Good afternoon, ladies and gentlemen, and welcome to the KinderCare Q4 2025 Earnings Call. At this time, all lines are in listen-only mode. 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 Thursday, March 12, 2026. I would now like to turn the conference over to Ms. Olivia Kirrer, Vice President of Investor Relations. Please go ahead. Thank you, and good evening, everyone. Welcome to KinderCare's Q4 and full fiscal year 2025 earnings call. Joining me from the company are Chief Executive Officer, Tom Wyatt, and Chief Financial Officer, Tony Amandi. Following Tom 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. 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 Factors 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 statement, whether as a result of new information, future developments, or otherwise. With that, I'd like to turn the call over to Chief Executive Officer, Tom Wyatt. Thanks, Olivia. Hi, everyone. I'm pleased to be joining you today in my first earnings call since returning as CEO in December. It is wonderful being back at the helm of KinderCare and leading this talented team. This company's purpose has been a significant part of my life for a long time, and these first few months back have been productive. The work we have begun to redirect our company back toward the type of growth I oversaw for 12 years is gratifying, and I'm looking forward to sharing more with you today. Let me start with this. Our recent performance has not been where we expected it to be, and that responsibility is ours. In some areas, we fell short of the consistency and execution that families expect when they choose KinderCare. That perspective, along with the time I've been spending in our centers, with our field teams, with clients, and many of you, has reinforced where we're executing well and where we need to improve. We must move with greater urgency, act more decisively, evolve how we operate, and strengthen accountability across the organization. Beyond our immediate business activities, I've spent time with lawmakers at both the federal and state levels, and I'm encouraged by the strong bipartisan support we're seeing for the childcare sector overall. I also continue to receive feedback from public policy officials about KinderCare's industry leadership. I'm proud that we continue to support working families in our centers while advocating for policies that strengthen access to quality, affordable childcare. That commitment is reflected in our culture as KinderCare was once again recognized as one of Gallup's exceptional workplaces for the tenth consecutive year. It is our educators and teams who bring our culture to life every day. Their unwavering dedication has been the cornerstone of our success as they build confidence in children and families across the United States, even in years that test our resilience. Last year was one of those years, as KinderCare delivered a mixed performance in the Q4 and overall throughout 2025. Concerns about inflation and the broader economy and declining consumer confidence magnified affordability concerns for some of our customers, creating a challenging environment. Confusion around federal and state grants further tested the childcare sector, although continued bipartisan support for childcare underscores the long-term importance of access to quality childcare. The economic and policy landscape will continue to evolve as it has over our nearly 60 years in business. Our commitment to serving working families remains at the core of who we are. With that context, let me turn to our results. Overall, we finished 2025 slightly better than anticipated at the end of Q3. Including an extra week in the Q4 this year, revenue was $688 million, up 6% from last year. Adjusted EBITDA in Q4 was $68 million. Adjusted earnings per share was $0.12, and same-center occupancy was 64.5%, down 340 basis points from last year. Tony will walk you through the extra week impacts during his remarks. While 2025 presented some areas of pressure, we made progress across our brands during the year. KinderCare, which accounted for 88% of our total revenue, continues to be the core driver of our overall performance. Our top quintile centers felt some of the headwinds during the year, while performance in our lowest quintile showed encouraging improvement. Much of that progress reflects the work underway in our opportunity region, which is a focus group of centers in our fourth and fifth quintiles receiving individualized leadership support to help unlock their growth potential. At the same time, we continue to expand the portfolio through new center openings and acquisitions, including expanding into Idaho and extending our high-quality classrooms to more families and communities. In a market that remains highly fragmented and where the three largest providers make up less than 5% of the total market, our national network gives us a unique ability to responsibly expand access to high-quality childcare over time. Our Champions before- and after-school brand continue to drive purposeful growth through an aggressive pace of new site openings and contributed 8% to the total revenue in 2025. Our newest brand, Crème de la Crème, contributed 4% to total revenue during the year. In 2025, we executed a focused reset of the brand, refined its positioning, and strengthened operational and program consistency while opening two new schools. Early indicators this year are encouraging, and we are intent on building from that progress. We expanded our B2B partnership in 2025, providing flexible childcare solutions to more working families while opening six new on-sites, the most in a single year for our company, and bringing our total to 77 total employer-sponsored centers. During the year, we opened new sites for government clients in Maricopa and Montgomery counties for energy sector employees at Halliburton and most recently for healthcare professionals at UNC Health Johnston. As we deepen relations with more than 1,000 employers, we see continued opportunity for steady organic growth in our B2B business. Overall, we continue to build on the capabilities in our brands that have long defined KinderCare when we operate at our best. This isn't about looking backward. It's about moving forward with urgency and reaffirming the important role we play in supporting working families across the country. How we ended 2025 is how we began this year. We're approaching this year with a clear understanding of what needs to be improved. This year is about raising the standard of execution across the business. That means improving how our centers operate, aligning spending with our highest priorities, and taking deliberate portfolio actions among underperforming centers when needed, while continuing to grow responsibly through new center openings and acquisitions. To reinforce that focus, we changed our short-term incentive plan, so the incentive compensation is more directly tied to the financial and operational outcomes we expect to deliver. Going forward, all employees eligible for performance bonus will share responsibility for achieving our growth targets. For the KinderCare brand, we are increasing marketing investments and expanding proven operational practices from our opportunity region. The path ahead for this brand reflects what we know and what we've learned, which will drive the next phase of our growth in our centers. What will be different begins with clarity about who we are and the experience families expect when they choose KinderCare. From there, it's about reaching new families, deepening engagement with those already enrolled, and ensuring that we continue to earn their confidence every day, from their first inquiry to the day their child graduates into kindergarten. To help navigate this path, we have simplified some of our management priorities as Michael Canavan, the President of KinderCare, who previously led the brand through a period of sustained growth, has shifted from overseeing multiple areas of the business to a single focus on driving only KinderCare. Crème Schools underperformed our expectations last year as we implemented significant brand repositioning. With that work behind us, Crème is now focused on translating those efforts into sustained enrollment growth through the refreshed curriculum we recently announced and targeted enrollment initiatives. Champions is set for another year of strong new site openings, alongside an increased emphasis on growing site-level enrollment. Across our B2B business, tuition benefit is as strong as ever, supported by our national network of centers that allows employees to access care at locations convenient to them. We're going to continue building on this momentum by expanding employer relationships, deepening client advocacy, and improving utilization to drive stronger partnerships and long-term growth. At our best, KinderCare is defined by strong leadership in our centers and sites, high standards in our classrooms, a differentiated educational experience, deep engagement with families, and the strength of our national network. Our expectations for this year reflect enrollment trends coming into the new year and the actions underway to strengthen execution and center-level performance. We expect this year to come with its own challenges. We will meet those challenges by building greater consistency across the business, addressing areas that have underperformed, and working hard to reinvigorate our enrollment trajectory. Tony will go over our 2026 outlook in detail. I am encouraged by the progress we are making, the opportunities ahead, and the dedication of our people. Our enduring commitment to families is what differentiates KinderCare within our industry. I look forward to the impact we will continue to make together. If there's one message I want to leave you with today, it's this. We understand where KinderCare needs to improve, and we're taking action. That work starts with growing enrollment, improving how our centers and sites perform each day, and making decisive portfolio adjustments when needed. Results are going to take some time, but we're excited to do what it takes, and the work has already begun. I'll turn the call over to Tony now to walk through the financial results and guidance in more detail. Thank you, Tom. Starting with the review of the Q4, revenue was $688 million, up 6% year-over-year, primarily reflecting the incremental $45 million contribution from the 53rd week. On a comparable basis, revenue was essentially flat year-over-year. Tuition contributed 2% growth in our centers, and Champions delivered double-digit expansion, while lower center enrollment offset those gains. Enrollment trends in the quarter were consistent with our expectation exiting the Q3. At the center level, we saw the same dynamics. Same-center revenue increased 6% to $618 million, driven by the extra week, tuition increases, and the incremental contribution of new centers entering the same-center pool, partially offset by lower overall enrollment. Same-center occupancy for the quarter was 64.5%, approximately 340 basis points below the prior year, in line with our revised guidance. Champions generated $60 million of revenue in Q4, up 12% year-over-year, approximately $800,000 of which was from the extra week. The performance was supported by incremental site additions during the year and continued client growth. In total, we added 128 net new sites compared to last year and finished with over 1,150 sites. Champions and our broader B2B initiatives continue to diversify our portfolio and complement our community-based centers. We see them as important long-term growth drivers, and during the quarter, we expanded our B2B footprint with a new KinderCare for Employers on-site opening, completing a record year of employer-sponsored site growth. We also made progress across our other growth drivers. In addition to the on-site center, we opened additional six new community centers and added six centers through acquisition during the quarter. Alongside these growth priorities, we also closed seven centers in Q4 as part of our regular portfolio management activities. Primarily due to a non-cash goodwill impairment charge recorded during the quarter, we reported a net loss of $177 million in Q4. The impairment was precipitated by market-based valuation inputs rather than changes in operating cash flows. It had no impact to our liquidity, debt covenants, or ability to generate cash. Adjusted EBITDA totaled $68 million for the quarter, which includes an approximate $12 million from the additional week and was helped by some incremental labor savings during the holiday period. Adjusted EPS was $0.12, up $0.03 from the prior year. SG&A to revenue was 10.7%, down compared to the prior year, which included some elevated IPO-related costs. We are now starting to lap the additional ongoing public company costs and will begin to have a more normalized comp set in coming quarters as we remain focused on disciplined cost management and operational efficiency. Interest expense declined significantly year-over-year, reflecting debt repayment and repricing actions completed following the IPO. These actions have lowered our structural financing costs and position us with a stronger and more resilient capital structure as we enter 2026. Looking at the full year, including the fifty-third week, revenue increased 2.6% to $2.73 billion, and Adjusted EBITDA increased just under 1% to $300 million. Adjusted EPS was $0.70, up from $0.40 in 2024. Same-center revenue increased 2.5% to $2.49 billion, reflecting tuition increases, centers entering the same-center base, and the extra week in the year, partially offset by lower enrollment. For our long-term growth levers, tuition growth for the year was 2.2%. This reflected lower than usual increases in subsidy reimbursement rates, along with the underwhelming performance at Crème. Same-center occupancy declined 200 basis points for the year to 67.8%, as the early softness we experienced last year persisted through the back-to-school season and into year-end. We ended the Q4 at 64.5%, which forms the starting point for 2026. As many of you are aware, we group our centers into quintiles, ranked by EBITDA, in order to better evaluate the performance during the year. Centers in our top three quintiles continued to hold a high average occupancy of almost 79%. Additionally, in 2025, as in 2024, about 60% of our centers were over 70% occupied. Champions and B2B initiatives contributed about 1% to revenue growth. We opened 14 new centers during the year, which contributed about 20 basis points to revenue growth. We also acquired 26 tuck-ins during the year, which contributed about 60 basis points. The revenue contribution from new and acquired centers, including new onsites for the year, was $23.5 million. Cash considerations for the 26 acquisitions was $23 million and was funded completely out of the $110 million in free cash flow generated over the year. Partially offsetting our center growth were 19 closures, which came out to about 1% impact to overall revenue growth. The primary drivers of the income statement were consistent with what we saw in the Q4. SG&A was more in line with our ongoing run rate compared to 2024, and interest expense declined substantially over the year following the balance sheet actions taken post-IPO. For the full year, we reported a net loss of $113 million, largely attributable to a non-cash impairment recorded in the Q4. Adjusted EBITDA margin for the year was 11%. While enrollment softness created top-line pressure throughout the year, disciplined expense management helped preserve overall margin performance and better align our cost structure with our current enrollment trends. Adjusted net income increased to $83 million from $39 million in 2024. We ended the year with net debt to Adjusted EBITDA of 2.6x at the lower end of our targeted range of 2.5x-3x, which we believe provides a stable and resilient financial foundation. While enrollment remains below prior year levels, the operational discipline implemented through 2025, particularly in our opportunity region, positions us to operate with greater consistency and control. Looking forward to 2026, our outlook is informed by the enrollment patterns exiting last year and our initial read on the Q1 performance. We expect revenue of $2.7 billion-$2.75 billion for the full year as compared to $2.69 billion on a 52-week basis in 2025. As the Q4 trends have carried over into the new year, lower enrollment in our largest brand is weighing on our top line, offsetting benefits from tuition increases, which began taking effect in early January. The enrollment outlook is driven by year-over-year challenges overall in both private pay and subsidy enrollments. We expect enrollment to improve gradually as we move towards our summer out period, although we do not expect that growth rate to surpass the rate we saw in the first half last year, given our current trends. Therefore, our full-year expectations reflect regular seasonality from a lower starting base as the actions we have taken to stabilize occupancy and improve performance have an opportunity to drive comparable enrollment and occupancy improvements in the second half. We will continue to maintain a healthy spread between tuition and wages. Adjusted EBITDA is expected to be $210 million-$230 million this year, down from $288 million for the comparable 52-week period, driven mostly by lower occupancy, a reduction in grants versus 2025, and increased marketing investment aimed at driving our top funnel activity for targeted centers. Consequently, we're projecting Adjusted EPS to be $0.10-$0.20, down from $0.62 for the comparable 52 weeks in 2025. Our full-year guide assumes tuition to drive approximately 3% of revenue growth and be fully offset by a 3% decline in same-center occupancy. Our other growth lever assumptions are expected to continue at their growth trajectories, with Champions and B2B contributing about 1% and the new center openings and acquisitions contributing approximately 0.5% to revenue growth each. Additionally, we expect revenue growth to be impacted by about 1% for the 15-20 closures which normally act as an offset each year. Our guide does not assume any closures beyond that, although we will likely take additional targeted actions where appropriate. We expect free cash flow to be between $35 million and $40 million, and CapEx to run about 5% of revenue for the year, with most of that CapEx directed towards growth. For modeling, you can assume our effective tax rate to be around 27%. We do not plan on regularly providing quarterly guidance. However, since we are so close to quarter end, additional color will be helpful. For the Q1, we expect revenue to be in the range of $664 million-$674 million, Adjusted EBITDA to be between $45 million-$48 million, and Adjusted EPS to be about breakeven. These expectations are underpinned by the drivers we've outlined for you already, as a lower base and enrollment trend carries over from the second half of last year and creates an unfavorable comp versus the Q1 last year. Enrollment remains below prior year levels, and our outlook reflects the starting point. The actions taken last year and those underway now are intended to position the business to exit the year on a better trajectory. Our priorities for 2026 are clear, stabilize occupancy, improve performance in lower-performing centers, and take decisive portfolio actions where needed while maintaining financial discipline. Operator, let's go ahead and open up the line for questions. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. To join the question queue, you may press star then one on your touchtone phone. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then the number two. Our first question comes from the line of George Tong from Goldman Sachs. Your line is open. Hi. Thanks. Good afternoon. You're guiding to 8% EBITDA margins in 2026 at the midpoint. That's a pretty significant drop from 11% in 2025. Can you elaborate on some of the key factors causing this sharp drop in margins? Yep, of course. Hey, George. Look, the first thing I'd start with, from your 11% is the extra $12 million we had in the 53rd week, right? That's not gonna duplicate, and that 53rd week is always a lot more profitable given the time of the year. From there, the big call-out is really all about those FTEs, George. Obviously, on the top line, that's impacting us. As we have that lower occupancy expectations, that's the biggest thing that we're deleveraging, obviously, with that, and that's impacting all the way down to margins. The other call-out kind of made there was grants. We knew in Q1 of 2025 that that was kinda gonna be the peak of the year, and it turned out that way, as the states were kinda reacting to their funds rolling off. We're seeing that in the back half of last year and expecting it to kind of stabilize back to normal pre-COVID levels this year as well. We're seeing that. It's all about FTEs at KinderCare, George, really, and that's the biggest impact on margin. Got it. That, that's helpful. I know that the part where you mentioned the goals at the beginning to move with more urgency, to act with decisiveness, to strengthen accountability, can you talk at a high level about what your top priorities are to achieve those initiatives for the upcoming year? Yeah, George, this is Tom. Just good to talk to you. We have done a number of things. One of the specific things that we did. Well, let me start with, we feel really good about the business we have in the at-work space. That business is growing for us. It's solid. It met last year, and it's on plan this year as well. We feel the same way about Champions. Champions had a great year last year. They're on track to have a great year this year, double-digit increase, as well. This is all focused on KinderCare, and it's all focused, as Tony just mentioned, on enrollment. What I tell you we've done is we've taken Michael Canavan, who is the president of KinderCare, who was also managing other businesses for us in 2024 and 2025, and we moved Michael back to just KinderCare. When Michael joined me, quite frankly, back in 2012, 2013, he was totally responsible for KinderCare. He enjoyed and led, quite frankly, the growth that we had during those years. That's number one. We want to put Michael back in charge. We want Michael to not have any distractions from KinderCare and work on enrollment. The second thing we did is we cleared the distractions of the center directors, which were many. When I got back to the company, there were a number of activities going on in the centers that were distracting, candidly, and we've taken those out, and we've actually seen already some improvement from that in activities including enrollment. We feel better about the role of the center director, making them the center director they wanna be, and that is, you know, introducing KinderCare to more families, more children, and going from that standpoint. The third is that we added significant investment in paid search for the first half of this year, and we're contemplating doing the same thing in the second half. We are seeing trajectories there we haven't seen in a while. We actually have an increase in number of inquiries in year-over-year, which is positive and feels good to us, and that's something that we're gonna continue to build upon. The last thing I'd tell you is that we changed our incentive compensation program. It's always had growth as a part of it, but we this year made it literally 100% focused on growth, on profitable and FTE growth for all aspects of anyone that's in the incentive program. Those are the key components that we've done, the big ones being, Michael, to me. Obviously, paid search is already showing signs of life. In clearing the distractions, we're allowing our center directors to be center directors, candidly, and they haven't been for about a year and a half. Very helpful. Thank you. You bet. Our next question is from Andrew Steinerman from JP Morgan. Your line is open. Hi, Tony. You moved a little quick for me on the prepared remarks. Could you just give us for the quarter just reported the M&A revenue contribution? And then within the context of the full year guide on occupancy being down, and obviously you can't really do anything at the immediate front. Of course, that's, you know, kind of where we are going into the year. My question is sort of the pacing throughout the year. Like for example, by the time we get to September, enrollment, is there an expectation that, you know, occupancy could be flat by then or maybe by the end of the year? Just a kind of a sense of the pacing of the year. You bet, Andrew. Revenue from acquired centers was $6.2 million in the Q4, totaling $14.9 million for the full year. Thank you. From our acquired centers here. Of course. Let me give you a little commentary on just kinda how the year trends, and then Tom, if you wanna add anything just on where we could go. Our guide at this point, Andrew, you know, our 3% down on FTEs assumes a curve that is for the most part similar to last year, and what we've seen historically, really, primarily last year and a little bit of the back half of 2024, and so utilizing that guide. What do I mean by that? We will continue to grow incrementally and we have been even this year and we did, from week 2 all the way till about week 20. It was kinda towards the end of May. We'll grow incrementally every week, up until that point where the end of May is usually our high point. At that point, we call it kinda, summer's out, and that's an inflection point for us. We'll lose a handful of families to some different summer decisions. We'll also get a lot more incoming families from some of their summer decisions. That's a big inflection point that we're building into now with our marketing and reach out with our families, as early as right now. That's inflection point to start to hopefully add some more students at that point. We'll hold those students over the summer and then back to school is obviously the big one. Another big inflection point, I think you guys are all aware of that. The current guide assumes pretty consistent performance to last year, but both those inflection points give us the ability to break those curves. Tom, if you wanna touch on it. Yeah. I'd like to. Sorry? I'm sorry. I thought someone said something. Anyway, I'd like to add this. Number one, I don't accept that curve just to be honest with you because and call me optimistic, but look, when I came to this company in 2012, the company had experienced 13 quarters in a row of negative top and bottom line. I joined in February of 2012, and in July of that year we went positive, and we stayed positive all through and to include through COVID. The opportunity for us to change the trajectory of this business is significant. By offering the opportunity for our center directors to be more focused on enrollment, to add paid search, which we didn't do back in 2012, we just did it organically, and to bring Michael back into the fold as being the head, the driver, the leader he was back then, are significant. We're being conservative or we're being thoughtful with using the curve from 2025, but I'll be very disappointed if we stay with that. Okay. Thanks, Tom. Yeah. Our next question is from Jeffrey Meuler from Baird. Your line is open. Yes, thanks. I guess it's gonna be a similar question to what I asked last quarter, but maybe Tom, in the context of just comparing how you view the industry structurally today to when you joined in 2012, KinderCare is not the only player in the market that's had tougher enrollment trends over the last year. You know, we're always trying to sort through to what extent that's cyclical and to what extent that's structural and to what extent execution plays a role. I would just love your views on maybe the structural health of the industry or what's kind of evolved over either since you last joined or since you last stepped out of the CEO seat. Thanks. Yeah, happy to. You know, when I joined in 2012, the business was, as it had been for, quite frankly, decades, growing at a moderate rate of 1%-3% a year, in occupancy and quite frankly, in just FTEs, naturally. It was only after the pandemic that we saw this, if you will, pressure on growth. As far as the industry is concerned, what I see happening is the strong, if you will, the scaled, larger providers are staying strong, although they are obviously challenged by enrollment and occupancy. The issue I see now that the monies from the pandemic, if you will, ARPA monies, that kind of thing, are gone. We're starting to see a contraction of the mom-and-pops, the smaller providers, and quite frankly, we're seeing that even in the centers that are offered up to us to purchase. I believe you're gonna see this year, and quite frankly, I've asked EY-Parthenon to do some work for us because I believe that you're gonna see a contraction of smaller players in 2026. You're gonna see us as the providers, us being the larger providers, continue to scale and continue to find ways to potentially gain share. I gave you an example of that. I said this to my team yesterday. If you look at the top three players in this business, it's obviously us in number one slot. It's Learning Care Group that's number two, and then Bright Horizons. If you look at all three of those, they barely come to 5% of the entire share of market of early childhood education, and we're at, like, 1.8, 1.9%. It baffles me that with aggressive approaches to marketing, aggressive approaches to the quality that we do, aggressive approaches to allowing our center directors to be high-quality providers of the relationship that they have, the effort they're making, the tours that they're taking, the time they're giving families. You know, I feel like we will continue to grow, and I think there'll be a few of us that emerge in 2026 doing just that. I don't think the entire market's gonna grow in 2026. I think we're gonna see more of what we saw in 2025 because of the economy, because of the, if you will, just instability of things that are going on in our environment. I do believe the opportunity for some of us to get in another lane, make an effort at what we're doing, put more emphasis on growth, we'll get there. Just my opinion. Okay. Then I think you said twice in your prepared remarks that you fell short of the consistency that families expect. My prior understanding was the challenges were more on demand or inquiry conversion, but existing family retention was good. Maybe if you can go into more detail on what you meant by fell short of the consistency families expect, and was that directed at existing families and retention, or was that more on inquiry conversion? No. Our retention, I'm pretty happy with. It's been stable and actually grown a tiny bit. We're fine there. We have not seen any slippage to say. Where I was speaking to specifically there is, and I go back to my comments earlier, is that we didn't allow our center directors to be center directors. They were bombarded with a number of things that really distracted them from the core effort of what they do, and that is taking care of families, being in the classroom, recruiting great teachers, and creating the environment they have. They weren't able to do the tours and do them in the quality way that they've done in the past because they were busy, they were distracted. The opportunity for us to give them back the time to do a high-quality tour, to, you know, be in the classroom, to empower their teachers, do all that, is what we do well. Quite frankly, we're getting back to that. Okay. Thank you. You bet. Our next question is from Manav Patnaik from Barclays. Your line is open. Hi, good afternoon, this is Ronan Kennedy on for Manav. Thank you for taking my questions. You spoke of bipartisan support, but I think also acknowledged confusion around the federal and state grants further testing the child care sector. Can you talk about... There had been a fair amount of headlines, I think early in the Q1 and throughout, whether it's the HHS Defend to Spend or even some headlines on a state-level budget cut standpoint, whether it's administrative throttling or reimbursement rates. Can you talk about those dynamics and the impacts for Q1 and what is anticipated or contemplated in the guide? Happy to. I'll tell you, in the first 90 days. I've only been here 90 days. In those first 90 days, I have been to Washington, and visited with senators and congressmen and women, basically, combating, if you will, and defending our approach to CCDBG, and our integrity around that. Minnesota was a curveball, and it happened right at the end of December into January. We flew, I think it was the second, maybe third week. 6 CEOs and I flew to D.C. to ensure the government officials that we were not the problem, we were the solution. Candidly, they agreed with us. We have worked with them to be sure that they are looking at things, that they're setting up the right corrective actions to ferret out any possible fraud that they may occur or might occur in that part of our business. What I came out of that meeting with, we met with the head of that, Alex, and forgive me, I don't remember his last name, but a great guy who works for RFK and literally is the top player in that arena. He feels very good about where the major providers are and has no intentions of freezing any funds or slowing any funds down. The Q1, we will see no impact to that. Quite frankly, we don't see an impact to it this year. I'd also tell you that a week after we were in Washington, they actually raised the block grant $85 million more dollars, so about 1%. Not a lot, but it's a lot better than freezing the funds, candidly. It was a lot better to see bipartisan support function increasing, although a little, increasing the CCDBG, the block grant. I also spent time in February in Colorado, and I'll be spending time in the next week in Massachusetts. I'll visit with the governors there and the lieutenant governors there and also the head of education in both states. It's all to I've done this all my career in this world. I've always wanted to get out, and I wanted to meet with them and be sure they realized the emphasis and impact that we have on hardworking families and, quite frankly, the development that we have on children. We're taking a very strong offensive stance to that. I've got a meeting in May with 8 of the CEOs, the top CEOs in the country, just those folks, to have a strategic session with them as well. All of that to say I feel good about, if you will, the block grant. I feel good about subsidy in total. We don't see any interruptions to it. Quite frankly, we feel good. Now, I will tell you we've had some manipulations in state funding. Some states, you know, are allocated more, some states are allocated less. for us, being in 41 states around the country, you know, we may see an interruption of a couple of funds or dollars in one state, but we pick them up in the following state. All in all, something we have to be all over. Quite frankly, we have a staff of a few hundred that administer the subsidy disbursements in our company. Quite frankly, that's a competitive advantage we have in that space. Thank you very much. Appreciate the insights there. If I may, please, I'll shift gears. You'd referenced being willing to take deliberate portfolio actions among the underperforming centers. I don't think the guidance contemplates that. It was referred to, if I'm not mistaken, as a possibility. Can you help us understand that decision framework? There's a level of occupancy margin or even trajectory that would trigger, say, a center-specific targeted initiative for improvement or a potential exit, and then what the total impacts of those could be for 2026, please. Yeah. Ronan, look. In the guide, we just have. We've been doing 15-20 per year the last few years, and you all know that. As we build out our guide and where we're going for this year, we did that. One of the things that Tom's asked myself and others, as he's been here and taking things in, is to do another hard look at all of our centers and revalidate that all of our centers are the ones that are gonna take us through 2026 and into 2027, as we get all the FTEs back across this fleet. We are, frankly, in the middle of taking a hard look at all of our centers. The things you're talking about are the ones that are important, demographics, occupancy, engagement, and all of their trends. We're taking a hard look at that now, so that we can come back and look ourselves in the mirror that we have the right centers going forward. That's likely gonna be higher number than 15-20. We're just not at the point now where we can give you that number because I don't even have it, but we're working through it. I'll just add one comment. I'm an ex-retailer, and you know that when you have a multi-site business, you're always evaluating all your centers. You're building some, you're closing some, and you're decorating some others. All of that is what we do. I just came back with a you know, a heightened awareness of that and wanted to be sure that we were as current as we could be. Tony's done a phenomenal job with that. I did wanna take a little bit more aggressive approach, candidly, from looking at it, given the enrollment trends of the last year and a half, and just be sure that we were where we needed to be. Thank you very much. Appreciate it. Our next question is from Toni Kaplan from Morgan Stanley. Your line is open. Thanks so much. I was hoping that you could just delve a little bit more into the enrollment issues. It's been asked in a couple of different ways, but, you know, I guess how much of it do you think is market-driven versus self-inflicted? What could, you know, drive the enrollment better or worse than the down 3% in the guide? You know, I guess the specific things that you're doing to try to sort of stem the decline here. I know you talked about, you know, personnel and, you know, paid search and incentive comp changes, but just any very specific, like, things that you're doing to try to drive enrollment and what you see as the real core issues on the enrollment side. Happy to, Toni. You know, I'll start with something we haven't discussed yet, that is, as you know, we've had some very good success in our—solid success in our opportunity region in 2025. I can tell you that the Q1 of 2026 is still performing above where it was before, and we're very excited about that. As a matter of fact, we've taken many of the best practices out of the opportunity region, if you will, and we've actually implemented those in all of our centers for 2026. Other than that, I'd say that, you know, there are macro situations that we're in. I go back to inflation, just the economy in general, the instability of our country right now. You know, even the work environment. I mean, people are still figuring that out. All those have played or been noise in, if you will, the aspects of enrollment. I tell you, to me, enrollment for us has been self-inflicted for the most part. Not totally, but for the most part. I actually believe when I look at the amount of activities that are going on in the center that do not pertain to enrollment, it's been significant. I really believe that we get our centers back to, and our center directors back to focusing on, you know, introducing KinderCare to more families, being a part of the community in a bigger way, doing the things that they need to do to create that kind of interest and enthusiasm will do much better. On top of that, please don't take anything away from the paid search that we've spent. We've spent millions of dollars there that we haven't spent in the past. It is showing increases in the number of inquiries we got. Not only the number, but also the quality of inquiries. They're coming to us. They're literally, if you will, in real time being spoken to. I mentioned earlier about the distractions we had. You know, if someone inquires to KinderCare, they're obviously looking at other centers or inquiring at other centers. You know, if we don't get back to them quickly, they may make a decision by somebody else's proactivity. Our centers today now have the time and the effort and the focus and priority to go after those inquiries as quickly as they possibly can. I mentioned Michael earlier, getting Michael back into that. He's an operations guru, and the opportunity for him to be at the centers, be sure that they're focused on these things, reliving all the things that he accomplished in the years past, I believe is gonna make it all come together. The fact that we started the year literally communicating that growth is priority one, including the change in our compensation program for the whole company, I think those are the right signals to send, and I hope they're gonna bring forth the fruit we've got. Great. Thank you for the update on the quintiles chart. I noticed obviously that the top four quintiles you know, had deteriorated a little bit year-over-year, and obviously, the fifth got better. I guess when you think about those top four, like, are you concerned that those are going down? Like, what's the right level there? Maybe the other question is, you know, I guess when you think about these quintiles, you know, are there different problems in the first quintile versus the third quintile? Or would you just generally put quintiles one to four in the same bucket of suffering from the same trends? No, I would say to you know, quite frankly, the top quintile is our highest quality center. It's the center that has the most stability in it. It's the center that, quite frankly, has the highest family engagement, the highest employee engagement, and it goes down from there. What I'd say to you is each one of them has individual challenges. But for the most part, I would say to you, the reason those higher quintile centers were down is it goes back to the distraction of the center director, in my opinion. They didn't have the opportunity to do what they needed to do, and they were highly occupied to begin with. The opportunity to take the opportunity regions best practices to those other quintiles, if you will, is gonna help them. That along with paid search, clearing the decks for the center directors to be center directors, all of that is going to help those grow. I'm not at all concerned about those quintiles going forward. Quite frankly, they're the ones that we've, you know, quite frankly, poured the marketing towards, and that's where we're gonna go. Thank you. Our next question is from Jeff Silber from BMO Capital Markets. Your line is open. Hey, good afternoon. This is Ryan on for Jeff. Just on the pricing algorithm, I understand the age-based methodology, but it looks like you were around 2% for 25. Just from the conversations with parents, what is the appetite for the 3% price increase you're layering in this year? Thank you. Yeah, of course. I think as a reminder, the tuition that we talk about as a company is the mix of, you know, approximately 2/3 private pay, 1/3 subsidy families. Our rate was actually higher than 3% last year as well on the private pay side. Really what pulled us down this year was some of those states, Indiana being the big one, but a few others too, in really that back half of the year, where we saw additional displacement from those private pay rates with what we were getting from subsidy. So far, we're what, 9 weeks into the year, and it's been really quiet, as far as our new rates, and so feeling good about that. Again, as a reminder for everyone, when we put those new rates in on January, they are for new students and age ups. It's not really as much of a price increase conversation. Virtually all of those families, the age up are still actually gonna be paying less than they did the prior week, even with that in embedded price. The way we do that really helps with those conversations, and helps the families feel solid about it. We're making sure we're living up to the value we need to give those families, even with those price increases. They're not feeling we need to be able to speak to the value they're getting from 'em. I appreciate it. You talked about some early wins on the selective marketing front. I was just wondering how you're measuring that and when you expect to see some of those results come to fruition? Well- We'll see them, you know. The great thing about paid search, and I'm sure you know this, but, is that you can track it all the way from inquiry to tour, to actually enrollment. We're doing every bit of that. Quite frankly, with AI, the amount of data we're getting and just capturing is phenomenal. What I was speaking to earlier, quite frankly, was just year-over-year growth in inquiry. You know, if we have more people inquiring for KinderCare and we're giving our center directors more time to generate a tour and generate the opportunity and conversation around enrollment, we'll win. That's the approach we're taking to it. It starts with just getting if we have traction in the number of inquiries that we have year-over-year, and that has shown up. It has shown up significantly for our smaller brands, and it has shown up in an increase in KinderCare as well. All in all, that's encouraging to me. I go back to my comment earlier about, you know, we're less than 2% of the share of market in this business. If we're gonna be aggressive and we're going to increase inquiry, and we're gonna give center directors the opportunity to do their job, the opportunity for us to grow enrollment is there. The opportunity now is all about execution, and that's the approach that we're taking. Our next question is from Josh Chan from UBS. Your line is open. Hi, good afternoon. Thanks for taking my questions. Hey, Tom, if somebody suggests or asks you whether growing enrollment is tougher now than it was 10 years ago, kind of like, how would you agree or disagree with that? Let me explain to you why I'm gonna say what I'm gonna say. Enrollment after a family decides, one, that they are proud of the brand. This is a brand they wanna be associated with. Inquires about potential openings in their child's age group, and then shows up for a tour. The actual opportunity to enroll them has not changed. We are one of the very few companies that actually show them how much KinderCare costs for their child in the classroom, in their community. So they come to our center knowing that. Quite frankly, this industry doesn't do that as a practice, and we felt like we should be transparent, so we don't waste someone's time. If they can afford KinderCare and they want to see the actual experiences a child has in the center, please come. I can tell you that by doing that, we have seen better enrollment as a% of the total inquiries and tours than we saw prior to that. It's not a problem. I think you have to understand that if a family is one, in need, and secondly, have chosen the number one brand in the country, KinderCare, and then have come in to literally take a tour and be with our center director and spend some time in the classroom, we're pretty darn confident we can win that tour. Okay. That makes a lot of sense. Thank you for that color. Kind of a financial question. I guess if you take out the 53rd week in 2025, then your guidance assumes kind of slight revenue growth in 2026, but then a $60 million+ EBITDA drop. Like, I guess, does that contrast surprise you? I know that there's, you know, enrollment and deleverage and things like that, but that just seems like a very large contrast between the top and the bottom line there. Is there a way to kind of conceptualize that? Yeah, no, I mean, a little bit to what I think George asked too as well, right? The biggest driver there truly, Josh, is the deleveraging, and what you see as those enrollments go down. You're just the basic fixed costs, rent, center directors, and some of the other fixed costs. Obviously, you're getting no leverage off of that as well at all. It is harder as you drop down, especially coming into the sixties, where we're at on average across the fleet there, to make up the teacher hours. You're not making up many teacher hours by dropping enrollment. That's really falling off, and that's the biggest impact that's really happening. We're high single digits millions of grant loss, you know, around 7-9, actually probably closer to 10, I guess, year-over-year, with most of that being in the first half of the year, of our expectations of what states are gonna do to grants, which really normalizes us in 2026 back to where it was pre-COVID is our expectation. The other one is some of this increased marketing as well is in our expectation there. Now, that should pay off for us over time and even in 2026. At this point, kind of factoring that in more weighted towards cost than the upside we'll see from it. Okay. I appreciate the color, Tony, and thank you both for the time. There are no questions at this time. Chloe, thank you. Everyone, thank you for your time today, and we look forward to talking to you again very, very soon. Thank you so much. This concludes today's conference call. Thank you for participating. You may now disconnect.