Ann: Embark market update, page-18

Looks like a bit of life in the stock this morning although it has frustratingly petered out again.

Anyway, these guys spoke last week at the NWR Vantage Point Conference (search YT and ye shall find it). The interesting takeaway for me given where occupancy currently was Chris Scott discussing the "78%" rule. Basically once these guys get to 78% occupancy all their government mandated staff to child ratios are satisfied all the way to full occupancy and consequently most of what they take in revenue above this % falls straight to the EBITDA line.

They've got 2,200 places worth about $33.8k/year each in revenue. The FY22 results averaged 80% occupancy in Australia. Interestingly, in the presentation CS described the frustrating problem they have had of enough demand to fill centres, but not enough staff – that has abated now that the labour issues are resolving; Demand is growing at 5% while supply is growing at 2%.

You don't need to be Einstein to figure out the change in EBITDA for a given level of occupancy. If they can lift occupancy to 90% then there's probably an extra $7m give or take in EBITDA.

The point is these childcare centres are like airlines. Once they can get occupancy in the sweet spot then they can really ream cash.

Just some thoughts.