Greetings and welcome to the Bright Horizons Family Solutions' Fourth Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] I'd now like to turn the conference over to your host, David Lissy, Chief Executive Officer of Bright Horizons. Thank you. You may now begin.

Thanks, Shay, and greetings, everybody, from snow-covered Boston. Joining me on the call today is Elizabeth Boland, our Chief Financial Officer. She will go through a few administrative matters before I kick off the ball. Elizabeth?

Thank you, Dave. Hi, everybody. As always, this call is being webcast. And the recording of our call, as well as the earnings release, are or will be available under the Investor Relations section of our website at brighthorizons.com. In accordance with Regulation FD, we use these conference calls and other similar public forums to provide the public and the investing community with timely information about our recent business operations and financial performance. Please note that some of the information that you'll hear today consists of forward-looking statements, including, without limitation, those regarding our current expectations for future performance, business outlook, enrollment trends and competitive advantages, and financial performance in 2015 and 2016, including revenue growth, operating margins, overhead costs, growth strategies, acquisitions and integration, center openings and closings, capital spending, borrowings, adjusted net income and EPS, cash flow, and share repurchases. Forward-looking statements inherently involve risks and uncertainties that may cause actual operating and financial results to differ materially. Factors that could cause actual results to differ include risks related to implementing our growth strategies, client demand, integrating acquisitions, and our indebtedness, as well as other risks and uncertainties that are described in the risk factors in our Form 10-K for the year ended 2014 and our other SEC filings. Any forward-looking statements speak only as of the date on which it is made and we undertake no obligation to update any forward-looking statements. As you know, we will also discuss certain non-GAAP financial measures on this call and they are detailed and reconciled to their GAAP counterparts in our press release, and they will be included in our Form 10-K, which, when we file it later this month, will be available on our Investor Relations website. I'll turn it back over to Dave for the review and updated business now.

Thanks, Elizabeth, and hello everybody, on the call today. So, as usual, I'll update you on our financial and operating results for this past quarter and the year, as well as our outlook for 2016. Elizabeth will then follow me with a more detailed review of the numbers, and then we'll come back for Q&A after that. First, let me recap the headline numbers for the fourth quarter. Revenue increased 10% to $372 million, adjusted EBITDA of $68 million was up 12% in the quarter, and adjusted earnings per share increased 21% to $0.47 a share. For the full year, revenue was up 8% to $1.5 billion and adjusted earnings per share increased 28% to $1.85 a share. The impact from foreign exchange rates translated to just over a 1% headwind on our revenue growth this past quarter, while for the full year the headwind approximated 2%. Therefore, on a common currency basis, our revenue growth for fiscal 2015 would have approximated 10%. The positive trends we've discussed throughout 2015 continue to cross all of our operating segments once again this quarter. Full service revenue increased $26 million; backup revenues added $5 million; and ed advisory services were up $3 million. In addition to the 10 new centers we added to our network this past quarter, new client and cross-selling highlights across our suite of solutions included Capital Group, Dignity Health, Herman Miller, NVIDIA, and Target. On the margin side, in the fourth quarter, we delivered 50 basis points of improvement in adjusted operating income, and we completed the year with a 140 basis point gain. Margin improvement in our full service centers comes from additional enrollment in our mature and ramping centers, disciplined pricing strategies, and expense management. As we've talked about over the last few quarters, the class…

Thanks again, Dave. So, recapping, our top-line revenue growth in the fourth quarter totaled $34 million. Full service center business added $26 million or 9% on rate increases, enrollment gains in our ramping centers, as well as in the mature class, and contributions from the 86 new centers we added in 2015. As Dave mentioned, the pound and euro FX rates have been lower in 2015 than 2014. This impact dampened the revenue growth in the full service segment by around 4 million or 1% plus for the quarter, and about $24 million or about 2% for the full year. The impact of centers that we've closed since the beginning of last year also offset the topline growth and full-service by around two percentage points. In our other segments, new client additions and expanded utilization of our services by the existing client base drove 13% revenue growth in the backup division and 29% revenue growth in ad advisory services. All-in for the quarter, organic growth on a common currency basis was 8% and acquisitions added 4%. Gross profit increased $9.4 million to $90 million for the quarter, and gross margin was 24.2% of revenue, which was up 40 basis points from the 23.8% that we reported last year. Starting with our smaller segments, backup and ed advisory services generate growth and operating margins that are more than double what we earn in the full service business. So the top line growth in these businesses also drives margin expansion and leverage. In the full service segment, operating margin, exclusive of nonrecurring costs for secondary offerings and completed acquisitions, increased 30 basis points in the fourth quarter to 8.5%, and it increased 120 basis points to 9.4% for the full year 2015. Our mature and ramping center cohorts continue to deliver strong…

Thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Gary Bisbee from RBC Capital Markets.

Hey good evening.

Hey, Gary. How are you?

I'm good thanks. So, Dave, I guess the question -- are you seeing any impact at all, it sounds like everything remains very positive. But from the combination of weaker energy and commodities, it seems like there is a bigger case that can be made that we have somewhat of an industrial recession going on, just a general corporate profit recession in the U.S., are you seeing that in any places or overall change in the tone of discussion with clients or just how the pipeline looks or anything like that?

Actually, as we head into 2016, Gary, our pipeline across each of our segments, centers and backup care, and advising, is strong. And so, I'm not seeing any kind of macro changes in client behavior or sort of willingness to engage with us, and ultimately I feel like we are in a good position as we head into 2016. Of course, there are some industries like oil and gas that used to be, several years ago, places that were more fertile for us that have not -- they're not places where we are seeing a lot of new activity happening. But we don't have much exposure there, anyway. It's a very, very small piece of our installed base of business. So, in general, I feel like our businesses -- the arrows are pointing in the right direction for us as we head into 2016, as we are in 2016 and moving forward.

Okay. And then can you give us an update just on the mature center, I feel like ever since you have come back as a public company, we have had this 1% to 2% growth, are you getting close to the prior peak levels of utilization of those or is there a couple of years left? And then as part of that, a similar type of question is the first one, just any change in how you are seeing the demand from families that aren't associated with particular corporate customers with those? Thanks.

Yes, I think we still have a few percentage points left to get back to where -- what our mature centers look like pre the last downturn. But -- so I expect, as we head into 2016, that we are in the 1% to 2% range, again as it relates to enrollment growth coming from our mature class of centers. So, I think we probably have another couple of years of that left, and then we are probably likely back to the place we were for a long period of time, which was we were able to eke out about maybe 50 basis points of improvement in the mature class. But -- so I feel like 2016 will look, broadly speaking, a lot like 2015 in that regard; probably have another one or two years left of that, and then probably move downward towards the 0.5% to 1% gain in the mature class from that point forward. With respect – go ahead.

Go ahead.

No, go ahead.

I was just going to ask the last question. Just you've circled in the past six or eight markets for those, the new lease consortium centers are being focused on. I have seen a lot of just discussion in several of those markets about the cost of real estate. And I guess I wanted to ask as you continue to go about that strategy, is that becoming more of an issue or is the pricing flexibility and the demand such that you are able to charge higher prices in those centers and that you feel very good about continuing that?

Clearly, since we made the decision to go into some of the markets that we are doing these new centers in now, we have done so contemplating a higher cost of real estate in what we traditionally paid; just by definition, those markets require that. I think we've been successful in finding the right sort of niche spaces within these markets, still higher cost than what we're typically seeing, but allow us to sort of get in and make a model work where the pricing can be enough to offset the sort of incremental real estate cost. So, feel good that, in those markets, in those sort of six to eight places where we have been focused, still there's a good deal of white space left. So, I don't really feel the need to deviate too much from where we're focused now, at least not for the next couple years, based on what we are seeing in the pipeline.

Great. Thanks a lot.

All right.

Thank you.

Thank you. Our next question comes from Manav Patnaik from Barclays.

Thank you. Good evening.

Hey Manav.

Hey, how are you doing Dave? Just to follow-up just on sort of the talk around pipelines and commentary, I was wondering if you could -- have you seen something different from the financial sector basically with the new wave of the office support coming? Starting this year, it looks like it's going to get a little bit more rough. Are you seeing anything in that pipeline that makes you think otherwise?

We're not seeing much change, Manav, in terms of the financial service area. It's been -- that is an area where we long had a good installed base of clients, and the larger clients in that space have been adopters of our new services and continue to be adopters of our new services. In terms of the new business that we are getting in that space, it's sort of a second, third wave of companies that are adopting our services for the first time, a little bit smaller than the bigger players, mostly. But still, if I look at the pipeline, it's still -- there is still a healthy representation from financial services.

Okay. And then on the M&A pipeline, I think it sounded like at least the healthy pipelines that you're talking about still seem to be the singles and the smaller outside center deals. I mean can you characterize maybe if there are any more larger ones, like you saw in 2013, still in those -- in that pipeline?

Yeah, I think as I have commented before, I think what's in our -- both the pipeline of discussions that we're having and also in our sort of longer term pipeline of potential beyond sort of what might be in immediate discussions or discussions over the next few months, consists of both -- as you say, single sites, but also what I will call sort of that next year, that three to 15 center type operator that operates in a geography that we are attracted to, as well as some albeit smaller group of somewhat larger providers between the sort of 50 and 100 center level. There are more of those candidates outside of the United States then there are left for us inside of the United States. So, I would say they are more disproportionately weighted internationally as far as the larger ones go. On the smaller side, they're disproportionately weighted domestically, because the market is so much bigger, so the volume is so much greater. So, that's sort of how it's shaping up for us at this point.

Got it. And then Elizabeth just one housekeeping question, please. So, I apologize if I missed this, but in the 8% to 10% total topline growth, what is the assumption for the FX impact and then the M&A contribution?

So, M&A contribution is in the range of around 2% to 3%. The FX is fairly modest. Its maybe 0.5%. We ended the year -- 2015 was in the range of $1.52, $1.53. And our outlook reflects where we currently are and pretty close to the $1.45 to $1.50 range, so it's only a small effect.

All right, got it. Thanks a lot, guys.

Thanks.

Thank you. Your next question comes from Trace Urdan from Credit Suisse.

Thanks. Good afternoon guys.

Hi Trace.

I wanted to -- we've got a lot of Gloomy Gus's here. I want to go back to this recession question one more time and ask it in a slightly different way. I hear you saying that you are not really seeing much evidence of any kind of pressure in these different sectors we described, but maybe you could just spend a minute, since you have lived through a pretty hefty recession once before, maybe you could just sort of talk a little bit more generally about what you would expect to see if, in fact, we see the economy tighten or even decline, as some Wall Street types are worried about?

I think we -- if we just use the last downturn as a sort of case study for kind of what happened to us during a recession, we still grew, as you know, both on the topline and earnings, albeit on a much slower pace than what we had -- are doing now and had done before. And then to break that down for you, I think the things beneath the surface were that enrollment at our centers slows down in terms of its pace. And in the case of the last downturn, we did see some enrollment loss in our mature centers over time. And then, in terms of new sales conversion, the market, the pipeline starts to shrink and sales cycle starts to elongate. So, those are the things that sort of happened to us. On the positive side of things, we had a -- now that we are operating in several countries and have more diversified services; we were able not to be completely reliant on just one segment. So, we had performance -- better performance in some areas that helped to offset some of the issues we faced in the mature centers. And also, the labor market obviously gets on the margin better for us in a sort of economic downturn. And so, all those things sort of happened to us in a downturn period. As I said earlier, I think that, in terms of if I look at our pipeline or our sales cycle or all the things that sort of give me an early look at what might come about over the course of the next few months and into 2016, they all appear similar to what they did in 2015 in terms of strength of the pipeline itself, in terms of volume and the sort of rate of closed new business and things like that that we would look at on the new growth side. And I had already commented on the enrollment side as well. So, I think those are the things in terms of what happens to us, but at this point, I think we've already commented that we feel good about where we stand at this point in 2016.

Yeah. No, I appreciate that, thank you. And then I wondered -- I apologize if this is sort of common knowledge and I just don't have it, but do you guys have a targeted net debt to EBITDA ratio? And then I am wondering if you might elaborate a little bit on your decision to expand the revolver and how we might -- how we should be thinking about that. Is that something to get excited about or not necessarily?

Sure. So, we don't have a formal target for net debt to EBITDA. We have been delevering and being thoughtful about utilizing some -- given the relatively low cost of debt, some additional financing that we took on last December to both fund all the things that Dave talked about and the capital allocation strategy. So, I think that our level of comfort in the 2.5 to 3.5 turns of debt is certainly very -- we are very comfortable at that level. We have some favorable pricing that kicks in at the 3.5-turns level, but having been able to withstand and demonstrate growth through a more highly leveraged and more costly structures in the past, we're certainly comfortable here. And we'll execute on all those growth strategies as well as the repurchase program we have. In terms of the additional revolver, I think it's really down to us being a $1.5 billion company. Now, we have some opportunities that are out there and have the -- they would have some temporary draws on cash that are somewhat lumpy. So, having some flexible debt rather than structural that is appealing to us and at this level, we think it's the right amount of flexible borrowing to have.

Okay. Thank you very much.

Yeah.

Thank you. Our next question comes from Sara Gubins from Bank of America Merrill Lynch.

Hi, thanks. Good afternoon.

Hey Sara.

Hey Sara.

So, the 2016 guidance suggests that trends are expected to be pretty similar to 2015, but I do want to ask if there any areas where you expect variance, either positive or negative?

I'm not sure I understand what you mean -- variance.

Meaning, the trends look -- seem like they are very similar to what you saw in 2015. But I'm wondering if you are looking at 2016 and saying this should be an incremental tailwind or headwind for us, either on revenue or margins.

Yeah, well, so maybe I will give some color that may help answer that. I think the commentary that we have on the lease consortium centers certainly puts us in a position as we go into having -- we have 46 of the centers, as I said, that we have opened the last three years. And we've got good tailwinds coming from the centers we opened in 2013 and 2014 that are contributory. We have a little bit of a headwind then from the 2015 class and the early 2016 class in the first part of 2016, that will, from overall margin growth standpoint, comping the quarter-to-quarter timing will be not dissimilar we would expect from what we saw this quarter. But other than that, the trends do continue, as you said, very similarly. And I think the expansion in the margins in the full service centers is now sort of testament to what we have been describing in terms of all of the levers that we used to grow those margins steadily over time, and have a big enough cohort now in that lease consortium class that we're able to observe that initial year of losses pretty readily. On the back of the ed advisory services side, they are certainly growth stories. And with their toplines growing faster than the full service business, they also help margin to grow. But we are also investing in those businesses in the sort of the people in the support systems to drive their ultimate opportunities. So, I think that is also a fairly steady-as-she-goes with the occasional -- you see a little bit of a variability on growth, depending on when new clients launch and/or relative utilization in a quarter. But other than that, I think it is a pretty stable story.

Okay, great. And then how should we think about new center distribution between the U.S. and international?

In terms of new centers that are opening or --?

Yeah, yeah.

Yeah. So, pretty proportionate. I mean, 20% of the business is outside the U.S. in our -- what we have in the pipeline and under development is relatively proportionate to that.

Okay. And then just last, could you talk about where you are in cross-selling services? I know one area of focus is trying to add in backup care and ed advisory to existing full service clients. How is that going? And if you've got any metrics around it, that would be great.

Yeah, Sara. So, we have almost 200 clients now that purchase more than one of our services. And I think, as I've talked about earlier, the most common combination of service at least thus far has been the combination of having a center and also having backup care. Although, more and more, the ed advisory services, both the EdAssist service and College Coach are catching up. I would say that it is not uncommon any more for our client to start with us with more than one service. So, I feel like we're still middle innings, if you will come, in the process. There's still a lot of opportunity, we think, to convert more of our clients to more than one service. The newer backup -- when we started selling backup -- backup is the service where we have most -- the highest volume of clients, and so it is also the place where we have clients that are smaller than our historic base of center-based clients. So, in those cases, we have many clients that we would never have enough volume to -- or enough employees to have their own center. But they could easily be candidates for EdAssist or College Coach, and they become the candidates for that. So, I would say we still have good momentum going and it still remains an important area of focus for us, not only this year but and beyond.

Great. Thank you.

You're welcome.

Our next question comes from Brandon Dobell from William Blair.

Thanks. Dave, last quarter, you talked, I believe, about the lease consortium model kind of making sense for -- I think you said eight or nine metro areas or metro markets. I guess I want to give a little more color on how you think about where or what those markets are, their certain characteristics, and why is eight or nine the right number as opposed to 15 or 20?

Well, Brandon, the markets that we are focused on for our new lease consortium models are really -- we're really trying to target areas that have a few important attributes. One, they are areas whereby the traditional supply of childcare and early education hasn't kept up with the sort of demand that has be created by the movement of young professional families into those areas.

Okay.

So, you think about many urban or what I call urban ring locations that have been redeveloped across the country, really in and around our major cities -- and they sort of become candidates. In those markets, we can do two things. One, we can satisfy demand from the kind of family that is looking for our level of quality and that can afford it. And then secondly, these are the same markets where lots of employees from the clients that we serve, live. So not only can we -- can that help with some clients buying some spaces for their employees in these centers, but also it helps us meet the growing demand for backup care and to be able to deliver that backup care in Bright Horizons centers, which helps our backup care service, both from a quality standpoint and from a financial performance standpoint. So, that's that -- those are really the areas -- they are areas where, of course, the center model also yields the best answer with respect to what we can charge from a pricing standpoint. So, all-in, that is sort of how we get to our thinking around what areas make sense, and then within those areas, when to pull the trigger on a given site.

Okay. No, that's helpful. And Elizabeth, you gave some stats around center opening and closing expectations this year. In terms of cadence, last year was a little bit backend-loaded, but not too much. Anything that we should know in terms of openings and closings, if there is going to be a particular quarter or two which are, I guess, more heavily-weighted?

Nothing -- I would say nothing in particular. We do tend to open -- centers have a little bit of an advantage if they are opening after -- toward the end of the third quarter in terms of the fall enrollment period. But I think that the reality is we work hard to work with our client partners and with the centers that we're developing to just move them as quickly as we can. So, it should be relatively even.

Okay, great. Thanks a lot.

Thanks.

Our next question comes from Jeff Meuler from Robert W. Baird.

Yeah. Thank you. Can you give us a sense of what percentage of your full service revenue is now coming from the lease consortium centers and tied to that? Anything worth calling out, how the lease consortium centers in the targeted large urban areas performed during the last recession?

So, I'd have to compile that sort of worldwide. I think from a -- maybe the question is getting at how are the newer centers contributing rather than the entire lease consortium cohort -- because in the U.S., the lease consortium centers are around 30% of the total, and worldwide, they are around 40%. So, they are, on a relative basis, similar sized, similar averages to the overall business. So, the revenue contribution shouldn't be that significantly different. I have said and would say again, that the newer centers that we are opening based on the areas that Dave was just describing that we are targeting, have a slightly higher revenue profile on average in more like the $2.5 million range for revenue. So, as those centers ramp to maturity, they are contributing -- if we are opening 15 of those centers in a year, by the time they ramp to maturity, they are contributing marginally at the higher overall rate than that. But the -- I think that's relatively consistent. I don't know if I have answered that -- the revenue question. What was the other part of your question?

I was just curious were they similarly resilient during the last recession to the other full service centers that you have full P&L responsibility for?

Yes, Jeff, I mean, the -- we really didn't start opening these models until just after the last recession. So, it's hard to compare the new class. We've had traditional lease models that were -- lease consortium models that had been open many years prior in different locations. And broadly speaking, I think they behaved similar to what we saw in our P&L center class. But the newer class really was started in 2011 into 2012.

Okay. And then, Elizabeth, did you say ed advisory margins flattish year-over-year in 2016? And if so, is that more of a temporary pause? Or is a backup care like margin still like a long-term aspiration?

Yeah. No, I think, broadly speaking, I was sort of painting a broad brush there, but the ed advisory business is -- I think the point there is that it is still in investment mode. And so we did see good operating margin improvement this year. And certainly, over time, we would expect it to be moving toward that 30% level that we see in the backup business. So that is a longer-term target. It will just be measured in -- over some time. So, broadly speaking, we should see a little bit of growth there, but wasn't trying to imply that that's flattening out. It's just -- I think it's just a heads up that these are businesses that are in development. You'll see a little bit of variability from quarter-to-quarter and don't be surprised by that.

Okay. And then just finally, anything worth calling out on free cash flow or working capital management in terms of cash flow from operations being flat to slightly down on a full year basis this year? And any sort of good benchmark that you guys look to in terms of adjusted EBITDA to cash flow from operations, conversion rates on a normalized basis or anything like that?

Yeah, I don't have sort of a conversion factor for that. I think the question on this year's free cash -- or operating cash flow being pretty flat with last year is true. We have a couple of factors going in there with some of the timing of the year end billings. We have some stepped-up receivables for our -- we have a number of clients that have annual billing. So, that's a bit of a factor. And prepaid -- we had some prepaid income taxes that was timed -- that was based on the timing of when the U.S. government issued some of their rules. And so we will benefit from that a little bit more this year than we were able to as the year 2015 rounded out. So, those are probably the two things that we would see stabilizing more. And that's what would drive more like the 200 million to 220 million of operating cash flow in 2016. So, a return to a more normalized level of conversion, if you will, of the operating income into cash flow.

Excellent. Thank you, guys.

Thank you.

Thank you.

Thank you. Our next question comes from Andrew Steinerman from JPMorgan.

Hi. Elizabeth, I'm going to ask you to think about the margin impact of the kind of portfolio of 46 lease consortium centers over the last three years. Like if you looked at that as a portfolio, with the ramp and the startup losses, and then the maturity of the older classes, how much of an effect is that having? How much drag is that having on EBITDA margins right now?

Well, I'd have to do the math on that, Andrew. I can say that those centers -- so, since they lose money in their first year, and they ramp up to maturity by the end of the third year, the 2013 classes in the fourth quarter of 2015, pretty close to their mature operating level. So a $2.5 million average revenue would be generating order of magnitude 600,000 or so of margin, though drag on operating income margins or EBITDA margins of the whole class is -- I would have to do some math to determine that, but it's probably in the 100 to 150 basis points range.

Okay. Maybe say it a different way, what would be the first 12 months losses for starting up the lease consortium center?

So, in the first 12 months, the center will lose anywhere between 500,000 and 750,000.

Perfect. Thank you. Appreciate it.

Thank you. [Operator Instructions] Our next question comes from Henry Chien from BMO Capital Markets.

Hey, good evening. Its -- I'm calling in for Jeff Silber. I just a question on --

Hi Henry.

Hey guys. I just had a question on the pricing environment. I know you mentioned you were able to get in 3% to 4% year-over-year price increases. I was wondering if you could talk a little bit more about those increases. Is it -- how much of it is just from the market environment? And how you justify using some of those increases, whether it be additional services or anything else you're developing? Thanks.

Well, as you know, we've had a long history of price increases in that range, in the 3% to 5% range, going back 10 or 15 years or more. So, but we always, each year, take a focus on -- or have a focus on being sure that we are looking at our pricing on a local level, being sure that the competition that we think is at our level, looking at the price comparisons there. And really kind of continuing to -- being sure that we continue to have the kind of premium that we think we get in each market. And so, as we look at it across the country, there are certain places that there are increases higher than the 3% or 4%. And there are some smaller amount of places where it's slightly less than that. That range is a good one. If you were to look at -- most places are in that 3% to 4%. So, -- but it gets -- it's sort of -- it's done on a rolled-up basis on a local level. And that's the range that we feel good about for this coming year, 2016 -- in 2016. So, again, it's -- I would characterize it as very consistent with what you heard from us for many years.

Got it, okay. And in terms of historically in a slowing growth environment, just is it the 3% to 4% similar range or -- can you talk about that a little bit?

Yeah, I mean, that's been our experience. In the 2007 to 2009 range, we were in -- we had price increases. And the difference becomes -- in a market like we're in now, where we're looking to -- another piece of our pricing strategy has been to try to price ahead of our anticipated cost increases, principally labor cost increases in a given year. And so what happens to us in a more robust labor market like we've been in, and are in now, we have to push it in some markets to stay above what we need to do from an annual merit increase. In other places, we don't see that same amount of pressure, so we don't need to. When the economy is slower, we also see less pressure on the wage side. So, in that sort of -- that's why, over a long period of time, in that 3% to 5% range, in a slower economy, our price increase tends to be at the lower end of that range; in a more robust economy, at the higher end of the range. And yet on any -- depending on the locale you're talking about, it could be a little bit higher or a little bit lower. So, that's what happens to us in a more -- in a different kind of economy than we are in now.

Got it, okay. Thanks so much.

Thank you. Our next question is a follow-up from Trace Urdan from Credit Suisse.

Thanks. I think you mentioned a couple of times the benefits of being able to relocate capacity from third parties to your own centers in the backup care model. And I wonder if you could just talk about what the business -- where we see the business benefit there? Is it in the backup care margins? And is there any way to quantify kind of what that looks like?

Well, I mean, Trace, when you think about our backup business in general, we're offering our clients the opportunity to have their employees have a day of backup care, either in the Bright Horizons center network, where capacity is available, or at a center that we partner with in a geography where we have no capacity in the Bright Horizons network; or thirdly, in an in-home care provision situation, either for childcare or for eldercare. And there are certain care uses where in-home is a must. You can't do sick childcare in a center. We can't do adult care in our centers. So those -- a lot of those types of cares have to be in the in-home piece. But if you just concentrated on the kind of care that can be delivered and that parents want in a center, obviously where there is a Bright Horizons center, that's where we can deliver it in a way that is consistent with what we do at Bright Horizons and lots of times, it's what parents want. So, what I was referring to earlier was, when we open a new lease consortium model in a market where we know we have many of our backup clients living, and where they may be using alternative types of care or we sign up a new client, and so to a degree that can be delivered in a Bright Horizons center, it satisfies, I think, what parents want, but also helps us financially in the sense that we're actually -- we're providing the care ourselves. We are paying ourselves for the care as opposed to a third-party. So, broadly speaking, to the degree more of the care is delivered through our network, it's a positive for us from a financial standpoint on the backup site.

Right. No, I understand all that. I was just looking to see if you could focus that a little bit more. So, it sounds like -- I think what I hear you saying; Dave is it's a benefit in terms of being able to drive more topline in the backup care business, because you can expand your offering in places where maybe you didn't have as much exposure before? But then I guess it's also a positive on the margin side of the backup care business, because that is sort of 100% contribution when you can put that child into sort of existing capacity that you already have?

I think the second part is right. I don't think its 100% contribution, but it's certainly a higher contribution than what we would get if we had to pay somebody else for that day of care. But, yeah, I think it is largely a margin benefit. I think there are some places where it becomes a revenue -- a new revenue opportunity. But most the time what we're dealing with are serving clients that have people that live in multiple geographies. And so, thus, we may be meeting their demand with Bright Horizons centers in certain geographies and having the rest of the demand met by our partners in other geographies. And to the degree we can fill more of that demand in places where we weren't before we got there, it's more of a margin help than it is sort of a big new revenue driver.

Okay. Thank you.

Okay. I think that concludes the -- Shay, the list of questions and we appreciate them. And certainly appreciate everybody spending time with us this evening. If you're in the New England area, get home safe. We'll try to do the same. And for the rest of you who are enjoying sunnier pastures, we'll see you in the -- we're jealous and we'll see you on the road.

Thanks, everyone. Have a good night.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.