Bright Horizons Family Solutions Inc. (NYSE:BFAM) Q3 2023 Earnings Conference Call November 1, 2023 5:00 PM ET
Michael Flanagan – VP, IR
Stephen Kramer – CEO
Elizabeth Boland – CFO
Conference Call Participants
Andrew Steinerman – JPMorgan
George Tong – Goldman Sachs
Jeff Meuler – Baird
Manav Patnaik – Barclays
Josh Chan – UBS
Jeff Silber – BMO Capital Markets
Toni Kaplan – Morgan Stanley
Harold Antor – Jefferies
Good afternoon, ladies and gentlemen. And welcome to Bright Horizons Family Solutions’ Third Quarter of 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.
It is my pleasure to introduce your host, Michael Flanagan, Vice President, Investor Relations for Bright Horizons Family Solutions. You may begin, sir.
Thank you, Judith, and welcome to everyone on Bright Horizons third quarter earnings call. Before we begin, please note that 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, financial performance and outlook are subject to the Safe Harbor statements included in our earnings release.
Forward-looking statements inherently involve risk and uncertainties that may cause actual operating and financial results to differ materially, and should be considered in conjunction with the cautionary statements that are described in detail in our earnings release 2022, Form 10-K 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 may 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 at investors.brighthorizons.com.
Joining me on today’s call is Chief Executive Officer, Stephen Kramer; and our Chief Financial Officer, Elizabeth Boland. Stephen will start by reviewing our third quarter results, provide an update on the business. Elizabeth will follow with a more detailed review of the numbers before we open it up to your questions.
With that, let me turn the call over to Stephen.
Thanks, Mike, and welcome to everyone who has joined the call this evening. I’m pleased with our performance in the third quarter. We delivered strong results with 20%- year-over-year revenue growth and 33% adjusted EPS growth.
Full service revenue came in ahead of our expectations, with comparable high single-digit enrollment growth. And Back-Up Care delivered an exceptional quarter with used across all care types, well outpacing our expectations.
Overall, as we approach the end of 2023, I’m proud of our performance and continued progress toward our near- and long-term objectives. So to get into some of the specifics. In our full service child care segment, revenue increased 17% in the third quarter to $445 million.
The typical seasonal enrollment dip over the summer months, primarily driven by older children, aging up and out into elementary school with slightly better than we expected, driving higher than projected year-over-year enrollment growth.
The center cohorts we have discussed previously continued to demonstrate improved year-over-year performance. In Q3, our top-performing cohort defined as above 70% occupancy increased to 36% of our centers, which is an improvement from 25% in Q3 2022. In our bottom cohort of centers, those under 40% occupancy, represents 17% of centers as compared to 20% in the prior year period.
To provide a bit more color on rolling trends, in centers that have been opened for more than one year, enrollment growth expanded to a high single-digit rate in Q3 with occupancy levels averaging 58% to 60% in the quarter.
In the US, year-over-year enrollment increased nearly 12% in these life centers with strong growth across both our client and lease models and notable ongoing momentum in our younger age groups with mid-teens growth in our infant and toddler classrooms.
Outside the US, enrollment again increased at a low single-digit rate in Q3. And the UK remains our most challenging geography. Enrollment growth in the UK improved modestly in Q3 as compared to Q3 — as compared to Q2, but as we discussed last quarter the macroeconomic backdrop’s and a staffing environment continue to be a headwind to the cadence of our coverage in the pandemic.
In the Netherlands and Australia, where occupancy averages more than 70%, enrollment increased sequentially over Q2 in line with our expectations. On the staffing front, the US continued to see positive recruitment and retention trends.
Staffing levels increased year-over-year, accommodating higher enrollment, underpinned by increased applicant flow and better retention rates. Outside the US, staffing trends continue to be more mixed.
In the UK, labor continues to be a constraint to our enrollment and overall cost structure. As we discussed last quarter, we continue to execute on a variety of talent acquisition initiatives, and have undertaken actions to retain our existing staff, attract new qualified staff and reduce our reliance on costly agency staff.
While I am optimistic that these initiatives will improve overall staffing levels and operating efficiency, these efforts will take time to drive a material change in labor costs and the profitability of our UK centers.
Let me now turn to backup care, which delivered another outstanding quarter. Revenue grew to $169 million. The 32% growth outpaced our expectations as we delivered a record level of use. Traditional network use was well above our guidance for the quarter with robust demand, notably from families who’s school children on summer vacation.
The strong use growth experienced in July continued through August with our Bright Horizons centers and Steve & Kate’s Camp showing the strongest growth across care types.
September was another strong month of use, though the pace of growth moderated from the high concentration of use over the summer. Overall, I am delighted with the performance this quarter and the execution by our operations team to meet this surge in demand, ensuring client families will feed the care they needed to remain productive at work.
The growth and expansion of our backup services this year illustrates the broad opportunity we have within the Back-up Care segment as we leverage the investments we have been making in technology, marketing and product.
Our Education Advisory business delivered revenue of $32 million, increasing 3% over the prior year. Notable new client launches in the quarter for EdAssist and College Coach included Fresenius Medical and Hubbell Incorporated.
As I wrap up, I want to take this opportunity to recognize the incredible work of our centered teachers and staff teams. They have always been the key to our ability to deliver the highest quality education and care to families and clients. I am thrilled to share that we’ve just received the results of our Parent Impact Survey.
We again saw excellent NPS and customer satisfaction scores and heard overwhelmingly from currently enrolled families that the quality of our teachers and the impact they have on their child education sets Bright Horizons apart from our early education peers. Our business is fundamentally about people serving people. And this recognition is a great affirmation of the work we do every day.
To in closing, I like the continued progress we are seeing across our business. Given our results year-to-date and our current outlook for Q4, we are narrowing our full year guidance to a revenue range of $2.375 billion to $2.4 billion, or 18% to 19% growth at an adjusted EPS range of $2.73 to $2.79.
With that, I’ll turn the call over to Elizabeth, who will dive into the quarterly numbers and share more detail around our outlook.
Thank you, Stephen, and hello to everyone on the call. To recap the third quarter, overall revenue increased 20% to $646 million. Adjusted operating income of $67 million or 10% of revenue increased 46% over Q3 of 2022 and adjusted EBITDA of $101 million or 16% of revenue was up 26% over the prior year.
Lastly, adjusted EPS of $0.88 a share grew 33% in the quarter. We added four new centers in Q3 and closed nine, ending the quarter with 1,063 centers.
To break this down a bit further, full-service revenue increased $64 million to $445 million in Q3 or 17% over the prior year, ahead of our expectations of 14% to 16% driven by increased enrollment and pricing. Enrollment in our centers opened for more than one year, increased high single-digits across the portfolio.
Occupancy levels averaged in the range of 58% to 60% for Q3 ticking down sequentially as expected, given the typical enrollment seasonality over the summer months. As Stephen mentioned, US enrollment grew in the low double-digits, while international enrollment increased in the low single-digits over the prior year.
Adjusted operating income of $7 million in the full-service segment increased $10 million in Q3. This year-over-year improvement was driven by higher enrollment, tuition increases and the improving operating leverage across our broader enrollment base.
Partially offsetting the earnings growth was a $5 million reduction a support received from the ARPA government funding program over the prior year and the continued cost impact of inefficient labor and agency staffing in our UK business.
Turning to back-up care. Revenue grew 32% in the third quarter to $169 million, well ahead of our expectations for 12% to 15% growth and operating income was 31% of revenue, growing to $52 million. As Stephen detailed, use volume was higher than we anticipated, with strong use across care types, particularly in our school age summer programs.
Lastly, our Educational Advising segment grew revenue by 3% to $32 million and delivered an operating margin of 26%. Interest expense increased modestly in the quarter to $11 million, excluding the $1.5 million per quarter in both 2022 and 2023 that is related to the deferred purchase price on our acquisition of Only About Children. The structural tax rate on adjusted net income increased to 28.5%, an increase of 180 basis points over Q3 of 2022.
Turning to the balance sheet and cash flow. Through September of this year, we have generated $161 million in cash from operations compared to $131 million last year. We’ve invested $92 million in fixed assets and acquisitions in 2023 and comparatively speaking in 2022, we had invested $251 million, including the acquisition of only about children on July 1 of 2022. We ended the third quarter of this year with $41 million of cash and a debt leverage ratio of 2.8 times net debt to EBITDA, down from the 3.25 times that that we started 2023.
Moving on to our updated 2023 outlook. As Stephen outlined, we are raising the lower end of our range to the full year revenue guidance of $2.375 million to $2.4 million to reflect the revenue performance through the first nine months of the year.
In terms of segment revenue for the full year, we now expect full service to grow roughly 18% to 19%, Back-Up Care to grow approximately 20% to 22% and ed advisory to grow in the mid-single digits. On an adjusted EPS basis, we are narrowing our guidance range to $2.73 to $2.78 for the year.
In terms of the remainder of 2023, this full year outlook assumes that Q4 overall revenue will be in the range of $575 million to $600 million, and adjusted EPS will be in the range of $0.72 to $0.77 for the quarter.
Before I close, as we’ve done each quarter this year, I want to quantify three discrete items that are affecting our reported margins and earnings growth rates in 2023 that is ARPA funding, interest expense and the tax rate.
In Q4, we expect those items to account for an approximate $0.25 headwind to year-over-year growth for Q4, with $13 million less in ARPA government funding at P&L centers, approximately 230 basis points higher tax rate and roughly $3 million more in interest expense.
Two notes here, the sequential step-up in interest expense to $14 million in Q4 of 2023 reflects the new quarterly run rate that we expect through 2024, as our interest rate caps step up this month. Also as a reminder, funding from the ARPA program at P&L centers, which effectively ended September 30, will be $33 million lower in 2024.
So in closing, echoing Stephen’s comments, we’re pleased with the continued progress across the business this year and continue to be excited about the opportunities ahead.
And so with that, Judith, we are open to questions and can go to Q&A.
Thank you very much, ma’am. Ladies and gentlemen, we will now be conducting a question-and-answer session. [Operator Instructions]
Our first question comes from Andrew Steinerman of JPMorgan. Please go ahead.
Hey, it’s Andrew. I just wanted to ask about the UK business, what gives you confidence that you’ll be able to improve the UK business? And how important is it strategically to serve the UK and the US, let’s say, together.
Good evening, Andrew, nice to hear your voice. So look, we have been in the UK since 2000, and so know that market incredibly well and understand how to operate within that market. We certainly recognize the challenge that we are currently facing there and have been facing.
But on the other hand, we also are starting to see some progress as it relates to our ability to staff and our ability to take out some of this agency staffing that we had continued to have.
In addition to that, I think that our quality leadership position in that market really holds us in good stead as we continue to build that business back. I think that in addition to that, we are seeing the government start to have very reasonable proposals as it relates to things like the qualifications of staff, the ratios in classrooms, as well as starting to think differently about funding.
And so again, from our perspective, we believe that the UK and especially the portfolio that we have in the UK represents something for our future. We are being very disciplined. So we will continue to look very hard at particular locations that over time are not going to make sense for us, and we’ll take the steps to have closures where we think the prospects are not strong.
On the other hand, overall, we believe in the UK market in the long-term and believe that we have a unique position to continue to make progress there.
Okay. Thanks Stephen. Appreciate it.
Our next question comes from George Tong of Goldman Sachs.
Hi, thanks. Good afternoon. You mentioned occupancy levels averaged in the range of 58% to 60% in the third quarter. Can you elaborate on some of the trends that you’re seeing with occupancy as you head into 4Q, and how you would expect the trends to play out in 2024?
Hi, George, sure. The trend there continues to improve, and it’s sequential dip. But as we compare the enrollment year-over-year, and we continue to have group of centers coming into this cohort that are more than 12 months operating. We feel good about the progress even as it’s just sort of steady quarter-to-quarter.
Looking ahead to next year, we’ve mentioned these three bands, if you will, of centers that are performing and our top-performing group that was 36% of the total this quarter, and we had reported last quarter was 43%. That’s the lion’s share where we are, obviously, aiming to get back to over 70% next year.
They have already gotten there. They’re achieving that performance now. So enrollment improvement there would be modest next year. It’s really in the middle band and the lower band where we would see enrollment progress.
And so looking at 58% to 60% now, we would be looking to be growing enrollment again in the high single digits overall next year across the various cohorts and centers that have the opportunity to keep growing that enrollment. So that’s broadly how we think about it.
Got it. And just a follow-up on that, when would you expect to get back to pre-COVID levels of occupancy rates?
Well, as mentioned in the top group, we are already back to pre-COVID levels, the middle group, which is just for those listening would be currently enrolled between 40% and 70%. Those centers are averaging in that range of what I even just quoted, they’re in that 55%, 60% range.
So those centers we would expect to see — have the most opportunity for growth next year and be very — getting to the pre-COVID levels that they had operated at in the second half is what we would be targeting second half of the year. And then the bottom cohort is a broader mix of centers. And so those would be certainly looking out to 2025 based on the cadence of enrollment that we’re seeing now.
Got it. Very helpful. Thank you.
Our next question comes from Jeff Meuler of Baird. Please go ahead.
Yeah. Thank you. Just first on backup care strength, I guess, it feels like I’m asking the same question as last quarter, which is you keep calling for deceleration and then the business keeps outperforming. So I can understand like why the Stephen case outsized growth from this last quarter won’t repeat.
But just help me out with like any other factors like the percentage of use banks that are exhausted at this point of the year relative to what that metric typically is? Or just any other constraining factors on the growth because otherwise, it’s looking like maybe you’re set up for a couple of years of potentially stronger post-COVID growth given all the clients you signed on during COVID?
So, thanks, Jeff. The — I think you’re pointing to some of the factors that do come into the overall mix is our clients have — a number of our clients have arrangements with us that are essentially on a pay-per-use basis or have a base level fee and then you paying for use over a minimum threshold. And so there’s a — there’s an opportunity, of course, for more users at a client to be utilizing backup care.
But for the most part, clients do have a constraint, if you will, on how much an individual employee can utilize. And so given the usage that we have seen through the first nine months, those baskets for the individual employees have largely been consumed for those that are the primary users through the first nine months. So that is what gives us some pause about just continued growth across a whole new cohort, we will certainly have some new users and be reaching out to all of those opportunities.
But I think our view is that with the — sort of the pull into the summertime with all of the school ages and the concentration of a week or two at a time of use for those parents that they’re has been more consumption in earlier in the year for those heavier users.
So I think the — we don’t want to have a great story sound negative. It has been a terrific growth trajectory a couple of years now of 30% growth plus in the third quarter. And the components of the way that this business is seasonal is sort of amplified by the numbers of clients who are seasoning in to their use banks. And as they consume the different use care types, we have the opportunity to make that more year round, but that’s our outlook for the first day of November.
Okay. I guess I’ll see if I’m asking that question again next quarter. On full-service margins, just anything else that’s weighing margin down relative to expectations in the quarter besides UK staffing and enrollment levels. I ask because it looks like there’s a decent shortfall despite revenue upside, and I would think the stronger enrollment growth will be coming at high incremental margins given the excess capacity that you currently have.
Yeah, I mean it’s totally fair call and I think other than the UK which certainly has been challenged and even slightly more challenged than we — our outlook had been last time we talked to you all, so we’ve sort of further refined that for the third quarter’s actual results and how we see it coming in the fourth quarter.
But I think the only other thing I’d note is that, with the higher concentration the growth of the infants and toddler age groups, which is a positive to the long-term enrollment story that comes at a higher intensity ratio and a higher cost structure as well. And so that’s probably the other component that I’d lay out in terms of the labor costs element.
Okay. Thank you.
Our next question comes from Manav Patnaik of Barclays. Please go ahead.
Thank you. Elizabeth just a follow-up on that and I apologize if I missed it, but can you just help us with your operating margin expectations for the three segments to know if anything’s changed I suppose since the last quarter.
Not significantly no. I think the back-up, just to start there we had just over 30% operative margin this quarter, that’s similar to what we would expect from Q4. The full-service and the low-single digits in Q4 are so similar. And that’s again I’ll just note that that’s improvement that’s performance against a quarter that won’t have ARPA funding coming through. And then the advising business is again still in the 25 to 30% range. So I would say consistent.
Okay. And then Stephen just in terms of your comment around just looking at the portfolio just curious on ed advisory things like that been decelerating, it’s been missing expectations you’ve lowered the expectation of growth there for quite some time. Just your thoughts on whether that strategically important or not.
Thank you, Manav. Look advisory business, we believe is strategic to the overall enterprise relationships that we enjoy with our clients. We have about 300 clients in that area who depend upon us to either support their employees dependence to the education advisory and/or employees going back to school themselves which obviously in the current environment and the environments coming forward is really critical from an upscaling and rescaling perspective.
In terms of thinking about the growth, we said and shared in the last quarter that we absolutely are in a time where we are continuing to reposition that service, again the needs of our core clients and respective core clients and that is underway.
We have new leadership in that business and really believe going forward, but there is a large opportunity for us to continue to lean in with the clients and new clients. So overall, yes, we believe it’s strategic and we believe that we are advantaged in the market and just need to get the cadence growth both from an employer perspective as well as from a participant perspective going into next year.
Okay. Thank you.
Our next question comes from Josh Chan of UBS. Please go ahead.
Good afternoon, Stephen and Elizabeth. Thanks for taking my question. So for my first question on Back-up Care, could you just kind of talk about what is driving the consumer behavior to use much more benefit now than before? I know that you always try to market your benefits and get the users to use it more. But why is it that this year and last year, especially that the users are accelerating the use, it seems like?
No, I can start off and Stephen can add color. I think the interesting thing or the notable thing about Back-up Care to consider that is different from full service care is that it is a benefit that is paid for mainly by the client. So the employees co-payment, their participation in the cost is much lower. It’s intended to be filling in when another care source breaks down and/or a need is there.
And so from an employee standpoint, it’s an opportunity to lean into a benefit that is provided by their employer. And now with the additional care types that we have across virtual learning solutions across pet care, school-aged children as well as younger children in centers and in home. I think it’s able to touch a wider array of employees at our client partners that have this sponsored as a benefit.
So there’s that element, and it’s flexible in terms of how it’s delivered across the Bright Horizons network of centers, across an in-home solution and what have you. So I think there’s — the opportunity is very broad with the employment base and the cost to that consumer is very modest, relatively speaking.
Full-service job here is — it is also subsidized by the employers through their facilities and often through tuition discounts, but the parent still has a meaningful out-of-pocket cost for it. And it’s a more concentrated benefit for a more concentrated number of employees. So I don’t know if you have other thoughts on the consumer behavior some?
Yes. I think the only thing I would add because I can be fully agree with Elizabeth. I would say that over the last several years, we have actually been investing in a more seamless experience for the end user through better technology and interfaces. We certainly have been investing in more personalized outreach and marketing efforts. And so again, I think those efforts are starting to bear fruit.
So ultimately, we continue to have these ongoing opportunities to continue to refine that experience and continue to refine those marketing opportunities and outreach opportunities, but believe that many of the investments are starting to pay fruit and you’re starting to see the last couple of years really show some really nice growth on top of what Elizabeth shared in terms of the actual use case growth and demand for the service.
Thank you for the color there. That’s really helpful. On the full service side, given that you seem to be expecting fairly healthy enrollment trends into next year, is there an opportunity to open more centers next year than perhaps usual given market demand or to take advantage of any disruptions that you see in the market and could you just talk about potential center opening cadence into next year?
Yeah, sure. So look, I’ll start by saying that certainly going into next year, our number one priority continues to be enrolling our existing centers. That has been our priority. It will continue to be our priority. It is our best opportunity in the near term to continue to grow the impact that we have and to grow the economics that we enjoy.
We are calling for centered growth of about, call it, 20 to 30 centers next year. And our expectation is that, that will be a combination of new employer centers that we’ll be opening on back of our clients as well as new lease models and acquisition opportunities.
As we have shared in the past, when ARPA ended September 30, we do see that there is likely to be a knock-on effect in terms of other operators in certain geographies, thinking differently about their longer-term plans of continuing to persist with their centers. And so again, we’re continuing to monitor that. But that’s another aspect of the growth that we may see in 2024.
Great. Thank you both for your time.
Our next question comes from Jeff Silber of BMO Capital Markets. Please go ahead.
Thanks so much. I wanted to continue the conversation about the new center pipeline. I know it’s a long sales cycle. I’m just curious in the current environment, are clients still receptive? Or are you seeing more caution given the uncertainty?
Yeah. I mean, certainly, we continue to see an elevated level of interest. But as I shared on the last call and certainly is still the case, employers are definitely taking more time to make decisions. They recognize that putting a center on site is a long-term decision. And so they want to make sure that they are deliberating that appropriately.
But again, as we think about the longer-term growth on this, our existing client base is really pleased that they have centers. And I think that those who do not and are considering it are, again, thinking about the impact they can have on their employees as well as their return to office. And so again, elevated interest, but certainly taking longer to make those decisions.
Right. And I know you’re not getting 2024 guidance yet, but I was curious maybe we can just frame it what you’re thinking in terms of price increases for next year relative to cost inflation.
Yeah. Yeah, we will be providing, obviously, detailed guidance when we talk with you all after 2023 is finished, so in February, but we are in the process of getting through our budget process now. And so from a general cost inflation standpoint, our primary cost in the full service business is certainly wages and other businesses have personal cost but other technology as well.
But wage increases, we are looking at likely 3% to 4% from a general inflation standpoint. Other costs are more variable, given inflation, although certainly some of the things like energy have come down. Other occupancy costs have been a little persistently higher, but broadly speaking, call it, 3% inflation.
From an overall pricing standpoint, our look at this point is likely in the 4% to 5% range. So 100 basis points to 200 basis points of spread. We do a center-by-center review and geography-by-geography. So that’s a broad average, but we will go higher where the market permits and where the structure is right. And we are also mindful of driving enrollment as our primary goal as we have talked about. So those are probably the two key elements on the structure for next year in our primary full-service business.
It’s really helpful. Thanks so much.
Thank you. [Operator Instructions]
Our next question comes from Toni Kaplan of Morgan Stanley.
Thank you. So you meet the 3Q revenue guide by about $30 million at the midpoint, but raised the full year guide by under half of that. I guess, why shouldn’t we expect the beat to flow through? I know you mentioned the UK was maybe weaker than expected. But is there anything else that we should be thinking about? Or is it just conservatism for thinking about 4Q? Thanks.
Sure. Hi, Toni, Thanks for the question. I think that the view of course we did outperform, as you say, and we’ve flowed that through the backup outperformance really essentially, we raised the that for the year. It’s a little bit lighter in Q4 at the midpoint, but roughly rough math, it’s very similar.
As it relates to the rest of the business, the main driver really is foreign exchange with the FX rates where they are. We carry that forward into Q4, and then that is a headwind against the revenue trends — what it translates to in revenue, and that’s where I think you see the difference between essentially carrying forward where we think we’ve performed today and stay firm.
Great. And then I’d like to ask the full-service margin question in a different way. I guess, ex-ARPA this quarter, which I think you said was about $9 million. The margins in full service were actually slightly negative again. What gets it to improve next quarter and going into next year? Thanks.
Yes. So as much as we had the turnover, if you will, of enrollment in the third quarter and how that manifests itself in averages for the quarter is relatively consistent to maybe a slight uptick in revenue in enrollment in Q4, but it’s absorbed into a more efficient structure as we cycle through that Q3, Q4 turnover period.
We also have contributions coming from the international operations, particularly Netherlands and Australia has tended to operate at a higher level of occupancy and sort of have a steadier contribution that continues to flow through somewhat better in Q4 than Q3.
And so those are the primary drivers. But the full service business is somewhat seasonal that’s not always evident in the timing of Q3 into Q4 and how the cost is coming through into line, if you will as we have transitioned teachers and transitioned children into the classrooms in Q4.
Thanks a lot.
Thank you. Our next question comes from Harold Antor of Jefferies. Please go ahead.
This is Harold from Jefferies. Not 100% sure if you touched on this, but how should we be thinking about interest expense in 2024 given the rise in interest expense in 4Q and a broad and — insight on their current capital structure.
As mentioned the step up in Q4 that we guided to about 14 million a quarter is what we’ve oddly expect overall interest rate to translate to for next year. We do have variable rate debt. We have interest rate caps on that floating debt. And so therefore have are able to manage and contain that cost.
But we do have — we have of payment for oak, the remaining deferred payment for oak that will be going out early next year. And so there will be some temporary revolver borrowings in the early part of the year but otherwise that 14 million a quarter is a good measure for the year.
Terrific. Well, thank you all very much for joining the call and I hope you have a great West rest of the week.
We’ll see you on road.
Thank you. Ladies and gentlemen, that completes today’s event. You may now disconnect your lines and thank you for attending.