Operational Performance - As of September 28, 2024, KinderCare Learning Companies operated 1,573 early childhood education centers with a capacity for 210,972 children, an increase from 1,551 centers and 211,164 capacity as of September 30, 2023[165][173]. - Average weekly ECE full-time enrollment (FTEs) for the three months ended September 28, 2024 was 143,298, reflecting an increase of 955 FTEs or 0.7% compared to the same period in 2023[177][178]. - Total before- and after-school sites increased to 1,018 as of September 28, 2024, up from 941 sites as of September 30, 2023, representing a growth of 77 sites[174]. - Total centers and sites reached 2,591 as of September 28, 2024, an increase from 2,505 as of December 30, 2023, driven by acquisitions and new openings[173]. Revenue Growth - ECE same-center revenue increased by $68.9 million, or 12.6%, for the three months ended September 28, 2024, totaling $616.7 million compared to $547.8 million in the same period of 2023[183]. - Subsidy revenue from government agencies was $242.6 million for the three months ended September 28, 2024, compared to $201.4 million for the same period in 2023, marking an increase of 20.5%[187]. - Revenue from early childhood education centers increased by $40.5 million, or 6.9%, for the three months ended September 28, 2024, driven by higher tuition rates and increased enrollment[206]. - ECE same-center revenue for the nine months ended September 28, 2024 increased by $188.2 million, or 11.3%, totaling $1.85 billion compared to $1.66 billion for the same period in 2023[185]. - Total revenue increased by $47.0 million, or 7.5%, for the three months ended September 28, 2024, compared to the same period in 2023[205]. - Revenue from before- and after-school sites increased by $6.5 million, or 16.8%, for the three months ended September 28, 2024 compared to the same period in 2023[208]. - Total revenue increased by $123.9 million, or 6.5%, for the nine months ended September 28, 2024 compared to the same period in 2023[218]. - Revenue from early childhood education centers increased by $98.1 million, or 5.5%, for the nine months ended September 28, 2024, with approximately 5% attributed to higher tuition rates[219]. Cost and Expenses - Cost of services (excluding depreciation and impairment) for the three months ended September 28, 2024, was $521.1 million, representing 77.6% of revenue, compared to $468.4 million, or 75.0%, in the same period of 2023[203]. - Total costs and expenses for the nine months ended September 28, 2024, were $1.85 billion, or 91.6% of revenue, compared to $1.67 billion, or 88.0%, in the same period of 2023[203]. - Cost of services (excluding depreciation and impairment) increased by $161.5 million, or 11.9%, for the nine months ended September 28, 2024 compared to the same period in 2023[222]. - Selling, general, and administrative expenses increased by $13.6 million, or 6.1%, for the nine months ended September 28, 2024 compared to the same period in 2023[227]. Income and Profitability - Income from operations for the three months ended September 28, 2024, was $54.4 million, or 8.1% of revenue, down from $58.7 million, or 9.4%, in the same period of 2023[203]. - Net income for the three months ended September 28, 2024, was $14.0 million, or 2.1% of revenue, compared to $16.0 million, or 2.6%, in the same period of 2023[203]. - Net income for the nine months ended September 28, 2024, was $40.7 million, or 2.0% of revenue, down from $87.7 million, or 4.6%, in the same period of 2023[203]. - Adjusted EBITDA for the three months ended September 28, 2024, was $71,356 million, compared to $57,019 million for the same period in 2023, reflecting an increase of approximately 25.2%[240]. - Adjusted net income for the three months ended September 28, 2024, was $4,303 million, compared to a loss of $3,431 million for the same period in 2023, indicating a significant turnaround[243]. - Basic net income per common share for the three months ended September 28, 2024, was $0.15, down from $0.18 in the same period of 2023[243]. Debt and Liquidity - As of September 28, 2024, the company had a total debt of $1,590 million under the First Lien Term Loan Facility and a $160 million First Lien Revolving Credit Facility[250]. - The company expects to meet its liquidity requirements for at least the next 12 months through cash generated from operations and available borrowings[249]. - The company has long-term debt obligations, including interest, of $2.5 billion, with $1.7 billion due after June 2030 when the First Lien Term Loan Facility matures[270]. - The company repaid $608.0 million of outstanding principal on the First Lien Term Loan Facility, reducing the principal balance to $966.8 million[256]. - As of September 28, 2024, cash provided by operating activities was $156.736 million, a decrease of $151.0 million compared to $307.764 million for the nine months ended September 30, 2023[265]. - Cash used in financing activities decreased by $60.7 million to $67.112 million for the nine months ended September 28, 2024, primarily due to proceeds from an incremental first lien term loan[268]. Interest and Tax - Interest expense increased by $5.4 million, or 4.8%, for the nine months ended September 28, 2024 compared to the same period in 2023[229]. - Interest income increased by $1.0 million, or 24.3%, for the nine months ended September 28, 2024 compared to the same period in 2023[230]. - Income tax expense decreased by $11.5 million for the nine months ended September 28, 2024 compared to the same period in 2023[233]. Other Financial Information - The company recognized $14.3 million in one-time expenses related to advance distributions to Class B PIU Recipients in March 2024[244]. - COVID-19 Related Stimulus recognized during the nine months ended September 28, 2024, included $55.9 million in funding for reimbursement of center operating expenses[246]. - Other (income) expense, net increased by $4.0 million, or 231.7%, for the nine months ended September 28, 2024 compared to the same period in 2023[231]. - The amendment to the Credit Agreement in March 2024 increased required quarterly principal payments on the First Lien Term Loan Facility to $4 million from $3.3 million[251]. - As of September 28, 2024, the company had cash, cash equivalents, and restricted cash totaling $137.334 million, down from $188.905 million at the end of the prior year[265]. - The company entered into interest rate swaps with a total notional amount of $800.0 million to hedge interest rate risk on a portion of its variable debt[279]. - As of September 28, 2024, the company was in compliance with all covenants of the Credit Agreement[261].
Kindercare Learning Companies, Inc.(KLC) - 2024 Q3 - Quarterly Report