Bright Horizons Family Solutions Inc.

Greetings and welcome to Bright Horizons Family Solutions first quarter 2022 earnings call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Flanagan, Senior Director of Investor Relations. Thank you. You may begin.

Thank you, Doug, and hello to everyone on the call today. With me on the call today are Stephen Kramer, our Chief Executive Officer, and Elizabeth Boland, our Chief Financial Officer. I'll turn the call over to Stephen after covering a few administrative matters. Today's call is being webcast, and recording will be available under the Investor Relations section of our website, brightrisons.com. As a reminder to participants, any forward-looking statements made on this call, including those regarding future business and financial performance, including the impacts of COVID-19 on our operations and on acquisition activity and strategy, 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 are described in detail in our 2021 Form 10-K and other SEC filings. Any forward-looking statement speaks only as of the date on which it is 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. Steven will now take us through the review and update of the business.

Thanks, Mike. Hello to everyone on the call and thank you for joining us this evening. I hope that you and your family are doing well. I'll start tonight with a review of our first quarter results and provide an update on the business as we approach the mid-year point in 2022. Elizabeth will follow with a more detailed review of the numbers before we open it up for your questions. I'm pleased with our start to the year and with the pace of the continued recovery in our business. We delivered 18% revenue and more than 100% earnings growth for the first quarter, generating revenue of $460 million and adjusted EPS of $0.47. We executed well in the quarter, again navigating a dynamic environment driven by the persistent effects of COVID-19 variants and the broader economic impacts, which for us are particularly evident on the staffing front. In our full service segment, revenue of $354 million represents an increase of 22% for the quarter. We added nine organic centers, including new client centers for the University of North Carolina and Olympus America, as well as two centers for Bryan Medical Center. We also reopened seven more centers in Q1 and ended the quarter with 97% of our 1,019 centers open. In our open centers, enrollment levels improved throughout the quarter and into April. I remain encouraged by the underlying demand trends that we see across all our center model types, COTS Plus, Bottom Line, and LACE Consortium. We have increasing numbers of parents expressing interest, scheduling tours, and registering at our centers as families continue to solidify their work and life schedules. We are also making positive strides on the staffing front. Our staffing levels increased throughout the quarter to serve the growing enrollment requests, and our talent and operations teams have been hard at work creatively deploying solutions and taking actions to address the unique conditions. Although we remain constrained from enrolling all of the families requesting care in some of our locations, the actions we took last fall and earlier this year, including increasing wages and expanding benefits have positively impacted our recruitment and retention efforts. Also, as the Omicron surge slowed in the second half of Q1, inquiries, applications, and interviews with prospective employees have been increasing, and our conversion rate to new hires continues to tick up. These leading indicators are a positive sign of the progress we are making in a still very challenging environment, and a strong affirmation that Bright Horizons is the employer of choice for early educators. Let me now turn to backup care. Revenue increased to $81 million, or 6% over the prior year. We had another solid quarter of new client additions, with 7-Eleven, Intel, Mount Sinai Health all launching in the quarter. As we discussed in February, the Omicron wave disrupted use levels in the latter half of Q4 and into Q1, as families showed some hesitation to engage with intermittent care solutions given the sharp rise in infections across the country. In addition, the availability of care providers was constrained in similar ways to our full-service childcare centers, which limited some placement of care. Encouragingly, as we progressed through the quarter, traditional use improved, both in-center and in-home, through February and March, and we look forward to the opportunity to deliver care under more normalized conditions this summer. Over the longer term, our growing list of clients and range of use cases further expands the opportunities over the longer term. Our education advisory business delivered revenue growth of 6% to $26 million. We added several new clients in the quarter, including launches with Hasbro, Papa John's, and Yahoo, and continue to see solid use levels at College Coach and EdAssist. Of particular note, we are proud to have been selected to manage McDonald's Archways to Opportunity program. Launching with EdAssist yesterday, this program offers more than 350,000 McDonald's employees across 14,000 US restaurants the opportunity to earn debt-free high school and college degrees. This program exemplifies the investment and focus by employers in workforce education and demonstrates how well positioned we are to support clients and prospects who are looking to differentiate their employee value proposition as well as upskill and reskill their employees into hard-to-fill roles. Now on to an exciting development we just announced this afternoon. One of our four key priorities that underpins the work we do is to extend our impact in early education through strategic growth. To that end, I am thrilled to share that we will be entering the Australian market through the acquisition of one of the leading providers of early education and childcare only about children. We have signed a definitive agreement and plan to close later this summer. Our success with this transaction further demonstrates our global reputation as an acquirer and partner of choice among like-minded, high-quality providers. The Australia market is structured around three key elements that align really well with our company's growth strategy. First, we are attracted to markets that have some form of third-party financial support for tuitions. Australia has a long history of providing robust support to families through the government-operated Child Care Subsidy, or CCS, program. CCS improves the affordability of child care for families by covering a significant portion of the cost thereby enabling parents to prioritize quality in their selection of childcare. Second, we look for markets with a quality-focused regulatory system. The strong national regulatory framework in Australia provides objective and transparent oversight and consistent measures of quality across the industry. It focuses on seven areas, including educational program and practice, children's health and safety, physical environment, and relationships with children. And finally, we value markets with a potential for organic and acquisitive growth, as well as positive supply-demand characteristics. The childcare industry in Australia is highly fragmented, with smaller providers representing roughly 80% of the market and a growing number of children and families utilizing center-based care. Within this positive context, we are particularly excited to be coming together with Only About Children, a high-quality premium provider focused on serving working parents in 75 centers located in the Greater Sydney, Melbourne, and Brisbane areas. In collaboration with the Only About Children team, we intend to utilize our service capabilities and expertise to further grow and broaden their impact to families in Australia. We look forward to welcoming the entire team, children, and families to the Bright Horizons family later this year, and we will share more details about their financial contribution to our business once the transaction is completed. Let me turn to our outlook for the rest of 2022. Based on operating trends, we are revising our 2022 revenue growth to approximately 15% to 20%, with operating leverage driving adjusted EPS growth of approximately 53 to 63%, or $3.05 to $3.25 per share. I continue to be very optimistic about our future as we continue to make progress post-pandemic, leveraging our strong client-partner relationships and differentiated business model to extend our services in the years to come. Before I close, I want to take a moment to recognize our entire Bright Horizons families unwavering commitment to upholding the principles, values, and culture that makes Bright Horizons such a special place to work. We have once again been named to Forbes list of Best Employers for Diversity, Bloomberg's Gender Equality Index, and the Human Rights Campaign's Corporate Equality Index. We are an intensely human business, and these external recognitions are important as they validate who we are as an organization, help us to continue to recruit and retain dedicated and talented professionals in our field, and demonstrate to our client partners our commitment to common values. With that, I'll turn the call over to Elizabeth, who will review the numbers in more detail, and I will be back with you during Q&A.