儿童保育专家电话会议要点：关注定价、入住率、劳动力和并购

USA | Diversified Services Childcare Expert Call Takeaways: Focusing onPricing, Occupancy, Labor, and M&A We hosted Danielle Briody, Founder of Strategic CareFits Solutions with 25+years of experience in the childcare industry. Our expert believes pricing goingforward could be pressured by macro uncertainty and price increase exhaustionfrom parents. Further, she believes potential govt regulation could cause an"occupancy" gap for pre-K. In terms of key trends, M&A remains hot, back-upcare demand remains robust, and labor is better today vs 2023/24 levels. Childcare Pricing Outlook.During covid, many child care operators held pricing steady, down fromthe LSD% price increases typically implemented pre-covid. Consequently, post-covid operatorsaccelerated pricing to 6-10%. Our expert noted that initially parents absorbed pricing of up to10%; however, Ms. Briody now believes parents are pushing back on pricing given elevated macrouncertainty. Lastly, our expert said she's seeing tuition now going into effect in September vsDecember historically. •Premium vs Mid-market.Historically, premium-priced players have always priced in excessof their mid-market peers. That said, given market uncertainty, our expert believes premiumplayers have less room to run on price vs mid-market players. All in, Ms. Briody believes parentsare more willing to trade down, and premium schools will have to offer more services todifferentiate themselves and justify cost.• Urban vs Suburban.Urban markets tend to demand more tuition vs suburban market, givenincreased demand. Note, our expert believes suburban market pricing can depend on thelocale, given operators price on the median household income of the area of the center: i.e., asuburban area in NJ would receive higher pricing than one in Texas. Where Did the Kids Go? Occupancy and Universal Pre-K.While our expert sees occupancy forthe youngest cohort at near pre-covid levels, she sees pressure on occupancy from potential govtregulation. Specifically, onUniversal Pre-K,our expert believes the increase of these programscould cause an occupancy gap and reduced exposure to operators' highest-margin cohort. Recall,this program is state-run and makes pre-school free for all. That said, she believes sophisticatedoperators will navigate this headwind by offering increased services and products to youngerchildren (2- and 3-year- olds) to shore up any lost business. Demand for Back-up Care Remains Robust.On back-up care, Ms. Briody highlighted that she'sseeing HR professionals focus more on "benefit equity," which ultimately leans into other serviceslike back-up care that child care providers also provide. Additionally, our expert believes demandfrom companies continues to increase, driven by new services: pet care, in-home care, etc. M&A Remains Attractive.On the call, our expert highlighted that there remains some disconnectin the market with respect to valuation, as some owners continue to chase covid multiples wherebusinesses sold for 6x EBITDA vs the 3-5x EBITDA transactions tend to go for today. Note, multiplescan differ depending on number of centers, level of occupancy, location, and size of school. OnPE, our expert sees PE's role in the space as important, given they tend to identify strong growingbrands and provide resources to support their growth while also potentially increasing the value tothe customer. Stephanie Moore * | Equity Analyst(615) 934-1384 | smoore@jefferies.com Harold Antor * | Equity Associate(212) 778-8483 | hantor@jefferies.com PJ Sullivan * | Equity Associate+1 (646) 805-5461 | psullivan@jefferies.com Lastly, on Labor and Tech.While labor, in our expert's view, will always be a challenge for the industry,she believes that companies, particularly the bigger firms, are luring new employees into the industrythrough attractive benefit packages. On tech, Ms. Briody believes that many of the companies haveimplemented standard technology for better communication with parents in their operations, thoughsome firms are now creating their own in-house technology. Company Valuation/Risks Bright Horizons Family Solutions Inc. We value the shares based on a EV/EBITDA multiple taking into account both the historical range over prior cycle and the peer group. Risks includelabor inflation, ability to source and execute accretive M&A deals, limited organic growth, and increased volatility in share price due to limited floatin the stock. Analyst Certification: I, Stephanie Moore, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) and subjectcompany(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressedin this research report. I, Harold Antor, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) and subjectc