Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2023 | Jul. 24, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-35780 | |
Entity Registrant Name | BRIGHT HORIZONS FAMILY SOLUTIONS INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 80-0188269 | |
Entity Address, Address Line One | 2 Wells Avenue | |
Entity Address, City or Town | Newton | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02459 | |
City Area Code | (617) | |
Local Phone Number | 673-8000 | |
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Trading Symbol | BFAM | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 57,876,598 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001437578 | |
Current Fiscal Year End Date | --12-31 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 66,011 | $ 36,224 |
Accounts receivable — net of allowance for credit losses of $2,682 and $2,947 at June 30, 2023 and December 31, 2022, respectively | 181,261 | 217,170 |
Prepaid expenses and other current assets | 88,839 | 94,316 |
Total current assets | 336,111 | 347,710 |
Fixed assets — net | 580,888 | 571,471 |
Goodwill | 1,767,480 | 1,727,852 |
Other intangible assets — net | 231,477 | 245,574 |
Operating lease right-of-use assets | 807,530 | 801,626 |
Other assets | 99,879 | 104,636 |
Total assets | 3,823,365 | 3,798,869 |
Current liabilities: | ||
Current portion of long-term debt | 16,000 | 16,000 |
Borrowings under revolving credit facility | 0 | 84,000 |
Accounts payable and accrued expenses | 238,808 | 230,634 |
Current portion of operating lease liabilities | 97,469 | 94,092 |
Deferred revenue | 239,965 | 222,994 |
Other current liabilities | 165,687 | 138,574 |
Total current liabilities | 757,929 | 786,294 |
Long-term debt — net | 954,172 | 961,581 |
Operating lease liabilities | 812,632 | 810,403 |
Other long-term liabilities | 94,669 | 100,466 |
Deferred revenue | 8,821 | 8,933 |
Deferred income taxes | 45,374 | 50,739 |
Total liabilities | 2,673,597 | 2,718,416 |
Stockholders’ equity: | ||
Preferred stock, $0.001 par value; 25,000,000 shares authorized; no shares issued or outstanding at June 30, 2023 and December 31, 2022 | 0 | 0 |
Common stock, $0.001 par value; 475,000,000 shares authorized; 57,740,699 and 57,531,130 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively | 58 | 58 |
Additional paid-in capital | 627,275 | 599,422 |
Accumulated other comprehensive loss | (57,887) | (70,629) |
Retained earnings | 580,322 | 551,602 |
Total stockholders’ equity | 1,149,768 | 1,080,453 |
Total liabilities and stockholders’ equity | $ 3,823,365 | $ 3,798,869 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for credit loss, current | $ 2,682 | $ 2,947 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 475,000,000 | 475,000,000 |
Common stock, shares issued (in shares) | 57,740,699 | 57,531,130 |
Common stock, shares outstanding (in shares) | 57,740,699 | 57,531,130 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||||
Revenue | $ 603,216 | $ 490,341 | $ 1,156,822 | $ 950,750 |
Cost of services | 466,653 | 361,816 | 898,645 | 712,166 |
Gross profit | 136,563 | 128,525 | 258,177 | 238,584 |
Selling, general and administrative expenses | 81,899 | 73,673 | 164,670 | 145,419 |
Amortization of intangible assets | 9,132 | 7,030 | 17,330 | 14,179 |
Income from operations | 45,532 | 47,822 | 76,177 | 78,986 |
Loss on foreign currency forward contracts | 0 | (5,917) | 0 | (5,917) |
Interest expense — net | (12,219) | (7,942) | (25,135) | (14,988) |
Income before income tax | 33,313 | 33,963 | 51,042 | 58,081 |
Income tax expense | (12,719) | (9,018) | (22,322) | (13,730) |
Net income | $ 20,594 | $ 24,945 | $ 28,720 | $ 44,351 |
Earnings per common share: | ||||
Common stock — basic (in dollars per share) | $ 0.36 | $ 0.42 | $ 0.50 | $ 0.75 |
Common stock — diluted (in dollars per share) | $ 0.35 | $ 0.42 | $ 0.50 | $ 0.74 |
Weighted average common shares outstanding: | ||||
Common stock — basic (in shares) | 57,707,565 | 59,113,044 | 57,655,715 | 59,103,884 |
Common stock — diluted (in shares) | 57,905,424 | 59,252,869 | 57,807,667 | 59,334,107 |
Cost, Product and Service [Extensible Enumeration] | Service [Member] | Service [Member] | Service [Member] | Service [Member] |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 20,594 | $ 24,945 | $ 28,720 | $ 44,351 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 9,456 | (46,345) | 16,336 | (63,351) |
Unrealized gain (loss) on cash flow hedges and investments, net of tax | 5,305 | 5,007 | (3,594) | 23,707 |
Total other comprehensive income (loss) | 14,761 | (41,338) | 12,742 | (39,644) |
Comprehensive income (loss) | $ 35,355 | $ (16,393) | $ 41,462 | $ 4,707 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Treasury Stock, at Cost | Accumulated Other Comprehensive Income (Loss) | Retained Earnings |
Beginning balance (in shares) at Dec. 31, 2021 | 59,305,160 | |||||
Beginning balance at Dec. 31, 2021 | $ 1,179,276 | $ 59 | $ 745,615 | $ 0 | $ (37,359) | $ 470,961 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation expense | 13,768 | 13,768 | ||||
Issuance of common stock under the Equity Incentive Plan (in shares) | 215,954 | |||||
Issuance of common stock under the Equity Incentive Plan | 10,625 | $ 1 | 10,624 | |||
Shares received in net share settlement of stock option exercises and vesting of restricted stock (in shares) | (44,312) | |||||
Shares received in net share settlement of stock option exercises and vesting of restricted stock | (5,154) | (5,154) | ||||
Purchase of treasury stock | (84,236) | (84,236) | ||||
Retirement of treasury stock (in shares) | (853,934) | |||||
Retirement of treasury stock | 0 | $ (1) | (84,235) | 84,236 | ||
Other comprehensive income (loss) | (39,644) | (39,644) | ||||
Net income | 44,351 | 44,351 | ||||
Ending balance (in shares) at Jun. 30, 2022 | 58,622,868 | |||||
Ending balance at Jun. 30, 2022 | 1,118,986 | $ 59 | 680,618 | 0 | (77,003) | 515,312 |
Beginning balance (in shares) at Mar. 31, 2022 | 59,133,183 | |||||
Beginning balance at Mar. 31, 2022 | 1,172,506 | $ 59 | 717,745 | 0 | (35,665) | 490,367 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation expense | 7,672 | 7,672 | ||||
Issuance of common stock under the Equity Incentive Plan (in shares) | 50,437 | |||||
Issuance of common stock under the Equity Incentive Plan | 1,730 | 1,730 | ||||
Shares received in net share settlement of stock option exercises and vesting of restricted stock (in shares) | (18,718) | |||||
Shares received in net share settlement of stock option exercises and vesting of restricted stock | (1,979) | (1,979) | ||||
Purchase of treasury stock | (44,550) | (44,550) | ||||
Retirement of treasury stock (in shares) | (542,034) | |||||
Retirement of treasury stock | 0 | (44,550) | 44,550 | |||
Other comprehensive income (loss) | (41,338) | (41,338) | ||||
Net income | 24,945 | 24,945 | ||||
Ending balance (in shares) at Jun. 30, 2022 | 58,622,868 | |||||
Ending balance at Jun. 30, 2022 | $ 1,118,986 | $ 59 | 680,618 | 0 | (77,003) | 515,312 |
Beginning balance (in shares) at Dec. 31, 2022 | 57,531,130 | 57,531,130 | ||||
Beginning balance at Dec. 31, 2022 | $ 1,080,453 | $ 58 | 599,422 | 0 | (70,629) | 551,602 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation expense | 13,313 | 13,313 | ||||
Issuance of common stock under the Equity Incentive Plan (in shares) | 232,935 | |||||
Issuance of common stock under the Equity Incentive Plan | 16,169 | 16,169 | ||||
Shares received in net share settlement of stock option exercises and vesting of restricted stock (in shares) | (23,366) | |||||
Shares received in net share settlement of stock option exercises and vesting of restricted stock | (1,629) | (1,629) | ||||
Other comprehensive income (loss) | 12,742 | 12,742 | ||||
Net income | $ 28,720 | 28,720 | ||||
Ending balance (in shares) at Jun. 30, 2023 | 57,740,699 | 57,740,699 | ||||
Ending balance at Jun. 30, 2023 | $ 1,149,768 | $ 58 | 627,275 | 0 | (57,887) | 580,322 |
Beginning balance (in shares) at Mar. 31, 2023 | 57,679,676 | |||||
Beginning balance at Mar. 31, 2023 | 1,103,443 | $ 58 | 616,305 | 0 | (72,648) | 559,728 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation expense | 7,463 | 7,463 | ||||
Issuance of common stock under the Equity Incentive Plan (in shares) | 63,137 | |||||
Issuance of common stock under the Equity Incentive Plan | 3,611 | 3,611 | ||||
Shares received in net share settlement of stock option exercises and vesting of restricted stock (in shares) | (2,114) | |||||
Shares received in net share settlement of stock option exercises and vesting of restricted stock | (104) | (104) | ||||
Other comprehensive income (loss) | 14,761 | 14,761 | ||||
Net income | $ 20,594 | 20,594 | ||||
Ending balance (in shares) at Jun. 30, 2023 | 57,740,699 | 57,740,699 | ||||
Ending balance at Jun. 30, 2023 | $ 1,149,768 | $ 58 | $ 627,275 | $ 0 | $ (57,887) | $ 580,322 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net income | $ 20,594 | $ 24,945 | $ 28,720 | $ 44,351 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Depreciation and amortization | 56,229 | 50,661 | |||
Stock-based compensation expense | 13,313 | 13,768 | |||
Loss on foreign currency forward contracts | 0 | 5,917 | 0 | 5,917 | |
Deferred income taxes | (4,250) | (4,269) | |||
Non-cash interest and other — net | 5,434 | (451) | |||
Changes in assets and liabilities: | |||||
Accounts receivable | 35,802 | 38,255 | |||
Prepaid expenses and other current assets | (15,845) | (5,813) | |||
Accounts payable and accrued expenses | 6,326 | 16,636 | |||
Income taxes | 1,505 | (10,899) | |||
Deferred revenue | 15,939 | (43,000) | |||
Leases | (19) | 734 | |||
Other assets | 10,705 | 12,087 | |||
Other current and long-term liabilities | 26,183 | 7,793 | |||
Net cash provided by operating activities | 180,042 | 125,770 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of fixed assets | (40,132) | (26,186) | |||
Proceeds from the disposal of fixed assets | 17 | 6,940 | |||
Purchases of debt securities and other investments | (8,956) | (7,030) | |||
Proceeds from the maturity of debt securities and sale of other investments | 11,227 | 11,009 | |||
Payments and settlements for acquisitions — net of cash acquired | (30,884) | (3,282) | |||
Settlement of foreign currency forward contracts | 0 | (4,591) | |||
Net cash used in investing activities | (68,728) | (23,140) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Borrowings under revolving credit facility | 224,000 | 0 | |||
Payments under revolving credit facility | (308,000) | 0 | |||
Principal payments of long-term debt | (8,000) | (8,000) | |||
Proceeds from issuance of common stock upon exercise of options and restricted stock upon purchase | 7,382 | 10,554 | |||
Taxes paid related to the net share settlement of stock options and restricted stock | (1,629) | (5,154) | |||
Purchase of treasury stock | 0 | (72,554) | |||
Payments of contingent consideration for acquisitions | (225) | (13,865) | |||
Net cash used in financing activities | (86,472) | (89,019) | |||
Effect of exchange rates on cash, cash equivalents and restricted cash | (330) | (2,215) | |||
Net increase in cash, cash equivalents and restricted cash | 24,512 | 11,396 | |||
Cash, cash equivalents and restricted cash — beginning of period | 51,894 | 265,281 | $ 265,281 | ||
Cash, cash equivalents and restricted cash — end of period | 76,406 | 276,677 | 76,406 | 276,677 | 51,894 |
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS: | |||||
Cash and cash equivalents | 66,011 | 270,425 | 66,011 | 270,425 | 36,224 |
Total cash, cash equivalents and restricted cash — end of period | 76,406 | 276,677 | 76,406 | 276,677 | $ 51,894 |
SUPPLEMENTAL CASH FLOW INFORMATION: | |||||
Cash payments of interest | 36,104 | 13,458 | |||
Cash payments of income taxes | 26,128 | 29,187 | |||
Cash paid for amounts included in the measurement of lease liabilities | 77,126 | 64,887 | |||
NON-CASH TRANSACTIONS: | |||||
Fixed asset purchases recorded in accounts payable and accrued expenses | 2,438 | 1,999 | |||
Operating right-of-use assets obtained in exchange for operating lease liabilities — net | 32,138 | 29,280 | |||
Restricted stock reclassified from other current liabilities to equity upon vesting | 8,192 | 3,160 | |||
Treasury stock purchases in other current liabilities | 0 | 11,909 | |||
Prepaid and other current assets | |||||
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS: | |||||
Restricted cash and cash equivalents | 8,298 | 6,252 | 8,298 | 6,252 | |
Other assets | |||||
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS: | |||||
Restricted cash and cash equivalents | $ 2,097 | $ 0 | $ 2,097 | $ 0 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | ORGANIZATION AND BASIS OF PRESENTATION Organization — Bright Horizons Family Solutions Inc. (“Bright Horizons” or the “Company”) provides center-based early education and child care, back-up child and adult/elder care, tuition assistance and student loan repayment program management, educational advisory services, and other support services for employers and families in the United States, the United Kingdom, the Netherlands, Australia, Puerto Rico and India. The Company provides services designed to help families, employers and their employees better integrate work and family life, primarily under multi-year contracts with employers who offer child care, dependent care, and workforce education services as part of their employee benefits packages in an effort to support employees across life and career stages and improve employee engagement. On July 1, 2022, the Company acquired Only About Children, an operator of 75 child care centers in Australia. Refer to Note 4, Acquisitions , for additional information. Basis of Presentation — The accompanying unaudited condensed consolidated balance sheet as of June 30, 2023 and the unaudited condensed consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the interim periods ended June 30, 2023 and 2022 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required in accordance with U.S. GAAP for complete financial statements and should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the Company’s unaudited condensed consolidated balance sheet as of June 30, 2023 and the unaudited condensed consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the interim periods ended June 30, 2023 and 2022, reflect all adjustments (consisting only of normal and recurring adjustments) necessary to present fairly the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year. During the six months ended June 30, 2023, the Company recorded expense of $6.0 million for an immaterial correction of an error related to value-added tax incurred in prior periods, of which $4.3 million is included in cost of services and $1.7 million is included in selling, general and administrative expenses. Refer to Note 11, Segment Information , for additional information. Stockholders ’ Equity — The board of directors of the Company authorized a share repurchase program of up to $400 million of the Company’s outstanding common stock effective December 16, 2021. The share repurchase program has no expiration date. The shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions, under Rule 10b5-1 plans, or by other means in accordance with federal securities laws. During the six months ended June 30, 2023, there were no share repurchases under the repurchase program and during the six months ended June 30, 2022, the Company repurchased 0.9 million shares for $84.2 million. All repurchased shares have been retired and, at June 30, 2023, $198.3 million remained available under the Board-approved repurchase program. Government Support — During the six months ended June 30, 2023 and 2022, the Company participated in government support programs that were enacted in response to the economic impact of the COVID-19 pandemic, including availing itself of certain tax deferrals and federal block grant funding in the United States. During the six months ended June 30, 2023 and 2022, $35.1 million and $46.7 million, respectively, was recorded as a reduction to cost of services in relation to these benefits, of which $12.2 million and $16.0 million, respectively, reduced the operating subsidies paid by employers for the related child care centers. Additionally, during the six months ended June 30, 2023 and 2022, $1.2 million and $3.4 million, respectively, was recorded to revenue related to amounts received for tuition support. As of June 30, 2023 and December 31, 2022, $2.3 million and $1.2 million, respectively, was recorded in prepaid expenses and other current assets on the consolidated balance sheet for amounts due from government support programs, and as of June 30, 2023 and December 31, 2022, $2.5 million and $4.6 million, respectively, was recorded to other current liabilities related to government support received related to future periods. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION Disaggregation of Revenue The Company disaggregates revenue from contracts with customers into segments and geographical regions. Revenue disaggregated by segment and geographical region was as follows: Full service Back-up care Educational Total (In thousands) Three months ended June 30, 2023 North America $ 300,014 $ 107,121 $ 28,282 $ 435,417 International 158,517 9,282 — 167,799 $ 458,531 $ 116,403 $ 28,282 $ 603,216 Three months ended June 30, 2022 North America $ 257,822 $ 85,096 $ 27,311 $ 370,229 International 113,494 6,618 — 120,112 $ 371,316 $ 91,714 $ 27,311 $ 490,341 Full service Back-up care Educational Total (In thousands) Six months ended June 30, 2023 North America $ 584,598 $ 195,941 $ 55,367 $ 835,906 International 304,124 16,792 — 320,916 $ 888,722 $ 212,733 $ 55,367 $ 1,156,822 Six months ended June 30, 2022 North America $ 501,059 $ 161,025 $ 52,944 $ 715,028 International 224,189 11,533 — 235,722 $ 725,248 $ 172,558 $ 52,944 $ 950,750 The classification “North America” is comprised of the Company’s United States and Puerto Rico operations and the classification “International” includes the Company’s United Kingdom, Netherlands, Australia and India operations. On July 1, 2022, the Company acquired Only About Children, an operator of 75 child care centers in Australia. Refer to Note 4, Acquisitions , for additional information. Deferred Revenue The Company records deferred revenue when payments are received in advance of the Company’s performance under the contract, which is recognized as revenue as the performance obligation is satisfied. During the six months ended June 30, 2023 and 2022, $175.2 million and $181.0 million was recognized as revenue related to the deferred revenue balance recorded at December 31, 2022 and December 31, 2021, respectively. Remaining Performance Obligations The Company does not disclose the value of unsatisfied performance obligations for contracts with an original contract term of one year or less, or for variable consideration allocated to the unsatisfied performance obligation of a series of services. The transaction price allocated to the remaining performance obligations relates to services that are paid or invoiced in advance. The Company’s remaining performance obligations not subject to the practical expedients were not material. |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
LEASES | LEASESThe Company has operating leases for certain of its full service and back-up early education and child care centers, corporate offices, call centers, and to a lesser extent, various office equipment, in the United States, the United Kingdom, the Netherlands, and Australia. Most of the leases expire within 10 to 15 years and many contain renewal options and/or termination provisions. As of June 30, 2023 and December 31, 2022, there were no material finance leases. Lease Expense The components of lease expense were as follows: Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 (In thousands) Operating lease expense (1) $ 39,459 $ 32,359 $ 77,427 $ 64,887 Variable lease expense (1) 10,565 9,768 21,740 19,712 Total lease expense $ 50,024 $ 42,127 $ 99,167 $ 84,599 (1) Excludes short-term lease expense and sublease income, which were immaterial for the periods presented. Other Information The weighted average remaining lease term and the weighted average discount rate were as follows: June 30, 2023 December 31, 2022 Weighted average remaining lease term (in years) 10 10 Weighted average discount rate 7.0% 6.7% Maturity of Lease Liabilities The following table summarizes the maturity of lease liabilities as of June 30, 2023: Operating Leases (In thousands) Remainder of 2023 $ 65,902 2024 154,654 2025 143,834 2026 136,610 2027 127,193 Thereafter 667,174 Total lease payments 1,295,367 Less imputed interest (385,266) Present value of lease liabilities 910,101 Less current portion of operating lease liabilities (97,469) Long-term operating lease liabilities $ 812,632 As of June 30, 2023, the Company had entered into additional operating leases with total fixed payment obligations of $23.5 million that have not yet commenced. The leases are expected to commence in fiscal 2023 and have initial lease terms of approximately 12 to 15 years. |
ACQUISITIONS
ACQUISITIONS | 6 Months Ended |
Jun. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS | ACQUISITIONS The Company’s growth strategy includes expansion through strategic and synergistic acquisitions. The goodwill resulting from these acquisitions arises largely from synergies expected from combining the operations of the businesses acquired with the Company’s existing operations, including cost efficiencies and leveraging existing client relationships, as well as from benefits derived from gaining the related assembled workforce. 2023 Acquisitions During the six months ended June 30, 2023, the Company acquired four centers in the United States and one center in Australia, in two separate business acquisitions, which were each accounted for as a business combination. The businesses were acquired for aggregate cash consideration of $30.8 million, which is subject to adjustments from the settlement of the final working capital and acquired enrollment. The Company recorded goodwill of $29.1 million related to the full service center-based child care segment in relation to these acquisitions, of which $25.3 million will be deductible for tax purposes. In addition, the Company recorded intangible assets of $3.3 million that will be amortized over four The determination and allocation of purchase price consideration is based on preliminary estimates of fair value; such estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date). As of June 30, 2023, the purchase price allocation for these acquisitions remains open as the Company gathers additional information regarding the assets acquired and the liabilities assumed. The operating results for the acquired businesses are included in the consolidated results of operations from the date of acquisition and were not material to the Company’s financial results. During the six months ended June 30, 2023, the Company paid contingent consideration of $0.2 million related to an acquisition completed in 2021, which had been recorded as a liability at the date of acquisition and is presented as cash used in financing activities in the consolidated statement of cash flows. 2022 Acquisitions Only About Children On July 1, 2022, the Company, through wholly-owned subsidiaries, completed the acquisition of the outstanding shares of Only About Children, a child care operator in Australia with approximately 75 early education and child care centers, for aggregate consideration of AUD$450 million (USD$310 million), which was accounted for as a business combination. The Company paid approximately AUD$300 million (USD$207 million), net of cash acquired and subject to customary purchase price adjustments, and will pay an additional USD$106.5 million 18 months after closing. In October 2022, the Company reached an agreement with the sellers on the final net working capital, resulting in a refund of AUD$2.6 million (USD$1.8 million), which was received in the fourth quarter of 2022. The present value of the deferred consideration of USD$97.7 million at the acquisition date and USD$103.5 million at June 30, 2023 is included in other current liabilities on the consolidated balance sheet. During the year ended December 31, 2022, the Company incurred acquisition-related transaction costs of approximately $9.2 million, which were included in selling, general and administrative expenses. In addition, the Company recognized realized losses of $5.9 million in relation to foreign currency forward contracts for the purchase of Australian dollars entered into in connection with settling the purchase price for the acquisition. Refer to Note 6, Credit Arrangements and Debt Obligations , for additional information on the foreign currency forward contracts. The purchase price for this acquisition has been allocated based on estimates of the fair value of the acquired assets and assumed liabilities at the date of acquisition as follows: At acquisition date Measurement period adjustments At acquisition date (In thousands) Cash $ 4,705 $ — $ 4,705 Accounts receivable and prepaid expenses 4,295 (54) 4,241 Fixed assets 21,702 (1,051) 20,651 Goodwill 283,466 4,056 287,522 Intangible assets 30,945 (3,377) 27,568 Operating lease right of use assets 156,678 (3,706) 152,972 Total assets acquired 501,791 (4,132) 497,659 Accounts payable and accrued expenses 17,991 772 18,763 Deferred revenue and parent deposits 6,809 62 6,871 Deferred tax liabilities 3,392 (3,392) — Operating lease liabilities 161,405 (1,715) 159,690 Other long-term liabilities 5,458 141 5,599 Total liabilities assumed 195,055 (4,132) 190,923 Purchase price $ 306,736 $ — $ 306,736 The Company recorded goodwill of $287.5 million related to the full service center-based child care segment, which will not be deductible for tax purposes. Intangible assets consist of customer relationships of $19.7 million with a six year life and trade name of $7.9 million with an eleven The operating results for Only About Children are included in the consolidated results of operations from the date of acquisition, and are reported with the full service center-based child care segment. Only About Children contributed total revenue of $68.7 million during the six months ended June 30, 2023. Net income for the six months ended June 30, 2023 was not materially impacted by the acquisition of Only About Children. The following table presents consolidated pro forma revenue as if the acquisition of Only About Children had occurred on January 1, 2021: Pro forma (In thousands) Revenue $ 1,019,667 Other than the impact of shifting the transaction costs incurred in 2022 to 2021, consolidated pro forma net income would not materially change from the reported results. In assessing the impact to the unaudited pro forma results we considered certain adjustments related to the acquisition, such as increased amortization expense related to the acquired intangible assets, adjusted depreciation associated with the fair value of the acquired fixed assets, and shifting of transaction costs. Other 2022 Acquisitions During the year ended December 31, 2022, the Company acquired one center in the United States, one center in the United Kingdom, and one center in the Netherlands, in three separate business acquisitions, which were each accounted for as a business combination. These businesses were acquired for aggregate cash consideration of $6.0 million, net of cash acquired of $0.2 million, and consideration payable of $0.2 million. The Company recorded goodwill of $5.6 million related to the full service center-based child care segment in relation to these acquisitions, of which $1.9 million will be deductible for tax purposes. In addition, the Company recorded intangible assets of $1.0 million that will be amortized over four years in relation to these acquisitions. The determination and allocation of purchase price consideration is based on preliminary estimates of fair value; such estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date). As of June 30, 2023, the purchase price allocation for two of the acquisitions remains open as the Company gathers additional information regarding the assets acquired and the liabilities assumed. The operating results for the acquired businesses are included in the consolidated results of operations from the date of acquisition and were not material to the Company’s financial results. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS The changes in the carrying amount of goodwill were as follows: Full service Back-up care Educational Total (In thousands) Balance at January 1, 2023 $ 1,481,936 $ 206,073 $ 39,843 $ 1,727,852 Additions from acquisitions 29,127 — — 29,127 Adjustments to prior year acquisitions 861 — — 861 Effect of foreign currency translation 8,547 1,093 — 9,640 Balance at June 30, 2023 $ 1,520,471 $ 207,166 $ 39,843 $ 1,767,480 The Company also has intangible assets, which consisted of the following at June 30, 2023 and December 31, 2022: June 30, 2023 Weighted average Cost Accumulated Net carrying (In thousands) Definite-lived intangible assets: Customer relationships 12 years $ 402,162 $ (358,755) $ 43,407 Trade names 10 years 19,555 (12,041) 7,514 421,717 (370,796) 50,921 Indefinite-lived intangible assets: Trade names N/A 180,556 — 180,556 $ 602,273 $ (370,796) $ 231,477 December 31, 2022 Weighted average Cost Accumulated Net carrying (In thousands) Definite-lived intangible assets: Customer relationships 12 years $ 398,238 $ (341,918) $ 56,320 Trade names 10 years 19,231 (10,236) 8,995 417,469 (352,154) 65,315 Indefinite-lived intangible assets: Trade names N/A 180,259 — 180,259 $ 597,728 $ (352,154) $ 245,574 The Company estimates that it will record amortization expense related to intangible assets existing as of June 30, 2023 as follows: Estimated amortization expense (In thousands) Remainder of 2023 $ 16,236 2024 17,493 2025 5,617 2026 3,994 2027 2,865 Thereafter 4,716 $ 50,921 |
CREDIT ARRANGEMENTS AND DEBT OB
CREDIT ARRANGEMENTS AND DEBT OBLIGATIONS | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
CREDIT ARRANGEMENTS AND DEBT OBLIGATIONS | CREDIT ARRANGEMENTS AND DEBT OBLIGATIONS Senior Secured Credit Facilities The Company’s senior secured credit facilities consist of a $600 million term loan B facility (“term loan B”) and a $400 million term loan A facility (“term loan A” and together with term loan B, the “term loan facilities” or “term loans”), as well as a $400 million multi-currency revolving credit facility (“revolving credit facility”). Long-term debt obligations were as follows: June 30, 2023 December 31, 2022 (In thousands) Term loan B $ 591,000 $ 594,000 Term loan A 385,000 390,000 Deferred financing costs and original issue discount (5,828) (6,419) Total debt 970,172 977,581 Less current maturities (16,000) (16,000) Long-term debt $ 954,172 $ 961,581 On December 21, 2022, the Company amended its existing senior secured credit facilities to replace the LIBOR-based benchmark rate with a term SOFR benchmark rate, which did not alter the applicable interest rates held in effect prior to the change. The amendment was treated as a modification and the related transaction costs were expensed as incurred. All borrowings under the credit facilities are subject to variable interest. The effective interest rate for the term loans was 7.27% and 6.49% at June 30, 2023 and December 31, 2022, respectively, and the weighted average interest rate was 6.91% and 2.56% for the six months ended June 30, 2023 and 2022, respectively, prior to the effects of any interest rate hedge arrangements. The weighted average interest rate for the revolving credit facility was 7.07% and 5.25% for the six months ended June 30, 2023 and 2022, respectively. Term Loan B Facility The seven-year term loan B matures on November 23, 2028 and requires quarterly principal payments equal to 1% per annum of the original aggregate principal amount of the term loan B, with the remaining principal balance due at maturity. Borrowings under the term loan B facility bear interest at a rate per annum of 1.25% over the base rate, or 2.25% over the adjusted term SOFR rate. The base rate is subject to an interest rate floor of 1.50% and the adjusted term SOFR rate is subject to an interest rate floor of 0.50%. Term Loan A Facility The five-year term loan A matures on November 23, 2026 and requires quarterly principal payments equal to 2.5% per annum of the original aggregate principal amount of the term loan A in each of the first three years, 5.0% in the fourth year, and 7.5% in the fifth year. The remaining principal balance is due at maturity. Borrowings under the term loan A facility bear interest at a rate per annum ranging from 0.50% to 0.75% over the base rate, or 1.50% to 1.75% over the adjusted term SOFR rate. The base rate is subject to an interest rate floor of 1.00% and the adjusted term SOFR rate is subject to an interest rate floor of 0.00%. Revolving Credit Facility The $400 million multi-currency revolving credit facility matures on May 26, 2026. At June 30, 2023, there were no borrowings outstanding on the revolving credit facility and letters of credit outstanding were $14.3 million, with $385.7 million available for borrowing. At December 31, 2022, borrowings outstanding on the revolving credit facility were $84.0 million and letters of credit outstanding were $5.2 million. Borrowings under the revolving credit facility bear interest at a rate per annum ranging from 0.50% to 0.75% over the base rate, or 1.50% to 1.75% over the adjusted term SOFR rate. The base rate is subject to an interest rate floor of 1.00% and the adjusted term SOFR rate is subject to an interest rate floor of 0.00%. Debt Covenants All obligations under the senior secured credit facilities are secured by substantially all the assets of the Company’s material U.S. subsidiaries. The senior secured credit facilities contain a number of covenants that, among other things and subject to certain exceptions, may restrict the ability of Bright Horizons Family Solutions LLC, the Company’s wholly-owned subsidiary, and its restricted subsidiaries, to: incur liens; make investments, loans, advances and acquisitions; incur additional indebtedness or guarantees; pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness; engage in transactions with affiliates; sell assets, including capital stock of the Company’s subsidiaries; alter the business conducted; enter into agreements restricting the Company’s subsidiaries’ ability to pay dividends; and consolidate or merge. In addition, the credit agreement governing the senior secured credit facilities requires Bright Horizons Capital Corp., the Company’s direct subsidiary, to be a passive holding company, subject to certain exceptions. The term loan A and the revolving credit facility require Bright Horizons Family Solutions LLC, the borrower, and its restricted subsidiaries, to comply with a maximum first lien net leverage ratio not to exceed 4.25 to 1.00. A breach of the applicable covenant is subject to certain equity cure rights. Future principal payments of long-term debt are as follows for the years ending December 31: Long-term debt (In thousands) Remainder of 2023 $ 8,000 2024 18,500 2025 28,500 2026 351,000 2027 6,000 Thereafter 564,000 Total future principal payments $ 976,000 Derivative Financial Instruments The Company is subject to interest rate risk, as all borrowings under the senior secured credit facilities are subject to variable interest rates. The Company’s risk management policy permits using derivative instruments to manage interest rate and other risks. The Company uses interest rate caps to manage a portion of the risk related to changes in cash flows from interest rate movements. On December 21, 2022, the Company amended its existing interest rate cap agreements in conjunction with the amendment to its senior secured credit facilities and replaced the one-month LIBOR rate with the one-month term SOFR rate. In June 2020, the Company entered into interest rate cap agreements with a total notional value of $800 million, designated and accounted for as cash flow hedges from inception, to provide the Company with interest rate protection in the event the one-month LIBOR rate increases above 1% (effective December 30, 2022, one-month term SOFR rate increases above 0.9%). Interest rate cap agreements for $300 million notional value have an effective date of June 30, 2020 and expire on October 31, 2023, while interest rate cap agreements for another $500 million notional amount have an effective date of October 29, 2021 and expire on October 31, 2023. In December 2021, the Company entered into additional interest rate cap agreements with a total notional value of $900 million designated and accounted for as cash flow hedges from inception. Interest rate cap agreements for $600 million, which have a forward starting effective date of October 31, 2023 and expire on October 31, 2025, provide the Company with interest rate protection in the event the one-month LIBOR rate increases above 2.5% (effective December 30, 2022, one-month term SOFR rate increases above 2.4%). Interest rate cap agreements for $300 million, which have a forward starting effective date of October 31, 2023 and expire on October 31, 2026, provide the Company with interest rate protection in the event the one-month LIBOR rate increases above 3.0% (effective December 30, 2022, one-month term SOFR rate increases above 2.9%). During the year ended December 31, 2022, the Company entered into foreign currency forward contracts in connection with an acquisition in Australia completed on July 1, 2022. The Company entered into the foreign currency forwards to lock the purchase price in US dollars at closing and mitigate the impact of foreign currency fluctuations between signing of the definitive purchase agreement on May 3, 2022 and closing. The forward contracts had a total notional value of approximately AUD$320 million, which included the expected payments for the purchase price and for letters of credit used to guarantee certain lease arrangements. The cash flows associated with the business combination do not meet the criteria to be designated and accounted for as a cash flow hedge and, as such, foreign currency gains and losses on these forwards are recorded on the consolidated statement of income. During the year ended December 31, 2022, the Company recognized realized losses of $5.9 million in relation to these forwards due to fluctuations in the Australian dollar. The fair value of the derivative financial instruments was as follows for the periods presented: Derivative financial instruments Consolidated balance sheet classification June 30, 2023 December 31, 2022 (In thousands) Interest rate caps - asset Prepaid and other current assets $ 11,591 $ 25,464 Interest rate caps - asset Other assets $ 37,108 $ 28,553 The effect of the derivative financial instruments on other comprehensive income (loss) was as follows: Derivatives designated as cash flow hedging instruments Amount of gain (loss) recognized in other comprehensive income (loss) Consolidated statement of income classification Amount of net gain (loss) reclassified into earnings Total effect on other comprehensive income (loss) (In thousands) (In thousands) Three months ended June 30, 2023 Cash flow hedges $ 15,312 Interest expense — net $ 8,004 $ 7,308 Income tax effect (4,088) Income tax expense (2,137) (1,951) Net of income taxes $ 11,224 $ 5,867 $ 5,357 Three months ended June 30, 2022 Cash flow hedges $ 6,847 Interest expense — net $ (68) $ 6,915 Income tax effect (1,828) Income tax expense 18 (1,846) Net of income taxes $ 5,019 $ (50) $ 5,069 Derivatives designated as cash flow hedging instruments Amount of gain (loss) recognized in other comprehensive income (loss) Consolidated statement of income classification Amount of net gain (loss) reclassified into earnings Total effect on other comprehensive income (loss) (In thousands) (In thousands) Six months ended June 30, 2023 Cash flow hedges $ 10,048 Interest expense — net $ 14,980 $ (4,932) Income tax effect (2,683) Income tax expense (4,000) 1,317 Net of income taxes $ 7,365 $ 10,980 $ (3,615) Six months ended June 30, 2022 Cash flow hedges $ 31,760 Interest expense — net $ (171) $ 31,931 Income tax effect (8,480) Income tax expense (431) (8,049) Net of income taxes $ 23,280 $ (602) $ 23,882 During the next 12 months, the Company estimates that a net gain of $25.2 million, pre-tax, will be reclassified from accumulated other comprehensive loss and recorded as a reduction to interest expense related to these derivative financial instruments. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The following tables set forth the computation of basic and diluted earnings per share using the two-class method: Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 (In thousands, except share data) Basic earnings per share: Net income $ 20,594 $ 24,945 $ 28,720 $ 44,351 Allocation of net income to common stockholders: Common stock $ 20,548 $ 24,840 $ 28,646 $ 44,164 Unvested participating shares 46 105 74 187 Net income $ 20,594 $ 24,945 $ 28,720 $ 44,351 Weighted average common shares outstanding: Common stock 57,707,565 59,113,044 57,655,715 59,103,884 Unvested participating shares 129,045 248,969 165,897 249,684 Earnings per common share: Common stock $ 0.36 $ 0.42 $ 0.50 $ 0.75 Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 (In thousands, except share data) Diluted earnings per share: Earnings allocated to common stock $ 20,548 $ 24,840 $ 28,646 $ 44,164 Plus: earnings allocated to unvested participating shares 46 105 74 187 Less: adjusted earnings allocated to unvested participating shares (46) (104) (74) (186) Earnings allocated to common stock $ 20,548 $ 24,841 $ 28,646 $ 44,165 Weighted average common shares outstanding: Common stock 57,707,565 59,113,044 57,655,715 59,103,884 Effect of dilutive securities 197,859 139,825 151,952 230,223 Weighted average common shares outstanding — diluted 57,905,424 59,252,869 57,807,667 59,334,107 Earnings per common share: Common stock $ 0.35 $ 0.42 $ 0.50 $ 0.74 Equity awards outstanding to purchase or receive 1.8 million and 2.0 million shares of common stock were excluded from diluted earnings per share for the three months ended June 30, 2023 and 2022, respectively, and 1.9 million and 1.6 million shares of common stock were excluded from diluted earnings per share for the six months ended June 30, 2023 and 2022, respectively, since their effect was anti-dilutive. These equity awards may become dilutive in the future. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXESThe Company’s effective income tax rates were 38.2% and 26.6% for the three months ended June 30, 2023 and 2022, respectively, and 43.7% and 23.6% for the six months ended June 30, 2023 and 2022, respectively. The effective income tax rate may fluctuate from quarter to quarter for various reasons, including changes to income before income tax, jurisdictional mix of income before income tax, unbenefited losses, valuation allowances, jurisdictional income tax rate changes, as well as discrete items such as non-deductible transaction costs, the settlement of foreign, federal and state tax issues and the effects of excess (shortfall) tax benefit (expense) associated with the exercise or expiration of stock options and vesting of restricted stock, which is included in tax expense. During the three and six months ended June 30, 2023, the net shortfall tax expense from stock-based compensation expense increased tax expense by $0.8 million and $2.9 million, respectively. During the three and six months ended June 30, 2022, the excess tax benefit from stock-based compensation expense decreased tax expense by $0.7 million and $2.7 million, respectively. For the three and six months ended June 30, 2023 and 2022, prior to the inclusion of the excess (shortfall) tax benefit (expense), other discrete items and unbenefited losses in certain foreign jurisdictions, the effective income tax rate approximated 28%. The Company’s unrecognized tax benefits were $4.1 million and $3.8 million at June 30, 2023 and December 31, 2022, respectively, inclusive of interest. The Company does not expect the unrecognized tax benefits to change over the next twelve months. The Company and its domestic subsidiaries are subject to U.S. federal income tax as well as tax in multiple state jurisdictions. U.S. federal income tax returns are typically subject to examination by the Internal Revenue Service and the statute of limitations for federal tax returns is three years. The Company’s filings for the tax years 2019 through 2021 are subject to audit based upon the federal statute of limitations. State income tax returns are generally subject to examination for a period of three to four years after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. The Company's filings for the tax years 2018 through 2021 are subject to audit based upon the statute of limitations. The Company is also subject to corporate income tax for its subsidiaries located in the United Kingdom, the Netherlands, Australia, India, and Puerto Rico. The tax returns for the Company’s subsidiaries located in foreign jurisdictions are subject to examination for periods ranging from one to five years. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified using a three-level hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The Company uses observable inputs where relevant and whenever possible. The three levels of the hierarchy are defined as follows: Level 1 — Fair value is derived using quoted prices from active markets for identical instruments. Level 2 — Fair value is derived using quoted prices for similar instruments from active markets or for identical or similar instruments in markets that are not active; or, fair value is based on model-derived valuations in which all significant inputs and significant value drivers are observable from active markets. Level 3 — Fair value is derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The carrying value of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable and accrued expenses approximates their fair value because of their short-term nature. Financial instruments that potentially expose the Company to concentrations of credit risk consisted mainly of cash and accounts receivable. The Company mitigates its exposure by maintaining its cash in financial institutions of high credit standing. The Company’s accounts receivable is derived primarily from the services it provides, and the related credit risk is dispersed across many clients in various industries with no single client accounting for more than 10% of the Company’s net revenue or accounts receivable. No significant credit concentration risk existed at June 30, 2023. Long-term Debt — The Company’s long-term debt is recorded at adjusted cost, net of original issue discounts and deferred financing costs. The fair value of the Company’s long-term debt is based on current bid prices or prices for similar instruments from active markets. As such, the Company’s long-term debt was classified as Level 2. As of June 30, 2023, the carrying value and estimated fair value of long-term debt was $970.2 million and $973.8 million, respectively. As of December 31, 2022, the estimated fair value approximated the carrying value of long-term debt. Derivative Financial Instruments — The Company’s interest rate cap agreements are recorded at fair value and estimated using market-standard valuation models. Such models project future cash flows and discount the future amounts to a present value using market-based observable inputs. Additionally, the fair value of the interest rate caps included consideration of credit risk. The Company used a potential future exposure model to estimate this credit valuation adjustment (“CVA”). The inputs to the CVA were largely based on observable market data, with the exception of certain assumptions regarding credit worthiness. As the magnitude of the CVA was not a significant component of the fair value of the interest rate caps, it was not considered a significant input. The fair value of the interest rate caps is classified as Level 2. As of June 30, 2023, the fair value of the interest rate cap agreements was $48.7 million, of which $11.6 million was recorded in prepaid expenses prepaid expenses Debt Securities — The Company’s investments in debt securities, which are classified as available-for-sale, consist of U.S. Treasury and U.S. government agency securities and certificates of deposit. These securities are held in escrow by the Company’s wholly-owned captive insurance company and were purchased with restricted cash. As such, these securities are not available to fund the Company’s operations. These securities are recorded at fair value using quoted prices available in active markets and are classified as Level 1. As of June 30, 2023, the fair value of the available-for-sale debt securities was $25.9 million and was classified based on the instruments’ maturity dates, with $18.4 million included in prepaid expenses and other current assets and $7.5 million in other assets on the consolidated balance sheet. As of December 31, 2022, the fair value of the available-for-sale debt securities was $29.6 million, with $17.7 million included in prepaid expenses and other current assets and $11.9 million in other assets on the consolidated balance sheet. At June 30, 2023 and December 31, 2022, the amortized cost was $26.2 million and $29.8 million, respectively. The debt securities held at June 30, 2023 had remaining maturities ranging from less than one year to approximately two years. Unrealized gains and losses, net of tax, on available-for-sale debt securities were immaterial for the three and six months ended June 30, 2023 and 2022. Liabilities for Contingent Consideration — The Company is subject to contingent consideration arrangements in connection with certain business combinations. Liabilities for contingent consideration are measured at fair value each reporting period, with the acquisition-date fair value included as part of the consideration payable for the related business combination and subsequent changes in fair value recorded to selling, general and administrative expenses on the Company’s consolidated statement of income. The fair value of contingent consideration was generally calculated using customary valuation models based on probability-weighted outcomes of meeting certain future performance targets and forecasted results. The key inputs to the valuations are the projections of future financial results in relation to the businesses and the company-specific discount rates. The Company classified the contingent consideration liabilities as a Level 3 fair value measurement due to the lack of observable inputs used in the model. During the six months ended June 30, 2023, contingent consideration liabilities of $0.2 million were paid related to an acquisition completed in 2021. The contingent consideration liabilities outstanding as of June 30, 2023 relate to an acquisition completed in 2021. The following table provides a roll forward of the recurring Level 3 fair value measurements: Six months ended June 30, 2023 (In thousands) Balance at January 1, 2023 $ 8,997 Settlement of contingent consideration liabilities (225) Changes in fair value 856 Balance at June 30, 2023 $ 9,628 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated other comprehensive loss, which is included as a component of stockholders’ equity, is comprised of foreign currency translation adjustments and unrealized gains (losses) on cash flow hedges and investments, net of tax. The changes in accumulated other comprehensive income (loss) by component were as follows: Six months ended June 30, 2023 Foreign currency Unrealized gain (loss) on Unrealized gain (loss) on Total (In thousands) Balance at January 1, 2023 $ (105,138) $ 34,738 $ (229) $ (70,629) Other comprehensive income (loss) before reclassifications — net of tax 16,336 7,365 (40) 23,661 Less: amounts reclassified from accumulated other comprehensive income (loss) — net of tax — 10,980 (61) 10,919 Net other comprehensive income (loss) 16,336 (3,615) 21 12,742 Balance at June 30, 2023 $ (88,802) $ 31,123 $ (208) $ (57,887) Six months ended June 30, 2022 Foreign currency Unrealized gain (loss) on Unrealized gain (loss) on Total (In thousands) Balance at January 1, 2022 $ (38,073) $ 738 $ (24) $ (37,359) Other comprehensive income (loss) before reclassifications — net of tax (63,351) 23,280 (175) (40,246) Less: amounts reclassified from accumulated other comprehensive income (loss) — net of tax — (602) — (602) Net other comprehensive income (loss) (63,351) 23,882 (175) (39,644) Balance at June 30, 2022 $ (101,424) $ 24,620 $ (199) $ (77,003) (1) Taxes are not provided for the currency translation adjustments related to the undistributed earnings of foreign subsidiaries that are intended to be indefinitely reinvested. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATIONThe Company’s reportable segments are comprised of (1) full service center-based child care, (2) back-up care, and (3) educational advisory and other services. The full service center-based child care segment includes the traditional center-based early education and child care, preschool, and elementary education. The Company’s back-up care segment consists of center-based back-up child care, in-home care for children and adult/elder dependents, school-age camps, virtual tutoring, pet care and self-sourced reimbursed care. The Company’s educational advisory and other services segment consists of tuition assistance and student loan repayment program management, workforce education, related educational advising, college advisory services, and Sittercity, an online marketplace for families and caregivers, which have been aggregated. The Company and its chief operating decision maker evaluate performance based on revenue and income from operations. Intercompany activity is eliminated in the segment results. The assets and liabilities of the Company are managed centrally and are reported internally in the same manner as the consolidated financial statements; therefore, no segment asset information is produced or included herein. Revenue and income from operations by reportable segment were as follows: Full service Back-up care Educational Total (In thousands) Three months ended June 30, 2023 Revenue $ 458,531 $ 116,403 $ 28,282 $ 603,216 Income from operations 13,070 26,908 5,554 45,532 Three months ended June 30, 2022 Revenue $ 371,316 $ 91,714 $ 27,311 $ 490,341 Income from operations (1) 19,722 25,119 2,981 47,822 (1) For the three months ended June 30, 2022, income from operations included $2.5 million of transaction costs related to acquisitions which was allocated to the full service center-based child care segment. Full service Back-up care Educational Total (In thousands) Six months ended June 30, 2023 Revenue $ 888,722 $ 212,733 $ 55,367 $ 1,156,822 Income from operations (1) 21,503 44,279 10,395 76,177 Six months ended June 30, 2022 Revenue $ 725,248 $ 172,558 $ 52,944 $ 950,750 Income from operations (2) 26,883 45,577 6,526 78,986 (1) For the six months ended June 30, 2023, income from operations included a value-added-tax expense of $6.0 million related to prior periods, of which $4.3 million was associated with the back-up care segment and $1.7 million was associated with the full service center-based child care segment. Refer to Note 1, Organization and Basis of Presentation , for additional information. (2) For the six months ended June 30, 2022, income from operations included $2.5 million of transaction costs related to acquisitions which was allocated to the full service center-based child care segment. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net income | $ 20,594 | $ 24,945 | $ 28,720 | $ 44,351 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 shares | Jun. 30, 2023 shares | |
Trading Arrangements, by Individual | ||
Non-Rule 10b5-1 Arrangement Adopted | false | |
Rule 10b5-1 Arrangement Terminated | false | |
Non-Rule 10b5-1 Arrangement Terminated | false | |
Mary Lou Burke Afonso [Member] | ||
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | On June 5, 2023, Mary Lou Burke Afonso, Chief Operating Officer, North America Center Operations, adopted a stock trading plan for the sale of up to 14,100 shares of the Company’s common stock until March 1, 2024. This trading plan was entered during an open insider trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended, and the Company’s policies regarding transactions in our securities. | |
Title | Chief Operating Officer | |
Rule 10b5-1 Arrangement Adopted | true | |
Adoption Date | June 5, 2023 | |
Arrangement Duration | 270 days | |
Aggregate Available | 14,100 | 14,100 |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation — The accompanying unaudited condensed consolidated balance sheet as of June 30, 2023 and the unaudited condensed consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the interim periods ended June 30, 2023 and 2022 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required in accordance with U.S. GAAP for complete financial statements and should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the Company’s unaudited condensed consolidated balance sheet as of June 30, 2023 and the unaudited condensed consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the interim periods ended June 30, 2023 and 2022, reflect all adjustments (consisting only of normal and recurring adjustments) necessary to present fairly the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year. |
Fair Value Measurement | Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified using a three-level hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The Company uses observable inputs where relevant and whenever possible. The three levels of the hierarchy are defined as follows: Level 1 — Fair value is derived using quoted prices from active markets for identical instruments. Level 2 — Fair value is derived using quoted prices for similar instruments from active markets or for identical or similar instruments in markets that are not active; or, fair value is based on model-derived valuations in which all significant inputs and significant value drivers are observable from active markets. Level 3 — Fair value is derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Revenue disaggregated by segment and geographical region was as follows: Full service Back-up care Educational Total (In thousands) Three months ended June 30, 2023 North America $ 300,014 $ 107,121 $ 28,282 $ 435,417 International 158,517 9,282 — 167,799 $ 458,531 $ 116,403 $ 28,282 $ 603,216 Three months ended June 30, 2022 North America $ 257,822 $ 85,096 $ 27,311 $ 370,229 International 113,494 6,618 — 120,112 $ 371,316 $ 91,714 $ 27,311 $ 490,341 Full service Back-up care Educational Total (In thousands) Six months ended June 30, 2023 North America $ 584,598 $ 195,941 $ 55,367 $ 835,906 International 304,124 16,792 — 320,916 $ 888,722 $ 212,733 $ 55,367 $ 1,156,822 Six months ended June 30, 2022 North America $ 501,059 $ 161,025 $ 52,944 $ 715,028 International 224,189 11,533 — 235,722 $ 725,248 $ 172,558 $ 52,944 $ 950,750 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Components of Lease Expense | The components of lease expense were as follows: Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 (In thousands) Operating lease expense (1) $ 39,459 $ 32,359 $ 77,427 $ 64,887 Variable lease expense (1) 10,565 9,768 21,740 19,712 Total lease expense $ 50,024 $ 42,127 $ 99,167 $ 84,599 (1) Excludes short-term lease expense and sublease income, which were immaterial for the periods presented. |
Schedule of Weighted Average Remaining Lease Term and Discount Rate | The weighted average remaining lease term and the weighted average discount rate were as follows: June 30, 2023 December 31, 2022 Weighted average remaining lease term (in years) 10 10 Weighted average discount rate 7.0% 6.7% |
Maturities of Lease Liabilities | The following table summarizes the maturity of lease liabilities as of June 30, 2023: Operating Leases (In thousands) Remainder of 2023 $ 65,902 2024 154,654 2025 143,834 2026 136,610 2027 127,193 Thereafter 667,174 Total lease payments 1,295,367 Less imputed interest (385,266) Present value of lease liabilities 910,101 Less current portion of operating lease liabilities (97,469) Long-term operating lease liabilities $ 812,632 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The purchase price for this acquisition has been allocated based on estimates of the fair value of the acquired assets and assumed liabilities at the date of acquisition as follows: At acquisition date Measurement period adjustments At acquisition date (In thousands) Cash $ 4,705 $ — $ 4,705 Accounts receivable and prepaid expenses 4,295 (54) 4,241 Fixed assets 21,702 (1,051) 20,651 Goodwill 283,466 4,056 287,522 Intangible assets 30,945 (3,377) 27,568 Operating lease right of use assets 156,678 (3,706) 152,972 Total assets acquired 501,791 (4,132) 497,659 Accounts payable and accrued expenses 17,991 772 18,763 Deferred revenue and parent deposits 6,809 62 6,871 Deferred tax liabilities 3,392 (3,392) — Operating lease liabilities 161,405 (1,715) 159,690 Other long-term liabilities 5,458 141 5,599 Total liabilities assumed 195,055 (4,132) 190,923 Purchase price $ 306,736 $ — $ 306,736 |
Business Acquisition, Pro Forma Information | The following table presents consolidated pro forma revenue as if the acquisition of Only About Children had occurred on January 1, 2021: Pro forma (In thousands) Revenue $ 1,019,667 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill were as follows: Full service Back-up care Educational Total (In thousands) Balance at January 1, 2023 $ 1,481,936 $ 206,073 $ 39,843 $ 1,727,852 Additions from acquisitions 29,127 — — 29,127 Adjustments to prior year acquisitions 861 — — 861 Effect of foreign currency translation 8,547 1,093 — 9,640 Balance at June 30, 2023 $ 1,520,471 $ 207,166 $ 39,843 $ 1,767,480 |
Schedule of Intangible Assets | The Company also has intangible assets, which consisted of the following at June 30, 2023 and December 31, 2022: June 30, 2023 Weighted average Cost Accumulated Net carrying (In thousands) Definite-lived intangible assets: Customer relationships 12 years $ 402,162 $ (358,755) $ 43,407 Trade names 10 years 19,555 (12,041) 7,514 421,717 (370,796) 50,921 Indefinite-lived intangible assets: Trade names N/A 180,556 — 180,556 $ 602,273 $ (370,796) $ 231,477 December 31, 2022 Weighted average Cost Accumulated Net carrying (In thousands) Definite-lived intangible assets: Customer relationships 12 years $ 398,238 $ (341,918) $ 56,320 Trade names 10 years 19,231 (10,236) 8,995 417,469 (352,154) 65,315 Indefinite-lived intangible assets: Trade names N/A 180,259 — 180,259 $ 597,728 $ (352,154) $ 245,574 |
Estimated Amortization Expense Related to Intangible Assets | The Company estimates that it will record amortization expense related to intangible assets existing as of June 30, 2023 as follows: Estimated amortization expense (In thousands) Remainder of 2023 $ 16,236 2024 17,493 2025 5,617 2026 3,994 2027 2,865 Thereafter 4,716 $ 50,921 |
CREDIT ARRANGEMENTS AND DEBT _2
CREDIT ARRANGEMENTS AND DEBT OBLIGATIONS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Outstanding Borrowings | Long-term debt obligations were as follows: June 30, 2023 December 31, 2022 (In thousands) Term loan B $ 591,000 $ 594,000 Term loan A 385,000 390,000 Deferred financing costs and original issue discount (5,828) (6,419) Total debt 970,172 977,581 Less current maturities (16,000) (16,000) Long-term debt $ 954,172 $ 961,581 |
Schedule of Maturities of Long-term Debt | Future principal payments of long-term debt are as follows for the years ending December 31: Long-term debt (In thousands) Remainder of 2023 $ 8,000 2024 18,500 2025 28,500 2026 351,000 2027 6,000 Thereafter 564,000 Total future principal payments $ 976,000 |
Schedule of Fair Value of Derivative Financial Instruments | The fair value of the derivative financial instruments was as follows for the periods presented: Derivative financial instruments Consolidated balance sheet classification June 30, 2023 December 31, 2022 (In thousands) Interest rate caps - asset Prepaid and other current assets $ 11,591 $ 25,464 Interest rate caps - asset Other assets $ 37,108 $ 28,553 |
Schedule of the Effect of Derivatives Financial Instruments on Other Comprehensive Income (Loss) | The effect of the derivative financial instruments on other comprehensive income (loss) was as follows: Derivatives designated as cash flow hedging instruments Amount of gain (loss) recognized in other comprehensive income (loss) Consolidated statement of income classification Amount of net gain (loss) reclassified into earnings Total effect on other comprehensive income (loss) (In thousands) (In thousands) Three months ended June 30, 2023 Cash flow hedges $ 15,312 Interest expense — net $ 8,004 $ 7,308 Income tax effect (4,088) Income tax expense (2,137) (1,951) Net of income taxes $ 11,224 $ 5,867 $ 5,357 Three months ended June 30, 2022 Cash flow hedges $ 6,847 Interest expense — net $ (68) $ 6,915 Income tax effect (1,828) Income tax expense 18 (1,846) Net of income taxes $ 5,019 $ (50) $ 5,069 Derivatives designated as cash flow hedging instruments Amount of gain (loss) recognized in other comprehensive income (loss) Consolidated statement of income classification Amount of net gain (loss) reclassified into earnings Total effect on other comprehensive income (loss) (In thousands) (In thousands) Six months ended June 30, 2023 Cash flow hedges $ 10,048 Interest expense — net $ 14,980 $ (4,932) Income tax effect (2,683) Income tax expense (4,000) 1,317 Net of income taxes $ 7,365 $ 10,980 $ (3,615) Six months ended June 30, 2022 Cash flow hedges $ 31,760 Interest expense — net $ (171) $ 31,931 Income tax effect (8,480) Income tax expense (431) (8,049) Net of income taxes $ 23,280 $ (602) $ 23,882 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings (Loss) Per Share, Basic | The following tables set forth the computation of basic and diluted earnings per share using the two-class method: Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 (In thousands, except share data) Basic earnings per share: Net income $ 20,594 $ 24,945 $ 28,720 $ 44,351 Allocation of net income to common stockholders: Common stock $ 20,548 $ 24,840 $ 28,646 $ 44,164 Unvested participating shares 46 105 74 187 Net income $ 20,594 $ 24,945 $ 28,720 $ 44,351 Weighted average common shares outstanding: Common stock 57,707,565 59,113,044 57,655,715 59,103,884 Unvested participating shares 129,045 248,969 165,897 249,684 Earnings per common share: Common stock $ 0.36 $ 0.42 $ 0.50 $ 0.75 |
Schedule of Earnings (Loss) Per Share, Diluted | Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 (In thousands, except share data) Diluted earnings per share: Earnings allocated to common stock $ 20,548 $ 24,840 $ 28,646 $ 44,164 Plus: earnings allocated to unvested participating shares 46 105 74 187 Less: adjusted earnings allocated to unvested participating shares (46) (104) (74) (186) Earnings allocated to common stock $ 20,548 $ 24,841 $ 28,646 $ 44,165 Weighted average common shares outstanding: Common stock 57,707,565 59,113,044 57,655,715 59,103,884 Effect of dilutive securities 197,859 139,825 151,952 230,223 Weighted average common shares outstanding — diluted 57,905,424 59,252,869 57,807,667 59,334,107 Earnings per common share: Common stock $ 0.35 $ 0.42 $ 0.50 $ 0.74 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Roll Forward of the Fair Value of Recurring Level 3 Fair Value Measurements | The following table provides a roll forward of the recurring Level 3 fair value measurements: Six months ended June 30, 2023 (In thousands) Balance at January 1, 2023 $ 8,997 Settlement of contingent consideration liabilities (225) Changes in fair value 856 Balance at June 30, 2023 $ 9,628 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Schedule of Changes in Accumulated Other Comprehensive Income (Loss) | The changes in accumulated other comprehensive income (loss) by component were as follows: Six months ended June 30, 2023 Foreign currency Unrealized gain (loss) on Unrealized gain (loss) on Total (In thousands) Balance at January 1, 2023 $ (105,138) $ 34,738 $ (229) $ (70,629) Other comprehensive income (loss) before reclassifications — net of tax 16,336 7,365 (40) 23,661 Less: amounts reclassified from accumulated other comprehensive income (loss) — net of tax — 10,980 (61) 10,919 Net other comprehensive income (loss) 16,336 (3,615) 21 12,742 Balance at June 30, 2023 $ (88,802) $ 31,123 $ (208) $ (57,887) Six months ended June 30, 2022 Foreign currency Unrealized gain (loss) on Unrealized gain (loss) on Total (In thousands) Balance at January 1, 2022 $ (38,073) $ 738 $ (24) $ (37,359) Other comprehensive income (loss) before reclassifications — net of tax (63,351) 23,280 (175) (40,246) Less: amounts reclassified from accumulated other comprehensive income (loss) — net of tax — (602) — (602) Net other comprehensive income (loss) (63,351) 23,882 (175) (39,644) Balance at June 30, 2022 $ (101,424) $ 24,620 $ (199) $ (77,003) (1) Taxes are not provided for the currency translation adjustments related to the undistributed earnings of foreign subsidiaries that are intended to be indefinitely reinvested. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Revenue and Income from Operations by Segment | Revenue and income from operations by reportable segment were as follows: Full service Back-up care Educational Total (In thousands) Three months ended June 30, 2023 Revenue $ 458,531 $ 116,403 $ 28,282 $ 603,216 Income from operations 13,070 26,908 5,554 45,532 Three months ended June 30, 2022 Revenue $ 371,316 $ 91,714 $ 27,311 $ 490,341 Income from operations (1) 19,722 25,119 2,981 47,822 (1) For the three months ended June 30, 2022, income from operations included $2.5 million of transaction costs related to acquisitions which was allocated to the full service center-based child care segment. Full service Back-up care Educational Total (In thousands) Six months ended June 30, 2023 Revenue $ 888,722 $ 212,733 $ 55,367 $ 1,156,822 Income from operations (1) 21,503 44,279 10,395 76,177 Six months ended June 30, 2022 Revenue $ 725,248 $ 172,558 $ 52,944 $ 950,750 Income from operations (2) 26,883 45,577 6,526 78,986 (1) For the six months ended June 30, 2023, income from operations included a value-added-tax expense of $6.0 million related to prior periods, of which $4.3 million was associated with the back-up care segment and $1.7 million was associated with the full service center-based child care segment. Refer to Note 1, Organization and Basis of Presentation , for additional information. (2) For the six months ended June 30, 2022, income from operations included $2.5 million of transaction costs related to acquisitions which was allocated to the full service center-based child care segment. |
ORGANIZATION AND BASIS OF PRE_3
ORGANIZATION AND BASIS OF PRESENTATION (Details) | 6 Months Ended | ||||
Jul. 01, 2022 center | Jun. 30, 2023 USD ($) shares | Jun. 30, 2022 USD ($) shares | Dec. 31, 2022 USD ($) | Dec. 16, 2021 USD ($) | |
Line of Credit Facility [Line Items] | |||||
Stock repurchase program, authorized amount | $ 400,000,000 | ||||
Stock repurchased (in shares) | shares | 0 | 900,000 | |||
Stock repurchase program, remaining authorized repurchase amount | $ 198,300,000 | ||||
Stock repurchased | $ 84,200,000 | ||||
Governmental assistance, reduction to cost of services | 35,100,000 | 46,700,000 | |||
Reduction of operating subsidies for the related child care centers | 12,200,000 | 16,000,000 | |||
Revenue recognized | 175,200,000 | 181,000,000 | |||
Full service center-based child care | Value-Added Tax Incurred In Prior Periods | |||||
Line of Credit Facility [Line Items] | |||||
Occupancy costs | 6,000,000 | ||||
Full service center-based child care | Value-Added Tax Incurred In Prior Periods | Cost of Sales | |||||
Line of Credit Facility [Line Items] | |||||
Occupancy costs | 4,300,000 | ||||
Full service center-based child care | Value-Added Tax Incurred In Prior Periods | Selling, General and Administrative Expenses | |||||
Line of Credit Facility [Line Items] | |||||
Occupancy costs | 1,700,000 | ||||
Only About Children | |||||
Line of Credit Facility [Line Items] | |||||
Number of centers acquired | center | 75 | ||||
Tuition Support | |||||
Line of Credit Facility [Line Items] | |||||
Revenue recognized | 1,200,000 | $ 3,400,000 | |||
Prepaid and other current assets | |||||
Line of Credit Facility [Line Items] | |||||
Due from government assistance programs | 2,300,000 | $ 1,200,000 | |||
Other long-term liabilities | |||||
Line of Credit Facility [Line Items] | |||||
Payroll tax deferrals | $ 2,500,000 | $ 4,600,000 |
REVENUE RECOGNITION - Disaggreg
REVENUE RECOGNITION - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 603,216 | $ 490,341 | $ 1,156,822 | $ 950,750 |
North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 435,417 | 370,229 | 835,906 | 715,028 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 167,799 | 120,112 | 320,916 | 235,722 |
Full service center-based child care | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 458,531 | 371,316 | 888,722 | 725,248 |
Full service center-based child care | North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 300,014 | 257,822 | 584,598 | 501,059 |
Full service center-based child care | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 158,517 | 113,494 | 304,124 | 224,189 |
Back-up care | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 116,403 | 91,714 | 212,733 | 172,558 |
Back-up care | North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 107,121 | 85,096 | 195,941 | 161,025 |
Back-up care | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 9,282 | 6,618 | 16,792 | 11,533 |
Educational advisory and other services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 28,282 | 27,311 | 55,367 | 52,944 |
Educational advisory and other services | North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 28,282 | 27,311 | 55,367 | 52,944 |
Educational advisory and other services | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 0 | $ 0 | $ 0 | $ 0 |
REVENUE RECOGNITION - Additiona
REVENUE RECOGNITION - Additional Information (Details) $ in Millions | 6 Months Ended | ||
Jul. 01, 2022 center | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | |
Business Acquisition [Line Items] | |||
Revenue recognized | $ | $ 175.2 | $ 181 | |
Only About Children | |||
Business Acquisition [Line Items] | |||
Number of centers acquired | center | 75 |
LEASES - Additional Information
LEASES - Additional Information (Details) $ in Millions | Jun. 30, 2023 USD ($) |
Lessee, Lease, Description [Line Items] | |
Total fixed payment obligations for operating lease not yet commenced | $ 23.5 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 10 years |
Operating lease not yet commenced term | 12 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 15 years |
Operating lease not yet commenced term | 15 years |
LEASES - Lease Expense (Details
LEASES - Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Leases [Abstract] | ||||
Operating lease expense | $ 39,459 | $ 32,359 | $ 77,427 | $ 64,887 |
Variable lease expense | 10,565 | 9,768 | 21,740 | 19,712 |
Total lease expense | $ 50,024 | $ 42,127 | $ 99,167 | $ 84,599 |
LEASES - Weighted Average Remai
LEASES - Weighted Average Remaining Lease Term and Discount Rate (Details) | Jun. 30, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Weighted average remaining lease term (in years) | 10 years | 10 years |
Weighted average discount rate | 7% | 6.70% |
LEASES - Maturities of Lease Li
LEASES - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Remainder of 2023 | $ 65,902 | |
2024 | 154,654 | |
2025 | 143,834 | |
2026 | 136,610 | |
2027 | 127,193 | |
Thereafter | 667,174 | |
Total lease payments | 1,295,367 | |
Less imputed interest | (385,266) | |
Present value of lease liabilities | 910,101 | |
Less current portion of operating lease liabilities | (97,469) | $ (94,092) |
Long-term operating lease liabilities | $ 812,632 | $ 810,403 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) $ in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2023 USD ($) acquisition | Jul. 01, 2022 USD ($) center | Jul. 01, 2022 AUD ($) center | Dec. 31, 2022 USD ($) | Dec. 31, 2022 AUD ($) | Jun. 30, 2023 USD ($) center acquisition | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) center | Sep. 30, 2022 USD ($) | |
Business Acquisition [Line Items] | |||||||||
Payments to acquire business, net of cash acquired | $ 30,884 | $ 3,282 | |||||||
Goodwill | $ 1,767,480 | $ 1,727,852 | 1,767,480 | $ 1,727,852 | |||||
Contingent consideration paid | $ 225 | $ 13,865 | |||||||
Number of purchase price allocation for acquisitions open | acquisition | 2 | 2 | |||||||
Forward contracts | |||||||||
Business Acquisition [Line Items] | |||||||||
Loss on derivative | $ 5,900 | ||||||||
Customer relationships | |||||||||
Business Acquisition [Line Items] | |||||||||
Finite-lived intangible assets amortization period | 12 years | 12 years | 12 years | 12 years | |||||
Trademarks | |||||||||
Business Acquisition [Line Items] | |||||||||
Finite-lived intangible assets amortization period | 10 years | 10 years | 10 years | 10 years | |||||
2023 Acquisitions | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of businesses acquired | acquisition | 2 | ||||||||
Payments to acquire business, net of cash acquired | $ 30,800 | ||||||||
Finite-lived intangible assets acquired | $ 3,300 | $ 3,300 | |||||||
2023 Acquisitions | Minimum | |||||||||
Business Acquisition [Line Items] | |||||||||
Finite-lived intangible assets amortization period | 4 years | 4 years | |||||||
2023 Acquisitions | Maximum | |||||||||
Business Acquisition [Line Items] | |||||||||
Finite-lived intangible assets amortization period | 5 years | 5 years | |||||||
2023 Acquisitions | Full service center-based child care | |||||||||
Business Acquisition [Line Items] | |||||||||
Goodwill | $ 29,100 | $ 29,100 | |||||||
Amount of goodwill expected to be deductible for tax purposes | 25,300 | $ 25,300 | |||||||
2023 Acquisitions | United States | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of centers acquired | center | 4 | ||||||||
2023 Acquisitions | Australia | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of centers acquired | center | 1 | ||||||||
2021 Acquisitions | |||||||||
Business Acquisition [Line Items] | |||||||||
Contingent consideration paid | $ 200 | $ 200 | |||||||
Only About Children | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of centers acquired | center | 75 | 75 | |||||||
Payments to acquire business, net of cash acquired | $ 207,000 | $ 300 | |||||||
Goodwill | 287,522 | 287,522 | $ 283,466 | ||||||
Business combination, consideration transferred | 310,000 | $ 450 | |||||||
Purchase price allocation adjustments | $ 106,500 | ||||||||
Purchase price allocation adjustments term | 18 months | 18 months | |||||||
Working capital adjustments | $ 1,800 | $ 2.6 | |||||||
Business acquisition, transaction costs | 9,200 | 9,200 | |||||||
Revenue of acquiree since acquisition date, actual | $ 68,700 | ||||||||
Only About Children | Forward contracts | |||||||||
Business Acquisition [Line Items] | |||||||||
Loss on derivative | $ 5,900 | ||||||||
Only About Children | Other long-term liabilities | |||||||||
Business Acquisition [Line Items] | |||||||||
Present value of the deferred consideration | $ 103,500 | $ 97,700 | |||||||
Only About Children | Customer relationships | |||||||||
Business Acquisition [Line Items] | |||||||||
Finite-lived intangible assets acquired | $ 19,700 | ||||||||
Finite-lived intangible assets amortization period | 6 years | ||||||||
Only About Children | Trademarks | |||||||||
Business Acquisition [Line Items] | |||||||||
Finite-lived intangible assets acquired | $ 7,900 | ||||||||
Finite-lived intangible assets amortization period | 11 years | ||||||||
Only About Children | Full service center-based child care | |||||||||
Business Acquisition [Line Items] | |||||||||
Goodwill | $ 287,500 | ||||||||
2022 Acquisitions | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of centers acquired | center | 3 | ||||||||
Payments to acquire business, net of cash acquired | $ 6,000 | ||||||||
Finite-lived intangible assets acquired | $ 1,000 | $ 1,000 | |||||||
Finite-lived intangible assets amortization period | 4 years | 4 years | |||||||
Contingent consideration paid | $ 13,900 | ||||||||
Cash acquired from acquisition | 200 | ||||||||
Consideration payable | 200 | ||||||||
2022 Acquisitions | Full service center-based child care | |||||||||
Business Acquisition [Line Items] | |||||||||
Goodwill | $ 5,600 | 5,600 | |||||||
Amount of goodwill expected to be deductible for tax purposes | $ 1,900 | $ 1,900 | |||||||
2022 Acquisitions | United States | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of centers acquired | center | 1 | ||||||||
2022 Acquisitions | United Kingdom | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of centers acquired | center | 1 | ||||||||
2022 Acquisitions | Netherlands | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of centers acquired | center | 1 | ||||||||
2019 Acquisitions | |||||||||
Business Acquisition [Line Items] | |||||||||
Contingent consideration paid | $ 19,100 | ||||||||
Acquisitions in 2021 and 2019 | |||||||||
Business Acquisition [Line Items] | |||||||||
Contingent consideration paid | $ 19,300 |
ACQUISITIONS - Assets Acquired
ACQUISITIONS - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Jun. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | |||
Goodwill | $ 1,767,480 | $ 1,727,852 | |
Only About Children | |||
Business Acquisition [Line Items] | |||
Cash | 4,705 | $ 4,705 | |
Accounts receivable and prepaid expenses | 4,241 | 4,295 | |
Fixed assets | 20,651 | 21,702 | |
Goodwill | 287,522 | 283,466 | |
Intangible assets | 27,568 | 30,945 | |
Operating lease right of use assets | 152,972 | 156,678 | |
Total assets acquired | 497,659 | 501,791 | |
Measurement period adjustments, Cash | 0 | ||
Measurement period adjustments, Accounts receivable and prepaid expenses | (54) | ||
Measurement period adjustments, Fixed assets | (1,051) | ||
Measurement period adjustments, Goodwill | 4,056 | ||
Measurement period adjustments, Intangibles | (3,377) | ||
Measurement period adjustments, Operating lease right of use assets | (3,706) | ||
Measurement period adjustments, Total assets acquired | (4,132) | ||
Accounts payable and accrued expenses | 18,763 | 17,991 | |
Deferred revenue and parent deposits | 6,871 | 6,809 | |
Deferred tax liabilities | 0 | 3,392 | |
Operating lease liabilities | 159,690 | 161,405 | |
Other long-term liabilities | 5,599 | 5,458 | |
Total liabilities assumed | 190,923 | 195,055 | |
Purchase price | 306,736 | $ 306,736 | |
Measurement period adjustments, accounts payable and accrued expenses | 772 | ||
Measurement period adjustments, Deferred revenue and parent deposits | 62 | ||
Measurement period adjustments, Deferred tax liabilities | (3,392) | ||
Measurement period adjustments, Operating lease liabilities | (1,715) | ||
Measurement period adjustments, Other long-term liabilities | 141 | ||
Measurement period adjustments, Total liabilities assumed | (4,132) | ||
Measurement period adjustments, Purchase price | $ 0 |
ACQUISITIONS - Pro Forma (Detai
ACQUISITIONS - Pro Forma (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Business Combination and Asset Acquisition [Abstract] | |
Revenue | $ 1,019,667 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 1,727,852 |
Additions from acquisitions | 29,127 |
Adjustments to prior year acquisitions | 861 |
Effect of foreign currency translation | 9,640 |
Ending balance | 1,767,480 |
Full service center-based child care | |
Goodwill [Roll Forward] | |
Beginning balance | 1,481,936 |
Additions from acquisitions | 29,127 |
Adjustments to prior year acquisitions | 861 |
Effect of foreign currency translation | 8,547 |
Ending balance | 1,520,471 |
Back-up care | |
Goodwill [Roll Forward] | |
Beginning balance | 206,073 |
Additions from acquisitions | 0 |
Adjustments to prior year acquisitions | 0 |
Effect of foreign currency translation | 1,093 |
Ending balance | 207,166 |
Educational advisory and other services | |
Goodwill [Roll Forward] | |
Beginning balance | 39,843 |
Additions from acquisitions | 0 |
Adjustments to prior year acquisitions | 0 |
Effect of foreign currency translation | 0 |
Ending balance | $ 39,843 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Definite-lived intangible assets: | ||
Cost | $ 421,717 | $ 417,469 |
Accumulated amortization | (370,796) | (352,154) |
Net carrying amount | 50,921 | 65,315 |
Intangible Assets: | ||
Cost | 602,273 | 597,728 |
Accumulated amortization | (370,796) | (352,154) |
Net carrying amount | 231,477 | 245,574 |
Trade names | ||
Indefinite-lived intangible assets: | ||
Indefinite-lived intangible assets: | $ 180,556 | $ 180,259 |
Customer relationships | ||
Definite-lived intangible assets: | ||
Weighted average amortization period | 12 years | 12 years |
Cost | $ 402,162 | $ 398,238 |
Accumulated amortization | (358,755) | (341,918) |
Net carrying amount | 43,407 | 56,320 |
Intangible Assets: | ||
Accumulated amortization | $ (358,755) | $ (341,918) |
Trade names | ||
Definite-lived intangible assets: | ||
Weighted average amortization period | 10 years | 10 years |
Cost | $ 19,555 | $ 19,231 |
Accumulated amortization | (12,041) | (10,236) |
Net carrying amount | 7,514 | 8,995 |
Intangible Assets: | ||
Accumulated amortization | $ (12,041) | $ (10,236) |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS - Estimated Amortization Expense Related to Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2023 | $ 16,236 | |
2024 | 17,493 | |
2025 | 5,617 | |
2026 | 3,994 | |
2027 | 2,865 | |
Thereafter | 4,716 | |
Net carrying amount | $ 50,921 | $ 65,315 |
CREDIT ARRANGEMENTS AND DEBT _3
CREDIT ARRANGEMENTS AND DEBT OBLIGATIONS - Senior Secured Credit Facilities (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Borrowings under revolving credit facility | $ 0 | $ 84,000,000 |
Letters of credit outstanding | $ 5,200,000 | |
Line of Credit | ||
Debt Instrument [Line Items] | ||
Effective interest rate for the term loans | 7.27% | 6.49% |
Weighted average interest rate | 6.91% | 2.56% |
Line of Credit | Term loan B | ||
Debt Instrument [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 600,000,000 | |
Debt instrument, term | 7 years | |
Percentage of periodic payment | 1% | |
Basis spread on variable rate | 1.25% | |
Debt instrument, interest rate, stated percentage | 2.25% | |
Line of Credit | Term loan B | Base Rate | Minimum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.50% | |
Line of Credit | Term loan B | SOFR | Minimum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.50% | |
Line of Credit | Term loan A | ||
Debt Instrument [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 400,000,000 | |
Debt instrument, term | 5 years | |
Line of Credit | Term loan A | Quarterly Payment Rate for First Three Years | ||
Debt Instrument [Line Items] | ||
Percentage of periodic payment | 2.50% | |
Line of Credit | Term loan A | Payment Rate in Year Four | ||
Debt Instrument [Line Items] | ||
Percentage of periodic payment | 5% | |
Line of Credit | Term loan A | Payment Rate in Year Five | ||
Debt Instrument [Line Items] | ||
Percentage of periodic payment | 7.50% | |
Line of Credit | Term loan A | Base Rate | Minimum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.50% | |
Line of Credit | Term loan A | Base Rate | Maximum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.75% | |
Line of Credit | Term loan A | SOFR | Minimum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.50% | |
Line of Credit | Term loan A | SOFR | Maximum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.75% | |
Line of Credit | Term loan A | Base Rate, Floor Rate | Minimum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1% | |
Line of Credit | Term loan A | SOFR Floor | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0% | |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 400,000,000 | |
Weighted average interest rate | 7.07% | 5.25% |
Borrowings under revolving credit facility | $ 0 | $ 84,000,000 |
Letters of credit outstanding | 14,300,000 | |
Remaining borrowing capacity | $ 385,700,000 | |
Net leverage ratio | 4.25 | |
Revolving Credit Facility | Base Rate | Minimum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.50% | |
Revolving Credit Facility | Base Rate | Maximum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.75% | |
Revolving Credit Facility | SOFR | Minimum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.50% | |
Revolving Credit Facility | SOFR | Maximum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.75% | |
Revolving Credit Facility | Base Rate, Floor Rate | Minimum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1% | |
Revolving Credit Facility | SOFR Floor | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0% |
CREDIT ARRANGEMENTS AND DEBT _4
CREDIT ARRANGEMENTS AND DEBT OBLIGATIONS - Outstanding Borrowing (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Schedule Of Borrowings [Line Items] | ||
Total debt | $ 970,200 | |
Less current maturities | (16,000) | $ (16,000) |
Long-term debt | 954,172 | 961,581 |
Line of Credit | ||
Schedule Of Borrowings [Line Items] | ||
Deferred financing costs and original issue discount | (5,828) | (6,419) |
Total debt | 970,172 | 977,581 |
Less current maturities | (16,000) | (16,000) |
Long-term debt | 954,172 | 961,581 |
Term loan B | Line of Credit | ||
Schedule Of Borrowings [Line Items] | ||
Term loan | 591,000 | 594,000 |
Term loan A | Line of Credit | ||
Schedule Of Borrowings [Line Items] | ||
Term loan | $ 385,000 | $ 390,000 |
CREDIT ARRANGEMENTS AND DEBT _5
CREDIT ARRANGEMENTS AND DEBT OBLIGATIONS - Future Principal Payments Under New Term Loan (Details) - Secured Debt $ in Thousands | Jun. 30, 2023 USD ($) |
Debt Instrument [Line Items] | |
Remainder of 2023 | $ 8,000 |
2024 | 18,500 |
2025 | 28,500 |
2026 | 351,000 |
2027 | 6,000 |
Thereafter | 564,000 |
Total future principal payments | $ 976,000 |
CREDIT ARRANGEMENTS AND DEBT _6
CREDIT ARRANGEMENTS AND DEBT OBLIGATIONS - Derivative Financial Instruments (Details) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2022 USD ($) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 AUD ($) | Dec. 30, 2022 | Jun. 30, 2020 USD ($) | |
Derivatives, Fair Value [Line Items] | |||||
Net gain to be reclassified from accumulated other comprehensive loss and recorded to interest expense during the next twelve months | $ 25,200,000 | ||||
Interest rate caps | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivative, notional amount | $ 900,000,000 | $ 800,000,000 | |||
Interest rate cap agreement, threshold for interest rate protection | 1% | ||||
Interest rate caps | SOFR | |||||
Derivatives, Fair Value [Line Items] | |||||
Interest rate cap agreement, threshold for interest rate protection | 0.90% | ||||
Interest rate caps | October 31, 2023 | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivative, notional amount | $ 300,000,000 | ||||
Interest rate caps | October 31, 2023 | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivative, notional amount | $ 500,000,000 | ||||
Interest rate caps | October 31, 2025 | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivative, notional amount | $ 600,000,000 | ||||
Interest rate cap agreement, threshold for interest rate protection | 2.50% | 2.50% | |||
Interest rate caps | October 31, 2025 | SOFR | |||||
Derivatives, Fair Value [Line Items] | |||||
Interest rate cap agreement, threshold for interest rate protection | 2.40% | ||||
Interest rate caps | October 31, 2026 | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivative, notional amount | $ 300,000,000 | ||||
Interest rate cap agreement, threshold for interest rate protection | 3% | 3% | |||
Interest rate caps | October 31, 2026 | SOFR | |||||
Derivatives, Fair Value [Line Items] | |||||
Interest rate cap agreement, threshold for interest rate protection | 2.90% | ||||
Currency swap | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivative, notional amount | $ 320 | ||||
Forward contracts | |||||
Derivatives, Fair Value [Line Items] | |||||
Loss on derivative | $ 5,900,000 |
CREDIT ARRANGEMENTS AND DEBT _7
CREDIT ARRANGEMENTS AND DEBT OBLIGATIONS - Schedule of Derivatives by Balance Sheet Location (Details) - Interest rate caps - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Prepaid and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Interest rate caps - asset | $ 11,591 | $ 25,464 |
Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Interest rate caps - asset | $ 37,108 | $ 28,553 |
CREDIT ARRANGEMENTS AND DEBT _8
CREDIT ARRANGEMENTS AND DEBT OBLIGATIONS - Effect of Derivatives on Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Derivatives, Fair Value [Line Items] | ||||
Cash flow hedges | $ (12,219) | $ (7,942) | $ (25,135) | $ (14,988) |
Income tax effect | 12,719 | 9,018 | 22,322 | 13,730 |
Net of income taxes | 20,594 | 24,945 | 28,720 | 44,351 |
Other comprehensive income (loss) before reclassifications — net of tax | Amount Of Gain (Loss) Recognized In Other Comprehensive Income (Loss) | ||||
Derivatives, Fair Value [Line Items] | ||||
Net of income taxes | 11,224 | 5,019 | 7,365 | 23,280 |
Other comprehensive income (loss) before reclassifications — net of tax | Amount Of Net Gain (Loss) Reclassified Into Earnings | ||||
Derivatives, Fair Value [Line Items] | ||||
Net of income taxes | 5,867 | (50) | 10,980 | (602) |
Other comprehensive income (loss) before reclassifications — net of tax | Total Effect On Other Comprehensive Income (Loss) | ||||
Derivatives, Fair Value [Line Items] | ||||
Net of income taxes | 5,357 | 5,069 | (3,615) | 23,882 |
Cash flow hedges | Other comprehensive income (loss) before reclassifications — net of tax | Amount Of Gain (Loss) Recognized In Other Comprehensive Income (Loss) | ||||
Derivatives, Fair Value [Line Items] | ||||
Cash flow hedges | 15,312 | 6,847 | 10,048 | 31,760 |
Cash flow hedges | Other comprehensive income (loss) before reclassifications — net of tax | Amount Of Net Gain (Loss) Reclassified Into Earnings | ||||
Derivatives, Fair Value [Line Items] | ||||
Cash flow hedges | 8,004 | (68) | 14,980 | (171) |
Cash flow hedges | Other comprehensive income (loss) before reclassifications — net of tax | Total Effect On Other Comprehensive Income (Loss) | ||||
Derivatives, Fair Value [Line Items] | ||||
Cash flow hedges | 7,308 | 6,915 | (4,932) | 31,931 |
Income tax effect | Other comprehensive income (loss) before reclassifications — net of tax | Amount Of Gain (Loss) Recognized In Other Comprehensive Income (Loss) | ||||
Derivatives, Fair Value [Line Items] | ||||
Income tax effect | (4,088) | (1,828) | (2,683) | (8,480) |
Income tax effect | Other comprehensive income (loss) before reclassifications — net of tax | Amount Of Net Gain (Loss) Reclassified Into Earnings | ||||
Derivatives, Fair Value [Line Items] | ||||
Income tax effect | (2,137) | 18 | (4,000) | (431) |
Income tax effect | Other comprehensive income (loss) before reclassifications — net of tax | Total Effect On Other Comprehensive Income (Loss) | ||||
Derivatives, Fair Value [Line Items] | ||||
Income tax effect | $ (1,951) | $ (1,846) | $ 1,317 | $ (8,049) |
EARNINGS PER SHARE - Computatio
EARNINGS PER SHARE - Computation of Basic Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Net income | $ 20,594 | $ 24,945 | $ 28,720 | $ 44,351 |
Allocation of net income to common stockholders: | ||||
Common stock | 20,548 | 24,840 | 28,646 | 44,164 |
Unvested participating shares | 46 | 105 | 74 | 187 |
Net income | $ 20,594 | $ 24,945 | $ 28,720 | $ 44,351 |
Weighted average common shares outstanding: | ||||
Weighted average number of common shares (in shares) | 57,707,565 | 59,113,044 | 57,655,715 | 59,103,884 |
Earnings per common share: | ||||
Common stock (in dollars per share) | $ 0.36 | $ 0.42 | $ 0.50 | $ 0.75 |
Unvested participating shares | ||||
Weighted average common shares outstanding: | ||||
Weighted average number of common shares (in shares) | 129,045 | 248,969 | 165,897 | 249,684 |
EARNINGS PER SHARE - Computat_2
EARNINGS PER SHARE - Computation of Diluted Earnings per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Earnings Per Share [Abstract] | ||||
Earnings allocated to common stock | $ 20,548 | $ 24,840 | $ 28,646 | $ 44,164 |
Plus: earnings allocated to unvested participating shares | (46) | (105) | (74) | (187) |
Less: adjusted earnings allocated to unvested participating shares | (46) | (104) | (74) | (186) |
Earnings allocated to common stock | $ 20,548 | $ 24,841 | $ 28,646 | $ 44,165 |
Weighted average common shares outstanding: | ||||
Common stock (in shares) | 57,707,565 | 59,113,044 | 57,655,715 | 59,103,884 |
Effect of dilutive securities (in shares) | 197,859 | 139,825 | 151,952 | 230,223 |
Weighted average common shares outstanding — diluted (in shares) | 57,905,424 | 59,252,869 | 57,807,667 | 59,334,107 |
Earnings per common share: | ||||
Common stock (in dollars per share) | $ 0.35 | $ 0.42 | $ 0.50 | $ 0.74 |
EARNINGS PER SHARE - Additional
EARNINGS PER SHARE - Additional Information (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Common Stock | Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Options outstanding to purchase shares of common stock excluded from diluted earnings per share (in shares) | 1.8 | 2 | 1.9 | 1.6 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |||||
Effective income tax rates | (38.20%) | 26.60% | 43.70% | 23.60% | |
Increase (decrease) tax, share-based compensation expense | $ 0.8 | $ (0.7) | $ 2.9 | $ (2.7) | |
Effective income tax rate prior to the inclusion of excess tax benefit and other discrete items (percent) | 28% | 28% | 28% | 28% | |
Unrecognized tax benefits, including interest | $ 4.1 | $ 4.1 | $ 3.8 |
FAIR VALUE MEASUREMENTS - Addit
FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Fair Value Measurements Disclosure [Line Items] | ||
Long-term debt | $ 970,200 | |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Prepaid expenses and other current assets | Prepaid expenses and other current assets |
Available-for-sale debt securities fair value | $ 25,900 | $ 29,600 |
Available-for-sale debt securities amortized cost | 26,200 | 29,800 |
Fair Value, Inputs, Level 2 | ||
Fair Value Measurements Disclosure [Line Items] | ||
Long-term debt, fair value | 973,800 | |
Contingent consideration | ||
Fair Value Measurements Disclosure [Line Items] | ||
Settlement of contingent consideration liabilities | $ 225 | |
Minimum | ||
Fair Value Measurements Disclosure [Line Items] | ||
Debt securities, remaining maturity term | 1 year | |
Maximum | ||
Fair Value Measurements Disclosure [Line Items] | ||
Debt securities, remaining maturity term | 2 years | |
Other assets | ||
Fair Value Measurements Disclosure [Line Items] | ||
Available-for-sale debt securities fair value | $ 7,500 | 11,900 |
Prepaid and other current assets | ||
Fair Value Measurements Disclosure [Line Items] | ||
Available-for-sale debt securities fair value | 18,400 | 17,700 |
Interest rate caps | ||
Fair Value Measurements Disclosure [Line Items] | ||
Derivative asset | 11,600 | 25,500 |
Interest rate caps | Fair Value, Inputs, Level 2 | Estimate of Fair Value Measurement | ||
Fair Value Measurements Disclosure [Line Items] | ||
Derivative asset | 48,700 | 54,100 |
Interest rate caps | Other assets | ||
Fair Value Measurements Disclosure [Line Items] | ||
Interest rate caps - asset | 37,108 | 28,553 |
Interest rate caps | Prepaid and other current assets | ||
Fair Value Measurements Disclosure [Line Items] | ||
Interest rate caps - asset | $ 11,591 | $ 25,464 |
FAIR VALUE MEASUREMENTS - Roll
FAIR VALUE MEASUREMENTS - Roll Forward of Recurring Level 3 Fair Value Measurements (Details) - Contingent consideration $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Business Combination, Contingent Consideration, Liability [Roll Forward] | |
Beginning balance | $ 8,997 |
Settlement of contingent consideration liabilities | (225) |
Changes in fair value | 856 |
Ending balance | $ 9,628 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 1,103,443 | $ 1,172,506 | $ 1,080,453 | $ 1,179,276 |
Other comprehensive income (loss) before reclassifications — net of tax | 23,661 | (40,246) | ||
Less: amounts reclassified from accumulated other comprehensive income (loss) — net of tax | 10,919 | (602) | ||
Total other comprehensive income (loss) | 14,761 | (41,338) | 12,742 | (39,644) |
Ending balance | 1,149,768 | 1,118,986 | 1,149,768 | 1,118,986 |
Accumulated Other Comprehensive Income (Loss) | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (72,648) | (35,665) | (70,629) | (37,359) |
Total other comprehensive income (loss) | 14,761 | (41,338) | 12,742 | (39,644) |
Ending balance | (57,887) | (77,003) | (57,887) | (77,003) |
Foreign currency translation adjustments | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (105,138) | (38,073) | ||
Other comprehensive income (loss) before reclassifications — net of tax | 16,336 | (63,351) | ||
Less: amounts reclassified from accumulated other comprehensive income (loss) — net of tax | 0 | 0 | ||
Total other comprehensive income (loss) | 16,336 | (63,351) | ||
Ending balance | (88,802) | (101,424) | (88,802) | (101,424) |
Unrealized gain (loss) on cash flow hedges | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 34,738 | 738 | ||
Other comprehensive income (loss) before reclassifications — net of tax | 7,365 | 23,280 | ||
Less: amounts reclassified from accumulated other comprehensive income (loss) — net of tax | 10,980 | (602) | ||
Total other comprehensive income (loss) | (3,615) | 23,882 | ||
Ending balance | 31,123 | 24,620 | 31,123 | 24,620 |
Unrealized gain (loss) on investments | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (229) | (24) | ||
Other comprehensive income (loss) before reclassifications — net of tax | (40) | (175) | ||
Less: amounts reclassified from accumulated other comprehensive income (loss) — net of tax | (61) | 0 | ||
Total other comprehensive income (loss) | 21 | (175) | ||
Ending balance | $ (208) | $ (199) | $ (208) | $ (199) |
SEGMENT INFORMATION - Income fr
SEGMENT INFORMATION - Income from Operations by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 603,216 | $ 490,341 | $ 1,156,822 | $ 950,750 |
Income from operations | 45,532 | 47,822 | 76,177 | 78,986 |
Full service center-based child care | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 458,531 | 371,316 | 888,722 | 725,248 |
Acquisition related costs | 2,500 | 2,500 | ||
Full service center-based child care | Value-Added Tax Incurred In Prior Periods | ||||
Segment Reporting Information [Line Items] | ||||
Occupancy costs | 6,000 | |||
Full service center-based child care | Value-Added Tax Incurred In Prior Periods | Cost of Sales | ||||
Segment Reporting Information [Line Items] | ||||
Occupancy costs | 4,300 | |||
Full service center-based child care | Value-Added Tax Incurred In Prior Periods | Selling, General and Administrative Expenses | ||||
Segment Reporting Information [Line Items] | ||||
Occupancy costs | 1,700 | |||
Full service center-based child care | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 458,531 | 371,316 | 888,722 | 725,248 |
Income from operations | 13,070 | 19,722 | 21,503 | 26,883 |
Back-up care | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 116,403 | 91,714 | 212,733 | 172,558 |
Back-up care | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 116,403 | 91,714 | 212,733 | 172,558 |
Income from operations | 26,908 | 25,119 | 44,279 | 45,577 |
Educational advisory and other services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 28,282 | 27,311 | 55,367 | 52,944 |
Educational advisory and other services | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 28,282 | 27,311 | 55,367 | 52,944 |
Income from operations | $ 5,554 | $ 2,981 | $ 10,395 | $ 6,526 |