Bright Horizons Family Solutions(US:BFAM)2019-05-01 01:03Financial Data and Key Metrics Changes - The company reported a topline growth of 8% to $502 million and adjusted EPS of $0.81, an increase of 13% [5][17] - Adjusted operating income expanded by 60 basis points, reflecting strong operating results [9][20] - Gross profit increased by $13.4 million to $127 million, representing 25.3% of revenue [20] Business Line Data and Key Metrics Changes - Full service center revenue grew by 6.5% or $26 million, driven by rate increases, enrollment gains, and contributions from newer centers [18] - Backup operations generated 18% topline growth, aided by new client launches and strong utilization from existing clients [19] - Education advisory services grew by 15% due to new client launches and expanded use by the existing base [20] Market Data and Key Metrics Changes - The company operates 1,079 centers with the capacity to serve 120,000 children and partners with over 1,150 clients [24] - The backup division is projected to grow in the range of 16% to 18% in 2019, including contributions from the My Family Care acquisition [25] Company Strategy and Development Direction - The company focuses on organic growth by cultivating new clients and expanding existing client relationships through cross-selling [10] - The strategy includes opening approximately 50 new centers and closing 20 to 25 underperforming centers [26] - M&A remains a key element of the growth plan, with a solid pipeline of acquisition prospects [13] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued strong performance with revenue growth in the range of 8% to 10% for the full year [17] - The company is optimistic about the market opportunity and its capabilities to assist leading employers [14] - Management noted that the tight labor market is beneficial for their services, although decisions for onsite childcare centers are long-term [45] Other Important Information - The company has been named one of Fortune Magazine's 100 Best Companies to Work For for the 18th time, emphasizing its commitment to employee culture [15] - The structural tax rate for 2019 is projected to be around 23.5% to 24% [29] Q&A Session Summary Question: Growth potential in the full center market - Management sees opportunities for growth from both cross-selling and new clients, estimating about 14,000 work sites in the U.S. that could benefit from onsite childcare [33][34] Question: Operating margins in the second quarter - Management expects operating margins to improve modestly as the year progresses, with a full-year guidance of 50 to 100 basis points [37] Question: Addressable market and acquisition strategy - Management acknowledges the large addressable market but notes that the decision-making process for employers is complex and lengthy [41][42] Question: Impact of the tight labor market - Management agrees that the tight labor market creates demand for their services, but decisions for onsite centers are long-term investments [45] Question: Client retention and attrition - The company boasts a high retention rate of 97%, with attrition typically occurring due to client mergers and consolidations [82] Question: Impact of college admissions scandal - Management believes the scandal has increased recognition of the value of ethical college admissions advice, which could benefit their advisory services [86]