Bright Horizons Family Solutions Inc.

Greetings, and welcome to Bright Horizons' first quarter 2019 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I would now like to turn the conference over to your host, Elizabeth Boland, Chief Financial Officer. Thank you. You may begin.

Thanks, Devin, and hello to everybody on the call today. With me on the call are Stephen Kramer, our chief executive officer, and Dave Lissy, our executive chair. Before I turn it over to Stephen, let me cover a few administrative matters. Today's call is being webcast, and a recording will be available under the investor relations section of our website, brighthorizons.com. As a reminder to participants, any forward-looking statements that are made on this call, including those regarding future financial performance, are subject to the safe harbor statement included in our earnings release. Forward-looking statements inherently involve risks and uncertainties that may cause actual operating and financial results to differ materially, and they are described in detail in our 2018 Form 10-K. Any forward-looking statement speaks only as of the date on which it's made, and we undertake no obligation to update any forward-looking statements. We also refer today to non-GAAP financial measures, which are detailed and reconciled to their GAAP counterparts in our earnings release, which is available under the IR section of our website. So Stephen will now take us through the review and update of the business. Stephen.

Great. Thanks, Elizabeth. And again, thanks to all of you who have joined us this evening. As always, on today's call, I'll review our financial and operating results for this past quarter and update you on our growth plans and outlook for 2019. Elizabeth will then follow up with a more detailed review of the numbers before we open it up for your questions. We are very pleased with the strong start to 2019. For the first quarter of this year, we are reporting top line growth of 8% to $502 million and adjusted EPS of $0.81, an increase of 13%. In our full service center segment, we added six centers, including our second backup center for Barclays, and a lease consortium center in Greenwich Village, New York. We expanded our backup care portfolio with recent client launches for ADP, waste management, and L3 technologies. We also added to our education advisory client base this past quarter, launching services for Aurora Healthcare and Thermo Fisher. We also continue to be very excited about the cross-selling and cross-promotion opportunities within our existing client base. As we have shared on prior calls, less than a quarter of our clients currently purchase more than one of our services. Chick-fil-A became the latest example of a client moving from a single service, in this case, full service childcare, to a multi-service client with the launch of our backup care solutions earlier this year. We've also begun to realize the benefits of the investments we have been making in targeted marketing programs and technology to speed and improve the end user experience. We continue to be really pleased with the progress of these initiatives, exemplified by the open rates of our personalized outreach journeys, the increased mix of reservations made on our mobile and web platform, and the percentage of reservations instantly booked. These initiatives and others, once fully rolled out, should continue to drive growth and operating leverage over time. In other growth activity in the first quarter, we acquired My Family Care, an innovative and highly regarded provider of backup care and other family support services for leading employers in the UK. This transaction is a great example of Bright Horizons being an acquirer of choice, building a relationship over time that enabled us to acquire this strategic asset off-market. We welcome the MyFamilyCare founders and their talented team to our organization, along with their client base, including leading employers such as Virgin Atlantic and Rolls-Royce. Together, we are well positioned to extend our leadership position in the emerging back-up care market in the UK. Tracking our solid top-line growth, we also continue to deliver strong and consistent operating results across the business. In the first quarter, adjusted operating income expanded 60 basis points. We continue to leverage enrollment gains in our full-service centers, including newer client and lease consortium centers that are ramping to mature operating levels. We also had strong utilization in our backup operations, and this, coupled with the contributions from My Family Care, drove the strong performance in that segment. Now I'll touch briefly on the strategic growth areas we're focused on. As we approach the midpoint of 2019, we do so with good momentum across all aspects of our business. First, our organic growth strategy continues to be focused on cultivating new clients and expanding our existing client relationships through cross-sells and additional use of current services. The sales pipelines in each of our services remain strong, with interest across industries and with both new and existing clients. Second, lease consortium centers. As a reminder, these types of centers have always been a component of our growth plans. Since 2013, our focus has been on select urban settings where we see a concentrated population of our target demographic, a limited supply of high-quality childcare, and strong opportunities to meet the needs of our client partners. We have opened 90 of these centers over the last six-plus years. We continue to be pleased by the progress and positive contribution from this group of centers as they ramp to mature operating levels. and we are very optimistic about the significant value creation opportunity of this strategy. Finally, with regard to M&A, we continue to cultivate a solid pipeline of acquisition prospects in each of our three primary geographies, including a good mix of networks and single centers. In addition, we have opportunities from time to time, like MyFamilyCare, to acquire non-center businesses that add to our backup or education advising segments. As they have throughout our history, we expect acquisitions to continue to be a key element of our growth plan in the years ahead. Taken together, this multi-channel approach puts us in a solid position to achieve our growth plans in 2019 and beyond. Before I sum up, I want to share my excitement about two final things. First, I was really pleased to have the opportunity to meet with and hear from nearly 100 of our employer clients and prospects at the Bright Horizons Summit we hosted in the Bay Area a few weeks ago. Senior HR professionals from clients including LinkedIn, Facebook, and Amgen shared their stories with those in attendance. After hearing from so many cutting-edge HR leaders, I feel even more energized and optimistic about the market opportunity and our unique capabilities to assist leading employers solve the challenges facing today's workforce. Along those lines, I'm also very proud that Bright Horizons has once again been named one of Fortune magazine's 100 best companies to work for, for the 18th time. Bright Horizons has been and will always be about our people. We work hard every day to perpetuate our strong culture and commitment to being a great place to work for all of our 33,000 employees globally. It is the passion and expertise of each and every Bright Horizons employee that allows us collectively to impact the lives of the children, families, adult learners, and employers that we have the privilege to serve. So in closing, we believe that we are well positioned to continue the positive momentum and operating agility we have demonstrated over the years. We anticipate continued strong performance with revenue growth in the range of 8% to 10% for the full year and operating leverage to drive adjusted earnings per share in the range of $3.58 to $3.64. With that, Elizabeth can review the numbers in more detail, and I'll be back with you during Q&A.