KinderCare Learning Companies, Inc. (KLC) Earnings Call Transcript

Welcome to KinderCare's Third Quarter 2026 Earnings Call. [Operator Instructions] It is now my pleasure to introduce Olivia Kirrer, KinderCare's VP of Investor Relations. You may begin the conference.

Thank you, and good afternoon, everyone. Welcome to KinderCare's Third Quarter 2026 Earnings Call. Joining me from the company are Chief Executive Officer, Tom Wyatt; and Chief Financial Officer, Tony Amandi. Following Tom and Tony's comments today, we will have a question-and-answer session. During this call, we will be discussing non-GAAP financial measures. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available in our earnings release and within the supplemental earnings presentation, both of which are posted on our Investor Relations website at investors.kindercare.com. 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 risk, which are explained in detail in the Risk Factors section of our most recent annual report on Form 10-K and other filings with the SEC. Please refer to these filings for a more detailed discussion of forward-looking statements and the risk 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'll now turn the call over to our Chief Executive Officer, Tom Wyatt.

Thank you, Olivia, and good afternoon, everyone. Third quarter revenue was $665 million as enrollment pressure in the KinderCare brand was partially offset by continued growth in Champions, which delivered its fifth consecutive quarter of double-digit revenue growth. Creme continued to build on the progress we've seen throughout the year. We're investing to capture the long-term growth opportunity we see at KinderCare for employers, and we have made additional progress on our planned footprint optimization. Starting off with KinderCare, our largest brand. Back-to-school enrollment fell short of our expectations. While inquiries from prospective families are up year-to-date, we haven't been converting enough of that interest into enrollment. As we reviewed performance across our centers, it became clear that we could bring greater consistency to how we approach enrollment and family engagement. During the quarter, we made a leadership change in the KinderCare brand, naming Cheslee Escobedo to lead the business. Cheslee has a proven record of successfully driving growth within our organization and has been given a clear mandate to drive performance across our centers. We also streamlined the organization through additional field leadership changes and reductions in corporate and support roles. Together, these changes are designed to strengthen accountability, speed up decisions and better align our support teams with the needs of our centers. At the center level, we've identified administrative tasks we can remove from our center directors workloads, including shifting more specialized HR and finance activities to our business partner teams and centralizing certain enrollment support activities. This gives center directors more time to support their teachers, engage with families and focus on growing enrollment. We're also managing staffing with an eye toward both current enrollment and the growth we expect ahead, giving our centers the flexibility to welcome new families as enrollment builds from a seasonal low. As a world-class leader in employee engagement, supporting our teams remains a priority. We recently completed our annual employee engagement survey to better understand their experiences and where we can improve. I want to thank our teachers, center directors, support teams and field leadership for their continued hard work and commitment to our children and families. That commitment to the families extends to how we engage with them before they enroll. We're making it easier to schedule tours, enhancing our follow-up with families and using new AI tools to support those interactions. We're also making targeted marketing investments in markets where we see opportunities to reach more families. Retention among our existing families is around its highest level since I've been with KinderCare. We're now bringing that same level of care and attention to new families as they consider enrolling. And we're beginning to see results. While total enrollment remains below last year's levels, we are seeing a change in trajectory. Since the end of back-to-school, we've been enrolling more new children than we did during the same period last year. This is a result of stronger execution across our centers and more consistent engagement with families considering KinderCare. We are pleased with this improvement, which puts us on track to narrow the year-over-year enrollment gap by approximately 200 basis points as we head into the holidays. Our focus now is to build on this progress, continue driving greater consistency across our centers and carry this momentum into 2027. We believe these actions are putting KinderCare on a stronger path for long-term growth. We're also nearing completion of the planned center closures that we mentioned to you last quarter. We closed 20 additional centers during this quarter, bringing the total to 69 through Q3 and expect to complete approximately 85 closures for the full year. These actions are helping us better align our footprint with local demand and focus resources where they can have the greatest impact on the families and communities we serve. Tony will discuss the financial implications and our progress on the lease resolution shortly. Turning to our other brands. We're seeing positive performance in several areas where we're focused on sustainable growth. At Creme, we continue to make progress throughout the year, including during the important back-to-school season. While enrollment remains below last year, the gap continues to narrow week-to-week and the business is performing ahead of our expectations. We are pleased with the early performance of our new Creme school in Irvine, California, which surpassed its first year enrollment expectations within the first 50 days of opening. It's a great example of the demand we can capture when we bring our premium education offering to a market with a clear need for high-quality care. At KinderCare for employers, enrollment at our comparable centers grew approximately 2% during the quarter. We also have 8 new on-site centers under contract over the next 2 years, and we're focused on growing that pipeline. A key area of focus is tuition benefit, where we see significant opportunity to make childcare more accessible and affordable to working families. At the same time, these partnerships will help drive additional enrollment into our existing KinderCare, Creme and Champions locations. We've also significantly expanded our sales and client relationship teams to strengthen our ability to win new employer partnerships and deepen relationships with existing clients. This is a deliberate investment in the long-term growth of the business and one we believe positions us to capture more of the opportunity ahead. Turning to Champions. We delivered another strong quarter with average weekly enrollment increasing approximately 17% year-over-year, reflecting growth across both existing programs and new sites. Throughout 2026, we've been focused on opening high-quality programs in locations with strong family demand. That approach is delivering results with enrollment at this year's new sites running ahead of last year's openings at the same time in their development. Beyond new site growth, we're seeing strong enrollment growth within our existing Champions programs. We believe that reflects the quality of the experience our teams provide and the trust they built with our families. And even with that growth, we see considerable opportunity to reach more families within the school districts we already serve. We're also taking a disciplined approach to expansion through new partnerships, focusing on locations where family demand is strong and where we can build programs with strong enrollment and sustainable performance. More broadly, we recognize that families are navigating a challenging economic environment. Higher cost across many parts of their lives are putting pressure on household budgets, while changing working arrangements are influencing how they think about their childcare needs. Despite these pressures, we're seeing higher inquiry levels than we did a year ago, reflecting continued interest from families looking for high-quality care. As I mentioned earlier, retention of our existing families also remains very high. Against this backdrop, we're focused on making high-quality child care more accessible and affordable for families. We're finding ways to expand our reach through programs that help families access care. For example, we recently acquired 2 new centers in New Mexico, where the state's universal childcare program is helping make high-quality care more affordable for families. We're also expanding our participation in Public Pre-K and other publicly funded early education programs, including before and after school care to better meet the needs of working families. We're building the partnerships and capabilities to bring these programs to more communities with a focus on quality and long-term sustainability. High-quality education remains at the center of everything we do. Our proprietary curriculum has a demonstrated track record with assessments showing that children in our programs are better prepared for kindergarten. Those assessments also show that learning outcomes are stronger among children who remain enrolled in our programs longer. We're now investing in the next generation of our curriculum, which we plan to introduce next year. Historically, curriculum enhancements have been well received by teachers and families and have helped attract new enrollments by demonstrating the value of a KinderCare education. Beyond our core curriculum, we see opportunities to expand the educational experience we offer families through small group enrichment programs. Learning Adventures has been a bright spot this year, reflecting families' interest in additional learning opportunities for their children. These programs allow children to explore subjects like on X, STEM and Spanish. We're focused on increasing participation within our existing centers, expanding our reach to new locations and introducing new offerings, including seasonal programs to build on children's interest. As we look towards the end of 2026, I want to bring together a few of the priorities we've discussed today. We've spent much of this year strengthening our business, simplifying how centers operate and improving the support we provide our field teams. More recently, we've made decisive leadership changes to reinforce accountability and improve execution. Throughout this work, we remain focused on managing expenses carefully while investing in the people and capabilities needed to improve performance. Beyond the KinderCare brand, we continue to see positive momentum across the other parts of our portfolio. Champions continues to deliver strong growth through existing programs and new site expansion, while we continue to make progress at Creme. At KinderCare for Employers, we've expanded our sales and client relationship teams to pursue new partnerships and drive enrollment into our existing centers. We're also expanding our participation in Public Pre-K, growing our small group infringement programs and preparing to introduce our next generation of curriculum in 2027. We recognize there's more work ahead, but the improvement we've seen in enrollment trends since back-to-school gives us greater confidence in the actions we've taken. With inquiries running ahead of last year, we believe improving our ability to convert that interest into enrollment is a significant opportunity, where we finished this year matters because it establishes our starting point for 2027. As we look ahead, our focus is on sustaining this momentum and building a stronger KinderCare. That means continuing to improve execution, investing in growth and expanding our ability to deliver high-quality care and education to more children and families. Tony will now walk you through the financial results for the quarter and our outlook for the remainder of the year.

Thank you, Tom. I'll start with our third quarter financial results, provide an update to our optimization work, and then I'll discuss our outlook for the remainder of 2026. Third quarter revenue was $665 million, a decline of 1.7% from $677 million last year. Lower enrollment across our KinderCare centers continue to pressure revenue, partially offset by growth in Champions, along with contributions from small group enrichment and newer centers. Average weekly EC enrollments declined approximately 6% for Q3 compared to the prior year, including a negative impact of approximately 190 basis points from center closures as part of our footprint optimization. Same-center revenue declined approximately $20 million or 3.2%, primarily reflecting lower enrollment at our existing centers. The decline included approximately $21 million in lower revenue from centers operating in both periods, along with a $12 million impact from center closures. These decreases were partially offset by approximately $13 million in revenue from newer and acquired centers entering the same-center cohort. Same-center occupancy was 63.8% in the third quarter, down 320 basis points year-over-year. Our optimization work provided a benefit of approximately 150 basis points for the quarter. As we assess the performance of our remaining portfolio, we're looking for progress on 2 fronts: growing enrollment, which drives revenue and improving occupancy, which reflects how we effectively work utilizing our center capacity. Pricing contributed approximately 2.8% to ECE revenue performance during the quarter, in line with our expectations. Turning to other components of our revenue performance. Champions contributed approximately $8 million in year-over-year revenue growth. Importantly, that growth reflects both higher enrollment in existing programs and the additions of new sites. We're encouraged by the opportunities in KinderCare for employers. Our growing pipeline of employer-sponsored centers provided visibility into future expansion, while tuition benefit offers another way to connect families with our existing KinderCare centers. We've recently expanded our investment in B2B sales and client success capabilities to support both opportunities, and we believe these investments will help KinderCare for employers become an increasingly important contributor to our long-term growth. During the quarter, we opened 6 new centers and acquired 3 additional centers. Cash considerations for the acquisitions was approximately $764,000 net of cash acquired. New and acquired centers have contributed approximately $20 million in revenue so far this year. Turning to the financial impact of our footprint optimization. We estimate that center closures will result in revenue headwind of approximately $32 million for 2026. We also estimate that closures will provide a benefit of approximately 150 basis points to same-center occupancy for the full year. Looking at the ongoing financial impact based on the work completed to date, we estimate an annualized benefit to adjusted EBITDA of approximately $10 million, mainly comprised of lower rent expense associated with leases that have definitive termination dates. For this year, cash impacts from the lease termination are expected to be $15 million to $17 million. We also expect an additional $8 million to $10 million impact in early 2027 for leases terminated related to the closures completed this year. Although our planned center closures are nearing completion, we still have work ahead to resolve the associated lease obligations. We currently expect approximately $10 million in dead rent associated with 2026 closed centers to carry into next year. We've engaged a third-party firm to help negotiate additional lease terminations with the goal of reducing those remaining obligations where it makes financial sense. As we did last quarter, we've included a slide in our supplemental earnings materials outlining the impact of center closures completed to date and our expectations for the remaining work this year. Turning to profitability. We reported a net loss of $85 million or $0.71 per share compared to net income of $5 million or $0.04 per share in the prior year quarter. The year-over-year change was primarily driven by higher noncash impairment losses, including goodwill impairment triggered by the decline of our stock price as well as impairment related to close and underperforming centers. Adjusted net loss was approximately $3 million or $0.03 per share compared to adjusted net income of $15 million or $0.13 per share in the prior year quarter. Adjusted EBITDA was $43 million compared to $66 million in Q3 last year, primarily reflecting lower enrollment and the resulting operating deleverage in our ECE business. This quarter's results include approximately $3 million in severance expenses associated with the organizational changes Tom discussed earlier. These costs are included in G&A and were not added back to adjusted EBITDA, reducing the reported result by the full amount. As Tom discussed, we're taking a disciplined approach to managing expenses while making targeted investments to improve enrollment performance. We're also making deliberate staffing decisions to balance labor costs with maintaining the capacity to welcome new families and deliver a quality care they expect. SG&A was 10.9% of revenue compared to 10.8% in the prior year quarter. While expenses declined slightly in absolute dollars, the lower revenue base resulted in a modest increase as a percentage of revenue. Lower incentive and stock-based compensation expenses helped reduce SG&A during the quarter. Those savings were largely offset by ongoing rent and other property-related costs associated with the remaining lease obligations at closed centers as well as severance expenses I mentioned earlier. Interest expense declined to $18 million from $24 million a year ago. Turning to the balance sheet. We ended the quarter with $143 million in cash and $188 million of available capacity under our revolving credit facility. We've generated approximately $20 million of free cash flow year-to-date while continuing to take a disciplined approach to capital spending and investment priorities. Net debt to adjusted EBITDA was approximately 3.5x, reflecting lower earnings and reduced cash balance, including costs related to our optimization plan. As we discussed last quarter, we expect leverage to remain elevated through year-end as we complete the remaining closures and continue working to resolve the associated lease obligations. While the closures will be completed this year, we expect the lease resolution process to continue into 2027. Termination payments will continue to affect near-term cash flow, and we've reflected the anticipated 2026 impacts in our updated free cash flow outlook. Turning to our updated financial outlook for the remainder of 2026. We now expect revenue between $2.64 billion and $2.66 billion, adjusted EBITDA between $190 million and $195 million and adjusted EPS between $0.02 and $0.04. The reduction in our outlook primarily affects enrollment performance during the third quarter that fell short of our previous expectations and the resulting impact on revenue and profitability. While enrollment trends have improved in the fourth quarter, that timing improvement limits contribution to our full year results. Looking at the revenue growth assumptions, we expect occupancy to be a headwind of approximately 2.5% for the year. Because our optimization work has reduced capacity and benefited reported occupancy, enrollment occupancy have diverged more than they typically would. As a result, we expect lower enrollment to represent an additional headwind of approximately 1.5%. We expect tuition to contribute approximately 2.5%. We are maintaining our expectations for Champions and B2B to contribute approximately 1% to revenue growth with new center openings and acquisitions each contributing approximately 50 basis points. We continue to expect center consolidations represent approximately a 1.5% headwind to revenue growth for the year. Finally, the absence of the 53rd week to benefit revenue last year represents approximately a 1.5% headwind. We expect CapEx for the year to total $120 million to $125 million, free cash flow expected to be less than $10 million, including the elevated cash costs associated with optimization work. For modeling purposes, assume an effective tax rate of 3% for the year. Our updated guidance reflects our latest expectations for the fourth quarter, including improving enrollment trends we observed through October. We're pleased with the progress we've seen in the recent weeks. And while we're taking a measured approach to its financial contribution for the remainder of this year, those trends give us greater confidence in our starting position for 2027. Before closing, I want to reinforce some of the key messages Tom shared earlier. We've taken decisive steps to strengthen accountability, improve execution and drive better enrollment performance. We're backing those actions with deliberate investments in our people and capabilities, including in B2B, curriculum and enrollment. Importantly, we're beginning to see results. The improvement in our recent enrollment trends gives us greater confidence in the actions we've taken and the direction we're headed. With more work ahead, we're focused on sustaining that progress and entering 2027 on stronger footing. With that, let's open the line for questions.

[Operator Instructions] Your first question comes from the line of Toni Kaplan of Morgan Stanley.

This is Yehuda Silverman on for Toni Kaplan. Just have a quick question around your comments on higher costs potentially putting more strain on family budgets and tying that into inquiries. So my main question is if inquiries are up a year ago and doing well year-to-date despite more strain on the budgets, what do you think the reason that this is not necessarily converting into enrollment at the pace you thought it would was? And how has the initiatives to gear these center directors towards bringing in more families and simplifying their tasks led to any better conversion compared to before you implemented these initiatives?

The biggest culprit for where we stand today have been execution. And that's why we talked so much about cleaning off the slates of the center directors, giving them more time for tours, for quality conversations with families who are contemplating come to our company and bringing their children. So that's number one. Number two, I would tell you, as we saw the cleaning off of the activities that were in the center post back-to-school, we did see, as Tony and I both mentioned, a significant change in the trajectory of the business and where we did pick up a couple of hundred basis points in enrollment after back-to-school. So it really has been an execution situation. Our center directors had a lot of activities, some that we weren't even aware of that we took off the plate. And a lot of that didn't happen until really around the back-to-school time frame. But since then, we feel like we've really done a good job of clearing the activity structure of our daily lives, and we're seeing the benefit of that.

Great. And just a quick follow-up on some of the closures that you've made. So aside from them being lower occupancy, can you talk about some of the attributes of these centers such as regions, end markets, demographics and what you thought has made them struggle more recently?

Sure. Yes. So as we've talked about in the past, there really wasn't any big geography things that we saw big shifts geography-wise. And as far as demographics, the biggest demographic thing that the majority of these centers had was child density in the kind of under 5 age. So previously, they were at a different level, and we've just seen them shift where just not quite as many children around in that area and potentially not as many children per provider as well. And so as we saw those come, there are just not as many children to serve, and we weren't able to do so profitably, and that's the biggest factor we really saw.

Your next question comes from the line of Andrew Steinerman of JPMorgan.

I'm still curious about this line in the press release that since the end of back-to-school, new enrollments have outpaced the same period last year, though overall enrollments remain below last year. I just want to understand what the word overall enrollments mean. Is that after closures? Or is this existing, let's say, remaining centers? And then if it's remaining centers, don't those remaining centers somewhat benefit from repatriating families from the closed centers?

Yes. Good questions, Andrew. Let me see if I can explain a little bit. So first, let me take your last question. We always hope to maintain and retain as many of those families at centers as we can. I know you've heard from us in the past when we did some of our closures years and years ago, so many of our centers were overlapping that we retained a really high percentage of them. I guess unfortunately, in this moment, not as many centers were as close to each other. So it was harder to take those children into other magnet centers as much. We still did a nice job and try to maintain as many as possible. So there's a little bit of that in the hundreds of students that we're able to kind of maintain from those 85 centers. What we mean by that statement, Andrew, about coming out of back-to-school was we're trying to be clear that we're seeing better new student enrollments. So new students joining us after back-to-school kind of through the holiday season than the new students that joined us last year. However, also trying to be very clear that our total enrollment is still below last year. So we have not broken through to that. So we're trying to explain those 2 things in that one sentence, and that might have been what the confusion was.

And Andrew, just to add on to that. We -- what I tried to say relative to the difference in that, the growth that we've seen post back-to-school has increased or decreased the deficit of children we had up to year-to-date from over 5% to 3%. So that was the 200 basis points that I referred to. Still behind, but gaining on it.

Your next question comes from the line of Manav Patnaik of Barclays.

This is Ronan Kennedy on for Manav. If not mistaken, pricing for the quarter was in line with expectations, but remains down from the historical mid-single digits. Can you give us a reminder of the drivers of that dynamic, whether it's private pay pricing fatigue versus lower-than-expected state subsidy? And then can you also comment on price elasticity trends in the private pay and the subsidized family cohorts?

Yes, of course. Good question. So yes, so pricing in Q3 came in as we expected it to, and the message stays where it was in Q2, and it will hold here in Q4 as well. Our private pay rates went in for a final kind of low double-digit percentage of students got those final rates in the start of September that hadn't aged up or weren't yet. And our private pay rates are hitting right where we expected them to. We're not -- we're actually seeing discounting down this year. So private pay is done great. On the subsidy side, and we talked about this, year-to-year, the subsidy rates ebb and flow a little bit. Over time, we've always seen collectively subsidy rates move in line with overall private pay market rates, but year-over-year, they might not. And that's really where we're seeing this year versus where we started the year with our expectations not come in. The subsidy rates collectively across our 41 states in D.C. are below where we expected them to be, and that's the pressure we're feeling here and then also the pressure we'll feel into Q4 as well. And then elasticity, so you asked about elasticity to Ronan. Let me get to that one, too. It continues to be in the pricing area for -- on the subsidy side kind of is what it is, right? A family generally gets a voucher. In certain states, they have to chip in a little bit, but they're chipping that in, whether it's a KinderCare or any other provider. So that's not really a pricing decision much they need to make. They're doing that no matter where they go. So on the subsidy side, it's just us proving out that value of their subsidy voucher. And similarly on the private pay side, we think it's the same. The elasticity comes with -- if a family believes we're providing the value and it's not the price. The families know what prices they're going to pay at the KinderCare or similar one. We have to treat them great through the enrollment -- through the inquiry to enrollment process and then maintain them as a family. And that's where value comes in and they're willing to pay that price. If we're not executing properly, we're not taking care of them in that process. They're going to move on and find somebody who's going to take care of them. And that's really what we feel like we kind of sell down a little bit at the start of the year. Oh, like to gather, one, Tom which word over makes me here, too, Ronen, to the other reminder, I think, on pricing is we continue to see our retention up year-over-year. And last year, our retention was up the year before. So also a reminder to us of we're doing a nice job of showing the value to our current families. They're enrolled with us. They're feeling those price increases when they come and they age up, and they're maintaining with us stronger than they have over the past couple of years. We just need to make sure we take that to our new families as well, and they feel that same thing.

Got it. And for a follow-up, if I may, please. For Champions KCFE and they're demonstrating solid momentum, especially relative to KinderCare centers on an occupancy basis. I understand there are inherent differences in the business, but is there an element of the operational playbook and underlying demand drivers, reasons for such different outcomes? And then a second part to that, how large can these businesses become economically? And what's the strategic intent there from a revenue mix opportunity? Could they potentially improve retention and core center occupancy?

The short answer to the last question is yes. Let me start with for employers. That business has really been a very stable business for us. And I mentioned in the prepared remarks that we already have 8 contracts for 2027 for new on-site centers. That will be the most centers that we've gone into a new year with. So we're excited that 6 or 7 of those will open in 2027, and we intend to even increase the number of centers that we acquire for going forward in 2027. And for employers, it's because of the expansion of the employer need to attract and retain this new, if you will, level of young families that are coming into the workforce and are desperately looking for child care. The accessibility and ultimately, the affordability that an employer-based program gives a family is significant. And families, one, the employer keeps them longer, we keep them longer. They're more loyal to both the child care provider as well as to the employer, and it's really been a win-win. We see the inbound on employer potential opportunities at as high a pace as we've seen. So that's number one. Going to Champions. Champions, when I joined the company 12 years ago, 14 years ago now, we had 200 sites, and we have about 20,000 kids today. We have 70,000 children, and we have 1,200-plus sites. And that business has the opportunity. There's over 60,000 schools out there that we have the opportunity to actually penetrate. And our intentions are to keep going. I mean our approach has changed a bit, and that is that we're going after larger school systems than we are smaller or more remote systems. And that proved to be a significant strategy for us in 2026 because we actually had only about 140, 150 sites this year against over 200 last year. And as I mentioned and Tony mentioned, those sites are actually out producing, out enrolling the sites we had last year. So almost 100 less sites are doing more enrollments than last year. So we feel like we have a great story to tell there. We are the only one that is accredited, corporately accredited in the before and after school space. The quality is exceptional, to be honest. And our approach is good. The other thing I'd say about Champions is the biggest part of our growth has been expanding current relationships. In other words, going to Fulton County in Atlanta and starting with a few schools and then adding to it, expanding our reach within that school system. So it's sort of organic growth, but it's also just expansion within our current employer base or, if you will, B2B spot. There was a -- I think that's it. If I didn't answer your question, please give me another thought, and I'll go after that, too.

And then did we cover Creme?

We didn't. Yes, thank you. Creme is one of the -- for us, one of the best positioned brands we feel like we've done. And the same with KinderCare, of course. But we bought Creme to be a premium brand for a discerning audience in areas of the country that were more educated, more affluent and more demanding of their child care provider. And the best example I can give you, and I was there for the opening of the center that we opened in Irvine just a couple of months ago, we had a significant outpouring of support for that center. And literally, we had 30 people, 30 children enrolled when I got there. And by the end of that week, we had over 80 children enrolled in that center, which is significantly ahead of our pro forma. So I'd say to you, when we do it right, and this is true about KinderCare as well. When we do it right, we find the demographic, to Tony's point, the density of children in a given market that are focal points for our experiences that we offer in all of our sites, we do exceptionally well. So I'm proud of Creme as well, and the business has just really, really shown in the new branding, if you will, that we did over last year and into this year is really shown through back-to-school, through a summer program. It was over 800 children above the year before in the summer. It's just been -- it's been a very good success story for us.

Your next question comes from the line of Jeff Silber of BMO Capital Markets.