BFAM - Earnings call transcript Q4 2020 | Bright Horizons Family Solutions Inc.

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Operator

Greetings, and welcome to Bright Horizons Family Solutions Fourth Quarter 2020 Earnings Release Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host and Senior Director of Investor Relations, Michael Flanagan.

Michael Flanagan

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

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

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

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

Stephen Kramer

everyone I'll to XXXX. up performance questions. tonight in a review Elizabeth we further Hello pleased your in I strategic our for and it and results will well detailed a recap priorities, to the we are thank we against the XXXX with our way outline and progress I'm numbers of more which call, keeping that this the position us recovery call made your before finished with on this COVID-XX XXXX Mike. follow Thanks, evening. you from for build hope open and our healthy the quarter fourth the pandemic. families start us you and our safe. joining on of with then will

revenue operations temporarily centers full-service in X million in close delivered to of resuming which $X.XX share. of per we past $XXX adjusted For at quarter. segment, and progress re-ramping In of we our our reopened and this EPS quarter, continue the fourth make centers.

a In addition center to this, SaaS. for we including launched new client sponsored centers, X

open in Importantly, around QX, throughout at the of occupancy community levels of centers increased improved COVID holidays. spread modestly spite

Our as use self-source use. the continued finished with reimbursed and well as business back-up increasing year in-home some center care in care strong

parents care to and hybrid client past growth schedules. in manage us back-up among As new remote adoptions great the help with X,XXX accessed Collectively, had additions. back-up and the Danaher, quarter Nordstrom our alternatives propelled another McDonald's, work client school We many of Okta, XXXX milestone. our

education past for our client MD AbbVie, We Anderson service and also to to base, launching continue Github advisory this add quarter.

While XXXX Family's presented I unprecedented Horizons be of couldn't proud response. Bright challenges, more the

and changing work time, to same teams global our the remain strategic while and priorities carry that children, X into forward needs that we quickly Our XXXX. underpin at focused clients, families adapted the on the of

First, preserve and extend lines quality culture highest a education workplace growth; and connect service strong strategic third, Horizons; great deliver services; and impact a through and second, functions, our geographies. at care across fourth, Bright

And strength. say core heard very people year, saw best. have this many times culture our are me and you before, As we our their

tirelessly we challenge of tens support created to also while get back-up learning for enhanced a up the front thousands supports. school telehealth safe pandemic. year time, of for expanded employees and throughout of ended and rose could and lines families an immediately families and teachers care introduction much-needed as by At included employees, as staff for organization Our result This children, pay the support education furloughed were providing the the on care. and our the of lives whose environments benefits the nurturing ensuring age same health the to families and COVID-XX, through worked

redoubling are people and appreciation XXXX, and to and education we particular, start our efforts an healthy, supportive announced and staff continue working program a we our encourage get context, Within on focus environment. recently culture. ensure this vaccinated. we to to As we incentivize our to safe center In our

an hopefully centers Having of key to setting. family's our than XXX thousands and and on and Quality and been we'll for over difficult the to and to from for and health have connected In children policies and has our learning that across to again for instituted of qualified child environment. never tens This our important always health healthy, pivoted experiences families, and and expect what the to we development our were Bright for standards and have heard protocols environment. to clients our high-quality safety early in been well-trained delivering high-quality many now the services. reopened respond to others, our centers to meet as adapted COVID-XX as over delivery teachers improving teachers, curriculum of actions industry-leading and the Horizon stay evolve always and of classmates families. and focused safe We is all our progress at with a Horizons. to us continue more how including practices pandemic, reenrolled In created waver at aspects, and quickly evolving research-based efforts safety. online standard the changing our mission. service Bright well vigilant curriculum set XXXX, we health children and We enroll we Second, and core disrupted encompasses days platform decisions

expand has has challenges, provided awareness our relationships. the strategic it deepen allowed The Third, growth us has client pandemic of also service many offerings and opportunities. while COVID-XX fundamentally increased and presented our to

now As back-up serve first Horizons. new in added an timers with Bright And those we clients of care. majority XXXX more the back-up large are with employers than X,XXX example,

same cross-selling partner We're than great seen is return the At more had work business XX% in to by employees' of ever leading strategic more and success client employers. employer to portfolio added pronounced expectations continuity, time, XXXX We a before. growing support of our also services, their supports than business for valuable to objectives as employers. other XXX multiservice in

XXXX. into Moving

on capabilities more and employers, work reopening of Center-based expanding looking to We reach, will critical and continue workplace a as client a environment. to irrespective to capitalize extend enrollment use of ways at for momentum our childcare employees they their their area especially location, site support and investment accommodate our services our this grow strategy. remains while dynamic work contemplate

well of technology suite services, Our impact. client relationships capabilities us position and extend to our

available digital for users it end that to Bright successful to we the stage. with Bright to One their program employers all invest launch and our showcases services clients personalizes portal services unique a the Horizons. of technology life My in for Finally, and end marketing example users. recent is And new of continue unify experience Horizons, through the their

care the and seamless streamlined employees experience. confirmation reservations In clients personalized also a in and their user speeding process. benefits XXXX, back-up for continue We the XXXX, more will more to outreach feel our booking process of the

to Bright awareness, continues friction-free serve utility and be of suite. Horizon ambition and an in use Our to their increasingly to increase the employees clients our the manner and

priority Before that to always and core comment our commitment been on bright I want one inextricably to I has equity wrap up, success. horizons business tied a our inclusion. DE&I in to long-term and culture, is Embedded diversity,

several we our the and continue to equity we we lasting founding be a those place since of steps difference make the expand our work to goals, lives and real touch, took welcoming Last to in and to We to and all. we inclusion have it that reinforce ensure do diversity, June, worked a and employ. inclusive we for

opportunity that comes generation. an addition, the curious with the environment educating and in to what make for the different. modeling open, families, by is next unique we that genuinely And children In in are is responsibility position interested a difference of and

DE&I workforce equity also recently a pledge, We education. with whose have which signed are inclusion. also on with Bright organizations, than how objectives, in particularly the X,XXX clients CEO I having commitment to diversity, CEOs services demonstrated aligns support and Horizons conversations like-minded more our their action

So environment we in I Horizons to objectives. incredible the closing, remaining their navigated and near-term priorities on as our Bright while the thank focused Family every member of throughout want efforts XXXX long-term for

it to will a prove on As I foundational be year look I Bright for back XXXX, Horizons. believe

to business critical resiliency it stakeholders, we discipline certainly operating financial for had the than has the challenges, services fostered our its nature to of the our our of the have provided three decades. opportunity demonstrate us more and While of model, and it all

on As ability importantly, XXXX our beyond. of we to strong position our enter lie and capitalize the XXXX, talented will and our drive our and and and depth quality, in poised most ahead. significant innovate opportunities that we reputation committed start new a for to adapt the success chapter, believe client workforce We relationships,

Elizabeth Boland

and you, quarter I then again now recap Thank will XXXX. provide the briefly results some thoughts on Stephen.

revenue. of the or ending year revenue. XX% contracted two and centers income fourth $XX or So new Operating to And was X% X million opened quarter, $XXX for revenue XXX XX% totaled million. adjusted in centers opened. with the $XX reopened million quarter, We of centers the EBITDA overall

continue below well periods of we the the families QX. and pre-COVID to was sequential still at are reenroll While improvement stability enrollment by and average encouraged XX% to occupancy in XX%

have centers In addition, that not yet we've approximately XXX reopened.

ahead full-service represents on of of million our $XXX to our over to of programs partners comparing XXXX, growth quarter Demand favorably full-service contracted flow X% to for income progressing million revenue the a of for XX%, well expectations expectations of and This XX% from range million to XX%. $XX XXXX was continued or through the As of expected $XX our childcare operating our revenue on in to loss in roughly as with as a contracted through support enrollment our XX% a the and ahead targeted also reduction, for income. XX% XX% center top result, the client million. -- management fourth of cost flow XX% $XX and segment services million operating with Adjusted solid line of back-up industry. government $XX QX a

early we in-center XXXX. continued trends with sequentially As half the use in to of the back-up ended encouraging traditional off rebounding from use pandemic show through back and growing lows and in-home the XXXX,

their several make needs, through peaked drove higher-than-expected to and While have clients use reimbursed care that care child continued to year. end care in this available of the option use QX, the support employees'

contributions Our client revenue admission and or XX% expanded of also solid workforce in college reported education with growth Educational launches services. segment Advising from advising the $X up on new quarter our and use million

XX% XXXX we was structural in income QX programs reopenings higher so provisions $X Act measured resulted investments, and demand spending the and been effective adjusted the XXXX. and expense financial various Interest for Netherlands which equity other disciplined a to be are This that million of on industry. and we've are childcare of will lower borrowings. rates support pandemic, down operating. proportionately care management, QX support full of the for down for impact we client represent to reduced U.K. prioritizing from year the tax aligning average initial transactions. million of XXXX direct We've in the our been our government income we the cost over Cares for XX% year of the remaining that the the revenue on we on about about with The in income center to locations in the XXXX, in variable on due of also X% to limit that received stages but XXXX, is a operating interest was In the and part adverse effect the rate contraction partners tax QX. full net structure, in able from on $X benefit from the rate taxable and due cost As the continue for

centers compared balance made the million million year the We our in $XXX operations year had for of have child XXXX, of outstanding cash $XXX XXXX. X,XXX to $XXX capital investments million $XXX in million portfolio. generated from We in borrowings and with and flow ended to care of XXXX Turning our in on cash million and revolver. $XX XX/XX cash as sheet no we the

performing closures conditions had centers, in Like these mentioned, X current smaller, last we and launched particularly closed typically we an centers. line quarter, more slate a the centers As time limited which XX recovery. of by the below for have quarter, and on impacted permanently been the were announced new additional visibility average we also

portfolio result as to our COVID-XX. may discussed identify As evaluate locations which or a not centers reopen we calls, on to otherwise to previous we continue of vest will consolidate, of

associated with providing As quarterly has as ongoing or remains not revenue difficult earnings XXXX, detailed we're the early the annual disruption pandemic been predict. since guidance or business case the to

families encouraged remain intermittent share despite on and by in However, pre-COVID qualitative the community enrolling reinstatement centers With to sequentially enrollment back increased our some I see and restrictions of our opened trends QX, how XXXX improved remains focus on color We can about throughout or portfolio, centers levels. our certain geographies. as XX% our XXX spread we utilization ramping of the unfolding.

we enrollments cadence the the contracted to term, will of show including onset decremental will of XX% recover will We based and in recovers. XXXX approximately continue XXXX, mid-March XXXX of conditions, flow-through take vaccination fully that near the first of current In continue before likely approximately but COVID-XX our that fully it given of late COVID-XX the revenue general the with our until full-service segment, in XX%. expect related quarter and to to believe XX% over on uncertainty, time, utilization we of

operating Back-up segment, second we valuable client income while XXXX. the revenue bright the providing of over also expect out to that care a been business of and positive look the has spot service in over to resume performance. to contributing opportunities we As the balance last of generate again, growth the resilience our clearly half in XXXX, overall year, full-service

experienced we use XXXX, reimbursed of discussed, growth self-sourced to care. in As due this large outsized significant part segment in in

care expect second that have XX% expect will we growth XXXX care, this quarter, of QX in particularly we seen reminder, a levels. the it XX% of trail In the near compared for the in in And as was continued in back-up XXXX XXXX significantly to to expect concentrated QX, XXXX. reimbursed levels revenue to given of Although use some decrease revenue but we half. outsized we term, first range comparison the in

and combining growth progress care as approximately and to of levels. So to a contract by QX, overall return in utilization in-center the XX%. XX% second QX would half With traditional toward in-home pre-COVID

business Advisory XXXX continue similar Ed our or revenue we growth. mid-teens saw in results to in deliver expect we approximately to Finally, XXXX as

challenging team into and encouraged capital about to the the business by our our to allocation. by of XXXX employees, experienced operating our approach and continues management demonstrates of we leveraging our management thoughtful be resilience environment our outlook employer We a I'm and strength XXXX fluid, like performance by conclude, balance the Stephen, of centric relying disciplined So as model. on durable and the dynamic business although and navigated sheet and and trends, a taking move cost to the recent our optimistic I'm dedicated beyond.

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

Operator

question first George Tong Instructions]. with Sachs. Goldman is [Operator And from our

George Tong

the since sequentially trends, full-service you in how in You to increased COVID, has your in XX% indicated range. start that occupancy levels trending business XQ XX% the including elaborate despite modestly in it's the of evolved improved the year? Can on occupancy those performance

Elizabeth Boland

I is improving measured has Well, month-to-month. on modestly headline George, think and that been performance utilization, the

So the that has time February into frame. January, continued

around averaging month last XX%, slightly encouraged average at That's XX% feel -- improvement ranged this, on as being sustaining to think looked we to we from -- slight by somewhere we why sort -- about the XX% I utilization have we and a that's but by it of talked month. why quarter XX%.

that, it at levels the us continuing pace, part But in of and is a very on terms the sort to what improved that's look has comfort this at into as gives we year. performance I about it measured say. the the year, early of in of that part So early talked of the but

George Tong

factors you in Very performance expectations? same sources Got business, the talk tailwinds follow-up, initial drove your your And quarters? And Can upside prior the in first that those represent future of expectations. a the quarter outperformance you helpful. noted service then exceeded would versus in as it. what if what just your were about full

Elizabeth Boland

in the the quarter, but think believe quarter. fourth first you I So mean outperformance I you said

George Tong

quarter, Fourth yes. it. That's

Elizabeth Boland

Okay.

into lead the wines it So I if was QX. like trying know to about didn't

mentioned, So full fourth quarter to service, improving. was I so in performance respect the with enrollment as

that in And so how it trend. we're held, was reopening and of to And looking some course, centers at cases, slightly better. and that's across enrollment going are

on I'd than So the we it was slightly end, expected. better had say

cautious have -- in -- the changes way about been is also result we families play to the a as are off cost hours the trying incremental up. bringing and this with pick labor back as accepting enrollment we're that think of We've management. drop good be will I how we and

well that staff some rooms, so the incremental labor that not we're place kinds way And been the of then cover some of that aspect as ratios incremental we think some is in trying been prepared -- did I in a plan for managing the put And there remarks some those that's the to as there's have have businesses, again, and childcare industry. additional to the fall anything to of this able in job to the particular, PPE, I in other things participate, and so but programs good outsized and not just that cost. mentioned as we the support well, the

and some state that of were access were that able there block So we related the grants to also contributed.

many what's had by point whether program the year. government down going support to example, U.K. that of quite the robust the I So essentially forward, of the a supports for, for continuing in say, of the think end wound

So that program behind us. largely is

provisions Some other on new largely Biden and the Act the are of the completed, there table Administration. Cares are with proposals

benefit -- may Some able of but that we is some which is of to may to -- determined. be be that from,

the programs, rather we're center, and would foundational for than we're performance perform, it be to bit less of -- build the government little the families I say us dependable. which on some those of opportunity to on on deliver to in continue basing that's back So enrollment, trying our that get a where can sort the operating

So fundamental I by were few performance a is good more the perhaps that think supported off. headline that one things

Operator

Barclays. with Patnaik Manav from is question next our And

Manav Patnaik

give Have to I'm those corporates? was them us the the the from any hearing just wondering cancel was are And of hoping just could you're most the what's corporate the come some locations. discussion like was color, still employees I of hoping XXX just could if are you just just what you of companies back. I some us won't give centers closed. those maybe there. tech presuming decided I that like

Stephen Kramer

Yes. It's a great Manav. question,

that the expect to say majority that client are say I are are you're ongoing, of continue So centers at with part open partners. right we conversations subsequent their employer associated reopening XXX their the to or as contemplate the is as reopen What would number our that that to and of yet either going of time just strategy, small of they that cases, worksites as sites. prior same to the reopening that they the work are reopening in some to

hearing many of that So is we're not clients reopening in from our offing. the not

And throughout the see to so continue we'll that XXXX, closed reopenings our expectation temporarily half of these centers. first is of

Manav Patnaik

can the wins -- the And but just now, logos in service, most sounded like similar? more are or like of has been understand why full out called you retention But kind losing nobody customers? you right the do we're you how I of up sign to back-up care. some in new wants script your are -- you

Elizabeth Boland

colleges. are a smaller government Also But the D.C. some have Manav, isolated we situation the agencies have some we the coming some that where any were say, for that some in been actually, area that and smaller back, over few of a smaller from let's I'd other last course few at centers to they're the smaller centers use. employees agencies, locations a quarters, those that in been pathway say looking in that were there certainly isn't would clients. closed were government the we have some locations with of those concentration, if just

but a new. client as of one see, change theme of a signing We point, from for fourth actually, in not of quarter. little terms we your new heart So to there've for interest, in a a open center the been client of clients did much not up like that, bit what

and We have clients continue have for centers an to in continue option. this conversations development with to as

couldn't that center of a is the some are that this of client of And time continue conversations maybe who with the slower, it. conclusion that was So they that you're seeing just culling have came say some that more not a these those were stopped. to decision I'd centers the but from they

a of nothing bit So there, attrition there major. little is but

Manav Patnaik

I Okay. could contribution, any CDC? like one if I squeeze And from quick just one, guess, the what acquisition -- was

Elizabeth Boland

of million a couple revenue. in It's

Operator

next And question our with JPMorgan. Stephanie is from Yee

Andrew Steinerman

fall full-service do and into happen Andrew with expect to end to happen? calendar utilization for to means question for What I know has It's this that the year, still to your by Stephanie. be of in to comment the you My high that has the that XXs. back normal in

Elizabeth Boland

it's cycle. cycle, typically, think a enrollment a actually bit would be that fall different little Well, new the I Andrew, that a and of

the seeing that a as we're year of a -- that bit expecting even gradually parents think that the cycle. we're to maybe linear course not I over back over come the more we're little progression and continue same of not summer

are looking is centers I So of what the care would be that consumed and are forward as we we see spring the have I return to kind foundation distributed course for achieve modest widely to would summer, enrollment think, over building fall be widely fall the happen, more would more that the continue and and to to think vaccinations and cycle. of group that that the parents

all this a that I think way remote, map. schools been it's in obviously have whole and/or the hybrid situation cadence over two, and the fully school,

more a Stephen, you think But I helpful other also deliver in cycle if about parents would to be don't fall thoughts planning. school enrollment? consistent of had that I what would So their know, terms

Stephen Kramer

Yes. think I No, that's exactly right.

to come to think group returning continued it's care. down to I confidence in going

the And cycle that all that states, in the of of for are I childcare think note one the elements vaccination. teachers that's I prioritized majority being worthy in of other is childcare the as also that would seeing perpetuate in and marker. think COVID-XX, continued don't spread persistence parent's centers places that, of an be that centers continue to important will propel confidence ultimately, our of earlier

I the helpful and centers with agree of within vaccination totally are addition child I sort and again, non-spread of think So as Elizabeth, attributes care well.

Operator

with Morgan from And Stanley. Kaplan our question next is Toni

Toni Kaplan

[Indiscernible].

Stephen Kramer

back we Toni, circle maybe to on can the next? maybe

Operator

with Mazari Hamzah from is Jefferies. question Next

Mario Cortellacci

Hamzah. filling for in This is Mario Cortellacci

you and X,XXX. comment on base the your I know current you could client back-up? disclosed -- Just

cross-selling your could figure. with how wondering guess, I XXX is X,XXX or that back-up. that pipeline you there with that X,XXX of size And clients. I then to room for even, your mean, speak relative -- full-service to much existing with penetration in client the Just clients

Stephen Kramer

Yes.

of back the opportunity. step as question I'll what take that So a sort really see and on characterize we

employer very clients this center small addressable a certainly, care is is the very, full-service small service are X,XXX -- very unlike of network that Remembering solution. overall service service. a to So is that for set national relative our child clients this

So it doesn't require a concentration of employees in any one location.

So total, XXX what that greater only is I'd say XX% X a ability benefit. in second clients buy than we find with more employees service. employers note is have the of we for serve have really overall than thing our to client of or base, our them X,XXX the worthy robust

either our in continues purchasing to directions, final we child on advisory the cross-sell buy an that one that of clients to the in And had of lots be and care. backup different the the have growth we robust and pipeline is in then XXXX of fact that investing number who focus the those in or I clients. terms So full-service of to backup piece say that would ability is for tremendous we despite backup, including areas continue

elder care that component care also service. both in We associated see challenges into momentum as going clients solving the are really and child created the strong to now are the prospective that future as that will with of the well disruptions interested

in So new momentum we and continued sales positive XXXX. see really

Mario Cortellacci

puts could help reimbursement in to back-up, some margin from the Could some to some less margin relative understanding those And and us expecting you 'XX? what maybe of you're maybe care. expect and it. with then on of 'XX like and us you versus help Just of takes 'XX of Got takes puts in-center within out understand more of and just in dynamics? the in-home

Elizabeth Boland

Yes.

XX% in income. general, is range we the in is a in-center or -- either operating business, a as where that return XX% delivery and of in-home care you -- say, primarily target service is provided our back-up on to So it

with And care, it net with to I margins of and our has the and along in reimbursed broadly would that, was being because XXXX. to from historic is some mix mix XXXX where a be deliver use so that's pass-through, in use the a expect the coming revenue to that able speaking, recognized backup think being in line of distorted -- we business perform it continued but recognized basis. That's the us mix aspect is able on

effect pushing And margin what has expect than the it of level so in the the future. we higher normative and would

that. to be So a be able XX% will and would QX general, what in to we to given as complete have backup margins expect compare be the outlier against structure and range, we our the delivery But service cost in you. XX% overall

Operator

Gary next question with Securities. Bank And our America Bisbee of is from

Gary Bisbee

that one. on follow-up me Let last

XX% in quarter reported. the for margin on So if it's to jumping-off QX the is short self-reimbursed there and clients just imagine going to XX% term. you of XX% some tail care into backup, it's I the continuing at right your can't some of in point

push least growth higher persist back going for And to There in XX%. to it X. a think just I some to much so quarter XX% is guess significant let or And I had I you've guess, bit than at could scalability. back right the little me it historical, client then, base. another should mean, be

You've using addition assume I your lot the reduce that's in clients. friction. to talked about part technology on to a

Or be that done of not profitable? you it sight you given this TAM that to might probably, wouldn't pandemic line do be have given the so more just well how And reasonable, from is yet? that benefiting the business has

Elizabeth Boland

mean, arrangement. client Yes. to access able One question, given is I fair think No, multifold. obviously more being is a utilization Gary. I it's within And the there opportunity any

to leveraging broader able who mix can And do. across there the access employees therefore then more who be overhead that are we are beneficial that because care So the and penetration. that

for I us think, continue there to an here. efficiency gain So opportunity, is to

certainly on focused we're having and enrollment to who use it. can the those rebuilding think available access use care the that I traditional the to ensuring want that and

use. premised historical And that model have you We us employees there to that who a in want their has sloping and mix be are certainly though right of in-home way, to with you're say clients conscious a level. so to use arrangement been And that if back, will, will on an that in-center the it.

so will, to if sure that persists. side driving And equation, sure that, to of order we want make cost in we're that the you that be

range. So there's for opportunity saying, better that way perform us think to long-winded of I than

We have made some investments.

We certainly there's stays the as to opportunity. is, client to some continue that And sign as the make upside will investments. strong extent up it

Gary Bisbee

how you ago. several think ask we a how I'll levers expansion potential. sort quarter long-term many they but how service? service many When -- guess, they're customers are then of about many type of And to a backup, the similar TAM guess how that, I question, a workers I growth And what It's using. asked the have, there's within I to workers many what using or -- of obviously do

year? not if historical just the you've lasting it to it's of lead called Or benefit there's it's that, in real awareness think that clients on in And earlier or year, but clients, out now comments growth people for for Stephen, within it that this that this could know how number the you that people with a you using here that if lift, you at the assuming at service? think use usage do some historical that the but could a could there see is levels? Or to people you could your potential higher. are to service the that the that is sort base probably from goes understand be that outperform you call given As included models delivery of to client is hard the more penetration there, much, really even potential

Stephen Kramer

Yes. There is levers think I experienced nice So a think right? the growth growth, about mean, client the call great in right? client within when I out, it's backup, we which certainly new new XXXX. we

into users We registered to client continue XXXX. to have an growth of lever, users. that another ultimately of And course, experience expectation number that we're the then is turn in actual nice new going

registered use are greater. from to now therefore, potential where so we is more who use America, users individuals care. people convert coming service take, self-sourced a more individuals place some they Bank many in the into And seen obviously, traditional that to have manner and of was then available. And in in understood QX care you XXXX, XXXX And some our like that

So overall, I one. think is your good a premise

try for seamless more to outreach. make to personalized experience. a to continue We more We do try

So driving new use certainly our calculus well as in a clients. client within is as driving

that, in embedded overall, certainly So that's we're strive to will that, baked that I we've If partially we some outperform the into think But plan. XXXX. occur sense to. again, able

Gary Bisbee

about sneak and How there's in part home, about center-based sense work an age risk always that And if reenrollment I in community-based a bring fall? about that then you others impact my of increase or that from we pandemic this how And the more that? cadence could and there's office, you business. class. do new are as just aren't out transition lot is one, this I attracting of one new competitors awful have of think back normal if are could And doors. the historically, lot open people people if corporates impact utilization. kids have a of you of a do the other that in are kids how the that, does And that class? have having closed Does And you does sense your users in go second the in a how impact that look still many and that, guess And their office to or where the not the the in the centers. transitioned opened

Stephen Kramer

Yes.

first address the piece. me So let

proportion have much piece in enrolled. that staying enrolled in X done. if And things, there is Either, different things very currently have those The a a is that community-based the have modality they're our There there's them. we that found this employer that ensure for are individuals a focused in-home provider been a is point individuals remember, close really again, right? them But that have And trying majority finding model not of vast a few convenient have chosen care. they who small therefore, third, we're those right? what been community those We've they've very chosen of is we've a an which our community been home. may are from are care, to a caregiver now very with program have those And centers then first previously welcome working on we open. contact our mind. program, So are at if who of different welcoming of the community-based program. to So that

And so continue there's site, a work real to the enjoyed center have incentive we divert back to those find for individuals who at sites. work experience to their

work. back on-site convenient the And for site and model hybrid or option fully at And so them at center. work working most therefore, is the they're work going either

live miles is XX second we And center. both majority includes that and welcoming that site parents. within work find our The vast of community their of customers the

are And and some home, vast they continuing their to work our may work so still employer-based be home drive days. from on but to for child it then the majority to open, center choose because may centers of that the go they're

one specifically very their community to center in back go think back we are really that those are, to Family those, that to and/or chosen in maximize of centers -- with So come the elsewhere I Bright at contact do either patterns go in looking to they've those not and what if to employer we're sure are looking interim. the what chosen make our have to facing close staying Horizons who

Operator

is question our And with Toni Kaplan next Stanley. Morgan from

Toni Kaplan

about limited with makes ask to given happening wanted just I year sense a This was COVID. relatively M&A. you, for which year everything

acquisitions? tick Or and internal current that waiting assume before the looking for your your we see is up should really see term? in Just new could strategy curious recovery focus on if the we if that near just to

Stephen Kramer

Yes.

in in the market continue that look be but in and high-quality operate. we in both would out currently front, the actively the U.S., don't geographies geographies you that's as operate, continuing, U.K. on owners. X the Netherlands, today So and talking providers acquisition we to which expect, the the to And we also to we're

for we'll to those. uncover will present through continue so and possibility XXXX, continue And opportunities to believe that we high-quality the themselves acquisition

to absolutely So we strategy committed come opportunities be providers. XXXX are together there continuing should growth us and with that that within to leg with believe our for high-quality of

Toni Kaplan

about Or That's for expense in XX% to was conversion better conversion lot else? that. XXXX? full-service to a Is but just And the margins, think And than in or about XQ, guiding XX% then at how you've we there control should been came that great. better lower full-service costs? you start-up something looking margin in

Elizabeth Boland

Yes.

a better So had conversion. QX

Some of good was management. it cost

we And on, been the to that To is but an I we be that what the ahead, the a were it grants access we had going also quarter mode call from it's -- a that look the ramp-up and XX%. clients the continued have we think in then quarter. remarks hadn't to of a state come. of Act necessarily prepared were also -- contraction we similar expect and to somewhat in to able then we counting in -- look with Cares revenue continued in the neighborhood range the had as in centers in first is, we support be flow-through said to XX% going some block impact XX%, QX,

are in building still We mode. an enrollment

costs and all that We have step coming through. variable

second lap the the expect, as of the resume sweet haven't by half. would goes as we on, in QX centers or operating and getting pure revenue spot operating So the would of reached leverage. all and over QX positive continue we course to year. income the really performance closing, And But year contraction a we second then growth a be will the of half the by the

get of So we rebuild tale continue stage the the X lapping bit it's a and a cities then as enrollment. to to of

Operator

Capital Instructions]. [Operator Silber Jeff with next is our BMO And question from Markets.

Jeff Silber

of the either of where on lot employees post-pandemic, more working questions. we're we're about and part-time planning or But whatever. remotely, know If Just hybrid what's a kind I a nobody follow-up a schedule or a happen. from on knows to going lot couple surveys prior talking are really of seeing a

having some holes, mentioned up? or that areas curious over you affiliations have are some some community-based the programs. closed of You might maybe in the of acquire have leases take you centers with looking I'm where to

Stephen Kramer

Yes.

site that are at we the We alongside work as our our continuing with have, a holistically positioned, about well always where are employees our have communities, very to typically so we So of and consortiums employer certainly lease we're the think clients believe in combination that working. of living centers, portfolio. employer obviously,

ultimately, feel well So positioned.

new hand, look the continue to other On centers. lease/consortium we for

to live, looking employer the well our support We choices continue acquisition where and portfolio be that where round prepared increasingly look opportunities to where will going is at we employees they're as so childcare that to going to their to out ultimately, needs. about make continue work they're

Jeff Silber

tax no will them when credit you you was stimulus that came it go go I tax I change. I the it. But you care? the have an Okay. Does do the it an child that external the kind an impact can but use started Or really tax That's impact on a -- skip has over in if curious either of just financially, and know, or me, obviously, And when between may proposals help find on decision helpful. I'm parents? this, increase is mean so to whether about of child forgive in late, historically credit, And credit. talked just care one the plan

Stephen Kramer

government our the a in all, provide fair because we've believed has to always great level question. childcare never say stimulated they support aside the really of It's to Yes. our demand from employer support, it's that I that model most disadvantaged first mean the for centers. of families,

bit seen cautiously Biden plan granted than On the past, a we're is the other hand, that teeth still it in we've optimistic the a what has more proposal.

its going rounded still it's to So get out. edges

going sort of is is an be of it not the we there level But of do. opportunity, monthly basis. to increase. could might a to if on where support that see what we're this that other the And be that facet potentially opportunity, is So counting interesting provided on is the

option a of who margin or the is Horizons to that someone on different potentially care part a of evaluating as set. factors modality could consideration tip X cost their Bright those So lower either find

and how so in ultimately really it. again, see the we'll days that's But pass. we're So thinking about what early comes to proposal,

Operator

And our question Baird. Meuler is next with Jeff from

Jeffrey Meuler

benefits, you new fall employee have year? been What I wages guess, into or doing calendar the and and in full-service for the pricing

Elizabeth Boland

year interesting an for been it's -- have we that. So

have to benefits through who were for continued pandemic. and who continued those employee actually our the We access were We active furloughed. employees

question? the misunderstand I did Sorry,

Stephen Kramer

thought increases. question wage was I on the So and tuition focused

Elizabeth Boland

sorry, sorry, in there I'm error complete like head, audio had I exactly. Exactly, Jeff. recording a my

tuition relationship. the and to I XXXX, a think, relates was it as labor disrupted year. So

we a mode centers open, front and in had had unusual we and line we premium sort we pay we we were for that geographies certainly were where So pay had as were where workers. operating structures hazard some had of pay

during year. So we've reset and a were the at similar disrupted looked which tuitions, with this for

of So I have, we think, center's operations. looking view resumed a structure at a overall the

alongside cost as ahead the sort XXXX calibrated see tuitions we what structure. have labor to and Looking the of

I the bit did I'd characterize it We weren't wage increases, a tuition -- was year. but -- board board. always I wasn't had of a So across disruptive we guess it We increases, XXXX as some some would had across they either. the but

resumed established for so not the business structure there. model But that. uniform what to at similar answer tuition in relationship a And we have we has there's are looking a XXXX, labor

to I'd it And that's so how think you. for I frame try

Jeffrey Meuler

to me prior lot Okay. coming were to newborns your new question. children a I'm I'm centers, you? new And wrong, your then a perspective, guessing enrollments, has a But if of and so enrollment how age been? Gary's how is up follow-up back the And I current with from correct the but enrollment of last infants on, think mix

Elizabeth Boland

that if No. with good new behind I you this. had But families had I we like, have a who think I don't returning well. know, actually, can as from we it's us, actually were -- have mean, but go have enrollment step enrollment

do younger. more centers with the where enrollments the children just slightly infant relativity as slightly they I more a meaningful across comfort enrollment. age age the good of their the has But X, come tipped have but toward It's we out age bit older parents we across have, So of the were groups I'd olds reopened. a It's happening what's a the groups, comfortable older in have X-year been if than are enrollment new to than we groups. say, general, terms preschool level And in think, all have back portion it's infant. they in balancing are that

Jeffrey Meuler

make last I want Okay. just the understanding one, to And sure then accounting. I'm

and from that you government support if the as the you in could quarter? confirm sizing us was give or can recognized you just the how much a rough And state So block grant clarify federal of that? revenue,

Elizabeth Boland

Yes.

are essentially, represent the support they in not cost. grants So expenses, and represent so those revenue, do -- the reduction of they

And that so south million in were $XX the those of for quarter, it recognized. was

spending though, certainly, that would and but of mix. think for PPE that businesses this what that characterize, we costs incremental incremental as would was are I things incurring labor U.K. opposed to rent, been too, was this much with or have -- support, it the perhaps directed to the otherwise toward occurring, similar not in was whether like

opposed So of out just put that is incremental. in as is just that out here there it and of to some a part as the equation

Stephen Kramer

good for a again evening stay thanks And the Well, safe us on everyone and and has hope right. I All call. healthy. joining

Elizabeth Boland

Talk all to soon. very much. you Thanks

Bright Horizons Family Solutions (BFAM) 18 Feb 212020 Q4 Earnings call transcript