BFAM - Earnings call transcript Q3 2017 | Bright Horizons Family Solutions Inc.

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Operator

Greetings and welcome to the Bright Horizons Family Solutions Third Quarter 2017 Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Lissy, Chief Executive Officer. you. Thank Mr. begin. may you Lissy,

David H. Lissy

Bob, and on hello everybody Boston, greetings call today. from the and to Thanks,

Joining the Officer. and a the Elizabeth we'll me call. our with few Boland, Kramer, on begin I our call administrative today Elizabeth? matters Chief kick going Financial Elizabeth And before usual Stephen as through are off President;

Elizabeth J. Boland

Thanks, hi everyone. the today. Dave, Thanks on and call for joining us

well release as this Investor is website, recording available close being that earnings we call the market be, issued reference, brighthorizons.com. call For today Relations today's and as a of will our are, the after webcast, section or of the under

margins, currency of operating and lease/consortium well acquisitions, as Some business interest statements our growth strategy plans, forward-looking integration and capital operating includes tax expectations for openings EPS financial segment cash XXXX, rates, as expense, revenue the income, providing information XXXX rates, contributions, the growth, costs, outlook investments, today of and regarding and net such and closures, as from those center foreign for centers, contributions flow. we're adjusted rest

inherently XX-Q measures Investor the factors of involve XX-K well statements. be be to non-GAAP operating uncertainties on also differ press forward-looking the Any as website. forward-looking Relations we our as and the those their it's may other our only any and with of in cause SEC, the These available that and financial discuss Form our date in results undertake counterparts which release are included filed will no to Forward-looking statements obligation to section and in uncertainties and Form GAAP and The materially. we in described and filings. detailed reconciled SEC include update when of risks will risks our risk that actual our as statement speaks made,

on and to So review Dave, the with the back update business. you,

David H. Lissy

Elizabeth, and on the call. everybody thanks, So to hello, again

questions. to Revenue with to Adjusted past this before results $X million, Elizabeth with We a million. third detailed strong EBITDA provide our our Stephen, the quarter XXXX. XX% update for more you XX% million financial per you it follow year. for increased usual, I and an quarter on I'll of increased updated then open and review the were As and your for of $XXX XXXX. to operating and outlook I'll Elizabeth share will up increased continue earnings performance from adjusted of $X.XX pleased last $XX in numbers

our these added of University included of Virginia from from Hospital. centers Back-up rate new top-line to advisory revenue and Salesforce, $XX quarter, New segments Center Medical Bank including for Sheetz three clients, new for increased centers XX expanded million of contributions the solid new and two in network client each business. of new West Recent our Weill launches DaVita. Our and this ed grew We growth Software the lines XX% Cornell (XX:XX), include Mellon, York XX% Healthcare EntIT and Piedmont quarter increases. utilization PepsiCo, (XX:XX),

growth levels the track we targeted our each achieve of in to continue to year, ahead be move our business. on we As of to of end lines XXXX the

costs, quarter, strong strategic and growth discussed business are and year. in and our efficiency the as more of about continue the expectations in and a to expand consistent also talk excludes deliver the our in we which support Operating certain make We minute, I'll operations, to for in with investments continued core for XX.X% margins line to even previously results ways. transaction

that three are there are impacting offsetting underlying margins As primary this other a year, XXXX. operating leverage areas reminder, in

than million service XXXX back-up consistent of the that XXXX our margin in from rest full with and the education are our advising which higher contributes $XX acquisition U.S. the Asquith of in service. the fourth business, are of about the lower at we mix UK made of First, in back revenue benefits UK quarter centers, margins but

$X.X integration incur this In targeted. million before year of we about type addition, the we costs we'll synergies fully that realize

contribution effects centers you to about. from The strategy. centers since centers that of of our our the talked second is nearly these million from newer from while to still cohort, the modest. lease/consortium is still we're associated growth a mature of significant, previously XXXX this roughly critical on XXXX short-term of we but We've of And longer-term margin in these XX beginning our $XXX as ramping mass to revenue component the in part the relates centers margin opened them

expect up, beginning we exists prior diminish value recent centers calls, unlock creation the naturally as will discussed of in these we've group more As this to that this next headwind ramp on year. classes that

investments The customers' people technology to client's deliver our over and levels our services relates services. to time third element build experience, utilization automated and within of and support efficient user to in workforces, enhance our more our

year, delivery. the marketing users, enhancements expanded color this both clients far the completed to to implementation we track, these and improve better that more back-up and increase we're new expect which that that foundation our service, more advising and in ed operating our investment on in within Let digital service which parallel to the making. with continued give areas, enhanced provide deliver the a over for online capabilities utilization capability. us a with of in me more investments and of These our foundation little we've systems mobile core efficient also of workforces a and cases, we the we've employer systems services time, future On customer including serve. you including Thus stronger with communication of implementation lay automated our

side, our My we're parent and network, we new functionality. Bright direct rave app, for the across really which our It's by communication center us of our user well and center which pleased families. real-time expanded call teachers, the parents adoption and On enables Day, administrators reviews positions received future between

year it this heavy be We certainly lift has a and expected this been. all to

the our to bring this will capabilities the However, us the progress that future. value pleased in by we're and and enhanced by

As all business. across aspects with we end we to the our and to come start do XXXX, good look of of momentum XXXX to ahead so

Our growth organic additional leveraging cross-sell both strategy and our acquisition to and continues existing be on growth, focused services. client on base to

in both new sales services Our each interest biotech, health education Consistent employer and of we've pipeline from this cross-sell the and most clients industry opportunities. with remain with verticals higher year, earlier technology. strong our remains care and what seen with active

Given organic the sales while plan next building we're strong in well-positioned and environment our year pipeline to seeing, achieve a growth beyond. XXXX for we're

more XXXX, continue even year tuck-in of scale and the for opportunities to year that in as expected Asquith, On to range in future. due the we acquisitions pursue after acquisition we an we XXXX outsized experience front, a will in typical

in We networks the active in have both a here single in center discussion and smaller and good opportunities our pipeline in Europe. U.S. mix of

we This of part quarter, locations work the part in to previous of we've that closures us to had due of handful that a somewhat level came identified our acquisition of a as integration diligence Asquith outsized underperforming and through centers as had center some well as groups.

quarter, in sell in and that adding had that had In would we stopped a August. completed of We that the years targeted. in produce remaining found to a after in was We've several centers centers not local interested market them, three Ireland. in determining our the that this addition, developed new in had acquiring transaction provider Dublin operating been whereby back Ireland way to employers originally a centers transaction we economics us and with July, co-invest as completed

operating will be centers. not remain in Ireland directly clients, our any back-up We serving however, we'll

sale of operations, and wind-down As tax write-off. of a a well as as include of benefit quarter third our realize from sale the the resulting we'll result part for the the as results the loss

revolver to flow, capacity in additional the that to arise. a operating we sheet position take opportunities of when access balance With any needed, strong and Moving might of things. good to side strategic cash advantage our remain

our outlined, lease remains and first priority consortium As acquisitions model we new growth-oriented in investments centers. previously

second interest priority portion as we color to a this Elizabeth will all minutes. we've with on on block remains purchases more to rate few also exposure throughout The XXXX, our thereby past repurchase participating shareholder executed in enhance May. both which half open-market interest as trade execute preserving well October, rates our value debt, In while continued our rate that in program, about rising some you in give floating. the share to through is on this swap floating reducing a flexibility

$X.XX ahead, our range is the the this looking few years. year of over XX% positive well-positioned per of XX% of have adjusted give let Also, over Elizabeth, growing our $X.XX brief to earnings So for of we XXXX. year. a share, and to growth outlook to I revenue the view before the outlook turn in you remainder over range experienced we last the in XX%; last per momentum on share We approximately to believe we're it expect initial continue me

on at range X% year, not While yet in we're based XXXX anticipating to we're how the next providing we're guidance detailed this be XX%. trending growth of to revenue in point, for

to to Elizabeth that you what rate With XX this thereafter. exact in and next rate And higher all leverage me that, earnings early tax Stephen, then to teens. in we do into back we per for margin points a it need based be Q&A and adjusted will in Elizabeth? over see slightly timing, a on Although regain effective and given factor growth let XXXX we into it's still of to forecast Elizabeth XXXX. to deeper operating I to to we'll step interest take the range for expect turn now, for translate year, low the basis expect for quarterly to share the higher a mid numbers, the slightly XXX to

Elizabeth J. Boland

Dave. again, Thanks

levels. with increased increased or was to $XX advisory a X%. coming operating quarter. million to translates XX.X% and growth The the back-up with was the $X X% up million Gross our Asquith growth, in advisory added million offset profit by the revenue, million, the over XX.X% again, closures centers, to quarter. $X So back-up adjusted segment most revenue. and basis, a X% And up from $XX the expanded overall on or top-line, over consistent XX% $XXX is services and XXXX service organic XX%. And On in $XX which top-line coming revenue of to X.X% ed ed or which division from of or income million services. approximates growth center XX% growth million Acquisitions, X.X%, significantly recap, further full

All in centers. any of center by increase driven expanded this in a advisory ed service in The our past XX% client didn't third level, enrollment new At revenue increases, this million FX launches in gains combination the contributions utilization existing income meaningful of from client by rate margin XX% $XX we generated quarter. operating the in We margin of results operating effect and have quarter. back-up base. full from and was new and

smaller these can and the discussed these revenue we're since are segments these margins our margin revenue client times making from the timing plan well earlier. to based margins to the in that the operating with time. growth as centers, marketing we quarter-to-quarter on two continue expansion performance For and our Dave margins that investments segments, service their operating investments for growth times our service three a in Operating full two what levels see earn growth XXXX, and on as and of track including service contributing bit are we over technology delivery, in the to and new vary and launches utilization two

The from are levels service. consistent ramping classes pricing the more still are strategy cost the our also realized gains to of the factors. centers with to operating from partially the lease/consortium growth roughly effects disciplined overhead new is stage. XXXX contributions of margin full and mature Gross in in margin centers, offsetting ramp-up we've which that with in from in offset XXXX and acquisition recently a and Increased the growth our in which were amortization acquired by and management segment. talk and centers, Asquith enrollment about spending, a full moment, service opened of margin couple I'll their arising headwinds Turning the

And in other the costs the sale with Dave $X.X earlier is, in that QX. are full mentioned captured this charge million, Ireland-based net expenses of the service results reported our in a segment. Lastly, again, of centers which associated in

So, turning on to little a SG&A. bit of detail

compared million $XX in was XXXX. overhead quarter, third million the $XX to For

to spending addition factors operations, cetera, typical et contribute to spend. expanding In increased growth two support marketing, and sales the to

and a enhancement is support functions. technology on initiatives in portion the additional the overhead related First, spending these service of

the overhead overlapping Asquith UK, of certain Second, in and connection the with integration costs, in we the business one-time spending XXXX. temporarily which increases incurred in have the

teams planned interest in realize XXXX, As earlier, consistent XXXX. QX that incremental is Asquith with costs offset in combination of the we we acquisition. on levels, from the XXXX synergy are to our had that track $XX.X as finance made support million lower borrowing discussed Interest roughly we which the of to we was the expense

at hedge our interest also of rates. rate $XXX end Dave a interest million As term loan swap entered the floating-rate mentioned, debt to our of of we into exposure October, to rising B four-year

As of on net $X a $XXX,XXX therefore, down a million to in $X trends. see that million result, slightly next interest tick rate we around in uptick year, QX expense turns ended year-end. quarter the modest to will, million, X.X expect $X.X depending by about interest We of at debt-to-EBITDA, and and

expect a exercises with estimate we operating through our the centers, of is the XX% down connection million. CapEx, tax asset adjusted we on September realized sale September. XXXX, net working estimate million investment one-time structural through for our of performance benefits from stock cash in $X now tax improved into core to option on also After $XXX Our of capital. free year, of account income the totaled We flow maintenance the flow write-off, compared XX, million and higher In rate quarter our totaled million XXXX slightly in cash last on the what XX%, taking benefit previous rest. which on slightly tax $XXX from generated Ireland $XXX

trade As outlined, centers operated and all the we May. across XXX,XXX our through serve we've through in new we XXXX, the over year-to-date open-market with and million modest around September we repurchased X At growth shares investments and serve capacity XX, Dave service acquisitions, clients lines. to X,XXX X,XXX purchases block both and invested children, center in of

approximately the and contemplates add our XXXX. build to approximating XXXX. of Based full outlook to organic centers. In Our over a centers. our construction updated base total on to XX sale X%, updated center estimates network, and XX of to price growth XX% now our timing completion line continue outlook and mature in our averaged our acquired centers, anticipates centers now for in XXXX approximately the we and X% of now top of increases planning licensing, we're new XX% Ireland enrollment ramping Including service closing

we're operating depreciation to million income Based of $XXX estimate adjusted of the combination the EPS the XXXX, range $XX capital Also, to of is $X.XX we in On and operating spending. outstanding outstanding flow the performance revenue. year amended million new million year. around of our to as we also in capital updated of of estimating terms range yielding XX.XX% operations at view opening $XX this amortization to XXXX, adjusted in this from reiterate agreement to generate what be share. after for used for that generate XXXX, XXXX, maintenance our weighted estimated estimated is for for structural $XXX a and $XX cash Investments to year. swap adjusted leads of and XX% million early around projected million We $XX the our to of interest the rest $XXX range are rate million million, now now million our shares and million projected for XX.X we're margins income flow this, of center credit net XX.X% million centers year approximately full in all to expect we'll the the rate of projection for on previously interest $XXX average and of a total $X.XX in to million. The XXXX from borrowings just approximately we've $XX cash projecting of that XXXX, we'll free XXXX. And entered $XX similar into in and to for mentioned, in QX, October, tax expense

with to so And we Q&A. go that, Bob, are to ready

Operator

Ladies session. now you. a and gentlemen, question-and-answer Thank we'll be conducting

Our your of Andrew proceed first with JPMorgan. question from comes Steinerman Please line the question. with

Andrew Charles Steinerman

you guidance piece XX% of talk I not some growth about you organic yet. ask us detailed sense to to revenue revenue XXXX, that? When give growth, the it's hope okay even said though you could about X% to

Elizabeth J. Boland

Yes.

X% acquisition would expect Andrew, year. typical been we because of from component a next year and a this include this a contributions would to So, typical pretty X% year, coming typical that has year

be to guess top of that on So the – X%, X%. X% X% sorry, would I X% growth X% organic to to –

Andrew Charles Steinerman

or And is that post-closings pre-closings?

Elizabeth J. Boland

XX% with be total, would to that X% Well, post-closings.

Andrew Charles Steinerman

Okay. Thank you.

Operator

you. Thank

Our of next question Capital comes from line the with Markets. with Gary RBC Please proceed Bisbee question. your

Gary Bisbee

Good Hey, guys. afternoon.

David H. Lissy

Hey, Gary.

Gary Bisbee

synergies sort getting called trend that it's So margin expansion, to about one margins are other of Asquith might year? official realize frame drag a I that. you've first when goes potentially the to isn't that actually and should getting I you're might long-term try And some think question, that things that out we we argue this called the back there given guidance above early yet, early you've any have the puts guess, out, major and that calling and you historically. of next on for to But takes yet. read for from

David H. Lissy

it's of Well, – to early, And quarterly we'll to you range think the we that models of said, early as receive the we and we're it's you little the the or sort bit they can now. – call ramp-up. trying flow full Gary, the pick-up a of we'll that quarters And you a as give on receive see not know, as move that around lease value as smooth from that's year. which as affects what

this investments – to that important expect given to the out which made year, with acquisition. called the from margin and which produced I the things my we year, think we consistent what it of had the part that's the we've is have had prior lack experienced this we is, regain Asquith most leverage perspective, of were sort experienced

be when able that happens. we'll the by as more we'll within ultimate next opportunities time talk call to plays we have certainly time fall to what clarity out and where you are, the our or So

think I expect been. seeing, on – we in the to do think that we're return I what is, the So important based where range of we we've where part to

Gary Bisbee

it and play what's about something longer-dated get investments? this understand and it after And to stuff from starting running certainly like a think the this of But the year? benefit? on think probably made the year-to-date the starts comfortable investments, you've reasonable technology efficiency next is that the up to follow-through to to sounds and with Okay. But Or good and we progress is is really timeline a then There potential all lag people use it. you should getting that out those.

David H. Lissy

clients the it Yeah, Yeah. – creation two will of of services service it's next think XXXX use Stephen sort early But all that delivery, – from that of improvement how like expect exact of picture, be advisory, headlines, the also that more obviously sort offer later is that positive. let call efficiency, those things center, probably of like things ed interaction workforces I'll of serve. too revenue that, next there drive oversees it. able achieving we're gain a color a of from of to being as of and major sort year. Those of efficiency little use and that the will some the kind are is is I given correlation you much is just lot that – which the you little lever two but mean we big gain. to I Stephen the between within call I'll a as more on service let he call give the there it the better we just which color direct services bigger since that, to out, of the to obviously back-up without versus the we in one technology, that. is a our point year and automated timing with value areas less is, human relates that But And

Stephen Howard Kramer

Thanks, Dave.

efficiency. is as about experience or trying really to end-user being with first thinking the driving we're first obviously and foremost, a think secondary we're the ultimately priority really I it, enhance a priority So way customer

their really piece on-demand, so think So idea more users, services actually the the when And really access said, is that self-service, really our and we really personalizing our this achieving for priority. our we Dave of meet need more end first occurring. is that outreach other real-time our do meet to about users us of them becomes more then end as when

growth. secondarily, have I to and will efficiency to perspective, ultimately things for the priority side your and And it so like ultimately additional benefit And relates be to is us foremost, first the that trying as will additional contemplating the use; would you – and that enhancing back-end we from into direct that should really experience, translate think contact on be user other center do. of that normally intervention then drive

Gary Bisbee

it me relationship you're going find it become Is to do here. market thought as that firm it's that an that a example thing something. it, on a that will enrollment has that employee a get of get it half it user? with, you the you more? How So lot guess the to like the a that they is already in with use have thinking me, the towards how people you company just a I open used back-up. about I let the to all a so are Is a have on one app – go figure an guys the me way it? more use My to that better pamphlet, of so the could Or through listed gets or app I'm how of trying to I relationship that back other. process kind I out as you or such and find you page then of

Stephen Howard Kramer

Yes.

a great one. So your example's

both. So it's actually

we the employers is is tools. and going And way other their communities, through employer, number interested be we And will marketing trying resources the in our to that go who increase to when service. Then their there we registered, actual aside how that meet user once, access someone have So will is idea do through is continue to that and goal of our access that needs. to engagement will ultimately who when something need really get trying our our discussions the but journeys the will more to. to that and just raised from them users at end employees engagement an their move hand to employees through to keep with through is them needs, ongoing ultimately to drive them Obviously, service and relationship we're personalized participate help their understand the with to anticipate first are programs. has

So, service for used back-up in example, Luther have King you may our care XXXX. Day for Martin

we to you XXXX, Day And Or would so as want Martin we up last sure Luther again that King of utilized think us is you that year we coming weather let the Midwest, to end they to year. snow our up, coming so us personalized that is of that the send about hit therefore, that have remember raised service, message you lead all about a King Martin this in know their in that make we Day Luther know users and point we who and will hand need. them

Gary Bisbee

you just Got one, give out what? it. I can with last you. What then terms of trading swap? quick for put Maybe that? Or you filing just are rate And Elizabeth, us a you one interest the missed have

Elizabeth J. Boland

we have filing $XXX No, on for about out just I a it. X% don't money cost four put of Essentially, we've million years. over fixed think tender,

Gary Bisbee

Okay. you. Thank Great.

Elizabeth J. Boland

Yeah.

Operator

Thank you.

Please Barclays. with Patnaik Manav of line the with from question. proceed comes your question next Our

Manav Patnaik

good you, evening thank Yeah, guys.

David H. Lissy

Manav. Hey,

Manav Patnaik

get who know on said lot the leave I there But the to I more up employers My there mean like least so full-time weren't, is is trying with sounds you today there. decision looking a Ireland. and I to it Brexit guess, question are centers. forth, first to the sign at on in just

a was that another the Europe? example country case in using I I premature decision maybe? just in of maybe understand, enter Ireland you to how might as trying So guess, was an study

David H. Lissy

retail. we is, tax we're essentially so found weren't an What jump a environment we and a thought to really driver have great operating that whether we in if don't as operate I've Yes. attractive the from focus, is as Ireland, we've for on the back was it either two what be sustainable would there incentive would entered we of one in either, scheme with able different talked time it that. what in employers place initially, about the UK. where before, Manav, developers they or quite supports you to put and much more an support that we a degree, sort like countries, there to it's funding in able way in just Netherlands. When point the might that incented in our that to employer money because in I the capital-light unfortunately, get centers beyond operate. the it it of make – in operate. developers look – without what think been we think not quality is operate U.S. investment. that care there enough we estate would at country for we into expectation put mechanism a employer we Or I to developments, for what around – really the weren't that about funding sort a world at to to just And little us what real is employers it that build some and time, to to very as provide we sustainable realistic our color, would that a One is price and do that child in Ireland took mechanisms. and and look entry there's And to lesser a affordability, able will or made enrollment happens the we And or incented participate prove investment. And going

wanted centers what of – center stopped it's we found energy. we but just that of think take had we we probably we've were to provider for can haven't and sense say group invest prospects. places we just the that I the made time a couple was and no a managed believe our eight who there's of us. lots small we small there. added years a fine We that We an growth we ago, and over created And centers And other had to had. So them a exit group little do after while,

– was in don't I have future there gotten we we've there. lot done that have that there growth fared to So know opportunity believed wouldn't that. fact, really most nothing suggested well. good providers And was if a of we not There that that

at there is at so smaller so but few And – and ones, local a scale. scale,

operating get in around we other could the energy markets about much there So and currently that time world in, we'll that that to. our more operate dedicating someday we're are excited and maybe

Manav Patnaik

basis that Got margin And of that maybe you a I XX And out drag you to the to that? XX components the assuming lease/consortium XX XXX a in that guess, positive, are on number? to it the break other is are can points from components year, basis the but of to next probably points, guessing I'm then expansion going what it. drive

Elizabeth J. Boland

able at Well, XX their advising back-up that's margins points to full are businesses a of probably continued we sustain ed our would be that from service. level looking and to growth than at XX contribute the coming and basis higher

we centers rest service tailwind. as from I the the say, from open think centers contribution slight to full new ramp type continuing to being in to components a and convert headwind of the the contribute of execution And acquisitions. same and – tuck-in centers you a As execution lease/consortium of then the of business beginning

would we advising be more rough discipline components to but would cost than to, headline. continue maybe and full would able to – able bit it's to pricing that those the contributing expect and ed service the back-up the to be a be sustain that's So

Manav Patnaik

Got it. lot. guys. Thanks a

Elizabeth J. Boland

Manav. thanks, Sure,

Operator

Thank you.

America. with Please Our Bank proceed the Chu of line from next of question. with question David your comes

David Chu

Hi. lot. Thanks a

ask you need met expectation, the if and there Just fall call your anything relative past wanted if enrollment to is fall to trends few to out seasons?

David H. Lissy

No, way I David, good now, think know with see based question. – we But pleased on we're it a what trended. it's you the

hit full in terms at areas second the across everybody we relative so. continuing beginning it's like board. a the or in on do the is of it's peak fall. sort natural quarter, and I of trends. quarter we are enrollment that trajectory the first else I seeing of of think not. – few fairly have And but a it's And normally rebuilding end I the like even, what service mean, we're over-contributing of we not enrollment we're like basis, in the our the And

pleased see. with we we're So what

David Chu

XX% Okay, for any growth just why shouldn't great. there XXXX, like level? ed back-up comparable, is for reason a a high advisory for expect we And here, XX% XX% to to from XX%

Elizabeth J. Boland

terms ballpark That's continuing contributions of would the them. the of to from what see No. be in in growth we

David Chu

Thank Okay. very you Great. much.

Elizabeth J. Boland

Thanks.

Operator

Thank you.

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

Jeff P. Meuler

Thank Yes. you.

called In terms on it's ancillary out good the know really the I that of increased and services, you performance usage cross-selling. both

On been success? the know you. get piece you particular, to for I the anything big in doing long that's cross-selling differently are a opportunity

if success having the doing are first, with differently guess, anything it? I So, to increased so, cross-selling? you you And are get

Stephen Howard Kramer

So I'll ways. two answer in that

align and yes, ourselves having And we success I the both increased The better with have incentive to first is cross-selling. programs we is, structurally are changed cross-selling. reason think

the instead, the specific really that would managers expectation to the clients, be going family. in their on historically, have But to where So moved existing to we makes the sales then skills team client second have incentive at accounts. and on addition ultimately is we people our have account relationship those more orientation, who who cross-sell. pointed that with grow environment, are stronger cultivators a more relationship model a to the between sales people to after and they had partnership for that we after are so And within existing energized that recognized about are the our a directly our sales current of prospective ones relationships would go individuals we and providing new side, Whereas, directly have the that teams those base effort. our to now be really it,

Jeff P. Meuler

team full sales do – Do the services or...? what And the all force, they sell? toolbox have of for sales they services entire the just

Stephen Howard Kramer

Yes.

we as from are services, child client prospective the So a going their first, care is centers well in have services of our that that after opportunity services. going ed is care to full back-up going specifically offer. is after our our when the we team We regardless core those sell that distinct do dependent dedicated go they as is base, is, expectation think about proposition that with suite who selling employer what anyone care who of within advisory

Jeff P. Meuler

And can the in higher, at of if and higher on on just terms Or the the XXXX benefit? to Stephen, comment XXXX, you is it Thanks, being the tax that why all? for Midwest. thanks reminder, I snow's it stock drivers quantify coming Okay. assumption the and for comp underlying the rate then – in what's lower

Elizabeth J. Boland

effect, may to estimate, it in it. the it's this is fixed can stock that not is increases. reason we a that it on And would tax would an our people but will, our fixed number, And that points tax maybe what estimate the Yes, and credit We ballpark pre-tax rest be that so increases, compensation outstanding higher be our less will Jeff, to for X of equity be year. can exercisable, percentage the the X exercising. you of a then income if of dependent expense. it than be proportionately, it's that's which the rest based on it's effect And as expense

And so a we're growing it over beneficial a effect time, as company. has less

that's So the in a estimating to increase X tax X why rate. percentage points we're

Jeff P. Meuler

you. Thank Okay.

Operator

you. Thank

the deals closures. question comes the center - next your (USA) Singh Credit Asquith I closures Anjaneya give in be sizeable questions. Please of Suisse with you looks Credit you're the us the on incremental percentage And what question or LLC not deal what then you've asked there anticipated another mentioning with able the a taking Our question. like for would Anj of to made Singh Asquith Suisse. way, my you a of from amount Securities sense done of proceed Thanks past? K. had the to line Is versus had maybe center you Hi. closures other when really?

David H. Lissy

isn't Anj, they're real any different. that the issue

I performing been do some the first always that previous for help what hadn't larger goal and we performing diligence to get to Asquith, that most centers not try when is our groups, unlike think can our not obviously first in diligence better. circle are them up we we did hope to do when on think provider. We

in whatever different out the that operate it they're the timing versus are when to possibly can terms leases continue is ability all you what may given to of get is Some contracts, or given be. –

equal. kind not it. it What all of we and we we they're diligence created what don't when is we the So get of do know don't into know until timing

than And get not of the changed be affected thought. guys of I know strong looks advantage been the the that you for to then I taking super it's you of ability slightly sort have But of of been don't Okay, And XX%, not we're of it's them tell level. exact towards numbers in us deal an about that is I front that target – just numbers have it. That's we Credit in of on – like same it's gap as update like? So got that XX% to seems performance of of in up? Singh each utilization to exists. the - at the K. give (USA) versus Anjaneya have talking what the you centers an just light that to it will closing how a LLC it's relates to you. we all, case gears, for previous follow-up groups, where have I grouping can you've could putting how XX%, there helpful. some Suisse sooner I where opportunity. mean, the ultimately I'm close centers always that's that percentage what update centers. – It me but many about ballpark be levels a changing a wanted Securities compares the your there Thank

Elizabeth J. Boland

our a of high mature centers. to but there, overall XXs go in Yeah, we're for bit There's close back I mean, that little our to to pretty core P&L room broadly that enrollment. range speaking, high-water mark in

growth so say would where you this Securities the a matter is room X.X% is grow be with enrollment, at or but we we to we're a little in room And I slow center seeing Credit now state Singh climb of and enrollment, – slightly sustaining to much. LLC that go little another steady Suisse we of would mature efficient out we typically are the of bit should environment to efficiency continuing so a have over say, And So there, new and - what growth open it's Anjaneya (USA) there back time, see, would it. centers. Thank we bit of we've maybe a now to sort point. little K. more have eke a Okay.

Elizabeth J. Boland

Thanks.

Operator

you. Thank

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

Henry Sou Chien

Henry Chien Jeff. Thanks. Hey. It's for calling

David H. Lissy

Henry. Hi,

Henry Sou Chien

Hey, guys.

how many you close quarter, this did open one, quick and a Just centers (XX:XX)?

Elizabeth J. Boland

Yeah.

we his centers, So a as added and we we in total opened XX, new remarks, Dave mentioned closed of XX. XX

decrease net XX. a of So,

Henry Sou Chien

Okay, the growth got it. you. Thank just on and strategy your And was I curious for organic XXXX.

to pick the can share Just any open are curious on thinking centers how the about new accelerate you're you're expansion markets more of whether planning change type you rate that in you looking or year, if some of color and up to in? next for Thanks.

David H. Lissy

grow And then hard as that broadly, to in the next the and there. seen on of again, growth have consistent And ed contribution lease/consortium teens think XX% Yeah, of employer and good from you grow. that both of from we'll range will think I been XXXX we to mean, the XX-ish us I XXXX, range, what see growing then neighborhood predict Netherlands. continue, and about, here centers, division the to you'll in I in new UK is we past. I cultivate, new timing back-up expect do, have in broadly also can we've us mean, I think to the and pipeline advising in it's you the we talking on to acquisitions I for always year. always range similar And from the continue both the what think high numbers speaking, see centers a in the to XX- also side, in centers in

can plan tuck-in add we a country. base it. in sooner will acquisitions small than would you the to be upside base the say to we on but always and is terms number based a report the nothing that there So of forecast, And that done things we that markets, in there's already be lumpy. get in anything to acquisitions new continue to active and of In potential new have, expect for our could for terms today what then calls if should pipeline consider then that you we we looking of

Although that in interest us. something for of term, the longer remains

Henry Sou Chien

That's is or – okay. Or And it, year? could there Is back helpful. Got services. that this care to just the hold growth? margins there expand dependent for next may business specifically incremental in it reason the margins – with any this back-up that shifting anything

Elizabeth J. Boland

leverage the a really and more of making in the of marketing business some margin been about amount We of than a back-up talking investments a that story we're fair We've growth story. one see as technology space. the

a I fixed think so with It comes those to going lower it margin cost full has would a be going forward. component than already higher in. service, sustain important

stay can a of of efficiently stable while, operating so year-over-year And to to range operate we is range. XX% more pretty we course, the margin will strive to look at that XX% continue what margin we in

there so sustaining that's leveraging out but them And what little over that to we less not try of to in margins, arena. – or trying as time, but we'll not those on really eking counting leverage bit see leverage perhaps leverage a about that it's

Henry Sou Chien

Got so much. it, okay. Thanks

Operator

time. you. Thank this at further There questions are no

David H. Lissy

thanks for for today us call. And you. thank Bob, for the everybody Okay, joining

Elizabeth thereafter. months on to and see night. usual, a Have talk the the and coming and in you will I good As Stephen road

Elizabeth J. Boland

you. Thank

Stephen Howard Kramer

you. Thank

Operator

does This teleconference. today's conclude

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

David H. Lissy	Bright Horizons Family Solutions, Inc.
Elizabeth J. Boland	Bright Horizons Family Solutions, Inc.
Stephen Howard Kramer	Bright Horizons Family Solutions, Inc.
Andrew Charles Steinerman	JPMorgan Securities LLC
Gary Bisbee	RBC Capital Markets LLC
Manav Patnaik	Barclays Capital, Inc.
David Chu	Bank of America - Merrill Lynch
Jeff P. Meuler	Robert W. Baird & Co., Inc.
Anjaneya K. Singh	Credit Suisse Securities (NYSE:USA) LLC
Henry Sou Chien	BMO Capital Markets (United States)

Bright Horizons Family Solutions (BFAM) 1 Nov 172017 Q3 Earnings call transcript