Bright Horizons Family Solutions Inc (BFAM) 2015 Q1 法說會逐字稿

Greetings and welcome to the Bright Horizons Family Solutions' first-quarter 2015 earnings release conference call.

(Operator Instructions)

As a reminder, this conference is being recorded.

Is now my pleasure to introduce your host, Mr. David Lissy, CEO for Bright Horizons Family Solutions. Thank you and please go ahead, Mr. Lissy.

Thank you, Jerry, and greetings to everybody from the Boston area. Greetings to everybody out there. Joining me on the call today as usual is Elizabeth Boland, Chief Financial Officer, who will take you through the Safe Harbor before I kick off the call. Elizabeth.

Thank you, Dave and hi, everybody. Thanks for joining us today and our call is being webcast. Our earnings release, which was issued after the market closed today and the webcast recording of the call are or will be available under the investor relations section of our website www.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 our financial performance, along with forward looking statements on our current expectations for future performance.

Forward-looking statements inherently involve risks and uncertainties that may cause actual operating and financial results to differ materially. These risks and uncertainties include our ability to successfully implement our growth strategies including executing contracts for new client commitments, enrolling children in our childcare centers, retaining client contracts and operating profitably in the US and abroad; our ability to identify complete, successfully integrate acquisitions and to realize the attendant operating synergies; the decisions around capital investment and employee benefits that employers are making; our ability to hire, retain qualified teachers and other key employees and management; our substantial indebtedness and the terms of such indebtedness; and lastly, the other risk factors which are set forth in our SEC filings.

We will also discuss certain non-GAAP financial measures on this call, which are detailed and reconciled to their GAAP counterparts in our press release.

So let me turn it back over to Dave for the review and update of the business.

Thanks, Elizabeth. And hello again to everybody joining us on our call today. As usual, I will update you on our financial and operating results for this past quarter, as well as our Business outlook for the rest of 2015. Elizabeth will follow me with a more detailed review of the numbers and then we will both be here for Q&A after that.

First let me recap the headline numbers for the first quarter. Revenue increased 6% to $350 million and adjusted EBITDA of $65 million was up 14%. Adjusted net income of $27 million was up when 20% over the first quarter of 2014, which yielded adjusted earnings per share of $0.43, up 26% from last year's first quarter. Our revenue growth of $18 million was roughly in line with our expectations for the quarter. Full-service revenue was up $13 million over last year, back-up revenues increased to $42 million in the quarter and then advisory grew to $9 million.

We added eight new centers this quarter, including new centers for Pioneer Natural Resources, the J.M. Smucker Company and Hoag Memorial Hospital. In our back-up and ed advising suite of solutions we recently launched a service for new clients that included US Bank, Rackspace, the Cleveland Clinic and the University of Chicago, medicine.

On our last call we discussed the potential impact of foreign currency fluctuations on our results. For the quarter, we saw a headwind of approximately 2% on our revenue growth more than $6 million in relation to Q1 2014 as the strength of the dollar effected our reported results from our European business.

We are also pleased with continued leverage at the operating income line. Our gross margin expansion this quarter drove 180-basis point increase in adjusted operating income from 10.4% to 12.2%. Consistent with what we've talked to you about on previous calls, the key factors contributing to this growth included the positive enrollment trend in our mature class of P&L centers, which are up approximately 2% over last year, price increases that averaged 3% to 4%, contributions from newer and ramping centers, strong performance in our back-up and educational advising segments and, lastly, the closure of a cohort of underperforming centers over the past year.

Another factor in our margin performance that we've talked about in the past is the headwind from the larger classes of leased consortium centers that we've opened over the last two years and continue to open this year. As we discussed in the past, we fully expect our investment in this class of centers to create considerable value going forward. The contributions for the centers opening 2013 and the first half of 2014 have begun to offset the loss of some of the more recently opened centers. And as a result this headwind is diminishing and we are therefore see more uplift in the full-service margins year-over-year.

Overhead this quarter was on track with our plan and continued top line growth along with discipline spending should yield modest improvements in our overhead cost as a percentage of revenue as the year progresses. So as you can tell we are pleased to be off to a strong start in 2015.

As we look ahead, we are well-positioned to continue to deliver on our plan for the year. Our core businesses in good shape with enrollment steadily increasing and our mature basis centers and our newer class of higher performing centers are ramping on or ahead of plan. We are also really pleased with the performance an opportunity that continues to exist in our back-up and educational advising segments, which are both poised to enjoy solid growth and also contribute to our ability to drive margin expansion.

Speaking of the ed advising business, this quarter we also made a small change in when we begin to capture the portion of contract revenue for the data conversion and implementation of new clients. This has the effect of creating a slight log of approximately three months, as compared to a similar revenue hit last year. Just wanted to point that out -- that nuance out to you as there remains very good momentum in that business. All in, the selling environment remains positive and the strength and breadth of our suite of services continues to be a strong competitive advantage for us in the market.

On the acquisition front, we are seeing good momentum from our pipeline of perspective high-quality centers. We have a good mix of smaller networks and single center opportunities and in our active discussion pipeline both here in the US and in Europe. Of course it's always hard to predict the timing, but we completed one deal in Q1 and based on what we see now we expect that we'll realize a more typical run rate of acquisitions this year as compared to 2014.

As I talked to you about before, our priorities for capital allocation, our first growth-related investments and acquisitions and new lease consortium model centers, so of course that's where we're focusing a lot of our attention and resources. Second priority is to enhance shareholder value through our repurchase program, which we continued to execute this past quarter through modest open market purchases.

So that updates you on our outlook for 2015 results. We continue to expect to see revenue growth in a range of approximately 7% to 10% over 2014 levels, which includes the continued impact of lower FX rates, generating approximately a 2% headwind. We expect to expand adjusted operating income margin by approximately 100 to 125 basis points and to produce adjusted EBITDA in the range of $270 million to $275 million. Thus, we are increasing our guidance for full year 2015 earnings per share to a range of $1.74 to $1.77.

Before I hand it over to Elizabeth, I want to knowledge the amazing dedication of our entire Bright Horizons family, as we were once again recently honored for the 16th time to be included in Fortune magazine's prestigious list of the 100 best companies to work for in America. This honor belongs to each and every one of our employees and is a direct reflection of the passion and dedication that they bring to work everyday that has a positive impact on those that we serve.

With that's, Elizabeth, let me turn it over to review the numbers and I will be back with all during Q&A. Elizabeth.

Thanks. So, again to recap a couple of the figures that Dave reviewed, our top line revenue growth in the first quarter was $18 million. The full-service center business added $13 million on rate increases, enrollment gains and our ramping centers, as well as the mature class, and contributions from the 35 new centers that we have added since Q1 of 2014.

As Dave mentioned, the pound and Euro FX rates declined measurably in Q1 2015 compared to Q1 2014, which damped our revenue growth in the full-service segment by more than $6 million or approximately 2 percentage points. On a common currency basis, therefore, the full-service segment growth was nearly 7% in the quarter. The impact of centers that we have closed since the beginning of last year also offset top line growth in full-service by about 2 percentage points.

The back-up division and ed advisory services continue to grow the top line from both new clients as well as from expanded utilization of services by the existing client base. They also enjoy a rate increase in the same range of 3% to 5% -- 3% to 4%, excuse me. For ed advisory, in addition to normal seasonality that we see from Q4 to Q1, the Q1 2015 revenue growth rate of around 11% reflects that slight variability that occurs in connection with the timing of our new client launches and the associated implementation phase of contracts that Dave discussed a minute ago.

Gross profit increased $9.5 million to $87 million for the quarter and gross margin was 24.7% of revenue, up 150 basis points in 2014 -- from 2014. As we've seen in prior quarters, our back-up and ed advisory services both continue to deliver strong margin performance in concert with their revenue growth. In addition, both of these businesses generate gross margins that are more than double what we earn in the full-service business.

On the full-service side, performance also remained strong in our mature and ramping class of centers. The steady pace of year-over-year enrollment gains in the mature class that we've seen since 2011 is also continued into early 2015 and we realized over 1.5% increase in enrollment for that class in Q1. Strong cost management, alongside this enrollment growth, plus the exit from underperforming locations also contribute to the margin expansion.

As we've talked about previous calls, we are now realizing the contributions from those investments that we made starting in late 2012 in our lease consortium growth strategy. We've opened 30 of these centers over the past two years and expect to add 15 to 20 more in 2015. Although we expect to incur roughly similar level of losses from this group in 2015 as we incurred over the last two years, so in the range of $8 million to $10 million per year, we expect the headwind to gross margin to abate in the latter part of 2015 as the 2013 class will be generating gross profit at near mature contribution levels and the 2014 class continues to ramp their enrollment.

Overhead for the quarter was $37 million, compared to $35 million in 2014 and was approximately 10.5% for both periods, adjusted to exclude the $500,000 in transaction costs associated with the secondary offering that we completed in March of 2014. Over time, with more scale in our European operations and our ed advisory business, we expect to be able to leverage our overhead spend in investments to support growth at levels that are similar to the 20 basis points that we realized in 2014.

Turning to a couple of other lines on the income statement, interest expense was $10 million in Q1 of FY15, reflects the full quarter impact of the $165 million of incremental term debt that we borrowed in mid-December of 2014, which we used to fund the repurchase of 4.5 million shares acquired in connection with the secondary offering that we also completed in mid-December. We ended the quarter with 3.4 times net debt to EBITDA, a reduction from the 3.6 turns that we reported at December 31, 2014 and we expect to further reduce that ratio through EBITDA growth throughout the rest of this year. The effective restructural tax rate of 35.5% in Q1 of 2015 is based on the applicable rate for our projected full year 2015 operating performance.

Turning to the cash flow statement, we generated operating cash flow of $47 million in the quarter, compared to $52 million in 2014 with a slight decline there due primarily to the timing of collections and payments in working capital. After deducting maintenance CapEx, our free cash flow totaled $40 million for the quarter and we ended Q1 of FY15 with $124 million in cash and no borrowings outstanding under our revolving credit facility.

I'll quantify our quarter end statistics before turning to our outlook for the rest of the year in Q2. At March 31, we operated 885 centers with capacity of 101,500, which is an increase of 1.8% over a year ago. The mix of contract types remains consistent, 75% profit and loss arrangements and 25% cost-plus contracts. As is the average full center -- full-service center capacity, which is 137 in US and 78 in Europe.

As Dave previewed, our outlook for the full-year 2015 anticipates revenue growth of approximately 7% to 10% over 2014. Growth breaks down as follows: organic growth approximate 8% to 10% including 3% to 4% price increase, 1% to 3% from growth in enrollment in our mature and ramping centers, 1% to 2% from new, organic full-service center additions and 1% to 2% from our back-up and ed advisory services. In addition, acquisitions add approximately 1% to 2%.

Offsetting these increases are the effects of center closings, which can include both legacy organic and acquired centers of approximately 2 percentage points and projected reductions from foreign exchange rate differences of also approximately 2%. Both of those primarily effect the full-service segment.

We are planning to add a total of 45 to 50 new centers, including organic new and acquired centers, and our current outlook also contemplates closing approximately 25 to 30 centers, including the handful of underperforming sectors acquired as part of the groups we added in 2013. We expect that income from operations of 2015 will expand approximately 100 to 125 basis points from the 11.1% adjusted income from operations that we reported in 2014 primarily, on gross margin expansion, and secondarily from a bit of modest overhead leverage.

For the full year we expect amortization in the range of $28 million to $29 million, depreciation of approximately $55 million to $57 million, stock compensation of approximately $9 million and interest expense in the range of $41 million to $42 million for the year, assuming continued 4% to 4.5% borrowing rates on our term loans and no borrowings required under the revolver based on our expected cash flow generation. We now estimate, as I mentioned before, that the effect over structural tax rate will approximate 35.5% of our adjusted pretax income in 2015, which is broadly consistent with the 2014 full-year rate and the projected GAAP reported effective rate for the rest of 2015.

Combination of top line growth and operating margin leverage drive adjusted EBITDA in the range of $270 million to $275 million for the full-year 2015 and adjusted net income in the range of $110 million to $112 million. The share buyback that we completed in December of 2014 adds roughly $0.03 to $0.04 a share to EPS after considering the incremental interest expense on the term debt, but this is offset by the projected foreign exchange impact that we talked about. One other element though that we are noting this quarter is that the lower tax rate contributes to modest EPS expansion, and so, as a result, we now estimate that the adjusted EPS will increase to a range of $1.74 to $1.77 in 2015. Lastly for the year, we are estimated weighted average shares to range between 63.5 million and 64 million shares.

On the cash flow side, we project that we will generate approximately $180 million to $190 million of cash flow from operations, which translates to $145 million to $155 million of free cash flow, net of the projected maintenance CapEx spending of around $35 million. Based on the centers in development and slated to open in 2015 and early 2016, we expect to invest approximately $50 million to $55 million in new center capital and $25 million to $30 million on acquisitions. We expect to fund all of these investments from operating cash and would end the year with $140 million to $150 million cash on hand.

Looking specifically to Q2 of 2015, we expect our top line growth to continue to be the range of 5% to 7%, including the impact of the lower foreign exchange. Our outlook for the adjusted EBITDA, approximately $72 million to $74 million and for adjusted net income in the range of $30 million to $31 million, with approximately 63.5 million shares outstanding this would translate to adjusted EPS in the range of $0.48 to $0.50 a share for the second quarter of 2015.

So with that, Jerry, we are ready to go to Q&A.

(Operator Instructions)

Gary Bisbee, RBC Capital Markets.

Good afternoon.

How are you?

Good, thanks. Can you clarify the ed advisory comments? Was there a change of policy of some sort or was it just sort of a timing as this stuff flowed in?

The first issue one Q1, Gary, I will let Elizabeth talk about the change in what we talked about. But the first, is there's always seasonality in Q1 so it is always a somewhat lighter quarter than what we expect to see as the year progresses, but we also did have a change that I noted before. I will let Elizabeth talk about it.

We have the ed advisory business is serving clients through what is essentially software as a service, to a large degree, on the administrative side. So for the period of time where the client is not able to use the product, we are deferring that portion of the contract time to recognize it over the client life. So during that three month implementation period or so, we won't be recognizing the revenue.

It is not huge number. It is maybe $0.5 million in the quarter, but it does show as a little bit of a sequential change so we just wanted to make note of it for the quarter and after this year it should be okay in the comps. But it will have a little bit of an effect this year.

Yes, I'll just end that, Gary, by saying we still really good momentum in that business and none of what Elizabeth just said has any effect on our ability to close new business, which continues to happen at levels similar to what I reflected on the last time we talk.

But for a couple more quarters this would linger through a delay from when you signed business relative to how you are booking it last year?

Yes, for the year we had commented that we think it is a 20% or north of 20% grower and I think if you didn't have this nuance, we would be right there. And I think this could will have the effect of a few percentage points less once the year plays out.

Okay, all right. Fair enough. Then little growth in centers again. I know you said there were eight new ones, so presumably there were number of closures again. I guess I wonder, are any of those from the 2013 acquisitions? And if they are and you add those in aggregate with closures from last year, do you evaluate in hindsight the acquisitions or think any differently of them than you did when you did them? Or were most of these closures really sub-scale and you knew it when you bought them?

I think any time we do diligence on acquisitions, Gary, particularly in FY13, when we acquire large networks in the US and the UK, we always circle up some sub-optimal performers that exist in any network that's out there. So lots of times it becomes more challenging, I will say, to act on them too quickly because we are try to get integration right and move -- proceed through, but we have them circled up and as time goes on we do act on them. Sometimes the contract will come up, other times different things will happen. We had seven closings in the first quarter, four of them were associated with past acquisitions. So I think that gives you an order of magnitude.

Okay. Great. Thank you.

Manav Patnaik, Barclays.

Thank you, good evening. So on the M&A front you mentioned there's a good pipeline, obviously, on the small to midsize. I was wondering what you think about the larger ones, I guess like you did in 2013, it seems like at least in your existing countries it doesn't feel like there's a lot more of those larger ones that you can. So I was wondering if that's a fair characteristic? And sort of an extension of that, when is the time that you decide to enter new countries?

I would say, Manav, first as that I look at the pipeline of active discussions on the M&A front that it is a healthy mix of single, two or three center operators, with some of what we'd call larger acquisitions for us. But I caveat larger, by saying larger looks a little bit like the ones that we acquired in 2014, maybe even a little less than that so in terms of numbers of centers.

So I would say that in both the UK and The Netherlands, and also here in the US, there still remains a few of those that are out there. And, as I said earlier, I can't predict when we'll get them done, or if we get them done, but based on what I can see now, particularly relative to where we were at this time last year, I feel good that we will be able to produce a year where acquisitions will look different than they did last year.

Okay. Fair enough. And just on the ed advisory side of things, are there M&A opportunities there or is it just more sort of organic growth business?

We are now the largest player in what is in emerging niche business line. There clearly are smaller operators in that business, but nothing that would be a game changer as it relates to changing the -- wildly changing the trajectory of growth on that side. I think we may get, who knows over time, we may find some smaller ones to tuck in but I suspect on the ed advising site most of our growth will come organically.

And last one to follow-up with Elizabeth, the FX is obviously just in the center base line, correct? And also, I guess the assumption of 2% headwind, I think for the full-year, that's based on current rate?

Yes, it is based on current rates where we are now so there's, obviously, a variety of outlooks out there, but that's what it is based on. And it is in the full-service. We have some back up in UK, but it is not meaningful.

All right, thanks a lot guys.

Sara Gubins, Bank of America Merrill Lynch.

This is David Chu for Sara Gubins. You posted that strong margin expansion in the quarter, but expect a slight down tick from this for the year. So why is the Q1 rate not sustainable?

You mean of the 180 basis points on operating margin?

Yes. Just the operating margin line, yes.

I think there's a couple factors. One is what we're comping against in the first quarter of last year, obviously in Q4 of last year we had also a very strong quarter. So I think it is just how it averages out for the year. Our view is that as the year goes along we have the same kind of factors that will continue to drive improvement in each of these segments. So I think, we are not seeing it as a deterioration from an overall performance standpoint.

Okay, got it. And then last quarter, I believe you mentioned that back-up care was supposed to grow in the low teens and ed advisory north of 20% for the year. Is this still a reasonable expectation?

Yes, I would say that's exactly right, David, except for what I caveated in response to Gary's question about the change we talked about earlier. So on the ed advising side, it may be a few percentage points less than 20 based on the change -- based on the change what we are doing with the recognition. But on back-up I would say we are in the same place that we had talked to about in the past.

Got it. Okay, thank you very much.

Jason Anderson, Stifel.

Good evening, everybody.

Hi, Jason.

A question, you talk about -- I guess Manav or somebody had the question about some other potential acquisitions whether it be ain ed advisory, but I was thinking too are there other employer benefit type verticals you could expand into or that you see out there that may be something entirely different, kind of adding to your suite of products?

Yes, I think that's certainly one of our thoughts as we look to grow, is how can we better leverage the relationships, strong relationships, that we have with our clients. And I think we've successfully shown we can cross sell new services into existing clients and it may be that in the future we will land on something that we think is the next great idea with respect to that.

Right now though, Jason, I would tell you that we're all in on what we have. We think ed advising has great growth opportunity. We want to invest in it. There are some product enhancements we can make to each one of our services that we think can drive additional revenue within those segments and we are going to do that. And we will continue to look and if we find something, and it is entirely possible, but there's nothing in our sights right now that would effect 2015.

Okay, thanks and another one for me here. The closings you mentioned sounds like that picked up a bit, I believe. Did I hear that correctly and, if so, what changed I guess from last quarter to this quarter? The closing guidance, I'm sorry.

I think that's just the additional three months of visibility into what the timing of either the centers that we circled up that Dave mentioned from the time of the acquisitions in 2013 and when we may be exiting a couple of those programs and/or just the normal -- some normal cycling that we just had better visibility on in the month of April than we did in earlier in the year. So it's nothing more than that.

Great. Thanks for that.

Andrew Steinerman, JPMorgan.

Good evening. Did you mention, and if not could you mention, how much revenue from acquisitions contributed in the quarter and then also looking into the second quarter with the acquisitions that we already have what might the contribution be?

We acquired five centers in total last year, Andrew, and the contribution from those five in the quarter was just under $2 million, about $1.75 million. And it would be a similar -- about $2.5 million perhaps with the additional center that we acquired in Q1.

You're saying $2.5 million for the second quarter number?

For the second quarter, yes.

Perfect. And can you just mention if there's been any change in the competitive landscape domestically?

No real change, Andrew, to what we've been talking to you about the past.

Perfect, thank you.

Jeff Meuler, Baird.

Thank you and good afternoon, everyone. Can we maybe revisit the back-up care long-term margin potential and the framework? What are the pre-reinvestment incremental margins for back-up care? What investments do you need to make to accommodate the growth and, I guess, what's the current thinking in terms of how high the margins can go over the longer-term?

Jeff, with respect to back-up we are not foreseeing much more expansion in margin in that business. Each quarter it may fluctuate a little bit, but overall I think as time goes on it really is a top line growth story with very solid margins associated with it.

With respect to longer-term, if we're going to find improvement in that business, it is going to be through the use of technology, better service delivery that takes some of the manual processes and puts them online. That will require some investment up front in order to make happen, but ultimately if there's longer-term opportunity in the gross margins in that business it is less volume flowing through the call center, for example, and moving to things like our mobile app, which we are just rolling out and other ways we can use technology to afford the service.

Okay, I just feel that's been a area where you have been good at under promising and over delivering recently. Can you remind us what is the margin delta between the US and the international markets in the full-service business?

It is probably 3%, 4% or so, the centers in the US have the advantage of both being a bit larger and so they just have a little bit of innate leverage in some of the fixed cost that are there, but it is pretty close. Overall full-service margins are in the range of 20% to 21% so the UK businesses in the high teens and the US is a bit over 20%.

Okay and just one more from me. Just with the unemployment rate dropping and starting to see some signs of wage inflation in the broader economy, just how our things going for your talent pull? So just any insight into voluntary turnover, wage inflation, ability to recruit employees, etcetera.

Our biggest issue, which we've talked about in the past, is the declining supply of qualified teachers in the early childhood area and that's been a long-term structural problem for the past 5 to 10 years that's not getting any better. So as I've talked about past, we've had to make -- we've invested in our own online University and we're doing a lot more credentialing of our own and, as you say, focusing on retention.

There are pockets around the country where wages are increasing slightly ahead of other places, but I think we've got a good plan in place for FY15 that contemplates the right levels of wage increases against the tuition increases that we have. And so even though it averages out to what I talked about earlier, there's some places where we can move tuition slightly ahead of our average and as a result move up wages. We continue to monitor it on a very local basis, but I feel like we are good shape for the year.

Okay, thank you both.

Thanks, Jeff.

Ang Singh, Credit Suisse.

Hi, this is Mark in for Ang. Had a question on potential new center adds. I know you guided to 45 to 50 new centers in the plan for 2015. What could allow you to exceed or prevent you from meeting that plan?

I think within that plan what always -- there are two real challenges to our center number, opening number in the year. One is just timing. Of course we are sitting here in almost May and trying to project this specific timing of when things are going to open each quarter in Q3 and Q4 and sometimes we see slippage from quarter to quarter or from quarter four to next year. So in the micro and there's always the slippage that could challenge it.

On the other side of it, the thing that could provide an uplift would be acquisitions ahead of what our typical run rate would be for acquisitions. So a normal year acquisition-wise for us on the smaller stuff might be 10 to 15 centers. If we get a larger acquisition done, from purely a center count perspective, it could have some upside with respect to our center numbers.

Okay and any color you can give us on the point for geographical?

Do you mean new geography?

Yes, what do you expect those adds to be? Are they going to be new? (multiple speakers)

Our plan includes proportionate growth, primarily organic growth in the US, and we would expect -- we are pursuing acquisitions in all three of the markets that we have. So as Dave mentioned, are bogey is the equivalent of, call it 15 centers from acquisitions and there would be an element to that would be in the US and UK and in Holland, proportionally. But otherwise, we have the same -- the other growth would be proportionate to where the business is so 80% US, 20% abroad.

Got it and can you give us a quick update on utilization and what you are seeing in the typical utilization for your acquisitions?

So on utilization we had, as I think we mentioned, another solid quarter of year-over-year gains so over 1.5%, so rounding to 2% in the quarter so our utilization is across the mature system north of 75% at this stage.

In terms of utilization that we have from acquisitions, it is really -- it varies a lot but tends to be, I would say the centers tend to be, in that same range, but could be anywhere from 65% to 75% or 80% occupied. They tend to be on average slightly smaller centers have the opportunity to be a little bit more enrolled.

As we've talked about the past on acquisitions, we tend to be buying -- centers are performing well and trailing earnings is forward earnings, unless we are acquiring a group that has some centers in ramp.

Got it, thanks, guys.

Jeff Silber, BMO Capital.

Thanks so much for letting me sneak in. Elizabeth, when you gave your detail on the guidance for the year I think you said the impact on revenues from acquisitions was about 2%. I'm just wondering if you can give us the impact in your adjusted EBITDA guidance and you're cash expectations for the end of year?

You mean from acquisitions?

From acquisitions, correct.

Typically acquisitions are going to be generating 15% to 20% or so of revenue. I would actually -- let me actually try to see if I can sketch that out. I don't have that right on my fingertips, but from a cash standpoint our guidance included spending $25 million to $30 million on acquisitions and so ending the year with cash balance $140 million to $150 million incorporated that sort of spending. It is just the EBITDA question that I need to take a gander at.

I guess from a theoretical perspective it had a 2% impact on revenues, it would have a smaller impact on EBITDA.

Yes.

Okay, I just wanted to double check on that. And then just in the first quarter was there any adverse impact from the bad weather you guys had in Boston and the rest of us have around the country?

Nothing that was material, Jeff. We obviously are counted on the back-up side to deliver in bad weather and we had some pretty remarkable stories of centers opening up when pretty much everything else was closed and caring for employees of hospital workers and other people that needed to get to work during that time.

Back-up there's a chance really for us to really shine in that regard and really show clients what we could do, that really helps them in critical times. We did have some of our centers close for a few days in the Boston area and some other areas, but again I don't really think anything that occurred had any material impact on the quarter.

Okay, thanks for the color.

Thanks, Jeff.

Okay, I think we've circled through everybody who had a question and we want to thank everybody for joining us on the call tonight. We are very pleased with the start for the year and we look forward to seeing many of you on the road in the coming months. Thanks.

Thanks, everyone.