- Earnings call transcript Q3 2022

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Operator

Greetings, and welcome to Bright Horizons Family Solutions Third Quarter 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Mr. of Director Senior Flanagan, Investor Relations. Michael Michael. you Thank

You may begin.

Michael Flanagan

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

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

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

Stephen Kramer

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

our $X.XX. one increased XX% new added and childcare recap $XXX income QuikTrip, to EPS quarter of in of $XX we third to million. and quarter. with revenue million of in service for the centers adjusted our in numbers adjusted XX% full million the third acquisition for quarter $XXX headline including In client XX the Australia. increased We Revenue to segment, centers the new First, four completed net the

reopened our and metro and QX Bay also in with centers in four Across quarter enrollment for our City, QX. enrollment we open. closed XX% In saw U.S. temporarily Atlanta growth areas located portfolio Angeles of their mid year-over-year the York centers We in digit of largest Area, notably to of X,XXX New Los showing in strong our single life with the the our centers, enrollment in Francisco recovery centers progress year-over-year the continue San gains. light

XX% levels, healthcare experienced tech ed, industrial centers prior that our our year. show clients fastest the the and to while represent of continue and clients portfolio highest higher clients occupancy growth consumer and enrollment Our approximately the over

teacher of infant in and classrooms titled to grew terms the staffing despite child the mix rate double our the acute these more preschool age prior X% to due year, In than over challenges age more younger of ratios. toddler tighter enrollment

continues enrollments retention progress we most staffing recruiting While and incremental geographies, this quarter. to in saw constrain past on from the

interest impact have in we seekers. retention, to an compensation Our from on greater see recent teacher investments continue and the had job

in Taken net hiring. together resulted in this improvement has continued

which enrollment ability the enrollment and to market to continue had UK we overall severely made on during levels. as restrict gains through spend prospective remains classroom time marketing the in Netherlands, been visits. occupancy activities, curtailed to tourism time us have. and engaging labor with demand Importantly, to traditional back challenges leadership is rebuild directors staffing pandemic, trends more are levels all the helping Outside families the enrollment of activities, muted These growth classrooms that U.S. hours pipeline the the our covering drive pre-pandemic enabling including and less was serve towards center all the

in several staff. that We of underway challenging market have qualified availability face drive initiatives the to of recruitment in classroom very remains the a

In this other where short performance. labor is a a acquisition premium. staff our the on term agency we to comes About pleased reliance on which to directly higher X, enrollment closed the In of impact stalling growth, July are Children's this augment initial teachers, addition employed quarters on greater given of Only with cost costs Australia, at we

across in operations. our was expectations, to even enrollment experience global we Australian line similar continue our with operations that while see Specifically, center dynamics labor

back-up to this turn quarter. results year prior outpacing third use now the million, in $XXX increased me XX% delivers which strong Revenue expectations quarter. exceptional care, Let to over the on

also QX Premier to Group Partners client see Leader new success We Lucid Hard with a for Rock Corporation, Health name launches International, continue good few. to and

school saw to As revenue encouraged record that third We in were we spoke about in we last particular enabling made his resulting increase in use our A growing backup momentum types, care of all children. to June a Steven their our capacity segment acquisition the across the us see quarter, our quarter. our number use continuing throughout highest team of in quarter note in with history. we XXXX. and footprint we contribution serve expanded Under that of families and aged was our available ownership, with backup

product a example drive greater service to the we additional third-party with virtual the an of months. strategy follows utility frequency this of backup use provider the Along our several case. tutoring last aged set and expand of school out use. broader to adoption care a of client with designed rolled expanded broader recently is and program, innovation over latest here camp to as successful pilot Additionally, eligible This our as of pet part employees, the

$XX launches to Moving VMware. clients of quarter, Hopkins We advisory AmerisourceBergen, growth on Johns revenue delivered our business, and in education several added the new including which with XX% million. to

excited an of to our for and We their to employee employers as remains employees differentiate continue participant particularly value proposition harvest notable to into workforce use solid opportunity quarter. different roles. looking be continue about see the focus in and upskill area education, assists I with levels, growth this

the outlook remain and of per of $X range to are touch share or for EPS track a $X.XX Let to growth XX% our of we revenue me We adjusted achieve rest now briefly to the $X.XX year. narrowing in billion XX% our to consolidated XXXX. full on for on

months. I over two up, My heartfelt opportunity it wrapping clients, all learners to Horizons across celebrate ago. nominations our appreciation want take workplaces. last recognition to on celebrations, we This award make colleagues. occurring families each employee after this couple signature virtual from year, Before to events And great have and in had Bright the out nearly employees of in two been to with that families, and to goes XX,XXX booming the of difference of years was the [Indiscernible] children, work of lives a tirelessly colleagues who here weeks day reflect

are So business. are the progress continued across in we encouraged we closing, seeing by our

relationships will for believe challenges recruiting reach childcare whose our us to with employer never and We coupled business have while clients on the greater. to a and you Elizabeth, continue turn our in against back further need have client all that quality execute sponsored range seamless the who call delivering objectives, investments long that, to met to workstreams, With care review strength in the benefits, and family investing and children, quality the launching services, user teachers by detail, for and Q&A. get more position during two well in I'll last plus remaining the our acute technology our families and types of for developing of over expanding broader and been the of unique new I support and for need and I years the education to employees compensation care to highest and numbers short on head making enable experiences, steadfast in client focus model, clients. will term

Elizabeth Boland

tonight. Steven. quarter Hello, recap joining the everybody, updated remainder some for the and Thanks, well. of as us year then provide and thoughts thanks the on results I'll

steady EBITDA the For XX and million centers temporarily revenue, reopened X,XXX of third over of income the to when $XX quarter revenue XX% X% increased centers, XX% XX been four new million $XX closed ending overall have Adjusted closed or added year. or thereby $XXX increased the operating In million. of quarter adjusted while third X% held revenue quarter, prior centers, centers. permanently we that at

the positive in in Our and million million to full Revenue effective by QX addition over service Only XX% as we in XX% due one acquired as in less more Children, in of year which availability of were the which million and centers X, having XX expansion, to our About revenue our growth pricing, gains the X%, constrained Enrollment $XXX staff. limit the enrollment prior year. with or increase for enrollment X% approximately the increased to increased contributed revenue $XX July driven European operations well by which contributed were reflecting open narrowly of to than mid effects single U.S. than digits quarter. enrollment

notable XX% this occupancy levels QX lower occupancy sequentially results QX. XX% from summer seasonality Our as X% QX in were average preschool to months, in the typical headwinds factors to over the to growth. enrollment Two

to outlook First, the childcare service year. operating we've strengthening was dollar by to for full client in Adjusted million, a of subsidy services, million year-over-year million support compared headwinds received the which clients $XX the an support contracted QX. And loss $X on revenue QX. million $XX incremental for in reduce million $XX behalf, resulted segment second, in a prior $X income

operating driven over months. The preschool third weakest quarter quarter from enrollment standpoint, is by mainly the income summer the historically our seasonality an

directly support period. $XX cost of inefficient QX, we $XX ARPA year. the to provide we've throughout continues million As to this childcare this last slightly funding seen the received year, in up from structure sector government We to received during million the the support ramping

mid outside operating it by components was on compensation, which investments and recent impacted most quarter, labor Looking at in the internationally. were including staffing of quarter costs, in effective higher income, agency teacher spend its

leading future. last recovering vacancies, a been fewer the In to enrollment over growth with has in initiatives. and for enrollment as addition, third increased and rebuilding the center quarter driver to operations key XX% the staff two to care million. pivot This revenue revenue new pipeline total as of directors they've years, enrollments back is been converting able the center case $XXX Back-up

or Steven of of quarter. use in pleased of through the income strength XX% performance, $XX revenue mentioned, operating the deliver which resulting million operating quarter we're with and particularly growth As the

educational contributions assist, and segment Our in and college financing of expanded the delivered services. and Sittercity from advising advising our admissions on launches, new XX% client use head growth

and innovation This market operating the we've performance can advisory growing an result technology the business, acquisition evolving and scale. education and this a customer in a profits associated as this, quarter As growth invest profit most operating each reflects and businesses earlier additional about required grow and against the and the out its while earlier execute of XX%. figured operating in and businesses opportunity. year, investments variability recent the spoken to growth within for in stage past, these in quarter is Illustrating solid investments margins at dampened

other to the Turning QX for few was Children, now $XX the million accreting earnings About deferred $XXX interest Reported including related payable to end Only million of interest payments in million at which the factors. $X.X is expense on XXXX.

back given under XXXX, adjusted also taxable activity is the Excluding in plus increased the tax tick expect interest to lower QX QX million current ASU added income, in XXXX and XXXX-XX. adjustments, tax in on environment. this net compared rate XX% to up we from to The increasing rate rates of structural benefits around amount, on XX% equity for $XX income to non-GAAP which has

the in and Turning and debt from of net X.X $XXX capital $XXX ended generated OAC million, balance debt the of billion. operations, $XXX made of $XXX the cash and at including quarter million. to for $X.X times execute $XX flow. EBITDA million with acquisition we investments million the share September, totaling repurchases cash to Through sheet in million We cash

to for rest of our on Moving XXXX. outlook the

seeing more estimated, rate Our well updated and inflationary previously interest as been pressures tax labor, and guidance foreign and expectations significant we've continued and trends reflects operating costs. the that exchange as food current expense with performance higher the energy than higher includes headwinds,

than expect billion, to care In previously approximately expecting $X At level, XX% XXXX we for of of range had we year-over-year million a and X% in and back-up grow XX%, service we includes foreign revenue exchange. higher the $XX is advisory line, grow segment headwind ed This approximately of XX%. estimated. million top terms which XX%, roughly are to between to to increase full $XX

I of this updated of EPS rate estimate mentioned, range will This into adjusted XX%. $X.XX the translate full to includes our In terms year the in narrower of range earnings, tax the higher that $X.XX XXXX. for

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

Operator

Thank you.

Instructions] George and be [Operator with first now with proceed will question comes questions. your Sachs. We conducting question Please session. Goldman Tong from Our a answer

George Tong

Good would billion and is to All performance, X% you're in to revenue Based right, outlook revenues appear revenue XQ. And around unity, afternoon. $X X%. revenue in from that guidance down on being slightly thanks. your for your from XQ XQ, up XXXX, it usually XQ down

So, can may XQ headwinds, confirm be XQ? there if if that cause that's And are than you so, case? factors revenues other FX besides lower the any to

Elizabeth Boland

So, the foreign main is the change. exchange

I think its in you're seeing, QX. high that have QX. do in watermark we George, in Sequentially, backups

in the that view, a range have pullback only range we XX% provided really our I that FX. we've know XX% to we that downgrade really in But would the with factors. there's bit it's updated backup a little provided same during are of it's So don't those a there. that see the

George Tong

And how the the much tell government you could it. outlook on Got revenue then the That's Okay. subsidies us what and helpful. both side, is cost you and side then from in P&L? recognized secondly,

Elizabeth Boland

Yes.

cost So, that think we have where centers, type revenue in $XX an plus in our to on was through, around was client a I offset million. the we I offset commented $XX million centers had that the P&L coming that cost that

And a needs of the subsidy reduces in it again, client that so the client because center a amount to that cost us. pay that's, reduces

that client. really us, of accrues its So to accruing to effect but it has it, benefit not of the a it

P&L that's P&L impact, and so $XX the So million effect. we think the of it's

or would to saw so that million QX. that the of to offset this from And would expecting we million a -- we sell we $X client be to proportion rest standpoint, to that X year the another what probably be similar $X it they or revenue, year. correlate but it's client for perhaps in of somewhat and rest the XX XX For quarter for the

George Tong

you. Got Very it. Thank helpful.

Elizabeth Boland

Thank you.

Stephen Kramer

Thanks George.

Operator

Thank you.

go Our is ahead. next Steinerman from question Andrew JPMorgan. with Please

Andrew Steinerman

could the Andrew. it's in again, go the constant fourth constant on you basis organic And in basis? Could let know were? currency us you what also post currency the implied over organic revenue post growth on closing Hi, third what's year-over-year quarter quarter, closings a

Elizabeth Boland

so from that back, mentioned how let well, we acquisition. contribution About Only other from Andrew, $XX go another organic, tuck-in or that So, Children. revenue million me I smaller around million, was and much was had there $X

the total So million growth of inorganic. $XX a of was

to here constant quickly, currency, remainder, the So have don't know able I be to I -- calculation do think the but we'd might

Stephen Kramer

ARPA Yes. have points kind service so. we in The FX received, that was $XX that basis million of both we ARPA full was another around X%. clients XXX The client the or

So, within XX% full was service growth around more constant organic currency year-on-year. no

Andrew Steinerman

hear XX? say you I Did didn't you?

Stephen Kramer

constant service Yes. organic. XX% currency Full grew XX. about

Andrew Steinerman

closing terms what's And on in quarter the currency, Okay. of organic implied post a in constant again, basis? fourth

Stephen Kramer

so then similar of plus Well, $X headwind we And or XX About have million Children quarter. another Only million $X fourth ARPA. FX to million in another of year-on-year, the beside performance

Elizabeth Boland

close to it's but Andrew, out, that that probably X% fill would We to XX%.

Andrew Steinerman

you much. Thank it. appreciate I Okay, very

Operator

you. Thank

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

Manav Patnaik

like you hoping of that terms think, gave what infant et what the guys high and X%, Thank of in help office around lot you're quarterly I And could you seeing hearing ties a just you, clients, cetera. improvements cadence return preschool mentioned are you maybe, help your that I kind the from to not? what appreciate twice maybe you're level, looks a growing just statistics toddler was with of in how on you Stephen, in?

Stephen Kramer

little you bit repeat So, question, don't mind are the a just if you muffled?

Manav Patnaik

Yes sir.

Elizabeth Boland

[ph]? distribution client about it Was

Manav Patnaik

Yes.

goals pull the what it through a outs just quarterly of you're in And different without in out hearing, us hearing and cadence I the really what client, your goals. to terms of to having was you occupancy? bunch from infant preschool hoping of it, for a carve base Just did terms and clients of

Stephen Kramer

up and here. single preschool start and infant that, two I'll the within started just, year-on-year performance quarter, the on toddlers maybe just different where infant within was preschool, range. the third growing the range digit enrollment Well, in those there, Manav, single-digit segments low high we

last recently saw ratios the cohort, the or which in to classrooms. better staff tighter teacher growth so, within more constrained, has So we more those year been child in that given

think that. that feed think well pipeline XX, XX into by were particularly as I enrollment, we classrooms months. that next older And will we So, XX, encouraged about bodes should of X, building over that these the

of which So that's performance question. the age we part I the those second what some of two groups. about the clients sentiment difference was And saw Manav, then within was and clients, your question believe

We continue positive their the office from to clients. to really of specifically return and importance have the those of and their our existing some centers to around base employees centers to sentiment client

may In addition well relates strong we investing pipeline self own have clients of historically as prospective them certainly seen who centers, operate in self a healthcare centers or those of centers in of clients as new who very ed, very childcare in clients many management. specifically, as interested transitioning their the form in have have at the potential to being operated, interested of that, or looking prospective to it being higher

think we important well-positioned of with so their are very employees. really continue those to topic them all I clients to cases, in on this and And to to partner

Manav Patnaik

seem can you the in Got full for think fourth the it. quarter, just the And, should about especially us how perhaps and service margins easier? we other help ones with Elizabeth,

Elizabeth Boland

Yes, I constrained mean of labor was, about, performance as number I talked service with quarter the the by a full the this impacts.

expect to continuing to some degree. those in be we quarter fourth so would the And

this quarter. but and performance So bit plus around we range, around But minus, should are a to breakeven service the perhaps, that segment hopefully improved. full to similar, that be close where close that's

you little through uptick performs year, the of way just And the the would the of we modest. as history overall similar, back-up expect know, So but sequentially, or from that in be that back-up enrollment the performance, rest year. for might of a bit to

in a of this have We watermark revenue margins high solid had quarter. terms and

view on long margins, it often XX% is back-up a higher. bit operating to be would XX% Our term QX in but

steady. that to lose utilization And the use with XX be opportunity we high there and tends would to our advising so, business look so use fairly clients it way and Ed some be of maybe in closer can it QX, given or to have so people gets banks consumed, that XX% the they is there as and margins then to

we we've As where XX% XX%t is said o this delivered quarter.

So, end well. in that for of higher could QX as be the

Manav Patnaik

Thank you.

Operator

Thank you.

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

Jeff Silber

much. so to you would confirm Did say utilization specific center was report? quarter, metric XX%? want Thanks I XX% to service something. that implied be just full that also, And guidance then and the third for what

Elizabeth Boland

So is yes, overall I did. averages XX%. The to XX%

seasonality sort points As we on a would to came through it the lifting of average couple be for up of we of the percentage rest the year. expect

a of that's so uptick. And little bit

cycling, and as fall Now XXXX, a that we're we're high that, lifts the is enrollments get we but watermark QX. would QX, through be the in into early of bigger more

Jeff Silber

helpful. call your centers. through know you footprint, number And the you I of go center and That's Okay. continuously

consolidating? quarter. said might little past you that are might XX some there was is more either it think considering? or a But it I centers, where the be this so to in you certain aggressive something low that geographies bit be closing, pay Is maybe utilization

Elizabeth Boland

of to had coming to seeing center's how we is took Well, where portfolio were hard a at and last as the will, look trying it's hold, back terms operating. obviously the years reopen. Jeff, of if as in over important in you do the portfolio I an couple have COVID stratify, We demand take we question, the mean, have we because very and

We have performers. some very, very high

the is of XX% fact, operating. In portfolio

maybe, range last was portfolio was we to enrolls, about last about that that that threshold. range of we think XX% clarify our about and talked talked time average was noticed we XX% -- just to XX% half I time, above the

a if that AME we operated. centers get or post target Just have to to where side are where mature to, setting from we the a to XX% you that consider been level [ph] previous will, And back for XX% has get commentary to enrollment we one recovery. that's COVID second, targeting we

look at quarter. is we XX% XX%. They in XX% around to we have range, actually if portfolio so at of that our And the third operating are XX% operating

margin a strong uses the of the deliveries, really very a in piece. but one back underperforming. the but terms sightlines So above, that portfolio close enrollment XX% the have we there, even more performing, we to the on cost are back so of the of have percentage to back, about to get well ratio underperformers all a though margin quarter margin very good not revenue, cycle, And is very pre-COVID XX% strong. XX% a is actually way performers which probably question, price is your is is But as but our on

see less candidates that be some enrollment have, of we are potentially So are be some in persisting positive or on certainly those XX% average that occupancy future. with to group because need be are, But we that future. to roughly, we watch working strong enrollment, or great but more in always we let's with that operating for are would have centers necessary that of see foreclose signs a ones may that are say, sure because at significantly striving the opportunity, success, would been be centers, still for the those consolidation list than we And we some as and in staffing the the but in to closure those we that we XXX group. in believe as you enroll the broadly location disciplined if those potentially be consolidate underperforming see to that we

Stephen Kramer

group in other only are and on top have that grouping that we group. underperforming the geographies in that centers the are same ones the that are in as the Sorry, third put the in I that middle fine is point

gives sightline. and enroll continue over our that that again we grow confidence to that time levels the continue is there as to so, us And staffing

as on that Instead, directly, to good of nice we we answer the sort of that center. is specific geographies Elizabeth have in we performance said to see top a very do close your geography mass question each that in by believe look ultimately, major thing we don't to always is going So our have category. But as out. that performing sightline we're we center

Jeff Silber

color. appreciate Okay, Thank the you.

Elizabeth Boland

Thanks.

Operator

Thank you.

Our is Toni Stanley. proceed with Kaplan with question question. next Please from Morgan your

Toni Kaplan

much. so I XXXX. number the to about of programs I large believe government another question Thanks the in wanted subsidies. the ask liquidity

expectations means to year-over-year? what wanted And pre-COVID? for for are this the year maybe understand XXXX maybe just a help of what like subsidies normal So Thanks. government

Elizabeth Boland

Sure. Thanks if this in So ARPA government income of essentially we is the we you statement of are million primarily September recap and funding ARPA that are Toni to just are you on receiving where around year, as $XX positive in will, status effects, the funding. we for regulation. expecting It's midst to $XX based the now that funding, sunsetting suggest current XXXX, of million

states on that. on distribute, to it's to but decide. what our of where expect have we could half to that based have, quite where we to have better, funds up but be our on footprint still money XXXX And the distribute, is, for considerable that to and whether support be sightlines, we So there, is applied states

So certainly, we families we are have support through not of to the XXXX. in were support very government Prior small able reduction that receiving various this year to of been ahead amount to looking a who programs. COVID, we've are a ahead we -- looking to footprint receive

be may revenue or it in that U.S. while so, And pre-COVID support environment we and X% have a of our the such X.X%

it operations, a international international our programs. is course, Of in

year for the support UK in And the Netherlands access and so the families all three in for to the olds and five families Australia.

just eligible support for those working So and are working adults systems parents.

built terms in intuition those so into And their support factor, the it's structure. of really

Toni Kaplan

XX% And as you XX%. Terrific. up. just mentioned know utilization a the I follow to

XX% it I think XX%. was previously, to

driving staffing main issues inability of that to the decrease? of it the this more been it guess, I sort is is Is backfill Like the so, drivers issue open leading what's sort really And have an the that of like consistently down? to classrooms?

Elizabeth Boland

Yes, decline last consistent The is quite is it's growth There seen. actually sequential year. with a seasonal we've where changes. over

QX the school. cycling from is preschooler to So The a on out change sequential elementary QX year-over-year into based increase.

gain And around averaging again groups little like the in X%, X%, so, and group a infant a lower higher the enrollment toddler to that's why cited mid infants in net in is is more X% half preschoolers toddler we about single that's preschool digit. growth and our X% and because bit is that out in whereas

se change the sequential average per not from staffing. that XX% from XX% to So and on simply seasonality it's weakness, is

from think staffing to are than growth I more challenges that. being constrained our

that's have performing group been about really in take the construct enrolled, to And that the that that of construct, talking in and demand our so in strongest weaker XX% where to wasn't group attract mentioned, enrolled. staff or is we we under in move wage XX% the investments the senators of benefits have order that's that advantage performing group I that

XX% to to XX% where that if will, opportunity. real get to you group, So up its That's target. a we have

Toni Kaplan

Thanks. helpful. Very Super.

Elizabeth Boland

Thanks.

Operator

your with question with Bank. proceed question. Deutsche next Alwy Please comes Our Faiza Instructions] [Operator from

Faiza Alwy

evening. Hi. Yes. Good

of your wondering bit it's the thinking terms of you're be maybe we haven't, in planning little us should I was about probably and indulge you how early I'm mind be we the sure enrollment, approaching keep Obviously, very could staffing, it What to in to if process. But how that you in as you'd of So a XXXX? would of middle sort address wages, are relates are pricing, anything XXXX? some should you helpful? things like

Elizabeth Boland

Sure, can as weigh start well. happy to in and I'm Steven

planning look events But have closing progress. look more out our next. we all the the at talk So, to process And throes specific of XXXX, we in of will, for have to we XXXX are course, to that. as been as when making provide we you information ahead we we

teacher marketing, we we're investing cetera. recruiting As efforts, in said, on the attraction, our enrollment invested we've retention, wages, in our front, et

pricing service full pricing our in increases above historical would average. to increases expect So we business, certainly see our

and knowing need are we are haven't looking So single the a digits, for to as we mid that well to certainly back we delivering. to in believe pricing to enrollment the this, we're we finalized higher that in competitive, would as that ranges X% service X% so maintain remain appropriate aiming certainly, to the for marketplace but be certainly get

wage expect X% would inflation to to We a maybe X%. ammoniating to around more that. reverting around range some is pricing So of typical be

because be Although investment that, substantial did higher wage make this fall. summer we will a and compensation than in

standpoint, would And be will consumer to things coupled knock-on mid that Other of costs From are high year. in inflationary COVID the knock-on at of its those to growth more in business structure. costs very XX%. through so off energy been effect coming are that We're portions coming effect -- smaller be cost a to because a we been the the that overall of to XX% coming with labor backup other and overall, higher this XX% single X% likely, year have, wage some strong double modest digits that lapping although our inflation. likely year like goods more tax. of digits has our are looking That the we the

we good that have can continue strong We client accounts build to on.

at sort looking business array probably metrics gross to the that's That And on that's refine more year. that digits. digits, next at of of again, so client But probably what we And But thoughts we're looking perspective? standpoint. the the mid to Bright but in on. grow goes we're back-up from like that of probably expect how any single double low we would the will year as

Stephen Kramer

you. Thank absolutely. Yes,

moving both new ed So back-up for we really from year good into into well advisory. the for client pipeline are this parts and of think that continue a we as feel centers, perspective. I our as final next, heading as about That's to

much on that their to I well. relates side would employers that, say really use the the backup our the of to think see I of client adopted say own they stressors continue to are is it offering that very as what on that interest as I cases workforce, and in their plans. office own are existing base, new return are we core especially our business, reception being a would services from

And adopted so, think virtual clients, of minority when the call already our it tutoring we of getting care two pet by the good clients. thirds a about implemented, being

our the centers, do life and we to the parents and what are showing then to I to education that to as ability through think and a disruption extend socialization the set of advisory as we're for both focus care, occurred importance safety, And to finally, of hear our across that to what users and continue our to employees. on is has broader through continue of among stages stages and career health continuing given pandemic. research continue importance backup about well centers, our to

So into serve. XXXX overall, really good those to feel it relates as going who we

Faiza Alwy

very more full Thank service. to Is you. here, That's going enrollment helpful. the is as relates guess just to up it that from it question say come to fair I incremental of from think different and arrangement a as Is staffing to a the to about less sort filling more things opposed it? return that hybrid way and work fair to that? gap like of follow

Stephen Kramer

is I of real think it families. numbers that, that is in constraints at increasing our in say this staffing to the a to cycle, point safe ability serve

at earlier, and to as really retention to say of that our then fair of we new have families. it's those would to our staff than work process continue alluded in our to time, top and wage and to like say, that same interested recruits, higher. our Elizabeth So, half outstrips specific funnel streamline things actually more to get improve retention and I other the continue service the demands our ultimately that do in ability we centers, for benefits really hard enhancements, increases to, about we our to to addition rate improving rates

and grow be major a that, continues would the of strides. to say we focus staffing same part the we larger continue to is yes, where at terms the a us I And for in believe of area enrollment. make is time, our ability of impediment So to it

Faiza Alwy

you. the pretty Thank term Because in the the is sort XX% tech in Are big like those may one advisory. increase you of is investments quickly I the is margins of know this quarter Are your long new we earlier XX% year. more and rate? to this just investments I margins? that know this, past past I sort run made ask some on you'd educational investments? I just margins If a on Great. see

Elizabeth Boland

are, technology XX That's recited all backbone, to range a a emergent to think fair type But that ed term be. long we it's for to there of as in in made. a recited less labor say I to range a advising periodic more that know, And that's like service. range, and businesses intensive, segment I what XX, the that segment of be wide investments need but as of XX XX delivered expectation are our would episodic technology we

ongoing I the are that that keeping our marketplace, the is work. developments innovation the adult I enhanced, both ongoing investments out of advising EdAssist say will of doing the administrative So of some learners the would investment mirror, college the with that is in processing an the build and in Sittercity, ongoing It the investment. investment think require for technology, in earlier some up and between which the in the sector business, elements just rearview of part year some of

So some the couple you a I it see out payoff might investments just strategy. were A payoff short and trying term we then of may or to may be either have why think lumpy. point longer quarters term

Faiza Alwy

so Really you Got it. much. Thank appreciate it.

Elizabeth Boland

You are welcome.

Operator

Thank you.

with is question proceed Baird. with question. next Jeff from your Our Miller Please

Jeff Miller

taking on service you the Thank for question. Yes. Question full margin.

just I temp unusual, and on there would acquired cost that to one for other APRA push that be onboard the understand month margins? you're excluding back me upfront is severance you of the any, was are side half out in anything Is transaction would seasonality calling like on acquisition? that else benefit. going there write So worth I the the There anything come margins? potentially revenue of the off mind the staffing costs. on lower anything into else and Australia a But that's that's costs, deferred hear

Elizabeth Boland

we just some And conversions it's themselves, like that -- just and and we're the transaction are, - but team that. to you have system some to a be things of headwinds, we given we're to question. don't there could not think Yes. -- a but have we tell I good don't did want but like just litany want It's time have onboarding integration the acquisition, costs some say, as of costs one not whether things costs which are with Australian the

million So And the to out, second next U.S. would in abate begin is the in there's million that the dollars, but complete we a affecting dollars margins, half the other Jeff, a as just continuing bit a XXXX. thing would that it that year, early about I little in of the call under integration be

I inflation, certainly to then portions of the our but energy some the been Netherlands there's adding and inflation the UK, think or Europe. have opportunity cost of and/ million bit settle the but year they are second of experiencing, persisting if of been we've abating people several a of costs course, in in terms [ph] things that overall down, in particularly And dollars the smaller business, high. has half more

I call headwind that So against up. that's another

Jeff Miller

the areas then and benefit on services seasonality, QX? that quarter for the can broader other margin And back-up is ago, that the you And folks Thanks perspective? revenue QX? I bit for type care camps but any from momentum there that quantify that usage business of growthful. for there from and the than And hear in just I And continuing, get given into a during Steven, care. any the year expansion is the outsized us is traditional like summer tail that. in are record

Elizabeth Boland

and the indicates but pull I'd vacation hit smaller are school same summer falls times there, there once to and quantify different really experienced over intermittent these on that they don't have camps, important intensity, camps events But a it's as summer. So, we actually revenue and tend away high holidays, the the for say over have utilization over not which groups. for and [Indiscernible] out an the the opportunities you've element, we very

So we much minimis quarter, certainly QX. the contributed that in in be revenue in growth de would more several millions but

Jeff Miller

how state floating then through rising rates? fixed kind managing just of currently, for Can And plans, versus exposure, me. last sheet steady given you you're leverage Okay. just etcetera talk management just balance thinking about

Elizabeth Boland

Sure.

we OAC in et for would sort given the investments right a that and to EBITDA significant obviously So some depth of the be our repurchases. And level third we X.X also at cetera. quarter grow now. We're comfortable with has to certainly share continue into But this a About looking substantial had of of acquisition us profile, term that's point.

our to general those at have restarting but protecting fall of tail looking we've are that we that is with target strategy. said the that is to are acquisition, rates. it, off interest significant -- speaking and escalation seeing roll of the our X.X on next some is caps got times of sequential -- certainly our in for always X.X we caps is And we us debt, our from doing costs, after leverage that We a debt something right portion we go caps always and on do to the of that. interest variability XX% like then A

XX% our a in to and converted essentially XX% is caps have we little So fixed those bit debt with of place in covered [Indiscernible].

Jeff Miller

you. Very helpful. Thank

Elizabeth Boland

Thank you.

Stephen Kramer

Thank you.

Operator

Thank you.

is Question Jeffries. proceed from Our Moore with Please your next Stephanie with question.

Unidentified Analyst

what's employer daycares for Stephanie Hi. a the sort I'm just of I wondering than financial ramp, verticals outside guys services and I to you seeing bit he just getting there? then more in of where are [Indiscernible] Moore. thought was guess sponsored any sale healthcare, look and like cycle

Stephen Kramer

Yes.

a shown the not they is to have that, ed. more distribution verticals. which higher much are well, there's particularly that and and verticals, the child to XX success of that they years as as see retain our as industry about in But think, a attract current two become again, we've and over day, and I in strength, focus But the addition on-site, given are it we seeing industry verticals the element. efforts. were that historically centers childcare in think I really attractive workforce looking challenges Certainly across So, we've in last think when healthcare are months good certainly manufacturing over the we announced

it. management self-operated pipeline, programs. some the And feel good some So ground as transition we overall, opportunity, well about earlier, the feel from new we of of up as mentioned I terms in good as about

good We So and feel interest, both again, about the good overall, the we feel inbound pipeline. about approaching. us

And feeling year, year interest. into next the going the of so good out about overall,

Unidentified Analyst

I guess That's with kind it. could you're just priorities? an how us you helpful. capital Got And allocation then of provide thinking about update,

Elizabeth Boland

Yes.

repurchases. share or So so Only with XXX investment million QX as we did primary acquisition of About Children, just and in I the said, pretty our capital some significant

But look this on the continuing tuck-in and So, we judicious at in about acquisition certainly we And to digestion be focused based mode, adsorption in are are smaller at growing are business. we'll to continue primary those. recovering opportunities. point, enrollment

that $XX and And of million of standard to number so are period. million spend lease month as new this models a the $XX have fits next in in We XX development, those in are growth outstanding. a near primary about It's moment, focus down and or be the would that so million term the of allocation paying at and be the that have view. we'll and, we capital $XXX revolver

Unidentified Analyst

you. it. Got Thank

Elizabeth Boland

You are welcome.

Stephen Kramer

for good Well, evening call much us joining and the Okay. thank wishing all a evening. this you you on very

Elizabeth Boland

care. everyone. Take Thanks,

Operator

today's concludes conference. This

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

Bright Horizons Family Solutions (BFAM) 2 Nov 222022 Q3 Earnings call transcript