Good afternoon, ladies and gentlemen, and welcome to the KinderCare Learning Companies, Inc. fourth quarter 2025 earnings call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. This call is being recorded on Thursday, March 12, 2026. I would now like to turn the conference over to Ms. Olivia Kirrer, Vice President of Investor Relations. Please go ahead.

Thank you, and good evening, everyone. Welcome to KinderCare Learning Companies, Inc.'s fourth quarter and full fiscal year 2025 earnings call. Joining me from the company are Chief Executive Officer Tom Wyatt and Chief Financial Officer Tony Amandi. Following Tom and Tony’s comments today, we will have a question-and-answer session. During this call, we will be discussing non-GAAP financial measures. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available in our earnings release, which is posted on our Investor Relations website at investors.kindercare.com under the Financials tab. Finally, a reminder that certain statements made today may be forward-looking statements. These statements are made based upon management’s current expectations and beliefs concerning future events impacting the company and involve a number of uncertainties and risks, which are explained in detail in the Risk Factors section of our most recent Annual Report on Form 10-K and other filings with the SEC. Please refer to these filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements. The actual results of operations or financial condition of the company could differ materially from those expressed or implied in our forward-looking statements. All forward-looking statements are made as of today, and except as required by law, KinderCare Learning Companies, Inc. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments, or otherwise. I will now turn the call over to Chief Executive Officer Tom Wyatt.

Thanks, Olivia. Hi, everyone. I am pleased to be joining you today in my first earnings call since returning as CEO in December. It is wonderful being back at the helm of KinderCare Learning Companies, Inc. and leading this talented team. This company’s purpose has been a significant part of my life for a long time. In these first few months back, they have been productive. The work we have begun to redirect our company back to the type of growth I oversaw for twelve years is gratifying, and I am looking forward to sharing more with you today. Let me start with this. Our recent performance has not been where we expected it to be, and that responsibility is ours. In some areas, we fell short of the consistency and execution that families expect when they choose KinderCare Learning Companies, Inc. That perspective, along with the time I have been spending in our centers, with our field teams, with clients, and many of you, has reinforced where we are executing well and where we need to improve. We must move with greater urgency, act more decisively, evolve how we operate, and strengthen accountability across the organization. Beyond our immediate business activities, I have spent time with lawmakers at both the federal and state levels, and I am encouraged by the strong bipartisan support we are seeing for the child care sector overall. I also continue to receive feedback from public policy officials about KinderCare Learning Companies, Inc.’s industry leadership. I am proud that we continue to support working families in our centers while advocating for policies that strengthen access to quality, affordable child care. That commitment is reflected in our culture, as KinderCare Learning Companies, Inc. was once again named one of Gallup’s Exceptional Workplaces for the tenth consecutive…

Thank you, Tom. Starting with a review of the fourth quarter, revenue was $688 million, up 6% year over year, primarily reflecting the incremental $45 million contribution from the fifty-third week. On a comparable basis, revenue is essentially flat year over year. Tuition contributed 2% growth in our centers, and Champions delivered double-digit expansion, while lower center enrollment offset those gains. Enrollment trends in the quarter were consistent with our expectation exiting the third quarter. At the center level, we saw the same dynamics. Same-center revenue increased 6% to $618 million, driven by the extra week, tuition increases, and incremental contribution of new centers entering the same-center pool, partially offset by lower overall enrollment. Same-center occupancy for the quarter was 64.5%, approximately 340 basis points below the prior year, in line with our revised guidance. Champions generated $60 million of revenue in Q4, up 12% year over year, approximately $0.8 million of which was from the extra week. The performance was supported by incremental site additions during the year and continued client growth. In total, we added 128 net new sites compared to last year and finished with over 1,150 sites. Champions and our broader B2B initiatives continue to diversify our portfolio and complement our community-based centers. We see them as important long-term growth drivers. During the quarter, we expanded our B2B footprint with a new KinderCare Learning Companies, Inc. for Employers on-site opening, completing a record year of employer-sponsored site growth. We also made progress across our other growth drivers. In addition to the on-site center, we opened six new community centers and added six centers through acquisition during the quarter. Alongside these growth priorities, we also closed seven centers in Q4 as part of our regular portfolio management activities. Due primarily to a non-cash goodwill impairment charge recorded…

We will continue to maintain a healthy spread between tuition and wages.

Adjusted EBITDA is expected to be $210 million to $230 million this year, down from $288 million for the comparable fifty-two-week period, driven mostly by lower occupancy, a reduction in grants versus 2025, and increased marketing investment aimed at driving our top-funnel activity for targeted centers. Consequently, we are projecting adjusted EPS to be $0.10 to $0.20, down from $0.62 for the comparable fifty-two weeks in 2025. Our full-year guide assumes tuition to drive approximately 3% of revenue growth and be fully offset by a 3% decline in same-center occupancy. Our other growth lever assumptions are expected to continue with their growth trajectories: Champions and B2B contributing about 1%, and new center openings and acquisitions contributing approximately 0.5% to revenue growth each. Additionally, we expect revenue growth to be impacted by about 1% for the 15 to 20 closures, which normally act as an offset each year. Our guide does not assume any closures beyond that, although we will likely take additional targeted actions where appropriate. We expect free cash flow to be between $35 million and $40 million and CapEx to run about 5% of revenue for the year, with most of that CapEx directed towards growth. For modeling, you can assume our effective tax rate to be around 27%. We do not plan on regularly providing quarterly guidance. However, since we are so close to quarter end, additional color will be helpful. For the first quarter, we expect revenue to be in the range of $664 million to $674 million, adjusted EBITDA to be between $45 million to $48 million, and adjusted EPS to be about breakeven. These expectations are underpinned by the drivers we have outlined for you already, as a lower base and enrollment trends carry over from the second half of last year and create an unfavorable comp versus the first quarter last year. Enrollment remains below prior-year levels; our outlook reflects the starting point. Actions taken last year and those underway now are intended to position the business to exit the year on a better trajectory. Our priorities for 2026 are clear: stabilize occupancy, improve performance in lower-performing centers, and take decisive portfolio actions where needed, while maintaining financial discipline. We will now open for questions.

Ladies and gentlemen, we will now begin the question-and-answer session. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then the number two. Our first question comes from the line of George Tong from Goldman Sachs. Your line is open.

Hi, thanks. Good afternoon. You are guiding to 8% EBITDA margins in 2026 at the midpoint. That is a pretty significant drop from 11% in 2025. Can you elaborate on some of the key factors causing this sharp drop in margins?

Yes, of course. Hey, George. The first thing I would start with from your 11% is the extra $12 million we had in the fifty-third week. That is not going to duplicate, and that fifty-third week is always a lot more profitable given the time of the year. From there, the big callout is really all about those FTEs. Obviously, the top line is impacting us, but as we have that lower occupancy expectation, that is the biggest thing that we are deleveraging, and that is impacting all the way down to margins. The other callout I made was grants. We knew in 2025 that that was going to be the peak of the year, and it turned out that way, as the states were reacting to their funds rolling off. We saw that in the back half of last year and expect it to stabilize back to normal pre-COVID levels this year as well. But it is all about FTEs in KinderCare Learning Companies, Inc., really, and that is the biggest impact on margin.

Got it. That is helpful. And I know that you mentioned goals at the beginning to move with more urgency, to act with decisiveness, to strengthen accountability. Can you talk at a high level about what your top priorities are to achieve those initiatives for the upcoming year?

Yes. George, this is Tom. It is good to talk to you. We have done a number of things. Let me start with, we feel really good about the business we have in the at-work space. That business is growing for us. It saw that in 2025, and it is on plan this year as well. We feel the same way about Champions. Champions had a great year last year. They are on track to have a great year this year, a double-digit increase as well. So this is all focused on KinderCare Learning Companies, Inc., and it is all focused, as Tony just mentioned, on enrollment. What I would tell you we have done is we have taken Michael Canavan, who is the President of KinderCare Learning Companies, Inc., who was also managing other businesses for us in 2024 and 2025, and we moved Michael back to just KinderCare Learning Companies, Inc. When Michael joined me back in 2012–2013, he was totally responsible for KinderCare Learning Companies, Inc., and he led the growth that we had during those years. That is number one. We want to put Michael back in charge. Michael will not have any distractions from KinderCare Learning Companies, Inc., and will work on enrollment. The second thing we did is we cleared the distractions of the center directors, which were many. When I got back to the company, there were a number of activities going on in the centers that were distracting, and we have taken those out. We have actually seen already some improvement from that in activities including enrollment. We feel better about the role of the center director, making them the center director they want to be, and that is introducing KinderCare Learning Companies, Inc. to more families and more children. The third is that we added significant investment in paid search for the first half of this year, and we are contemplating doing the same thing in the second half. We are seeing trajectories there we have not seen in a while. We actually have an increase in the number of inquiries year over year, which is positive and feels good to us, and that is something that we are going to continue to build upon. The last thing I would tell you is that we changed our incentive compensation program. It has always had growth as a part of it, but we made it literally 100% focused on growth—on profitable FTE growth—for all aspects of anyone that is in an incentive program. Those are the key components. The big ones are Michael, paid search already showing signs of life, and clearing the distractions. We are allowing our center directors to be center directors, and they have not been for about a year and a half.

Very helpful. Thank you.

You bet.

Our next question is from Andrew Steinerman from J.P. Morgan. Your line is open.

Hi, Tony. You moved a little quick for me on the prepared remarks. Could you just give us, for the quarter just reported, the M&A revenue contribution? And then, within the context of the full-year guide on occupancy being down, and obviously you cannot really do anything at the immediate front because that is kind of where we are going into the year, my question is sort of the pacing throughout the year. For example, by the time we get to September enrollments, is there an expectation that occupancy could be flat by then or by the end of the year? Just to get a sense of the pacing of the year.

You bet, Andrew. Revenue from acquired centers was $6.2 million in the fourth quarter, totaling $14.9 million for the full year from our acquired centers. Let me give you a little commentary on just how the year trends, and then Tom, if you want to add anything on where we could go. Our guide at this point, at our 3% down on FTEs, assumes a curve that is, for the most part, similar to last year and what we have seen historically—really primarily last year and a little bit of the back half of 2024. What do I mean by that? We will continue to grow incrementally, and we have been even this year, from week two all the way to about week twenty, towards May. We will grow incrementally every week up until that point, where May is usually our high point. At that point, we call it summer’s out, and that is an inflection point for us. We will lose a handful of families to different summer decisions, and we also get a lot more incoming families from some of their summer decisions. That is a big inflection point that we are building into now with our marketing and outreach with our families as early as right now. That is an inflection point to start to hopefully add some more students at that point. We will hold those students over the summer, and then back to school is obviously the big one—another big inflection point. The current guide assumes pretty consistent performance to last year, but both those inflection points give us the ability to break those curves.

I would like to add this. Number one, I do not accept that curve, just to be honest with you. Call me optimistic, but when I came to this company in 2012, the company had experienced thirteen quarters in a row of negative top and bottom line. I joined in February 2012, and in July that year, we went positive, and we stayed positive up to and including COVID. So this opportunity for us to change the trajectory of this business is significant. By offering our center directors the opportunity to be more focused on enrollment, adding paid search—which we did not do back in 2012; we just did it organically—and bringing Michael back into the fold as the leader he was back then are significant. We are being thoughtful with using the curve from 2025, but I will be very disappointed if we stay with that.

Okay. Thanks, Tom.

The next question is from Jeffrey Meuler from Baird. Your line is open.

Thanks. I guess it is going to be a similar question to what I asked last quarter, but maybe, Tom, in the context of just comparing how you view the industry structurally today to when you joined in 2012. KinderCare Learning Companies, Inc. is not the only player in the market that has had tougher enrollment trends over the last year, and we are always trying to sort through to what extent that is cyclical and to what extent that is structural and to what extent execution plays a role. I would just love your views on the structural health of the industry or what has evolved either since you last joined or since you last stepped out of the CEO seat. Thanks.

Happy to. When I joined in 2012, the business was, as it had been for decades, growing at a moderate rate of 1% to 3% a year in occupancy and in FTEs naturally. It was only after the pandemic that we saw this pressure on growth. As far as the industry is concerned, the strong, scaled larger providers are staying strong, although they are obviously challenged by enrollment and occupancy. The issue I see now that the pandemic-related ARPA monies and the like are gone, we are starting to see a contraction of the mom-and-pops and smaller providers. Quite frankly, we are seeing that even in the opportunities that are offered up to us to purchase. I believe you are going to see this year—and we have had a firm like Parthenon do some work for us because I believe you are going to see—a contraction of smaller players in 2026. Larger providers will continue to scale and continue to find ways to potentially gain share. I gave you an example. If you look at the top three players in this business—us in the number-one slot, Learning Care Group number two, and Bright Horizons—you look at all three of those, they barely come to 5% of the entire share of market of early childhood education. We are at like 1.8% to 1.9%. It baffles me that with aggressive approaches to marketing, to quality, to allowing our center directors to be high-quality providers of relationships, the effort they are making, the tours they are taking, the time they are giving families, I feel like we will continue to grow. I think there will be a few of us that emerge in 2026 doing just that. I do not think the entire market is going to grow in 2026. I think we are going to see more of what we saw in 2025 because of the economy and the instability in our environment. But I do believe the opportunity for some of us to get in another lane, make an effort at what we are doing, and put more emphasis on growth—we will get there. It is my opinion.

And then I think you said twice in your prepared remarks that you fell short of the consistency that families expect. My prior understanding was the challenges were more on demand or inquiry conversion, but existing family retention was good. Maybe go into more detail on what you meant by falling short of the consistency families expect, and was that directed at existing families and retention, or was that more on inquiry conversion?

Our retention, I am pretty happy with. It has been stable and actually grown a tiny bit. Where I was speaking specifically is that we did not allow our center directors to be center directors. They were bombarded with a number of things that really distracted them from the core effort of what they do, and that is taking care of families, being in the classroom, recruiting great teachers, and creating the environment they have. They were not able to do the tours—and do them in the quality way that they have done in the past—because they were busy. They were distracted. The opportunity for us to give them back the time to do a high-quality tour, to be in the classroom, to empower their teachers, to do all of that, is what we do well, and we are getting back to that.

Okay. Thank you.

You bet.

Our next question is from Manav Patnaik from Barclays. Your line is open.

Hi. Good afternoon. This is Ronan Kennedy on for Manav. Thank you for taking my questions. You spoke of bipartisan support, but also acknowledged confusion around the federal and state grants further testing the child care sector. There have been headlines early in the first quarter and throughout—whether it is HHS “defend the spend” or some headlines on a state-level budget cut standpoint, whether it is administrative throttling or reimbursement rates. Can you talk about those dynamics and the impacts for first quarter and what is contemplated in the guide?

Happy to. In the first ninety days—I have only been here ninety days—but in those first ninety days, I have been to Washington and visited with senators and congressmen and women, basically defending our approach to CCDBG and our integrity around that. Minnesota was a curveball, and it happened right at the December-into-January period. The second or third week, six CEOs and I flew to D.C. to ensure the government officials that we were not the problem; we were the solution. Candidly, they agreed with us, and we have worked with them to be sure that they are looking at things and setting up the right corrective actions to weed out any possible fraud that might occur in that part of our business. We met with the head of that, Alex—forgive me, I do not remember his last name—a great guy who works for HHS and literally is the top player in that arena. He feels very good about where the major providers are and has no intentions of freezing any funds or slowing any funds down. In the first quarter, we will see no impact to that, and we do not see an impact to it this year. A week after we were in Washington, they actually raised the block grant $85 million—about 1%. Not a lot, but a lot better than freezing the funds, and it was good to see bipartisan support increasing the CCDBG block grant. I also spent time in February in Colorado, and I will be spending time next week in Massachusetts. I will visit with the governors and lieutenant governors and also the heads of education in both states. I have done this all my career. I want to be sure they realize the emphasis and impact that we have on hardworking families and the development that we have on children. We are taking a very strong offensive stance to that. I have a meeting in May with eight of the top CEOs in the country to have a strategic session with them as well. All of that to say, I feel good about the block grant. I feel good about subsidy in total. We do not see any interruptions to it. We have had some manipulations in state funding—some states allocated more, some less—but for us, being in 41 states, we may see an interruption of a couple of dollars in one state, but we pick them up in another. All in all, it is something we have to be all over. We have a staff of a few hundred that administer the subsidy disbursements in our company, and that is a competitive advantage we have in that space.

Thank you very much. Appreciate the insights there. If I may, I will shift gears. You referenced being willing to take deliberate portfolio actions among the underperforming centers. I do not think the guidance contemplates that—it was referred to as a possibility—but can you help us understand that decision framework? Is there a level of occupancy, margin, or trajectory that would trigger a center-specific targeted initiative for improvement or potential exit? And what could the total impacts of those be for 2026, please?

Yes. Look, in the guide, we have been doing 15 to 20 per year the last few years, and you all know that, so we built that into our guide for this year. One of the things that Tom has asked myself and others as he has been here is to do another hard look at all of our centers and revalidate that all of our centers are the ones that are going to take us through 2026 and into 2027 as we get all the FTEs back across this fleet. We are frankly in the middle of taking a hard look at all of our centers. The things you are talking about are the ones that are important—demographics, occupancy, engagement, and their trends. We are taking a hard look at that now so that we can look ourselves in the mirror and ensure we have the right centers going forward, and that is likely going to be a higher number than 15 to 20. We are just not at the point now where we can give you that number because we do not have it yet, but we are working through it.

I will just add one comment. I am an ex-retailer, and you know that when you have a multisite business, you are always evaluating all your centers. You are building some, you are closing some, and you are redecorating some others. All of that is what we do. I came back with a heightened awareness of that and wanted to be sure that we were as current as we could be, given the enrollment trends of the last year to year and a half, and just be sure that we were where we needed to be.

Thank you very much. Appreciate it.

Our next question is from Toni Kaplan from Morgan Stanley. Your line is open.

Thanks so much. I was hoping that you could delve a little bit more into the enrollment issues. It has been asked in a couple of different ways, but how much of it do you think is market-driven versus self-inflicted? What could drive the enrollment better or worse than the down three in the guide? And the specific things that you are doing to try to stem the decline here? I know you talked about personnel and paid search and incentive comp changes, but any very specific things that you are doing to try to drive enrollment and what you see as the real core issues on the enrollment side?

Happy to, Toni. I will start with something we have not yet. We have had solid success in our Opportunity Region in 2025, and I can tell you that 2026 is still performing above where it was before, and we are very excited about that. We have taken many of the best practices out of the Opportunity Region, and we have implemented those in all of our centers for 2026. Other than that, there are macro situations—inflation, the economy in general, the instability of our country right now, even the work environment. People are still figuring that out. All of those have been noise in the aspects of enrollment. But for us, enrollment has been self-inflicted for the most part—not totally, but for the most part. When I look at the amount of activities going on in the center that do not pertain to enrollment, it has been significant. I believe that when we get our centers and our center directors back to focusing on introducing KinderCare Learning Companies, Inc. to more families, being a part of the community in a bigger way, and doing the things they need to do to create interest and enthusiasm, we will do much better. On top of that, please do not take anything away from the paid search. We have spent millions of dollars there that we have not spent in the past, and it is showing increases in the number of inquiries we get—not only the number, but also the quality of inquiries. They are coming to us, and in real time being spoken to. I mentioned earlier about the distractions. If someone inquires to KinderCare Learning Companies, Inc., they are likely looking at other centers too. If we do not get back to them quickly, they may make a decision based on somebody else’s proactivity. Our centers today now have the time and the focus to go after those inquiries as quickly as possible. Getting Michael back into that—he is an operations guru—and having him at the centers ensuring focus on these things, reliving what he accomplished in years past, I believe will make it all come together. The fact that we started the year communicating that growth is priority one, including the change in our compensation program for the whole company, are the right signals to send, and I hope they will bear fruit.

Great. And thank you for the update on the quintiles chart. I noticed that the top four quintiles deteriorated a little bit year over year, and the fifth got better. When you think about those top four, are you concerned that those are going down? What is the right level there? And when you think about the quintiles, are there different problems in the first quintile versus the third, or would you generally put quintiles one to four in the same bucket, suffering from the same trends?

I would say the top quintile is our highest-quality centers. They have the most stability, the highest family engagement, and the highest employee engagement, and it goes down from there. Each has individual challenges, but for the most part, the reason those higher-quintile centers were down goes back to the distraction of the center director, in my opinion. They did not have the opportunity to do what they needed to do, and they were highly occupied to begin with. The opportunity to take the Opportunity Region’s best practices to those other quintiles will help them. That, along with paid search and clearing the decks for the center directors to be center directors, is going to help those grow. I am not at all concerned about those quintiles going forward. We have poured the marketing toward them, and that is where we are going to go.

Thank you.

Our next question is from BMO Capital Markets. Your line is open.

Hey. Good afternoon. This is Ryan on for Jeff. Just on the pricing algorithm, I understand the age-up methodology. It looks like you were around 2% for 2025. From the conversations with parents, what is the appetite for the 3% price increase you are layering in this year? Thank you.

Of course. As a reminder, the tuition that we talk about as a company is the mix of approximately two-thirds private pay and one-third subsidy families. Our rate was actually higher than 3% last year on the private pay side, and what pulled us down was some of those states—Indiana being the big one, but a few others too—in the back half of the year where we saw additional displacement from those private pay rates with what we are getting from subsidies. So far, we are nine weeks into the year, and it has been really quiet as far as our new rates. We feel good about that. As a reminder, when we put those new rates in in January, they are for new students and age-ups, so it is not really as much of a price increase conversation. Virtually all of those families that age up are still going to be paying less than they did the prior week, even with the embedded price. The way we do that helps with those conversations and helps the families feel solid about it, and we are making sure we are living up to the value we need to give those families. Even with those price increases, they are not feeling them. We need to be able to speak to the value they are getting from us.

I appreciate it.

And then you talked about some early wins on the selective marketing fund. How are you measuring that, and when do you expect to see some of those results come to fruition that will feed into the P&L?

The great thing about paid search—and I am sure you know this—is that you can track it all the way from inquiry to tour to actual enrollment, and we are doing every bit of that. Quite frankly, with AI, the amount of data we are gathering and capturing is phenomenal. What I was speaking to earlier was year-over-year growth in inquiries. If we have more people inquiring for KinderCare Learning Companies, Inc., and we are giving our center directors more time to generate a tour and the opportunity and conversation around enrollment, we will win. That is the approach we are taking. It starts with getting traction in the number of inquiries year over year, and that has shown up. It has shown up significantly for our smaller brands, and it has shown up in an increase in KinderCare Learning Companies, Inc. as well. That is encouraging to me. We are less than 2% share of the market in this business. If we are aggressive and increase inquiries and give center directors the opportunity to do their job, the opportunity for us to grow enrollment is there. Now it is all about execution. That is the approach we are taking.

Our next question is from Josh Chan from UBS. Your line is open.

Hi, good afternoon. Thanks for taking my questions. Hey, Tom, if somebody asks you whether growing enrollment is tougher now than it was ten years ago, how would you agree or disagree with that?

Let me explain why I am going to say what I am going to say. Enrollment, after a family decides that they are proud of the brand, inquires about potential openings in their child’s age group, and then shows up for a tour—the actual opportunity to enroll them has not changed. We are one of the very few companies that actually show them how much KinderCare Learning Companies, Inc. costs for their child in the classroom in their community. So they come to our center knowing that. Quite frankly, this industry does not do that as a practice. We felt we should be transparent so we do not waste someone’s time. If they can afford KinderCare Learning Companies, Inc. and they want to see the actual experiences a child has in the center, please come. By doing that, we have seen better enrollment as a percent of total inquiries and tours than we saw prior to that. It is not a problem. If a family is in need and has chosen the number-one brand in the country, KinderCare Learning Companies, Inc., and then comes in to take a tour and be with our center director and spend some time in the classroom, we are pretty confident we can win that tour.

That makes a lot of sense. Thank you for that color. And then a financial question. If you take out the fifty-third week in 2025, then your guidance assumes slight revenue growth in 2026 but then a $60 million-plus EBITDA drop. Does that contrast surprise you? I know there is enrollment and deleverage and things like that, but that just seems like a very large contrast between the top and the bottom line. Is there a way to conceptualize that?

A little bit to what I think George asked as well. The biggest driver there truly is the deleveraging you see as enrollments go down. Your basic fixed costs—rent, center directors, and some other fixed costs—you are getting no leverage off of that at all. It is harder as you drop down, especially into the sixties where we are at on average across the fleet, to make up teacher hours. You are not making up many teacher hours by dropping enrollment, and that is really falling off. That is the biggest impact. We are high single-digit millions of grant loss—around $7 million to $9 million, actually closer to $10 million—year over year, with most of that being in the first half, based on our expectations of what states are going to do to grants, which normalizes 2026 back to where it was pre-COVID, in our expectation. The other factor is increased marketing as well. That should pay off for us over time and even in 2026, but at this point we are factoring that in as more weighted towards cost than the upside we will see from it.

Okay.

Appreciate the color, Tony, and thank you both for the time.

Are there any questions at this time?

Chloe, thank you. And everyone, thank you for your time today. We look forward to talking to you again very, very soon. Thank you so much.

This concludes today’s conference call. Thank you for participating. You may now disconnect.