Bright Horizons Family Solutions LLC

The positive outlook reflects our expectation that Bright Horizons will exhibit continued high-single-digit revenue growth, its S&P Global Ratings lease-adjusted EBITDA margin will increase to over 25%, and that it will maintain leverage under 3.5x over the next 12 months. We could raise the rating over the next 12 months if the company continues to report solid operating performance and remains committed to maintaining its adjusted leverage below 3.5x. We could revise our outlook to stable if revenue growth slows or declines due to weak macroeconomic trends, or management pursues large debt-funded shareholder returns that increase leverage to the high-3x area. U.S. real GDP growth of 1.9% in 2020 and 1.8% in 2021. We also project U.K. real GDP growth

...Bright Horizons' operating model is better positioned than peers in the event of a U.S. economic slowdown We believe Bright Horizons is better positioned to weather adverse conditions than its peers because it has more employer-sponsored centers than its cohort. The longer-term contractual arrangements, lower startup costs, and stability associated with an employer-sponsored centers provide advantageous positioning compared to retail-based peers. About 75% of Bright Horizons' capacity and revenues come from the U.S., where a prolonged rise in domestic unemployment rates would threaten overall demand for childcare services. We expect S&P Global Ratings' adjusted leverage will improve to around 3x in 2020 from the mid-3x area in 2019. The positive outlook is supported by our projection that leverage will improve to about 3x this year and that the company will keep it below 3.5x over the long term. The credit metrics improvement reflects our expectation of EBITDA growth in the high-single-digit...

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