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Greetings, and welcome to the Bright Horizons Family Solutions Third Quarter 2024 Earnings Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Michael Flanagan, Vice President of Investor Relations. Thank you. You may begin.

Thanks, Julian, and welcome to Bright Horizons' third quarter earnings call. Before we begin, please note today's call is being webcast and a recording will be available under the Investor Relations section of our website, brighthorizons.com. As a reminder to participants, any forward-looking statements made on this call within those regarding future business, financial performance and outlook are subject to the safe harbor statement included in our earnings release. Forward-looking statements inherently involve risks and uncertainties that may cause actual operating and financial results to differ materially and should be considered in conjunction with the cautionary statements that are described in detail in our earnings release, 2023, Form 10-K and other SEC filings. Any forward-looking statement speaks only as of the date on which is made, and we undertake no obligation to update any forward-looking statements. Today, we also refer to non-GAAP financial measures, which are detailed and reconciled to their GAAP counterparts in our earnings release, which is available under the IR section of our website at investors.brighthorizons.com. Joining me on today's call are Chief Executive Officer, Stephen Kramer; and our Chief Financial Officer, Elizabeth Boland. Stephen will start by reviewing our results and provide an update on the business. Elizabeth will give a fall with a more detailed review of the numbers before we open it up to your questions. With that, let me turn the call over to Stephen.

Thanks, Mike, and good evening to everyone on the call. Before we dive into our financial results, I want to extend our heartfelt sympathies to everyone affected by Hurricanes Helene and Milton. While the overall operational impact for Bright Horizons was quite limited, these storms have had a profound effect on many of our educators, families and clients in the affected areas. The devastation is truly heart breaking and our thoughts are with those impacted. In the face of unimaginable challenges, however, the Bright Horizon spirit continued to show through as employees across the South and Eastern U.S. stepped up to support our clients, families and communities during this challenging time. Their dedication and resilience in the face of these natural disasters is truly inspiring. Thank you for embodying our heart principles and showing such unwavering commitment. Moving on to our results. I was pleased with our overall performance in the third quarter. Total revenue and adjusted EPS came in better than we expected, driven largely by our backup care segment through stronger use, revenue and margin performance, while full service and Ed Advisory were generally in line with our expectations. Overall, I am proud of our performance so far in 2024, and we are set up well to close the year with strength. To get into some of the specifics on the third quarter, revenue increased 11% to $719 million with adjusted EBITDA up 20% to $121 million and adjusted EPS growing 26% to $1.11 per share. In our full service child care segment, revenue increased 9% to $487 million. We added six centers in the third quarter, including client centers for Colorado School of Mines, Regeneron Pharmaceuticals and Yale New Haven Health System. The enrollment in centers opened for more than one year increased at a low single-digit rate in Q3 across our U.S. and international operations. An average occupancy percentage followed its typical seasonal pattern stepping down sequentially to the low 60s. The U.K. continued to make operational and financial progress in the third quarter, narrowing its losses as compared to last year. There is still a lot of work to be done in the U.K. to return our operations to pre-pandemic performance levels and beyond, but this year's gains have been particularly encouraging following the changes of 2023. I continue to be confident that we have established a solid foundation and set of initiatives to drive continued improvement in 2025 and beyond. Let me now turn to Back-up Care, which delivered another outstanding quarter. Revenue increased 18% to $202 million outpacing our expectations for the quarter on stronger employee engagement and use. We also continue to expand our client base with new employer launches, including Progressive Corporation and Brookfield Property. Growth in back-up use was robust across traditional care types with notable strength in centers and camps as the care needs for school-age children are particularly acute over the summer break. As we have spoken about in the past, the supply of care is a critical element to achieving our back-up growth goals. The operations team again performed exceptionally well this quarter, delivering on the supply to meet another record level of use over the short summer period. The investments we have made and continue to make in building supply, new care types and personalized market and technology initiatives are bearing fruit and position us well to deliver on our growth goals in the years ahead. Our Education Advisory business grew to $31 million in the quarter. We added new clients to the portfolio, notably launching Enterprise Holdings and Rice University. However, as we have discussed for the last several quarters, participant growth in our EdAssist business remains muted. We are continuing to make investments in the team, product and marketing to revitalize our participant growth in 2025 and beyond. Before I wrap up, I want to highlight the incredible success of our Omni Horizon Summit, our first in-person client event since the pandemic. We were thrilled to welcome clients from across the country and across industries, including leading employers such as Accenture, J.P. Morgan Chase and Valero. There was a wonderful opportunity for clients to visit our home office, including the June Greenman Early Education Innovation Center, network with each other and hear from HR executives and Bright Horizons leaders who underscored ways that our services support client employees care and education needs. This summit reinforced our commitment to innovation and excellence in employee engagement and productivity solidifying our position as a leader in the industry. In closing, I'm encouraged by the continued growth and high-quality operational delivery we are seeing across our business. Given our results year-to-date and our current outlook for Q4, we are refining our full year revenue guidance to be approximately $2.675 billion, representing 11% growth and an adjusted EPS range of $3.37 to $3.42. With that, I'll turn the call over to Elizabeth, who will dive into the quarterly numbers, and share more details around our outlook.

Thank you, Stephen, and hello, to everyone participating on the call. Again, to recap the third quarter, overall revenue increased 11% to $719 million. Adjusted operating income of $89 million or 12.4% of revenue increased 34% over Q3 of '23 while adjusted EBITDA of $121 million or 16.8% of revenue increased 20% over the prior year. We ended the quarter with 1,028 centers, adding six and closing 10 centers in the third quarter. To break this out a bit further, full service revenue of $487 million was up 9% in Q3 on pricing increases and low single-digit enrollment growth. As Stephen mentioned, occupancy levels across our portfolio opened for more than one year averaged in the low 60s for Q3 as occupancy stepped down sequentially given the typical summer seasonality. In the center cohorts we've discussed previously, we continued to show improvement over the prior period -- prior year period. In Q3, our top-performing cohort, defined as above 70% occupancy, improved from 36% of our centers in the third quarter of '23 to 42% in the third quarter of 2024. And our bottom cohort of centers those under 40% occupied represents 13% of centers, improving from the 17% in the prior year period. Adjusted operating income of $12 million in the Full Service segment increased $5 million over the prior year. Higher enrollment, tuition increases and improving operating leverage, particularly in our U.K. operations, more than offset the $9 million reduction in the support received from the ARPS government funding program in Q3 of '23. Our new back-up care revenue grew 18% in the third quarter to $202 million, ahead of our expectations of 11% to 13% growth on stronger overall use which was also reflected in the adjusted operating income of $70 million in Q3 of '24, which was 35% of revenue. Lastly, our revenue in the Educational Advisory segment increased 4% to $31 million and delivered operating margin of 21%. The modest deleverage in operating margins in Q3 over the prior year reflects the investments that we are making in this segment. Turning to a couple of other components of the income statement. Net interest expense of $12 million in Q3 of '24 reflects lower average borrowings, offset by higher overall net rates on our outstanding debt as compared to Q3 of '23. The structural effective tax rate on adjusted net income was 27.5% in the quarter. On the balance sheet and cash flow through September of this year, we've generated $217 million of cash from operations compared to $161 million last year. We made fixed asset investments of $65 million in 2024, similar to the $60 million for the same period in '23. We ended the quarter with $110 million of cash and reduced our leverage ratio to 2.1 times net debt to adjusted EBITDA. Now moving on to our '24 outlook. As Stephen mentioned, we're narrowing our guidance '24 ranges for both revenue and adjusted EPS to reflect the stronger performance in Q3. We now expect revenue to approximate $2.675 billion and adjusted EPS to be in the range of $3.37 to $3.42 a share. In terms of our updated full year outlook by segment, we expect full-service revenue to grow roughly 10% to 11%, back-up care to grow 14% to 15% and EdAdvisory to be relatively flat compared to the prior year. Therefore, this full year outlook translates to Q4 overall revenue in the range of $665 million to $675 million and adjusted EPS in the range of $0.88 to $0.93 a share. So with that, Julian, we are ready to go to Q&A.

And our first question comes from Andrew Steinerman, J.P. Morgan.

Hi, Elizabeth. Could you just tell us what your organic constant currency revenue growth was in the third quarter post the center closings that you mentioned? And then also mentioned if there's been centers acquired through M&A over the last 12 months.

Sure. So overall, the full service revenue growth was 9.4%. Organic constant currency would have been 8%. The FX was around 100 basis points and M&A was about 50 basis points.

Perfect. Thank you very much.

Our next question comes from Manav Patnaik, Barclays.

I think you mentioned that total enrollment growth was low single digits. I know in the past, you've given us what the U.S. growth was and even what infant and toddler and the older age group was. I was hoping you could just give us that breakdown just to track how enrollments went this time?

Yes. So broadly speaking, Manav, enrollment was pretty consistent, both domestically and internationally in that low single digits range. Infant and toddler enrollment has been stronger as we've talked about the last couple of quarters, and it's coming more in line with the growth that we're seeing with preschool. So broadly speaking, those statistics kind of came in line, which is why we didn't isolate them.

Okay. Got it. And then I know it's still early, but just when we look out into '25, any moving pieces that perhaps you'd want to call out? I know it's early to give set guide ranges, but just trying to get a first peek there.

So I think your question was whether we're looking out into 2025. Is that -- I'm sorry, I didn't quite hear that.

Yes, correct.

Yes. I mean it's early for us to be -- we're not providing full guidance for '25, but understand as we get closer to the end of the year, and we're obviously in a process to detail, complete our budget. So we do have some sight lines into where we are thinking. The second half of this year, as we just reported for Q3, low single digits enrollment growth, but that would be a similar pace for the rest of this year. So similar cadence in Q4, and that's where we would be looking to see enrollment next year in that low single digits as well. Price increases have been in the 5% range on average. We would expect that to be tapering a bit, something more like 4% with 100 basis points of gap between tuition and wage increases that we would see. So that translates to the full service key performance indicators. Backup growth, of course, has been very strong this year, looking at 14% to 15% for the full year. But coming off of these -- a number of sequential both quarters and years of performance, we'd be looking at something that's more like our historical guided range of low double digits, 10% to 12% in that sustaining the operating margin performance is just a little bit less robust top line growth in that arena.

Okay. Thank you.

Our next question comes from George Tong, Goldman Sachs.

Hi, thanks. Good afternoon. Can you discuss what your expectations are for occupancy rates by the end of this year and the timing for when overall occupancy rates will recover back to pre-COVID levels in the 70% range?

Sure. So I'll take a stab at maybe breaking down the piece parts of that since it's not a completely uniform answer, George. The overall, we're in the low 60s utilization this quarter, we would expect to continue around that range for the rest of this year. So exiting the year in the low 60s. Our high watermark tends to be Q2 and so we would be building back up to that in the early part -- up above that next year in the first half. Overall, as you've heard us talk about, the top cohort of our centers are already at their sort of their top enrollment occupancy. So not a lot of gain to be had there. The enrollment growth will come from the other -- at this point, it's about 55% of centers, but roughly half of the centers that need to get to a pre-COVID occupancy level. We are expecting to see that making very good progress in the mid-cohort group. They are making their way there now and so getting close to those levels in '25. It's a bottom cohort that is less clear. And I think it's too soon to say when the entire group will be back given the more lagging performance of that, call it, 10% to 15% of centers that are under 40% occupied. That is where the most challenge in getting the enrollment momentum. They're having good enrollment gains, but it's off of a very low base. And so making that progress back towards that 60%, 70% plus range is slow volume.

Got it. That's helpful. And just to elaborate on that last point, what would you say is the key challenge around the momentum in that bottom cohort. Is it the work-from-home dynamic? Is it geography? Like where these centers are operating, what are some of the commonalities that this bottom cohort of centers have that you could perhaps address in trying to drive improvement in occupancy?

I'll let Stephen answer that.

It's a great question. And obviously, we spend a lot of time analyzing this bottom] cohort and the centers within. What I would say is that there's no sort of straight through line, right, in terms of either micro-geography or sort of where they are in terms of the other aspects of what you would typically think about as an operating center. What I would say is, certainly, there is a segment of them that are client centers. And overall, our client centers are higher occupied than our lease consortium centers. But there are certainly a segment of them that are client vendors. Of course, those client centers are at the discretion of the client. And so we earn a fee. And so to the extent that they're underutilized, that's at the client's discretion -- then I would say, of the lease consortium, certainly, there is an imbalance between the amount that are in the U.K. versus here in the U.S. So on a relative basis, we see more centers in the U.K. relative to the size of the portfolio in the U.K. On the other hand, we have seen improvement there. And so overall, while we'd love to be able to say, this is a sort of prototype of what is in the underperforming. Each one, we are actioning with very specific actions and ultimately are treating each one individually and are performing and planning against them individually.

Very helpful. Thank you.

Our next question comes from Jeff Meuler, Baird.

Yes. Thank you. Good afternoon. I mean, it makes sense to me that the enrollment trends would be kind of normalizing towards the long-term average as you have more pockets of capacity constraints and more centers in the greater than 70% occupancy bucket. But can you give us a sense of the trends in the 40% to 70% occupancy bucket? Like what is the same-store sales enrollment growth just in that cohort and has it been slowing at all?

I mean I think the consideration there is with our average in the low single digits, of course, in the top cohort very well enrolled and so growing under -- in the 0% to 1% range because they're so well enrolled. That middle cohort would be mid-single digits and that is where we both have the opportunity to just keep building on that sort of steady. But as you say, there's some capacity constraints as it were in the children fit together in which rooms have space, but there still is good momentum in that group to continue to enroll. The lower cohort, those that are under 40% enrolled have the most enrollment growth as a percentage of their base. But it is both a smaller cohort of centers and they're growing -- their numbers are -- the percentages sound high, but they're still ways away from getting to even to that sort of 50% to 55% breakeven obviously.

And I guess in the middle cohort, has the growth been holding steady? Or as you went through the back-to-school process this year? Was there any deceleration or acceleration?

I think it's been relatively steady. There is a little bit of -- at this time of year, the enrollment the turnover, if you know, from the seasonality, we've gotten back to a much more normalized seasonality cadence. So we certainly did see a little bit slower growth this year, but it's not 100 basis points, 500 basis points.

Got it. And then was there any meaningful impact either in Q3 or in Q4 from self-sourced reimbursed care? And I know you said the operational impact of the hurricanes financially was not overly impactful, but did you see any sort of discernible impact on full-service enrollment transfer? Thank you.

Yes. I think you were asking about on backup, whether or not we saw self-source care and then also transition to full-time care in terms of enrollment. I think on the backup side, we continue to see a deceleration on the use of what we would call self-source care. And that shift has meaningfully gone towards our traditional care types. So from our perspective, that's a really positive trend because obviously, in the depths of COVID where we didn't have the network to be able to support the need, we then were providing the financial resources for people to find it on their own. On the other hand, what we are best at and what we are really proud of is when we can actually deliver the care. And so we've seen definitely a decrease. We did not see a spike in out-of-network care during this quarter nor did the hurricane sort of bring that out in any meaningful manner. So really, the spike that we saw in Q3 was because of the need for centers and camps and then in home care. In terms of enrollment, again, we didn't see any meaningful change in terms of people's start dates, or things of that nature. Again, for the most part, where our centers are located, they were not impacted for a significant period of time. We only had one center that was closed for any meaningful period of time. And again, that was a client center in Asheville, North Carolina. And within that context, it was, again, a single center.

Back open.

Yes, back open.

Thank you.

Our next question comes from Toni Kaplan, Morgan Stanley.

Thanks so much. I was hoping you could give a little more quantification on the drivers within back-up care growth. If you could maybe talk about either how much is from new clients versus clients adding days to existing plans, camps, price, whatever factors you want to include just really great growth, and I just wanted to understand it a little bit better.

Sure. So thanks for the question, Toni. It is -- I think, simply put, it's more utilization by more eligible employees, primarily at existing clients rather than it being driven primarily by new clients. We do have new clients who typically are launching care and then they tend to season in over a couple of years. So in your new clients aren't necessarily contributing a lot of velocity to that use growth. But having the additional care types and options available in ways that are responsive to parents needs whether it's from academic tutoring or it's a summer camp program or it's backup care on high holidays or other schools out time. I think that we've been able to reach more employees at different stages of their care needs life. And therefore, as awareness builds, it's more that used by newer users growing that new user space even in clients adding to their basket of uses either.

Great. And I wanted to ask about M&A. Have we started to see any more willingness from independent to sell with some of the COVID programs rolling off, just anything on the M&A pipeline and what you're seeing within the industry?

Yes. So I mean, certainly, Toni, we continue to keep strong relationships with providers that operate high-quality programs in locations that are strategic to us. The reality is that many of those programs continue to progress enrollment and are not back to where they were in 2019, and therefore, valuation expectations at this point still are mismatched given the financial perform they enjoy today versus what they may have enjoyed back in 2019. So what I would say is we still see prospects for the future. But in the near term, we continue to be very disciplined and making sure that how we're thinking about valuation and capital allocation is reflective of our long-term strategy and not reflective of any need in the short term to be acquisitive beyond what we require.

Perfect. Thanks.

Our next question comes from Jeff Silber, BMO Capital Markets.

Thanks so much. I actually wanted to ask about EdAssist. I know it's a relatively small portion of the business, but you talked about I think you used the word terms, muted participation growth, I might have been off there. But can you talk a little bit more about that? Is this an industry issue? Is it an execution issue? And if it's the latter, is there anything -- what do you think you can do about that?

Yes. It's a great question, Jeff. Thank you. So look, our EdAdvisory business has two segments, right? One is supporting employee dependence through the college emissions process. We've been in that business since 2006. And I would say that, that business continues to garner clients. We continue to see improvements in participation levels. The larger part of the EdAdvisory business is what we call EdAssist. EdAssist is focused on employees who are going back to school themselves. So we manage the tuition assistance programs for employers and ultimately, like our other services are participant driven. And so what I would say is that in the context of sort of what is market versus what is us, I would say that certainly in stronger economic times, it is fair to say that fewer people feel the incentive to go back to school, fewer people feel the need to extend their skills. So I think from a market perspective, we're starting to see a little bit of change as it relates to behavior just generally. In terms of what we're doing, I think that we are very focused on a transformation within that aspect of the business. We want to make sure that we are responding to what employers need and what their employees need in this particular area. And so we have certainly refreshed the team in that area. We are in the process of investing in the platform and the product. And then finally, we are like we did over many years in backup care investing in the outreach and personalized marketing efforts that really do attract users. And so I would say those are the three sort of categories of things we're doing to improve our own situation within advisory, specifically within EdAssist. And this year would have been a fairly growth, a little bit of growth over last year. And then as we enter next year, we're hoping for slightly better than that. But again, are really focused on investing in that business for the long term.

All right. That's really helpful. I believe we've got a presidential election in this country tomorrow. I know you really don't get much of your revenues via the federal government. But Vice President Harris had proposed a cap on external child care costs. I forget the number, but it was a relatively small percentage of total household income. I don't know if you heard anything more about this, if something like this would happen, what kind of impact could that have on your business?

Yes. Look, I think the reality is that there has been a lot of rhetoric over many years, certainly for the lifetime of this company, having federal government get more involved in child care and different regulations that they may have suggested. I think the governing factor here is financial, right? At the end of the day, to get the kind of involvement that politicians might suggest is possible requires an outsized amount of resource that government here in this country has never been prepared to invest. I would say that for sure, the U.S. government has always focused its limited resource in this area to the neediest families, which we certainly support those in most need. But the reality is that the federal government has not gotten involved more broadly in child care. So again, this is less about which political party and more about just categorically government here in the U.S. just not prioritizing investment in early childhood education beyond those families that are most disadvantaged.

Really appreciate the color, Steve. Thanks.

And our next question comes from Josh Chan, UBS.

Hi. Good afternoon, Steve and Elizabeth. Thanks for taking my questions. On back-up care, do you track any metrics such as the percentage of allowed days that your customers or your consumers are actually utilizing? Is there anything that you can share with us in terms of baselining where you are in terms of penetrating the total available days, I guess.

Yes. We do have -- we have a variety of component parts that we track, Josh. But I think for us and what we've talked about publicly, it's really been more broad-based on overall use because in some respects, the population isn't tapped an individual person may be cast the majority of our client partners have an arrangement that's on a paper use. They may have a base fee, but then its participation and use after that. And so it's not limited to how many employees may have how many days. So having a variety of care types available in different times and in different ways for employees at different stages of their lives is how we're able to grow some of that participation without regard to people consuming their entire basket. I think anecdotally or just sort of qualitatively, what we see is generally most people who are using a backup care benefit, find it useful and they utilize as much as they can. There are some who are more dabblers, but it tends to be a benefit that has good penetration with those who are users.

That's really helpful color. And then on the full service side, how would you characterize fall enrollment trends versus what you're expecting? Any deviations compared to what you think kind of going into the fall enrollment season? Thanks so much.

So as we talked about enrollment overall for the year being mid-single digits and a little bit more robust first half than second half. So broadly speaking, I think the third quarter came in as we would have expected. I think our outlook is cautious. And that is in part because of what we talked about with having space available and the enrollment opportunities in the centers that we -- that are not as fully enrolled, we will continue to be more challenging than the enrollment we've been able to get over the last two, four, six quarters. And so I think that's what informs our outlook for both the rest of this year and then into 2025 being in that low single digits continued growth across that group of centers that are not yet fully back to their pre-pandemic levels.

Great. Thank you for the color and thanks for the time.

[Operator Instructions] And our next question comes from Faiza Alwy, Deutsche Bank.

Yes, hi. Thank you so much. Elizabeth, I just first wanted to clarify and confirm that there's no changes to your margin expectations by segment. I don't think you gave those for the year. I think we talked about sort of low to mid-single-digit operating margin for the full service business and maybe 25% to 30% for back-up care? Are we in a similar ballpark still?

Yes. So I think I caught that you were just having a little microphone issue here. But I think the question on margins for the rest of the year. Yes, we would expect backup to continue to be very similar to -- or not continue to be, but to be for the full year, very similar to where we were in 2023. It will be an elevated level of margin in Q4 compared to the rest of the year, so north of 30% we would expect in the quarter. But for the full year, in that similar range to where we were in 2023. Full service margins improving from where we were in Q3, still low single digits, but improving from where we are in this quarter. I would note one element we've talked a bit about this overhead the distribution of overhead between the segments, and it's a little bit of a headwind to full service this quarter, about 75 basis points. It's a little bit of a tailwind to back up about 175 basis points of tailwind to backup. And so that similar effect would impact them in Q4, and then that will be behind us as we get into 2025. But broadly speaking, high and sort of high teens to low double -- low 20s in the advising business.

Okay. Great. Thank you. And then hopefully, you can still hear me, but I wanted to ask about you gave some color around 2025 enrollment growth and pricing. And I'm curious if you think there's opportunity to take additional pricing. It seems to me that the category is a little bit less elastic more broadly, but would love to hear your views on how you're thinking about your pricing strategies?

Yes. I mean we are -- I think we're always mindful of the balance in the pricing against the drive for being able to deliver the service and growing in moment. It has been an environment where we've seen elevated cost structure that we are, frankly, still working our way through. We made investments in wages, and we want to continue to maintain that discipline on price to wage, but we are seeing an environment where we think it varies center by center, as you've heard us talk about. But broadly speaking, the strategy would be to recognize that inflation has tapered some and taking a price increase on average that's a little bit lower than what we saw this year. We have time to make those decisions. They are certainly coming up to some January price actions and some April price action. So we have time to consider those, but that's our general thinking at this point.

Okay. Thank you so much.

And our next question comes from Harold Antor Jefferies. Harold, please proceed with your question.

Sorry, I still muted. This is Harold Antor on for Stephanie Moore. Just on the U.K., I know you've been seeing improvements there. But if you could just provide us with how things are trending there employment levels there, wage inflation there compared to the U.S.? And I guess, if you could give us an update on the percentage of centers that you have in the U.K. now because I know you've been closing centers with them being on the lowest cohort, just wanted to get a sense of how that’s trending? Thank you.

I’ll take the closure question, and turn thing to you Elizabeth.

I can start with the first piece, which it's fair to say that the U.K. performance was largely in line with our expectations in the quarter. It was certainly a nice improvement year-on-year. We talked about the fact that 2023 was a very challenging year in the U.K. And so year-over-year, we've made some good progress. I think we had called out in 2023, that we're going to lose in the full-service business about $1,300, and we've cut that in half this year. And so we feel good about the progress that we're making in the U.K. We still progress to be made and then maybe Elizabeth will comment on the closure side.

Yes. So we have closed a number of centers this year. We're on track globally to close plus/minus 50 centers overall. And the U.K. has been certainly part of that strategy, rationalizing the portfolio there. We have circled up some that are on the docket for closure in 2025. But at this point...

For this year, close to 15 to 20 or so of this year's closures within U.K. and when you look at that bottom cohort Harold, as Stephen mentioned earlier, about the communal centers in that bottom cohort we're about 40% or so in the U.K. weighted more towards the U.K. there, particularly in the third quarter. But as Elizabeth said, we have some centers that we will circle it up to close here in Q4 and also in 2025 in the U.K., if you look to optimize that portfolio there.

And then I guess just on the inflation side that you're seeing in the U.K.? Would you say that it's in line with the U.S.? Or would you be pricing a little bit more aggressively in the U.K., there's anything there? Thank you.

So the figure that I gave was a general average around our global operations. So it will vary by both geography and there may be some parts of the U.K. where we aim a little bit higher and others where we aim lower, but that was encompassing a global view. Inflation in the U.K. has been tapering as well. I don't have right at hand the exact comparison to the U.S., but we certainly see some of the particularly acute areas like energy and food have some of that pressure that's come out of the environment, but services still remain high, and there are a number of pressures on the labor side that we continue to balance with the tuition increases that we do considering the challenges of the overall labor environment supply as well as wage.

Well, thanks all very much for joining the call, and have a great free-election evening.

Thanks, everyone.