Good afternoon, ladies and gentlemen, and welcome to the KinderCare Third Quarter 2025 Earnings Conference Call. At this time, all lines are in listen-only mode, and following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, November 12th, 2025. I'm now extending the call over to Ms. Olivia Kirrer. Please go ahead. Thank you, and good evening, everyone. Welcome to KinderCare's Third Quarter Earnings Call. Joining me from the company are Chief Executive Officer Paul Thompson and Chief Financial Officer Tony Amandi. Following Paul and Tony's comments today, we will have a question-and-answer session. During this call, we will be discussing non-GAAP financial measures. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available in our earnings release, which is posted on our investor relations website at investors.kindercare.com under the Financials tab, and finally, a reminder that certain statements made today may be forward-looking statements. These statements are made based upon management's current expectations and beliefs concerning future events impacting the company and involve a number of uncertainties and risks, which are explained in detail in the risk factor section of our most recent annual report on Form 10-K and other filings with the SEC. Please refer to these filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements. The actual results of operations or financial condition of the company could differ materially from those expressed or implied in our forward-looking statements. All forward-looking statements are made as of today, and except as required by law, KinderCare undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments, or otherwise. I would also like to mention, for interested parties, our executives will be participating in upcoming fireside chats over the next few weeks, which will be publicly accessible on our investor relations website under the News and Events tab. And with that, I'd like to turn the call over to Chief Executive Officer Paul Thompson. Thank you, Olivia, and welcome to everyone on the call with us today. In the third quarter, we saw success across our B2B and portfolio growth levers. Revenue was $677 million, up nearly 1% from last year, with same-center revenue of $617 million. The softness we anticipated in organic growth continued, resulting in same-center occupancy of 67%, at the lower end of our expected range. Remember, Q3 is typically our lowest quarter due to summer seasonality. When thinking about our current occupancy, it's important to note that our top three quintiles, which are roughly 960 early childhood education centers, continue to operate around 80% occupancy on average. And our employer-onsite centers average over 70% occupancy, while the balance of our network provides clear growth opportunities. I'll share in a moment some of the operational initiatives we focused on during the third quarter, which we believe over time will help ease the recent moderation in occupancy and position us to drive future growth. The back-to-school season unfolded amidst a more cautious consumer backdrop, which we believe influenced family decision-making. While demand at the center level was adequate to support our enrollment objectives, our average weekly enrollment fell short of last year's mark. Additionally, we saw headwinds in our subsidy business in a handful of states, with near-term softening of tuition reimbursement rates and fewer new student authorizations. We believe the enrollment challenges reflect the current economic environment, are not permanent, and we expect to see returns to the historical performance we have experienced in subsidy enrollments in the future. It's worth noting here that our belief is rooted in the historical bipartisan support for childcare funding we have seen both at the federal and state level, and we remain confident in the long-term outlook for childcare subsidy funding. Turning to our other growth levers, we continue to make great progress in the quarter. Specifically, we signed a number of new clients at our Champions School Age program and expanded our employer relationships as employers look to offer dedicated onsite or access to our network of community centers for their employees. We also grew our center count through new center openings and tuck-in acquisitions, with the latter continuing to outperform on the year. Stepping back from the quarter's results, I'll spend a moment on what we're seeing in the broader economic landscape. Inflation remains elevated, and families are showing more caution in their decision-making, as reflected in recent economic data showing an overall decline in consumer confidence. We recognize how these influences are causing hesitation for some as they make their childcare decisions. We believe these dynamics are likely to persist into 2026. In this environment, we're managing with a focus on discipline execution, operational efficiency, effective cash management, and a continued commitment to meet families in their local market where they need us the most. We believe KinderCare's national scale, strong subsidy partnerships, and ability to serve families across diverse circumstances position us to navigate these conditions with resilience. Our commitment to high-quality early education and the distinctive experiences offered through our centers strengthen our brand and reinforce the trust families place in us. These advantages give us confidence in KinderCare's ability to perform through varying and uncertain economic conditions. A number of families seeking subsidy assistance remains elevated across the country, and our government funding team continually seeks to engage state and local agencies in productive ways to expand care to as many of those families as possible. However, to maintain balanced budgets, some states have implemented measures such as waitlists and reducing reimbursement rates. In certain cases, these actions have had a significant impact. For example, in Indiana, roughly 13,000 fewer children are receiving subsidy assistance since the start of the year, and our full-time subsidy enrollments have declined proportionally in the state by nearly 1,000 children over that same period. At the same time, many providers in this state have been further pressured for reduced reimbursement rates. Other states are taking steps in the opposite direction by expanding support for childcare with measures like reducing costs for families by lowering co-pays, increasing reimbursement rates, or, in the case of New Mexico, pursuing a public-private solution to make childcare universally accessible. Regardless of each state's approach to appropriating their budget, we remain committed to partnering with state and federal leaders to expand access to affordable, high-quality childcare for families across the country. As these efforts unfold across the broader childcare landscape, we remain focused on strengthening our own operational foundation. As I mentioned, occupancy was at the lower end of our expected range due to a complex of near-term dynamics. Over time, we are confident that our ability to convert the demand we see in our centers, together with ongoing positive and constructive engagement with state and federal leaders on childcare funding, will be important drivers toward achieving our occupancy goals. Progress here may take some time. However, we believe we are taking the right strategic steps to build sustained improvement upon solid fundamentals. In order to accelerate our pace of results, we intensified our focus on the operational levers within our control, evolving our leadership talent, applying lessons learned from our opportunity region more broadly, and expanding the use of our digital and diagnostic tools. We concentrated on center-level improvements, particularly enhancing both the speed and personalization of family interactions. Our digital tools continue to make it easier for families to move through the enrollment process and for center directors to more effectively match available spots with family needs. The digital tools are also helping to drive overall improvement within our opportunity region and, in some cases, creating significant impact at the center level. As a reminder, our opportunity region is a collection of around 150 centers that we've determined to have high performance potential, which can be unlocked with focused attention and resources. One of our opportunity region centers, located in Michigan and led by a veteran center director, used our center diagnostic tool to pinpoint opportunities for improving enrollment and worked with her district leader to develop a remediation plan. Within eight months, she lifted occupancy from 48%- 95%. That kind of turnaround shows what's possible when we pair well-trained leaders with our tools to execute. I share this example to illustrate that despite the challenging environment, we are finding ways to make progress. Overall, we continue to see encouraging progress within the opportunity region, and we're applying the lessons learned from our successes there more broadly across our network. To be clear, we don't expect to achieve results of the same magnitude in all of our almost 1,600 ECE centers. We believe, however, that the easiest path for broad-based improvement in overall enrollment is generally going to be among centers that currently have lower occupancy, most of which are grouped in quintiles four or five. Beyond attracting new families, we're equally focused on the engagement of our current families. In fact, we recently completed our annual engagement survey and received over 130,000 responses from our families, which is near last year's record response total. This represents our 13th year of partnering with Gallup, and as a reminder, we measure both employee and family engagement. Consistently, we hear from families that they celebrate the positive impact that safe, high-quality childcare can have on their child's development and that the families are deeply connected to our center staff. In addition to receiving feedback, high levels of engagement help us maintain strong family retention. Our ability to create consistent, nurturing environments is a hallmark of the KinderCare experience and underscores the reason so many families stay with us year after year. Our focus on operational excellence extends into the management ranks as well. In order to better align our strategic operational goals with our growth initiatives, we recently announced the promotion of Lindsay Sorhondo to Chief Operating Officer. Lindsay has been an incredible executive leader for us during her 12 years with the company, most recently as our Chief Innovation Officer. She has been a decisive business partner with a strong track record of execution and driving results. We're excited for Lindsay to apply her tremendous skill set to accelerating operational excellence throughout the organization. This structural alignment represents an important step forward in our broader strategy to sharpen brand-level focus and connect our strongest operators directly to driving same-center occupancy growth across our centers. Closer to the center level, we also took purposeful actions within our field leadership to strengthen performance. During the quarter, we refined our district leader structure to sharpen operational focus, increase accountability, and improve agility, while ensuring we retained our most effective leaders. These critical members of our organization are responsible for oversight and development of our center directors and are expected to step in and personally support them where help is needed. Turning to tuition, growth came in at 2% for the third quarter, which Tony will discuss in more detail shortly. With back-to-school finished, we are now finalizing our plans for 2026 tuition rates. As a reminder, we maintain a 50-100 basis point spread overall between wages and tuition, and we will continue with that strategy while setting tuition to reflect local market dynamics and needs. This financial discipline gives us the flexibility to continue investing in our other growth levers: B2B, NCOs, and tuck-in acquisitions, all of which performed to expectations this quarter. Our Champions before and after-school business continued to perform well with double-digit revenue growth year over year, including meaningful growth in average enrollments in established sites. Year to date, we expanded the program with over 200 new site wins. The solid performance from the Champions team this past quarter and, frankly, all year provides momentum for Q4 and the rest of the school year. KinderCare for Employers, which consists of our onsite employer-focused centers, also continued to perform well for us. During the quarter, we opened three new centers at employer locations and continued to develop our pipeline of opportunity. It's also important to note that occupancy at our onsites averages over 70%, which speaks to the great partnerships we have fostered with employers to let their employees know about this benefit available for their children. Employers are also expanding childcare benefits for their employees through our tuition benefit offerings. During Q3, we signed 20 contracts with employers, including Parkview Health System, Discovery Life Sciences, The Aspen Group, and MassMutual Life Insurance. Our new contracts were spread across 17 states, covering 317,000 employees who will now have access to KinderCare's nationwide network of centers at a discounted tuition rate. We continued executing on our other growth levers during the quarter by welcoming families to two new early childhood education centers in Illinois and Colorado. This brings our year-to-date total to eight new center openings within communities. We were also very active with tuck-in acquisitions the past quarter by acquiring six centers across six different states. Taken together, we have clear visibility into these two levers and expect 2026 to be another active year. Looking at the remainder of this year, we'll continue to focus on improving same-center occupancy and tuition by driving engagement and consistency through our leaders and center-level teams. We expect our other levers will perform to our 2025 expectations, reinforcing the diversification of our model. With that, I'll hand it over to Tony to walk through the financial results and outlook. Thanks, Paul. Our third quarter results were mixed as revenue came in slightly below our expectations, largely reflecting a slower pace of enrollments through the back-to-school season. While this pressured margins for the quarter, cost discipline and positive cash generation remained consistent as Champions and KinderCare at Work, NCOs, and tuck-in acquisitions all continued to perform well. Let me walk through the quarter in more detail. Total revenue was $677 million, up 80 basis points from last year, with growth driven by Champions. Despite positive effects from tuition increases, early childhood education revenue softened due to slower enrollment activity during the quarter, which also resulted in lower occupancy for the quarter. Same-center revenue was flat to last year at $617 million, supported by generally robust retention levels during the third quarter and continued contribution of prior new center openings and acquisitions being included in the same-center pool. Total average weekly full-time enrollments decreased by 190 basis points to just over 140,000 students in the quarter, reflecting lower overall enrollment compared to last year and a softer starting point at the beginning of Q3. The new student enrollment dynamics during back-to-school compressed our same-center occupancy to the low end of the range we expected for the quarter, finishing at an average of 67%, down 160 basis points from a year ago. As we look forward, remember that back-to-school is our highest new student enrollment period and sets the start of the climb for the next seven to eight months, in which we historically have sequential growth each week until summer. Tuition was a 2% contributor to revenue growth versus last year, which was lower than we anticipated entering Q3, reflecting a higher subsidy mix and smaller subsidy rate increases than expected for 2025, further affected by subsidy rate reductions in a few states. Most importantly, we continue to maintain a healthy spread between tuition and wages, which ensures our ability to consistently drive margin within our centers as we deliver the high quality of care KinderCare is known for and ensure our teachers can receive a competitive pay and benefits package. Champions and KinderCare for Employers continue to demonstrate solid growth. Champions revenue grew 11% in the third quarter versus last year to $50 million, with 120 net new sites added to the portfolio over the past 12 months. Employer onsite centers continue to perform well during the quarter, with average occupancy over 70% and consistent revenue growth. As employees continue to navigate flexible work arrangements, our team is deepening partnerships with employers to expand onsite childcare options, including the opening of three new centers this quarter, while also growing participation in our tuition benefit programs that support families using our community-based care. As Paul mentioned, we opened two NCOs during the third quarter and acquired six tuck-ins, bringing us to 20 tuck-ins so far this year. On a year-to-date basis, cash consideration for the tuck-ins is just under $18 million and was funded completely out of the $138 million in free cash flow generated this year. Our ability to fund new centers and tuck-ins while maintaining our leverage is a testament to the strength of our operating and growth models. The revenue contribution from new and acquired centers year to date was $21 million as of the third quarter, relatively consistent with the first three quarters of last year. Our development timeline for new centers provides excellent visibility into the timing of future openings, and we are firmly on track to accelerate our pace of NCOs into the mid-20s per year in 2026 and beyond, consistent with our long-term growth objectives. While we aren't seeing a flood of independently owned center closures this year after the expiration of COVID funding, we are certainly seeing many more opportunities for tuck-ins. We expect to sustain this momentum beyond the current year as part of our broader long-term growth strategy. Net income for the quarter was $4.6 million, bringing the year-to-date total to $64 million, a 58% increase over the same year-to-date time period last year, benefiting from operational improvements and lower interest expense due to all our deleveraging actions. Adjusted EBITDA for Q3 came in at $66 million, down 7% from last year, as lower occupancy led to leverage pressure in the quarter. Our adjusted EBITDA margin for the quarter came in just under 10%, reflecting fewer enrollments in Q3 seasonality. Quarterly SG&A expense to revenue was up 109 basis points year- over- year. Embedded in there are one-time fees incurred from favorable credit facility repricing we completed in July and increased public company costs versus Q3 last year. We'll begin to lap incremental public company costs incurred since the IPO in Q4 this year. As we move forward, we will remain focused on disciplined cost management and operational efficiency. Income from operations was $26 million for the third quarter, compared to $54 million from the prior year. Interest expense was $24 million, sharply down from the $39 million last year, reflecting the positive impact of our post-IPO debt repayment and repricing actions since, including the repricing we completed on July 1st. Adjusted net income for Q3 was $15 million, up from $4 million last year, and adjusted EPS was $0.13, increasing from $0.05 a year ago. Our ratio of net debt to adjusted EBITDA at the end of Q3 was 2.5x and remains comfortably at the bottom of our targeted range. Moving on to our outlook for the rest of the year, as we analyze trends coming out of back-to-school, it's clear that recovery and enrollment occupancy is going to take longer than we expected. In addition, while we haven't experienced a direct material impact from the government shutdown, the tangential and downstream unknowns due to its severity have added another layer of complexity into our expectations for the year. As a result of these factors, we are updating our forecast for 2025. For the full year 2025, we're expecting revenue to finish the year between $2.72-$2.74 billion. Adjusted EBITDA expected to land between $290-$295 million and adjusted EPS to be between $0.64-$0.67. Looking at our growth lever assumptions for the year, we expect revenue growth from tuition to increase by approximately 2% from 2024, a reduction from our prior guide due to the combination of higher subsidy revenue proportion and a small amount of states reducing their reimbursement rates. We are currently finalizing our 2026 tuition planning, and as always, we align our pricing approach with community-level dynamics, ensuring we balance profitability with the different pressures families are managing for access to care. Turning to same-center occupancy, we expect to continue seeing week-to-week growth in full-time enrollments for the remainder of this year. Given where we ended Q3 and the subsequent data so far in Q4, we now see a full year occupancy coming in about 200 basis points lower than 2024. We expect Champions to continue performing well in Q4 and carry that momentum into 2026. At the same time, we continue to see solid progress in KinderCare at Work and its contractual recurring revenue streams. Putting these two together, our B2B business is expected to contribute about 1% to growth this year. New center openings are expected to be shy of 1% growth contribution this year, as previously expected. We will continue our thoughtful and measured strategy with opening new centers, and given our clear visibility into new centers coming online, we should improve this contribution percentage in 2026 and beyond. Tuck-i n acquisitions have been robust all year and continue to be favorable for us. We have been able to advance our growth priorities in this space with a discerning eye on quality and capital efficiency. We believe the number of opportunities we evaluate will continue at a high level for the foreseeable future. This key lever for portfolio expansion and diversification is expected to contribute about 1% to growth this year and at least the same in 2026. The pipeline visibility for acquisitions remains strong. We expect free cash flow to be between $88-$94 million for the year. CapEx will likely land in the range of $131-$133 million for the year, with most of that aimed towards growth initiatives. For modeling purposes, our effective tax rate should be around 27% for 2025. While we are not providing official guidance for 2026, we're giving some directional insights into growth levers as we see them today. We expect tuition increases will be a larger contributor to growth than in 2025. We also believe the momentum we have in B2B and our pipeline visibility for NCOs and tuck in acquisitions should keep each of these three levers on a solid trajectory, with each around 1% for 2026. With that, Operator, let's open up the line for some questions. Thank you. Ladies and gentlemen, we'll now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question, and your first question comes from Toni Kaplan from Morgan Stanley. Please go ahead. Hi, this is Yehuda Silverman on for Toni Kaplan. Just had a quick question about enrollment. So, as we know, it's been a bit weaker all year, weaker in this quarter. Just wondering, heading into 2026, what your expectations were surrounding it, or at least directionally? I know you mentioned that there's been some hesitation. Do you expect it to be in 2026 at current levels, worse or better? Just want some color on that. Thanks. I appreciate the question. And as Tony said in his comments, that's what we're watching for in the remainder of 2025 so that we can clearly see any continuation of impact from the government shutdown. What I would tell you is we still feel very good about the level of inquiries we're seeing at the local level of each one of our centers. We continue to see improved performance from our center directors and district leaders on how they work those inquiries into enrollment. And then, as we continue to see confidence return for our consumer who are in that space, we believe over the long term, we will return to the growth algorithm we've talked about historically for growth for KinderCare, and our scale and diversification allows us to do that. Great. And just a quick follow-up. You mentioned in the guide that there was no direct impact from the government shutdown, but the uncertainty added more issues heading into the end of the year. Is there anything factored into the guide itself? And if so, to which growth algorithm assumptions is this tied to? Yeah. So, we did not see very, very, very few families that were impacted by it. We extended a couple of courtesies to a few families here and there that were impacted to help them make it through, and that will be great for them and for us in the end. Just some of the uncertainty continues to come from some of the things we talked about that we think is putting pressure on the states as they think about what they're doing in the future as far as their spend. We are in constant talks with all those states and know that there's a lot of thought process going on and what the impacts to their budgets might be by something like this in the future too. And so, that's just kind of where some of the uncertainty currently sits. Got it. Thanks. Thank you. And your next question comes from Andrew Steinerman from JPMorgan. Please go ahead. Hi. I was wondering what timing you think you could get back to the long-term algo. And I think you said for 2026, you expect pricing increases to be higher than 2025. Could you just comment on that? Yep. No, that's right, Andrew. We believe they'll be higher, right, as we're ending this year on 2%. So, we're still finalizing what our private pay rates will be for next year that'll go in place January 1st. So, we're not quite there on the private pay side. And then a little bit like I just mentioned, still some of that uncertainty. We want to see what happens here with the states as we conclude our fiscal year and head into next year and have some better expectations for what's going to happen on the subsidy side. We still have direct confirmation with some states what they're doing. There's a number there still. We're not sure yet. So, that's why we're not going out with a guide, but at this point, feel good that it'll be above next year. I mean, this year. Sorry. Next year will be above this year. Right. And my first question was, when do you think you'll get back to algo? As far as pricing, Andrew? No, no. Overall, your medium-term algorithm, when do you think you'll get back to? What type of timing do you think you'll get back to the medium-term algorithm overall? Overall, we will get back to the algorithm in 2027. And then what we're watching for is clearly on B2B and NCOs and acquisitions. We continue to be in 2026, as Tony articulated, on track for that, feel good about tuition, and then for us to continue to make progress on occupancy specifically. Understood. Thank you very much. Thank you. And your next question comes from Manav Patnaik from Barclays. Please go ahead. Hi. This is Ronan Kennedy on for Manav. Thank you for taking my questions. Tony, may I ask if you could please expand or just remind us on the softer starting point you referenced for the back-to-school enrollment period? And then, could you confirm the extent to which the lower enrollment was driven by macro factors, the softening of reimbursement rates, fewer student authorizations, or internal opportunities for improvement of conversion? Yeah. So, look, the reference to the softer start was already that we were bringing in a lower number coming into back-to-school, right, than we would have liked to really start the year. So, as part of my talking points there was that Q2, as we headed out of the summer, was at a lower point than we would have liked to be heading in. So, that kind of gave us a softer starting point for back-to-school in general to do it. As far as kind of, I don't think we have, we don't have a quantitative number for you in each one of those, Ronan. They're obviously all impacting it. And we're well aware that the consumer confidence environment and people thinking about their next dollar spent is clearly impacting our whole economy. Once you get down to a local level, though, then that's on us to show the value you get out of spending those dollars to come to KinderCare and having your child ready to be ready for kindergarten as they get through with us. And so, that gets down to the local level where it's on us to utilize those tools and tell those stories and show that value. And so, those kind of Gantt charts start to overlap quite quickly. And then the subsidy one, Paul alluded to Indiana. Indiana is the biggest state for us that's definitely impacting us with being down 1,000 students from the start of the year based on some of the decisions they've made to balance their budget and what they've done to wait lists and some freezes. We have a couple other states that aren't up to that level but have also been a real drag to us here at back-to-school as well. So, hopefully, that helps. Thank you for that. And then, can you provide any insights on your occupancy trends by quintile through the quarter and exiting into 4Q? It's consistent with what we talked last time about that slight decline in the top three quintiles and then an improvement in that fifth quintile. That continues to give us the confidence in what we're talking about. Returning to our long-term growth algorithm is the improvement we're seeing in our opportunity region. We've talked about the larger opportunity that exists in our lower-occupied centers. So, the diagnostic tools and the digital tools are working well to enable that growth, and we believe that will continue. Thank you. Appreciate it. Thank you. And your next question comes from Jeff Meuler from Baird. Please go ahead. Yeah. Thank you. Just on your optimism for getting back to algo in 2027 and characterizing this as short-term factors, could you just address, I guess, the structural concern that industry supply has been built over time, and you're now combining that with a lower birth rate, and the industry had taken a lot of above CPI pricing that's compounded over time that's pricing families out of the market. Just what gives you confidence that it is just short-term factors and not a greater supply-demand imbalance that's built in the industry over time? Yeah. No, great question. There are many factors that we're watching. Beyond birth rates, you're also looking at women in the workforce. You're looking at children ages zero to five. All those things accumulate to what we track as inquiries per center so that we know that we're getting a sufficient flow of inquiries at the top of the pipeline to fill our centers. That is the most important thing to us, which continues to be very, very good for us. In addition to that, the bipartisan support for childcare so that we can have a thriving economy across the US so working parents can go back to work and know that their children are in a safe environment where they're being ready for a successful kindergarten transition as they go into that. So, those things about seeing bipartisan support for our lower-income families, the continuation of good inquiries even through the last number of months as we came into this back-to-school, and then knowing there's a lot of controllable factors for us, one of which we just mentioned is our center directors slowing down with those parents who are looking at making an investment in their child for early childhood education, is us helping them recognize their child, the longer they are in our care, the more successful they're going to be in kindergarten and beyond. And that's a really compelling argument as we talk to, or justification is probably a better word, as we talk to parents. So, all those things, as we continue to improve the talents across our organization at the district leader level as I talked, is what gives us confidence as we move into 2026. And then beyond, I guess, discipline, cost management, and operational efficiency initiatives, at what point do you more proactively take cost out of the business? I ask because we're now in a position of revenue declines on a per-week basis, and it looks like the EBITDA deleveraging on the revenue adjustment and guidance is pretty significant. So, at what point would you be more proactive about taking expense out of the business? It's something we're looking at all the time on evaluating the efficiencies of different investments we're making to become stronger on the digital side or other investments across our teams. And so, there's things that we're already doing to ensure we're delivering the best flow-through of profit from the revenue that we do have. Labor continues to be a big part of our P&L, as you well know. So, continuing to think about how we up-level our sophistication around labor is another piece that we'll continue to lean into. So, there's a number of ways that we can ensure that whether it's G&A or labor or other things that we have from a cost control, we are watching that all the time and talking about any more aggressive measures that we should be doing. All at the same time that we're delivering long-term revenue growth is very important. Yep. Thank you. Thank you. And your next question comes from Jeff Silber from BMO Capital Markets. Please go ahead. Thanks so much. I just wanted to continue on Jeff's question. Are you thinking at all about more aggressively closing some centers? You didn't really mention that when you talked about some of your cost control. Yeah. I wouldn't necessarily say more aggressively, Jeff. We are constantly looking at the right centers for us to maintain and go forward with them, right, so that starts with the demographic look and a little bit that's what Paul was talking to, like where are our current inquiry levels, where are our competition levels on our outside of our walls, one, and then basing that then against inside our walls, where are our engagement levels? Are we performing to those right levels, and then where's our profitability based on rent and labor and things like that, so we're constantly looking at those. We are up for closing centers, and I think that's been clear in the past. We don't have a cap for how many centers we need to do. If it's the right time to close centers, we'll do that. Obviously, you're looking at lease timing on those and making sure that the ROI on a closure does make sense. But you won't see us hesitate to close centers that should be closed, but we'll continue to keep the ones open that we think can and should be profitable, not only in the long term but in the shorter medium term too, that we believe we can get there through the right methods. All right. Fair enough. And let me just continue this questioning. You continue to make acquisitions. I know it's a small piece of the capital allocation, but would that be something that you might consider putting on hold and maybe shifting more towards a little bit more aggressive deleveraging? Thanks. Yeah. So, as we sit today, our board is pushing us to continue to make sure we do have that medium to longer-term look on the use of our capital. And so, as we sit today, we are going to continue to fund that MCO engine, which is a couple of years out from when we say yes on the center, and also continue on the tuck-in ones. We're still getting nice value on those in the very low single-digit EBITDA multiples and think that that's both helpful for short-term and long-term. All right. Thank you. Thank you. And your next question comes from George Tong from Goldman Sachs. Please go ahead. Hi. Thanks. Good afternoon. I wanted to go back to enrollment trends. Can you estimate how much of the enrollment headwinds you're seeing are due purely to economic factors like consumer confidence versus more idiosyncratic factors at the local level? It's difficult, George, to draw a line of direct correlation to those factors to the enrollment. What we would tell you is, but for those handful of centers or, excuse me, states where we saw a slowdown of subsidy, we would be in a much stronger position, closer to flattish enrollment. And so, that in and of itself is something that we know is more short-term in nature. But then there are other things where we see, as we've talked to you before, the decisions from parents and the longer cycle around that, that they are considering consumer and thinking about kind of the overall macro conditions, but nothing that we can provide to you on a direct correlation, just recognizing that these factors have an impact. Got it. That's helpful. And along the same lines, as you look at the center diagnostic tools and the various findings at the various centers, especially in the opportunity regions, what have been the latest local factors that have come up most frequently as preventing enrollment growth? And have those factors changed from the prior quarter? So, from the way I would answer it with what we're seeing with our opportunity region and them using and the change management and adoption that goes with those diagnostic tools and digital tools, we actually are seeing stronger enrollment in those centers. So, it is working. And again, they are at lower occupancy. So, the range of age groups and parents that you can activate across that pipeline are more significant. And so, what I would answer to your question is continuing to take those learnings from opportunity region, continuing to be more proactive with our parents in our higher-occupied centers. Those things will continue to minimize the reasons why a parent isn't enrolling as quickly as they might have been over the last few months in our higher quintile centers. Got it. Thank you very much. Thank you. Your next question comes from Josh Chan from UBS. Please go ahead. Hi. Good afternoon. Thanks for taking my questions. I guess a question on the Q4 enrollment that is baked into the guidance. How low does guidance is it around the 4% decline mark? I guess that's important because it sort of sets the stage, like you said, for the remainder of the school year, I guess. Josh, will you ask it one more time? So, I heard you reference the 2%, and then we lost you for about six or seven seconds, and then you said 4%. Can you restate it one more time for me? Yeah. I apologize. I'm wondering what type of enrollment decline is baked into the Q4 because that forms the run rate into next year. Yep. We obviously gave you kind of a guide for the full year, right? We're seeing Q4 so far be slightly below where we were at Q3. So, it's not nearly as dramatic as your numbers are suggesting, but we are seeing a slight flip that, like you said, would take us into the holidays, holidays being an important inflection point. It's kind of the number three behind summer and back to school and how we come out of that. And then that really sets the range of outcomes through May. Okay. That's helpful. And then on the margins that's embedded into the Q4 guide, could you just talk through what is happening to cause the relatively steep change in terms of the EBITDA expectations relative to the revenue expectation change? Yeah, of course. Yeah. So, look, the revenue is being caused by two different things, right, that we talked about. And so, I'll take those two and talk about the impact. Occupancy dropping a little bit more than we thought is having some impact. Occupancy declines, obviously, don't have as big of an impact on EBITDA as do pricing, but it does less students, obviously, is bringing in less revenue, which is bringing in less EBITDA. And then, obviously, an occupancy decline impacts our ability to leverage, especially our gross margin and even our G&A a little bit. So, we're seeing definitely some impacts from that. And then the other one is the pricing, right? So, as we're seeing a few of these states, Indiana, again, being one of the big ones, drop some of their reimbursement rates, those dollars flow pretty much straight through to the bottom line. That dropping to 2% is really the probably more powerful thing here in the fourth quarter that dropped our EBITDA guide. That makes a lot of sense. Yeah. Thanks for the color there. Thanks, Josh. Thank you. Your last question comes from Faiza Alwy from Deutsche Bank. Please go ahead. Yes. Hi. Thank you. I want to just make sure that I'm understanding the mechanics around the subsidies, especially after listening to the last answer from you, Tony. So, just maybe could you take a step back and just explain to us maybe how much of an impact that had on the quarter or you're expecting to have on the year and kind of when do you expect resolution and what should we be following to get a better sense of where we land here, whether things are getting better or worse in the specific states and any sort of timeline or decision when other states might make certain decisions around these reimbursements? Yes. Most of the states have already worked through that. And what is the origination from it is everything not related to childcare specifically. So, all of that was fully funded, but these are the discretionary dollars this year. As other impacts flowed into states, they needed to think about how they budgeted for the new fiscal year. And so, it is the expectation that every state has already gone through the awareness for what their funds need to be or what their balanced budget needs to be going into 2026. Where we saw the most significant change, as I mentioned, was in a handful of states. Even in two of those states, Texas and Arizona, they after that time have come out that they're adding both of them are kind of in the $50 million-$100 million over the next two years. Some of that will come in a rate improvement. Some of that will come in additional chairs for children. So, I believe that we're through it with most states. We've already seen those two states take a different weighing back in. And then for the remaining states, there's a continuation of that going into 2026. Okay. Okay. Understood. And then just on the pricing comment, that pricing is going to be higher in 2026. I'm curious what you're seeing from a wage inflation perspective. I know the question has been asked before around whether or not the end consumer is sort of ready for that pricing given the level of inflation that we have seen generally. Just give us a bit more color around why you think pricing will be higher and what's driving the decision behind higher pricing in 2026. Yeah. I'll take your wage one first, which I think you were leading me to the second one, Faiza, because you remember how we really do that as kind of a starting point. We're working on wage right now and where we believe that will end and are pretty much there on that one. We utilize that one to test ourselves, but we're always trying to make sure we can get 50-100 basis points differential, and at this point, believe we can again next year. From there, kind of in parallel, we're working at a center level to look at a number of factors. The ones internal to us are our engagement levels and our occupancy are the two biggest ones, how those families feel with us and how many we have. Obviously, our two big factors there, and then externally, we're looking at a number of competitors. We're looking at competitor pricing, and we're looking at general other demographic factors for that local center, so as we're seeing the early roll-ups of where we think we're going to land and believe what we can do at that center-by-center level are the things that give me the confidence to make that statement. Sorry. If I can just clarify, so do you think that 50-100 basis points differential can actually be higher in 2026, or is it really the higher wage growth that's leading to higher pricing? Yeah, so I wouldn't say they tie directly, but we will still be at 50-100 basis points next year as well, so I don't want you to walk away thinking wage growth leading the higher pricing. We believe we know where we'll land wage, and with the tools we have, we can be pretty precise for that for the year, and we are also confident we can create 50-100 basis points of price based on our individual center dynamics. Got it. Thank you. Thank you, and there are no further questions at this time. I will now turn the call over to Mr. Paul Thompson. Please continue. Thank you, Kelsey. Just last month, we passed the one-year anniversary of becoming a publicly traded company. As we move forward from this milestone, we are focused on exceeding with discipline and driving continuous improvement in all facets of our organization. Our long-term strategy remains sound, and we are confident in our ability to deliver against it as broader economic conditions improve. Thank you all for joining us today, and we look forward to speaking with you again soon. Ladies and gentlemen, this does conclude your conference call for today. We thank you very much for your participation. You may now disconnect. Have a great day.