Greetings. Welcome to the Bright Horizons Family Solutions Second Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I would now turn the call over to your host, Michael Flanagan. Please go ahead.

Thanks, Stacy, and hello to everyone on the call. With me tonight are, Stephen Kramer, our Chief Executive Officer; and Elizabeth Boland, our Chief Financial Officer. I'll turn the call over to Stephen after covering a few administrative matters. 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, including those regarding future business and financial performance, including the impact of COVID-19 on our operations, 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 are described in detail in our Form 10-K 2020 and other SEC filings. Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statements. We also refer today 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. Stephen will now take us through the review and update on the business.

Thanks, Mike. Hello to everyone on the call and thank you for joining us this evening. I'll start tonight with a recap of our second quarter results and provide an update on our current operations and plan for the remainder of 2021. Elizabeth will follow with a more detailed review of the numbers before we open it up for your questions. First, let me recap the headline numbers for the second quarter. Revenue increased 50% to $441 million and adjusted operating income of $34 million was up 25%. Adjusted net income of $30 million yielded adjusted EPS of $0.49, up 11% from last year. Overall, as we passed the midpoint of the year, I continue to be pleased with our performance and optimistic about the trajectory of our recovery, as well as the opportunity that lies ahead across all three of our business lines. Let me start with our full-service segment. Revenue grew 144% in Q2, reflecting the steady recovery of our early education operations since the widespread shutdown of 80% of our centers at the same time last year. We ended the quarter with 920 of our 1,006 centers open, having added four new centers and reopened the total of 18 temporarily closed centers in Q2. As I mentioned in our last, we've started to see several clients pull forward their reopening timelines, and more than half of our Q2 reopenings were originally slated to open in the second half of the year. The center that we opened for Ochsner Health in Q2 adds to our healthcare client portfolio. And in that vein, I'm also excited to have welcome six previously self-operated centers for the mass general Brigham Health system to the Bright Horizons Family in early July. This opportunity was in large part based on our unique ability…

Thank you so much, Stephen, and hi to everybody on the call tonight. Thanks for joining us. I'll recap the quarter’s results and then provide some thoughts on the rest of 2021. For the second quarter, overall revenue increased 50% to $441 million and adjusted operating income increased 25% to $34 million or 8% of revenue with adjusted EBITDA of $68 million or 15% of revenue. We ended June with 920 out of our 1,006 centers open. In the second quarter, we added four new centers and reopened 18 centers that had been temporarily closed. We also permanently closed 13 centers. The 86 centers that remained temporarily closed at June 30 are slated to reopen in the coming months. Full-service revenue increased $197 million in Q2 or 144% comparing favorably with our expected increase of 135% to 140% year-on-year. As Stephen mentioned, enrollments are tracking well and our occupancy levels now average between 50% to 60%. As noted, we are particularly encouraged by the sequential improvement of enrollment across all geographies. Adjusted operating income for the full service segment also improved $59 million over 2022, to a positive $4 million. This represents a 30% flow through on the revenue growth. Again, this is ahead of our expectations of approximately 20% flow through on the progressing enrollment and solid cost management, as well as continued support from our client partners and the government programs that are targeted for the childcare industry. The underlying demand for backup care services continue to remain strong in the quarter with a growing list of clients and expanding user base and broadening of care types. As we’ve discussed on prior calls, backup care experience outsize growth in 2Q of 2020 due to the significant use of sales force reimbursed care during the initial phase of the…

Thank you. We will now be conducting a question-and-answer session. Our first question comes from Manav Patnaik with Barclays. Please go ahead.

Thank you. Good evening.

Hi, Manav.

Glad to hear all the reopenings and all that positive commentary talks about. The one question I was curious about is, you guys acquired Sittercity, you got the Steve & Kate’s Camp. And even at Barclays, I think we just got an email saying you could exchange a day of backup for like four hours a virtual visit or something of which the tutoring. And I was just curious how did the economics of all that work, does it change what we’ve seen historically, or is it – are they just substitute just trying to understand if we can – if those can be offsets to what’s continued uncertainty of reopening here.

That’s a great question, Manav, and thanks to Barclays for continuing to lean in on the backup service. So essentially as we’ve always described the underlying economics of our backup care service is based on the use that we’re able to achieve, and that ultimately accrues to what employers are investing. And so as we continue to increase the use types, and obviously as you just described, Barclays is investing in virtual tutoring. You have the ability to use in-home care. You have the ability to use any center care. We are just broadening the kinds of services that are used within the rubric of backup care. And our goal obviously is to extend the benefit to a larger swath of the employee population and at the same time, make the services more relevant to that larger population. So ultimately, the goal is to continue to increase the investments that our employer partners are making as a result of the fact that we’re having more and more impact on their employees.

Got it. And just curious Elizabeth just on the Ed Advisory, I think I heard you give us the margin expectation, just curious how we should think about the growth in the second half of last year, there was a step up there, but just curious if there’s anything to call out.

So the growth, do you mean the revenue growth?

Yes, correct.

Yes. So still looking at mid-teens revenue growth we did as you mentioned before, Sittercity has joined the family and there was – it is contributing in that group. That’s where it is reported in terms of the segment reporting. So it will be lapping that inclusion last year as we get to the end of 2021. So it also has – because we are ramping that business and getting it to its own maturity. It has – and it’s contributed to some of that headwind on the margin being closer to 20% than what we would see as more of a long-term margin in that segment between 20 and 30. So near term, that’s why we guided to 20 to 25. And think that mid-teens on the top side.

All right. Thank you very much,

Your next question George Tong with Goldman Sachs.

Hi, thanks. Good afternoon. You mentioned that occupancy rates for full service are at 50% to 60% now, can you talk about how you expect that to progress and step up in Q2? What’s embedded into your outlook? And then exiting the year, are you still on track to get back to pre-COVID occupancy rates and what are those rates and your view, structurally. Has it changed post COVID versus pre-COVID?

Yes, I mean, I think the headline answer or the initial answer to that is that we’re broadly similar to what we have talked about in prior quarters. We are on track that we’re pleased with in terms of the sequential progression, the Q3 results we’ll have some turnover, if you will, of that enrollment as the older preschoolers do go to elementary school and we’re backfilling with new family. So even though we would seasonally, typically see enrollment declining in Q3, we’re expecting some continued modest improvement and continuing that into the fourth quarter, so that we are getting at to near pre-COVID levels by the end of this year. That is certainly what we see as given the demand profile that we’re hearing from parents, what they’re requesting and the conversations we’re having with clients. So I think we’re on Page 4, similar to what we have talked about in the past.

Got it. That’s helpful. You mentioned that you’re going to see some weighing on operating income as you finish off 2021 with full service due to ramping costs. But you also talked about the flow through for operating income is going to be 45% in 3Q. So does that suggest that margins will come under particular pressure in 4Q and some of those costs come back online?

I think what – the messaging there is that we are in some respects in Q3, we will be at the apex of the inflection on comparison to last year. So we were reopening centers in Q3 of last year. We had sort of the highest inefficiency of enrollment and cost structure. So the flow through as we continue to ramp will be at the top now, as we compare to Q4, we’re not giving detailed guidance on Q4 at this point. But certainly, it will pull back from that level, because we had already seen quite a bit of improvement last year from Q3 to Q4. So I think just trying to make sure that everyone’s understanding that we still have some COVID protocols, we’re not going to be back to our margins in pre-COVID, even as we are approaching our enrollment levels by the end of the year. We need to get all of these – the sort of stability and the consistency of the cost structure to align with the enrollment and have the opportunity to have the tuitions cycle through as well. So there’s just a few moving parts like that, that are contributing to our needing a few more quarters to be getting back toward the pre-COVID gross margin or operating margin that is aligned with having enrollment levels close to where we were.

Got it. Very helpful. Thank you.

Next question Hamzah Mazari with Jefferies.

Hey, good afternoon. My question was on backup, your Q3 guide seems very positive. Your 2020 revenue base was like, I think 388 million. I guess the question is, how big could this business be over time? Do you have a sense of how we should look at the addressable market given you’ve added more clients during this COVID timeframe than you’ve ever done before. And is there any competition here or not really?

Yes, a lot in there, Hamzah, and I’ll take each one in turn. In terms of the addressable market and sort of what we see as the opportunity. We think the opportunity within backup care is great, right? So different from our onsite childcare center business, which requires sort of a minimum of a 1,000 or 1,500 employees in a single site location, our backup care services really can address the needs of employers, really any employer greater than 500 employees. So the addressable market there is quite a bit larger in terms of the number of employers. You’re right to point out that we have added a large number of additional employers into this segment. And as they season, we’ll continue to see greater amounts of use coming from those employers. And at the same time, as And as they pointed out, we continue to extend the number of use cases that are attributable to our backup care service. So again, I think there are a number of very positive tributaries that we are heading down as it relates to the backup care service. In terms of competition, we obviously do have competition in this marketplace. That said, we are by far and away the leader, we pioneered this space and certainly have continued a fairly dominant position within the marketplace. We take the innovation within the service line incredibly seriously, because we ultimately always want to be providing best-in-class service to our employer clients and their employees, and feel incredibly positive about both the opportunity, as well as our competitive position.

That’s a very helpful and I forgot to mention Jefferies is a backup client too, just in case. But also just a follow-up question and I’ll turn it over, the 100 employers centers that you had called out, I guess, a few quarters ago they were shut, I think they were shut in Q4, they were shut in Q1. I think the new disclosure is that you expect 95% of your centers to open by Q3. I’m just curious as to the 100 employer centers, maybe that’s old definition, but are any of them open now? And are you expecting all of them to reopen by the end of Q3? I’m just – I just wanted to get a sense of, if any of those centers you expect to remain shut forever or are impaired, I guess, is the question. Thank you.

Yes. So just to clarify, we have a total of 86 centers that are still temporarily closed and it’s not to say, never say never, there may be a handful of those that ultimately don’t reopen, but in general, we think they all are going to reopen. They all have a schedule and a plan. There are handful that are into early 2022, but the vast majority are this year and the vast majority are expected for Q3. So of those – there are a number of client centers in that group. We do have a few that are our lease models that are under our discretion that we have been managing the opening. But for the large portion of these are client decisions. And that’s why we framed it as the majority being Q3.

Great, thank you so much.

Thanks, Hamzah.

Next question Andrew Steinerman with JP Morgan.

Hi. I actually have two questions. I hope that’s okay. The first one is, it’s good to see the occupancy rates for full service centers heading back to pre-COVID levels by year end this year. My question is past that. So into next year, what needs to happen to get full service revenues back to pre-COVID levels? And then my second question, which is really different question is, are you seeing full service demand from Bright Horizons Family’s closer to where they live and work and how is Bright Horizons addressing that dynamic?

Sure. So, I think the answer to the first question is into 2022, of course, as we target to be – as we said, at or near pre-COVID levels by the end of the year that we would be in into early next year, before we are seeing revenue comparable to pre-COVID levels. We have the advantage of some – it depends on where the enrollment is concentrated in terms of the relative tuition levels and some of those things. But in large measure, we would expect to be lapping at comparably at the revenue level sometime in the first half, probably of 2022. And as it relates to continuing to grow enrollment from there, I think the opportunity for us as we’ve talked about on prior calls, Andrew, we’re talking about pre-COVID levels and that certainly is threshold one. But from there as we continue to work in an environment where the supplier is contracted and the awareness of the need of childcare is increasing and employers are continuing to be supportive, we will also be working hard to continue to grow past what was the pre-COVID levels and now will also have the opportunity to drive revenue a bit higher than that. But I’ll let Stephen answer the second part of your question.

Great. Thank you, Elizabeth. So Andrew, in terms of, is our enrollment tending towards closer to home or to work? I think the answer is, yes. The reality for us is that our enrolment tends to be either at the workplace or in a community facing center. But in both cases, the individual who’s enrolling lives typically within 10 miles. And so, we are finding that a lot of our families that enroll are living within 10 miles of their work site and therefore enrolling in their work site. And ultimately for those who are enrolling in our community-facing centers, again, they are living relatively close to the center. And so, to get sort of underneath the question, what we’re finding is that again, where our centers are located are very proximate to where our enrollment lives and ultimately those centers are very well located for them. So overall feeling really good about where the portfolio is. We continue to look for additional employer clients that are looking to subsidize and finding good success. And at the same time, continuing to look for new developments that allow us to continue to infill and then finally, looking for acquisition targets to do the same. So overall feel really good about where we’re located and the enrollment trends related to those who are choosing a Bright Horizons experience.

Perfect. Thank you.

Next question, Gary Bisbee with Bank of America Securities.

Good afternoon. I guess, two sort of risks that appear to be out there I wondered if you could comment on. The first is just, are you hearing any change in plans as it relates to the Delta variant? I think there’ve been a number of large companies that have publicly sort of pushed off when they’re bringing back a lot of employees. And so is that conversation happening? Do you see that as a timing risk, as we think about the next several months and quarters? And secondly, just labor inflation and tight labor markets, maybe Elizabeth, that was part of your comment on costs will be higher. Margins will take longer to come back than revenue. But how are you working through that? Is that an issue or are you able to price and cover that as you’ve done in the past? Or is that somewhat of a headache at the moment? Thank you.

Great. So Gary, on the question around timing of return to office, I think look, we have been on the front end of this information flow from our clients because obviously, they see our support as a critical element of their return to office strategy. So, we were very early to recognize that employers were anxious to get their employees back, even though some of the rhetoric in the news was different from that we heard very early that that was the direction of travel. We continue to hear that that is very much a focus for employers is to by and large get their employees back to the office. Irrespective of that, I think there is certainly a tone change as it relates to irrespective of few employers that may delay their date past Labor Day or just after Labor Day. There is real intent to make sure that employees have full supporting coverage and sort of the flexibility that employers are moving forward with is certainly narrowing. But that said, what we’re hearing is perhaps, in the news, you heard about Apple moving it off by a month. That’s still has them within the window of the Labor Day schedule. And I think there’s a lot of focus around that just after Labor Day return to the office.

And then as it relates to labor inflation, Gary, I would say that we are certainly seeing wage inflation in our industry, like many other industries we’ve – we’re not a minimum wage payer. We average well above that. And even though our wages do vary by geography, we’re well above that across the geographies that we operate. But it is still – last year 2020 was quite a disruptive labor year. And so there is both some market constraint with people differing timing of coming back to work with either concern or ill – their own exposure or their own health concerns and/or unemployment benefits continuing. And so we are seeing that the labor inflation is on the higher end of where we would have framed at typically in the past. So we’ve been – the last few years, we’ve been in more of a 2% to 3%, and I’d say we’re more in our 3% to 4% range on average with some areas higher than that. But from a pricing standpoint, we have today been able to continue to price ahead of that and to consider that even in markets where it’s higher than that 3% to 4% average, we’ve been able to do that and expect that we would continue to. Where we’ve talked about a potential longer cycle of recouping all of the costs that that may be in the model or in the sort of typical full service center going forward, as we get through this COVID pandemic period and the extra costs that are in the model now with protocols that are kept up, not just from a health and hygiene standpoint, but also from some of the incremental staffing that is required. That will need to work its way out as we get more to a return to normal. And so that is where we may see a little bit of time in the headwind on margins as well. But overall structurally, labor inflation we think is on the higher end. We do have some support for that in the near-term, the government programs that are geared toward directing some of the Consolidated Appropriations Act or ARPA funding to labor. So we’re able to defray some of the costs with that. But it is still something that is part of the calculus that we’re working through for our plan he rest of this year and next.

Okay. So is it reasonable to think that some of those costs like the COVID protocols, you mentioned whatnot bleeds into next year. That comment maybe wasn’t just thinking about the next four months. Is that or is it...

I think that – yes, not a lot of it. I think what we’re expecting now is that we will be tapering that down at the year end, but there may maybe some ongoing protocol for that. But again, we’re looking to government support for some of those costs to offset the majority of it next – if there’s a bleed into next year.

And then, if I could just sneak in one more, your balance sheet is obviously quite strong. Profits are coming back. So leverage is going down. I've heard from a lot of people thinking that you'd likely be active in the M&A markets, looking at businesses that are in weaker position and the full service center business to take share there. Maybe even transition your mix a bit more to the community based market. We haven't seen any meaningful activity yet. Is that a real opportunity and sort of what's the gating factor to moving on those kinds of opportunities? Thank you.

Sure. So we absolutely are very actively seeking acquisition opportunities as it’s been our history on this topic. We are looking both in the geographies in which we operate the U.S., UK and the Netherlands as well as more broadly. As we've shared before, we look at markets where there is some form of third-party support, whether that be government employer, or some combination there off. So I think that you can count on us for continuing to focus and look and make sure that we are evaluating good opportunities that are a strategic fit, a quality fit and a financial fit. I would say that part of the delay, if there has been a delay has been in just the amount of disruption that providers in our sector have experienced. And so I think that as we have built in continuing to build enrollment, many providers are trying to do the same thing so that they can bring back some of the value that they felt they had in a pre pandemic level and ultimately achieve valuations that are more in line with their expectation. And so I would say that's the piece, that's important to consider is just the timing around that and when that will occur. But absolutely we are focused on continuing to look at both acquisition as well as organic growth opportunities, both in the markets that we're in today as well as more broadly.

Thank you. That's helpful.

Next question Jeff Silber with BMO Capital Markets.

Thank you so much. Stephen, I just wanted to clarify something you had said earlier. I think you had mentioned that the majority of your full service center clients, the employees live I think it was within 10 miles of the center. And then also even the ones that may go to the least consortium models also live a similar proximity if I'm taking my child to a work site – childcare center, and then I'm working from home two days a week. If I wanted – if I contracted you for a whole month or for a week, I can still kind of pick and choose which center to take my child based on the proximity. Is that correct?

Yes, I think – so there's sort of two ways to think about that. The first is, that we have many, many examples at this point of families who are having their children five days a week within a worksite center and maybe working two or three or four days at the work site. And the real advantages for a family to think that way the first is they recognize from a continuity of care perspective, right? That is likely the best for their child to have that continuity of teacher, as well as classmates within a center. In addition to that, as you all know, it's important to recognize that often they are receiving a quality of care at a lower cost because there is an inherent subsidy being provided by the employer. So there is a real draw for employees to utilize their work site center both from continuity of care, but also from a financial and quality perspective, sort of irrespective of how many days they're working in the office versus at home and having their child at the work site. But yes, we do have other families that make the decision that they're going to go and mirror their schedule within the work workplace. And also have a child a couple of days in one of our community facing centers that may be closer to home. But again, we offer both options, but we are certainly seeing much more of a draw to utilize the onsite center for their employer center, as opposed to splitting the week between two centers.

Yeah. And that makes a lot of sense. And I do appreciate you that you clarifying that if I could switch over to your Ed advisory business, we're seeing a lot of companies really focused on offering education oriented benefits to their employees. I think target just made another expanded announcement today. Are you seeing a lot more interest in that kind of business? And if I kind of combine all your other educational advisory services as a whole, should we expect that to be a bigger percentage of your business going forward?

Yeah. So I'll take each of those in churn. So first, that area of our business is certainly growing more quickly than our full service area in particular and likely in our backup area as well. And so increasingly just that growth rate will cause that to become an increasing percentage of the overall, granted it's still relatively nascent today compared to the other two businesses, but we do expect to continue to see a healthy growth rate as it relates to our Ed advisory. In terms of the market, look on the workplace education side, most major employers, most leading employers have had tuition assistance programs since the IRS tax code came into being. That said, given the need for upskilling and reskilling, there is absolutely a real focus on making sure that they are doing this work in a really strategic way. And that's where our innocence line of service comes into play is our ability to take something that has historically been managed internally and do it in a much more progressive and employee centric way. So I think that overall employers are recognizing that as they look to fill hard to fill jobs, as well as look to the future for jobs that are going to be needed and hard to fill they are absolutely looking more specifically at how they develop their workforce through education. And we believe we're incredibly well positioned within this market as well as across our client base to continue to grow this business.

Okay. That's really helpful. Thank you so much.

Next question comes from Toni Kaplan with Morgan Stanley.

Thanks so much. So wanted to ask about the center count, it went down in the quarter by nine. I was just hoping you could go into what the primary drivers were of the 13 that closed. Was this a more permanent shift from employers towards like more flexibility in the work schedule or are there other reasons that we should be thinking about on why the employers would want to close those centers?

Yes, so thanks for the question, Toni. We had a number of centers obviously that were temporarily closed and we were still assessing whether they were viable for the long-term, whether we could accommodate families at other centers. So certainly a good portion of those are leased models that we also had control over. So not all of those centers were client decisions. There are a handful of client centers where the population was – had maybe a lighter imprint to going in. And so they were not as viable as an ongoing support location for that client and they have made the decision. So I don't – I think as we've looked at each case, it does not come to us as any kind of a fundamental or indicative shift. It's really been a location-by-location decision that. In some cases may have been reflected in any normal year, not just COVID, but COVID gave the impetus for that client to make a decision.

That's great. And as a follow-up to that, I guess, how should we be thinking about new center growth as we sort of go through the rest of the year and into 2022, like versus history? I guess, is there a longer – I imagine during COVID you are seeing a longer timeframe for someone to really pull a trigger on a new center, like, has that shortened now that once the case count started going down and the uncertainty lifted a little bit, I just want to understand the timeline.

Yes. So, I mean, look, the full service center, onsite center business has always had a long sales cycle. I would say that we had a number of clients who were further along in the sales cycle when COVID hit, obviously many of them put that on pause, as they were focused on other priorities. That said, what I would observe is that we’ve also had some clients through COVID, especially those who currently self operate their center, make decisions more quickly, right. I mentioned the Mass General Brigham earlier. They’re a great example where that sales cycle was relatively short, given the fact that we impress them with the work that we did with backup care in the midst of the pandemic. They self-operated six centers and made the decision that we were the right partner to transition those centers, given how difficult they were finding operating through the pandemic. So, I think it’s sort of a combination to me, where, we definitely saw positive decisions to COVID and I think that keep in mind, there is a long sales cycle on the other hand, especially on the self-op transition opportunity side, we hope to see some good opportunities coming out through 2022 as a result of COVID specifically.

Super. Thank you.

Next question, Jeff Meuler with Baird.

Yes. Thank you. Good afternoon. Just so that I’m kind of interpreting your commentary or setting expectations appropriately when you’re talking about getting back toward pre-COVID enrollment and full-service centers, should we be thinking about that more on like a per center basis since I think center counts still, probably down something like, I don’t know, 8% from pre-COVID by the end of this year, in terms of like what is not permanently closed. And then do we also need to buffer for the centers that are reopening in the second half of this year, that would take some typical ramp time.

So, it’s a great clarifying question, Jeff. We’ve been trying to be descriptive of comparative set. So that occupancy level, if we’re at 50% to 60% now, and we’re looking to be back at, or near pre-COVID levels by the end of the year that’s for those centers, not as an absolute number of total enrollments compared to total. So, how is the occupancy in the centers that we are operating? So then to the question of centers that are opening in Q3 or Q4 those would not be part of that cohort. They would be starting out at 10%, 20%, 30% occupied, unless they may have a different wait list, but they’d be starting out at the lower end of that and ramping up as we get with the other centers that we’re reopening. So that’s intended to be, as I say, as sort of a same center comparison.

Okay. And then maybe to broaden Gary’s wage inflation question out a little, just if you could comment on how your teacher and caregiver employee retention has been trending over the last year or into this year, following a really challenging the set of circumstances for those individuals. And then I guess, related to that is the ability to hire qualified labor, a meaningful constraint. If I look at the overall utilization rate, I would think not, but I don’t know if there’s meaningful pockets and if in those meaningful pockets, if that’s a constraint for you at all or not?

So, I’ll start it off and Stephen can play a color. I think the short answer to the question about labor – the labor pool, if you will, is that we have long been in a constrained labor pool. The numbers of folks entering the early childhood space has been declining shrinking for years. And so we have for many years been working hard to not only be an employer of choice where those committed teachers and caregivers want to work and that we are an employer of choice for many, many reasons, including our total employee value proposition from pay and benefits to our environments and our career opportunity. So, we have long invested in that. But the labor pool is in a – it’s in a very challenged state right now. We are certainly seeing those – between the people who are affected by the work that they’re doing. So they’ve got their own health, concerns and questions, and want to be careful about that. And they are dealing with a stressful and job environment. We have seen relatively we’re pleased with the turnover status that is it’s not markedly different than prior years, but the hiring environment is challenging and we’re in a re-ramp mode and there are folks who have ultimately left the industry in this kind of an environment where it’s just become more challenging than what they want to continue in. So, I think the – as I said, the headline is, we’ve been dealing with this kind of an environment and think that we can continue to do so, but it is quite challenging. There is an economy where wage rates are part of the equation and they’re rising. And we think we can –as I talked about before, we can manage through that with our business model, that’s been proven and parents and clients understand it well, and they are supportive of it, but the labor supply itself is another part of that equation. And that is one that is to be sort of fought with a long game.

And I think the only thing I can add to that is, I think we were especially proud, after what was a very difficult set of circumstances when we temporarily closed centers and were forced to furlough such a large number of employees. I think we were incredibly proud of the vast majority coming back when we were reopening and asking them to come back. That to us was sort of the first sense of the kind of retention and the kind of culture and employer of choice status that we enjoy and the relationship that we enjoy with our employees. So that was a real sort of force in terms of allowing us to get to the place that we are, is the ability to attract those employees who are with us pre-COVID. And I think that it’s fair to say that many other employers, both within our industry and outside of our industry did not enjoy that and therefore have found a place to be a very difficult one. So, we were very pleased at the ability to attract back our previously employed folks from pre-COVID and have them be the basis of our workforce yet again.

Okay. And then last one for me, I know the backup care margin this quarter was in the range that you’ve been talking us to however, it’s lower than it’s been in the other quarters that have had contribution from self-sourced reimbursed care. So, I don’t know if self-sourced reimbursed care is just getting too small to matter and to help your margin, or if there’s another factor that goes into that.

The self-sourced care is, as I mentioned a care type, but it is diminished significantly. It’s still is – there still is some component there that it’s higher than prior years, but it’s a much more modest portion of the use. And so as traditional use comes back and we have that supply chain if you will of caregivers providing care, that’s where the costs come back into the system in a slightly different way. So, that would be both our Bright Horizons centers where we’re providing care and that’s a benefit to full service, but it’s a cost to the backup group or our third party network of in-home or our other center providers would drive that.

Okay. Thank you.

Thank you, Jeff. Great.

Great. So thanks again for everyone joining the call and wishing you all a great rest of the summer and a good night.

Good to talk to all. Thank you.

This concludes today’s teleconference. You may disconnect your lines at this time. And thank you for your participation.