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KLC, KinderCare Learning Companies Inc.
KinderCare Learning Companies Inc. is a leading private provider of high-quality early education and child care services in the United States.
The market for center-based ECE services is highly fragmented according to Child Care Aware of America.
We are a leader in early childhood education and care across our three consumer-facing brands designed to address key parent demographics: KinderCare Learning Centers (" KCLC ") is a leading provider of community-based early child care and education in the United States.
The business
What it sells, where the money comes from, the kind of company it is.
Next report By 11/12 · the 10-Q for the quarter ended early October · due within 40 days of period end · has filed ~45 days after · the wire records it on arrival
The business in brief
read the 10-K →What this business is and what moves its needle, from its own SEC filings.
- Situation
- Unprofitable. No sustained operating profit across the record; an earnings multiple has nothing to rest on. What the record does show is revenue, the gross-margin trajectory, and the burn against the cash on hand. Distress / turnaround. Thin interest coverage, or operating cash burned against real debt, across the record. The balance sheet carries this situation; the debt schedule sets the clock.
- What moves the needle
- Operating margin has run about 7.0% through the cycle, a thin margin, where volume, cost discipline and the price it gets all bear on the result. The operating margin has swung widely — from −0.7% to 18% over the years — so the through-cycle figure carries more than any single year, and the worst year more than the best. On its own account, the filing leans hardest on concentrated dependence, set against the numbers in what the filing emphasizes, below.
Every line is arithmetic on the company's filings, shown in full in the sections below.
The record
Ten years of arithmetic, read across the cycle.
Revenue down 0.4% year over year; operating income down 96.5%
figures computed from the filing's XBRL
The record, 2022–2025
realized figures from each filing · older years to the left| 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMJul 2026 | |
|---|---|---|---|---|---|
| Income statement | |||||
| $2.2B | $2.5B | $2.7B | $2.7B | $2.7B | RevenueRevenue |
| 11% | 11% | 16% | 11% | 11% | SG&A / revenueSG&A/rev |
| $389M | $275M | $79M | ($20M) | ($407M) | Operating incomeOp. inc. |
| 18.0% | 11.0% | 3.0% | −0.7% | −14.9% | Operating marginOp. mgn |
| $288M | $130M | ($78M) | ($93M) | — | Pretax incomePretax |
| $219M | $103M | ($93M) | ($113M) | ($471M) | Net incomeNet inc. |
| 24% | 21% | — | — | — | Effective tax rateTax rate |
| Cash flow & returns | |||||
| $342M | $304M | $116M | $239M | $210M | Operating cash flowOp. cash |
| $89M | $109M | $118M | $124M | $126M | Depreciation & amortizationD&A |
| $24M | $79M | ($53M) | $216M | $546M | Working capital & otherWC & other |
| $139M | $129M | $132M | $128M | $129M | CapexCapex |
| 6.4% | 5.1% | 5.0% | 4.7% | 4.7% | Capex / revenueCapex/rev |
| $202M | $174M | ($16M) | $110M | $81M | Owner earningsOwner earn. |
| 9.3% | 7.0% | −0.6% | 4.0% | 3.0% | Owner earnings marginOE mgn |
| $202M | $174M | ($16M) | $110M | $81M | Free cash flowFCF |
| 9.3% | 7.0% | −0.6% | 4.0% | 3.0% | Free cash flow marginFCF mgn |
| $158M | $10M | $11M | $23M | $10M | AcquisitionsAcquis. |
| ($300M) | ($118M) | ($147M) | ($154M) | — | Investing cash flowInv. cash |
| ($118M) | ($135M) | ($63M) | ($13M) | — | Financing cash flowFin. cash |
| ($76M) | $51M | ($94M) | $71M | — | Change in cashΔ cash |
| — | 14% | — | — | -26% | ROICROIC |
| 54% | 20% | -11% | — | -101% | Return on equityROE |
| 54% | 20% | −11% | — | −101% | Retained to equityRetained/eq |
| Balance sheet | |||||
| $105M | $156M | $62M | $133M | $174M | Cash & investmentsCash+inv |
| — | $88M | $104M | $119M | $114M | ReceivablesReceiv. |
| — | $51M | $45M | $49M | $52M | Accounts payablePayables |
| — | $37M | $59M | $70M | $62M | Operating working capitalOper. WC |
| — | $283M | $215M | $358M | $342M | Current assetsCur. assets |
| — | $427M | $413M | $485M | $459M | Current liabilitiesCur. liab. |
| — | 0.7× | 0.5× | 0.7× | 0.7× | Current ratioCurr. ratio |
| — | $396M | $419M | $418M | — | Net PP&ENet PP&E |
| $1.1B | $1.1B | $1.1B | $965M | $692M | GoodwillGoodwill |
| — | $3.7B | $3.6B | $3.7B | $3.4B | Total assetsAssets |
| — | $1.3B | $926M | $928M | $926M | Total debtDebt |
| — | $1.1B | $864M | $794M | $752M | Net debt / (cash)Net debt |
| 3.8× | 1.8× | 0.5× | -0.2× | -5.1× | Interest coverageInt. cov. |
| — | $3.1B | $2.8B | $3.0B | — | Total liabilitiesTotal liab. |
| $408M | $507M | $865M | — | $466M | Shareholders’ equityEquity |
| 0.5% | 0.5% | 5.4% | 0.4% | 0.3% | Stock comp / revenueSBC/rev |
| — | — | — | $178M | $451M | Goodwill written downGW imp. |
| Per share | |||||
| 93.5M | 90.4M | 96.3M | 118M | 119M | Shares out (diluted)Shares |
| $23.18 | $27.77 | $27.65 | $23.10 | $23.05 | Revenue / shareRev/sh |
| $2.35 | $1.13 | $-0.96 | $-0.95 | $-3.97 | EPS (diluted)EPS |
| $2.16 | $1.93 | $-0.17 | $0.93 | $0.68 | Owner earnings / shareOE/sh |
| $2.16 | $1.93 | $-0.17 | $0.93 | $0.68 | Free cash flow / shareFCF/sh |
| $1.49 | $1.43 | $1.37 | $1.08 | $1.08 | Cap. spending / shareCapex/sh |
| $4.36 | $5.61 | $8.98 | — | $3.93 | Book value / shareBVPS |
| 3-yr | 5-yr | |
|---|---|---|
| Revenue / share | −0.1%/yr | −0.1%/yr (3-yr) |
| Owner earnings / share | −24.5%/yr | −24.5%/yr (3-yr) |
| Capital spending / share | −10.1%/yr | −10.1%/yr (3-yr) |
| Book value / share | +43.4%/yr (2-yr) | +43.4%/yr (2-yr) |
Where the cash went
ReinvestBuybacksDividendsAcquisitionsRetainedBeyond op. cashEach year's outlays against its operating cash: the mix, and how it drifts. The hatched cap is spending beyond that year's operating cash — financed from the balance sheet or borrowing, not operations.
Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.
In fiscal 2025 the business turned a $113M loss into $110M of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.
| FY2025 | FY2024 | FY2023 | FY2022 | |
|---|---|---|---|---|
| Reported net income | ($113M) | ($93M) | $103M | $219M |
| Depreciation & amortizationnon-cash charge added back | +$124M | +$118M | +$109M | +$89M |
| Stock-based compensationreal costnon-cash, but a real cost | +$12M | +$144M | +$13M | +$10M |
| Working capital & othertiming of cash in and out, other non-cash items | +$216M | −$53M | +$79M | +$24M |
| Cash from operations | $239M | $116M | $304M | $342M |
| Capital expenditurecash put back in to keep running and to grow | −$128M | −$132M | −$129M | −$139M |
| Owner earnings | $110M | ($16M) | $174M | $202M |
| Owner-earnings marginowner earnings ÷ revenue | 4% | -1% | 7% | 9% |
Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $12M), owner earnings is nearer $98M.
Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.
Quality & stewardship
Returns, the balance sheet, capital allocation, and pay.
Owner’s Scorecard
Will it survive?
- Can it pay its interest? -0.2×Does not cover its interestOperating income ($20M) ÷ interest expense $84M
What this means
A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.
- Net debt against an operating lossCash $133M − debt $928M
What this means
Netting $133M of cash and short-term investments against $928M of debt leaves $794M owed, with no operating profit this year to measure it against — understand that combination before anything else about the company. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
- Not enough data
What this means
The filing data didn't include the inputs for this check.
Is it a good business?
- Not enough dataIndustry peers: median 8%
What this means
The filing data didn't include the inputs for this check.
- Solid through the cycle4-yr median margin, range -1%–9%; latest $110M = operating cash $239M − maintenance capex $128MIndustry peers: median 12%
What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 4% of revenue this year, a 5% median across 4 years. Treating stock comp as the real expense it is (less $12M of SBC) leaves $98M.
- Loss, but cash-generativeNet income ($113M) · cash from operations $239M
In the filing’s words And the filing leans heavily on adjusted, non-GAAP earnings — steering you off the GAAP figure just where the cash is not backing it. Read the reconciliation in the notes before taking the adjusted number.
What this means
The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.
How is the cash used?
- Not enough data
What this means
The filing data didn't include the inputs for this check.
- Investing or harvesting? 1.03×MaintainingCapex $128M ÷ depreciation & amortization as filed $124M
What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
The promise and the pay packet
- Is the buyback buying ownership, or mopping up? 0.4%The count is risingStock compensation $12M (fiscal 2025), 0.4% of revenue · no repurchases · diluted shares +26.6% since 2022
What this means
Stock handed to employees is a real cost paid in the owner's own currency: it is charged against profit, but the shares it creates are permanent. Many companies repurchase stock at the same time, which looks like a return of capital and often is not — if the count barely moves, the cash merely cancelled the pay packet and bought the owner nothing. The three states worth telling apart are a count genuinely shrinking, a count standing still despite large repurchases, and a count rising because the issuance was never offset at all.
Graham’s defensive tests · 1 of 3 met
Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.
- Adequate size PassRevenue ≥ $2B · $2.7B
What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity MissCurrent ratio ≥ 2× · 0.74×
What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt MissDebt ≤ working capital · $928M vs ($127M) WC
What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $-0.29/share (latest year $-0.95), the averaged base the calculator's gate runs on. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Durability & moat, 2022–2025
Whether the record’s returns held, and what the capital reinvested earned.
- Profitable years 2 of 4
What this means
Lost money in 2 year(s), look at what happened there before trusting the average.
- Operating margin 14% → 1% (2-yr avg ends)
In the filing’s words The filing attributes gains to higher prices, but the margin in the record has not followed — the claim outruns the result here.
What this means
Through the cycle the operating margin slipped — about 14% early to 1% lately, median 3% — competition or costs are biting in.
- Reinvestment, incremental ROIC returns capital
What this means
The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.
- Owner earnings growth −37%/yr
What this means
Owner earnings shrank about 37% a year over the record.
- Worst year 2025 · −0.7% op. margin
What this means
Operations went underwater in 2025, understand why before trusting the good years.
- Share count +8.2%/yr
What this means
The share count is rising, dilution works against you on a per-share basis.
All figures as filed; the source filing is linked above.
Current Position
as of the latest quarter, Jul 4, 2026Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.
- Cash & short-term investments$174M
- Receivables$114M
- Other current assets$54M
- Debt due within a year$10M
- Accounts payable$175M
- Other current liabilities$275M
From the company's latest filing.
Lease obligations
the lease note, SEC EDGAR →Debt by another name. What the business owes on the property, aircraft, stores and equipment it rents rather than owns is a fixed claim due on a schedule; added back to the debt, it is the true leverage. That ladder, operating and finance leases together, and what it adds to the debt on the page above.
Lease payments by year, scaled to the largest; “later” is everything beyond year five, shown apart. These are the contractual cash payments, before the interest the filing imputes back out to the balance-sheet liability.
True leverage: debt plus leases
Counting the leases the way Buffett does, the fixed claims on this business come to $2.5B, of which the leases are 63%, more than the debt itself. The lease wall above and the debt schedule together are the calendar of what must be paid, and when.
Lease ladder read from the ASC 842 tags in the company’s Jan 3, 2026 annual report and reconciled: the yearly buckets sum to the undiscounted total, which less the imputed interest equals the balance-sheet liability; a ladder that doesn’t tie out is withheld.
How the cash was used, 2022–2025
Over the record, the business generated $1000M of operating cash; how management split it reads as a reinvestor, most operating cash is plowed back into the business.
- Reinvested$529M · 53%
- Buybacks$73M · 7%
- Retained (debt / cash)$398M · 40%
- Returned to owners$73M
15% of the owner earnings the business produced over the span, $0 as dividends and $73M as buybacks.
- Average price paid for buybacks—
Buybacks ran $73M over the span, but the filings don't tag the share count needed to deduce the average price paid.
- Net change in share count27.0%
The diluted count rose from 93M to 119M: issuance (stock pay, deals) outran any buybacks, so owners were diluted on net.
- Dividend record—
No dividend line was reported in the filing data over the span; the record here neither confirms nor rules out a payout.
- Return on what it retained−71%
Of the earnings it kept rather than paid out ($43M over the span), annual owner earnings (first three years vs last three) fell $31M, so each retained $1 gave back about 0.71 of yearly owner earnings. Buffett's test, run on owner earnings instead of market value.
Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.
Acquisitions & goodwill
from the balance sheet & the 4-year cash-flow recordGoodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.
$178M written down across 1 year (2025): goodwill the company has already conceded it overpaid for, charged against earnings. That is roughly 88% of the cash it put into acquisitions over the span. A write-down costs no cash (the cash went out when the deal was signed), but it is management marking its own past judgment to market.
Beside that spending sits $36M of cumulative amortization of acquired intangibles charged against earnings since fiscal 2022 — the purchase price of past deals, expensed over time. The cash figure above counts only cash consideration: goodwill of $965M against it says much of the buying was paid for in stock, which never passes through the cash-flow statement.
Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and amortization summed across the company's full tagged history, write-downs across the 4-year record, from the company's own filings.
Management, ownership & pay
read the proxy →From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.
| Fiscal year | Chief executive | Pay, as filed | “Actually paid” | Net income |
|---|---|---|---|---|
| 2024 | Tom Wyatt | $59.0M | $48.0M | ($93M) |
| 2024 | Tom Wyatt | $21.4M | $17.8M | ($93M) |
| 2026 | Tom Wyatt | $2.5M | $1.6M | — |
| 2026 | Tom Wyatt | $5.3M | $2.7M | — |
Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Net income is the whole business's, as filed, for the same fiscal years.
- Insider ownership5.8%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
- CEO pay ratio283:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
- Stock-based compensation$12M
The slice of the business handed to employees in shares in fiscal 2025, 0.4% of revenue. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
What an owner would ask, FY2026
read the 10-K →- Which reported numbers are a judgment call?Management names Revenue recognition, Income taxes, Insurance reserves as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →
The questions the record and the charts do not answer on their own; each carries the figure and the place to look.
Peers, Education Services
The same industry, side by side on owner economics. Each column names the period it is read over, and a median resting on fewer than three years carries that count beside it; the group median at the foot is the line to read each figure against.
| Company | Revenuelatest FY, USD | Gross marginmedian over the record | Op. marginmedian over the record | ROICmedian over the record | Owner earn. marginmedian over the record |
|---|---|---|---|---|---|
| GHCGraham Holdings Company | $4.9B | — | 4.6% | 3% | 5% |
| EDUNEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC. | $4.9B | 55% | 9.3% | 15% | 23% |
| TALTAL Education Group | $3.0B | 54% | 2.0% | -0% | 18% |
| BFAMBright Horizons Family Solutions Inc. | $2.9B | 24% | 10.0% | 8% | 9% |
| KLCKinderCare Learning Companies Inc. | $2.7B | — | 7.0% | 14%1y | 5% |
| LRNStride Inc. | $2.5B | 35% | 8.1% | 12% | 11% |
| CVSACovista Inc. | $2.0B | 53% | 13.2% | 8% | 16% |
| LAURLaureate Education Inc. | $1.7B | 23% | 7.9% | 6% | 12% |
| Group median | — | — | 8.0% | 8% | 11% |
The price
What a price has to assume.
What the price implies
reverse-DCFType today's close and see the owner-earnings growth you'd have to believe to justify it, beside what KinderCare Learning Companies Inc. has delivered.
Through the cycle, KinderCare Learning Companies Inc. earns about $150M on its 5.5% median owner-earnings margin. This year’s 4.0% margin runs below that; the reported figure may understate a lean year. Normalize, below, values the price on that through-cycle figure rather than the latest year.
—
9.0% = the 4.71% 10-year Treasury (Aug 18, 2026) + 4.29 points of equity premium. The rate you require is yours to set.
Enter a price above to run it.
A dated snapshot of the price you typed, the assumptions you set, and what the page showed for them. A snapshot is never edited after it is saved. Your notebook is yours alone — the commitment states what is stored and what we will never do.
Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.
Prefilled with the 10-year Treasury (4.71%, as of Aug 18, 2026). Edit it for today’s exact figure, or a AAA corporate yield.
Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.
Owner earnings $81M on 119M shares outstanding, per the 10-Q cover, as of 2026-08-11; net debt $752M. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.
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