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

Thanks, and good afternoon to all of you. This is KinderCare's Third Quarter 2026 Earnings Call, and we're glad to have you with us. With me from the company are Tom Wyatt, our Chief Executive Officer, and Tony Amandi, our Chief Financial Officer. Once Tom and Tony have shared their remarks today, we'll open things up for a question-and-answer session. On this call, we'll be talking about non-GAAP financial measures. You can find the most directly comparable GAAP financial measures, along with a reconciliation of the differences between the GAAP and non-GAAP financial measures, in our earnings release and in the supplemental earnings presentation, and both of those are posted on our Investor Relations website at investors.kindercare.com. Just a quick note before we start — certain remarks today could be forward-looking. These remarks represent what management currently expects and believes regarding upcoming events that might affect the company, and they come with various uncertainties and risks. Those are laid out thoroughly in the Risk Factors section of our latest annual report on Form 10-K, as well as in other documents we file with the SEC. If you'd like a fuller picture of these forward-looking statements and the risks and uncertainties tied to them, those filings are the place to look. Actual results of operations or our financial condition may end up materially different from what our forward-looking statements express or imply. Every projection here reflects where things stand today. Other than where the law demands it, KinderCare assumes no duty to revise or refresh any of these statements publicly—whether because of fresh information, later events, or anything else. At this point I'll hand things over to Tom Wyatt, our Chief Executive Officer.

Thanks, Olivia, and good afternoon to all of you. Revenue for the third quarter came in at $665 million, as enrollment pressure at the KinderCare brand was partly offset by continued growth at Champions, which posted its fifth straight quarter of double-digit revenue growth. Creme kept building on the progress we've seen all year long. We're putting investment behind the long-term growth opportunity we see at KinderCare for employers, and we've made further progress on the footprint optimization we have planned. Let me begin with KinderCare, our largest brand. Back-to-school enrollment came in below what we expected. Inquiries from prospective families are up year-to-date, but we haven't been converting enough of that interest into enrollment. When we reviewed how our centers were performing, it became evident that there was room to make our methods for enrollment and engaging families more uniform. Midway through the quarter, we changed leadership at the KinderCare brand by appointing Cheslee Escobedo to head the business. Cheslee has demonstrated an ability to generate growth successfully inside our company, and she now has a clear directive to lift performance throughout our centers. In addition, we simplified the organization by making further field leadership adjustments and cutting roles in corporate and support functions. Considered as a whole, these moves are intended to reinforce accountability, accelerate decision-making and more closely match our support teams to what our centers require. On the corporate side, we've pinpointed administrative work that can be removed from center directors' plates. That includes moving more specialized HR and finance tasks over to our business partner teams, along with consolidating some enrollment support functions. The result is that center directors gain additional time to back up their teachers, connect with families, and concentrate on building enrollment. In addition, we're aligning staffing levels with today's enrollment as well as the growth we anticipate going forward, so our centers can flexibly bring in new families as enrollment climbs back from its seasonal low. Remaining a world-class leader in employee engagement means continuing to prioritize support for our teams. We just wrapped up our yearly employee engagement survey, which helps us better grasp their experiences and spot areas where we can do better. I'd like to express appreciation to our teachers, center directors, support teams, and field leadership for the hard work and dedication they keep showing toward our children and families. That same dedication carries over into how we connect with families prior to enrollment; scheduling tours is becoming simpler, our follow-up with families is improving, and we're leveraging new AI tools to assist with those interactions; in addition, we're directing targeted marketing spending toward markets where we see chances to reach additional families. For families already with us, retention stands at roughly the highest point since I joined KinderCare. We're now extending that same degree of care and attention to new families while they weigh enrolling. And results are starting to show. Even though overall enrollment is still lower than a year ago, the direction has shifted. After back-to-school ended, we've been signing up more new kids than we did over the same stretch last year. That's the result of stronger execution across our centers and steadier outreach to families considering KinderCare. We're pleased with the gain, and it should let us shrink the year-over-year enrollment gap by about 200 basis points as we head into the holidays. Our focus now is to keep building on that progress, drive greater consistency across our centers, and carry the momentum into 2027. We believe these moves are putting KinderCare on a stronger path for long-term growth. We're also nearing completion of the center closures we outlined to you last quarter. During this quarter, we closed an additional 20 centers, taking the total through Q3 to 69, and for the entire year we anticipate completing roughly 85 closures. These actions allow us to better align our footprint with demand in local markets and to channel resources toward the areas where they can deliver the greatest benefit for the families and communities we serve. In a moment, Tony will cover the financial aspects and where we stand regarding lease resolution. Turning now to our other brands, we're seeing solid results across several areas where our emphasis is on sustainable growth. Throughout the year at Creme, we've continued to make strides, even during the crucial back-to-school period. Although enrollment remains under last year's level, that shortfall is narrowing each week, and the business is outperforming our projections. We're happy with the early results from the new Creme school in Irvine, California. Within its first 50 days of operation, it exceeded first-year enrollment targets. That's a strong example of the demand we can tap when we bring our premium education offering into a market that plainly requires high-quality care. For KinderCare for employers, enrollment at our comparable centers increased roughly 2% during the quarter. Additionally, we've signed agreements for 8 additional on-site centers that will come online during the next 2 years, and expanding that pipeline remains a priority for us. A major area of emphasis is tuition benefit, where we perceive considerable opportunity to improve how accessible and affordable childcare is for working families. Simultaneously, these collaborations will assist in driving more enrollment to our current KinderCare, Creme and Champions sites. We have likewise broadened our sales and client relationship teams considerably, which strengthens our capacity to secure new employer partnerships and reinforce connections with clients we already serve. That represents a purposeful investment in the business's long-term growth, and we think it puts us in position to seize a greater share of the opportunity that lies ahead. Turning now to Champions. This quarter was another solid one for us: average weekly enrollment rose roughly 17% compared with a year earlier, driven by gains in our current programs as well as at new locations. Throughout 2026, we've concentrated on launching high-quality programs in areas where family demand is strong. That strategy is paying off—enrollment at this year's new sites is outpacing last year's openings at the equivalent stage of their development. In addition to growth from new sites, we're experiencing robust enrollment increases within our existing Champions programs. We think that speaks to how good the experience is that our teams deliver and to the trust they’ve established with our families; and even with that growth, we still see substantial room to serve more families in the school districts we already operate in. We’re also pursuing expansion in a disciplined way through new partnerships, concentrating on places where family demand is strong and where we can develop programs with solid enrollment and sustainable performance. More broadly, we understand that families are dealing with a difficult economic environment. Rising costs in many areas of their lives are straining household budgets, while shifting working arrangements are shaping how they view their childcare needs. Despite those challenges, the number of inquiries remains above last year’s level, demonstrating that families continue to show interest in securing quality care. Retention among families already enrolled with us, as I mentioned before, is still extremely strong. Against that background, our priority is to make excellent child care both easier to obtain and more affordable for families. We are identifying ways to extend our reach via initiatives that assist families in accessing care. One example: we just acquired two new centers in New Mexico, a state whose universal childcare program is helping families afford high-quality care more easily. We're expanding our involvement as well in Public Pre-K and additional early education programs that are publicly funded—before and after school care included—so we can more effectively meet what working families need.

We are developing the partnerships and capabilities needed to extend these programs into more communities, with quality and long-term sustainability as priorities. Quality education stays at the heart of all that we do. Our proprietary curriculum has a proven track record, with assessments indicating that kids enrolled in our programs are better prepared for kindergarten; those same assessments show stronger learning outcomes for children who stay enrolled longer; we are now investing in the next generation of our curriculum, which we intend to launch next year. In the past, curriculum enhancements have been warmly received by teachers and families and have helped draw new enrollments by showing the value of a KinderCare education. Beyond the standard curriculum we offer, there are opportunities to expand what families receive educationally by way of small-group enrichment offerings. Learning Adventures has stood out during this year, which shows how interested families are in additional learning chances for their kids. Through these programs, children can explore topics like on X, STEM and Spanish. Our attention is on increasing participation at the centers we already operate, reaching additional locations and introducing fresh options, among them seasonal programs that draw on what children are interested in. Looking ahead to the close of 2026, I'd like to bring together several of the priorities we've covered today. A lot of this year has gone into fortifying our business, making the way centers run less complicated, and improving the backing our field teams receive. In more recent weeks, we've put decisive leadership changes in place to shore up accountability and sharpen execution. Amid all of that effort, our attention stays on watching costs closely while putting money into the people and capabilities needed to lift performance. Outside the KinderCare brand, positive momentum keeps showing up in the remaining pieces of our portfolio. Champions is still posting robust growth via programs already in place and through adding new sites, and at Creme we keep moving forward. Within KinderCare for Employers, we've grown both our sales force and our client-relations group so we can chase fresh partnerships and boost sign-ups at the centers we already run. In addition, we're widening our involvement in Public Pre-K, scaling up our small group infringement offerings, and getting ready to roll out the next generation of curriculum in 2027. We know there's still plenty of work to do, yet the gains in enrollment patterns we've witnessed since the back-to-school period leave us more confident about the steps we've taken; since inquiries are outpacing where they stood a year ago, we see a major opportunity in getting better at turning that interest into actual enrollment, and how we close out this year counts because it sets the baseline we'll build from for 2027. Looking forward, we're concentrating on keeping this momentum going and making KinderCare even stronger. To do that, we'll keep sharpening how we execute, put more into growth, and broaden what we can offer so that high-quality care and education reach additional children and families. Tony will now take you through this quarter's financial results and what we expect for the rest of the year.

Thanks, Tom. I'll begin by covering the financial results for our third quarter, then give you an update on the optimization efforts, and after that I'll talk through what we expect for the rest of 2026. Revenue in the third quarter came in at $665 million, which is down 1.7% compared with $677 million a year ago. Weaker enrollment at our KinderCare centers kept weighing on revenue, though that was partly offset by growth at Champions as well as contributions from small group enrichment and from newer centers. Average weekly EC enrollments for Q3 fell roughly 6% versus the prior year, and that figure includes a negative impact of about 190 basis points stemming from center closures tied to our footprint optimization. Same-center revenue was down roughly $20 million, or 3.2%, mainly because enrollment at our existing centers was lower. That decline included about $21 million in lower revenue from centers that operated in both periods, plus a $12 million impact from center closures. Partly offsetting those decreases was roughly $13 million in revenue from newer and acquired centers that entered the same-center cohort. Same-center occupancy for the third quarter was 63.8%, a drop of 320 basis points year-over-year. Optimization efforts contributed about 150 basis points of benefit this quarter. In assessing the rest of the portfolio, we're monitoring two areas for progress: enrollment growth, which fuels revenue, and occupancy improvement, which reflects how effectively we're using center capacity. Pricing contributed approximately 2.8% to ECE revenue results for the quarter, in line with what we expected. Turning to the remaining components of revenue performance: Champions delivered roughly $8 million of year-over-year revenue growth. Notably, that growth stems from both increased enrollment in existing programs and new site additions. We're encouraged by the opportunities in KinderCare for employers. The pipeline of employer-sponsored centers keeps expanding, which gives us a view into future growth, and tuition benefits provide another route for linking families to the KinderCare centers we already operate. We have lately increased what we invest in B2B sales and client success capabilities in order to back both of these opportunities, and we think these investments will make KinderCare for employers a more and more significant driver of our long-term growth. In the quarter, we opened 6 new centers and bought 3 more centers. The cash consideration for those acquisitions was about $764,000, net of cash acquired. So far this year, new and acquired centers have brought in roughly $20 million in revenue. Now, on to the financial impact of our footprint optimization. Our projection is that shutting down centers will mean a revenue headwind of about $32 million in 2026. We further expect those closures to lift same-center occupancy by roughly 150 basis points across the full year. Turning to the continuing financial effect given the work finished so far, we project an annualized boost to adjusted EBITDA of around $10 million, driven primarily by reduced rent expense tied to leases with firm termination dates. In the current year, cash effects stemming from lease termination should land between $15 million and $17 million. We also anticipate an extra impact of $8 million to $10 million in early 2027 from leases terminated tied to the closures finished this year. Even though our planned center closures are almost done, there is still work left to settle the related lease obligations. At present we expect roughly $10 million in dead rent tied to 2026 closed centers to carry into next year. We have brought in a third-party firm to assist in negotiating further lease terminations, aiming to cut those remaining obligations wherever it makes financial sense. As with the prior quarter, our supplemental earnings materials include a slide detailing the effects of center closures finished to date and our expectations for the rest of this year's work. Turning to profitability: we recorded a net loss of $85 million, or $0.71 per share, compared with net income of $5 million, or $0.04 per share, in the same quarter last year. That year-over-year swing was driven primarily by larger noncash impairment losses, among them goodwill impairment triggered by the decline in our stock price, as well as impairment related to closed and underperforming centers. Adjusted net loss was about $3 million, or $0.03 per share, versus adjusted net income of $15 million, or $0.13 per share, in the prior-year quarter. Adjusted EBITDA was $43 million versus $66 million in Q3 last year, largely reflecting lower enrollment and the operating deleverage that resulted in our ECE business. Results for this quarter include about $3 million of severance expenses connected to the organizational changes Tom discussed earlier. Those costs sit in G&A and were not added back to adjusted EBITDA, cutting the reported result by the full amount. As Tom discussed, we are taking a disciplined approach to expense management while making targeted investments to improve enrollment performance. We are also making deliberate staffing decisions to balance labor costs against keeping the capacity to welcome new families and deliver the quality care they expect. SG&A was 10.9% of revenue versus 10.8% in the prior year quarter. Although expenses fell slightly in absolute dollars, the lower revenue base produced a modest increase as a percentage of revenue. Lower incentive and stock-based compensation expenses helped bring SG&A down during the quarter. Those savings were largely offset by ongoing rent and other property-related costs tied to the remaining lease obligations at closed centers, as well as the severance expenses I mentioned earlier. Interest expense fell to $18 million from $24 million a year ago. Turning to the balance sheet. We closed the quarter with $143 million in cash and $188 million of available capacity under our revolving credit facility. So far this year, we've brought in roughly $20 million in free cash flow, and we've stayed disciplined about where we put capital and how we set investment priorities. Our net debt to adjusted EBITDA came in at about 3.5x, which mirrors softer earnings and a smaller cash balance, and that includes costs tied to our optimization plan. As we mentioned last quarter, we expect leverage to remain elevated through the end of the year as we complete the remaining closures and continue working to settle the lease obligations connected to them. Those closures will be finished this year, though resolving the leases should stretch into 2027. Termination payments will continue to pressure cash flow in the near term, and the expected 2026 effects are captured in the free cash flow outlook we've updated. Now turning to the revised financial guidance we're giving for the remainder of 2026. We expect revenue to come in somewhere from $2.64 billion to $2.66 billion, with adjusted EBITDA in the $190 million to $195 million range and adjusted EPS of $0.02 to $0.04. The primary driver behind the reduction in our outlook is third-quarter enrollment performance that fell short of what we had anticipated, plus the knock-on impact that had on both revenue and profitability. Fourth-quarter enrollment trends have shown improvement, though because of when that improvement arrived, its contribution to the full year is limited. As for the revenue growth assumptions, we anticipate occupancy will act as a roughly 2.5% headwind for the year. Because our optimization efforts cut capacity and helped the occupancy we report, enrollment and occupancy have moved apart more than usual. As a result, we expect lower enrollment to be an added headwind of about 1.5%; tuition should add about 2.5%. We continue to expect Champions and B2B to add about 1% to revenue growth, while new center openings and acquisitions should each add about 50 basis points. Center consolidations are still expected to be a headwind of about 1.5% to revenue growth this year. Finally, the lack of the 53rd week that helped revenue last year is a headwind of about 1.5%. We expect capital expenditures for the year to come in at $120 million to $125 million, and free cash flow should be under $10 million, which includes the higher cash costs related to optimization work. When you're modeling, use an effective tax rate of 3% for the year. The guidance we've updated reflects our most recent expectations for the fourth quarter, including the better enrollment trends we saw through October. We're happy with how the last few weeks have gone; and although we're taking a cautious approach to its financial contribution for the remainder of this year, those trends leave us more confident about where we're starting in 2027. Before I wrap up, I'd like to reiterate a few of the key messages Tom shared earlier. We have acted decisively to reinforce accountability, sharpen how we execute, and lift enrollment results. To support those measures, we are making purposeful investments in our people and capabilities, including B2B, curriculum and enrollment. Crucially, results are starting to show. Recent enrollment trends have improved, which makes us more confident about the steps we have taken and where we are going. More work remains, and our focus is on keeping that momentum going and heading into 2027 from a stronger position. With that, we will now take questions.

This is Yehuda Silverman, filling in for Toni Kaplan. I just have one quick question about what you said regarding higher costs possibly placing greater pressure on family budgets, and how that connects to inquiries. So my main question is this: if inquiries were up a year ago and are performing well year-to-date even with more strain on budgets, why do you think that isn't necessarily turning into enrollment at the pace you expected? And how have the initiatives aimed at steering these center directors toward bringing in more families and making their tasks simpler produced any improved conversion versus before those initiatives were put in place?

How we got to where we are today comes down mostly to execution. That's the reason we talked at such length about freeing up the center directors' plates, so they have more hours for tours and for meaningful conversations with families who are thinking about joining our company and enrolling their children. So that's point one. Point two, I'd say that once the activities in the center wound down after back-to-school, we saw—as both Tony and I noted—a meaningful shift in the business's trajectory, and we gained a couple of hundred basis points in enrollment following back-to-school. So execution really is what this has been about. The people running our centers were juggling plenty of tasks—including some we hadn't even known about—and we removed those from their workload. A good deal of that shift didn't occur until roughly the back-to-school period. Even so, from that point on, we believe we've succeeded in decluttering the schedule of activities that fills our everyday operations, and the payoff is now visible.

Great. And a quick follow-up regarding a few of those closures you've made. So other than the fact that they had lower occupancy, could you discuss a few characteristics of those centers, like regions, end markets, demographics, and what you believe caused them to struggle more lately?

Sure. Yes. So as we've discussed previously, there really weren't any major geography items where we saw large shifts geographically. And when it comes to demographics, the biggest demographic factor that most of these centers shared was child density in the roughly under 5 age group. So before, they were at a different level, and we've simply observed them change to where there just aren't quite as many children in that area and potentially not as many children per provider either. And so as we saw those arrive, there just aren't as many children to serve, and we couldn't do so profitably, and that's the biggest factor we really saw.

There's a line in the press release I'm still curious about: since back-to-school ended, new enrollments have been higher than the same stretch last year, even though total enrollments are still under last year's level. What I'd like to understand is what "overall enrollments" refers to there. Does that count after closures? Or does it mean the existing centers, the ones that remain? And if it's the remaining centers, wouldn't those centers get some benefit from families moving over from the closed ones?

Yes. Those are good questions, Andrew. Let me try to walk through it a bit. First, I'll take your last question. It's always our hope to keep and retain as many of those families at centers as we can. You've heard from us before about closures we did years and years back, when so many of our centers overlapped that we held onto a really high percentage of them. Unfortunately, I'd say at this moment, fewer centers were that close to one another. So moving those children into other magnet centers was harder for us to do as much. We still did a nice job and worked to keep as many as possible. So a bit of that shows up in the hundreds of students we were able to keep, in a sense, from those 85 centers. What that statement means, Andrew, the one about coming out of back-to-school, is that we're trying to be clear we're seeing improved new student enrollments; that is, new students joining us after back-to-school and on through the holiday season, compared with the new students who joined last year. At the same time, we're also trying to be very clear that our total enrollment is still under last year's figure; we haven't broken through to that level. So we're attempting to explain those 2 things in that single sentence, and that may be where the confusion came from.

And Andrew, I want to add something to that. What I was trying to convey about the difference there is that the growth we saw after back-to-school has either widened or narrowed the shortfall in children we had through year-to-date, moving it from more than 5% down to 3% — that's the 200 basis points I was talking about. We're still trailing, but we're closing the gap.

Ronan Kennedy here, sitting in for Manav. Unless I'm mistaken, pricing for the quarter matched expectations, though it's still below the historical mid-single digits. Could you remind us what's driving that dynamic—is it private pay pricing fatigue, or state subsidies coming in lower than expected? And would you also speak to how price elasticity is trending in the private pay and subsidized family cohorts?

Yes, absolutely. Good question. So pricing in Q3 landed as we anticipated, the story is unchanged from Q2, and it will stay that way in Q4 too. On private pay, a final low double-digit percentage of students received their rates at the beginning of September—those who hadn't aged up or weren't yet—and our private pay rates are landing exactly where we expected. We're not—actually, we're seeing discounting come down this year. So private pay has done very well. On the subsidy side, as we've discussed, subsidy rates fluctuate somewhat from year to year. Over time, we've consistently seen subsidy rates collectively track overall private pay market rates, but in any given year they may not. That's really where this year has played out differently from the expectations we had at the start of the year. Across our 41 states in D.C., subsidy rates collectively are below where we expected, and that's the pressure we're feeling now and will also feel into Q4. Then on elasticity, since you asked about that, Ronan, let me address it too. It remains in the pricing area—on the subsidy side, it is what it is, right? A family generally gets a voucher. In some states they contribute a little themselves, but they contribute that whether it's KinderCare or any other provider, so it isn't really a pricing decision they need to make. They do it wherever they go. So on the subsidy side, it's simply about us proving the value of their subsidy voucher, and on the private pay side we think it's the same. Elasticity comes down to whether a family believes we're delivering value rather than focusing on the price. Families know what they'll pay at KinderCare or a similar provider. We have to treat them well through the enrollment—through the inquiry to enrollment process—and then keep them as a family. That's where value comes in, and they're willing to pay that price. If we don't execute properly and don't take care of them during that process, they'll move on and find someone who will. So that's essentially the piece we tend to discount somewhat as the year gets going. Oh, just to pick up on, one, Tom — that word "over" keeps bringing me back here, too, Ronen — and the other thing to keep in mind, I think, on pricing is that retention keeps climbing versus a year ago. And the prior year, retention had risen compared with the year before that. So it's also a signal to us that we're doing a solid job demonstrating value to the families we already serve; they're signed up with us. They notice those price hikes as they arrive and as they move up in age, and they're staying with us more firmly than they did across the last couple of years. We simply have to make sure we carry that over to new families as well, so they experience the same thing.

Understood. As a follow-up, if I could, please; regarding Champions KCFE, they are showing strong momentum, particularly when compared with KinderCare centers on an occupancy basis. I realize there are natural differences between the businesses, but is part of it the operational playbook and the underlying demand drivers, which would explain such divergent results? And then the second part of that: how big can these businesses get economically? What is the strategic intent there in terms of the revenue mix opportunity? Might they be able to lift retention and occupancy at the core centers?

The brief answer to that last question is yes. Let me begin with for employers. That business has truly been a very steady business for us; and I noted in the prepared remarks that we already hold 8 contracts for 2027 for new on-site centers. That will be the largest number of centers with which we've entered a new year. So we're excited that 6 or 7 of those will open in 2027, and we plan to further grow the count of centers that we acquire going forward in 2027; and for employers, it's driven by the growing employer need to attract and retain this new, if you will, tier of young families who are entering the workforce and are desperately seeking child care. The accessibility and, in the end, the affordability that a program based at an employer gives a family is significant. And families, first, the employer keeps them longer, we keep them longer. They are more loyal both to the child care provider and to the employer, and it has truly been a win-win. We see inbound on potential employer opportunities at as high a pace as we've ever seen. So that's number one. Turning 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 are 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 shifted a bit, and that is that we're pursuing larger school systems rather than 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 fewer 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. Another point on Champions is that most of our growth has come from deepening existing relationships. To put it differently, we went into Fulton County in Atlanta, began with a handful of schools, and then kept adding, widening what we do inside that school system. That makes it a form of organic growth, yet it is equally an expansion inside the employer base we already serve, or what you might call our B2B spot. There was a — I believe that covers it. Should I have missed your question, please share another thought with me, and I will pursue that as well.

And Creme — did we discuss that?

No, we didn't. Right, thanks for bringing it up. Creme ranks among the brands we believe are most strongly positioned, and in our view we've performed well with it. KinderCare is no different in that respect. What drove our purchase of Creme was the desire for a premium brand aimed at discerning customers in regions of the country with higher education levels, greater affluence, and tougher expectations of their child care provider. The clearest illustration I can offer is the Irvine center we opened a couple of months back — I attended the opening myself. That center drew a substantial outpouring of support. When I arrived, we had literally 30 people, 30 children enrolled. By the week's end, enrollment at that center had passed 80 children, which puts us well ahead of our pro forma. What I'd say is that when we execute properly — and the same holds for KinderCare — when we get it right, we identify the demographic, echoing Tony's point, the concentration of kids in a particular market who are the focus of the experiences we provide across all our locations, and we perform extremely well. So I'm also proud of Creme, and the business has truly, truly demonstrated through the new branding effort, so to speak, that we carried out over the past year and into this one, it has really come through during back-to-school and via a summer program. That summer saw more than 800 additional children compared with the prior year. From our standpoint, that has turned out to be quite a successful story.