Bright Horizons Family Solutions(US:BFAM)2025-10-30 22:00Financial Data and Key Metrics Changes - Revenue increased by 12% to $803 million, with adjusted EPS growing by 41% to $1.57, both exceeding expectations [4][12] - Adjusted operating income rose by 39% to $124 million, with operating margins up approximately 300 basis points to 15.5% [12] - Adjusted EBITDA increased by 29% to $156 million, representing an adjusted EBITDA margin of 19% [12] Business Line Data and Key Metrics Changes - Backup Care revenue grew by 26% to $253 million, driven by strong demand during the peak summer season [4][13] - Full-service revenue increased by 6% to $516 million, supported by enrollment growth, tuition increases, and new center openings [7][14] - Education advisory revenue grew by 10% to $34 million, led by the strength of College Coach and an expanded participant base in EdAssist [9][15] Market Data and Key Metrics Changes - Enrollment in centers open for more than one year increased at a low single-digit rate, with average occupancy in the mid-60% range [7][14] - UK full-service business showed enrollment growth and improved demand among working families, contributing positively to the overall segment [8][68] Company Strategy and Development Direction - The company aims to build a more integrated model that aligns delivery, technology, and client partnerships, with Backup Care as a cornerstone of this strategy [11] - Plans to continue investing in Backup Care to expand capacity and deepen personalization, reinforcing its value proposition [6][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to sustain growth in Backup Care, projecting an 18% growth for the year, with expectations for low double-digit growth in the following year [20][22] - The company is upgrading its full-year earnings guidance, expecting revenue of approximately $2.925 billion and adjusted EPS in the range of $4.48 to $4.53 [11][17] Other Important Information - The UK segment is expected to contribute modestly positive earnings in 2025, with ongoing improvements in operational performance [8][68] - The company has generated $203 million in cash from operations and repurchased $105 million of stock [16] Q&A Session Summary Question: Sustainability of Backup Care growth rates - Management noted that while current growth is strong, they expect to return to a sustainable growth rate of 11% to 13% in the following year [20][22] Question: Clarification on enrollment growth - Management indicated that enrollment growth is expected to taper to around 1% for the year, with low single-digit growth being a temporary measure [26][27] Question: Impact of economic conditions on tuition pricing - The company plans to implement an average tuition increase of around 4%, with localized pricing strategies based on demand [33][72] Question: Performance of the UK segment - The UK segment is improving and is expected to contribute positively to margins, although it still trails behind the US business [68] Question: Pricing strategy in relation to wage inflation - Management expressed confidence in maintaining a pricing strategy that outpaces wage inflation, targeting a 100 basis point spread [71][72] Question: Net center openings for next year - The company anticipates being a net closer of centers, with plans to close 5 to 10 centers due to underperformance [74][76]