Bright Horizons Family Solutions(BFAM) - 2020 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported revenue of $338 million for Q3 2020, a decline of 34$0.02 per share [8] - Adjusted operating income declined to a loss of $3 million, with adjusted EBITDA at$30 million, representing 9% of revenue [30] Business Line Data and Key Metrics Changes - Full-service segment revenue contracted by $191 million, approximately 46$57 million [31][32] - Back-Up Care revenue grew by 16% to $93 million, with operating income of$46 million, driven by increased client engagement and new client additions [32][17] - The Ed Advisory business continued to perform well, with expectations for similar results in Q4 as seen in Q3 [44] Market Data and Key Metrics Changes - Approximately 900 centers were open by the end of Q3, representing nearly 90% of the total portfolio [13] - Enrollment in reopened centers was reported to be between 20% and 60%, with an average utilization rate of 35% to 40% [54][55] Company Strategy and Development Direction - The company is focusing on re-enrollment of previously enrolled families, followed by wait-listed families, and finally new families [14][91] - There is a strong emphasis on maintaining and deepening relationships with employer clients, which has been a key factor in navigating the pandemic [24][28] - The company plans to continue phasing in center reopenings in collaboration with client partners, supported by demand surveys [40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery trajectory, noting that families are eager to return to centers due to the company's health and safety practices [15][28] - The company anticipates that full-service revenue will trail 2019 levels by approximately 35% to 45% in Q4, with a similar flow-through to operating income [41] - Management highlighted the importance of employer support in the recovery and the potential for long-term growth opportunities in the child care sector [28][60] Other Important Information - The company generated $170 million in cash from operations year-to-date, with$120 million generated in Q3 [36][100] - The company ended Q3 with $365 million in cash and no outstanding borrowings on its$400 million revolver [36] Q&A Session Summary Question: What characteristics are being evaluated for the centers that were closed? - Management indicated that closures were based on financial performance and overlap in the portfolio, focusing on smaller, lower-performing centers [48][49] Question: How is the utilization rate for open full-service centers? - The utilization rate is between 20% and 60%, with an average of 35% to 40% [54][55] Question: What is the growth contribution from new versus existing customers in the Back-Up Care business? - Approximately 100 new clients were added this year, contributing to growth, but a significant portion of growth is also attributed to increased usage due to COVID-19 [66][68] Question: How are clients approaching benefit commitments for 2021? - Renewal rates are high, with clients returning to traditional use banks while reserving the right to increase usage if necessary [77] Question: What is the risk of reclosure for centers? - Management does not foresee a scenario where full centers would close again, as child care is considered essential [81][82]