Greetings, welcome to the Bright Horizons Family Solutions first quarter 2023 earnings release conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Flanagan, Senior Director of Investor Relations. Please go ahead. Thanks, Stacy, and welcome to Bright Horizons first quarter earnings call. Before we begin, please note that today's call is being webcast, and a recording will be available under the Investor Relations section of our website, brighthorizons.com. As a reminder to participants, any forward-looking statements made on this call, including those regarding future business, financial performance, and outlook, are subject to the safe harbor statement included in our earnings release. Forward-looking statements inherently involve risks and uncertainties that may cause actual operating and financial results to differ materially and are described in detail in our 2022 Form 10-K and other SEC filings. Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statements. We also refer to the non-GAAP financial measures, which are detailed and reconciled to their GAAP counterparts in our earnings release, which is available under the IR section of our website. Joining me on today's call are Chief Executive Officer, Stephen Kramer, and our Chief Financial Officer, Elizabeth Boland. Stephen will start by reviewing our first quarter results and provide an update on the business. Elizabeth will follow with a more detailed review of the numbers before we open it up to your questions. With that, let me turn the call over to Stephen. Thanks, Mike. Welcome to everyone who has joined the call. I am very pleased with our performance in the first quarter. I delivered 20% year-over-year revenue growth with contributions from all of our segments. Our enrollment recovery continued to progress positively with notably strong performance in the U.S. and in our younger age groups. Back-Up Care delivered another outstanding quarter, building on the momentum of 2022. Traditional use increased significantly year-over-year, and the start of the year saw a healthy set of new clients launching Back-Up Care. We are off to a solid start to the year and well on our way to delivering on our 2023 full-year guidance. Revenue in the quarter increased 20% to $554 million, with adjusted net income of $28 million and A djusted EPS of $0.49. In our full-service childcare segment, revenue increased 22% in the first quarter to $430 million. We added six more organic centers. From a utilization standpoint, our progress within the cohorts we discussed with you last quarter is also heartening. 35% of our centers are now in the top cohort, defined as above 70% occupancy. This is up from 25% in this cohort in Q4. Encouragingly, less than 20% of our centers are now under 40% occupied. Enrollment in centers open for more than one year increased at a mid-single-digit rate this past quarter. Focusing on the U.S., year-over-year enrollment increased 9% in these like centers, and we continue to see improvements across all age groups and model types. Specifically, we saw low double-digit growth in the infant and toddler age groups and mid-single-digit growth in our preschool programs. We saw good consistency across center model types, realizing just over 10% growth in our leased consortium centers and high single-digit growth in our client centers. Consumer, energy, and tech again showed the fastest enrollment growth, while our higher ed, healthcare, and industrial clients continue to show the highest overall occupancy levels. Staffing remains a constraint to our full enrollment potential in many areas across the U.S., but we do continue to make incremental progress on the labor front. Staffing levels increased through the quarter as the expanded compensation investments we made last fall, along with the initiatives to streamline the recruitment and onboarding processes, continue to drive improvement in staff retention, applications, and hires. In the U.K., enrollment growth has trailed the U.S. recovery as staffing challenges constrain our ability to serve all families seeking care. The U.K. has seen more acute and persistent hiring gaps, which we expect will continue to challenge enrollment and operating performance for the remainder of the year. In the Netherlands, as we have talked about on previous calls, performance has been more consistent and contributory through the pandemic. Let me now turn to Back-Up Care, which kicked off 2023 with an exciting start. Revenue increased 19% over the prior year to $96 million, outpacing our expectations in the first quarter. We also continued to expand our client base with Q1 launches for Equifax, Loews Hotels, and The Ohio State University, to name a few. Traditional use again grew significantly year-over-year in Q1. We saw solid use growth in our Bright Horizons centers, extended network centers, and in home care, as well as in our newer academic tutoring and pet care offerings. Unique users showed strong growth as more employees took advantage of the expanding menu of offerings within the Back-Up Care benefit. I remain very excited about the opportunity in the Back-Up Care segment as we work to leverage our technology and marketing investments, innovative care types, and our ongoing success in adding new clients. Moving on to our education advisory business, which delivered revenue growth of 6% to $27 million. We launched a number of new clients for EdAssist and College Coach this quarter, including Arrow Electronics, Bank of New York Mellon, and Raytheon. We also saw a number of clients launch or expand their no-cost and direct bill certificate and degree programs in Q1. These programs, which saw strong growth in 2022, reduced the barriers to education and increased the overall participation in their employer's workforce education programs. I remain optimistic about our opportunity across education advisory, given our breadth of our client footprint, the strong underlying employer need for upskilling and reskilling, and the continued demand for college admission and financial aid supports. Before I wrap up, I want to take this opportunity to reflect on this year's Senior Leadership Forum. This conference brings together our top 100 field and corporate leaders to collaborate and explore opportunities for long-term growth. This year, we focused on four of our strategic assets: our global footprint, our trusted brand, our extensive client base, and our central focus on families and learners. It was a very energizing few days spent with this talented team and a great opportunity to welcome some new leaders to this strategic planning process while harnessing the unique perspective of our many long-tenured leaders. In closing, I am pleased with the strong start to 2023 as the key metrics of our business strengthen. Full service center enrollment, Back-Up Care use, and EdAssist participate use. While the global environment still has its challenges, I am encouraged by the ways our teams have adapted to employer client needs and expectations, while at the same time continuing to deliver the highest quality care and education to our families and learners. We are reaffirming our 2023 full year guidance, specifically revenue growth of 14%-19% to $2.3 billion-$2.4 billion, and Adjusted EPS of $2.80-$3.00 per share. The Q1 performance is a solid foundation to accomplish the goals we set for 2023. With that, I'll turn the call over to Elizabeth, who will dive into the quarterly numbers and share more details around our outlook. Thank you, Stephen, hello to everyone who's joined the call. To recap the first quarter, overall revenue increased 20% to $554 million. Adjusted operating income of $37 million or 7% of revenue increased 18% over Q1 of 2022, while Adjusted EBITDA of $70 million or 13% of revenue increased 11% over the prior year. We added six new centers and permanently closed eight centers in the quarter, ending at March 31st with 1,076 centers. To break this down a bit further, full service revenue increased $76 million to $430 million in Q1, or 22% over the prior year, ahead of our expectations for a 15%-20% increase. Organic constant currency revenue grew approximately 14%, driven by increased enrollment and pricing, while acquisitions added 10% or $34 million to revenue in the quarter. The foreign exchange headwind comparing Q1 of this year to Q1 of last year was in line with our expectation of 3% year-over-year. Enrollment in our centers open for more than one year increased mid-single digits across the portfolio. As Stephen mentioned, U.S. enrollment grew 9%, while our European operations were up only nominally. While average occupancy levels remain in the 65%-60% range in Q1, they did step up sequentially from Q4 of 2022 and in each of the months during Q1. Adjusted operating income of $10 million in the full service segment increased $3 million in Q1. The year-over-year improvement was driven by higher enrollment, the effect of tuition increases, and improving cost efficiency. Partially offsetting the earnings growth was the year-over-year impact of the teacher compensation investments we made in the fall of 2022, as well as the continued outside spend in our international operations on agency staffing and, to a lesser extent, energy costs. Support received from the ARPA government funding program was higher than we expected in Q1. We had projected that the $30 million of ARPA funding estimated for the full year 2023 would come in more evenly across Q1- Q3. We received $15 million in support in P&L centers in Q1. This was roughly $7 million more than we had anticipated for the quarter, but was also roughly $3 million less than last year. As a reminder, the ARPA program is set to expire on September 30th of this year, and funding disbursements have been tapering over the last couple of months. We estimate the remaining $15 million that we expect to receive will be split roughly evenly between Q2 and Q3. Turning to Back-Up Care revenue grew 19% in the first quarter to $96 million, ahead of our expectations for 12%-15% growth. As Stephen Kramer mentioned, we were pleased with the volume and breadth of use growth through the quarter, we attribute some of the higher than expected use to employees utilizing their baskets earlier in the calendar year than we had expected. Operating income of $22 million was 22.5% of revenue in line with our expectations for the quarter. Our educational advising group reported revenue growth of 6% to $27 million on expanded use of our workforce education and college admissions advising services, as well as from contributions from new clients who launched. Turning to a couple of the other items in the P&L and balance sheet. Interest expense totaled $11.5 million in the first quarter of 2023, excluding the million and a half dollars per quarter that relates to the deferred purchase price on our acquisition of Only About Children. This represents an increase of $4.5 million over 2022 on an overall increased borrowing and higher interest rates. The structural tax rate on our adjusted net income also increased to 28%, a 220 basis point uplift over Q1 of 2022. As it relates to the balance sheet and cash flow, for the quarter, we generated $67 million in cash from operations compared to $59 million in Q1 of 2022. We made fixed asset investments and acquisitions totaling $19 million compared to the $12 million we spent in Q1 of last year. We also paid down $40 million outstanding on our revolving credit facility. We ended the quarter with $45 million in cash and reduced our leverage ratio to 3x net debt to EBITDA. Moving on to our 2023 outlook. As Stephen previewed, we are maintaining our 2023 full-year guidance for revenue in a range of $2.3 billion-$2.4 billion and Adjusted EPS in the range of $2.80-$3.00 a share. In terms of segment revenue, we continue to expect full service to grow roughly 15%-20%, Back-Up Care to grow 12%-15% for the full year, and ed advisory to grow 10%-15%. As we outlined last quarter, there are three discrete items affecting our reported margins and earnings growth rates in 2023, specifically related to the ARPA funding, interest expense, and our tax rate. We continue to expect those items to account for roughly $0.60-$0.65 of headwind to growth for the full year, this reflects $30 million less in ARPA funding at P&L Centers, $12 million more in interest expense, and a 200 basis point increase to the tax rate. In our more immediate time frame, our outlook for Q2 is for revenue growth of 17%-21%, with full service revenue growth of 18%-22%, Back-Up of 15%-18%, and Ed Advisory of 5%-10%. We expect Q2 Adjusted EPS to be in the range of $0.57-$0.62. In terms of the discrete items I mentioned just above, we expect those items to account for roughly $0.17-$0.19 of headwind to the growth for Q2 on a year-over-year basis. This reflects $4 million more of interest expense, $9 million less in government support from the ARPA program, and approximately 200 basis point higher tax rate. With that, we are ready to go to Q&A. Stacy. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. First question comes from Andrew Steinerman with JP Morgan. Please go ahead. Hi, Elizabeth. Could you tell us how you expect full service utilization to trend in the second quarter and through the year to make the 2023 guide? Yeah. As we talked about on the call, first quarter started off solidly with mid-single digits, and that's what we expect to see continue in Q2 and for the rest of the year. Wouldn't you expect a step up in utilization, in the kind of September timeframe? There's the seasonality that does occur in the third quarter, so there's a little bit of that cycling that comes through as older preschoolers, graduate. Other than that, we would expect the sequential performance to continue, yes. Okay. Thank you very much. Next question, George Tong with Goldman Sachs. Please go ahead. Hi. Thanks. Good afternoon. You're continuing to see an enrollment recovery in your full service centers. Can you outline what the average occupancy rate percentage was in the quarter, where you expect to end the year, and when you expect to get back to pre-COVID occupancy rates of 70%-80%? As we outlined, the overall occupancy level in centers that have been open for more than a year is in the range of 55%-60%. It has stepped up from where we ended the year, Q4 of last year, and it's improved over Q1 of the prior year. Sequential improvement, year-over-year improvement. You know, getting obviously if we're in 55%-60% range and we're improving, we're getting closer to that 60% threshold, which we would be expecting to see by the end of the year. As it relates to the profitability of the centers, I think it is an important call-out that we're averaging a lot of variability in performance. We are really pleased to see that the centers that we, as a reminder, we've isolated some cohorts of performance on the last couple of calls. In the group of centers that are operating at more than 70% occupied, as a threshold, as you mentioned, getting back to pre-COVID levels, that 70%-80% range is where we've targeted getting back to. In that group, where about 25% of our centers were in that grouping at the end of last year, in the last half of last year. 35% of those centers are above 70% occupied. Good progress from the middle group. The group in the 40%-70% range continues to hold steady. Some of those have moved in the top, into the top cohort. We are making progress on the lowest performing group, which is under 40% enrolled. Those had been about 20% or so of the overall mix, and they are now less than 20% in the, you know, sort of mid to high teens of the overall, of the overall group. Those centers, that's just a little bit of framing for how the centers are performing. Going back to the top performers, those that are above 70%, they are really on a pretty strong march to pre-COVID operating margins by the end of this year, really. The mid group, those that are in the 40%-70% occupied are improving. The occupancy level is improving and their margins are improving, but we would expect them to be back at pre-COVID levels in 2024, mid-2024. They would need 1 more pricing cycle. Then the lower performing group will be later than that. I expect it'll be 2025 before that group is either, you know, back to that level and overall mix, and the overall mix is able to absorb that. Got it. Very helpful. As a follow-up, you mentioned the staffing levels are starting to normalize. Can you elaborate on what you're seeing on the labor front? How much of a headwind, if any, it's presenting to your current occupancy rates, and what kind of staffing levels you're assuming in your full year guide? Yeah. I think when we think about the progress that we're making from a staffing perspective, we're focused on continuing to see improvement on the net hire front. For us, that starts with retention. I think we shared at the end of last year that we had returned to 2019 retention levels. What we would say is that in this first quarter, we have actually eclipsed that. We are doing better from a retention standpoint than we saw even in 2019. In addition to that, we're seeing good job seekers and ultimately a nice uplift as it relates to applications that, again, are driving towards new hires. The combination of better retention and new hires is helping us to get back to that cadence where we are going to approach pre-COVID levels of staffing. Again, when we think about what it's gonna require, I think Elizabeth highlighted here in the U.S., we are definitely closer to getting back to what that pre-COVID enrollment and ultimately staffing looks like. In the U.K., we are a bit further back on the curve, seeing more labor shortages. Got it. Very helpful. Thank you. Thank you. Next question, Manav Patnaik with Barclays. Please go ahead. Yeah. Hi, good evening. If you could just tell us how you're thinking about, just remind us of the seasonality, I guess, for the rest of the year. The question just being, you know, you obviously had a solid start to the year, you know, probably gives you a little bit more visibility, but just, you know, just curious why you didn't, you know, change the guidance accordingly? Why we didn't change the guidance for the rest of the year? you mean in terms of the Yeah. Correct. The occupancy? Yes. Well, as I say, Manav, I'll start and Elizabeth can add color. You know, the quarter, you know, we saw enrollment step up sequentially in Q1. You know, it was a little bit better than we had expected. As we think about seasonality for the rest of the year, we'd expect, you know, enrollment and occupancy to step up again sequentially into 2Q. You know, going into the third quarter, we've talked about in the past, you saw last year, we have these older kids, preschool kids that cycle through and age up and out, and we backfill as many as we can. You know, occupancy and enrollment typically falls sequentially from 2Q to 3Q, and we would expect that this year. The fourth quarter is typically the moment in occupancy is, you know, flat to slightly positive sequentially in the fourth quarter. That's how we entered the year, and that's kind of still how we see the year unfolding around enrollment and occupancy seasonality this year. Got it. Okay. Then, Elizabeth, could you help us with the, you know, operating margins by segment for the second quarter? I'm guessing the full year numbers you helped us with last quarter are unchanged. We're just hoping for what 2Q should look like. you know, from a full service standpoint, I think the start to the year, the 2.5% or so adjusted operating margin, we have some expectation for sequential improvement to that. Since it's low to mid-single digits for the full year, it won't be a significant change, but progress quarter-over-quarter, and that's inclusive of some of the challenges that we talked about in the prepared remarks about the ARPA funding being about $8 million less than Q1. You know, that's 200 basis points. And just the more challenging performance in the U.K., as an example that we don't expect will be adding much momentum to the Q1- Q2 performance. Improvement in bright spots in a number of places and seeing it sequentially improve, but that would be still in the low to mid-single digits in Q2. The Back-Up Group continuing in the pace that we saw this quarter, 20%-25% operating margin. Seeing, you know, seeing that consistency because of the mix of use there that includes, you know, essentially just by having more use that we're providing care for and paying provider fees that we would have, the consistency of that 20%-25% and improving margin, as the second half comes along, and that's what gets us to the 25%-28% for the full year. In the ed advising business, you know, carrying, pretty consistent operating margin in the mid-to-high teens. Thank you very much. Thank you. Next question, Toni Kaplan with Morgan Stanley. Please go ahead. Hi there. Actually sort of a follow-up on the last one. The full service margin, I guess, ex the ARPA funding looked at like it actually got a little bit worse, just if, you know, given that you got sort of the $15 million of ARPA. Like, I guess, should we be thinking? Like, I thought the revenue growth actually this quarter, you know, was good. I just having a little trouble reconciling that. You're talking about Q1's performance, Toni? Yeah. Yeah. Thank you. A couple of things affecting Q1, which are from the revenue growth standpoint and not converting as much. The wage investment is still being absorbed. We also have having mentioned the U.K.'s performance, it is weaker than what we would've seen historically. That's a bit of a headwind. I think the other slight nuance to the results this year is that we having acquired the Australian business, they are actually in their summer season in the first quarter. Their performance is they accelerate more in their winter, which is over our summer. That is not a contributor in terms of their revenue contribution doesn't convert much to the margin there. That would be another reason why you see the revenue growth, with a little bit, weaker conversion on the operating side. I'll just add, we talked about a little bit in the prepared remarks, Toni, but, you know, the, we saw faster growth in the younger age groups, the infant and toddlers in particular, and also our client centers were strong. That both year-over-year and sequential growth in those two groups, it doesn't add as much on the margin side as you may otherwise see. Yeah. Okay. They're a challenge, but a good thing for the overall business. Yep. Yep. Wanted to ask my follow-up on sort of the pipeline of new centers. It sounds like there were a couple of names that you mentioned signed this quarter, but just wanted to understand the pipeline now versus, you know, maybe a year ago or even a quarter ago. Just any sort of reference points you can provide. Sure. Toni, what I would say is, the pipeline continues to strengthen. I think you would note that, you know, employer-sponsored child care continues to, you know, have a lot of press, right? If you think about the CARES Act, you think about, you know, the government and all of the talk around the importance of employers getting involved in child care. I think there has been certainly a renaissance or an awakening among employers, that there is an increasing tightening in the market, for their employees to be able to find care. They're hearing it from their employees directly. I think that from a pipeline perspective, we feel really good that there continues to be growth in the pipeline, especially in industries like healthcare, and more industrial distribution, supply chain, manufacturing, those kinds of industries. What I would say is that certainly, the process is a longer arc as we've always talked about. you know, the decision-making does take time. It requires, you know, space and capital and a long-term commitment. But again, I think overall we feel good about where we sit from employer receptivity to employer-sponsored care. Thanks a lot. Thank you. Next question, Stephanie Moore with Jefferies. Please go ahead. Good afternoon, this is Harold Antor on for Stephanie Moore. Just wanted to get an update on the current pricing environment. What are pricing expectations for this year, and have you received any pushback on pricing so far? We have done most of our price increases as of the January cycling and have on average in the 6%-7% range this year. Obviously, it's a fairly strong inflationary environment. We have been looking to balance the efforts that we have to get enrollment and keeping the care as affordable as possible for as many parents as possible, while recognizing that we have seen a pretty substantial uptick in our own cost structure with, particularly with the wage investments we've made. We've taken a view that's local, that's an average 6%-7%, but we do vary that locally and have had, I think, good understanding, receptivity. I don't know that anyone loves the price increase, but I think we've had pretty good reception from the parent base on that, those decisions. I think that the opportunity is playing itself forward, and it I think also sets us up for and also a meaningful ability to have an increase next year that continues to allow us to make progress on those center economics recovery to pre-COVID levels. Thank you for the color. I guess another question would just be on, like, cross-sell, upsell opportunities. Like, how many of your full service customers are also Back-Up Care customers or using EdAssist or the College Coach? Thank you. Yeah. Certainly we have highlighted the fact that we believe there's a lot of opportunity in our overall client base to continue to cross-sell and upsell. I would say it goes in all of the directions, right? We have center clients that are picking up Back-Up. We have Back-Up clients that are picking up centers. Certainly, as we have said before, many clients start with an advisory and then end up purchasing another service from Bright Horizons. Yeah. Yeah. I'd say I think it's a little above a third, maybe a little north of a third of our full service clients would look to buy Back-Up Care. We have higher attach rates with, you know, Back-Up Care and Ed and the full service as well. That's where it stands currently. Thank you. Next question, Jeff Silber with BMO Capital Markets. Please go ahead. Hey, Ryan on for Jeff. We've seen some headline proposals including the CHIPS Act requiring subsidies for childcare and then, some free childcare proposals in the U.K. as well. While they're just proposals and I would assume it would take some time to shake out even if they were passed, can you parse through how these might impact your business? Sure. I think first, it has brought to the forefront, right? All of these legislative pieces have brought to the forefront the importance of employers getting involved in childcare. Clearly the CHIPS Act is very specific about it in that, those who are gonna take advantage of government subsidies from a semiconductor perspective, are expected to provide childcare. We are in the early days of educating these companies to the extent that they don't already offer childcare and/or are opening new plants. We are educating them about exactly the best ways to do that and what the expectations are likely to be from the government. We see that as certainly a nice longer term tailwind and something that we are out in front of with the market. Got it. Anything on the U.K. proposals? U.K. Well, yeah. I think the U.K. Look, the new government in the U.K. is next year, right? I think that there'll be a lot of conversations in the meantime about all the different proposals. You know, it's hard to know exactly where they're gonna land. I think the U.K. has, for, you know, a long time been very focused on subsidy for the older children in our care. Broadly, the, you know, three to five year olds have gotten good subsidy from the government or parents, who've gotten good subsidy from the government. Whether that goes, you know, deeper in age group, whether the subsidies become more significant in nature, is yet to be seen. Certainly there's a nice track record in the U.K., and it's one of the reasons why it's a great market for us long term. Thank you. Just one follow-up. Over the past few years, we've seen some parents, entertain a greater preference for retail-based centers closer to their homes. Do you think as the office occupancy rates continue to creep up, you could start to recoup some market share from the retail centers? If so, how long do you think it might take for parents to reevaluate their center preferences and make the switch if so? Yeah. I think, first I would start by saying, you know, since the earliest in terms of our reopenings in the pandemic, our client centers have typically been more highly enrolled than our lease consortium centers. The reality for us is that there is a real value proposition for families related to the on-site centers. We see scenarios where people are choosing to go back to work or go back to office rather, because that is the place they think of as the place that they can get a high-quality, affordable opportunity for their child to go to a center. In addition to that, we have examples where families actually drive, drop their children off at the child care center at the workplace, and then work from home on certain days. Generally what we find is in all of these cases, the on-site center is relatively proximate to where someone lives and works, and so it's a really great option for them. I think for us, we just continue to move the ball forward across all of our model types, and making sure that we're delivering great value, for those who we're caring for and continue to focus on the quality of our delivery. Next question, Jeff Meuler with Baird. Please go ahead. Yeah, thank you. Good evening. I wanna follow up on Manav's first question about why you're not raising guidance or narrowing the range or something on what looks like a really good quarter that might be a positive inflection. I guess I'm just trying to understand, is it legitimately just in line with your expectations or maybe a little bit better, and maybe we mismodeled around comping against Omicron headwinds or something like that? Is it that it's better, but hey, it's been a long few years and it's a really choppy macro still, so let's not get ahead of ourselves, maybe the guidance is de-risked? Is it that there's some sort of, like, specific offset, whether that's the U.K. challenges or, I don't know, more white-collar layoffs at some clients? I'm just. I'm not really understanding the guidance in the context of the Q1 performance, and the prior answer didn't fully connect it for me. Thank you. Well, I'll start, I guess, with a maybe just a clarification. The previous guidance on the ARPA funding was $30 million for the year, of which $8 million would be in Q1, and we had $15 million in Q1. That was $0.08. You know, we outperformed certainly the, you know, we're pleased with the earnings performance, but $0.08 of that against where we had guided from a range standpoint is attributable to the timing of the ARPA funding. That really hasn't shifted the underlying fundamentals. That said, coming on quarter, you know, certainly a couple of cents of outperformance. We outperformed revenue, outperformed earnings. Some good indicators on both the backup use side and on the enrollment trends. They are both, you know... The summer season is coming, and it's an important one with, you know, some delivery, I think some more visibility into the delivery on the scale and consumption of Back-Up Care over the summer. On the conversion of enrollment, the comment came through, but we did have, you know, a little bit more cyclical seasonality than we had anticipated last year. We have a good mix coming into the summer with slightly more infants and toddlers than we had last year, and so we feel like we've got that visibility. There are... You know, there are some uncertainties in the market still, with the economy where it is, and I think we wanna see continued progress, Jeff, against what we feel good about, and appreciate you recognizing the opportunity that's there. I think that's how we say we're looking at it as. You framed it right. It's optimistic, but there are some challenges ahead. Stephen, I don't know if there's anything else you'd. I mean, I think I would just underscore the, I think it was your middle point, Jeff, which is, you know, we are really pleased with the way the year started, right? I think we shouldn't get lost in the detail around the fact that we are pleased with the way the year started. I think that we do want things to play forward. We do wanna make sure that we're taking into consideration, you know, all of the positives as well as some of the headwinds that we outlined, right? I think we feel really good about the way enrollment's coming back. We feel really good about the way Back-Up Care use came in, and advisory is on plan. I would say that, you know, the U.K. is something that we called out on this call. It's something that is certainly, you know, on the challenging side. On the other hand, you know, within the total, I think that we were very capable of absorbing that this quarter. Wanna make sure that we're not getting ahead of our skis and make sure that we're giving ourselves the appropriate amount of runway to have a really successful year. I think reaffirming for the full year is something that we feel good about. We feel good about the quarter. You know, appreciate your sort of upfront compliment. Awesome. Just on the summer and fall seasonal churn, are you seeing any forward signs that you could have a repeat of last year? Just how much forward visibility do you have? As we get to what month will you know with high confidence what the churn's going to seasonally look like then? Well, as you can imagine, the visibility forward is reasonably good for 2 to 3 months. Parent interest generally is you get the longest lead time with infants. I think as it stands, as it relates to the churn for summertime, it can vary. I think that last summer, I think that our expectation around the age ups and the sort of infilling into the preschool rooms didn't hit the mark as it needed to. We do have, you know, we do have a lot of eyes on this and vigilance. We are not only looking to monitor closely, but ensure that we are clear on where we have leavers so we can be filling those spaces with starters. I think that the You know, when we will know how the fall churn actually plays out, you know, when we're talking to you this time, next quarter is when we will have a reasonably good visibility for that. It will be, it can be kind of variable over the summer, but generally, we have visibility a few months into the, you know, into the future. Okay, thank you. Once again, if you would like to ask a question, please press star one on your telephone keypad. Your next question comes from Faiza Alwy with Deutsche Bank. Please go ahead. Yes. Hi, thank you. I guess first just wanted to clarify, you know, you talked about mid-single-digit growth occupancy. How is that relative to prior years? Just want to clarify, is that on a year-over-year basis, or were you talking about sequential seasonality from 4Q into 1Q? Well, you know, I'd say for the year, we're talking about, you know, mid-single digit. Overall enrollment. ... overall enrollment growth, you know, mid- to high single-digit or overall year-over-year enrollment growth. I'd say historically, you know, you wouldn't be looking at that normally, you know, in pre-COVID, you know, when our centers were mature and full, you'd be looking at more of a low single-digit, 3%-4% type, 3%-ish type year-over-year enrollment growth. No. Across all the centers, including more centers ramping up. So fully mature centers would be growing more or less 1%. Sure. Yes. so certainly much better as we're rebuilding and we're starting from, you know, 55%-60% occupancy versus, you know, pre-COVID, you'd be at that 70%-80% range. It's a lower starting point. Great. Thank you. Then if you could just help with, you know, a few housekeeping things in terms of, you know, how much did the acquisition in Australia contribute? Sorry if I missed this in the prepared remarks. I think that would be helpful. Then I know on the government funding, there's a revenue contra revenue component and an operating profit component. I'm just trying to back into, you know, organic growth ex the funding and ex, you know, any acquisitions. If you could help us with those two impacts on the top line, that would be really helpful. Yeah. The acquisitions contributed about $34 million to the quarter. The vast majority of that was the Australia acquisition. That was the contribution to the revenue. Overall, there was about a $3 million headwind on revenue growth for the ARPA funding that contributed to against as a contra against the revenue. The P&L centers where we are able to offset costs for the funding was about $15 million of cost reduction in the quarter. Great. Thank you. And then just one last one, you know, on capital allocation. You mentioned that you paid down some debt. I'm curious, you know, what your approach is towards capital allocation. Should we expect more sort of debt pay downs? I believe in 4Q, there's a cash payment that's due for the Australia acquisition if it meets certain criteria. Curious how that's trending relative to, you know, what those benchmarks might be. Is there an expectation that you'll be making that payment? Our focus now is on revolver pay down. We ended the quarter with just over $40 million on the revolver, so we're focused on paying down the revolver. We've got really favorably priced debt, so I think it would be, you know, that would be not on the immediate term to pay down that very favorable, favorably priced debt. We do have two things in that you cite. One is just the ongoing, you know, where is the capital allocation between now and the end of the year when that's the payment for the deferred payment for Australia is due at the end of the year. There aren't any criteria for it. It was simply an agreed deferral of timing of the payment. That will be just over $100 million that will be due at the end of this year. We are building cash for that. We are also making selective investments both in the existing business to refurbish and freshen up the center portfolio that we have and also to invest in new centers. We have a number of lease models that we are opening this year. We continue to look for quality acquisitions to round out our growth strategy. Are executing on some of those this year. There will be some capital deployment for that, in the interval between now and the end of the year when we have the deferred payment due. At this time, we're not looking at a share buyback in the near term. Excellent. Thank you so much. Next question, Tom Singlehurst with Citi. Please go ahead. Okay. Good evening. It's Tom here from Citi. Thank you very much for taking the question. Bit of a relief not to be talking about AI, unless you want to make any comments. One of the questions I had was on some of the sort of government support falling out towards the end of the year and the impact you anticipate this will have on the competitive landscape. I was just wondering whether you think I mean, obviously, that's bad news in terms of support, but I wonder whether you think that might result in some capacity coming out of the market more broadly, especially among smaller players. That was my question. Thank you. Sure. Thank you. Thank you for the question. Yes. Just to clarify, the expectation is that come September, the ARPA program is gonna sunset, and the funding will have been distributed. Again, there are some programs that are in place, but again, much more focused as they historically have been on families that are most disadvantaged and providers that serve, you know, that constituent. What we would say is that, you know, we obviously have been very disciplined about pushing price and also really thinking about our center economics in a post-ARPA world. What we have seen in the marketplace is mixed as it relates to that. I think there are a number of providers that have not prepared their cost structures and/or their pricing strategy reflective of ARPA coming out of the market. we, as well as the market in general, believes that there is the potential for a second wave. We saw a wave of about 15%-20% of centers who came out of the market early in COVID. There is an expectation that there may be another wave, come the fall, winter and into next year, where providers just aren't able to cope with, the price cost structure that they have against the tuitions that they charge. Two responses, right? One is that they could significantly increase their tuitions all at once, with the hope of getting to a place that's more economic. The second is that there may be, some providers that simply decide that they either need to sell or close, in which case there would be a contraction in, the overall, number of centers in the country. I think, you know, what you implied in your question, and I'm saying directly, is that, there is certainly gonna be some level of, right-sizing around pricing and/or, the number of centers that are able to, ultimately, work in the new environment come this fall, winter and into next year. That's very clear. Thank you very much. Thank you. Okay. Well, thank you all very much for joining the call. Appreciate the thoughtful questions, and wishing you all a good night. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.