BFAM - Earnings call transcript Q2 2022 | Bright Horizons Family Solutions Inc.

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Operator

Greetings, ladies and gentlemen, and welcome to Bright Horizons Family Solutions Second Quarter of 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. The question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I’d now like to turn the conference over to your host, Mr. of Director Senior Flanagan, Investor Relations. Michael ahead, go sir. Please

Michael Flanagan

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

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

uncertainties financial is on operating and statements are Any obligation cause Forward-looking speaks Form materially our and filings. as involve that results date we in differ and of statements and which detail in undertake XX-K forward-looking no made, only described and XXXX risks actual to the SEC website. any may other inherently We take and earnings measures, to section through may financial today non-GAAP and to detailed of available are update our now business. the which GAAP statements. update is under which the counterparts of in the forward-looking release, Stephen also our will refer to review IR us reconciled the

Stephen Kramer

are numbers and Elizabeth will detailed a view provide your families and quarter for it the plans on of a results us joining second review before XXXX. for up your I well. open tonight more you an that the for business and with we thank questions. Mike. Hello, update everyone you call, and our of on the Thanks, the this follow evening. I’ll remainder of hope with doing start

the for let quarter. numbers recap headline the First, second me

and $XXX the adjusted In Revenue and of year, up quarter, to XX% up In Adjusted yielded new was to in good [ph], [Shannon on we enrollment $XX our of both QX, ending service strategy progress. of in make As centers operating in midpoint million in We increased our growth income our year. quarter the urban $X.XX, across top Across and we occupancy adjusted delivery. we improvement center new million, $XX growth. More areas, of million suburban by the segment, sequential and XX%. the from focused more XX% New in year-over-year our income and locations. the remain last both continue second million. centers, opened. we quarter, a saw net metro increased of areas reopened XX% client in suburban including $XXX the for Seattle. X City and full X of to added our York just locations EPS large broad-based Medical] new centers, revenue lease/consortium lead settings, expanded occupancy urban X,XXX major DC, solid in velocity with growth the centers, second XX% And our led specifically, we increased centers in with while still part saw more enrollment quarter passed

highly saw deliver to our verticals, our highest also be to in centers levels. We the lease centers, growth occupancy higher healthcare continuing industrial more occupied solid continue and which Ed, client with than

experience to positive hiring. continue combined interest, front, retention On driving a are net enhanced seeker make our with the staffing we efforts. and and job also candidate Increased in recruiting compensation progress streamlined

to still the we accommodate While staff unable enrollment due we are demand unfilled to of have roles. all

staffing also making feel enrollment strides progress and UK about positive by in the the last the the have rebuilding U.S., over hiring momentum made and we months. levels. Outside encouraged the in several are We of is

response, a result our the we The the Dutch enrollment pattern moderately this school the by challenges. In up backdrop, fall pandemic, of time levels replicating to some summer as seasonal actions and retention the With constrained start muted backfilled June, in and has July. labor for historical and pandemic have period. into aging that UK have a Netherlands been created teams new is experience first U.S. recovery recruiting and older the re-ramping impact deployed. children team started the enrollment families been into many persisted as during which of the in market However, and seasonal since elementary with enrollment of

our driven the we younger led half those second persistence full than we a of the lower enrollment to achieve with shortages, we originally staffing requested ultimately open care our that are seasonal enrollment However, recovery. will and but has more has inability the backfill expectations enrollment age recent of in all families anticipated. that us particularly cohorts, of spaces XXXX, the to dynamic This trend for confident had

recently use us can use of We teens examples a care needs new segment of type, employee populations. a Western Let now is continue June, momentum benefit. $XX year. milestone menu types pandemic and of Exelon, increased for was Digital care into academic to unavailable. Traditional we time level new clients’ evolving Clients a workforce, are are when use piloting an prior in-home name more our expanding families with couple adults various fall reach the July, began. cases within their has a the the over enabling service with owners important backup persisted We hit QX and center first and me or solutions. for encouragingly, diverse our you And, XX% engaging owners. Pet our serve our turn this XXXX surpassed clients in in comparable care, their care. pet our virtual support our and new clients, expanded their offering its Revenue to new backup also the and intermittent that to developing and require since and to as to value that employees use pet positive solid, of to flexibility that base and million few. illustrate care in Infineon tutoring launched These

to this see to revenue our which business, delivered high levels from at to interest X% education levels $XX continues help on Activity advisory million. business growth of parents college needing were solid Moving coaches the college processes. did client strength due navigating admissions fewer than the continued we market. see in EdAssist, in to financing participants the labor In interest part of while steady, is expected new and

the I strong education. to development our for Given opportunity growth, reskilling underlying optimistic and and employer upskilling demand and about and need, support workforce career am

About want I to Children, team welcome up, the from and with Bright wrapping Before that along folks Only families formally children the Horizons Family. to the serves

collaboratively Furthermore, and with our impressed childcare and last of in this the visit grow are working families. impact their the to opportunities had We on teams completed new I to interest the market. operational OAC from further of opportunity exploring be the with have on Australian OAC organization. to expressing a potential to I July. for and the month, employees care in more And our And clients have Elizabeth support acquisition closely number our broaden to caliber couldn’t heard over integration. beachhead excited early I’m in with about now been we attractive employer-sponsored the multinational supports. thrilled be Australian have and the

over revenue OAC expect million XX to remainder of centers We XXXX. of the $XX approximately contribute

its given EPS effects integration, and As the full our realized the call, last of we beyond. be XXXX OAC’s will spoke potential about contribution XXXX limited near-term on in with in

of to turn the now me our consolidated outlook for XXXX. rest Let

leaning an are period. operate on to over environment year-to-date continue summer particularly and the limited more seen fall into investments has fall. of the We have transition given we some staffing, that wage enrollments, more this we of in important visibility And constraints heavily

development outlook are approximately clients children, critical to revenue Given our families we $X have $X.XX share, role of to the of lives and of on of their and these to many factors, we closing, feel adjusted XX% revising In EPS for billion XX%. proud we learners. impact our so or the employees, significant and XXXX and we’re and growth per $X.XX the

We during will call the the review With in fortify will near-term be foundation certainly are now the be more and I’ll you Q&A. detail, back numbers focused over most work and turn the I with over critical that to for the that, our will future. Elizabeth, who on to done

Elizabeth Boland

you, Thank Stephen.

thoughts provide updated for results XXXX. As then of the outlook you the additional and remainder quarter said, I’ll recap our on some

$XX increased quarter, XX% EBITDA second The quarter Full currency the QX, had temporarily X to million. operating ending increased million, that $XXX increased income operating. service to basis. adjusted over $XX $XX Adjusted centers $XX XX% and we a to [ph] million a in centers, million XX% and XX% centers million increase with centers, X year, reopened prior on the or X,XXX revenue million increased permanently closed XX% the overall to $XXX X closed of quarter constant second been revenue new revenue, of In or XX% or revenue. added

the the the continues As XX% quarter. XX% uptick Stephen X QX quarter. million of had British with revenue revenue QX, Countering to for than average the improved this the higher pound approximately mentioned, headwinds were capacity and points levels of occupancy U.S. in against growth second discrete in in our euro expansion in and across to was a past of portfolio to between The which couple the dollar enrollment enrollment compared slightly we strength anticipated this the and quarter. range $XX resulted of headwind of XXXX,

XXXX. books enrollment P&L $XX approximately increase subsidy was higher at on million behalf through anticipated, continue of was that $XX This that revenue operating second an offset the growth an than QX driven to by $XX teacher childcare funding government income we centers. Backup of needed the centers those X% the helps with $X total received Adjusted service $XX by of support the this in costs operating XX% as the million received government as addition, income funding The million the of segment client In and our to in revenue clients flow for ARPA full including period, to increased million, mentioned, was increase in services that that in XX% I make we million. well of reduced that during our gains was or certain quarter, we revenue investments from and compensation. of we operating for rebranding revenue, over QX.

capitated of acceleration from a use or mentioned, we’re and in-home our Stephen in use base slightly quarter. surpassing Operating levels, Because in As That mix with we said, our pleased million care with between the of continuation July. our in for quarter. projections pay-per-use $XX had broadly of expectations. achieved targeted in XX% XXXX backup on of use clients as use and the overall revenue was differs are pleased modest the our revenue expectations of line trends into the center the for It the we that quarter impact trend in the and June, income levels. with

contributions on and lower segment. new that client revenue X% Stephen Our launches, our overall educational services. borrowing growth ads $X slightly was use QX mentioned, million over from quarter. in in SitterCity this of advising used segment resulted lower XXXX of and in admissions college participant expected the million advising comparatively expanded financing delivers growth Interest in expense down and The in for $X costs lower than

However, rates, under acquisition to taxable activity QX be and because is we increased half XX% in approximate interest the Only income, expecting the second XXXX, closing adjusted the tax ASU income in per year tax on are structural XXXX-XX. current rate increasing of we About to million of and will compared drawn of quarter higher on XXXX for lower the net Children. the from on the The temporarily revolver environment, in benefits equity following XX% of $XX on to

now to So the and cash sheet flow. balance turning

the cash ended For XX $X due QX, we of million. and our of totaling Children at investments of times and capital in is generated approximately we net and June operations deferred $XXX This until to from payment About million We $XX the will executed million XX July million of Only X. remaining XXXX. end increase approximately $XXX million paid X.X of the at share Well, repurchases made completion acquisition on closing debt-to-EBITDA.

revised XXXX our to on moving now outlook. So

rising business guidance labor, factors, well trends performance and funding FX general updated other movements, energy as operating particularly of interest supports, reflects quantum including government rates, the as timing costs. and Our inflation, and current and food and market on

revenue grow backup roughly In to advisory the billion. of XX%, we to now terms At grow to XX% and to of $X expect XX%. a segment full to XXXX the increase top-line, expect approximately range in X% XX% service of ed level, we

adjusted into $X.XX In $X.XX terms range of full the for earnings, translate will is the this year EPS XXXX. in to

In of revenue growing as full We we QX earnings to to to our backup XX%, the to expect XX%, roughly total and of with more range in OAC year, outlook range, service to second growth and contribute XXXX XX% the revenue integrate million half for XX% XX% business to $XX approximately immediate for XX% growth operations. the for this the roughly with contribution of is limited Ed X% again, in overall revenue advisory, growth XX%. timeframe,

In segment. $X.XX to to to service terms make believe in our EPS QX and that disrupted on critically child in we conditions field. various are and performance important made $X.XX In operating and closing, continue enrollment per to We range leadership in be and levels share. return expect trends will the adjusted earnings, care our we strengthen the of we’re further that actions position of timeframe the investments the to taking way our the have full pre-COVID have

diversity our strength and unique, to us that, care, backup well we ready offerings, with is of an to service Our expanding to educational care, these of to on child opportunity of service employer-sponsored relationships market for and advising Q&A. go our all the Judie, model capitalize And to positions services. business full from the are

Operator

[Operator question Andrew comes you. first Our Thank Steinerman JPMorgan. of Instructions] from

Andrew Steinerman

true a all it’s is meeting supply is it in markets, some you’re I we But wondering demand staffing, feels there. you definitely were Stephen, it that of in timing major growth growth And mostly like the or if recovery, really saying then the major clear correctly, Or still to not heard supply, markets? we’re constraint? it you constrained Hi, was is I have. and recovery? demand most is recruiting, like

Stephen Kramer

Yeah.

the levels. of I’ll all, pre-COVID saying centers, start to have first back at of to had our right, half by ability we get So,

and a staff, staff. certainly And some from between more so, of as retain a continue urban persist have of to is The that demand obviously, nice have as that attract demand those staffing the that the our been in perspective, in those meeting markets, are we flip that challenging, markets. and well be balance there to and exists that ability to markets both against side

we I like where York New So highlight, are again, would seeing Seattle, progress. places DC, City,

I a we Boston, suburban the other age in side. the terms the nice On Francisco. portfolio also on see urban in supply, hand, and demand our client constraints well really overall What areas in definitely would the centers, centers, groups in of progress in on then say San select but is, they do lag our certain as both as finally like LA,

we the Andrew, and then answer fulfill have ultimately meet demand are then side. question, on side, on your places there been are supply that able overall, and where garner struggle to answer where areas is able So, to the the we’ve not in we continue to staff country to to And that demand. the other

Andrew Steinerman

just be quick you could below the of That makes really quarter Only the depreciation And the that from D&A if About Children? comes highlight, we sense. amortization question one just in on Elizabeth, just the year? should little in number for which bit model. What that came for side, thinking D&A a and piece about my

Elizabeth Boland

Yeah.

estimate be for $X.X probably year around of so, million to so the the the quickly doing $X about contribution with overall Children D&A just for Only we million, would million, About translation. million $X $XX So or

Andrew Steinerman

Thank very appreciate Much you it. Okay. much.

Elizabeth Boland

Yeah.

Operator

The next from Patnaik question Barclays. comes of Manav

Manav Patnaik

color more half little wondering – had a to give just Because reached full I’m like now. and Thank you. if hoping, of can is denominator you guidance the number a Please said that to occupancy same to And basins is And you push us a back cases? you’ve these X of the percentages? week? your office terms occupancy. on return bit Stephen, days that people for was already off while get that pre-COVID obviously just of that the have I in sentence the

Stephen Kramer

of start Yes, well, with of why last don’t asked you which I me patterns is the question that enrollment around families.

are majority vast who enrolling still the at centers time. for of registering our in We full and coming seeing are families

is centers. in client consortium onsite and is centers, lease And our at so that that our

perspective identical that like. pre-COVID from perspective, is schedule So to look what a pattern a and

able the so, that to seeking ultimately, take care. families are enrollment making, progress it’s centers, what think And in our focused of full is continuing be we as really in about certainly obviously, to on because we’re terms that time

thinking about achieved pre-COVID. centers In have the at of not terms enrollment the that

that say some been performing client by saw are But, we’ve to we enrollment in large, that started significant coming upfront and quarter and increase. urban think centers better our of lag, to I we seen that the our we centers, urban the counterparts. that what see suburban than this the velocity markets in in again, had is

bit we’re terms portfolio. hope giving ultimately in I for that’s we a across of and see overall, so, of fair where how enrollment, a coming context in characterization you you around it seeing And the

Manav Patnaik

it. come going to – about get you X just the Got the you that Do anticipate you back, Okay. to on But how et mean, it curious another out? it quarters you been takes situation? think think it’s X do supply on settle obviously shortages, the tackle or X know, Just then will quarters And now. like X can before can for you labor you’ll cetera? I I you done, said on,

Stephen Kramer

Yeah.

have to the past, both I it, call over all, – remarks, first some wage made of we we and X investments So, X labor highlighted months. the as in and investments Elizabeth prepared

wage We are in adjustment teams. for also the our another of process doing staff

we staffing that. continued continue so side. that to are And to the increasing we’ve opportunities going Certainly, wages focus been we unlock that seeing hopeful and with are on this

rise number of net our continues staff increase new So to number ability to us the rise. to of the applications continue to

to have to enroll an against and staff. as an look ability that impact and actions increasing hopeful as these we out, that so are staff ultimately we relates it to continue impact our And then have will

Manav Patnaik

Okay, thank you.

Operator

of Tong from Sachs. The Goldman next question comes George

George Tong

Good afternoon. Hi, thanks.

and then home? performance distinguish June an in of a you how increase versus in may little on seasonal you a because from what may a client of about in factors changes bit departure what between COVID in versus mentioned performance. Can about work And be weighing You more sort July behaviors, talk talk that? seasonal be enrollment

Elizabeth Boland

start me add. let Stephen and see Yeah, what to else wants

The we’re So are that out seasonal our description where from elementary our going to aging of we’ve the the a to school, they’re and be so enrollment in had probably little is to on is seasonal always this going standpoint, pattern attendance convey bit going to preschoolers center but a around and business enrollment. trying average old XX%. more, or our XX% in George, what may of preschool be be the is in capacity

children of old those older out, ones the are group into with backfill from and to aging from and the outside aging the with either children year X-year new are preschool age So them center year or we X X were old out are then the who need families old.

because the steady older enrollment. normal been just that’s grow portfolio, through rebuilding revamping entire been have decline essentially that’s we’ve the to shorter, what we’ve So is much the of a and that we the than been continuing rather And pattern. linear pandemic and been enrollment seeing across more

spaces. from that not July, have we not tutorial have the that from backfill period, will, into we mentioned, for this – that post-pandemic – fill them seen elementary outside been and back children coming prepared aging a June as been the child just are care has getting category able parents in able those that system, seen we’ve or to to we are if We number in either out, and are of preschoolers from you and as those are our school,

the to preschoolers younger of a the the result a children And of into growing seeing as little so needing come we’re and up seasonality bit ranks.

back that decisions behavior, your usual extent been are other office we distinguish as coming said so or up how making a certainly choices. parents work is the the do is, to about that And we and question what It aging patterns. from disrupter, seasonality to about care

been all don’t have levels care, the of who sidelines. same before off We we the don’t so still in care. had And all parents children children in have

majority that of kind see of seasonal in because in And is, condition. from is it the other work of our of it some a centers, office seeing more at cadence what point, of disruption of home, so system. we’re think, there pattern we I any this the still good than a work But from

George Tong

helpful. much you Got then And subsidies tell That’s it. benefits us received quarter? in government you in and how second the could

Elizabeth Boland

Sure.

a our attributable of to received P&L we million centers. So was total $XX about that

costs in the So those that able quarter. in to was defray centers

Our cost to that essentially back $X clients return plus was where another the million. we client

again, I of So a the costs. last was year. was about prepared million total that quarter, offsetting remarks, increase $XX which in over the $XX million in cited million other the $XX

second of XXXX, quarter in we million. $X So got the about

George Tong

Got it. Thank Very helpful. you.

Stephen Kramer

Thank you.

Operator

The Silber next Jeff question Capital Markets. from BMO comes of

Jeffrey Silber

Stephen, to at go you so of the you remarks, to back much. the Thank some wanted I had beginning.

do you I a bit full the that think recovery? when full by happen? is I to achieve about more Are the utilization? a ultimately roughly that? think we were going you’re was, little mean you when talking quote centers, think confident revenues? enrollment get talking And Can about that’ll company about you Are service you you talking What color?

Stephen Kramer

we was to reflective to in have pre-COVID utilization, so our that is providing would is levels. not And, it and really utilization But levels at relates centers. year within getting utilization when the as obviously, expectation be to we’re guidance that any our enrollment looking back XXXX. pre-COVID that of Yeah, of

Jeffrey Silber

gears us very I’m a we what helpful. remind should then if for price cost this appreciate about you lot price you on what year and from shifting side. year? and That’s wondering next And perspective, just I talk what’s going can the took increases Okay. that. expect a

Elizabeth Boland

Yeah.

take I’ll that, So Jeff.

markets where took by on this so of mid-year X% it that we but does X% there’s was not minor price some some looked but location, to So we at systemic, X% increases, vary increases around of this to year average. other year. average, X% on selective And, average and

Stephen giving yet for XXXX. ahead, we’re not just said, look we As guidance

have the average. would higher our continued a even speak. And given wage to historical be I think and looking as are that We at making XXXX. make than XXXX directionally we we we in investments have in made

average historical around been have X%. would Our

it seeing. as to against costs, a So levels price get to sort that at as But again, the the center to balance rebuilding on expect back we economics. was increases and and the to active average looking first, would cost follow-on of we higher, obviously than recover and continue be, focus higher inflation much to we’re our that XXXX of enrollment looking action pre-COVID underlying

So, we I cost something broadly X%, on just we that speaking, landed think would between north needle levels that you’d of It but have be there the the enrollment not see threading be. what would overall unfolding. structure and see the

Jeffrey Silber

Great. Appreciate so color. much. Thanks the

Operator

comes The next question Hamza Jefferies. Missouri from of

Hamzah Mazari

you. Good obviously, visibility conviction My for, your is in I morning. some issues for the we expectations frame kind Maybe your today. that question financial around Thank just non-controllable – on guess, couple we of, level us first times a have were labor today. you got have of like given just guidance

in if however want Just the or investors? don’t I and of couple curious to visibility how much want a ago know compare versus of buffer you you today frame your you to kind have for – new quarters that guide

Elizabeth Boland

I think, visibility the in One ways. few time both year. is is of a challenging Hamzah,

turnover the we I sort that to in So articulate the seasonality. earlier tried are of about summer period

of are filling we in an a mode a standpoint so building anyway. from always enrollment sort And and

the we of do are gain year. we to of rest enrollment. measured on expecting that So do a additional have now. we that’s we’re been And will But that centers need looking to that the we what about we visibility percentage the we’ve where are But of think in have over out aged terms enrollment high backfilling good do. the children of we that as

of can we’re how having of now, quickly we see can of – engines and looked more taking convert to the You bear we’ve that fruit. the you revision we’re follow at – if to patterns are will, the now are that staffing all steps that we actions guide from from sort what restarting the of the where and taking behind we the marketing that

even think of And measured go, isn’t already, a books. we’ve room the it the the you to and have will year, we’ve so target. We rest we set been if for do XXX% in reasonable of though we some think

Hamzah Mazari

helpful. post end debt this, do much pro floating where on That’s you but very sheet you the And on up maybe want And leverage your exposure Australia maybe as part balance how eventually? of the have? just missed And to I rate leverage forma just that, thoughts deal.

Elizabeth Boland

because be where speaking, didn’t roughly X the we’d I up of than times. speaking, closer taking explicitly quarter Yeah, but we said, so it, X.X at roughly times are the miss you to of didn’t end

And carrying, step year a to that not billion In we terms that. just we bottom that point. as very $XXX the at value it’s much rate, a of debt But bit variable debt this compared a well. on exploding so do have million up on to all caps really favorable last our year of overall have about we do but is floating, we interest we have of $X in that are

at standpoint, I we’ve looking X.X. higher done a reason of X.X this, And growth bit be something we’ve leverage acquisition. level just to always certainly plus, carried north than a that said from we’ve little that’s historically temporarily a a think substantial even

in comfortable up general X.X above in generation range, take that because So and just business. the we’re range, temporarily could and of it I our cash think comfort the

Hamzah Mazari

Got Thank you it. much. so

Stephen Kramer

you. Thank

Operator

The next Baird. question comes of from Jeff Miller

Jeff Miller

Yeah, you. thank

more So just some those X.X other other oversimplifying children found years the is on driver? care that in or persisting care important missing pandemic? the that summer They Or born the I during in am backfill dynamic Many arrangements? roughly it it been arrangements? are have the last

Stephen Kramer

we’ve so this are talking that path own ends piece dynamic right, seen that think summer the summer that group oldest about, school, in period. age elementary seeing well the who there really families, certainly enrolled the is up I currently are a Well, to we’re and matriculating historically, very and on

think as think have, is so ability enrollment staff to goal we when the is match against we levers, the levers, capacity. to about we’re on I the our those focused that against that backfill expected right, that our dynamic those requests piece and certainly is

either continue the at where most take hire to need is age youngest of groups, to versus becomes when had to the groups. garner the grow in demand ultimately, those some groups obviously outside, to older the demand where a we significant teachers or own the we that into from have age our enrollment levers where impacts large And incremental we extent the age going to

Jeff Miller

on than the what’s is guess, expected? older I to those But, backfill from why lower the demand hypothesis children

Elizabeth Boland

Well, have have so they’re someone is been framed, short younger younger months X how a you as conditions been the there X some a X there and able or enrollment – group not to I staffed, are think ago. – we been take years age with is certainly where have child, old, who able, some we not two,

be so So to in they not a not care families, in work years, and come as last born have for or they waitlist said, on have back entered yet in the were system, the they they aging couple you not up for take dynamic the child are down. of system were us, that channels, are as difficult care. is and have have But, happened. found that’s too, some other parents some but of those you certainly couldn’t dynamic of we gone them, say, that each There they of are there they and quantify it’s where to

Jeff Miller

charges? the the your you margin out? at? for just I going you are profile charges then are you going backing Or about or and to onboarding they be including only integration restructuring And integration including in And of integration type to chart, guess be Okay. are EPS? what children, those adjusted Are

Elizabeth Boland

costs not costs. that something we significantly that filings investment back, incremental either transaction that are But we unless may of not overlapping – you’re added we typically costs those So, integration would the be new to absorbed. temporary that add generally, for just reporting outside, are helping that and There’s those have and to acquisition make, we everything those the are transitional statutory we or, of resources with costs beachhead and need would some this bring bear else. of because resources that

service an would contribution overhead support when COVID, in that’s to we high-single-digits, and we fee So operations as are where to they from period, gross to XX% prior our are getting part service. operating level a primarily United we is both initially, our are business reporting they this full said those be our results, level States, announced similar of full to expecting not level. why X%, full that for transaction, similar over are initial coming talked rest we level was that the this of other us at and service The business outside we’ve the business meaningful operated to the the a about, margin

is OAC So, are us quite that X of not pandemic. over to from said, level, they a as the, still recovery coming mode I slight to in at the because

into business coupled optimized just be you of not are functional their – but that the they what on we of as rate, attributing incremental that in costs and mix get that they some goes given fully to the there track mentioned So, are flow to at and we would it. the with interest cash will, run if these this overall incremental

Jeff Miller

of FX currency dollars we so the Okay. an headwind in And plus this then guidance to last can the from terms headwind we guidance? What bridge, guidance the bridge? get is you constant just estimate. organic if with clean come Just relative of incremental have prior can we But do the up in a OAC. XX

Stephen Kramer

year. million full That’s million to about $XX $X

Jeff Miller

Okay. Thank you.

Operator

[Operator Instructions] Morgan Stanley. you. Kaplan The Toni Thank question from next comes of

Toni Kaplan

Thank different were be are is really paying found benefits able labor that jobs unemployment if driving seemed wrong. is clarify, that labor. and somewhat do you I shortage? guess, to paying. I so you industry think an the to correct about that’s hoping that higher but strong, the is we largely imagine Are shortage? being you could that driving that’s really back or have to just me think it’s labor what lower But, through, during caregivers I COVID, I go thinking much. what guess, I’m it we

Stephen Kramer

in certainly we benefits there right? have there opportunities roles, and Yes, that they’re the valued. are on unemployment is we of out. frontline certainly roles, previously retention, put pressure the many frontline of had teaching real roles especially a headwind dearth or period. time, labor terms the jobs, had think faced past look, some are we across And that that that of I is recognition But, our industries, important, difficult They’re certainly a this think under same side. individuals a I and seeking throughout These really are are at highly these

are the hand, On difficult. they other

teachers within for we’re our And, decisions are leave categorically different are training industry therefore, hiring our skill. have, employees, who and are certainly so there And as that we the deciding very certainly and industry. focused to we then for are making seeing on within always who attitude

industry, so But, that continues important to most of childcare the it I of is work is into a be our care new that individuals the Horizon certainly, the field, interested well that One offer programs certainly for important and attraction shortage entrants that have program. is there is we think us. across child on our that future degree an field. to in doing recognized are the And

Toni Kaplan

so guess, Stephen, have what’s into, for to demand, care guess, I guess, have offering the pet you them? pet And mentioned can shift relationship the work? And, the of it. advantage? your in-home it ones getting in just demand, if with I employer, term, that service the care? already that I are pet to also you lack new pet better wanted and ask, just that you a what’s that a so are have I how to caregivers interchangeable, advantage the Is the don’t Got does you you’re you’re you

Stephen Kramer

up possibility our in expanding over do again, continued of client first our think, the and of breakdown foremost, And have their know way rightly they And, pets of need you that their of all our client and out relationships, is we we pet, therefore, to that that the think Yeah, their time we children. the certainly ones think come organizations within point employees use pet this many conversations have in fact of specifically time of about has support. when a And have have reality one line so the arrangements the area is with they backup that they cases, clients, about care. service. X,XXX as with the I as same some

care work similar child to and elder the side. on so that we the do And

utilize be a set going use path. through are employer providing We to to their towards service available of that that their their allows for is directed employees

going so benefit backup to care and be third fulfill the care, parties actually that to demand. contracting mechanism And obviously with we’re using and to that deliver

Toni Kaplan

you. Thank

Operator

of question Alwy The comes Deutsche Bank. Faiza from next

Faiza Alwy

thank you. Hi, Yes.

maybe that So about dynamics. wonder one isolate supply more supply are trending And sort now. you I the and I’m demand the seeing much I’m And is was way you’re of I is the of urban sort driven? the if are what supply pre-pandemic, think them could side? areas. it of help on kind you’re – guess, thinking like out I you relatedly, in us versus how think urban, board? of right urban bit maybe enrollment through centers, still Or we more if these these urban a across can gap some unclear around And where was seeing of curious issues the they

Elizabeth Boland

speaking, about the in will, enrollment between disparity, points. is if Well, broadly suburban our urban you X percentage versus

gaps has So there suburban sort we’ve is but DC, intense areas of wholesale a it’s City, in compared New much around a you York gap, generic called bigger, wider a if comparison. it’s think I a cetera, out urban, not distinction, that more will, a to these more that et that

the and we there just that that preschool the in center enrolled, final more from have that teachers obviously, a XX% demand room. is similar X problem, can’t at, room, the there’s room, center so because of in them add to the can’t or open we XX% there’s open supply, XX% or don’t is next more demand – toddler that a with center, is And enrolled, standpoint a of we

there has constraints So depending I supply on are pretty dynamic think the that centre that is are that our hyper demand localized. has much a how supply enrolled. changed, But view

then teacher Some at But less there know reopened that out And don’t more there. anything disrupted know particular so not they don’t us, therefore, I looked there’s areas for did supply were the much. would is patterns there. shutdown having as I – they we call quickly. that And

Stephen Kramer

continuing It yeah, to we York we progress. a the to Yeah. And I – where heartening cities, even back affirmed. than on DC’s, rightly like cities we more is, for is very San of about And, would add like places But this the in this the took York, flip pointed reasons. in DC plays Elizabeth, see we I held really not an within specifically have But that think urban LA, the of garden that portfolio Francisco, therefore, the certain are out been only that, variety really are New that Seattle, Seattle’s. thinking quarter as New a thing strongly also think great they are have side the challenging nonetheless, challenge. last have I to Boston, and City’s,

expect have San Boston, as like quickly won’t come not just Francisco are LA we They us. those So cities that not back. places and for as back come

Faiza Alwy

Okay.

home? around seeing to for what born Okay. of sort curious caregiving the Is you follow-up Thank research particularly, new yet? for? then work gone your just parents, that. is terms of shown hasn’t parent at environment? – more question maybe I one on guess, you the your Is it’s has more were the of around, in that that. more looking And like doing they’re I’m children prior psyche of, is shown And that back what are what a during really it COVID of hybrid who research

Stephen Kramer

individuals enrollment or what that and first out, our Yeah, to are who time a childcare basis. are coming what on for research patterns our childcare, are coming into full back the time coming certainly back bear

patchwork making as others their back of into continuity combination. and/or coming time the have, meantime, caring support days going settings really they’re to they’re to that a in for what to are or spending exactly are the and their where X the have a children trying January could the the of days Bright week So really full work fall support and as and week, consistency a care five needs for employees. choosing to fall, just to they are and working then be find of decision what in like continuing to to side have few from going different the play be, are more enrollment together for support, doing care a figure it to and to hobble desk, and/or child relates them some not their come working things, Horizons. of generally summer a group who arrangements planning home their grandparents, and out spouses, which then back are includes off professionalized care into really folks together some are And trying or children. And their between of The a

Faiza Alwy

you. appreciate Really it. Thank Okay.

Stephen Kramer

appreciate Excellent. Well, evening a joining night. us you wishing everyone you. we this great Thank and

Elizabeth Boland

rest of good a Have Thanks. your summer.

Operator

Thank today’s you. gentlemen, your you concludes Ladies for this conference. participation. Thank and

Bright Horizons Family Solutions (BFAM) 3 Aug 222022 Q2 Earnings call transcript