Bright Horizons Family Solutions Inc.

Greetings, and welcome to the Bright Horizons Family Solution third quarter 2024 earnings call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Michael Flanagan, Vice President of Investor Relations. Thank you. You may begin.

Thanks, Julian, and welcome to Bright Horizons' third quarter earnings call. Before we begin, please note 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 made on this call, including those regarding future business, financial performance, and outlook, 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 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 to the data which is made, and we undertake no obligation to update any forward-looking statements. Today, we also refer 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 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 good evening to everyone on the call. Before we dive into our financial results, I want to extend our heartfelt sympathies to everyone affected by Hurricane Helen and Milton. While the overall operational impact for Bright Horizons was quite limited, these storms have had a profound effect on many of our educators, families, and clients in the affected areas. The devastation is truly heartbreaking, and our thoughts are with those impacted. In the face of unimaginable challenges, however, the Bright Horizons spirit continues to show through, as employees across the South and Eastern U.S. stepped up to support our clients, families, and communities during this challenging time. Their dedication and resilience in the face of these natural disasters is truly inspiring. Thank you for embodying our heart principles and showing such unwavering commitment. Moving on to our results, I was pleased with our overall performance in the third quarter. Total revenue and adjusted EPS came in better than we expected, driven largely by our backup care segment through stronger use, revenue, and margin performance, while full service and ed advisory were generally in line with our expectations. Overall, I am proud of our performance so far in 2024, and we are set up well to close the year with strength. To get into some of the specifics on the third quarter, revenue increased 11% to $719 million, with adjusted EBITDA up 20% to $121 million, and adjusted EPS growing 26% to $1.11 per share. In our full-service child care segment, revenue increased 9% to $487 million. We added six centers in the third quarter, including client centers for Colorado School of Mines, Regeneron Pharmaceuticals, and Yale New Haven Health System. Enrollment in centers open for more than one year increased at a low single-digit rate in Q3 across our US and international operations. An average occupancy percentage followed its typical seasonal pattern, stepping down sequentially to the low 60s. The UK continued to make operational and financial progress in the third quarter, narrowing its losses as compared to last year. There is still a lot of work to be done in the UK to return our operations to pre-pandemic performance levels and beyond, but this year's gains have been particularly encouraging following the challenges of 2023. I continue to be confident that we have established a solid foundation and set of initiatives to drive continued improvement in 2025 and beyond. Let me now turn to Backup Care, which delivered another outstanding quarter. Revenue increased 18% to $202 million outpacing our expectations for the quarter on stronger employee engagement and use. We also continue to expand our client base with new employer launches, including Progressive Corporation and Brookfield Property. Growth in backup use was robust across traditional care types, with notable strength in centers and camps, as the care needs for school-age children are particularly acute over the summer break. As we have spoken about in the past, the supply of care is a critical element to achieving our backup growth goals. The operations team again performed exceptionally well this quarter, delivering on the supply to meet another record level of use over the short summer period. The investments we have made and continue to make in building supply, new care types, and personalized marketing and technology initiatives are bearing fruit and position us well to deliver on our growth goals in the years ahead. Our education advisory business grew to 31 million in the quarter. We added new clients to the portfolio, notably launching Enterprise Holdings and Rice University. However, as we have discussed for the last several quarters, participant growth in our ed-assist business remains muted. We are continuing to make investments in the team, product, and marketing to revitalize our participant growth in 2025 and beyond. Before I wrap up, I want to highlight the incredible success of our On the Horizon Summit, our first in-person client event since the pandemic. We were thrilled to welcome clients from across the country and across industries, including leading employers such as Accenture, JPMorgan Chase, and Valero. It was a wonderful opportunity for clients to visit our home office, including the June Greenman Early Education Innovation Center, network with each other, and hear from HR executives and Bright Horizons leaders who underscored ways that our services support client employees' care and education needs. This summit reinforced our commitment to innovation and excellence in employee engagement and productivity, solidifying our position as a leader in the industry. In closing, I'm encouraged by the continued growth and high-quality operational delivery we are seeing across our business. Given our results here today and our current outlook for Q4, we are refining our full-year revenue guidance to be approximately $2.675 billion, representing 11% growth, and an adjusted EPS range of $3.37 to $3.42. With that, I'll turn the call over to Elizabeth, who will dive into the quarterly numbers and share more details around our outlook.