Judson Lindley's questions to Kindercare Learning Companies Inc (KLC) leadership • Q2 2025
Question
Judson Lindley from J.P. Morgan asked for details on the drivers of the year-over-year gross margin compression and the spread between tuition and wage increases. He also inquired if the weakness in private pay enrollment relative to subsidy enrollment still holds true.
Answer
CFO Tony Amandy stated that the 50-100 basis point spread between tuition and wage increases is being maintained. He attributed the gross margin pressure primarily to the decline in occupancy, which impacts leverage on labor and rent. CEO Paul Thompson added that while subsidy enrollment growth has softened slightly, it continues to be strong, supported by state budgets.