Earnings call transcript Q2 2023

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Operator

Greetings. Welcome to the Bright Horizons Family Solutions' Second Quarter 2023 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 Relations. to turn President Flanagan, now Investor of will conference Michael over Vice I you begin. you, Thank may

Michael Flanagan

Thanks Sherry and earnings call. welcome to Bright Horizons second quarter

webcast section of Before call website at be note please our under and being available Relations we will a Investor that the brighthorizons.com. recording begin, is today’s

on earnings Harbor financial a outlook performance, As made are to release. statement those including subject any participants, call, reminder Safe included and our in regarding statements to forward-looking this future business,

and uncertainties financial in risk that may cause materially Forward-looking should XX-K and involve statements in in our statements that actual operating XXXX, Form the and results and detail inherently release are described cautionary differ other to earnings conjunction SEC be considered with filings.

of made, it on to as the no obligation Any date and any undertake forward-looking is forward-looking statements. update speaks which we statement only

non-GAAP of are earnings in refer measures, section IR is also and We which investors.brighthorizon.com. counterparts release, financial to GAAP to our reconciled our at today website the their under which detailed available

me will more Elizabeth the Executive it Chief on Boland. before provide business. today's update Elizabeth Stephen with our follow to Officer, up Financial Kramer; of questions. and Steve our an Joining is with quarter your Officer, results call the second detailed and open reviewing review will a start Chief numbers on we

With that, I'm going to over to turn the Stephen. call

Stephen Kramer

We the revenue quarter. has share. solid call. year-over-year am I and earnings second with strong another the performance everyone joined $X.XX Thanks adjusted Mike welcome in who per quarter to and really pleased results growth our of XX%-plus delivered with

quarter expectations highest in with network care growth. realized we users June posting outpacing Occupancy month delivered our QX year-over-year and improved and and in an use history. growth outstanding use enrollment Back-up with our traditional the mid-single-digit sequentially

for is us results Overall, our overall enrollment continue area well trail headwind persistent to business, make service continues first remain objectives. where one against half plan position good challenges our year, our earnings staffing our performance. and that UK progress the our a full to There to to XXXX

some increased XX% Revenue of and into full of million So, From utilization $X.XX. quarter the child standpoint, increased progress $XX second we further the XX% to with a have the quarters. the quarter in center across cohorts of $XXX in EPS million. $XXX our last specifics. revenue made In adjusted to segment, care discussed get service over adjusted net million income few to we the

centers QX, under XX% teens XX% were Specifically as our an top in above Only in cohort, in from XX% occupancy. occupancy the improvement QX, are centers our XX% defined QX. high of the of in

are pleased head with have into a the averaged as more been a year, for we We XX% we at and quarter. more bit well-positioned mid-single-digit in into gains the centers QX, for enrollment and summer the enrollment occupancy dip. are seasonal one opened rate enrollment that detail, than typical increased that Beginning feel more continued than in

groups, across with and in in the toddler infant year-over-year and notable age in age our teens in center low XX% In enrollment momentum models these growth our all with increased centers sustained performance solid groups younger classrooms. life accelerating the US, and

and taken rates staffing ahead in in levels environment to many pre-pandemic labor applications continues locations, serve us tour quickly stabilize, for families we While in a hiring to progress meet able places are continue to future US today we families and more actions These the With retention and to enrollment. help care offer to needs. and the constraint and staffing. remains the improve, some and build and children improvements will better pipeline to their have the driven continuing overall of have levels more considerable

the QX. back in continue improving for the they US, opened be we sequentially modest. With pre-pandemic the enrollment increased recovery this, single-digits, Australia two the The therefore, geographies occupancy more enrollment low one Looking to their by and cadence as pleased year levels. XXXX in of higher levels year-over-year build more than the centers from Netherlands performance to is, pandemic, through of so growth outside maintained in these flattish

I in costs UK rates, staff challenging. remained at growth inefficiency greater a on previewed, environment margins as current higher more wage our pressured and and costly and favorable agency expectations to inherent continues Conversely, lag the with that occupancy recovery has enrollment less staffing backdrop macroeconomic by are particularly the levels. reliance a Labor

our is and suboptimal our result, performance a operating As behind plan.

streamlined limited. the expanded remainder and progress remain While experience, we year apprenticeship of we including have actions, overall of international our to costs programs, and relatively the be a anticipate recruiting to labor for instituted number elevated enrollment

and turn a few. now me extended name expectations. Sikorsky outstanding utilization delivered in with Public quarter, Revenue increased million to our we System, Storage which new to XX% only grew outpacing to Duke University an as back-up our Health for partnerships launches Aircraft, Let $XXX as care, client QX and

use showing we additional we made uptick Bright of grows awareness real benefit in across growth swath used network strong results, of quarter. initiatives the with have than enhance supply, Traditional investments wider network in and access with client product technology for The within centers employees the types, as was across broad-based users. use the and projected and development accelerating of particularly care expansion higher to a are quarter Horizons with through all use overall the

reach be about back-up off summer to start, I our growth opportunity to families excited company's expand a our to and the extending margin accelerating The our is clients and strong business, continue to and profile. and

in College Notable included and via and Live [ph] Games of new EdAssist Carrier, revenue Coach Corporation delivered [ph]. the million. business advisory client launches education Our for quarter $XX

problem doers, are advance to field. thinkers, United Childhood Innovation doing I unique education the at the some forward. a of innovative the had early learn practitioners of some was the with practitioners sector event to brightest. want from in showcase education we best opportunity we foster hosting Before will us work wrap and highlight researchers, in month, the I Last This industry's for honor policymakers fresh to field This early and leadership solving up, XXX creative the and of to drive to of partnering the no and great scholars Summit. field gathering approaches the our doubt Early and thinking, that

with first I am XXXX. half pleased closing, our of solid In

Given performance growth to the year's billion. to moved so year to billion of range revenue have guidance XX% $X.XX far, XXXX our $X.X full we a XX% or up

of revising in also $X.XX the to EPS a lower are $X.XX, XXXX. now for We performance to anticipate adjusted we range operating the reflecting our guidance UK

our more call will With who to that, over numbers details the into outlook. Elizabeth, around dive turn quarterly the and I'll share

Elizabeth Boland

joined million, Stephen, who's recap the QX of hello, second from million. is and $X us million XX% today. income or everybody, $XX $XXX increased operating To overall of quarter, XXXX. revenue down which X% you, Adjusted was revenue Thank to

adjusted the While to prior was flat EBITDA XX% compared revenue of $XX million, year. or roughly

added revenue approximately currency million and bit Net ahead $XX increased six second to the XX, further, quarter. quarter QX in constant an the of quarter XX% revenue X,XXX million our centers the full new service in the prior We in with million increase. over organic or To to added which year, $XX for while an to $XXX driven enrollment roughly increased down XX%, . by in acquisitions grew closed pricing, expectations revenue centers. ending this a XX% or break XX% XX% is

averaging year-over-year negligible the these the on opened year, had more range exchange, foreign in to in quarter. occupancy our change the digits sequentially, impact than increased in in for the ticked portfolio Enrollment up respect XX% FX for centers one and mid-single XX% a to rates centers of QX. With across levels

compensation full segment while driven in XX%, Netherlands enrollment $XX tuition and The year made well and from US the prior QX. $X from that centers million the As labor staffing. the UK a Adjusted prior were agency well impact we the in in grew of the spend year-over-year fall income Stephen of year. our the decrease Partially investments X% headwinds mentioned, inefficient contracted teacher enrollment received offsetting as over support on continued program was over and reduction the $X contributions funding as in increased as enrollment increases. as million growth UK by of the XXXX, the these operating in million service in the ARPA government

Revenue care. well-ahead to for $XXX quarter XX% growth. to of expectations million, grew the in back-up to Turning second XX% our XX%

were million was As $XX pleased income and volume the which XX% we quarter. with the of Stephen mentioned, quarter. in of of Operating breadth line revenue, is expectations use the for throughout our with

to education and Our educational spending launches. million to margin new advisory And and expanded services as of contributions college advisory growth reported workforce from on our efficiency. admissions on XX% as of revenue use well client improved segment X% operating $XX

This Children. the to revolver $X higher $XX Only an over for interest The of $XX totaled in expense increase rate quarter excluding adjusted an per our acquisition borrowings. represents structural income deferred million in basis to million million increased XXXX, tax the price About attributable increased of XXX the Interest on $X.X XXXX. related increase XX.X% QX of million points over to quarter, of and purchase QX, rates net

sheet turning balance flow. the So, to and cash

to $XXX million assets For outstanding and acquisitions from cash down in our remaining We $XX operations quarter, million in to on of million $XX fixed in credit million compared QX XXXX revolving in paid XXXX. the we generated and facility. the $XX invested compared million QX $XX of

turns net cash of $XX beginning the at and times of EBITDA, year. ended ratio X.X of We the debt quarter million with from to a down leverage the X.X

our Moving updated on XXXX outlook. to

$X.XX billion in year. half We the are year revenue moving guidance of revenue to our to $X.X the billion first reflect XXXX full outperformance the to

to care to to the revenue, we high XX% to in of terms ed segment expect In back-up and full-service grow single-digits. grow XX%, grow to roughly XX% now advisory XX%,

This we lower line $X.XX an performance the the through previous XXXX. reflects a with expectations in range remainder the of majority of basis, anticipated are in to a the reduction share. EPS to specifically of related across UK $X.XX EPS an adjusted to business, our performance guiding with On

revenue immediate X% single-digits revenue back-up and of XX%. of more of full-service XX%; growth for outlook revenue overall XX%; to timeframe, to XX% the for QX XX% of with XX% XX%, a to in advisory our to care growth growth ed In is high

to QX the be in of $X.XX. expect $X.XX adjusted range We EPS to

to close, as discrete ARPA couple specifically rates expense, that our in provide are last related our additional margins of growth summarize and context three funding, we've and also items XXXX, and wanted in tax rate. done interest the I I the Before quarters, reported earnings affecting to

headwind rate. growth interest account items We effect ARPA the in point funding for the and expense a centers, year, to those full less in million $XX in a including the tax $X.XX of increase roughly $XX now $X.XX P&L basis expect more for XXX to million share to at

items expect those Specifically, account in QX, to roughly $X. we for

more million QX approximately in interest year-over-year for -- funding in share headwind Again, with P&L is rate. to roughly million growth government a funding tax less at higher $X this $X and and basis expense all QX. XX XXX centers, ARPA for

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

Operator

first Tong [Operator question George Please you. Sachs. Our with Goldman proceed. Thank from Instructions] is

George Tong

afternoon. Good Hi, thanks.

You the for occupancy year? occupancy seeing of sequential you quarter improvement the talked rates expectations and about latest what are quarter. where in your the ended in about occupancy talk Can this by end

Elizabeth Boland

Sure.

in quarter, from several to about average points had picked an So last XX% so up percentage we quarter. the XX%,

for in are year We the at point the highest seasonal childcare.

bit will we a into quarter back in the bring of a third So to begin dip QX. and in it then go

So end the in we percent. this that at point XXs year expect would the low

we are bit dipping into a down after where QX. behind just So now

George Tong

enrollment other behind outside talked Can expectations That's negatives it. expect what when a the talk positives UK performance about little weighing And with to and trade on that challenges business bit how overall or about results. a you to seeing the bit -- reverse of little or any overall might out? you Got helpful. call and UK, below staffing you

Elizabeth Boland

Yes.

on out more coming the So year has in that in and we had seen the and of although challenging the one anticipated being the US more labor think it is well around in world. Australia. earlier environment of it XXXX, I the the forward protracted challenging strides been view a in as more UK than We've Netherlands a environment labor and improvement,

other has the been and the we pretty that outside steady. performance So US operate countries the

already. pre-COVID, in Australia. and have of both Netherlands The the than but points pre-COVID rest complete business they few the a isn't through are behind recovery where been the pandemic still occupancy steadier the percentage their levels held have levels to They would

but So I that a prepared muted think, to there they starting is the is remarks recovery place, a more already because bit referred in are Stephen, at performance is, higher the solid.

sufficient fall this And supply to that the the profound through of into labor to the constrained staff, that fall is I but of get this certainly, seeing more we affecting year the enrollment and looking have on seeing as labor only because of It's persist on the really to cost it the cost through end it's well. is are also the UK challenges implications the having not color structure, -- more it's -- and think that cycle need we're enrollment and XXXX. somewhat

George Tong

Thank it. you. Got

Stephen Kramer

Thank you.

Operator

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

Andrew Steinerman

operating that change can as comment has full And service just operating be to And specific, any if me, full I single-digits a to kind company previously XXXX about regard that to guide Hi, remind in full in that or Elizabeth, terms you quarter margins hear a margins? make single-digits. would there service the been for helpful? today expectations be margins about your high comment service well, I a operating low talked of did third of thought

Elizabeth Boland

Sure.

Andrew. We would right, this talked operating about So is of low full the of had digits service that just year. for margins sort I to it. first refine part mid-single

This quarter, and of back our expect that third in And we by see season, a operations, if of you into will. range. quarter offset bit seasonality that certainly to is the its little strong Australian little cyclical a are in bit would coming which with in coming positiveness we the taper

we The of QX other will sunsetting is ARPA September. one funding is headwind program The the at sunsetting. ARPA end government in have

had completed. $X in about QX million to to funding we to so it million as And that would of QX. be $X expect $X off ARPA in tapers We million be

the it -- get low ticking single So then and fourth a we little the bit this a digits, up would in be there and takes between as is the bit the digits. we that are single little puts still where behind low quarter and a digits closer mid-single quarter to into

the So single I digits. don't were ever think we high in

Andrew Steinerman

Elizabeth. Okay. Thanks

Elizabeth Boland

Sure.

Operator

Baird. Our Jeff with Please Meuler next question from proceed. is

Jeff Meuler

Yeah. Thank you.

there to the the that get controllables address extent you change extent with to you could in what tough planning could -- to which to So a are the I it's UK which to but environment, initiatives? BFAM be

Stephen Kramer

you. Jeff. Sure, Thank

are our have a outlined that So undertake. of believe own in in there clearly, detail. the undertaken actions as a I that go UK. and that highlight few remarks, something to I'll are talent into we to do little growing We the prepared and bit specifically continue well-suited we is

the enlarging element of not it's is going When going so the to apprenticeship actions taking an And we about the to our increasing that we it classes the are apprenticeships, complete working be scale sure that think are economical and of program forward. they supporting in our we so make it, important but also time learners just about can program, most possible. persist do through

-- in have of are recruitment We we international beyond Spain. also looking history a so

UK. overseas, we that countries looking bringing the are the additional to that for that can talent We so that at of scope expanding we expand program so can program be you from will, in if

improve through with the the job we at then And all we way continue like US, in their experience finally, candidate the onboarding. look can seeker here that to we did ways the starting

those we, this of underway push and to examples have that at three are hard to so on. continue actions going point, are And

Jeff Meuler

lot back-up Got signed you it. And through in the of new pandemic. then care, clients a

lot a added services. of new You

banks or prior care, the success adding care the in -- that You've kind back-up signed services? the had Can out feel maybe just guidance what among clients or increasing really quarter, talk quarters, pandemic strong up of are on you implies limiting the growth and to and having growth of couple use you your the deceleration. factors are a quarter about new during either like types what like I every

Stephen Kramer

Absolutely.

when of their related about may use that forward of remainder thinking individuals that that, pulling So uses. be out we year, level what and ultimately, was we of the individual we're QX pull-forward for was they the we the outperformed then modulated to a possibility then at ultimately talked use in had out that the

was user really What of very base, we the us. which excitingly, QX, saw was actually expansion an positive for in

the is the pandemic as you clients in a to of that that certainly, half the we're new garner first also time fact XXXX the that we that period. comping pronounced the the were look way. in existed some COVID referenced that able need at be year, of of mindful But where more of still to against we of Some in we maturation

least Omicron We the had at wearing our centers, we still so And in had, in quarter. we first are into QX. masks

we on the that year of against And will is stronger basis and again, why, QX. we're so don't going rate half, that use look year a in the growth when be we I have But at going why now really in think acceleration the are of XXXX, a which into performance half second have we comping strong to second expectations the QX overall.

Jeff Meuler

Helpful. it. Got you. Thank

Stephen Kramer

you. Thank

Operator

is next Manav from with Our question Please proceed. Patnaik Barclays.

Manav Patnaik

service, anything Thank us the the you that also back-up full full like just you you. for has like? just and margin with look for might the with did XQ, help what And Elizabeth, ed? if could expectations year for changed

Elizabeth Boland

Sure.

at saw we in the the key expect use it quarter about would be higher So this as QX. is were for in the XX% we to summertime. you even than is it quarter, period QX, of we saw Here, This in strongest and

to tick the margin, up the Overall the XX% expect so quarter. more for to more to And year, in for XX% XX%. be be it'd like QX like would XX% we to

So of average more bit year. but normalized through the carrying the some benefit to that like the of end by little QX, a

higher So back-up level. at continues that to deliver

up a fall ticking the EdAssist and summer expect participate-driven quarter in the in Coach standpoint, College in as very are XX% both EBIT period. be again, the we pick that participation net businesses much businesses and this margin. tends buying deliver up We'd late From would to the fall to

as to to those expect back tick up to So more like margins XX% we well. would XX%

Manav Patnaik

terms just you. Like you visibility you can apologize XQ? missed for the Thank I I assumption XQ in of do have it, much you guess about it. and And -- I how what just have for talk but visibility the utilization fall, enrollment now? if Got

Elizabeth Boland

elementary when I'm Yeah, have stage and of the where, of older can sorry, them -- in they timing with get -- so to a enrollment of I make course, some happen age child the is a going -- own sorry. know it utilization changes the much that in the to least didn't what pretty visibility, we're when in the relates as groups olds go how for they we not pre-schoolers, to quite in so when decisions may are that's school. leave. but school much four-year We program some a elementary as interest parents their school, associated visibility

that So turning and we toddlers group typically age be through continue there our and can three over, and program. four-year variability infants old persist to in some age whereas, see up

So fall at visibility the point. have reasonable we this into

it's little far telemetry of bit visibility the But So XX% is are enrollment there there say. not plan. unknown loaded base. XX% as in we've the who with toddlers school in backlog, programs, August, at tracking associate some these comprise this to more with of is summer, but got reasonable leaving a a toddlers than may we and of it's in the month in to point, our have overall be But of our infants quantifiable I and that, loss of terms September to like infants and

So, pretty there. solid view

Manav Patnaik

you. All right. Thank

Operator

Please Moore is proceed. Our Jefferies. next from question with Stephanie

Stephanie Moore

tuition to Good bit little Hi. or touch wanted increases a I you. pricing. just Thank on afternoon.

just second they to in similar how little resonated Thanks. if on then the that I question any environment that of hear the increases didn't bit and with maybe it But pricing. you are here or you So or of tuition on US? in have from labor first like the you you're enrollment pushback a of anything I some the Maybe talk planning question, of increases in US? tuition respect correctly. the what the any help don't might how in part part just getting the kind implemented view kind And and the -- UK, of

Elizabeth Boland

Yes.

overall, price. tuition a that in true X% to price be in I other ahead average, increases and to the also So choices and they're parents really look add And the we're UK. start while to decisions and and recognizing on sure as make, can market was be on particular order Stephanie. as from can can market, comping that certainly this may we staying what vary have we and the we But that Stephen both increase year did we local competitive color, to making XXXX, would set X%,

it's want other knowing that balancing it enrollment price certainly environment well, that is, into while assertive with cost on as the centers. getting the inflation, But inflation as be the is what inflationary as it's to we possible labor

-- increases. staff found They getting have parents year, in understanding have labor environment. They certainly generally staff quite the We and this price challenge the of found we be recognize keeping centers. to recognize of

the absorbed, cost much a are So of but feel I that's marginal the possible, that measured we've as of and investment been to and think not taken fruit. it's we cycles it couple capturing all a bearing it's that as of trying cycle, reasonably of we well looking part approach, that at like and enrollment reason recover making sure over in one

think the of and pricing go market other affordability one in beyond I programs. just challenge has challenges and a tuition UK is the that the

looking they is five support number two-year-olds rates, hours week. they at And year the government One of has the by the more UK elements in enrollment reimbursement revising recently, a be care olds. been three certain to of per to added the covered of of of

reimbursement address right it try affordability issue. to those still for And the environment, at have but so rates been them the they looking completely size inflationary to doesn't

So prices for are consideration in sure.

Stephanie Moore

appreciate Okay. in color. And helpful same I sticking maybe in then as the line it. UK. that's just the No,

year some there of other that been maybe maybe in be might also what structurally talk factors? to look kind so or centers of so? just more these XXXX sense So, are or has as to at post-COVID, are maybe disadvantaged we Is of a probably about for So kind of have seeing those continue else underperformance some an you and kind out a of called affordability you pricing. evaluated that anything

Stephen Kramer

Sure.

to look So center I'll of it it is to say it applies how viability sustainability at sort individually obviously, this of of sort then -- I think center globally. uniquely. elevate we the we and each which UK, the and And think and about each and is the

particular, continue And are so a at a in make to an levels, to the from the trying to as we in between sight trade-off we look perspective, to from centers UK, perspective. getting the but contribution enrollment both back line pre-COVID also

underperformers. a some to At the there centers amount time, so because less that same continuing that more the rent sense. But because year makes lose they be of be can left that than life will those are economical be each to on their operate and it lease, operate continue lot the actually of to would their

haven't found is categorical. this of landlords, We sort and

We in relates dislocated. maintain have leases continuing open-minded stubborn and/or reducing rents environment. to taking point, to about particularly pretty it current been But to even back as been Again, they've in the this not that have be found that places landlords either the change. space may may at

we it see as on reducing of lowest look So, outlined Elizabeth And basis. earlier, are to continue an a reality in cohort. number that the overall, that at we centers is our individual case-by-case

to with so we're even make encouraged progress that the lowest occupancy that we're in And categorically group. able

Stephanie Moore

you helpful. really so Thank much. All

Stephen Kramer

Thank you.

Operator

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

Toni Kaplan

the or Is quarter more. in the to XX% to last wanted comparable quarters? much. that to just quickly that that preference a XX% year and you to gave with of metrics the know that utilization. last your so I XX% really centers the number open clarify I providing you've been XX% for Thanks

Elizabeth Boland

XX% exactly. Yes, progression a That's from last to XX% the comparative quarter.

Toni Kaplan

Is you Thanks. on has the well outside And EPS lower challenges UK the that little to The about a is UK bit that you then of disappointing down. been across there just as maybe guide? Okay. driving areas? other the I guide, to anything EPS the causing wanted ask guide talked EPS margin

Elizabeth Boland

of the business. There's minor really very noise the rest around

the outlook rest just ed that's according so there thing. the be only of the softness plan performing little a pretty and the but other And the really beginning steady of The advising, business year. on bit is to of initial -- may the at the

Toni Kaplan

to light gave bit expecting one in get did a like seemed It last the growth of the terms half. this bit maybe on quarter guidance that on want tougher I advisory. Okay. ed comps rate. the some and a second one last call little you ask little acceleration. quarter seemed And The was it in

there's just half I something Thank has acceleration you. the that been second that first pressuring the it wanted the know reverse to So that half? if will in drive in or will

Stephen Kramer

Yes.

So we to I area. think in it's say that results would have better this expected fair

in see this to that hired our of and performance taken own have level improve particular, certainly, area. disappointment that, in given of I have opportunity made We the we front and we in actions us. area. the say this would this new try some We a leader for

in leader marketing new this a hired have area. We

ability make this things and in the that we is will have the some to actions expectation then expectation our how And that first business should we're a half of second the to good short-term the in going to are perform. so have going accelerate longer term, And year. of

Toni Kaplan

Thank you.

Operator

with from is Please Bank. question proceed. Deutsche Alwy next Our Faiza

Faiza Alwy

you. thank hi, Yes,

provides? give and like how pre-COVID sense the us the the where of this few UK, the they the and how questions. revenue but is? to disclosed now you curious of UK just were business, are are perspective, how I'm how in us And think big I centers in clarifying a contribution US? remind compare sort much a from So more a margins what of One, a UK many importantly, they

Elizabeth Boland

Sure.

versus backup is is component to US$XXX business million in about around US, our the UK It back-up business million revenue. portion business, network $XXX business the back-up. has similar in the So so of but a overall like that $XX is million a

around centers the $XXX And across million. with that's So of business various associated portions full the UK. is service XXX

considering focus to business. pre-COVID relates performed that, a on it business US to As the service full the the similarly

there, sort mid- not full point, then, we're At flow certainly business they're is been not the from within to small which have operating performance So the -- income a seeing has from back-up to high able on again, where contributing. been digits contribution single and with, the below that of service expand. the this well revenue there

the getting So behind based runway has is and on it's that this get enrollment back recovered. to

Faiza Alwy

And you've strong be think on you. care, had Thank should line. But really then back-up that I stronger. margins, just would Great. the growth margins top on

business? more curious, I'm think long-term Like that or is there margins in about it? costs, how higher we this to like is should So just

Elizabeth Boland

Yes.

been there's were So would couple from XX% coming in maybe quarter-to-quarter considerations higher performing predictable little backup have operating that XX% to expect we to relatively consistent we've of less the last over of range. be a of as average bit margins. the pandemic. than Typically, a years They margin the number or the business made out

had XXXX, because have service. of mean, needed provider we've Bright of fees home direct the lack result service network Horizons XXXX, centers, the margin lower We affiliation third-party And to Bright the the actually be care that Horizons a deliver had to paid I higher network our partners, relatively as within of by givers. care in that,

we use direct are there So costs as provide more more now.

backbone that what more -- with team management business. the that, other backup clients that X,XXX than into we drive investments so in the go essentially the coupled and account the the is technology the And supports have

this XX% the this to in of be to XX% in and we range. so mentioned XX% the And some range quarters year, to -- during quarter, expect we another as be in XX% we'll coming would

access and paying the customers care ensure innovation with utilization, So the make experience to we're matching are to that to providers move we that the need. investing in the drivers third-party and are then customer ensuring around

Faiza Alwy

Great. Thank you so much.

Operator

next from question Our Chan [Operator proceed. with comes Please UBS. Josh Instructions]

Josh Chan

stronger kind centers the Thanks and you the if more make those for lease than performance that of taking I we other the of about to was could inclined future? are go into does consortium open centers, my if Hi, guys. more the wondering, question. lease your talk you centers as consortium

Elizabeth Boland

Yes.

we So and our lease have that taking more and et is as control fixed be a tuitions kind control client consortium the are over the cohort. rates, and highest-performing the centers the opportunity we opposed we and P&L decisions the responsibility for around decisions, a earn. on an more cost-plus staff risk It's where making we have of to where full cetera, of fee to have those structurally our of environment site, to

within well. points would maybe, performing our but levels are, direct as are in of recovering centers centers a enrollment. are client -- consortium them where as they and The very of overall expect terms couple to consistently enrollment are there lease Our are we proximate behind

-- so expecting see continue we would undersupply. We to we and open working. it locations, we expect -- living families And professionals, where yes, would young see be to

but months feel certainly being we're good commitments access the next otherwise where undertaken thoughtful it so be about that XX in, given that we're about are model to to as coming the markets the us environment And dynamic allows operating we XX those underserved. may over

Josh Chan

of for with primarily function seasonality? Okay. you. that a guess color. reconcile EPS from the guidance kind the QX. Thank is being QX That's And the on then going QX, than I great just higher to of care back-up QX, the I'm trajectory

Elizabeth Boland

Yes.

and revenue the with a back-up is in of certainly, the performance the to for this a main lot QX -- only reason by XX% from higher the that's move. and moving measure velocity, QX QX, margins, quarter lot that's XX% not substantial So in to is higher versus

Josh Chan

Okay. Perfect. for Thank you the color.

Operator

our with Silber final from question proceed. is And Please Capital Markets. Jeff BMO

Jeff Silber

apologize wasn't in. for hope Thanks much I I asked. Excuse question came Thanks. late. squeezing me this me. I on so

XX bit know when centers? last I center closures? the are up us you a And said higher And underperforming think seems little to in Can a you those than I where normal. in be more That close little little you being it give quarter. you bit color a deciding closed bit quarter. also creeped centers more are aggressive to

Elizabeth Boland

Yeah.

certainly So Jeff. some of you to closings give color, quarter and -- bit center this a little variety there's the here,

so back-up we far XX three So quarter, year. this the overall, in of were centers the But centers. closed probably

providers we of having say, So at are more to have is children than downtown home. parents network a come have back-up the the for utilize in operated works a network large found their that solution back-up centers Horizons and or third-party either to Bright site smaller, that rather

couple locations those. come for permanently there's a So the back closed pandemic, have really we of and just that not

-- that's don't time on temporarily we closed line going point, we're couple to that just We a one this say, centers have did of site. to So There's a ultimately that reopen. they're element. your not had we

actually there a has a given So really there category. of client that had came That were us been and area. where -- a government agencies never they're in are centers, couple recovered And more into that that the couple not that of located for were D.C. they been market bounce-back others.

And so call out, that's is notable. probably the three, I

Jeff Silber

a these more too Am deciding when of question, aggressive just to reading I bit And then close you I'm much you're part generally, centers? into it? second the sorry, the being are

Stephen Kramer

be of like the of to this say say we decision, would say part general, But reading may is about Jeff. would disciplined pretty occurs. into closures. course, that I closures. in bit our little I about becomes some continue I is that disciplined you it, been And typical I when we've that really a be lease it think about end in of times would Yeah. the

so had typical. And more few a than this quarter yes,

into I On in wouldn't the it read other hand, I anything say would particular.

Jeff Silber

Thanks All much. right. Appreciate the color. so

Stephen Kramer

you. Thank

Elizabeth Boland

Thank you.

Stephen Kramer

and you Terrific. joining you us all road look forward fall. to Well, for evening on the much thank this this out very seeing

Elizabeth Boland

a everybody. good Have Thanks, night.

Operator

you. conference. will today's conclude Thank This

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

Bright Horizons Family Solutions (BFAM) 1 Aug 232023 Q2 Earnings call transcript