Bright Horizons Family Solutions (BFAM) 2 May 232023 Q1 Earnings call transcript

Greetings and welcome to the Bright Horizons Family Solutions First Quarter 2023 Earnings Release Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]

As a reminder, this conference is being recorded. pleasure Investor your Relations. my Senior Michael now of Director is to host introduce Flanagan, It Please ahead. go

Thanks, Daisy and earnings call. welcome to Bright Horizons’ first quarter

webcast our website Before call under note please brighthorizons.com. Investor recording being the of we available will section that Relations be begin, is today’s

those are in reminder including subject Safe statement participants included to earnings this to financial release. business, a forward-looking statements the future As on performance, our made any call, regarding and outlook Harbor

cause XXXX no actual We involve differ filings. our risks and section and forward-looking only may update the on release, speaks non-GAAP our results take described obligation which uncertainties Forward-looking reconciled today detailed as to in other available statement and and statements to to date may IR operating measures, refer that the which under materially we in statements. of inherently financial which are detail to Form earnings website. is SEC financial and going any are is and also it forward-looking counterparts of in Any our are GAAP XX-K to the made

before Boland. me open our will business. call in Executive Elizabeth Chief Stephen start we to and follow with update will questions. Joining Elizabeth of our and Officer, numbers Financial it by review are Kramer; reviewing provide results the first Chief the quarter Officer, an today’s Steve on your detailed more up

over call Steve. the turn me to let that, With

all first segments. pleased revenue We everyone year-over-year to of our delivered welcome and joined from the call. with am Mike has quarter. contributions our growth with Thanks, the I performance in who very XX%

performance in younger continues to age progress groups. strong in U.S. the and recovery our Our positively with enrollment notably

healthy of use building of and another set on significantly Back-Up a new the of the quarter year-over-year Care year launching clients Care. XXXX. saw outstanding Back-Up Traditional momentum the start increased delivered

year to full delivering guidance. to on on a off and start year the are We XXXX our to well solid our way

Childcare million, and $XXX the of quarter increased adjusted XX% XX% $X.XX. million the and heartening. quarter of in new our within discussed with of revenue to defined EPS to progress We six now $XX Service centres we also cohort, income in last adjusted Revenue added quarter is segment Full occupancy. with increased the net are from standpoint, million. above our centres our XX% you $XXX the first as top a utilization In organic XX% cohorts in

This under are at rates one than from year than Enrollment this more centres this mid-single-digit XX% is for quarter. up our opened in less a increased in XX% QX past now encouragingly, cohort of and occupied. XX% centers

Focusing on age the U.S. groups all increased to X% improvements see centres, in year-over-year we continue types. life model across enrollment and these and

infant realizing Specifically, We leads types, consortium consistency centers preschool a the and good we high toddler in age low XX% in in saw saw and growth programs. mid-single-digit growth over client just our centers. double-digit in and our model center across growth groups growth single-digit our

a healthcare on constraint the make continue many showed Consumer U.S., across the the to incremental highest remains full to in levels. occupancy industrial potential we enrollment tech overall while show and do continue areas to ed, again our higher energy progress and labor clients Staffing but growth our enrollment front. fastest the

continue expanded levels and retention, the streamline compensation Along made staff and in applications to drive increased the as recruitment quarter through the to with fall. initiatives hires. Staffing processes the investments last improvement we onboarding

we In been have is care. The the U.K., the all U.K. families recovery enrollment performance growth on Netherlands, seeing staffing and to pandemic. more to of as remainder and the year. will challenge contributory has In consistent constrained and previous as the enrollment the continue has for expect to persistent about ability hiring acute operating which seeking talked performance more U.S. gaps, the our calls, challenges we serve trailed

me prior an with million, over to exciting turn revenue start, outpacing off $XX Let increased the to XX% quarter. XXXX the kicked year first back-up which our now care, expectations in

QX base a to few. launches Equifax, for University continue our State to with name the Loews also Ohio We and hotels, expand client

in of Traditional use Unique the showed centers, back-up in QX. more We solid employees care and of care network as again expanding Horizons and saw grew homecare, advantage growth extended newer Bright academic as tutoring well took as growth strong benefit. offerings significantly pet our within users the year-over-year use menu centers our in offerings. in

I ongoing care Back-Up technology innovative and the remain in segment our in work very new leverage in opportunity the about adding to our success ties excited investments, marketing Care as clients. we

Education to million, College Raytheon. of Arrow Bank growth and business, number delivered we EdAssist new New launched our X% Coach Moving which $XX York a including for Electronics, quarter, and clients this of revenue of on Mellon Advisory to

their launched We QX. expand degree a bill or also and saw cost of no programs in number clients and certificate direct

participation XXXX, overall of the their upskilling workforce the and reskilling the opportunity financial education programs. for to our for in advisory, breadth education remain reduced about These our and programs, given admission client and strong and support. footprint, growth the education need which barriers employer saw in optimistic aid I continued across our employers’ demand college strong increase underlying

on our corporate year, take field opportunities leadership for of explore to I our together and reflect senior four up, growth. This focused want leaders strategic opportunity we Before brings and assets. year’s collaborate forum. I on to this this conference long-term XXX Top wrap to This

focus brands, and footprint central our global client families our extensive learners. Our base and trusted our on

welcome leaders the tenured long furnacing energizing was spent strategic whilst of opportunity this new and few process, team planning perspective our It talented many unique a very with leaders. days to to this great a some

of use the start key business as enrollment, strong to XXXX the back-up In pleased our I full closing, center metrics and strengthened, use. service participate am with advisory care

the by highest deliver our learners. environment quality to expectations, global employer have while has care our to same time, and the needs way and client challenges, still to encouraged education its While the adapted teams I’m the continuing and families at

The revenue solid our XXXX specifically, the adjusted is and per QX $X.XX performance to to guidance, reaffirming goals growth accomplish to foundation to for billion We XX% of to XX% year XXXX. set a share. full billion we of $X.X $X.X $X EPS are

With I’ll our Elizabeth, more will outlook. who quarterly the that, and over the turn into share details dive numbers around to call

hello closed $XX of with operating quarter, XX% of Thank EBITDA ending to has adjusted at We centers to in XX% the everyone while increased you, six permanently who Stephen, centers. XX% ‘XX, revenue prior added or or of revenue and XX% the million recap over million X% of new eight revenue joined over the million centers XX and X,XXX call. To adjusted $XX overall quarter, first - March year. of increased the increased QX $XXX income

in down million QX grew XX% revenue To service XX%, quarter. ahead full break driven bit over $XXX currency our and or to Organic acquisitions approximately to by this added a of million pricing constant prior expectations $XX in year, increase. a the increased while revenue increased or enrollment further, for XX% XX% revenue the $XX to million XX%

The more headwind our in QX year line for digits last to across the comparing exchange in X% year portfolio. opened expectation centers of this QX with than of one foreign Enrollments increased of mid-single our year-over-year. year was

while X%, our U.S. European operations only Steve mentioned, enrollment As were nominally. up grew

operating step improving each by of Full in QX. XX% improvement in and increased income XX% and from QX. levels months to the did in enrollment, the average $X occupancy the Service cost during increases million remain was they QX, of Adjusted efficiency. effective in in range million The sequentially up driven QX While $XX year-over-year segment ‘XX higher of tuition

And the energy as year-over-year continued growth in earnings the teacher our investments and, operations impact with expense on as offsetting extent, well agency staffing compensation the made we Partially of of lesser costs. fall outside a XXXX. in the to international the

ARPA QX. Additionally, than was program we funding government from in the higher received support expected

across projected the $XX QX had come full We in XXXX ARPA for more million of to funding QX. year would that estimated the evenly

million we also P&L last anticipated centers in in $X but less $X million million roughly was in received QX. $XX was roughly we had more This year. the quarter, However, than than for support

disbursements this QX split year, between $XX QX. set and been last and to funding receive months. September over a evenly tapering ARPA expect As expire that on to be couple is remaining reminder, the estimate XX program we the have We roughly million of will of the

ahead Turning revenue in first to million, the $XX for quarter XX% expectations our XX% to of grew back-up care, growth. XX% to

the baskets we had breadth use As and and were of the with pleased of the volume year employees than through the utilizing calendar quarter, Stephen we expected use higher mentioned, than earlier in expected. we growth attribute some to their

million quarter. Operating our for was of XX.X% the expectations with line $XX income in revenue, of

workforce new from services of of reported group advising million client as and use institutional expanded Our as revenue education X% on from to contributions our launch. college to admissions advising $XX well growth

About an an of structural basis XX%, rates. to quarter in rate relates the million items tax other on of P&L $X.X income totaled the and million increased also over sheet, Children. the adjusted of on a This our ‘XX, The of overall Turning $X.X excluding acquisition balance to XXXX point million purchase increased to a ‘XX. our first increase expense that represents higher $XX.X QX quarter couple the and of on Only interest borrowings XXX in price uplift interest the deferred net over per

million million successive in compared it million We $XX we flow QX the investments compared in the million $XX and net leverage cash quarter, to from with to the ended relates acquisitions reduced ‘XX. And of operations we $XX our totaling As generated outstanding in to the spent cash balance credit in made X $XX sheet for our last debt cash facility. to of year. EBITDA. million on revolving we also times $XX million We $XX down of QX to paid ratio and quarter

in outlook, billion XXXX we share. to guidance full to Moving range adjusted our on our EPS the $X and in year billion maintaining previewed, a range XXXX Stephen the $X.X for of are as of revenue to $X.XX $X.X

the of back-up to to XX% grow segment to XX% terms full we to XX% grow full continue to roughly revenue, advisory care for to and In service XX% XX% grow an expect XX%. year to

related three and affecting funding and our XXXX, interest rate. our last reported outlined As growth expense are the quarter, discrete ARPA we earnings items tax in rates margins there specifically to

$XX interest point a We funding $XX headwind to expect those rate. at year, $X.XX P&L of ARPA in increase to to in centers reflects basis full the tax to the continue this XXX roughly less more million $X.XX for and and expense to million for items growth account

In our service with net is of our and XX% revenue XX% QX X% to XX% immediate to XX% of of for to more XX%. back-up growth for of revenue and timeframe, growth XX% to XX% full outlook advisory

to be in adjusted of QX to the range expect We $X.XX. EPS $X.XX

expense, interest account growth the this tax for those to million of of QX in I above, from for $X ARPA terms higher headwinds a rate. million and more roughly reflects discrete $X.XX of basis. the approximately items to expect program just mentioned point on In XXX $X And items, we to $X.XX year-over-year less support government the basis

So Q&A. with that, to we to are ready go

comes ahead. you. Andrew Thank JPMorgan. from with question Steinerman Please First go [Operator Instructions]

Hi, the you us Could the full you Elizabeth. second XXXX year utilization the to guide? tell in to make through quarter and trend how service expect

Yes.

first mid-single year. on off we about for the talked expect see rest and that’s QX we and solidly as the in So what digits, call, quarter continue the with started to of

step kind utilization a up of September expect you Wouldn’t timeframe? the in in

the that does third occur in - Well quarter. seasonality the

performance a But yes. little the comes that older that, sequential that expect continue, bit we cycling than preschoolers would there’s other through So of with graduate. to

you Thank very much. Okay.

Sachs. George question, ahead. with Please go Next Tong Goldman

Thanks. Good afternoon. Hi.

outline rate XX%? you where occupancy of year expect end back see Can to you occupancy get recovery quarter, the was your average the and the to continuing full rate XX% enrollment You’re to expect you what centers. percentage to pre-COVID when in in to service

Yes.

in XX%. for open as of year centers of it’s we as ended that we in year QX improved have a range It So year occupancy has up is over more been QX from outlined, year. XX% the to the the stepped prior level the we of than where last overall

the So sequential we’re we’re improvement, to - XX% getting year-over-year so XX% and improving. obviously, improvement and in range,

see XX% year. getting to by end be we threshold, would to which of expecting We’re that the the closer

important - performance. is call we’re As to variability the in it I averaging of profitability a of the out centers, it relates lot to that think

are more last as see a reminder, that XX% we’ve we are operating really and on, of group so, we And the pleased the calls centers centers so that isolated at to in some that cohorts than occupied. couple - performance of the of

to. back pre-COVID So getting our XX% where about XX% as getting mentioned of to to back would threshold, a is group, levels centers we’re range you were we that at XX% targeted In the XX% in middle up that group. progress above of end XX% grouping last occupied last the and are centers year the at of of those year good half so, from now last

progress or they range XX% some into under in in the lowest top have those top are XX% in making overall sort of the group. enrolled. XX% to so moved and the is setting have group continues are of we the to cohort, overall which the - The the XX% high group, about hold less of performing now to XX% mid the Those been than mix, teens and of on

And framing how just for performing. so, the are little those that bit centers of a centers

to XXXX occupancy above would this by and top year, mid-XXXX. this XX%, margins those improving. that those expect are group, the improving, at levels So to operating are XX% back centers in in levels a are the improving March the The the that them be to going really are XX% we but occupied prepaid pretty - strong their are of pre-COVID back end they performers, In really. to are that margins on

And group will is, XXXX lower before level then later to that. either would able overall will mix one and back expect cycle. need pricing than overall is it performing to more mix the that. the that absorb that be I they And be group and

as you assuming your what to occupancy much of on the normalize. if any, labor follow-up, are you’re seeing mentioned on current you year a staffing rates? in very starting presenting the And guide? it’s helpful. And elaborate it How kind headwind, you’re to full what Got levels front? a staffing levels of your Can then

Yes.

on staffing the think So And on front. perspective, I from starts with we improvement us, to for when progress continuing that higher making see the think that net retention. focused we’re about a we’re

at we this have we had levels. in the retention So of eclipsed I to shared returned first would actually we end year we is think last that XXXX that. What that quarter, say

we XXXX. are we better So even in retention standpoint doing from saw a than

job applications towards nice seekers we’re good to as ultimately, it hires. that, a uplift are addition again, In to seeing that, relates driving new and

get And hires to back helping going cadence is new so, we to us the that staffing. of retention and are levels pre-COVID combination of where better to approach

to we Again, what getting I seeing going enrollment staffing definitely require, U.S., and highlighted, a are think when we back on we And back further looks think to then about Elizabeth to it’s that more like. ultimately in in the U.K., the curve shortages. are what pre-COVID closer here bit the labor

you. Thank it, Got very helpful.

you. Thank

ahead. Patnaik Next question Please with Barclays. go Manav

I how - evening. obviously the The guidance us us wanted could didn’t - of if had a curious the accordingly? remind rest Good the you but little the Yes. guess, more just tell gives to why I start you just about just you’re year, question seasonality, for you of just the change thinking a you year. visibility, just probably solid being,

you guidance that Why rest the we for change mean the it.... the didn’t year of

Yes. Correct. Yes.

we It’s - add I’d color. than expected. had step-up start Well, Elizabeth better I’ll say can quarter enrollment Manav, the in But we sequentially QX. and little saw bit a

to into XQ. step As in occupancy we seasonality would we the again of up the enrollment about expect rest think year, for sequentially

you third last had Going kids out. the through in cycle preschool we talked about past, open kids year the quarter, when the saw we’ve they that older into

sequentially women’s typically to And can, year as we to then positive that XQ. occupancy many typically we in sequentially XQ and backfill but as in from we the would flat that is, into fourth occupancy enrollment is expect quarter slightly XQ, this fall

how still year year. we this on ended we kind and unfolding occupancy enrollment seasonality the see how year that’s of that’s and So the

Got it.

for you Okay. the And second margins with then, help by Elizabeth, could operating us the quarter. segment

with unchanged. - last full I’m numbers the guessing are helped year us think I you quarter

should So look XQ for just like? hoping what

Yes.

the we full significant QX. It the expectations the the progress year sequence margin, some being $X inclusive that of talked less for percent we for about to digits X.X the million think that funding be year. won’t a but of to mid-single build ARPA than about from low adjusted of so and since that’s in prepared its change, quarter-over-quarter, remarks or about some challenges So standpoint, I full have start improvement to operating the the service

be QX momentum the much points. couple more the adding an hundred performance. we challenging just the That’s a to expect basis U.K. don’t performance we’ll of example, QX And to as in

So Bright that would quarter, we back-up spots in that of that to it XX% improvement mid-single The places low improve in group to XX% the seeing continuing operating saw sequentially the number and and in still digits in but be pace this margin seeing and QX. consistency.

consistency year. provider of we’re the Because XX% mix of use about fees as would includes have more of there the financing for and we essentially paying that improving that care margin to providing XX% a and use that us the margin and full the second in carrying, the comes teens. the high then to XX% XX% along, in consistent to advising the And what gets operating to half mid for that’s pretty business

you Thank right. much. All very

you. Thank

Kaplan Please Next question ahead. with Toni Morgan Stanley. go

The if like there. $XX ARPA a service I the this one. a last guess, the sort it growth revenue of that ex guess, got sort like given margin, the just of little I got - should like saw thinking the on million quarter follow-up was Hi, of ARPA, Actually looked worse I you be bit full actually we funding good. actually -

So, I just trouble that? having, reconciling a little

you’re Toni? about performance, QX’s so And talking

Thank Yes. Yes. you.

Yes.

things and So from of a QX, growth standpoint not are converting much. couple revenue which a as affecting

absorbed. So investment still the is wage being

you have the than weaker we is also - U.K.’s historically. mentioned performance would it what We have have seen

hadn’t results the I is the - headwind that business. Australian the So this find other year nuance and think that we to acquired the

which summer. accelerate first in They their they quarter more their in are in their actually so winter, our is performances summer the that season over

is revenue in there. of convert their margin the to terms contributor And not a contribution much so doesn’t that

little a bit So revenue another see the you side. conversion be operating that weaker with would reason on the growth why

prepared age growth the we groups, particular, client add, our also And toddlers and bit centers Toni, remarks, in little saw about the in but we a younger strong. talked infants - I’ll in were the just and faster

as so, you on side And those sequential may groups. as growth have that the otherwise in year-over-year X doesn’t and margin both It much see.

Yes. On for the thing business. your a but challenge, good overall

Yes. new quarter. a quarter the couple of or maybe my Yes. year Just points sounds centers, the Wanted names understand a even you were of of just provide. sort now ago? of on versus pipeline to reference mentioned to it pipeline like there ago wanted But a can sort follow-up this any that ask you signed

Sure.

to continues I the Toni, think would what So pipeline is it strengthen.

And employer-sponsored care the of think that about around importance you government and care. in a involved has the then certainly would I I that awakening note think an talk right? Act, an all there able been the think CARES to increasing to the to tightening market you You employers for about find there continues press renaissance lot healthcare. getting among in have the of think and employers be employees a their or is of

So they’re their from hearing directly. it employees

that I as in continues pipeline that there supply manufacturing, we So a the a that What industries. longer more feel be from think the in always of would certainly, pipeline, is good industries about. I like we’ve say healthcare chain, kinds to arc really especially process perspective, and distribution, is growth those industrial talked

receptivity requires feel about So long-term the But commitment. time. overall, from It does to employee good we sit and where we decision-making think I and capital take a employer-sponsored care. an space again,

lot. a Thanks

Thank you.

you. Thank

Moore Jefferies. Next with question ahead. go Please Stephanie

Good afternoon, Stephanie Harold on this Moore. is for

this And what you on see are how pricing environment any so Just for current far? wanted pricing expectations do an pricing pushback year? so to the on get update

Yes.

price as We have environment. to of the on fairly increases of average, year. strong obviously January and inflationary cycling most done a range the X% this our have we So X% in have,

inherent own recognizing have to substantial we have we made. enrollment the as seen so, efforts - as structure possible been particularly while affordable as the we’ve and uptick investments care we to our possible as that pretty in with the balance cost that with a keeping wage And we looking have get

on I but us that at decisions. I that understanding know I also parent So, anyone up to that but we’ve pretty loan have think, And receptivity. we increase on also good continues a itself that’s base view opportunity to don’t lose an X%, reception think needful had, think from locally that taken our - make is for an vary economic that good I the forward levels. a have a global. progress average pre-COVID recovery price the That’s allow this think and us I the sets that to increase, ability playing next and has do year

Thank then be And another just you guess I for would the opportunities. on color. like question cross-sell

or you. using So like customers Thank your College also at many customers how EdAssist or full service of back-up Coach? care

Yes.

So that So to believe would in that certainly, the in the client up. cross-sell overall lot clients of opportunity we say upsell. goes and continue picking I we of to directions, up center our highlighted we there’s have have base fact a right? it all back are

centers. We as many have And are another as and end have back-up from certainly, we clients clients with up Horizons. then said that up before, advisory service start picking purchasing Bright

Yes.

say, I’d about a full our back-up think service little so it’s I clients north little And a of a third a care. of maybe with third the

full service We attach care and Harold. add rates higher But that’s where back-up stands it have well. - as with

Thank you.

Next question Markets. Please go BMO Capital Silber ahead. with Jeff

for as then proposals, seen for some the the Ryan including in some care Hi. Jeff. Act care requiring well. on We’ve proposals child CHIPS U.K. and subsidies free child headline

some to how were if impact they time parse I proposals, just out While you business? your would it through best even they’re shake takes these assume and might can -

Sure.

getting subsidies it is Clearly, first, in to and of employers think right forefront about who take going provide childcare. government brought that are Act the that I childcare. the advantage legislative these involved to so the perspective very importance from of semiconductor all of are are the specific CHIPS those pieces So a is to to expected forefront, brought it

the them the do of are We exactly early new offer expectations educating the opening what to about they be way are in likely don’t to and/or best educating already and are the government. these that are childcare days companies the from And extent that so, to we plants

out something of with a see that in So, certainly we front are the we longer-term nice that tailwind market. and as

anything on pay And the proposals? it. Got

Yes.

So the meantime think new government think in U.K. all year, about the I conversations be a the lot So right? in next the proposals. there’ll different U.K., is of that look, I the

exactly so, land. hard to know they’re where going And it’s to

think I our in U.K. time, for focused very has, older a care. subsidy children the the been for long on

the good the who’ve have got gotten And to government. from a the so X subsidy broadly, good parents subsidy olds X-year or from government

deeper Whether But in it’s in subsidies a whether one in that be nice record each group, reasons it’s a goes more the yet the become significant is us U.K., why seen. long-term. certainly, the and of there’s to nature track great market for

just you. preference continue close seen And retail-based we’ve creep Thank the Do occupancy past as greater then rates recoup some one years, entertain office follow-up start preferences parents to it few share you the a some parents you centers? if centers homes. And to it for for over up, and do the their make so? to might so, think re-evaluate switch take to you market retail how from center long their the could think

Yes.

of centers saying terms client been earliest by reopening’s first, more consortium start than lease our the typically in since would our pandemic, So in enrolled have I I think the centers. our highly

for there a value so, reality And for related to centers. is real us on-site that the proposition is the families

can we the the get that they their think to to a to go back place child to is back as rather, to for go where so, are or because opportunity a center. choosing high-quality, scenarios And people affordable place office see that work they of go

center we center then of on the works. where cross home lives these in all and off children actually examples have is and cases, on-site drive is find childcare from work relatively families workplace to the certain their to that, days. addition at someone approximate where the we Generally, at what In

so, them. And for great a option really it’s

the of on our great quality model we’re for to across all we those and think for caring continue move just to And were of so, the I for that and our forward continue types delivering focus us, delivery. sure making ball value who

go Jeff question with Miller Next Baird. ahead. Please

what like just evening. want or about to Good something? range positive against a up inflection? might is your comping looks in that follow first you’re just guidance and with I or nearing better maybe expectations that? a around the not really you. we Omicron on trying maybe or good I And raising understand, And be why question to headwinds Manav’s a legitimately guess Thank bit I’m it Yes. quarter little or mis-modeled something like line

Is it hey a that few really macro it’s but a years been long choppy still. it’s it’s better, that

the there’s that’s So ourselves. that know, specific is let’s whether challenges sort of some it more is derisked the or not Maybe guidance get offset, or U.K. ahead like of don’t I it layoffs collar I’m me? I’m it QX clients. some and just context fully answer not prior performance the in the the did white - guidance at the of understanding really for connect

would I start, $XX funding I’ll ARPA and million which was guess, the of on be QX. previous for just year, guidance we with $X From clarification. million maybe $XX in the had million

had standpoint, timing $X.XX funding. ARPA earnings to So against of that the was the range a is performance, the $X.XX. with of we from We that outperformed guided certainly pleased where though we’re but attributable

and came the into one a that revenue, important and anticipated some did an summer of back-up both season of has with scale of more are comment delivery, think, I it’s coming, through, out in the that more of on That They the the some had we certainly the cyclical we really a conversion so shifted year. enrollment said, bit visibility than but outperformed coming outperformance. last that fundamentals. been little of and enrollment delivery cents on the seasonality on summer - consumption both have side good trends. used the outperformed So some quarter, indicators couple the and earnings, to underlying is We

in a than had toddlers We last mix have more good more we coming slightly into - with the year. summer infants

we opportunity I uncertainties with recognizing in is, what there and so you right I how good progress, there think you else are are had Stephen it as the I closed. adding some framed but but say that against see And you to like Jeff, calendars feel we’re that’s feel we looking are at anything the that’s want we and that market appreciate it think But to. some there. about economy we it we’ve that visibility, optimistic, got continued where still the

I would way was Yes. I I Jeff, it with I get we are just are we fact in which the - I pleased pleased the middle right? lost shouldn’t mean detail the year started. the your around year underscore the the So think the way point, that with started, think really think is we

right? I make headwinds that of things that the the into consideration well want play think outlined as do to to some do positives forward. We all we taking want we’re we as that sure of

back. think about is we use U.K. is is I good We in that would and it’s this the side. plan. on say we on came I good feel challenging really the out call, feel really something that is something way the way coming about enrollment that back-up called certainly advisory the on

the I other we quarter. of within total that capable think hand, very absorbing this that On were the

sure make have and to I make year. that not we’re giving ahead runway we’re sure But skis want to our a amount of ourselves that successful the getting appropriate of really

So about. good I something quarter. about year we for feel good feel that the full think - reaffirming is We the

sort your appreciate complement. upfront of I so, And

last know like kind of look churn with is visibility at we how - year? seasonal then that? seasonally seeing that have of you confidence the you have? could And on as are then just to you like churn, like you summer will high much forward signs And fall get do to just what the Awesome. a and repeat any month what like forward Like going what

I forward time relates to generally can think is is lead longest with months’ visibility reasonably as unless I you it mark the And the interest can needed three as it stands expectations that imagine, can the the age the parent for you the to get to. - good as Long two a churn sort of hit it rooms our And or the vary. preschool for summertime, as lot infants. time into around of it ingoing that didn’t think think I

so And on - have do do digital. and a eyes this we lot we of

with are closely, not on be where are can looking have but clear starters. ensure so filling only We to that spaces we monitor we levers, we those

summer. reasonably good think visibility can kind when the this when the know future. of months have the plays few generally, that. will over talking out, I fall next have be it quarter you is actually so, how that the variable for visibility a will we we will into It be we a But we’re And time churn to when

you. Thank Okay.

Thank you.

from Faiza Instructions] [Operator ahead. next question Please with Deutsche Bank. comes Alwy Your go

Yes. Hi. you. Thank

clarify, occupancy XQ? wanted to to is talking about talked is growth that And prior I just XQ were a into years? want about how you first, mid-single-digit seasonality from So relative I I guess, that just basis you to clarify, or sequential year-over-year on

enrollment historically, Well, wouldn’t be that talking in year-over-year more single-digit about centers type be to of overall I year, in looking we’re digit I’d of single-digit enrollment to say, our the looking enrollment X-ish growth. percent for at or as when percent, high low were mature you’d growth. mid-single year-over-year at X normally type a pre-COVID overall you say mid full, of growth X%

- Yes. XX centers including less Across all or be X%. up more so more mature ramping fully centers growing would

news. Good Yes.

XX% XX% So to and certainly versus from range. pre-COVID we’re XX% that better we’re rebuilding, much starting occupancy to XX%

point. starting lower a So it’s

I operating know that revenue in there’s with trying Thank And funding, I funding things if would organic and just an of component into I’m in to ex just help And ex component. did if contributed. acquisitions. helpful. and this sorry, Great. be contract revenue growth a any the you. few back prepared Australia then you missed acquisition the much I on the then how the a in profit government think remarks, housekeeping I’m terms could

impacts you If help really would top be could that with us on two line the helpful? those

Yes.

majority million The the $XX to contributed Australian So vast of about acquisition. the the quarter. was acquisitions that

there the to for cost was in a revenue. contract as revenue And against the And where that advance quarter. ARPA we P&L about contributed was was to centers so are the headwind reduction the million then that on funding Overall, revenue. million the able for offset a -- the growth $X $XX of the to about contribution funding costs

Should last Great. that’s Australia it what’s we there’s approach one cash And debt sort capital down of downs? allocation? sort more capital I your then you that payment the debt. a mentioned Thank for you. criteria. of XQ, in is allocation some meets pay believe due on expect paid And you just towards I’m acquisition one curious if

Is making an those payment? will be trending expectation to might that that’s So curious how benchmarks relative that you that what be?

Yes.

million over $XX is the on now revolver just the focus Our We paydown. with quarter on revolver. ended

So paying favorably debt. -- focused on got really we’re down we’ve the priced revolver

to have debt. be - that do be would things would priced it that the in think I not favorably two term we on very So paydown immediate But the site.

One There at is the of due the any It end agreed the simply allocation an just the the for of of is ongoing was capital the year when Australia payment deferral for payment deferred aren’t payment. where the year. criteria between timing now and the of the it. for end

$XXX be of due be at will million over that that the end this year. just will So

in are toward business we that both up we that. refurbish portfolio have the also the also existing center making to so freshen in invest and centers. And new building are to we selective And investments, and cash

number this We of year. lease have we a models are opening that

growth acquisitions strategy. We quality round continue to out for look to our

so, some And this those of year. executing on are

that between of due. will payment there now have the interval at the term. looking in in year near buyback not But deferred So this some be when for capital the end deployment share the and - we the we’re

you Thank so Excellent. much.

Next Please question ahead. with Singlehurst Citi. Tom go

be this any you questions of and towards anticipate Yes. Good had much very the bit of from year relief evening. talking Tom to competitive that landscape? have but of the on end some on a the of I for of want the impact the Thank sort unless you not A was falling the here support you about question. comments, Citi. out one government make It’s to AI the will taking

out news coming especially you I result but of just obviously, was question? wonder Thank mean, wondering the whether more smaller my broadly, I support, you in terms players bad think and in that’s whether of that market - some was that I among might capacity think you.

Sure. Thank you the for question. Yes.

just So is the sunset the have expectation going funding September, distributed. is ARPA the to clarify, will program to and been come that

focused disadvantaged we in on that much historically are world. price very is that are families have center are been really have post in about there would programs obviously What most our that more constituent. they again, as some about again, So place, thinking that and a disciplined economics we but pushing ARPA and also been providers say serve that

marketplace seen relates it as mix that. to is have the in we What

structures number of and/or So their out have I coming pricing that of market. a prepared ARPA cost think providers the strategy of there reflective are not their

as market second in well the a centers as for so COVID. who is And saw market a XX% XX% wave came in the early a of potential We wave. about we, of general, believes of out to that there

fall, another expectation tuitions wave and an with structure cope that the year, next that against they charge. cost is may there aren’t where be winter price that they come just into There able to providers the the have

be a One of right? responses, once, to is at significantly increase two so they tuitions their hope second then, that’s the with And economic. more could that getting all the And is place that in the some either decide a country. they that be of providers there contraction in close that there may centers or need overall to simply which number case, the sell would in

going be of to around think what level in this in are saying some work winter question certainly the the and next able I is into environment come is rightsizing So and centers directly fall, year. your there pricing of number I’m to that implied ultimately new you and/or that

you quite very much. clear. That’s Thank

you. Thank

I thoughtful all good all Okay. a call. very joining the for the night. and Well, you appreciate thank you wishing much questions

This concludes today’s teleconference.

lines disconnect you time at this and for may You your thank your participation.