Bright Horizons Family Solutions Inc.

Greetings and welcome to the Bright Horizons Family Solutions first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A brief 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Flanagan, Vice President, Investor Relations. Please go ahead.

Thank you, Stephanie. Sorry, thank you, Stacey. Welcome to Bright Rises' first quarter earnings call. Before we begin, please note that today's call is being webcast and recording will be available underneath the investor relations section of our website, brightrisens.com. As a reminder to participants, any forward-looking statements made on this call, including those regarding future business, financial performance, and outlook, are subject to safe harbor statements 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 should be considered in conjunction with the cautionary statements that are described in detail in our earnings release, 2023 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 at investors.brighthorizons.com. Joining me on today's call is our Chief Executive Officer, Stephen Kramer, and our Chief Financial Officer, Elizabeth Bolin. Stephen will start by reviewing our results and will provide an update on the business. Elizabeth will follow with a more detailed review of the numbers before we open it up to your questions. With that, let me turn the call over to Stephen.

Thanks, Mike, and welcome to everyone who has joined the call. We are really pleased with the solid start to 2024 and our performance in the first quarter. Revenue increased double digits year over year and earnings outperformed our expectations. With occupancy in our full service segment ticking up to greater than 60% globally and backup use continuing its solid year over year growth trend, we are tracking to deliver on our 2024 guidance. So, to get into some of the specifics. Revenue in the quarter increased 12% to $623 million, with adjusted net income of $30 million and adjusted EPS of $0.51 per share. In our full-service child care segment, revenue increased 12% in the first quarter to $484 million. We launched six centers in the quarter, including client center transitions for Aflac and Rockefeller University. Enrollment in centers that have been open for more than one year increased at a mid-single-digit rate in Q1, and occupancy averaged more than 60%. The U.S. continues to see the strongest performance, with high single-digit enrollment growth driven by double-digit growth in our younger age groups and mid-single-digit growth in the preschool age group. The U.K. led our growth outside the U.S., while our centers in the Netherlands and Australia have had more limited expansion in enrollment, given they sustained higher than average occupancy levels over the last couple of years. Occupancy in the UK stepped up sequentially on mid-single digit enrollment growth. Although the operating environment continues to be challenging, I am encouraged by the recent progress we have made to improve the efficiency of our center operations, specifically by retaining and hiring more Bright Horizons employee teachers and reducing our reliance on agency staff. While the UK remains a headwind to our overall full-service profitability, I am encouraged by the trends and the fundamentals and expect to see continued performance gains. Let me now turn to Backup Care, which delivered another strong quarter, growing revenue 16% to $115 million on solid utilization. We also continue to expand our client base with Q1 launches for Lincoln National, NXP Semiconductors, and United Therapeutics, to name a few. Traditional network use remains strong, with the largest growth in our Bright Horizons owned and controlled supply. While Q1 is a seasonally lower use period for backup care, the number of employees utilizing their care benefit was solid in Q1 and serves as a positive indicator as we look ahead to the higher use summer months. With this expanding participation by eligible client employees, combined with our broader portfolio of use types, we continue to track to our 2024 growth goals. Our education advisory business delivered revenue of $24 million in the quarter, flat over the prior year. Notable new client launches in the quarter included Danaher, IPG Photonics, and WR Graze. As we discussed last quarter, we expect participant levels and use to be relatively stable in this segment this year. We are making strategic investments in the team, product suite, and marketing to transform both the service offering and the service experience. Ed Advisory is a youth-driven business, and I believe the investments we are making today will ultimately drive greater client adoption and client-employee participation in 2025 and beyond. Before I wrap up, I want to share the results of our annual Modern Family Index that we are releasing next week. For the last decade, we have explored the sentiments of working parents as they balance work and their family responsibilities. What we have seen change over the last decade is working parents' new confidence in advocating for family supports, as well as their increasing expectations of their employers. For 70% of employees, employer benefits that support a work-life balance are non-negotiable. Child care in particular was at the top of parents' wish list, trumping even remote work and increase flexibility. This new view of the relationship between employers and employees is vital for the health of families and employers, and it is a clear warning signal for employers who do not invest in family supports. We are very proud to be the partner of choice for so many leading employers who are already ahead of the curve. In closing, I'm pleased with the strong start to 2024. We executed well in the quarter and the results set a solid foundation for us to accomplish the goals we set for 2024. I believe we are well positioned to continue the positive momentum and operating discipline in Q1. As such, we are reaffirming our 2024 full year guidance, specifically revenue growth of approximately 10% to 2.6 to 2.7 billion and adjusted EPS in the range of $3 to $3.20 per share. With that, I'll turn the call over to Elizabeth, who will dive into the quarterly numbers and share more details around our outlook.