BFAM - Earnings call transcript Q4 2017 | Bright Horizons Family Solutions Inc.

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Operator

Greetings and welcome to the Bright Horizons Family Solutions Fourth Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, David Lissy, Executive, Chairman, Bright Horizons Family Solutions.

David Lissy

Omar. Thanks, everybody today. to the on hello call And

few Joining our CFO. CEO; on call. the Elizabeth? through And off I Stephen Kramer, call are a going and by with as me matters the start before kick today Elizabeth usual administrative Elizabeth Boland, our

Elizabeth Boland

Hi, thanks us today. joining And everybody. for

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

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

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

for update back Dave and the review I'll turn business. over to So and it on Stephen

David Lissy

follow outlook quarter going Elizabeth And hi your him past reviewing review start detailed results questions. by plans we XXXX. follow to financial am call is of update with Elizabeth. me before I for the to for and our year. growth this everybody, and will Stephen operating our more with on Thanks today. up will on our numbers who And and an a it open again

to we good our year. quarter to increased this $X.XX EBITDA fourth the XX.X% Revenue and as Adjusted earnings a position to end adjusted $XXX increased We strong share $X performance continue to began per in of increased million. million. $XX are pleased in million per share. XX% And XXXX to

growth of XX% the per For year of of in earnings increased full $X.X represented And $X.XX XXXX, XXXX. share adjusted revenue billion XX%. over

million And from QX Our lines each each XXXX, of well. levels contributions in as our having there targeted growth in top included $XX growth solid segment of of business. line we finished achieved

a in University Our fourth this Full for Sachs, revenue XX%. Ed XX% Service our and fourth in for name increased few. Recent quarter and Colorado Mine, added in System, one client the grew Yale include Haven launches one of seven and the expanded new the And School Health Advisory Goldman we Center Oregon for revenue new State Development centers International these Lake for XX% segments client Exelon Agency center Salt two our including US New the to Back-up City. quarter.

excludes and XX.X% in of for make our line debt to of We quarter, our margins investments transaction the our amendment, to we results, growth, related Operating continued as efficiency. continue operating deliver consistent to are costs and plan. quality also service even strong support the delivery with which our

primary would in we to As a areas year. this the the reminder, when leverage in other margins three our we previewed XXXX, you offsetting impact last that underlying time talked year, operating

than XXXX $XX of million the which at full lower our centers, Asquith revenue are of acquisition total XXXX, that rest service First, U.S. UK consistent but the QX margins roughly business. in of contributed with our

costs type integration of XXXX, million $X.X approximately won't as this that incurred a headwind but year. in served we recur addition, In

we short-term about. centers The newer as the relates margin effects these part was strategy. from million that XXXX, centers modest. long-term lease/consortium component revenue, our a five the growth In to roughly of We've our talked the our as centers group opened associated margin these years but over previously generated on still last of second XX of $XXX contribution

classes. As startup two the diminishing from outweigh Thereby, each now and headwind we've the been the our operating successive experiencing. first will ramping level, the have class losses reaches like the centers contributions a mature matured cohorts of done, newer naturally

discussed we in centers. this therefore are to exists value that on calls, we prior As creation of group beginning unlock the

to people part. levels utilization deliver relates within our a about customers' in during to and element time our more efficient Stephen over services couple and minutes user third support automated in our workforces, to talk of will that his our build enhance services. and technology a more little investments The experience, client's

sheet to take side balance we may and that opportunities any of things, operating well remained positioned the arise. of On advantage strong cash capacity, debt with strategic our flow

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

program, open-market The share as to value as through which purchases second repurchase enhance shareholder execute well continued participating a and in in both is trade priority XXXX, we've in November. our block to May with both

loans and continue CEO ahead. Executive proud our floating Horizons term rising and in XXXX. of opportunities exist Bright Chair as to repricing on that swaps forward On by as road. are exposure executing the continue going process we to credit so know, in look past role for new couldn't be front momentum forward. past our positioned our rates of we've well the strategy And in results transition October. confident are this interest Stephen this to leadership we to I Stephen's his the and pleased and and have to debt assuming year, you and more am they delivered with interest past successfully I the team our half the believe our to I also completed January, reduced role. rate my our leadership I exciting many ability down the about also Kramer years mission drive rates continue This executive

Stephen over talk our let to speaking going turn So about of Stephen? to forward, forward. going it more me outlook

Stephen Kramer

Dave. And speaking update our today. progress and Thanks good of on the the outlook. to investments all growth we've XXXX all Great. priorities be you on technology with I making. strategy on with of eager am our you And been to

Dave all outlined, As across XXXX business. we good momentum of finished with aspects our

and growth. growth continues to both prioritize Our organic acquisition strategy

with On interest pipeline and both to existing the who new organic services remains front, add are our strong growth employees. clients, from for their clients looking sales

years X,XXX which of And and with technology us. on positive now these cross both proposition the time our on most the market of for remains the The tax services; sectors from gain of The factors. game our partners. on retention remained continued employers double families continue opportunities active the while for existing now this effective with than working XXX us, ago. suite extremely clients employer Healthcare, for and more More than nearly to us; the three recruitment focus robust and exceeds our for and same for value to us selling at We in opportunity tight not helps one challenges be labor just selling higher our margin further. reform changer while our workforce. which purchase these traction number the expand client to base, Ed the five service

we've with the and this years is to Over the urban particularly areas of benefits, wages greatest. worked challenge in several stay curve last where ahead

Our and advantage. also contemplates investment our XXXX enhance ongoing plan and as for culture focus to continuing a competitive

populated support demand Places back-up our for geographies. addresses employers expanding business the develop own These also consortium sometimes by in centers. key centers space at to back-up high develop in new lease service, market full urban strategy don't our to Our specific locations centers. education sufficient and to capacity densely have early our care deliver these quality, their where

our allowing to our their We continue see offer contribute drive XXXX. This segments core our segments to to of advisory grow and Ed proposition to between across synergy back-up to by full our the provide workforces. business These time and to to value we market our services, in margin opportunity stages. services employees expansion capitalizing life and on more employers enhances our than service expect us over ability key clients' the faster expanding

we to typical centers globally. most a to had front, tuck-in year XXXX. Adding key plan more And year growth been have strategy. number. expect similar always Asquith, element in our due of outsized total a of continue in that know in that XXXX acquisition the an of considers On acquisitions XXXX a and acquisitions we of you And XXXX XX After a beyond. our

Europe. and We active that discussions, network opportunities the opportunities continue US range a single and here in both mix have to in in and center smaller pursue scale and of good

serve. systems we making new been areas, core our stronger workforces marketing foundation and provide of previewed, Dave to mobile in our we've with and significant more On including to both more to expected including in employer continued I completed client of As more technology. investments expanded on of deliver over increased in we've investments, people track, on a the streamline To the include in service the you better update systems capabilities. These want to users, and with operating provide utilization an parallel online XXXX implementation enhancements capability. these demand implementation the delivery which communication and advisory back-up investments we experience, with ed user investment expanded and Future also capabilities. on within digital who our are recap personalized cases are enhanced us drive in time and which with with mobile

My between reviews functionality. positions and administrators On teachers, families. center communication parent and the Bright received time our network center has real our user expanded our parents for across app, Day, well side, us direct and enables rave It

to plan our positioned make the the experienced systems us market. many position we'll we've to to part for enhance that well provide and years. over believe continue momentum to In value that XXXX, sum, As grow key platform expect our we the deliver and that these we continue positive we need are with ensure in the that of leadership investments

adjusted in we'll regain mid to EPS our can a points tax and XX%, of which in operating interest share. the slightly you rate lower for for detail. we will And anticipating Elizabeth year. for XXXX, With high effective in growth expect per are XXXX XX As the margin translate rates leverage in XXX detail, to review growth during $X.XX slightly be the and With more to $X.XX to of we into discuss teens higher plans with that we range the to expect this revenue next numbers back or more range to this look do basis in Elizabeth year, Q&A. we at to X%

Elizabeth Boland

Stephen. you, Thank

the we these and line, and back-up in that operating expanded and launches, the of our and recap, our ed from advisory a combination added growth new XX.X% from and full top their margins again, approximates and delivery. by full to both $XX or $XXX launches center or just line segment quarter. the the service On profit are up top million to growth sustained X.X% The segments and service margins of in of the quarter. we Ed line against X.XX% adjusted from to levels So from of in million utilization division in That contributing X% and about increased a Acquisitions with on closures the are income was based the what over since or $X the earned growth organic or XX.X% and advisory. to adding the X%, the time. can expansion and coming up growth continue increased existing over pound Revenue top service to further the the $XX Xx clients. Xx to growth client basis, X.XX% quarter. strengthened while dollar, operating overall operating vary And back-up the service revenue performance XX%, $X ed was expanded X.X%, And in to on growth Gross coming the revenue. new growth revenue. million, advisory a client making euro we in margin million XX.X% see million revenue in by investments quarter-to-quarter both timing utilization back-up centers, of offset said

ramping ramp X.X% overhead factors. in a effects partially in centers, contributions is was offsetting increases, roughly lease Turning an realized QX, Operating the XXXX for XXXX, during pricing XXXX secondary and enrollment full new interest rate and enrollment cost of The offset million with levels borrowings. that from as year levels stage. we transaction cost this margin revenue. gains the it still opened $XX $XX growth offerings two strategies consistent by classes matured The from contributions are by XXXX. QX and the the few were acquisitions of million and increase acquired with with offset roughly lower in a centers. service. incremental compared $XX their excluding that percentage in Overall, to the with the we've and Interest transaction rates consortium management from our new recently in million Again QX revenue centers consistent to costs center and was are the last XXXX again, disciplined gains from up debt quarter, in $XX.X centers excluding XXXX margins, as million expense in consistent XXXX, essentially of had was repricing in driven too

at to B a into of operating for lower liability interest rates. exposure loan additional for outlined, As nature estimate four This affect to tax interest from Dave October to deployed reform tax we we deducting relates cash and hedge it the last option Dave conjunction our CapEx, compared slightly our rising swap We income time on XXXX us. and with as provisions tax rate of year exercises does transition tax million into floating $XX performance improved the the due due recorded The effects the structural QX, $XXX not previous flow initiated of cash primarily stock in reform. rates any under rate And $XXX had adjusted entered generated also capital. on at million flow net cash year. maintenance in foreign came term the include one than to higher the in core million mentioned, year. The of $XXX that debt XXXX. that earnings a acquisition. estimated. XXXX our we in Again we the center rate XX% of to quarter on working benefits end the million we After tax free totaled our investments to for reform million was $XXX But than flow XXXX, increase in

repurchased through We debt XXXX. total end and in both trades net at the towards shares million X that open X.Xx expect XXXX purchases also We and EBITDA May to to XXXX ended block of November. of market Xx roughly tick in down and the of by

the XX/XX/XXXX, serve we XXX,XXX X,XXX capacity operated with at Lastly, to centers children.

Stephen to that add to now headlines So the guidance previewed.

year. approximately XX total are centers planning in our approximate contemplates Our Ed to And new rate XXXX. and in new approximately XX% to double in outlook we the XXXX. digit XX% back-up top line includes for In for XX% low closing services XXXX to revenue anticipates over outlook revenue add our than run also in our growth XX% segment, in X% to service growth more in the organic, That of division, centers. XX acquired to including full XX XX% advisory centers. typical year. saw a A we for growth our And XXXX range the

network, to from X.X% course rate the of and operating project to X% XXXX XXX full outstanding margin depreciation to And our other center in price as while P&L to of that of increases. of anticipate range we'll of the for the maintaining additional key regain a million interest estimates the Based our spread the the therefore diminish amortization $XX $XX $XX and X% full across $XX to year. year cost basis XX interest ramping of centers. in in in enrollment factors approximately are and X% around in XXXX, estimate mitigating of the we $XX expect gain the for to million. service, in over measure we some mentioned expansion XXXX XXXX, range the we that operating X% continue borrowings increases projecting price the On increases in compensation of expense We, side million we Stephen million. leverage our averaging On and points stock on range million, matured between

let for the effects be XXXX the Tax while and effect Horizons expected rate potential net is Now, structural in on on the modest us of Bright Reform. touch headline the will positive, given effective XXXX comparison The estimate tax in benefited for me that that for the on rules structural to XXXX, We new tax XX% regarding the XXXX. compared in rate will tax to rate XXXX, equity the from XX% approximate which benefits tax transactions.

estimate exercises applicable is to and the tax lower significantly in the benefits by for reduction federal the estimated the of be both projections rate. US effective foreign substantially two, the tax Specifically, option stock in for of to impact rates after in $XXX eligible income estimated generate $XXX lower in higher due we'll to of CapEx. partially XXXX will from rate tax on million offset of new maintenance the flow be XXXX, around incremental tax our Most expected We to XXXX. taxes or $XX and activity so million earnings one, are and net free state total to of to centers of that million ops million Investments cash million approximately million $XXX capital $XX flow $XX yielding center in early exercises. in $XXX XXXX projected million cash opening

of So in the of million net the that lead and EPS of our these XX adjusted XX.X of factors weighted million. we'll range $X.XX the $X.XX adjusted on to combination projection $XXX income to projected $XXX million to in million, range all average to generate shares

growth, to in $X.XX projecting income Looking $XX net specifically to to the million of range QX and of million a the adjusted in adjusted X% range of EPS share. top X% $X.XX XX, line $XX we're to

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

Operator

Manav Our with proceed Instructions] Barclays. first is question question. your Patnaik, Please [Operator from

Manav Patnaik

your all lines. in Was referring new about enter think Yes, is or thank something you or country basically question exploring you. there My to to M&A that other well? opportunities anything a first more guys. those to that as the comments Good was along I evening, talked

David Lissy

And to for and world the add value. source question. hear look the answer in I that's, exist for where around criteria opportunities there funding Bright for that couldn't you as -- said addressing the to Dave we and We at Stephen. beginning the what opportunity we that the countries on I'll we've addition you that Would to that the expand And is continue, potential Manav. Horizons through is But pay. think remains that me, that the think look to parents past in a or lens we

So market that US, have a comes source support we either financial the like is from for government in potential the or employer an that sustainable.

are -- the of around basic There's that it so nothing there to continue horizon. a line And meet have the is around the the countries for a But future possibility for us. number expansion. our And possibility those down potential criteria. that on world world fit new for we teams near-term if

Manav Patnaik

how Got that should just And me -- returns evaluate it. think one do other about we then you how like for one is the how --

Elizabeth Boland

return A on --

Manav Patnaik

so What that see and numbers -- forth. we

Elizabeth Boland

you did do how our we on returns So say, tech measure investments, the Manav?

Manav Patnaik

that correct. talked about. The technology spend you Yes,

Stephen Kramer

evening. Yes, Good sure Manav.

we flavors, So outreach personalized users. the about they we're investments One right. more making, sort and experience the marketing of that two as around and come shared to other in end employee is when think around I employee tech flavor is

services. drive to employees satisfaction that scores use that addition the the really different into looking funds use employees ROI, in ultimately as so the systems, additional it to of that outcome looking our their think for we and we're And to we into employer clearly different then use. about from that clients opportunities enhance invest we are these these higher our And drive is to and about is

Operator

your is proceed JPMorgan. Our with Andrew Please next question from Steinerman, question.

Andrew Steinerman

David. Hi,

the lease will to could of And the grow of long target lease centers. What by the the on You'll to way. me me operating centers? how consortium of intrigued kind you You portfolio value do get be take consortium within reminding target margins recognizing? along think unlocking continue

David Lissy

Elizabeth I'll Yes, I'll start, add Steve Andrew, it. and and let to

our put that them consortium go. we've capital range would invest The I center models to think We those we're margins. high decision to, portfolio. high the on look range terms to us focus as say target make of criteria site, end typically margin before going just center the I of sense drive that make to of what we our that within margin XX% looking a in at if to about the in our -- range. And in at we the centers So where are on would XX% to the how lease the our gross we use the talked

headed the so course, portfolio. And the of goal, we're that's to where and that's with

As to to several know, somewhat you years takes that centers new And ramp to diluted. there. open get continue up then we it

back on much and We'll for to and fully. the expansion we're we've looking talked in overall we'll the we're more be going of delivered years And been for. the think now. some lot a recognize unlocked as older XXXX, start only kind that start because we diminishing has years we of we're we some getting there portfolio full what value our are helps five place going where have from will in there it's portfolio get now of And the us newer that a it margin get so that because cohorts in as value be we value So like few aren't time. before see to a there. of be sits to out added that But therefore, to part of a whole over -- value contributing about, cohorts

Andrew Steinerman

your years margin few for targets gross a the years operating targets. And few ultimate margin for or

Elizabeth Boland

jump a the we I here, XXXX. Andrew, expect just turn bit in talked I'll about, to think I of beginning tide mean, I as margin in Yes, see gross we've the think to

about years talk start and be million have you from to instantaneous coming points going it's we across to of it's full-service cohorts to over these overhead of The in maybe of not pretty because a in to revenue classes $X the XX zip But business, see the have where of what each year, of centers if group margins million pretty operating this just contributing. of X% basis So you you've code XX that -- improve. predictable that gross XX the described Dave our XX%. to per we in range got margins $X.X can will center. the time That's

So for margins that above to will even though level. now our full the right margin service leverage overall contribute operating are

Operator

question Bisbee, Please Markets. next question. Gary comes Capital proceed from with Our RBC your

Gary Bisbee

Hey, good evening.

you missed larger So, for without the ASU the you've the being like guidance fourth benefit on it looks to quarter earnings. me

it's I Although, think a tax I just relative did maybe months I perspective little always ask, tough if stuff, than you for It but looks from how guess to there. you to different came you wanted guess this And in expected? anything margin you begin what ago. expected anything on just your like did the three gross what going

Elizabeth Boland

think is that good no, margin different than performance back-up all we've across I Ed had talked view in bit three about little advising and the quarter-to-quarter. of segments as Yes, and We a growth the varies Gary. our

guidance and be XX from before we've So arising did of feel we a that what the slightly come can around benefit then expected was unpredictable, the $X.XX but like given in year rate in had the is at for we different the came we there came overall for range tax year. tax XX in, we

So within our at range. a seen we were as not all, missed that

Gary Bisbee

if And not I ASU guess us your how benefit XX%, Tax not rate sticking Can you tax Okay, how is you had on moving the been ASU rule like is I of that how -- in been all XXXX, in and the think would structurally left. right. the tax is much had if said much changed -- what theme, for Reform guess declining color. enough. Fair much appreciate and of that outside this I down? year, because How tell up

rate zero, how go? to were go higher that much if would So Thanks. the to

Elizabeth Boland

Yes.

we at good look the did So this tax -- record record. revalue tax centers about a exited had closed We way that benefit deferred Ireland. of because from reform there Ireland sort a it. had and we had that we to the transition to rate where our is taxes. And also If talking we our excluding base of noise a to XXXX had it's is in

year us is effect aside structural XXXX. And XX% of ASU a say our the this between was basis would So rate got leaving to the that as rate. as base rate in base the our That's XX% rate you forms XXXX, the XXXX. is and federal XX% XX% the what be that estimate. of a less our In about rate in blend that

rates Our deductibility. even operations, because that taxes, closer tax the has which then the to state state the lower bit but the up effective US of rate which net is gone course, foreign they are income have Netherlands net And are federal is rate a higher.

and but estimating XX% the to of year we're footnotes that. compared XX% the is, That's So to million $XX XX. to headline in then million maybe what the release, of it's a the forecasting ASU this on $XX press we're for credit

Gary Bisbee

I benefit percent rate earlier. said Okay lower not expecting like you're got, you so lower a to at tax like sort the And of it's two recur. understand thirds of the terms benefit of, in a

rate us for? you're That's rate quick then Can right. you helpful. two interest other of All And very ones the that fixed from swap? Okay. the me. rate give swapping What's Thank you. your

Elizabeth Boland

to blends X.X% it's X.X XXX. rate swapped or we Yes, are at and it so plus L is we the

essentially at tranche. it's fixed So that X.X for

Gary Bisbee

last way but it? essentially investments said it. stay growth is then we and was right the one, Got operating operating we How Thank the in to of at investments. with is the how that particular basically capital the now continues? that investment, when from Or guess the much think I growth Or earlier these versus the of in just flow both grow the it okay is technology capital in as line that in look year and through or at those revenues year? should you that level CapEx, of look This you, investment you. the and at how now the cash in much initiatives was

Elizabeth Boland

to broadly Yes, investments, started accelerated that that's rate we will speaking, investments to an -- continue them. we've we've made and I think The of right. make but not

support the headwind actual the depreciation some and personnel with do So to the the with talking and has about effect that P&L, we've most continues. margin obviously but been of depreciation, its

this there So to on it in some that's saw year, something seeing view, we modest a capital, on this to that is this and I what going that you're may see an what value. continue be but focus cash we're P&L, there that's out area But calling increases of the top flow year really as is not don't to as our it expenditure it we're is notable. think we

Operator

question America your Chu, David with Bank of next proceed Please Our from question. comes Corporation.

David Chu

Great. Thank you.

wanted a lease a get So bridge provide consortium investment? and to at So the gauge can Asquith you of just tech to arrive margin the XXXX outlook? impact

Elizabeth Boland

So, quite that not sure bridge I it that way. can

to that expect bps from bridge see XX lease general was think in more to this would headwind XX service, contributes. we probably so but back-up between consortium of I what be partially headwind the headwind contributory what XX and overhead the think call would XX performance maybe midpoint it, the that another in like the the the ed to The so that before, and a to XX but from on the coming of as and mentioned would those components, of then margin, mode. are bps so we partially components points XX out from Asquith bps the coming centers be, I Asquith the much that rest year, in XX is more not the business basis was advising full and XXX be would -- is

David Chu

you. Got

or basis XX point? headwind like tailwind a you maybe Asquith is a XX when to say So

Elizabeth Boland

it's a a we service in mix, the there full base. well, of was in because just and it's headwind XXXX, was overhead reason Asquith piece it is a -- So now the of

get And where it's is the overhead $X.X in repeated the contributory so so million be tailwind or base service of a not synergies. we having more full it won't because

XX I'm why goes spend XX that's that that away. is and saying So bps overhead

David Chu

Okay course and in of new it's terms then point just for or of back-half be should just year, over this even assume pretty XXXX, of at centers loaded? should the we timing the

Elizabeth Boland

particularly reasonably that visibility The of don't pipeline, when got point, over back-end can from weighted. but of the of the variable. I anything know it this vary At open the we've year. timing centers this ratable the course there's just it's

David Chu

just quarter? And of great. number includes centers a the just Okay, open for Xth lastly new

Elizabeth Boland

X. we, X, we opened closed added So and

Operator

Our Please Hamzah next from Macquarie. question comes proceed your with question. Mazari,

Kayvon Rahbar

Rahbar in growing or and share Can you about if the color is give US the this question My Kayvon staying filling on market Hi, Hamzah. same? internationally. for that's in any

Stephen Kramer

represent compete. we leverage in two segments Netherlands, our pretty largest market which the competitor. we when in full the market, then line, overall even think really we the if market in fragmented UK, the United it players two but frame it Netherlands, UK we look think largest the market varies the our the We much entire share. that of obviously And market. the those fragmented of one care competitive but the specifically still in over competitors markets, the space, service we the we service again is we employer represent, very the And centers in are at with Top enjoyed of highly type in have incredibly of look other a we start markets. X fact small In in that in for next child market think then And of percentage about in the the by Xx when represents sort position I employer it segment and greater again, that an number Yes, about at here those and you we in as share segment States.

Operator

next Our question proceed Jeff from with Instructions] Meuler, Baird. your question. [Operator Please is

Jeff Meuler

Yes. Thank you.

tech. going going going I XX to to you about you're you're then XXXX. think to deliver started a points. So in to on was expansion us say something the I basis not the But on path to give margin people are XXX us, going you're to because that I talking get you missing in thought investments lead

I'm So expansion trying get a explaining see figure in missing? turnover and you trend out of out there's more I what if signal. the first anything primary in why Just Are to to a just you -- but trying guess guess sized normal year I sort else turnover starting one you're to the employee the of your of you is an about or that one employees, margin XXXX? on pickup question

Stephen Kramer

Hi, Stephen. Jeff. It's

So our what as about. you're I assume turnover. employee it that's relates asking to

much on and And lot that being Bright down to effort that are, time an very in we we pretty of point. spent of again a Horizons. choice, we culture static invest continue the seeing think at be the at comes to and have we're employer this I fact that have here we that

sort what that status. be So wanted ensuring that labor about maintaining very to to we we have really been we market, despite a folks that tightening of really highlight for thoughtful continue thoughtful very are and

turnover in that share to trying rate. have what to to good relates nice don't progress tech uptick investments, in areas. we're so the we year. last our increase then it from expect level really an strides And an that was we don't relates see anticipate that And it over been spend We employee the making as the to as we those continue

And rate rate. look baked it like and that at has, sustain is the continue a to will because sort in of way so we'll the approximately therefore not headwind that into it run margin it

Jeff Meuler

starting I and That's guess something guess service I'd Okay. there's seeing I full was if well. viral a And back-up this then helpful. care be multi you're I the but as just on season at interested business, there the on side, impact part

if with year you. incremental first are a And there certain viral usage be of over a the in or because the instances I of is seeing guess revenue any season? care question employers that if busy a think the the there that Thank for back-up Do to you have usage? and spikes in selling employee usage, of the you're you of associated course just is is would second incremental you in question then expense have, many also just, use number uptick given their base. to there spike an spike So is seats I

Stephen Kramer

Sure.

second because why it So of comes with part I question start your the don't the part. first frames sort

two back-up our care So have we service. types different contract within

that, they that employers for down employer uses draw upon. a level to bank uses of the enjoy we are the them new continue service. upgrade the and those those we'll uses to the then and number use a aggregate that use So over that to specific obviously that the net contract as employees in them allows within have if And then

on happens will second the use, is largest really in uses We have and focused for type that that our cover of clients. pays pay of number per be which employer those And those tend is use. what type, a to they really the contract scenarios employee that an

if use two a about so And contract feature. those you types in positive is actually both think instances

been winter. this and second have flu issues around other prevalent your to Going question that

enough back-up same our uses cases where small their be the may that numbers employers Our necessarily way. wouldn't total and people show use to for significant and/or of point, across base this the relative at user of is all that in children employees of impacted use base,

or For again might snowstorm is much of people example, that because might just number impacted greater. hurricane a a the

So we within as the part just is wouldn't you it based haven't of indicated. I significant And that of up. uses is of at detected on number this the book just total that any our increases, flu discernible think number of that so point business show

Operator

question. Please from Jeff Capital your Markets. comes Our BMO proceed Silber, with question next

Henry Chien

guys, Henry for its Hey Jeff. Chien calling

whether in demand types bit from trends. demand about you're a change or enrollment. I was in it if you're terms Just the you had comment of is a corporations could wondering if of seeing question little seeing

the demographic or up we of top sentiment and for people from this to context shift terms picking line. seeing need is growth on up more to wait impact your having corporations in of start something employment babies up, picking of more thinking a an Just wages more maybe of picking that

Stephen Kramer

Yes.

here that very we looking So say market. employers. labor to differentiate themselves are I say, perspective environment selling in I the ways for and in a is what would certainly from really Employers are would positive what tight a

level the at of services. our reception the terms in so And to that we're employer receiving

would robust again to demand positive. know as a which a and back have see very where we at the in time last water side is and we you did of I the say we real user appropriate enrollment climb nicely What was back level have, pipeline, continue see there number from on think the over the years to We is, on downturn drop a line therefore, come sales that. a economic I

level consumer back the that puts come a place. a at And exists us at demand so individual certainly level comfortable therefore, has nice the to that

So of employment I Gary. think that deliver positive picture is for overall the we services the types obviously

Henry Chien

it. Got

I to Could on broadly Okay, focused flow. on where and your you just tuck-in to on thoughts M&A. use you And M&A the of be more beyond to wanted likely flow. know up mentioned of free intent your you the just cash follow your but is cash free deploy smaller type share networks,

David Lissy

on plenty Other over focused out. lease models. as I are of opportunity the year within believe likely earlier, defined and for plan our things new you any can And while strategy now, that will foremost as continuation what see consortium also it's contemplates third the on buyback commented they're also to we of based the than remains we the larger markets that, I relates sense. focused strategy on as We XXXX we've that have that's and time which that priority of as as that across a another what because ourselves. of M&A plenty - lumpy, we come roll past we lease as in earlier, delivered our and for we're we makes on But we Yes, acquisitions, there mentioned on there our counting commented it of in that consortium where think not course so and is still sort as find capital the model -- XXXX. first is on remain deployment will

David Lissy

be for for behalf down you of you good Henry of many I'm a Elizabeth the participating On line. to talking call night. everybody. on thank will the and Thanks, thanks you I, we Stephen, sure Have tonight, and and

Operator

This concludes today's conference.

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

Bright Horizons Family Solutions (BFAM) 8 Feb 182017 Q4 Earnings call transcript