Executives: David H. Lissy - Bright Horizons Family Solutions, Inc. Elizabeth J. Boland - Bright Horizons Family Solutions, Inc. Stephen Howard Kramer - Bright Horizons Family Solutions, Inc.

Analysts: Andrew Charles Steinerman - JPMorgan Securities LLC Gary Bisbee - RBC Capital Markets LLC Manav Patnaik - Barclays Capital, Inc. David Chu - Bank of America - Merrill Lynch Jeff P. Meuler - Robert W. Baird & Co., Inc. Anjaneya K.

Singh - Credit Suisse Securities (USA) LLC Henry Sou Chien - BMO Capital Markets (United States)

Operator: Greetings and welcome to the Bright Horizons Family Solutions Third Quarter 2017 Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Lissy, Chief Executive Officer.

Thank you. Mr. Lissy, you may begin. David H. Lissy - Bright Horizons Family Solutions, Inc.: Thanks, Bob, and greetings from Boston, and hello to everybody on the call today.

Joining me on the call today are Stephen Kramer, our President; and Elizabeth Boland, our Chief Financial Officer. And as usual we'll begin with Elizabeth going through a few administrative matters before I kick off the call. Elizabeth?
Elizabeth J. Boland - Bright Horizons Family Solutions, Inc.: Thanks, Dave, and hi everyone. Thanks for joining us on the call today.

For reference, this call is being webcast, and the earnings release that we issued after the market close today as well as a recording of today's call are, or will be, available under the Investor Relations section of our website, brighthorizons.com. Some of the information we're providing today includes forward-looking statements such as those regarding our operating strategy and financial outlook for the rest of 2017 and 2018, as well as expectations for revenue growth, operating margins, acquisitions, and contributions from lease/consortium centers, integration costs, business segment contributions, growth plans, center openings and closures, capital investments, interest expense, foreign currency rates, tax rates, adjusted net income, EPS and cash flow. Forward-looking statements inherently involve risks and uncertainties that may cause actual operating and financial results to differ materially. These risks and uncertainties include those described in the risk factors of our Form 10-K as well as our other SEC filings. Any forward-looking statement speaks only as of the date on which it's made, and we undertake no obligation to update any forward-looking statements.

The non-GAAP measures that we discuss are detailed and reconciled to their GAAP counterparts in our press release and will also be included in our Form 10-Q when filed with the SEC, and will be available in the Investor Relations section of our website. So Dave, back to you, with the review and update on the business. David H. Lissy - Bright Horizons Family Solutions, Inc.: So thanks, Elizabeth, and hello, again to everybody on the call. As usual, I'll update you on our financial and operating results for this past quarter and I'll provide you with an updated outlook for 2017.

Elizabeth will then follow with a more detailed review of the numbers before Stephen, Elizabeth and I open it up for your questions. We were pleased to continue our strong performance in the third quarter of 2017. Revenue increased 13% to $433 million. Adjusted EBITDA increased $7 million to $77 million, and adjusted earnings per share of $0.62 increased 27% from last year. Our top-line growth of $49 million included solid contributions from each of our three lines of business.

We added 10 new centers to our network this quarter, including new centers for PepsiCo, Salesforce, Sheetz (03:06), Weill Cornell Medical Center and West Virginia University Hospital. Back-up revenue increased 13% and ed advisory grew 37% in the quarter from new clients, expanded utilization and rate increases. Recent new client launches for these two segments include the Bank of New York Mellon, EntIT Software (03:28), Piedmont Healthcare and DaVita. As we move ahead to the end of the year, we continue to be on track to achieve our 2017 targeted growth levels in each of our lines of business. We also continue to deliver strong and consistent results in our core operations, even as we make investments to support continued growth and efficiency and to expand the business in strategic ways.

Operating margins of 11.2% for the quarter, which excludes certain transaction costs, and I'll talk about more in a minute, are in line with our previously discussed expectations for the year. As a reminder, there are three primary areas that are impacting margins this year, offsetting other underlying operating leverage in 2017. First, the Asquith acquisition we made in the UK back in the fourth quarter of 2016 contributes about $90 million of revenue in 2017 at margins that are consistent with the rest of our UK full service centers, but are lower than our U.S. business, which benefits from the mix of higher margin back-up and education advising service. In addition, we'll incur about $2.5 million of integration type costs this year before we fully realize the synergies that we targeted.

The second component relates to the short-term effects on our margin from our newer lease/consortium centers that we previously talked to you about. We've opened nearly 70 of these centers since the beginning of 2013 as part of our longer-term growth strategy. And while we're still ramping to a critical mass of mature centers in this cohort, the roughly $120 million of revenue in 2017 from these centers is significant, but the associated margin contribution from them is still modest. As we've discussed on prior calls, we expect that this headwind will naturally diminish as these more recent classes ramp up, beginning to unlock the value creation that exists in this group of centers next year. The third element relates to our investments in technology and people to enhance our customers' user experience, build utilization levels of our services within our client's workforces, and over time to deliver more efficient and automated support services.

Let me give you a little more color on these investments that we're making. Thus far this year, we've completed the implementation of new core operating systems in our back-up and ed advising areas, which in both cases, provide us with a stronger foundation in which to deliver better and more efficient customer service, including enhanced online and mobile capability. These systems lay the foundation for future enhancements including more automated service delivery. On a parallel track, we've continued with our investment and implementation of expanded digital marketing capabilities that we also expect to improve communication with our users, and over time, to increase the utilization of our services within the workforces of the employer clients that we serve. On the center side, we're really pleased by the adoption of our new parent user app, which we call My Bright Day, which enables real-time direct communication between our teachers, administrators and parents and families.

It's received rave reviews across our center network, and positions us well for future expanded functionality. We expected this all to be a heavy lift this year and it certainly has been. However, we're pleased by our progress and by the enhanced capabilities and the value that this will bring to us in the future. As we come to the end of 2017 and start to look ahead to 2018, we do so with good momentum across all aspects of our business. Our growth strategy continues to be focused on both organic and acquisition growth, and on leveraging our existing client base to cross-sell additional services.

Our sales pipeline in each of our services remains strong with interest both from new employer clients and with cross-sell opportunities. Consistent with what we've seen earlier this year, the most active industry verticals remain health care and biotech, higher education and technology. Given the sales environment we're seeing, we're well-positioned to achieve our organic growth plan in 2017 while building a strong pipeline for next year and beyond. On the acquisition front, after an outsized year in 2016 due to Asquith, we expected and we will experience a more typical year of tuck-in acquisitions in 2017, even as we continue to pursue opportunities that range in scale for the future. We have a good mix of smaller networks and single center opportunities in active discussion in our pipeline both here in the U.S.

and in Europe. This quarter, we've had a somewhat outsized level of center closures due in part to a handful of Asquith locations that we had identified through our diligence and integration work as well as some of the underperforming centers that came to us as part of previous acquisition groups. In addition, this quarter, we completed a transaction to sell our remaining centers in Ireland. We had stopped adding new centers in Ireland several years back after determining that the market had not developed in a way whereby employers would co-invest with us to produce the economics that we had originally targeted. We've been operating three centers in Dublin as of July, and found a local provider that was interested in acquiring them, and completed that transaction in August.

We will remain in Ireland serving our back-up clients, however, we'll not be directly operating any centers. As a result of the sale and wind-down of operations, our results for the third quarter include a loss resulting from the sale as well as the tax benefit we'll realize as part of the write-off. Moving to the balance sheet side of things. With strong operating cash flow, our revolver and access to additional capacity when needed, we remain in a good position to take advantage of any strategic opportunities that might arise. As we previously outlined, our first priority remains growth-oriented investments in acquisitions and new lease model consortium centers.

The second priority is to enhance shareholder value through our share repurchase program, which we've continued to execute throughout 2017, both with open-market purchases as well as participating in a block trade this past May. In October, we also executed in interest rate swap on about half our floating rate debt, thereby reducing our exposure to rising interest rates while preserving some flexibility on the portion that remains floating. Elizabeth will give you more color on all this in a few minutes. So looking ahead, our outlook for the remainder of this year is we expect revenue growth in the range of 10% to 11%; and adjusted earnings per share in the range of $2.63 to $2.65 per share, growing approximately 22% over last year. Also, before I turn it over to Elizabeth, let me give you a brief outlook on our initial view of 2018.

We believe we're well-positioned to continue the positive momentum we have experienced over the last few years. While we're not yet providing detailed guidance for next year, based on how we're trending at this point, we're anticipating revenue growth in 2018 to be in the range of 8% to 10%. Although it's still early to forecast the exact quarterly timing, based on what we see now, we do expect to regain operating margin leverage in the range of 50 to 100 basis points for 2018. And given that we'll need to factor in a slightly higher interest rate and a slightly higher effective tax rate for next year, we expect this all to translate into adjusted earnings per share growth for 2018 in the low to mid teens. With that, let me turn it over to Elizabeth to take a step deeper into the numbers, and then Stephen, Elizabeth and I will be back to you for Q&A thereafter.

Elizabeth?
Elizabeth J. Boland - Bright Horizons Family Solutions, Inc.: Thanks again, Dave. So again, to recap, overall revenue was up 13% or $49 million in the quarter. The organic growth approximates 7.5%, with 5% coming from full service and 2.5% coming from our back-up and ed advisory services. Acquisitions, most significantly the Asquith centers, added a further 7% growth in the quarter.

And center closures offset top-line growth by 2%. Gross profit increased $12 million to $103 million or 23.8% of revenue, which is consistent with 2016 levels. And adjusted operating income increased to $49 million or 11.2% of revenue. On a segment basis, the back-up division expanded over $7 million on the top-line, which translates to 13% growth, and ed advisory services was up over $3 million, or 27%. All of this from a combination of new client launches and expanded utilization by our existing client base.

The $39 million increase in full service center revenue was driven by rate increases, enrollment gains and contributions from new centers. We didn't have any meaningful FX effect in results in the third quarter. At the operating margin level, we generated operating margin income of 26% in back-up and 29% in ed advisory this past quarter. For these two smaller segments, revenue growth and margins can vary a bit from quarter-to-quarter based on the timing of our new client launches as well as the service utilization levels and the investments that we're making in the growth and service delivery, including the technology and marketing investments that Dave discussed earlier. Operating margins are on track with our plan for 2017, and since these operating margins in these two segments are two times to three times what we earn in our full service centers, we continue to see their revenue growth and operating performance contributing to margin expansion over time.

Turning to full service. Gross margin in 2017 is roughly consistent with 2016 levels with a couple of offsetting factors. The gains that we've realized from enrollment growth in our mature and ramping centers, our disciplined pricing strategy and cost management and the contributions from the new and acquired centers are partially offset by the margin effects of the recently opened classes of lease/consortium centers, which are still in their ramp-up stage. Increased overhead spending, which I'll talk about more in a moment, and amortization arising from the Asquith acquisition were also headwinds to operating margin growth in the full service segment. Lastly, the costs associated with the sale of our Ireland-based centers that Dave mentioned earlier are reported in other expenses in Q3.

And this results in a net charge of $3.7 million, which is, again, captured in the full service segment. So, turning to a little bit of detail on SG&A. For the third quarter, overhead was $46 million compared to $40 million in 2016. In addition to typical growth spending to support expanding operations, sales and marketing, et cetera, two factors contribute to the increased spend. First, a portion of the additional spending on technology and the related service enhancement initiatives is in these support overhead functions.

Second, in connection with the integration of the Asquith business in the UK, we have incurred certain overlapping and one-time costs, which temporarily increases the overhead spending in 2017. As we discussed earlier, we are on track to realize the synergy that we had planned from the combination of our support teams in 2018. Interest expense was $10.8 million in Q3 of 2017, which is roughly consistent with 2016 levels, as lower interest costs offset the incremental borrowing that we made to finance the Asquith acquisition. As Dave mentioned, at the end of October, we also entered into a four-year interest rate swap of $500 million of our floating-rate term loan B debt to hedge our exposure to rising interest rates. As a result, we will, therefore, see a modest uptick in interest expense of about $0.5 million, $500,000 in Q4 and around $2 million to $3 million next year, depending on interest rate trends.

We ended the quarter at 3.5 turns of net debt-to-EBITDA, and expect that to tick down slightly by year-end. Our estimate of the 2017 structural tax rate on adjusted net income is now 25%, down slightly from our previous estimate of 26% on slightly higher tax benefits from stock option exercises in the quarter and what we expect for the rest. In connection with the sale of our Ireland centers, we also realized a one-time tax benefit on the asset investment write-off, which totaled $7 million. We generated operating cash flow of $200 million through September 30, 2017, compared to $165 million last year, on improved core performance in working capital. After taking into account maintenance CapEx, our free cash flow totaled $170 million through September.

As Dave outlined, we've invested in growth through new center investments and acquisitions, and we repurchased around 1 million shares year-to-date both through modest open-market purchases and the block trade in May. At September 30, 2017, we operated 1,037 centers with the capacity to serve 116,000 children, and we serve over 1,100 clients across all of our service lines. Our updated outlook for 2017 now anticipates top line growth approximating 10% to 11% over 2016. In our full service center network, price increases averaged 3% to 4%, and we continue to build enrollment in our mature and ramping base centers. Based on our updated estimates of the timing of construction completion and licensing, we're now planning to add a total of approximately 45 new organic and acquired centers in 2017.

Including the sale of our Ireland centers, our outlook now contemplates closing approximately 35 centers. On the operating performance for 2017, we expect adjusted operating income margins to range from 12.25% to 12.5% of revenue. Also, for the full year 2017, we're estimating amortization of $33 million and depreciation in the range of $63 million to $64 million. Based on our outstanding borrowings and the updated terms of our amended credit agreement and the interest rate swap that we entered into in October, we're now projecting interest expense of approximately $44 million for 2017. And as previously mentioned, the structural tax rate is now estimated to be 25% in 2017, similar to what we've used in Q3, and weighted average shares outstanding are projected at 60.5 million for the year.

We estimate we'll generate approximately $250 million of cash flow from operations for 2017, yielding around $210 million of free cash flow after $40 million of estimated maintenance capital spending. Investments in new center capital for centers opening this year and in early 2018 is also projected to total around $40 million this year. The combination of all this, just to reiterate our view for the rest of 2017, leads to our projection that we'll generate adjusted net income in a range of $159 million to $160 million, and adjusted EPS of $2.63 to $2.65 a share. And so with that, Bob, we are ready to go to Q&A.

Operator: Thank you.

Ladies and gentlemen, we'll now be conducting a question-and-answer session. Our first question comes from the line of Andrew Steinerman with JPMorgan. Please proceed with your question. Andrew Charles Steinerman - JPMorgan

Securities LLC: I hope it's okay to ask about 2018, even though you said not detailed guidance yet. When you talk about 8% to 10% revenue growth, could you give us some sense of the organic revenue growth piece to that?
Elizabeth J.

Boland - Bright Horizons Family Solutions, Inc.: Yes. So, Andrew, that would include a typical component of 1% to 2% coming from acquisition contributions because this has been a pretty typical year this year, and we would expect a typical year next year. So the organic growth would be 6% to 7% – 6% to 8%, I guess on top of that – sorry, 7% to 8%. Andrew Charles Steinerman - JPMorgan

Securities LLC: And is that post-closings or pre-closings?
Elizabeth J. Boland - Bright Horizons Family Solutions, Inc.: Well, with 8% to 10% total, that would be post-closings.

Andrew Charles Steinerman - JPMorgan

Securities LLC: Okay. Thank you.

Operator: Thank you. Our next question comes from the line of Gary Bisbee with RBC Capital Markets. Please proceed with your question.

Gary Bisbee - RBC Capital

Markets LLC: Hey, guys. Good afternoon. David H. Lissy - Bright Horizons Family Solutions, Inc.: Hey, Gary. Gary Bisbee - RBC Capital

Markets LLC: So first question, I guess, one might argue given that Asquith goes from a drag to getting the synergies and some of the other things you've called out, that you might actually have margin expansion, potentially above the long-term trend that you've called out historically.

And yet, you're sort of calling for getting back to that. I realize it's early and this isn't official guidance yet. But are there any major puts and takes that we should think about when we try to frame that early read on margins for next year?
David H. Lissy - Bright Horizons Family Solutions, Inc.: Well, as you said, Gary, it's early, and we're trying to give you a range of what we see now. And we think – it's early to sort of call the quarterly flow of the pick-up that we'll receive or the value that we'll receive from the lease models as they ramp-up.

And as you know, that's not as smooth as – quarters can move around a little bit on that which affects the full year. I think the most important part is, from my perspective, is we expect to regain margin leverage that's consistent with what we experienced – had experienced prior to this year, given the things that we have called out which had produced the sort of lack of it this year, which were the investments we've made and the Asquith acquisition. So where we'll fall within that or what the ultimate opportunities are, we'll be able to have more clarity when we talk to you as time plays out and certainly by the time our next call happens. So I think the important part is, I think that based on what we're seeing, we do expect to return to where we – in the range of where we've been. Gary Bisbee - RBC Capital

Markets LLC: Okay.

And then on the technology investments, it sounds like you've made good progress year-to-date and certainly understand the potential to all of those. But what's a reasonable timeline to think about the efficiency follow-through from the investments? There is probably a lag after you get the stuff up and running and people getting comfortable with it and starting to use it. But should we think that this is something that starts to play out next year? Or is this really longer-dated benefit?
David H. Lissy - Bright Horizons Family Solutions, Inc.: Yeah. Yeah, I mean – I think we're – it's a little too early to call as it relates to next year.

I'll let Stephen offer some color since he oversees a lot of that. But from just big picture, without being able to call how much of it will be sort of later next year versus 2019 and kind of the exact timing of all that, the two major sort of value creation areas that we expect to gain from technology, one is, as you point out, which is efficiency, that is obviously more automated service delivery, less human interaction with call center, things like that – that will drive just better efficiency in the service which is positive. But also probably the bigger lever is the improvement of the use of our services within the workforces of the clients that we serve. And obviously achieving that, given that things like back-up and ed advisory, there is a direct correlation between the use of those services and revenue that we gain. Those are there the two sort of headlines, but I'll let Stephen give you a little more color on it.

Stephen Howard Kramer - Bright Horizons Family Solutions, Inc.: Thanks, Dave. So I think the way we're thinking about it, first and foremost, is we're really trying to really enhance the customer or end-user experience as a first priority with a secondary priority obviously being ultimately driving efficiency. So when we think about the idea of really achieving more self-service, more on-demand, more real-time access to our services for our end users, that really becomes our first priority. And then as Dave said, the other piece of this is really personalizing our outreach so that end users really do meet us and we meet them when their need actually is occurring. And so first and foremost, I think the priority for us and ultimately from your perspective, you should be contemplating – is really enhancing that user experience, trying to drive additional use; that ultimately will translate into growth.

And then secondarily, the additional side benefit of that will be efficiency on the back-end as it relates to things like contact center and other direct intervention that we normally would have to do. Gary Bisbee - RBC Capital

Markets LLC: So let me use as an example here. My firm has a relationship with you guys on back-up. I go through the open enrollment pamphlet, it's towards the back of it, like half a page or something. Is the thought process that you get the app and all of that listed in that kind of thing or that you find a way to market to me, as an employee of a company you have a relationship with, such that I – I guess I'm trying to figure out how the one gets to the other.

How do you get me on the app so that I could then become a user? Or is it just people that have already used it are going to find it a lot better so they will use it more? Is that more how you're thinking about it?
Stephen Howard Kramer - Bright Horizons Family Solutions, Inc.: Yes. So your example's a great one. So it's actually both. So the first is that we are trying to increase the number of end users who participate with our programs. And the way we're going to do that is through engagement tools.

Obviously, we need to go through their employer, but ultimately trying to drive engagement through communities, discussions and other resources that employees will have access to. And the idea is that employers will be more interested in marketing when there is something that employees will get aside from just access to our service. Then when we move to the actual user and someone who has registered, raised their hand once, our goal really is to keep an ongoing relationship with them and continue through personalized journeys to anticipate their needs, and ultimately help them to understand how our service will meet them at their needs. So, for example, you may have used our back-up care service for Martin Luther King Day in 2017. And so as we lead up to Martin Luther King Day in 2018, we would let you know that Martin Luther King Day is coming up, last year you utilized our service, we want to make sure that you remember us again this year.

Or we know that snow is coming to the Midwest, and therefore, we will hit all of the end users who have raised their hand and send them a personalized message about that weather so that they think about us in that point of need. Gary Bisbee - RBC Capital

Markets LLC: Got you. And then just one last quick one, Elizabeth, can you give us just the terms of interest rate swap? What are you trading for what? Or have you put out a filing with that? Maybe I missed it. Elizabeth J. Boland - Bright Horizons Family Solutions, Inc.: No, I don't think we've put out a filing about it.

Essentially, we have fixed just over 4% cost of money on $500 million tender, for four years. Gary Bisbee - RBC Capital

Markets LLC: Okay. Great. Thank you. Elizabeth J.

Boland - Bright Horizons Family Solutions, Inc.: Yeah.

Operator: Thank you. Our next question comes from the line of Manav Patnaik with Barclays. Please proceed with your question. Manav Patnaik - Barclays Capital, Inc.: Yeah, thank you, good evening guys.

David H. Lissy - Bright Horizons Family Solutions, Inc.: Hey, Manav. Manav Patnaik - Barclays Capital, Inc.: My first question is just on the decision to leave Ireland. I mean I know you said the employers there today at least weren't, I guess, looking to sign up on the full-time centers. But it sounds like with Brexit and so forth, there is a lot more who are trying to get in there.

So I guess, was that a premature decision maybe? I was just trying to understand, using the case study in Ireland as an example of maybe how you might enter another country in Europe?
David H. Lissy - Bright Horizons Family Solutions, Inc.: Yes. Manav, just to provide you a little more color, we've been there for quite some time, and I think that just going back to our – the sort of focus, as I've talked about before, what from – as we look around the world at different countries, what is it about a country that would make it attractive for us to operate. And what we really would look for is either one or two sustainable sort of funding mechanisms. One is whether or not there is an incentive or a realistic expectation that employers will participate in the way they do in the U.S.

and to a lesser degree, in the UK. Or there's a sustainable funding mechanism that supports quality and affordability, much like what happens in the Netherlands. And if we don't have either, we're essentially operating in an environment where it's great retail. When we entered Ireland, there was a tax scheme put in place that incented developers that made our entry into Ireland really very capital-light because it incented real estate developers to put in money to build child care centers in the developments, and we would operate. And I think what we – so initially, we thought we would be able to operate with that as a driver and that employers might jump on and support it beyond that.

What we found in time is, unfortunately, we weren't able to prove enough enrollment at the price point that it took to operate without employer investment. And we weren't able to get employer investment. So I think what we had to do was say – we stopped probably eight years ago, we haven't added a center there. And we just managed the small group of centers that we've had. And the couple that we had were fine but after a while, it's just a small group of centers and no growth prospects.

We believe there's lots of other places we can invest our time and energy. We found a little provider who wanted to take them over and we created an exit that made sense for us. So I don't – we wouldn't have done that if we believed that there was a lot of good future growth opportunity there. There was nothing that suggested that. And in fact, really most providers that we've gotten to know there have not fared well.

And so – at scale, and so there is a few local smaller ones, but at scale. So there are other markets around the world that we're currently operating in, and that maybe someday we'll operate in that we could get much more excited about dedicating our time and energy to. Manav Patnaik - Barclays Capital, Inc.: Got it. And then on the margin expansion of 50 to 100 basis points, I guess, to next year, can you break out the components that drive that? And I'm guessing it probably is the lease/consortium going from a drag of 10 to 20 basis points to maybe a positive, but what are the other components that you are assuming in that number?
Elizabeth J. Boland - Bright Horizons Family Solutions, Inc.: Well, we would probably be looking at 20 to 25 basis points coming from the continued growth of our back-up and ed advising businesses that are able to sustain their margins and contribute at a level that's higher than full service.

As you say, the lease/consortium centers beginning to contribute as we convert from being a headwind to a slight tailwind. And then I think the execution of – the same components of the rest of execution in the full service business of continuing to open new centers and ramp centers and contribution from tuck-in type acquisitions. So the pricing to cost discipline we would expect to be able to continue to sustain and it's those components that would be – full service maybe contributing a bit more than the back-up and ed advising would be able to, but that's the rough headline. Manav Patnaik - Barclays Capital, Inc.: Got it. Thanks a lot.

guys. Elizabeth J. Boland - Bright Horizons Family Solutions, Inc.: Sure, thanks, Manav.

Operator: Thank you. Our next question comes from the line of David Chu with Bank of America.

Please proceed with your question. David Chu - Bank of America -

Merrill Lynch: Hi. Thanks a lot. Just wanted to ask if fall enrollment trends met your expectation, and if there is anything you need to call out relative to the past few fall seasons?
David H. Lissy - Bright Horizons Family Solutions, Inc.: No, I think – David, it's a good question.

But you know based on what we see now, we're pleased with the way it trended. I think we're continuing sort of the natural trajectory of rebuilding enrollment like we do in the fall. And we hit our peak at the end of the first quarter, beginning of the second quarter or so. And normally in full service enrollment – but I like what we're seeing in terms of the trends. And it's fairly even, it's not like we have a few areas that are over-contributing and everybody else is not.

I mean, on a relative basis, it's across the board. So we're pleased with what we see. David Chu - Bank of America -

Merrill Lynch: Okay, great. And is there any reason why we shouldn't expect a comparable, like 10% to 12% growth for back-up here, 15% to 20% for ed advisory for 2018, just from a high level?
Elizabeth J. Boland - Bright Horizons Family Solutions, Inc.: No.

That's in the ballpark of what we would be continuing to see in terms of the growth contributions from them. David Chu - Bank of America -

Merrill Lynch: Okay. Great. Thank you very much. Elizabeth J.

Boland - Bright Horizons Family Solutions, Inc.: Thanks.

Operator: Thank you. Our next question comes from the line of Jeff Meuler with Baird. Please proceed with your question. Jeff P.

Meuler - Robert W. Baird & Co., Inc.: Yes. Thank you. In terms of the really good performance on the ancillary services, I know you called out that it's both increased usage and cross-selling. On the cross-selling piece in particular, are you doing anything differently to get the success? I know that's long been a big opportunity for you.

So, I guess, first, are you having increased success with the cross-selling? And if so, are you doing anything differently to get it?
Stephen Howard Kramer - Bright Horizons Family Solutions, Inc.: So I'll answer that in two ways. The first is, yes, we are having increased success cross-selling. And the reason I think is we have changed both structurally and incentive programs to align ourselves with better cross-selling. So to be really specific about it, we now have our sales teams pointed directly at our existing client base in addition to going after prospective clients, so ones that would be new to the family. Whereas, historically, our account managers had the expectation that they would grow their current relationships and ultimately cross-sell.

But instead, we have recognized that within our environment, a partnership between people who have relationship skills and relationship orientation, with people who are more of the cultivators on the sales side, makes for a stronger and more energized effort. And then the second is that we have moved to a model where we really are providing the incentive directly to those individuals that are on the sales team to go after those existing accounts. Jeff P. Meuler - Robert W. Baird & Co., Inc.: And the sales team – just what services do they all sell? Do they have the full toolbox of services for the entire sales force, or...?
Stephen Howard Kramer - Bright Horizons Family Solutions, Inc.: Yes.

So first, when we think about anyone who is going in to sell within our employer prospective client base, the expectation is that regardless of what their core selling proposition is, they go with the full suite of services that we offer. We do have a dedicated team that is going after our ed advisory opportunity that is distinct from those who are going after our dependent care services, specifically child care centers as well as back-up care services. Jeff P. Meuler - Robert W. Baird & Co., Inc.: Okay.

Thanks, Stephen, and thanks for the reminder, snow's coming to the Midwest. And then on the comment on the tax rate for 2018 being higher, I just – what's the underlying drivers that lower assumption in terms of the stock comp benefit? Or why is it higher in 2018, and if you can quantify it at all?
Elizabeth J. Boland - Bright Horizons Family Solutions, Inc.: Yes, so our estimate, Jeff, would be that it would be maybe 2 to 3 percentage points higher than this year. And the reason for that is that the stock compensation effect, which is a fixed number, if you will, it's not fixed in that we can estimate it. We can ballpark what it may be based on equity that's outstanding and exercisable, but it's dependent on people exercising.

And then it's a credit to the tax expense. And proportionately, it will be less of an effect as the rest of our tax expense increases, the rest of our pre-tax income increases. And so it has a less beneficial effect over time, as we're a growing company. So that's why we're estimating a 2 to 3 percentage points increase in the tax rate. Jeff P.

Meuler - Robert W. Baird & Co., Inc.: Okay. Thank you.

Operator: Thank you. Our next question comes from the line of Anj Singh with Credit Suisse.

Please proceed with your question. Anjaneya K. Singh - Credit Suisse Securities (USA) LLC: Hi. Thanks for taking my questions. I had a question on the Asquith center closures.

Is the amount of closures you're mentioning there incremental to what you had anticipated when you made the deal or not really? And then maybe asked another way, would you be able to give us a sense of what the percentage of Asquith center closures looks like versus other sizeable deals you've done in the past?
David H. Lissy - Bright Horizons Family Solutions, Inc.: Anj, the real issue isn't that they're any different. I think when we did diligence in Asquith, not unlike when we do diligence on most larger groups, we always circle up some centers that are not performing that hadn't been performing for the previous provider. We think our first hope and our first goal is try to do what can to obviously help them to get better. Some are – they're all different in terms of what the ability is to continue to operate versus when the timing is that you can possibly get out given leases or given contracts, whatever it may be.

So they're not all created equal. What we don't know when we do diligence and what we don't know until we get into it is kind of the timing of it. So it's not like the numbers of centers changed at all, it's just that we have the ability to have some of them be affected slightly sooner than we thought. And we're taking advantage of that opportunity. But it's not – I mean, I don't have the exact numbers as it relates to how many ultimately will close in front of me versus how that compares to previous groups, but I can tell you ballpark that it's about the same percentage of centers.

It seems to always be the case that there is a grouping of centers in each deal where that's a – where what I'm talking about exists. Anjaneya K. Singh - Credit Suisse Securities (USA) LLC: Okay, got it. That's super helpful. And then for a follow-up – sort of changing gears, could you give us an update for what your utilization levels looks like? I know you've been closing the gap towards the 78%, 88%, 80% target of level.

I just wanted to get on an update there in light of the strong performance that you guys have been putting up? Thank you. Elizabeth J. Boland - Bright Horizons Family Solutions, Inc.: Yeah, I mean, broadly speaking, we're pretty close to back to that high-water mark in our mature P&L centers. There's a little bit of room to go there, but overall in that high 70s range for our core enrollment. So the growth that we're seeing now is slightly what we would typically see, I should say, in a mature center environment we would have a little bit of room to grow enrollment, be more efficient with it.

And we have a little room to go there, maybe another 0.5% or so over time, but we've – the slow climb back to sort of steady state is where we would say we are at this point. And now it's a matter of sustaining enrollment, continuing to eke out a little bit of efficiency and growth there and open new centers. Anjaneya K. Singh - Credit Suisse Securities (USA) LLC: Okay. Thank you so much.

Elizabeth J. Boland - Bright Horizons Family Solutions, Inc.: Thanks.

Operator: Thank you. Our next question comes from the line of Jeff Silber with BMO Capital Markets. Please proceed with your question.

Henry Sou Chien - BMO Capital Markets (United States): Hey. Thanks. It's Henry Chien calling for Jeff. David H. Lissy - Bright Horizons Family Solutions, Inc.: Hi, Henry.

Henry Sou Chien - BMO Capital Markets (United States): Hey, guys. Just a quick one, this quarter, how many centers did you open and close (41:46)?
Elizabeth J. Boland - Bright Horizons Family Solutions, Inc.: Yeah. So as Dave mentioned in his remarks, we opened 10, we added 10 new centers, and we closed a total of 20. So, a net decrease of 10.

Henry Sou Chien - BMO Capital Markets (United States): Okay, got it. Thank you. And I was just curious on the organic growth and your strategy for 2018. Just curious if you can share some more color on how you're thinking about expansion for next year, whether you're planning to accelerate or pick up the rate of new centers and any change in the type of markets that you are looking to open in? Thanks. David H.

Lissy - Bright Horizons Family Solutions, Inc.: Yeah, I mean, I think broadly speaking, I think what you can expect from us in 2018 is similar to what you have seen from us in the past. I mean, numbers of new centers will continue to grow. And I think both on the lease/consortium centers and also on the employer side, we'll see good consistent growth in 2018, contribution from new centers, both here in the UK and also in the Netherlands. And I think you'll continue, again, broadly, to see the back-up division grow in the range that we've been talking about, in 10- to 12-ish range, and then ed advising growing in the neighborhood of high teens to 20% range for next year. And then as we always do, we have a pipeline of acquisitions that we cultivate, and it's always hard to predict the timing there.

So acquisitions will be lumpy. In our base forecast, we consider a small number of tuck-in acquisitions based on the pipeline that we already have, and then there is always the potential for upside if we could get things done sooner than what the base plan calls for and that would add to it. And then in terms of new markets, we continue to be active in looking but there's nothing that we can report to you today to say that you should expect anything in terms of a new country. Although in the longer term, that remains something of interest for us. Henry Sou Chien - BMO Capital Markets (United States): Got it, okay.

That's helpful. And just shifting to the – specifically the back-up dependent care services. Is there any reason that margins – or could margins expand in this business with this incremental growth? Or is there anything that may hold it back for next year?
Elizabeth J. Boland - Bright Horizons Family Solutions, Inc.: We really see the back-up business as one of more of a growth story than a margin leverage story. We've been talking a fair amount about some of the investments that we're making in the technology and marketing space.

I think those would be important to sustain going forward. It has a lower fixed cost component than full service, so it already comes with a higher margin going in. And so while, of course, we will strive to continue to operate more efficiently year-over-year what we look at is a pretty stable margin that we can stay in the range of 25% to 30% operating margin range. And so it's less about leveraging that over time, a little bit of eking out perhaps but that's really what we see there as sustaining those margins, not trying to leverage – or we'll try to leverage them but not counting on leverage in that arena. Henry Sou Chien - BMO Capital Markets (United States): Got it, okay.

Thanks so much.

Operator: Thank you. There are no further questions at this time. David H. Lissy - Bright Horizons Family Solutions, Inc.: Okay, Bob, thank you.

And thanks for everybody for joining us today for the call. As usual, Elizabeth and Stephen and I will see on the road in the coming months and talk to you thereafter. Have a good night. Elizabeth J. Boland - Bright Horizons Family Solutions, Inc.: Thank you.

Stephen Howard Kramer - Bright Horizons Family Solutions, Inc.: Thank you.

Operator: This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.