KinderCare Learning Companies (KLC) Morgan Stanley Global Consumer & Retail Conference summary

Company overview and strategy

• Operates over 1,500 centers in 40 states, serving more than 200,000 children, making it the largest private early childhood education provider in the U.S.

• Focuses on community-based, suburban locations and partnerships with parents to prepare children for kindergarten and beyond.

• Expanded into the premium market with the Crème brand and offers B2B services through Champions, a before/after-school and summer program.

• Champions and B2B offerings have experienced double-digit growth, with flexibility in client solutions as a key differentiator.

Financial outlook and growth algorithm

• 2024 performance and long-term growth are tracking in line with management expectations, with annual guidance updates planned.

• Growth algorithm targets high single-digit revenue growth, driven by 1%-2% enrollment, 3%-5% tuition pricing, 1%-2% B2B, 1%-2% new centers, and 1%-2% acquisitions.

• EBITDA margin is expected to expand, with EBITDA dollars projected to grow in the low double digits.

Pricing, utilization, and operational initiatives

• Tuition increases are expected to be in the 3%-5% range for 2025, after a 7% increase in 2023.

• Utilization has returned to pre-COVID levels, with targeted strategies for underperforming centers, including operational playbooks and digital enhancements to improve enrollment and parent experience.

• Center closures have normalized to about 1% of the portfolio annually, with new center growth expected to ramp up to pre-pandemic levels by 2025-2026.