new, declining right? really recent question

this of would be say that declaring full transparency, So, overall point. spirit in soon at optimistic. we’re cautiously I But, is it the to

line of the Please proceed from Stephanie comes Morgan. with Yee question your JP question. next with Our

not center to to Good high-XXs to like the on rate, utilization afternoon. put parents level on by really the sounds front, due of as kids clarify want labor just reopening, I Hi. constraints the back. to to their end opposed wanting really year. back reaching that It it’s the

XXXX event, change when utilization again? be Just that if -- in situation first I see a into as if look supply expect that high-XXs it if to XXXX, the it guess, is we’ll half of And labor kind rate maybe do alleviates, big you situation? you a

I on an environment inputs here certainly out, mean, actions is and the here. that at a portfolio, the will the what looking taking are are we side, happen constrained the taking, can are some we hold. have are staffing our I variability pointing across think Stephanie, But is policies, that impacts that we all those different and Yes. you and procedures, our

We by we demands they that bear in to need heartened act fruit we see the there. are to out time all terms the that results, early need of the but

actual that what alluded with of I think a to in and it’s of time. gradually in seen in back. along constraint changes parents, Stephen non-linear it headlines combination coming translates we’ve sentiment, in the behavior But, it’s to sort also over -- the the here. way

demand is is ability is address up. what unfolds. demand are from to how will things we constraints our and there, there gradually these us see we can staffing is that need, the parents, to we So, being But get service there there all a prognosticating it the need return now and to gradual there when knowing continue is able

predictions. dragging what’s our that’s So,

of the the the path to get it more be be but certainly half all we about of of normalizing couple a next more question this will to need through first see XXXX, to quarters of So, definitive of whether get there, to that. we

seen doing of our are the back-up into not centers? year your want back guess, the clients you -- certainly date towards stopping they kind employers some next in more and it this some you interest color conversations maybe? the conversations of of color. wanting for, give having firm. services news geared year up Just That’s you industries maybe looking given kind kind still And just we’ve helpful Is some what other that headlines expanding care can they on when about you’ve seen that that. we’ve having on having That’s with employees case the a onsite conversations are for I of if headlines or putting on options are they their on levels. But Okay. from office. been

Stephanie. to, happy Sure,

I and are seeing going our pervasively prospective conversations to fairly by Obviously, back employees more see likely starting that. been what York. we’re get we the financial led it’s start that say in country. to our But would And in think especially with seems that office. the ambition pervasive New services, that to first, clients, I throughout to So is to be clients there

so, for And back to office. real the employees ambition is there first, get think I to employers

it as centers. site Secondly, relates upbeat to about on we’re the having, really we’re about conversations we’re the conversations having

organizations is are into want time or contemplating the conversation. support really type employees. two We I truly of their not there’s they that who with and this And lot are to whether of that CHROs certainly the be to stepping CEOs said, as engaging, for elements of a

their attractive The really want and want back to worksite first to at. to is, back make ultimately place to come they their for office, employees be an

it seeing are And think, retention great that in they it and always childcare been, as seeing addition they the piece the the of terms amenity. attraction shortage second worksite coming then, it guise to is back as is back has a an office. I get a the and contemplate amenity, the to And work, really their to in centers, they’re as employees so, under that tool is full also service that to there recognize being they growing able

continuity one of this to top and back-up through And that to of get pandemic That it a has address it are been office. care to back really the work employees their terms so, in that are the as said, ability perspective their from to they challenges the trying tool. get seen business back citing ultimately is

upskilling employees overriding around good being is see then, so, choice. adding prospective interest clients back-up to an and of employer really really we And the ultimately productive, their all and to arsenal reskilling. And from continue additional care of keep this piece to about

from our enable prescriptive to jobs, lot hearing are roles. their but ready using clients educational to ultimately a to they employer, clients their will an we’re and and about not so, be employees And to who current to fill of as be hard-to-fill of that also a prospective need differentiate really only opportunities tool about education key as fill those kinds

basis. think, that that well-positioned I across robust strategic are today, of challenges on all are employers vis-à-vis having service and So, incredibly our are we the conversations really segments, having

[Operator of Morgan from Stanley. next Toni comes with line the Our question Instructions] Kaplan

last on wanting wanted that provide question your appreciate more actually. Definitely comments employers benefits. follow-up to to I on

employer -- less pre-K and obviously And in so, is does what’s pre-K basically that Like and all sort I maybe is does universal worth right thinking about investors been that come whether just maybe of the the after, guess, into starting employers? at not it’s thinking not fit up news a up universal now that does how passing, something are or but like, how new on center?

Yes. focus is I a don’t that for employers. think

to think that I is in very what age the care shortage specific groups. the employers is younger recognize largest

And level. so, availability percentage preschool is communities, largest of typically the the in at

and and And have where employers place wanted supply, the look is historically into so, future, they in care infant out where in there. it’s as from emphasis progressively to the certainly then shortest most

at experience leave, to, and But rightly little worksite. onsite care most focused what high-quality is then And I having into what think the elementary Toni, between rather paternity where available, getting work, affordable, this be both education seems from point downstream quality, as is the so, is and out, to potentially providing about intersection you of to in the fathers after there work importantly preschool, moving sort of very back to high at a return ultimately childcare what government is return maternity terms which is or and thinking stalled. to point mothers

or again, the the they from is of early level. ensuring And employer down to two into public childhood is high on want children. -- they’re about that young early -- whether available on is education there getting preschool government really quality sorry, elementary so at education thinking not paths. come I early space very childhood and employees education to work, a different back for think focused sort The And

really two concepts. again, different So,

M&A. Got Should this just me. maybe year by that be M&A, of of a get -- bigger be mentioned should it it. ask or we to bigger to -- about you’re this for year, expect when some especially driven tell recovery get that that, path this call on want see few we should And on not the You start centers expect my number times should you follow-up, bigger? just as to the to we or increased

clarify, to actually of a acquisition UK. XX-center in Just complete we an the fourth did group the in quarter

of year, around side typical XXXX, XX tuck-in a So, number in aiming and single couple of acquisition we centers of site actually locations add so the over average with pretty other we that around did a did -- sort centers year. that, for earlier of a by in again, the

of acquisitions. for So, level I our think plan a calls similar

coming on. to have they more And pre-COVID Many market kind is anywhere set cohort for it of or what from others. be think mind So in still think four would would how return five or be to asking point nothing it’s to certainly two their sellers coming I back? are our more that either readily handful in outside, that selected that and value markets, to that to also of sites ‘XX. able is, single routine than is level comprise and add but their you’re a heart realize waiting of I back a of performance to perception a the And M&A, for center that the to

U.S., waiting for the on been than in the more And more longer these some certainly facilities and so, sidelines, would support some of we have been there’s there’s anticipated.

on bit it’s next and disciplined an to to it also, the over pay, about is hanging we’re focused really sort be many want trying So, prices longer, we both, of where we be years. be laser to owners are opportunity on a the that but

careful on Stephen? are that Are being thoughts the markets, there we so, way. other And

agree And only is because in progress news on the good and the of as Netherlands. pre-COVID say, all sellers Yes. are the we UK more completely we absolutely with the sentiments teams specifically, markets in the I I ground levels, thing would conversation. are U.S., seeing those that towards the have would interested very add, I becoming the is,

seen We acquirer choice. are an of as

that have the just be strong the worth right we And our take markets shape, the today. main at some be we in. of today don’t being find expand so, continue in we really there we years to that over will look continues is that relates outside operate belief footprint piece as to high-quality three to acquisitions. recovery other observing then, place believe may to And able as it that the globally the continue we areas operate coming to And we is, opportunities that to

So, us be some we And employers mindful there’ll form other places believe support, or government of of form either for some form opportunities then, to to build of continue again, geographies, both, forthcoming. good and in third-party the is relationship. or that we continue in be the there the three of likewise, track in where to

question from question. Baird. the your Jeff proceed comes line Our with with Mueller of next Please

looks I the Yes. step-up into good Thanks. ask space then, And it the to in QX. implied margins afternoon. expense like subsequently, year actually wanted about guess, the you QX. following I the pretty Good over balance of have

that help as understanding margin goes? ramp or from the follows or base sequencing government year unusual that in surged else like what’s anything of would the is any given benefits, assumed sort the of other temporary anything of if for just year QX? ramp Omicron, around terms anything the So, the timing support with expense than enrollment labor better wondering Just the in QX guidance there just there, rates, full

Yes.

certainly happen in and first question, and number quarter fourth things little do it’s fair So, of that a a the bit are different a the point than quarter.

that there plans of resets are tax in there everything QX. We have are that in which an from taxes have we the certainly launching have been flight and payroll payroll limits, are impact, -- have launched -- obviously some gotten

backend funds step grant, their So, more third But more had a there quarter. important government and they up point opened result about deploying and cost states funding the there. as one. We is we fourth up were -- in had XXXX, an your the in some applications is weighted

states QX. that have their funds these and QX, continued some than we And very in government out about we funding in for along them but it some so planning in had similar dependent million or on rolling XXXX, are further process of in So, others. gotten $XX is

So, year and there bit to both QX. throughout of a assumption QX going the whole a on comparing is lower

it’s straight-lined So, call we the or you, $XX it if full million for more like, And in are year. at pretty so looking view. that

part more And standpoint, having to back-up progress, did there’s what we’re business year, is we few a So, that’s about platform element. from out the more there then, that and The than as the continue family that we is acquired we’re it care last be is we an deliver would parcel overall And other investment last experiencing talked a paused of Sittercity. supports. that use delivery and thing mention that’s in late minutes Stephen we are point of back-up environment called at think use, when we ago. I’d I in enhanced -- looking an our XXXX, have and one where service cost

enhanced so, going And on investment some in was latter QX, have XXXX. there more we part of QX that’s it than in the

several So, million well. as up of that’s step

like components there’s So, that.

goes like mix. and if and fulfillment back-up or pre-COVID normalizes one then, to, percentages usage care And back

services I on and and what versus you effect, don’t self-sourced in-center know like a to there’s in-home what where some more additive basis a reimburse lasting to care. cannibalistic So new the of be the expect extent

trend and current But, care line, normalizes, in when So, XX% of XX% your that in revenue a to kind what’s a assumed to back-up long preamble. relative usage or what mean if just for that does growth XXXX?

the where were use... So, up right the you line, I asking the part had is what’s what’s last I about you think until or question it of trend revenue the

assuming look there mix is would higher care No. Yes. a you you in that guidance? terms what how usage. more to going ‘XX Like normalize mix you in the so like normal? step at like you be impacting is back sure or Just some not function -- more relative to to point this largely normalized for if expect revenue, at you Is of in care back-up back-up are you would

comparative the overall for high Yes. in a bit single year, that the mean lighter in I -- we’re QX is digits.

up in be XX% against for high-use cases, the it’s stepping that the summer. to what would use -- Then be towards QX along it the expect if up do the would the over the we And more do in pick -- accordingly. year, continues to over we with range natural area that progressing in looking it the are different full so, year, use to XX%

steady there. growth So pretty

elements we think are how manage cost kinds that I the and there more use. the that around of the different against

many years considering view there’s your similar you’ve through it wondering underearning is pretty is normalized under not back-up too the I yet just like the they’re XXXX and new last are pandemic. the clients clearly mix onboarded is care you, in where hasn’t how full few utilization a dynamic Well, and for if service business margin I’m your guess, in going. where if earning, because

what that we all all would true I going use consume. add clients that there. They maybe added not to added don’t of have I populations the are couple years. I’m have if of Stephen can Well, we by implied deliver was to But, have that we start, that we’ve having sure those the over say think still target be know -- a to not underutilizing capture last to and to their able could been we would what it’s

season. more those is an even clients year planning use for there as to there absolutely So, opportunity have this to -- than drive we’re

absolute And in under so, dollars. they’re earning

performing XX% year. of the backup to we guide of overall to to the In XX% our for the range be in terms for the this range that long-term of XX% revenue margins do XX% in have we we’re this expecting against of year, performance expect

but revenue think is that opportunity will convert more under So, then do more income. for operating be there the for and we not to for It’s have we that revenue earning to really for performance the that, consistent.

you the this everyone appreciate a call joining we night. great evening, Well, Excellent. and wishing

care. Take everyone. Thanks,

today’s this And concludes conference.

your disconnect Thank may participation. time. you You line your at for this