Q3 2025 Kindercare Learning Companies Inc Earnings Call

November 12, 2025

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 12 2025.

Now ill turn the call over to MS. Olivia Kim. Please go ahead.

Paul Thompson: 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? If so, to which growth algorithm assumptions is this tied to? Yeah, 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.

Thank you and good evening, everyone welcome to Kindercare third quarter earnings call. Joining me from the company are Chief Executive Officer, Paul Thompson, and Chief Financial Officer, Tony I'm Andy.

Following pollen 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 dock Kindercare dot 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 factors section of our most recent annual report.

Paul Thompson: We are in constant talks with all those states and know that there's a lot of thought process going on regarding what the impacts to their budgets might be by something like this in the future too. That's just kind of where some of the uncertainty currently sits. Got it. Thanks. Thank you. Your next question comes from Andrew Sanderman from JPMorgan. Please go ahead. Hi. I was wondering what timing you think you could get back to the long-term algo. 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, as we're ending this year on 2%. We're still finalizing what our private pay rates will be for next year that will go in place 1 January.

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.

I would also like to mention for interested parties are executives, who will be participating in upcoming fireside chat over the next few weeks, which will be publicly accessible on our investor relations website under the news and events tab.

Paul Thompson: We're not quite there on the private pay side. 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. 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. 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—what do you think you'll get back to?

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 <unk> and portfolio growth levers revenue was $677 million up nearly 1% from last year with same center revenue of $617 million the softness we.

Inorganic growth continues.

<unk> and same center occupancy of 67% at the lower end of our expected range.

Paul Thompson: 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. What we're watching for is, clearly, on B2B, NCOs, and acquisitions, we continue to be, in 2026, as Tony articulated, on track for that, feel good about tuition, and for us to continue to make progress on occupancy specifically. Understood. Thank you very much. Thank you. Your next question comes from Manav Petnik from Berenberg. 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?

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 III 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.

A 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 <unk>.

Paul Thompson: Could you confirm the extent to which the lower enrollment was driven by macro factors, the softening of reimbursement rates for your student authorizations, or internal opportunities for improvement of conversion? Yeah. 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. 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. That kind of gave us a softer starting point for back-to-school in general to do it. As far as kind of—I do not think we have a quantitative number for you in each one of those, Ronan. They are obviously all impacting it.

While demand at the center level was adequate to support our enrollment objectives. Our average weekly enrollments fell short of last year's Mark.

Additionally, we saw headwinds in our subsidiary business in a handful of states with near term softening of tuition reimbursement rates and fewer new student authorizations.

We believe the enrollment challenges reflects the current economic environment are not permanent and we expect to see a return 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 child care funding, we are seeing 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.

Paul Thompson: 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, 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. That gets down to the local level where it's on us to utilize those tools and tell those stories and show that value. Those kind of Gantt charts start to overlap quite quickly. The subsidy one, Paul alluded to Indiana.

Specifically, we signed a number of new clients at our champion School age program and expanded our employer relationships as employers look to offer dedicated onsite for 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 a ladder 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.

<unk> 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've recognized how these influences are causing hesitation for some as they make their childcare decisions.

Paul Thompson: 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 with waitlists and some freezes. We have a couple of other states that aren't up to that level but have also been a really drag to us here at back-to-school as well. Hopefully, that helps. Thank you for that. Can you provide any insights on your occupancy trends by quintile through the quarter and exiting into Q4? 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, what we're talking about. Returning to our long-term growth algorithm is the improvement we're seeing in our opportunity region.

We believe these dynamics are likely to persist into 2026.

Asia 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 child care decisions we.

In this environment, we're managing with a focus on disciplined execution operational efficiency effective cash management and our continued commitment to meet families in their local market, where they need us the most.

We believe kindercares national scale strong subsidy partnerships and ability to serve families across diverse circumstances position us to navigate these conditions with resilience.

We believe these dynamics are likely to persist into 2026.

Our commitment to high quality early education, and the distinctive experiences offered through our centers strengthen our brand and reinforce the trust families placed in us.

We believe Kinder care's national scale strong subsidy partnerships and ability to serve families across diverse circumstances position us to navigate these conditions with resilience.

Paul Thompson: We've talked about the larger opportunity that exists in our lower-occupied centers. 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. Your next question comes from Jeff Mueller 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, can 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? 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.

These advantages give us confidence in kindercares ability to perform through varying in 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 and productive ways to expand care to as many of those families as possible.

Our commitment to high quality early education, and the distinctive experiences offered through our centers strengthen our brand and reinforce the trust families placed in us.

These advantages give us confidence in kindercare its ability to perform through varying in uncertain economic conditions.

However to maintain balanced budgets some states have implemented measures such as waitlist and reducing reimbursement rates.

The number of families seeking subsidy assistance remains elevated across the country and our government funding team continually seeks to engage state and local agencies and productive ways to expand care to as many of those families as possible.

In certain cases these actions have had a significant impact for example in Indiana roughly 13000 fewer children are receiving subsidy assistance since the start of the year and our full time subsidy enrollments have declined proportionately in this state by nearly 1000 children over that same period.

However to maintain balanced budgets some states have implemented measures such as waitlist and reducing reimbursement rates.

At the same time many providers in this state have been further pressured from 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 copays increasing reimbursement rates.

Paul Thompson: There are many factors that we're watching. Beyond birth rates, you're also looking at women in the workforce, and you're looking at children ages 0 to 5. 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 means 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.

Or in the case of new Mexico pursuing in public private solution to make childcare universally accessible.

At the same time many providers in this state had been further pressured from reduced reimbursement rates.

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.

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.

As these efforts are sold 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 overtime. We are confident that our ability to convert demand we see in our centers together with ongoing Pos.

Or in the case of new Mexico pursuing a public private solution to make childcare universally accessible.

<unk> and constructive engagement with state and federal leaders on childcare funding will be important drivers toward achieving our occupancy goals.

These efforts are all across the broader child care 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're confident that our ability to convert demand we see in our centers together with ongoing positive.

Paul Thompson: 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. That's a really compelling argument as we talk to, or justification is probably a better word, as we talk to parents. All those things, as we continue to improve the talent across our organization at that district leader level as I talked, is what gives us confidence as we move into 2026.

Progress here and 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.

And constructive engagement with state and federal leaders, a childcare funding will be important drivers toward achieving our occupancy goals.

Progress here and May take some time. However, we believe we are taking the right strategic steps to build sustained improvement upon solid fundamentals.

Enhancing both the speed and personalization of family interactions are digital tools continue to make it easier for families to move through the enrollment process and percentage of directors to more effectively match available spot 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 sensor level.

<unk>, both the speed and personalization.

Family interactions are digital tools continue to make it easier for families to move through the enrollment process and percentage of directors to more effectively match available spots with family needs.

Paul Thompson: 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. 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, evaluating the efficiencies of different investments we're making to become stronger on the digital side or other investments across our teams. There are 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.

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.

The digital tools are also helping to drive overall improvement within our opportunity region and in some cases, creating significant impact at the sensor level.

One of our opportunity to region centers located in Michigan and led by our veteran Center director used our center diagnostic tool to pinpoint opportunities for improving enrollment and worked with our district leaders to develop a remediation plan.

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 focus attention and resources.

Within eight months, she lifted occupancy from 48% to 95% that kind of turnaround shows what's possible when we pair well trained leaders with our tools to execute.

One of our opportunity to 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 their district later to develop a remediation plan.

Sure. 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 at the same magnitude in all of our almost 1600 ECE centers.

Within eight months, she lifted occupancy for 48% to 95% that kind of turnaround shows what's possible when we pair well trained leaders with our tools to execute.

Paul Thompson: Continuing to think about how we up-level our sophistication around labor is another piece that we'll continue to lean into. 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. 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.

I share. This example to illustrate that despite the challenging environment, we are finding ways to make progress.

We believe however that the easiest path for broad based improvement in overall enrollment is generally going to be amongst centers that currently have lower occupancy most of which are grouped in quintiles four or five.

Overall, we continue to see encouraging progress within the opportunity region.

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 at the same magnitude in all of our almost 1600 <unk> centers.

On 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 130000 responses from our families which is near last year's record response total.

We believe however that the easiest path for broad based improvement in overall enrolment is generally going to be amongst centers that currently have lower occupancy most of which are grouped in quintiles four or five.

This represents our 13th year partnering with Gallup and as a reminder, we measure both employee and family engagement.

Beyond the tracking 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 130000 responses from our families which is near last year's record response total.

Consistently we hear from families that they celebrate the positive impact that safe high quality childcare can have on their child's development and then the families are deeply connected to our center staff.

Paul Thompson: Jeff, we are constantly looking at the right centers for us to maintain and go forward with them, right? 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? Where is our profitability based on rent, labor, and things like that? 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.

In addition to receiving feedback high levels of engagement helped us maintain strong family retention.

This represents our 13th year partnering with Gallup and as a reminder, we measure both employee and family engagement.

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.

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.

Our focus on operational excellence extends into the management ranks as well.

In addition to receiving feedback high levels of engagement help us maintain strong family retention.

In order to better align our strategic operational goals with our growth initiatives, We recently announced the promotion of Lindsay store Hondo to Chief operating officer.

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.

Lindsey has been an incredible executive leader for us during their 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 acquire tremendous skill set to accelerating operational excellence throughout the organization.

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 start Hondo to Chief operating Officer Lindsay has been an incredible executive leader for us during their 12 years with the company.

Paul Thompson: Obviously, you're looking at lease timing on those and making sure that the ROI on a closure does make sense. You won't see us hesitate to close centers that should be closed. 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. 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.

<unk>.

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.

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 acquire tremendous skill set to accelerating operational excellence throughout the organization.

Closer to the center level. We also took purposeful actions within our field leadership to strengthen performance during the quarter, we refined our district leaders structure to sharpen operational focus increased accountability and improve agility, while ensuring we retained our most effective leaders. These.

Paul Thompson: 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. As we sit today, we are going to continue to fund that NCO 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. 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.

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.

These critical members of our organization are responsible for oversight and development of our center directors.

As a reminder, we maintain a 50 to 100 basis points spread overall between wages and tuition.

And are expected to step in and personally support them where help is needed.

Turning to tuition.

And we will continue with that strategy, while setting tuition to reflect local market dynamics and needs.

Both came in at 2% for the third quarter, which Tony will discuss in more detail shortly.

Paul Thompson: 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 drill 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. That in and of itself is something that we know is more short-term in nature.

This financial discipline gives us the flexibility to continue investing in our other growth levers.

With back to school finished we are now finalizing our plans for 2026 tuition rates.

<unk> and Ceos and tuck in acquisitions, all of which performed to expectations this quarter our.

As a reminder, we maintain a 50 to 100 basis points spread overall between wages and tuition.

And we will continue with that strategy, while setting tuition to reflect local market dynamics and needs.

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.

This financial discipline gives us the flexibility to continue investing in our other growth levers <unk> and Ceos and tuck in acquisitions, all of which performed to expectations this quarter.

Year to date, we expanded the program with over 200, new site wins with.

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.

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.

Paul Thompson: 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. 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? Have those factors changed from the prior quarter?

Kindercare for employers, which consists of our onsite employer focus centers also continued to perform well for us.

Year to date, we expanded the program with over 200, new site wins the <unk>.

During the quarter, we opened three new centers and employer locations and continue to develop our pipeline of opportunities.

Solid performance from the champions team this past quarter and frankly, all year provides momentum for Q4 and the rest of the school year.

It's also important to note that occupancy at our onsite averages over 70%.

Kinder care for employers, which consists of our onsite employee focus centers also continued to perform well for us during the quarter. We opened three new centers and employer locations and continue to develop our pipeline of opportunity. It's also important to note that occupancy at our onsite averages over seven.

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 vendors 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 mass mutual life insurance, our new contracts were spread across seven.

<unk> percent, which speaks to the great partnerships, we have fostered with employers to let their employees know about this benefit available for their children.

Paul Thompson: 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. It is working. Again, they are at lower occupancy, so the range of age groups and parents that you can activate across that pipeline are more significant. 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.

17 states covering 317000 employees, who will now have access to Kindercares nationwide network of centers at a discounted tuition rate.

Employers are also expanding childcare ventas for their employees through our tuition benefit offerings. During Q3, we signed 20 contracts with employers, including Parkview Health system Discovery Life Sciences.

We continued executing on our other growth levers during the quarter by welcoming families to two new early childhood education centers, and Illinois and Colorado.

Aspen group and mass mutual life insurance, our new contracts were spread across 17 states covering 317000 employees, who will now have access to kindercares nationwide network of centers at a discounted tuition rate.

This brings our year to date total to eight new center openings within communities.

We're also very active with tuck in acquisitions in the past quarter by acquiring six centers across six different states taken together, we have clear visibility into these two levers we expect 2026 to be another active year.

We continued executing on our other growth levers during the quarter by welcoming families to two new early childhood education centers, and Illinois and Colorado.

Looking at the remainder of this year, we will continue to focus on improving same center occupancy and tuition by driving engagement and consistency through our leaders and center level teams.

This brings our year to date total to eight new center openings within communities.

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.

Looking at the remainder of this year, we will continue to focus on improving same center occupancy and tuition by driving engagement and consistency through our leaders and center level teams.

Paul Thompson: Your next question comes from Josh Shen from UBS, sorry. 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? I heard you reference a 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. 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.

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.

We expect our other levers will perform to our 2025% expectations reinforcing the diversification of our model.

While this pressured margins for the quarter cost discipline and positive cash generation remained consistent as champions in Connecticut for employers Ncos and tuck in acquisitions, all continued to perform well, let me walk through the quarter in more detail.

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.

Total revenue was $677 million up 80 basis points from last year with growth driven by champions to.

This pressured margins for the quarter cost discipline and positive cash generation remained consistent as champions in kidney care for employers Ncos and tuck in acquisitions, all continued to perform well, let me walk through the quarter in more detail.

The spread 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 and included in our same center pool.

Total revenue was $677 million up 80 basis points from last year with growth driven by champions.

Paul Thompson: 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. 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. That really sets the range outcomes through May. Okay. That's helpful. 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. The revenue is being caused by two different things, right, that we talked about.

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.

Total average weekly fulltime enrolment decreased by 190 basis points to just over 140000 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.

Average weekly fulltime enrolment decreased by 190 basis points to just over 140000 students in the quarter, reflecting lower overall enrollment compared to last year and our software starting point at the beginning of Q3.

As we look forward remember that back to school is our highest new student enrollment period and sets the start of the client for the next seven to eight months and 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.

As we look forward remember that back to school is our highest new student enrollment period and since the start of the client for the next seven to eight months and which we historically have sequential growth each week until summer.

Paul Thompson: 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. Obviously, an occupancy decline impacts our ability to leverage, especially our gross margin, and even our G&A a little bit. We're seeing definitely some impacts from that. The other one is the pricing, right? 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.

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.

J P as in 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.

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 can occur is known for and ensure our teachers can receive a competitive pay and benefits package.

Employer onsite centers continued to perform well during the quarter with average occupancy over 70% and consistent revenue growth.

J P. The 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.

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.

Paul Thompson: 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 call there. Thanks, Josh. Thank you. Your last question comes from Faiza Ali 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.

Employer onsite centers continued to perform well during the quarter with average occupancy of over 70% and consistent revenue growth.

As Paul mentioned, we opened two NCR was during the third quarter and acquired six tuck ins, bringing us to 20 seconds. So far this year on.

On a year to date basis cash consideration for the tuck ins are just under $18 million and was funded completely out of the $138 million and free cash flow generated this year.

Our ability to fund new centers in tuck ins, while maintaining our leverage is a testament to the strength of our operating and growth models.

Paul Thompson: Maybe could you take a step back and just explain to us 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. What is the origination from it is everything not related to childcare specifically. 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.

As Paul mentioned, we opened two NCI was during the third quarter and acquired six tuck ins, bringing us to 20 seconds. So far this year.

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.

Year to date basis cash consideration for the tuck ins is just under $18 million and was funded completely out of the $138 million and free cash flow generated this 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 <unk> into the mid twenty's per year in 2026 and beyond consistent with our long term growth objectives.

Our ability to fund new centers in 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.

While we aren't seeing a flood of independently owned center closures. This year. After the exploration 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 or 58% increase over the same year to date time period last year benefiting from operational improvements and lower interest expense following our deleveraging actions.

While we aren't seeing a flood of independently owned center closures. This year. After the exploration 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.

Adjusted EBITDA for Q3 came in at $66 million.

Paul Thompson: 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, after that time they have come out that they're adding, both of them are kind of in the $50 to 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. 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 continuation of that going into 2026. Okay. Okay. Understood.

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.

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 and we completed in July and increased public company costs versus Q3 last year.

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.

We will begin to lap the incremental public company costs incurred since the IPO in Q4, this year and as we move forward, we will remain focused on disciplined cost management and operational efficiency.

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 and we completed in July and increased public company costs versus Q3 last year.

Income from operations was $26 million from 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, including the repricing we completed on July one.

Okay.

Income from operations was $26 million for the third quarter compared to $54 million from the prior year.

Adjusted net income for Q3 was $15 million up from $4 million last year and adjusted EPS was <unk> 13.

Paul Thompson: 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. 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.

Accretion from <unk> a year ago.

Our ratio of net debt to adjusted EBITDA at the end of Q3 was two five times and remained comfortably at the bottom of our targeted range.

Moving onto our outlook for the rest of the year as we analyzed trends coming out of back to school, it's clear the recovery in enrollment occupancy is going to take longer than we expected.

Adjusted net income for Q3 was $15 million up from $4 million last year and adjusted EPS was <unk> 13.

In addition, while we haven't experienced a direct material impact from the government shutdown. The 10 gentle on downstream unknowns due to 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.

Increasing from five cents a year ago.

Our ratio of net debt to adjusted EBITDA at the end of Q3 was two five times and remains comfortably at the bottom of our targeted range.

Moving onto our outlook for the rest of the year as we analyzed trends coming out of back to school, it's clear the recovery in enrollment occupancy is going to take longer than we expected.

For the full year 2025, we are expecting revenue to finish the year between $2 72, and $2 74 billion.

In addition, while we haven't experienced a direct material impact from the government shutdown. The tangential in downstream unknowns due to 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.

Adjusted EBITDA expected to land between $290 million to $295 million and adjusted EPS to be between 64% and 67.

Paul Thompson: We utilize that one to test ourselves, but we're always trying to make sure we can get 50 to 100 basis points differential. 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, which are the two biggest ones. How those families feel with us and how many we have, obviously, are two big factors there. Externally, we're looking at number of competitors, we're looking at competitor pricing, and we're looking at general other demographic factors for that local center. 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.

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 the reimbursement rates.

For the full year 2025, we are expecting revenue to finish the year between $2 72, and $2 74 billion adjusted.

Adjusted EBITDA is expected to land between $290 million to $295 million and adjusted EPS to be between 64% and 67.

We are currently finalizing our 2026 tuition planning and as always we align our pricing approach with community level dynamics, ensuring rebalanced profitability with a different pressures families are managing for access to care.

Turning to same center occupancy, we expect to continue seeing week to week growth in fulltime 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 are currently finalizing our 2026 tuition planning and as always we align our pricing approach with community level dynamics, ensuring we balance profitability with a different pressures families are managing for access to care.

Paul Thompson: If I can just clarify, do you think that 50 to 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. I wouldn't say they tie directly, but we will still be at 50 to 100 basis points next year as well. 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. We are also confident we can create 50 to 100 basis points of price based on our individual center dynamics. Got it. Thank you. Thank you. There are no further questions at this time. I will now turn the call over to Mr. Paul Thompson. Please continue. Thank you, Kelsey.

We expect <unk> to continue performing well in Q4 and carry that momentum into 2026 at.

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.

At the same time, we continue to see solid progress in Kindercare for employers and its contractual reoccurring revenue streams.

Putting these two together our <unk> business is expected to contribute about 1% to growth this year.

The 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 a clear visibility into new centers coming online we should improve this contribution percentage in 2026 and beyond.

We expect <unk> to continue performing well in Q4 and carry that momentum into 2026 at.

At the same time, we continue to see solid progress in Kindercare for employers as contractual reoccurring revenue streams.

Putting these two together our <unk> business is expected to contribute about 1% to growth this year.

Tuck in acquisitions have been robust all year and continued 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% of growth this year.

Paul Thompson: 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 executing 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.

And at least the same in 2026, the pipeline visibility for acquisitions remains strong.

Tuck in acquisitions have been robust all year and continued 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 seeable future. This key lever for portfolio expansion and diversification is expected to contribute about 1% of growth this year.

We expect free cash flow to be between $88 million to $94 million for the year.

Capex will likely land in the range of 131% to $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.

And at least the same in 2026, the pipeline visibility for acquisitions remains strong.

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 larger contributor to growth. In 2025. We also believe that the momentum we have in <unk> and our pipeline visibility for <unk> and tuck in acquisitions should keep each of these three levers on a solid trajectory with each around 1% for <unk>.

We expect free cash flow to be between $88 million to $94 million for the year.

Capex will likely land in the range of $131 million to $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.

<unk> thousand 26.

While we are not providing official guidance for 2026, well give you some directional insights into growth levers as we see them today, we expect tuition increases will be a larger contributor to growth. Then in 2025. We also believe the momentum we have in <unk> and our pipeline visibility for MTO and tuck in acquisitions should keep each of these three levers on a solid trajectory with each around 1% for <unk>.

With that operator, let's open up the line for some questions.

Thank you.

Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one and you touched on pumps you will hear prompt eager hand has been raised.

Should you wish to declines in the polling process. Please press the star followed that thank you.

<unk> thousand 26.

With that operator, let's open up the line for some questions.

If you are using a speaker phone please lift the handset before pressing any Q1 moment. Please for your first question.

Thank you Les.

Ladies and gentlemen, we will now begin the question and answer session did you have a question. Please press the star followed by the one and you touched on from you will hear prompts that your hand has been raised.

And your first question comes from Toni Kaplan from Morgan Stanley. Please go ahead.

Hi, This is <unk> on for Toni Kaplan just had a quick question about enrollment so as.

Should you wish to the clients and the polling process. Please press the star followed by the Q. If you are using a speaker phone. Please lift the handset before pressing any Q1 moment. Please for your first question.

As we know it has been a bit weaker all year and weaker in this quarter just wondering heading into 2026.

What your expectations were surrounding it at least Directionally I know you mentioned that there has been some hesitation do you expect it to be in 2026 at current levels worse or better just want some color on that thanks.

And your first question comes from Toni Kaplan from Morgan Stanley. Please go ahead.

Hi, This is <unk> on for Toni Kaplan.

Quick question about enrollment so.

I appreciate the question and as Tony said in his comments.

We know it's been a bit weaker all year and weaker in this quarter just wondering heading into 2026.

What we're watching for in the remainder of 2025, so that we can clearly see any continuation of.

Your expectations worse surrounding it at least Directionally I know you mentioned that there has been some hesitation do you expect it to be in 2026 at current levels worse or better just want some color on that thanks.

Impact from the government shutdown, what I would tell you is we still very feel very good about the level of inquiries were seen 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.

I appreciate the question and as Tony said in his comments.

What we're watching for in the remainder of 2025, so that we can clearly see any continuation of impacts from the government shutdown. What I would tell you is we still very feel very good about the level of inquiries were seen at the local level of each one of our centers we continue to see.

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 growth algorithm, we've talked about historically for growth for Kindercare and our scale and diversification allows us to do that.

The 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.

Great and just a quick follow up so you mentioned in the guide that there was no direct impact from the government shutdown. 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.

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.

Yes. So so we did not see very very very few families that are impacted by it we extended a couple of courtesies were a few families here and there that were impacted to help them make it through in.

Great and just a quick follow up so you mentioned in the guide that there was no direct impact from the government shutdown, but the uncertainty added more issues hitting until 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.

That will be great for them and for us in the yen.

Just some of that uncertainty continues to come from some of the things we talked about that we think it's putting pressure on the stage.

Yeah, so well so we did not see very very very few families that are impacted by it we extended a couple of courtesies through a few families here and there there were impacted to help them make it through.

Think about what theyre doing in the future as far as our spend we are in constant talks with all of those states and know that there is a lot of thought processes 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 sets.

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've talked about that we think it's putting pressure on the stage.

Got it thanks.

About what theyre doing in the future as far as our spend we are in constant talks with all of those states and know that there is a lot of thought processes 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 sets.

Thank you. Your next question comes from Andrew <unk> from Jpmorgan. Please go ahead.

Hi, I was wondering what timing do you think you could get back to the long term algo and I think you said for 2006, you expect pricing increases to be higher than 25 could you just comment on that.

Got it thanks.

Yes.

Thank you. Your next question comes from Andrew <unk> from Jpmorgan. Please go ahead.

Yes, that's right Andrew.

Believe there'll be higher right Randy.

Hi, I was wondering what the timing you think you could get back to the long term algo and I think you said for 2006, you expect pricing increases to be higher than 25 could you just comment on that.

We're ending this year and 2% so we're still finalizing what our private pay rates will be for.

For next year that will go in place January one so we're not quite there on the private pay side and then a little bit like I just mentioned so some of that uncertainty we want to see what happens here with the states as we concluded 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 <unk>.

Yes, no that's right Andrew.

Believe there'll be higher right, we're ending this year and 2%. So we're still finalizing what our private pay rates will be for.

Correct.

Confirmation with some states what theyre doing there is a number there's still we're not sure yet so thats why were not coming out with a guide but at this point and feel good that it'll be above next year.

For next year that will go in place January one so we're not quite there on the private pay side and then a little bit like I just mentioned so some of that uncertainty we want to see what happens here in the states as we concluded 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.

I mean this year, sorry next year will be above this year.

And my first question was when do you think youll get back to Aldo.

Direct.

As far as pricing Andrew.

Confirmation with some states what theyre doing there is a number there's still we're not sure yet so thats why were not coming out with a guide but at this point feel good that it'll be above next year.

Overall your medium term algorithm when do you think what do you think youll get back to what type of timing do you think youll get back to the medium term algorithm overall.

I mean this year, sorry next year will be above this year.

Overall, we will get back to the algorithm in 2027, and then we're watching for is clearly <unk> and MTO and acquisitions.

And my first question was when do you think youll get back to Aldo.

As far as pricing Andrew No no overall your medium term algorithm. When do you think what do you think youll get back to what type of timing do you think you'll get back to the medium term algorithm overall.

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.

Overall, we will get back to the algorithm in 2027.

Thank you very much.

What we're watching for is clearly on BBB and Ncos and acquisitions.

Thank you and your next question comes from Manav Patnaik from Barclays. Please go ahead.

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.

Hi, This is Brian Kennedy offer but thank you for taking my questions. Tony May ask if you could please expand through 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 rework reimbursement rates.

Understood. Thank you very much.

Thank you.

And your next question comes from Manav Patnaik from Barclays. Please go ahead.

Fewer students authorizations or internal opportunities for improvement of conversion.

Hi, This is roni Kennedy offer them at all thank you for taking my questions. Tony May 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 rework reimbursement.

Yes, so the reference to the softer start already that we are bringing in a lower number coming into back to school right than we would've liked to really start the year. So that's part of my talking points there was Q2.

Rates for your student authorizations or internal opportunities for improvement of conversion.

Got it out of the summer.

One at a lower point than we would like to be heading to answer that kind of give us a software starting point for back to school in general.

Yeah. So the reference to the softer start right is already that we are bringing in a lower number coming into back to school right then.

To do it.

As far as kind of I don't think we are we haven't don't have a quantitative number for you in each one of those ronan, they're obviously all impacting it.

We would have liked to really start the year. So that's part of my talking points. There was that Q2 as we headed out of the summer.

And we're well aware that the consumer confidence environment and people thinking about their next dollar spend is clearly impacting our whole economy.

One at a lower point than we would like to be heading to answer that kind of give us a softness starting point for back to school in general.

To do it.

Once you get down to a local level, though and that's on us to show the value you get out of spending those dollars to come to Kindercare and having your child ready.

As far as kind of I don't think we are we haven't 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.

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.

Once you get down to a local level, though and that's on us to show the value you get out of spending those dollars to come to Kindercare and having your child ready.

And so those kind of Gantt chart 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 1000 students from the start of the year based on some of the decisions they've made to balance their budgets and what they've done their waitlist and some freezes we have a couple of others.

To be ready for kindergarten as they get through with us.

It sounded at the local level, where it's on us to utilize those tools and tell those stories and show that value and so that those kind of Gantt chart start to overlap quite quickly and then the subsidy one Paul alluded to Indiana, Indiana is the biggest state for us, it's definitely impacting us with being down 1000 students from the start of the year.

States are up to that level, but have also been a really drag to us here at back to school as well so hopefully that helps.

Thank you for that and then.

Could you provide any insights on your occupancy trends by quintile.

Some of the decisions they've made to balance their budgets and what they've done their waitlist and some freezes. We have a couple of other states that are up to that level, but have also been a really drag to us here at back to school as well so hopefully that helps.

During the quarter and exiting into <unk>.

It's consistent with what we had talked last time about that slight decline in the top three quintiles and then an improvement in that fifth quintile Thats continues to give us confidence what we're talking about returning to our long term growth algorithm is the improvement, we're seeing and our opportunity.

Thank you for that and then.

Could you provide any insights on your occupancy trends by quintile during the quarter and exiting into <unk>.

It's consistent with what we talked last time about that.

To 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.

<unk> decline in the top III Quintiles and then an improvement in that fifth Quintile Thats continues to give us confidence what we're talking about returning to our long term growth algorithm is the improvement, we're seeing and our opportunity to region.

Thank you I appreciate it.

Thank you and your next question comes from Jeff Mueller from Baird. Please go ahead.

<unk> 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.

Yes. Thank you just on your optimism on getting back to I will go into 2027 and characterizing this as short term factors could you just address I guess.

The structural.

Thank you I appreciate it.

CERN that.

Industry supply has been built over time and you are now combining that with a lower birth rate and the industry.

Thank you and your next question comes from Jeff Mueller from Baird. Please go ahead.

Yes. Thank you just on your optimism on getting back to I will go into 2027 and characterizing this as short term factors could you just address.

And taken a lot of above CPI pricing, that's compounded over time that pricing families out of the market. Just what gives you confidence that it is just short term factors.

The structural concern that.

Industry supply has been built over time and you are now combining that with a lower birth rate and the industry.

A greater.

Apply demand.

And balance that's built in the industry over time.

No great question. There are many factors that we're watching beyond birth rates, you're also looking at women in the workforce Youre looking at children Ages zero to five and all of those things accumulate too what we track as inquiries per center. So that we know that we're getting into sufficient flow of <unk>.

And 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.

Not a greater.

Supply demand imbalance that has built in the industry over time.

No great question. There are many factors that we're watching beyond birth rates, you're also looking at women in the workforce Youre looking at children Ages zero to five.

<unk> is at the top of the pipeline to fill our centers and that is the most important thing to us which continues to be.

Barry.

Very good for US in addition to that the bipartisan support for child care. So that we can have a thriving economy across the U S. So working parents can go back to work and know that their children are in a safe environment, where they are being.

And all of those things.

Similar to what we track as inquiries per center. So that we know that we're getting into sufficient flow of inquiries at the top of the pipeline to fill our centers and that is the most important thing to us which continues to be.

Ready for a successful kindergarten transfer.

Very very good for US in addition to that the bipartisan support for child care. So that we can have a thriving economy across the U S. So working parents can go back to work and know that their children.

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 do.

This environment, where theyre being.

Ready for a successful kindergarten.

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.

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.

<unk> argument as we talk to our justification is probably a better word as we talk to parents. So all of those things as we continue to improve.

The talent across our organization at that district leader level as I talk is what gives us confidence as we move into 2026.

Argument as we talk to our justification is probably a better word as we talk to parents. So all of those things as we continue to improve.

And then beyond I guess disciplined cost management and operational efficiency initiatives.

At what point to you more proactively take cost.

The talent across our organization at that district leader level as I talk.

Out of the business I asked because we're now in a position of revenue declines on a per week basis and it looks like the.

Is what gives us confidence as we move into 2026.

And then beyond I guess disciplined cost management and operational efficiency initiatives.

EBITDA deleveraging on the revenue adjustment in guidance is pretty significant so at what point would you be more product, but taking expense out of the business.

At what point to you more proactively take cost.

It's something we're looking at all the time on evaluating the efficiencies of different investments, we're making to become a 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.

Out of the business I asked 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 in guidance is pretty significant so at what point would you be more broken, but taking expense out of the business.

The 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 will continue to lean into so theres a number of ways that we can ensure that.

Yes.

Whether it's G&A or labor or other things that we have from a cost control.

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 will continue to lean into so theres a number of ways that we can ensure that whether it's G&A or labor or other things that we have.

We are watching that all the time I'm 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.

Okay. Thank you.

Okay.

Thank you and your next question comes from Jeff Silber from BMO capital markets. Please go ahead.

Our 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.

Thanks, So much I just wanted to continue on Jeff's question.

Are you thinking at all about more aggressively closing some centers you didnt really mention that when he talked about some of your cost control.

Okay. Thank you.

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 in a little bit that's where I'd, Paul was talking to like where our current inquiry levels where competition levels.

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 didnt really mention that when he 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.

Outside of our walls, one and then basing that then against inside our walls, where our engagement levels are we performing to those levels.

That starts with the demographic look in a little bit that's why it's always talking to like where our current inquiry levels where competition levels.

And then, whereas our profitability based on rent and labor and things like that so we're constantly looking at those.

We are.

For clothing 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 closed centers, we will do that obviously youre looking at lease timing on those and making sure that the ROI on our closure does make sense, but you won't see us hesitate to closed centers that should be closed, but we will continue to keep them.

Outside of our walls, one and then basically then against inside our walls, where our engagement levels are we performing to those levels.

Whereas 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 thats 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 closed centers, we will do that obviously youre looking at lease timing on those and making sure that the ROI on our closure does make sense, but you won't see us hesitate to closed centers that should be closed, but we will continue to keep the ones.

<unk> is open that we think can and should be profitable not only in the long term, but in the short or medium term too that we believe we can get there through the right methods.

Alright fair enough and let me just continue this questioning.

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.

Open that we think can and should be profitable not only in the long term, but in the short or medium term too that we believe we can get there through the right methods.

Yes, 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.

Alright fair enough, let me just continue this questioning.

You need 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.

Fund that NCO engine.

There's a couple of years out from when we say, yes on a center and also continue on the tuck in ones, we're still getting nice value on those.

Yes, 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.

Very low single digit EBITDA multiples and think that Thats both helpful for short term and long term.

Alright, thank you.

Funnel fund that NCO engine.

Thank you and your next question comes from George Tong from Goldman Sachs. Please go ahead.

There's a couple of years out from when we say, yes on a center and also continue on the tuck in ones, we're still getting nice value on those.

Hi, Thanks, good afternoon.

I wanted to go back to enrollment trends can you estimate how much of the <unk>.

Very low single digit EBITDA multiples and think that that's both helpful for short term and long term.

Enrolment headwinds youre seeing are due purely economic factors like consumer confidence versus more idiosyncratic factors at the local level.

Alright, thank you.

Thank you and your next question comes from George Tong from Goldman Sachs. Please go ahead hi.

It's difficult George to drill align a direct correlation to those factors to the enrollment what we would tell you is.

Thanks, Good afternoon.

To go back to enrollment trends can you estimate how much of the enrollment headwinds youre seeing are due purely economic factors like consumer confidence versus more idiosyncratic factors at the local level.

But for those a handful of centers or excuse me states, where we saw a slowdown a subsidy we would be in a much stronger position closer to flattish enrollment and so that in of itself is something that we know is more short term in nature, but then there are other things where we see.

It's difficult George to drill align a 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 of itself is something that we know.

As we've talked to you before the decisions from parents in the longer cycle around that.

They are considering consumer end.

And thinking about kind of the overall macro conditions, but nothing that we can provide to you on a direct correlation just recognizing that it does these factors have an impact.

Is more short term in nature, but then there are other things where we see.

As we've talked to you before the decisions on from parents in the longer cycle around that that they are considering consumer end and thinking about.

Got it that's helpful and along the same lines as you.

Look at the centre diagnostic tools and the various findings.

At the various centers, especially the opportunity regions what have been the latest.

The overall macro conditions, but nothing that we can provide to you on a direct correlation just recognizing that it does these factors have an impact.

Local factors that have come up most frequently.

Preventing enrollment growth and have those factors changed from the prior quarter.

Got it that's helpful and along the same lines as you.

Look at the centre diagnostic tools and the various findings.

So from.

The way I would answer it with what we're seeing with our opportunity region and down using and the change management and adoption that goes with those diagnostic tools and digital tools, we actually are seeing stronger enrollment and those centers. So it is working and and again they are at.

At the various centers, especially in the opportunity regions what have been the latest.

Local factors that have come up most frequently.

Preventing enrollment growth and have those factors changed from the prior quarter.

So from.

Lower occupancy so the range of age groups and parents that you can.

Yes.

Activate across our across that pipeline are more significant and so what I would answer to your question is continuing to take those learnings from opportunity to region continuing to be more proactive with our parents and our higher.

And again they are at lower occupancy so the range of age groups and parents that you can.

<unk> 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.

Our next question comes from Josh Chan from USB from UBS. Please go ahead.

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.

Hi, good afternoon, thanks for taking my questions.

Yes.

Question on the Q4 enrollment that is baked into the guidance like how low does.

Got it thank you very much.

Thank you.

Guidance is it around that.

And your next question comes from Josh <unk> from USB from UBS. Sir. Please go ahead.

<unk> declined Marc I guess, that's important because it sort of sets the stage like I said for the remainder of the fiscal year I guess.

Hi, good afternoon, thanks for taking my questions.

I guess a.

Josh when you ask it one more time, so I heard you referenced of 2% and then we lost you for about six or seven seconds. You said, 4% can you restate that one more time for me.

A question on the Q4 enrollment that is baked into the guidance.

Low debt.

Guidance is at around the 4% decline Mark I guess, that's important because it sort of sets the stage like I said for the remainder of the fiscal year I guess.

Yes, I apologize I'm wondering what type of enrollment decline is baked into the Q4, because thats forms that run rate into next year.

Yes, so we.

Josh will you ask it one more time, so I heard you referenced of 2% and then we lost you for about six or seven seconds. And then you said, 4% can you restate that one more time for me.

Sure.

We're we obviously gave you kind of a guide for the full year right. We're seeing Q4.

So far be slightly slightly below where we were in Q3. So it's not nearly as dramatic as your numbers are suggesting.

Yes, yes, I apologize I'm wondering what type of enrollment decline is baked into the Q4, because thats forms that run rate into next year.

Yes.

We are seeing a slight slip that like you said would take us into the holidays holiday has been an important inflection point.

Yes, so we.

Yes.

We obviously gave you kind of a guide for the full year right, we're seeing Q4.

Number three behind summer and back to school and how we come out of that and then that really sets the range outcomes through may.

So far be slightly slightly below where we were in Q3. So it's not nearly as dramatic as your numbers are.

Okay. That's helpful and then on the margin that's embedded into the Q4 guide could you just talk to what is happening to cause.

Yes, Tim.

Right.

We are seeing a slight slip like you said would take us into the holidays holiday has been an important inflection point, it's kind of a number three behind summer and back to school and how we come out of that and then that really sets the range outcomes through may.

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 and we talked about and so I will take those two and talk about the impact.

Okay. That's helpful and then on the margins that's embedded into the Q4 guide could you just talk to what is happening to cause.

Occupancy dropping a little bit more than we thought.

The relatively steep.

Change in terms of the EBITDA expectations relative to the revenue expectations change.

Some impact occupancy declines obviously, you don't have as big of an impact on EBITDA as due.

Yeah of course, yeah. So look the revenue is is being caused by two different things right. So we talked about and so ill take those two and talk about the impact.

Through pricing, but it does less students obviously is bringing on less revenue, what's bringing unless EBITDA and then obviously in August and 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.

Occupancy dropping a little bit more than we thought is having some impact occupancy declines obviously, we don't have as big of an impact on EBITDA as due.

Through pricing, but it does less students, obviously is bringing unless revenue, what's bringing unless EBITDA and then obviously and obviously an occupancy decline.

And again being one of the big ones.

<unk> dropped some of their reimbursement rates those dollars flow pretty much straight through to the bottom line.

Impacts our ability to leverage, especially our gross margin and even our G&A a little bit. So we're seeing this definitely some impacts from that.

So god dropping to 2% is really the probably more powerful thing here in the fourth quarter that dropped our EBITDA got it.

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.

That makes a lot of sense. Thanks for the color there.

Thanks, Josh.

Thank you and your last question comes from Ali Deutsche Bank. Please go ahead.

Dropped some of their reimbursement rates those dollars flow pretty much straight through to the bottom line.

Yes, hi, thank you.

So that dropping to 2% is really the probably more powerful thing here in the fourth quarter that dropped our EBITDA guidance.

Wanted to just make sure that all of this morning the mechanics.

Subsidies, especially after listening to the last one for you Tony can you just maybe could you take a step back and just explain to us.

That makes a lot of sense. Thanks for the color there.

Thanks, Josh.

Thank you and your last question comes from Faiza <unk> from Deutsche Bank. Please go ahead.

Maybe how much of an impact that had on the quarter or are you going to have on the yellow component.

Yes, hi, thank you.

Well, let's just make sure that all understanding the mechanics there.

When do you like.

Subsidies, especially after listening to the last answer from you or Tony can you just maybe could you take a step back and just explain to us.

And what should we be following to get a better sense of where we land here, but that things are getting better or worse.

How much of an impact that had on the quarter or you're expecting to have on the antenna.

Davidson.

You sort of timeline of decision when other states might make certain decisions around.

And then what.

Yes.

When do you expect resolution.

Yes, most of the states have already worked through that and what is the origination from it is everything not related to child care. 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 holiday.

And what should we be following to get a better sense of where we land here, but that things are getting better or worse than the specific states and any sort of timeline of decision when other states might make certain decisions around.

These reimbursements.

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 they are balanced budget needs to be going into 2026.

We saw.

The most significant change as I mentioned was in a handful of states even in two of those states, Texas and Arizona day. After that time have come out that they're adding both of them are kind of in the $50 million to $100 million over the next two years some of that will come in a rate improvement some of that will.

Budgeted for the new fiscal year and so it is the.

Expectations that every state has already gone through the awareness for what their funds need to be or what they are balanced budget needs to be going into 2026, where we saw the <unk>.

Most significant change as I mentioned was in a handful of states even in two of those states, Texas and Arizona day. After that time have come out that they're adding both of them are kind of in the $50 million to $100 million over the next two years some of that will come in a rate improvement some of that will come.

Come in additional chairs for children.

I believe that we're through with most states we've already seen those two states take a different.

Weighing back in and then for the remaining states.

There is there is up.

<unk> of that going into 2026.

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.

Okay. Okay understood and then just on the pricing comment that pricing is going to be higher in 2026.

Wayne back in and then for the remaining states.

What you're seeing from a wage inflation perspective, and I know the question has been asked before around.

There is up.

Continuation of that going into 2026.

Whether or not the end consumer is ready for that pricing given the level of inflation that we have seen generally so just give us a bit more color around why you think pricing will be higher.

Okay. Okay understood and then just on the pricing comment that pricing is going to be higher in 2026.

And Im curious what youre seeing from a wage inflation perspective, and I know the question has been asked before around.

What's driving that decision beyond coal pricing in 2000.

Yes, so I'll take your wage one first which I think you were leaving me to the second one <unk> you remember, how we really do that as kind of a starting point. So we are working on wage right now and where we believe that will end.

Whether or not the end.

Consumer is sort of already for the pricing given the level of inflation that we have seen generally so just give us a bit more color around why you think pricing will be higher what's driving the decision behind higher pricing in 2006.

We're 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 to 100 basis points differential and at this point believe we can again next year.

Yes so.

Your wage one first which I think you were leading to me to the second one <unk> you remember, how we really do that as kind of a starting point. So we're working on wage right now and where we believe that will end.

From there.

In parallel we're working at a center level to look at a number of factors the ones that are internal to us or our engagement levels in our occupancy are the two biggest ones are those.

<unk> 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 to 100 basis points differential and at this point believe we can again next year.

Those families deal with us and how many we have obviously, our two big factors there and then externally. We're looking at number of competitors. We are 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.

From there kind of an.

Parallel we're working at a center level to look at a number of factors the ones internal to us or our engagement levels in our occupancy are the two biggest ones.

Those families deal with us and how many we have obviously, our two big factors there and then externally. We're looking at number of competitors. We are looking at competitive pricing and we are 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.

One of the things that gives me the confidence to make that statement.

Sorry, if I can just clarify so do you think that 5200 basis points differential can actually be higher in 2000, and Florida has the ability to higher wage growth.

Wage growth leading to higher pricing.

Yes.

I wouldn't say they tie directly but we will still be at 50 to 100 basis points next year as well. So I don't want you to walk away thinking.

One of the things that gives me the confidence to make that statement.

I'm sorry, if I can just clarify so do you think that 50 to 100 basis points differential can actually be higher in 'twenty think Florida is it really the higher wage growth wage growth, that's leading to higher pricing.

Wage growth leading to 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 to 100 basis points of price based on an individual's center dynamics.

Yes.

I wouldn't say they tie directly but we will still be at 50 to 100 basis points next year as well. So I don't want you to walk away thinking.

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 Bill.

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 executing with discipline.

Got it thank you.

Alan 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.

Thank you.

And there are no further questions at this time I will now turn the call over to Mr. Paul Thompson. Please continue.

Thanks, Kelcey, 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 I guess with.

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.

Jay.

Ladies and gentlemen, this does conclude your conference call for today, we thank you very much for your participation you may now disconnect.

Okay.

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