BFAM - Earnings call transcript Q2 2021 | Bright Horizons Family Solutions Inc.

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Operator

Greetings. Welcome to the Bright Horizons Family Solutions Second Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. the to turn Flanagan. host, now would call your over Michael I go Please ahead.

Michael Flanagan

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

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

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

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

Stephen Kramer

numbers results follow it I'll questions. the review to plan XXXX. Elizabeth an Thanks, provide and evening. a more remainder for with before tonight of start your up you current we second for and a detailed this Mike. our everyone us with quarter Hello of on the the thank call will open update of joining and for operations recap on our

performance Adjusted $XXX operating for the XX% net recap of with and income we all quarter. million ahead and of adjusted trajectory across optimistic to XX% as I $XX XX%. our million EPS the headline last three be of $X.XX, income well about recovery, adjusted lies me million our second yielded from was lines. year, midpoint increased the our continue up year. that up $XX let Overall, the as of the of passed First, as pleased opportunity the numbers Revenue of business to

with in steady in and of having temporarily segment. grew our quarter XXX% closed me We early recovery the QX. the reopened Revenue start last four of since of at centers the year. shutdown the the open, ended of reflecting education XX QX, full-service our X,XXX our new operations same Let our centers centers of centers with XXX time XX% added total widespread

deliver to QX adds I our mentioned pull were center I'm we've we than second in half half more their vein, last, timelines, reopenings healthcare of started QX Health Ochsner to for opened As backup forward result. excited in to in previously self-operated as their early unique based height of ability for opportunity the the care large in also the at Health to Horizons part on forged Brigham and to This we July. Family general year. open to portfolio. our our in the to centers system that the slated the mass see that deep have reopening was of client the Bright our a partnership originally in six several pandemic employees The clients welcome and And

their I'm interact from their encouraged with to organizations, other to and return to leaders office. they As hear clients commitment

centers clients time. creativity, new all employees, childcare campus be thrilled teams will will will We third by the reopen in-person office our on have our eager that same to to respond through variants, and reestablish we excited our I September our Even couldn't COVID-XX to to be evolving at am opening coming from state-of-the-art and foster open our full-service collaboration, been our clients XX. sentiment enrollment and from who continue center impacts improvement to I condition are organization. is and foundational officially And which all levels. offices always work new our company under more home remaining reinvigorate culture, clear be as mid-September. and quarter, majority their too We our the most the as opened to remain steady to together to with our loud cultures. now of anticipate collaboration, roof has back in for opening closed centers, one plan encouraged that be continued in to Within I temporarily that the

remain ability growth have I resurgence are occupancy While levels. of months, underscored COVID-XX geographies our environment pre-COVID reopening, COVID-XX in consistent the experienced that employers’ on occupancy XX by since return to the periodic our to last demonstrated decision-making. over quarter-to-quarter working many confident and impact its and have of navigating With persistence fluid, employees’ we business that and a and said, levels remains

the exacerbated certainly reserve staffing early pandemic In shrinking to the the stay field. demands working look as in working have the addition, a centers, families as are has more spaces industry pressures, the which tours long full-time effected of hard to supply and request educators childcare in of to we ahead labor due our

the the few. the for Revenue UMass synopsis another The the the We people we among second new Family, our long-term a pandemic. growth employers trends additions backup Let and clients Health, launches quarters service was Cargill, year backup financial interest me surge $XX line quarter the ago a early now million turn Horizons quarter core strong in in of in Memorial name for new the but expectation, within to XX% demand our opportunity and and robust. of new saw broadening due of reflect than care business underlying cross-sell. backup three stages of of to reflecting with More with client to decrease Bright are significant care. remain a experienced to in does our

use On traditional ramp as taper and reimbursed transitioning the use in-center to continues continues settings. to parents front, with self-sourced traditional care expected and use more to in-home

last More users I'm challenging also to to been in-person And the in see Kate’s pre-pandemic fully year-on-year to next and traditional and by months. than through quarter longer-term and segment. encouraged to was returned for summer added Camps. not stepping forward has have to this excited offering quarter, within with year sequentially nicely. use XXX grew very client in interest a use we great clients tutoring children virtual their the tutoring after care returned what and have up about levels, opportunity Steve camps the this returning virtual all. three truly backup very it and uptake backup activities near- Although I to look unique & growth remain the

the XX%. individuals of of growing division within for new clients helping the on participating a our as focused Bright years solid and Children's in Cincinnati a their to advancement. quarter, next as as family position joining other a educational training to are and believe editor's OneTen few well-positioned opportunities with of weeks coalition amplified education upskilling number leading a jobs OneTen sustaining and of in support complex strong We for ago. I'm the with launched advising parents revenue the our the children's into education. Hospital, excited employees. employment through also to towards committed employer our pathways client continue of build America LXHarris. decisions both unique International Horizons Turning joined Coach, black OneTen talent advisory hiring solutions has activity employers I and which that business, we working to College XX million pandemic particularly continue a workforce support is over delivered to to X upskilling, see developer, the levels, demand And employers further that growth face announce including our employees attainment. Paper education and and and educational promoting

for existing the caused done business, the with advisory tremendous suite first remainder quality our XXXX The a childhood education our year ed to well our by services how execute continue I and So in of capitalizing solid pleased for at disruption to employer team a closing, on and of beyond. the of solutions am over recovery combination time, the half clients, in partners. unprecedented the are while job of in care backup opportunities the and early client families, learners growth. positioned product identifying pleased I'm unique rate we has employer create to Elizabeth? same with and education and and delivering powerful pandemic. of highest our our and The following the

Elizabeth Boland

to then and so on the call XXXX. of Thanks joining hi for much, us. some provide I'll everybody and Stephen, you the on results Thank tonight. the quarter’s rest thoughts recap

new been four million adjusted of EBITDA and XX% open. adjusted and of increased revenue had of second increased our XX or that second million to we or We quarter, with In closed. XXX ended centers income quarter, operating June overall the the reopened revenue. XX% of with to $XX XX% For centers X% added million $XXX out X,XXX revenue temporarily $XX centers

also slated to remained closed the QX $XXX XXX% XX are year-on-year. centers temporarily reopen at favorably centers. in increased of XX XX with comparing Full-service or in permanently our million coming revenue We months. XXX% increase expected XXX% The to that June closed

and to mentioned, XX%. now XX% well are enrollments As between tracking Stephen levels occupancy our average

in cost management, encouraged as of well of XX% sequential underlying $XX full through user also clients income partners all for continued This positive continue our childcare of growing and types. for the a $X programs The through geographies. backup list care support care industry. solid ahead segment flow operating noted, on service the client remain flow As services of this strong we the Adjusted growth. of the that as by are progressing million approximately expectations with and revenue million. and the on for XXXX, targeted are improved the over enrollment a is and particularly from government Again, base represents improvement a to expanding across to XX% broadening quarter the demand enrollment our

of significant sales reimbursed backup lockdowns. As growth care outsize on initial of discussed of prior we’ve to during the the in use care calls, XXXX experience the phase due XQ force

type While options one to be continues reimbursed for year. of care prior the significantly clients, reduced the is it to some compared care

targeted half in in-center expanding a growing backup XX% continues uses result that and to our backup of as solidly down XX% the revenue to result, QX broadly revenue total use comparison. a was XXXX up the with the XXXX in year, pre-COVID back As users line outside and compared expectations. over are for Overall, against decreased first our the care, performance. our in-home on of Traditional network income toward levels. of $XX Both progress available centers need segment broadly Adjusted contribution additional with of margin This recognition which or which operating from care revenue reflected the for outsize net the self consistent has in million recognized XX% to basis. on for revenue a the compares year, for increased quarter source prior reimbursed was $XX the million parents and longer-term support. of

with also to demand the quarter up with to services. or XX% client client offerings. the been for of Educational We’ve Advising well needs as launches, and the $X college been investment education, outset in able impact revenue our segment with reported expanded Our we’ve responded from also – and pandemic, aligning workforce cost the on the new revenue onset our use solid of schedule growth contraction as about spending, limit measured admissions service creatively on Sittercity management we’ve contributions million our about of disciplined income. Since We’ve reopening care. been operating adverse and expanded advising,

to in received the adjusted and Interest on various the the in ASU rate equivalent Consolidated de-leveraging. the from $X.X cost helped XXXX, the to programs the of net toward Netherlands we And as lower limit income prior in equity QX expense variable and childcare have our Our under primarily the and activity tax compared XXXX-XX. due well structural from XX% as our to roughly in other was was and of directed to UK year. cares proportionately partners, the XXXX U.S. XX% government also client tax million Act support industry the Appropriations benefit of provisions structure

the the an existing share terms We of $XX investments investments that’s in the our first authorization. in cash with our and of growth organic by repurchases prior our in operations million and acquisitions the is followed fixed out In $XX from generated deployment in of both quarter priority capital strategies, million year. made under inorganic in line business, around

revolver. $XX times at the We $XXX and debt shares million million over no program also in ended X.X with of on resumed our and our QX after prior We acquired our borrowings million share the of to net outstanding quarter year. EBITDA cash pausing $XXX repurchase

we has cadence onset the As since not of year, guidance been the the predict. as are providing of last remains case full difficult earnings recovery to the pandemic

their families end delays. offices over our next that the some to With the levels. XX% will I opened unexpected any clients by most see be enrolling we remains open centers on be anticipate qualitative on ramping mid-September, focus to and However, of QX client how our said, will we quarter share pre-COVID centers color absent of targeting unfolding. back With by

trends pleased incremental XX%. increase from As by the discussed, we operating near-term, of growing of over around the to interest full-service and with we’re continue see income in expect enrollment prospective revenue with XX% Therefore approximately to through XXXX XX% to flow families. QX

as the experienced in seasonality In stepped protocols, continuation will staffing of income temporary have the we finish addition enhanced COVID the off segment, we to way typical including QX on reopening with we some inefficiency XXXX. ramp and pace of that the associated up stage, the operating this along during our levels,

backfill school. cycling younger shifts cares to the optimistic we the now surge a QX runway. we younger of Shifting Having as XXXX. elementary This of the the fall toward a in outset enrollment in we quarter and in remained backup mix significant groups pandemic preschoolers As to that lapsed our about reminder, impacts enrollment seasonal backup, to cohorts. delivered experiences reimbursed at growth some care as very move enrollment that margins the age older third typically

We half approximately use growth traditional care our mid-teens build XX%. growth to we that, the the to for to margins Q&A. backup total expect we grow and XX% ranging range growth of operating With continue second expect around revenue revenue business, expect of consistent in with to and deliver to return to to QX driving to Advisory care year-over-year XX% near-term, to the QX. to the in to In operating year. continue to XX% ready backup in income And XX% year-over-year significantly we of regard XX% with Ed go are

Operator

you. Thank

first Manav ahead. We a [Operator Our go with Instructions] be Barclays. question-and-answer Patnaik will comes conducting from session. now Please question

Manav Patnaik

Good evening. Thank you.

Elizabeth Boland

Manav. Hi,

Manav Patnaik

question and you just all a day Glad hours all was & like Sittercity, I I think to exchange email about of Barclays, the hear got saying the could we one positive curious even And a talks commentary you four backup Camp. is, that an acquired – Steve reopenings you Kate’s about. The guys for at got how which tutoring. just those did of continued they are the I we’ve to economics does just offsets virtual work, of historically, here. uncertainty visit of we it can or be change something the reopening is curious what’s it substitute understand all trying And what can was just seen if that to or if –

Stephen Kramer

on Manav, That’s in to to Barclays and a great thanks question, for continuing backup service. the lean

as described So to and based ultimately we’re what investing. that is on use underlying economics of service to essentially always accrues the that are achieve, care we’ve the our able backup employers

you as investing tutoring. continue just and is the we And to so Barclays types, described, increase obviously in as use virtual

You have the in-home ability to care. use

ability the You have center to use any care.

extend services services population. same of the is make of the the our to larger time, to the that are benefit more employee at And the that within care. broadening obviously are backup goal just a of and the swath relevant population larger rubric kinds We used to

So continue ultimately, our employer fact employees. of that that making to the we’re partners are the increase having the more more a as is and to goal impact investments their on result

Manav Patnaik

think should Got how expectation, think give it. on a year, anything you out. step margin curious Elizabeth there’s to last in the there, just curious just Ed I of growth was the about we the curious heard half just us call if up second I And but Advisory, there just the

Elizabeth Boland

the revenue growth, do the mean growth? So you

Manav Patnaik

correct. Yes,

Elizabeth Boland

Yes.

there where before, is revenue it family So that joined mentioned growth of has reported terms and contributing reporting. did Sittercity it segment the That’s in as – was still group. is in the mid-teens we looking at you

to will inclusion of as it lapping year that So we last be get the end XXXX.

to So see a to margin that are more what XX% in It headwind – ramping it to closer long-term of own and has because business as also than has we between being segment would it’s that of it getting XX. and the on maturity. contributed margin and we XX its – some that

think on So to top why mid-teens guided that’s we side. And the near XX XX. that to term,

Manav Patnaik

All right. much, Thank you very

Operator

Your next Sachs. George Tong question Goldman with

George Tong

Hi, thanks. Good afternoon.

exiting get you then on And to changed service track back structurally. expect to are still pre-COVID? embedded and the about QX? year, how occupancy outlook? rates pre-COVID occupancy versus in for are that XX% your step and rates What’s talk now, post full to that mentioned up You your can XX% you are progress COVID it those view, what to at into Has rates and you

Elizabeth Boland

Yes, I what quarters. broadly or about we’re prior talked have that that the to to mean, initial headline I in answer similar is think we the answer

with are of turnover, progression, school pleased the on that results if the in you new we’re QX We sequential we’ll and with some track the do as to family. enrollment go backfilling older have we’re elementary terms of that preschoolers will,

this given we enrollment of parents, we’re though some we expecting see year. we’re end continued requesting modest the and as from the continuing so at pre-COVID demand declining by they’re near that hearing certainly what even getting So we are to having That and conversations fourth the improvement we’re that would quarter, into is seasonally, see that levels typically in with what clients. QX, profile the

So have talked past. X, in the what I we’re to think similar Page about we on

George Tong

Got it. helpful. That’s

finish costs. But that XQ. you’re through going to flow operating the weighing about talked be to in to You some going with you also due mentioned off for on full service is you see XX% income operating income XXXX as ramping

come suggest those costs under online? back and come that XQ of particular that some will does margins So in pressure

Elizabeth Boland

to apex of is be I some in the what we we – inflection will messaging year. the the in respects that comparison on are last think at there QX,

We enrollment cost highest of in were So year. inefficiency the and reopening had last structure. sort QX centers we of of

will to as level, quite the last it we detailed from that QX top at we on through certainly, back ramp QX be seen year a at we compare QX. continue we’re flow from the not to giving because point. to will pull QX, this already now, But improvement as had bit of guidance So

sure enrollment to we the well. understanding cost as even So I through our the by to that all of to everyone’s in approaching that not these consistency – have COVID think make to of our of some cycle with back the enrollment end the align going just We to the year. levels to have stability as trying we’re pre-COVID, margins be structure still protocols, are and have of need tuitions the the get sort the opportunity and we

So moving there’s quarters having few contributing that that, the to operating to pre-COVID where be enrollment parts like just are needing toward is that close with were. getting a few a levels or back gross we margin our more aligned to margin

George Tong

helpful. it. Got you. Very Thank

Operator

Mazari Next question Hamzah Jefferies. with

Hamzah Mazari

My on question afternoon. seems positive. good backup, your Hey, was guide QX very

the Your before. this is, like, during or XXXX we look was million. question business you’ve think given market ever sense guess big base revenue COVID time? is addressable added this be than really? I Do any you’ve you And more here have should not the how done XXX over timeframe competition I a how clients could at of there

Stephen Kramer

Hamzah, one lot a in there, turn. each and in Yes, take I’ll

of think of backup is single center see and of any services our great, in from site childcare minimum than employer the within what the address our addressable requires a of right? employees. the employees opportunity employers, backup X,XXX business, a can location, In or care So different really needs greater a XXX opportunity. terms as X,XXX sort which care of sort really we We market the onsite

a larger quite market addressable bit the the employers. of there in number of terms So is

care use greater out at out, continue of those as we have And And use point number And as to see they same extend this large the they our backup from employers. we’ll of into that we a are service. additional amounts to employers time, to the coming season, of right You’re number that attributable to as continue added segment. pointed cases

a positive relates very it down So care of are think the we as there service. are number backup again, tributaries I to heading that

said, the to That incredibly certainly we we have because innovation of and pioneered position. terms positive take both In in always best-in-class within this and our their providing are dominant do marketplace. about want incredibly and our to marketplace. the as the be the leader, seriously, We the position have fairly competition service by employees, obviously opportunity, employer competitive well space and continued this ultimately feel we far competition, clients within we away service as line a

Hamzah Mazari

too, follow-up think just That’s a few helpful centers shut out, XXX a to also that were mention I they QX, employers Jefferies turn quarters you the it were had called a in forgot and is case. were But guess, and QX. very in client I in I I’ll question a they just over, ago they shut, backup shut

is centers of your them of open QX? I just to just expect those definition, expecting remain that’s you to any centers – XXX centers, curious I’m just is now? shut think maybe all of, you. are employer of by the Thank to QX. get the are by disclosure a them the I open of or new I’m of old any that sense to expect but as wanted you I you impaired, XX% guess, are question. the forever reopen to if end And

Elizabeth Boland

Yes.

and never, XXXX, centers they have ultimately are majority handful clarify, still vast in for but reopen, it’s temporarily total and reopen. not all to all year those general, schedule QX. to are handful just think never and that There have the the but of are a early are They say closed going there vast say, of a this we So don’t majority be that a to we a into XX that are are plan. may expected

And do the We these that our it the that a decisions. for number client as QX. – So our discretion of in framed But portion that lease being are have client opening. large there managing are under few we models majority centers group. been a of the those why have are are of that’s that we

Hamzah Mazari

so thank Great, you much.

Stephen Kramer

Hamzah. Thanks,

Operator

with Steinerman JP Next question Morgan. Andrew

Andrew Steinerman

that’s hope two I questions. Hi. okay. I actually have

this centers one My see first year heading occupancy The service by is good year. full for the end to pre-COVID question to that. back rates past it’s levels is,

to So how into Bright service And is happen next Family’s they Horizons Bright then second different addressing that you get what which really and my to pre-COVID is where full service closer question, dynamic? revenues full are to levels? question is, Horizons from year, and demand needs live back to seeing work

Elizabeth Boland

Sure.

So, I to answer would revenue – think be of we the of question near into pre-COVID comparable at before pre-COVID that end by first year the XXXX, we be we levels next as we to target levels. year, seeing is the to the or said, as course, in into early are

the probably about levels We measure, on as it we’re to certainly the some calls, to threshold is also are But the the continuing of have some will in the I and is will to continuing But – question. also levels at think of levels from talking continue your higher the it talked the Andrew, grow prior Stephen sometime be be would those bit the on of second we increasing I’ll But XXXX. working enrollment advantage be large half, what the from terms first and need about the of revenue supportive, depends lapping to things. where hard in tuition pre-COVID expect and comparably pre-COVID answer the as we’ve concentrated to a drive we enrollment was an And part to relative let grow revenue now and for in contracted at have and level there, than opportunity continue us supplier past work that. in relates opportunity where awareness to of one. to as childcare environment there that is employers the of of we is

Stephen Kramer

Great. Elizabeth. you, Thank

enrollment to reality our or So to tends or I center. yes. to Andrew, cases, answer a think of, that community in lives individual who’s home The in the is either in enrolling facing is, both workplace work? is the be enrolment But miles. the our within closer us typically XX towards at terms tending for

site. families the centers, for are our miles work to lot close in are that their a enroll again, who they center. their we relatively that are enrolling and those our living therefore And are ultimately XX enrolling community-facing work finding within so, of site in living of And

get where and located to to what again, is well so, underneath centers are are our centers very question, ultimately And are proximate our those located we’re sort that where enrollment for the finding them. of very lives

the overall about is. portfolio So feeling where good really

looking We employer the finally, And look continue that do to and new are us targets continue same. the good for allow then look subsidize same to developments acquisition and at continuing finding looking to clients to additional that for time, to infill to success. for

the where good feel choosing about really related we’re who experience. trends overall those So and Horizons located enrollment Bright to are a

Andrew Steinerman

Perfect. Thank you.

Operator

Gary Bank Bisbee with America of Securities. question, Next

Gary Bisbee

if Good that afternoon. could I out wondered guess, you I two to comment sort be risks of appear there on.

number publicly of the is when Delta there’ve lot a back The a pushed that have change sort large they’re of first just, to variant? relates bringing companies I think are you any been hearing in employees. plans off it of as

months will Elizabeth, than But we that how higher. a about labor price cover and comment as will maybe revenue. to done your you that that longer Thank timing working inflation of that labor markets, of in just moment? are somewhat the is an and come is at Is to risk, was and secondly, are think take issue happening? you several you. Or through the past? on that be back you that? you’ve or costs the Do as part conversation so tight see And a as that And quarters? Margins next able headache

Stephen Kramer

Great.

because of to our they look, element a critical clients question of Gary, been obviously, see So on of I return to return timing information we our around flow think the have strategy. on from office, office the support as this front end their

different to that that we So, though was the we early that very of from anxious their the employees to rhetoric the that employers in very news back, travel. some recognize was early get of direction were even were heard

to I very That’s that there of supporting much narrowing. is the sort within to return their hear office. schedule. month. continue we’re And focus Labor office. and the think moving window employees it a Apple We that perhaps, is back that for to But with coverage the off is there’s large think moving a just is of employers to certainly the employers by a Irrespective employers to sure Day get of about few full of that, still that and irrespective employees are the to intent news, of past forward have heard hearing or is their in them Day after you just relates flexibility it Labor may a Day There the that I certainly Labor said, Day. real is that has date as lot make that change around tone focus after by delay what Labor

Elizabeth Boland

though that last above – above even quite our then And do geographies we Gary, many that we’re by still I wages disruptive industry, across relates not wage that minimum well well other payer. that. industries say And in our to we’re seeing year like average – labor it is We wage we the was year. a it as would labor operate. certainly vary But inflation inflation, we’ve are geography, a XXXX

and/or own And concern with continuing. with work ill of so people exposure timing is unemployment or there own constraint both – differing either their market to health or concerns their some coming benefits back

we are that the where we past. seeing the framed in at of would is labor so higher on end inflation have the And typically

range would I’d So to higher longer in to that are work the X% we’ve X%, all in to of been to. and are we’ve X% service average period a ahead of and we’ve its from the recouping potential Where COVID today That where get that this some that areas and expect of required. protocols health just able way cycle sort extra that been able normal. of model of a a through X% hygiene to in as to the costs standpoint, get and average, the do a consider more standpoint, from going on have need been pricing return may more as with than But out to in years, be last and that now we’re the been to we price but that kept more that up, that. even that or we we markets X% we with – than say about incremental that some in our staffing to from typical it’s few the we’ve continue full talked continue higher the that to to forward, pandemic in of model will center a is also costs X% not

the of little And the we But time headwind of on is are to programs inflation so We geared directing the funding toward a that the in labor that government is see think Act where on Consolidated bit overall have margins or well. that higher do support the some may as near-term, labor. end. structurally, some we ARPA for in Appropriations

the costs calculus it of still through working that that. year able plan we’re of But defray we’re with that the some to for our is of So rest this part is something and he next.

Gary Bisbee

Okay.

thinking some maybe Is about comment into reasonable those it... So the you wasn’t whatnot next is that like the that bleeds just costs That months. is to next COVID year. think or it four of protocols, mentioned

Elizabeth Boland

that not lot – a think I of yes, it.

what down into but some year. of tapering we’re end, support a think at is the may that expecting next the we there again, will majority of there’s that. year government – protocol ongoing for now it offset to looking next I that to be maybe for if those we’re costs some But bleed

Gary Bisbee

I your then, coming more, back. sneak obviously one sheet is are could in just strong. Profits balance quite And if

the businesses the from transition community there. in and M&A to you'd weaker markets, based center So a Maybe that leverage lot even take business in to people down. looking likely market. a position bit share thinking more is mix of going service active full at your I've that heard be the are

Is gating meaningful yet. seen and opportunity We any to real that a on those the what's of sort of factor opportunities? activity Thank you. haven't moving kinds

Stephen Kramer

Sure.

So we been as acquisition opportunities are our absolutely on topic. this seeking actively very history it’s

geographies Netherlands in are well UK we both looking the more We broadly. which the in U.S., operate as the and as

form some shared whether combination at we support, is be government where some there third-party there of or that off. employer, we've before, As look markets

for and opportunities quality sure we strategic fit fit, and So look continuing on to that are and can count evaluating make a are that I think us you that focus a good in of providers a has that a been the has of would our been part delay, there I financial disruption have delay the fit. experienced. that if just amount in say sector

line have some the and build expectation. enrollment, that back so level are providers And the that achieve continuing I are think to felt they value in in ultimately that many valuations to we their of do built had trying same pre with in so bring they as thing can that pandemic they more a

that's absolutely continuing occur. timing that look consider in piece, at and as well as in that say will growth more focused as as both would opportunities, important today to just I when the we're is are we the to that so organic well around that's broadly. markets acquisition the But And on both

Gary Bisbee

helpful. That's you. Thank

Operator

Capital Markets. question Silber BMO Next with Jeff

Jeff Silber

much. you earlier. Thank Stephen, just to wanted something you clarify had so said I

XX proximity may then I the least work days can choose ones the had then think two I for of employees a live site from If of consortium to go childcare you on contracted or week, child I was the which the working majority your if even my center, correct? a kind I clients, for a still and you week. home miles whole think proximity. pick I take – I'm that the models center service And Is – and similar a mentioned I'm that child center wanted if a it based of center. full within the that taking live my also also to to month

Stephen Kramer

that. of sort Yes, there's – think think I two to ways so about

way continuity family five perspective, and that within is recognize center of real as That And worksite advantages or is, the the many, at continuity well for site. as examples a a think right? child have a the many within the maybe we that their this of from days teacher, a care classmates working to point first they have are center. families to for that is week best likely or work days four a their three having two The first at children of who

they you a know, that, at an by the receiving to quality addition all often lower In are there employer. of as it's provided cost subsidy a is important inherent being to because care recognize that

our at days site. utilize a and irrespective financial both home and But they're also employees site there their to So but offer centers the families both schedule to child we one they're working their from draw facing the are center, closer center in may employer center care, mirror to week versus work as the but quality how having from more options, couple work do a for workplace. that have utilize a continuity community again, to to of days opposed their that work certainly at a of of yes, be perspective, a also sort is And their other two real many the make child centers. But between onsite much of for draw in seeing of we go have the and we office the within decision home. that going splitting of

Jeff Silber

a you makes offering really that appreciate Ed lot I on a to I their And lot sense. we're And of employees. do to Yeah. clarifying seeing companies switch your over education benefits advisory of if you oriented that focused could that business,

kind other announcement should whole, percentage just be bigger services seeing that expect lot of if going a business you And of educational combine think your more all kind I in a a advisory of we as interest business? target expanded today. to I your forward? that another Are made

Stephen Kramer

Yeah.

churn. So take I'll each of those in

service likely quickly area business backup as that in growing well. than area certainly our is our first, area in full more So particular of and our

to our do growth And overall, as the granted that continue Ed businesses, to it's to a to rate growth still of healthy an the we increasing relatively so that see nascent just two other percentage but today relates expect will compared cause it become increasingly rate to advisory.

our sure internally side, that's programs ability service centric strategic do something historically a IRS the to have being. way. employers, most comes upskilling in take that progressive for this said, on market, real way. tax into look since workplace play there the innocence focus into leading making In education is been is tuition it a assistance given need and much work are that had of a has the employee the came our employers And more terms major code reskilling, where and most really and on of managed doing That line they in absolutely

well And believe I are they So positioned as at business. the develop future to as this we we're for as are overall they hard looking as are absolutely to continue to as our incredibly through going grow base fill fill that hard education. and that specifically more think to they this to look client fill across how jobs, to jobs needed look well to their that recognizing well employers within market workforce be

Jeff Silber

Thank helpful. really That's much. so Okay. you

Operator

question with Morgan Next [Operator comes Instructions] Stanley. Kaplan from Toni

Toni Kaplan

Thanks so much.

centers? went XX drivers just ask So shift are wanted into on could I closed. center we go be in employers to that reasons you the the to schedule count, about down primary close quarter was nine. the a employers what that it hoping flexibility why this work from like more were thinking there want permanent or those should the other about by would in towards more of the the Was

Elizabeth Boland

were we were Toni. still and We closed centers for number assessing Yes, had whether question, a accommodate could centers. the of viable temporarily at were we the families other for long-term, so they thanks that obviously whether

a good control we So models those had leased also are certainly portion that of over.

all client of not centers was in. of to the those So client where centers decisions. are lighter population maybe were imprint There had a – handful a going

client were they an viable so made have decision. location as support And not that as and for the they ongoing

been some It's may gave been a So COVID, that. I normal decision. fundamental kind at any does think don't a that have I in reflected of case, come indicative shift. not to or as but as really the year, make decision impetus – any each a just us cases In location-by-location client looked we've not it COVID to for

Toni Kaplan

be to and XXXX, down a about a growth center a going follow-up little COVID that want uncertainty you the of the once seeing And really guess, rest go is to the should through timeline. as lifted sort new for That's that a bit, thinking has are I we started we the case count like, great. versus – I guess, shortened pull during understand like new there into someone trigger just that, timeframe now center, history? longer a to longer and I imagine a as year I the how of on

Stephen Kramer

Yes.

centers, backup where more Brigham make did Mass especially business General service the a care had onsite of and I long in full cycle center, the a number center who the work how those that along the cycle. clients operating look, we mean, further we that has when say obviously that with who sales always would to right. on fact were I I six hit, example had had So, the cycle in the those the given we center, sales the a would great quickly, was some impress midst COVID decision we’ve observe put relatively focused They partner centers they them the transition They’re that were clients with finding given of made difficult That of short, sales were they earlier. through currently what through that their is many pause, mentioned decisions pandemic. COVID, priorities. on as that I we said, them other were operate that right the self-operated pandemic. also self

especially COVID sort a on we and to definitely through a hope combination I to see some that XXXX hand, opportunity coming good COVID we side, there think other the of in So, saw think transition positive mind, a of result on as to is I self-op out specifically. long cycle me, decisions opportunities keep it’s where, sales the

Toni Kaplan

Super. Thank you.

Operator

Next Baird. question, Jeff Meuler with

Jeff Meuler

you. Thank Yes. Good afternoon.

kind your when down more be still, that per a of typical counts toward year, in I the centers you’re center like, back second in centers, from X% Just pre-COVID time. I by on terms buffer is or And reopening should pre-COVID I’m year, enrollment then and some the take this we also need half appropriately probably full-service permanently something like closed. don’t of what for about this know, the are so we not center basis since interpreting would of ramp of setting do commentary think like that about end that to thinking that talking getting expectations

Elizabeth Boland

set. a been question, it’s descriptive clarifying We’ve So, comparative be of trying Jeff. great to

the those if back not end of we’re the looking that that’s total to we’re total. be enrollments level, So of absolute centers, levels near at year occupancy an number XX% as and pre-COVID at, compared or XX% for now, to to by

ramping occupied, a we starting the lower at centers then they how the XX%, end starting have at opening that out the QX other we’re So, not They list, XX%, to is in or with of that operating? So of that would occupancy would part the be may up question XX% unless different are centers wait those they’d be and in of are be cohort. that the reopening. we QX out but as get centers that

to intended center as say, of as So be, that’s same a I sort comparison.

Jeff Meuler

really wage Okay. a been And your Gary’s And following but or then year, last the retention the and for caregiver this then over those challenging broaden to could how if I a of year into inflation individuals. teacher employee set has maybe comment question out circumstances little, trending that’s on just know you related if hire constraint to I you the in qualified don’t all a constraint. and ability If is if at a pockets utilization not? pockets, the or think overall rate, look meaningful I that meaningful I meaningful for guess, not, to those if there’s would at labor,

Elizabeth Boland

can start I’ll off a Stephen So, it and color. play

in been pool. about we the short a is that the been labor years. numbers childhood declining question long has to pool, shrinking labor early answer the the I space labor of – think for you will, if entering folks The have constrained

choice are And want years pay many, opportunity. and for environments benefits value our career and have from been for where to caregivers only teachers be of work we employer those our total committed employee choice of employer we proposition that an to many our not an and and to working so many reasons, including hard

now. the But in labor have long right it’s a pool So, we invested – in challenged a that. very in state is

– the work they’re We affected who by are are those certainly the that people seeing doing. between

that. and want are own and they So they’ve job got dealing And with environment. and concerns about stressful careful questions, be their a to health,

challenging it’s markedly than folks there and have want kind different but the continue industry pleased We what re-ramp the of environment in with where an the this turnover environment relatively and who are in challenging become left seen they we’re mode it’s have years, in. status is a than prior that more hiring not is ultimately just to we’re

rates I think is an we the we through of but can it they’re and with wage I so, the business been to quite long And of economy is this – it equation. is, is been –as sort rising. kind There and can do continue is with is we’ve supportive of game. I proven model, talked they and So, dealing be that think an the challenging. part we clients supply that and where one equation that said, are environment to part of as headline think before, labor our that are about another fought manage understand that itself of parents can and that’s And well, a we but with the it,

Stephen Kramer

to of And difficult set circumstances when is, proud, I we I furlough temporarily of we closed think thing the to I after were only were that large add was number very especially employees. what and a can such forced think a centers

enjoy back. incredibly to we to we and retention kind That majority proud the sense of back the vast of we sort and status coming kind come think choice first of we enjoy with and of and that of culture I when were employees. them asking were was that relationship the reopening the employer us our of the

say of both allowing not to therefore who get our have to many a to to are, of employees fair the and that a the So that difficult other very found attract a us is our in us with to within employers, sort ability it’s place did industry force outside real one. that those think be of pre-COVID. industry and are enjoy that was And that we place terms I

we at have them previously pre-COVID very ability of be again. employed from our back yet our basis So, the the pleased were folks attract and to workforce

Jeff Meuler

lower that for contribution the from have I to know that it’s one quarters been than last then me, talking margin was range had care. And us reimbursed other self-sourced this the the Okay. quarter been in backup care in however, it’s you’ve

and care I to margin, getting self-sourced too don’t or help that to So, small is matter if there’s if that. another just into your reimbursed know factor goes

Elizabeth Boland

is a as it’s modest component portion than care The there some care use. diminished the prior I a still is that but is, it still self-sourced is it’s higher there It’s type, much but years, significantly. more – mentioned of

and into as you back supply care, different of system have so in back use providing if we And come traditional costs comes the a where the will caregivers that chain that’s slightly way.

it’s a So, of both third that. that service, backup our Horizons group providers or would drive cost and other Bright be center the where providing or a centers would in-home full our our benefit but network party we’re care to to that’s

Jeff Meuler

Okay. Thank you.

Elizabeth Boland

Thank Great. you, Jeff.

Stephen Kramer

Great.

for So the again all a call and joining a thanks the and of good everyone rest night. great you summer wishing

Elizabeth Boland

Thank to talk you. to all. Good

Operator

This teleconference. concludes today’s

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

Bright Horizons Family Solutions (BFAM) 5 Aug 212021 Q2 Earnings call transcript