Kindercare Learning Companies, Inc.(US:KLC)2025-11-12 22:10Early Childhood Education Centers - As of September 27, 2025, the company operated 1,595 early childhood education centers, an increase from 1,573 centers as of September 28, 2024, with a total capacity for 213,709 children[122] - Average weekly ECE full-time enrollments (FTEs) decreased by 2,783, or 1.9%, for the three months ended September 27, 2025, compared to the same period in 2024[126] - ECE same-center occupancy decreased by 160 basis points to 67.0% for the three months ended September 27, 2025, primarily due to lower enrollment at same-centers[129] - ECE same-center revenue remained relatively stable, increasing by $0.2 million, or 0.0%, for the three months ended September 27, 2025, compared to the same period in 2024[131] - Average weekly ECE FTEs for the nine months ended September 27, 2025, decreased by 1,998, or 1.4%, compared to the same period in 2024[127] - Total before- and after-school sites increased by 120 from 1,018 sites as of September 28, 2024, to 1,138 sites as of September 27, 2025[123] Revenue and Income - Total revenue for the three months ended September 27, 2025, was $676.8 million, an increase of $5.4 million or 0.8% compared to $671.5 million for the same period in 2024[151] - For the nine months ended September 27, 2025, total revenue was $2.045 billion, an increase from $2.016 billion in the same period in 2024[152] - Total revenue increased by $29.1 million, or 1.4%, for the nine months ended September 27, 2025, compared to the same period in 2024[165] - Revenue from early childhood education centers increased by $0.5 million, or 0.1%, driven by higher tuition rates, partially offset by lower enrollment[154] - Revenue from early childhood education centers rose by $16.8 million, or 0.9%, driven by higher tuition rates, partially offset by lower enrollment[166] - Revenue from before- and after-school sites increased by $12.3 million, or 8.6%, primarily due to the opening of new sites[168] - Net income for the three months ended September 27, 2025, was $4.6 million, a decrease from $14.0 million for the same period in 2024[151] - Net income for the nine months ended September 27, 2025, was $64.3 million, compared to $40.7 million for the same period in 2024[152] Costs and Expenses - Cost of services (excluding depreciation and impairment) rose by $22.0 million, or 4.2%, primarily due to lower government assistance and higher personnel costs[156] - Selling, general, and administrative expenses increased by $7.9 million, or 12.2%, attributed to higher professional fees and personnel costs[159] - Impairment losses increased by $2.1 million, or 163.2%, primarily due to property and equipment impairment at certain centers[160] - Cost of services (excluding depreciation and impairment) increased by $60.0 million, or 3.9%, mainly due to lower government assistance and higher personnel costs[169] - Selling, general, and administrative expenses decreased by $10.7 million, or 4.6%, primarily due to lower stock-based compensation and bonus expenses[171] Debt and Liquidity - The company had a total debt of $962.0 million under the First Lien Term Loan Facility and $262.5 million under the First Lien Revolving Credit Facility as of September 27, 2025[192] - The company expects to meet its liquidity requirements for at least the next 12 months through cash generated from operations and available borrowings[190] - The company had an available borrowing capacity of $194.4 million under the First Lien Revolving Credit Facility as of September 27, 2025[196] - Long-term debt obligations total $1.3 billion, with $39.2 million expected to be paid out for the remainder of fiscal 2025[208] Interest and Tax - Interest expense decreased by $15.4 million, or 38.9%, due to lower outstanding principal and interest rates following the repayment of the First Lien Term Loan Facility[161] - Interest expense decreased by $55.5 million, or 46.3%, due to lower outstanding principal and interest rates on the First Lien Term Loan Facility[173] - Effective tax rate for the nine months ended September 27, 2025, was 27.2%, compared to 31.7% for the same period in 2024[176] Cash Flow - Cash provided by operating activities increased by $77.5 million to $234.3 million for the nine months ended September 27, 2025, compared to $156.7 million for the same period in 2024[205] - Cash used in investing activities rose by $5.7 million to $114.4 million, driven by $7.0 million in increased acquisition payments and $2.7 million in higher capital expenditures[206] - Cash used in financing activities decreased by $59.7 million to $7.5 million, primarily due to a $55.7 million distribution to KC Parent in the prior period[207] Adjusted Metrics - Adjusted EBITDA for the nine months ended September 27, 2025, was $232.4 million, compared to $232.1 million for the same period in 2024[182] - Adjusted net income for the three months ended September 27, 2025, was $15,282,000, compared to $4,303,000 for the same period in 2024, representing a 254% increase[185] - Adjusted net income per common share (diluted) for the nine months ended September 27, 2025, was $0.58, up from $0.31 for the same period in 2024, reflecting an increase of 87%[185] Interest Rate Management - The interest rate on the First Lien Term Loan Facility was 7.04% as of September 27, 2025, with a weighted average interest rate of 7.41% for the nine months ended September 27, 2025[197] - The company entered into interest rate swap contracts totaling $1.3 billion to hedge against interest rate risk, with fixed rates ranging from 3.72% to 3.89%[217] Other Financial Information - The company recognized $0.7 million in COVID-19 Related Stimulus funding during the nine months ended September 27, 2025, compared to $16.9 million in the same period in 2024[147] - The company recognized $30.1 million in Employee Retention Credit (ERC) offsetting cost of services during the nine months ended September 27, 2025[191] - There were no impairments of goodwill during the three and nine months ended September 27, 2025, despite a decline in market capitalization[212] - The net changes in operating assets and liabilities resulted in a $49.8 million increase in cash, driven by timing of rent payments and changes in tax positions[205]