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Barnes & Noble Education Inc  (BNED 152.67%)
Q2 2019 Earnings Conference Call
Dec. 04, 2018, 10:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Good morning. My name is Adam, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Barnes & Noble Education Second Quarter 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. And after the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. Tom Donohue, Senior Vice President, Treasurer and Investor Relations, you may begin your conference.

Thomas Donohue -- Senior Vice President, Treasurer and Investor Relations

Thank you, and good morning and welcome to our second quarter fiscal 2018 earnings call. Joining us today are Mike Huseby, Chairman and CEO; Patrick Maloney, President of Barnes & Noble College; Barry Brover, CFO; and Kanuj Malhotra, President of Digital Student Solutions, as well as other members of our senior management team.

Before we begin, I would remind you that the statements we will make on today's call are covered by the Safe Harbor disclaimer contained in our press release and public documents. The content of this call is for the property of Barnes & Noble Education and they're not for rebroadcast or use by any other party without prior written consent of Barnes & Noble Education.

During this call, we will be making forward-looking statements with predictions, projections and other statements about future events. These statements are based upon current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release and public filings with the Securities and Exchange Commission. The company disclaims any obligation to update any forward-looking statements that may be made or discussed during this call.

At this time, I'll turn the call over to Mike Huseby.

Michael Huseby -- Chairman and Chief Executive Officer

Thanks, Tom. Good morning, everyone, and thanks for joining us today. In our second quarter, our seasonally largest sales quarter, we saw the pace of higher ed industry change accelerating. In order to maintain our position as a leader in serving our institutional customers, while simultaneously developing high value direct to student offerings, BNED's transformational pace is also accelerating as it must.

We have built a solid foundation for this transformation and we're adding to it each day. We acquired and are successfully integrating MBS to expand our capabilities and offerings including unique virtual distribution capabilities. Student Brands, LoudCloud and PaperRater, other important acquisitions provide us with a platform with people to deliver and develop advanced digital services and products.

These units, linked to BNC's unique distribution platform of millions of students, faculty and alumni, give us the unique opportunity to scale our new digital offerings. Evidence of our shift to digital offerings by all our segments is underscored by our results for the quarter. Despite declines in revenue, we're beginning to see increasing and broader acceptance of our digital and other new services and products in all of our segments.

The level of change our company has been through since just last year when we purchased MBS is truly profound. From the time of our spin-off from Barnes & Noble in 2015 through the end of fiscal year 2017, virtually a 100% of our revenue and adjusted EBITDA came from our BNC bookstore management contracts.

The impact of both our acquisitions and the development of DSS offerings has created a more diversified BNED with substantial growth opportunities. Before intercompany eliminations in corporate expenses, BNC currently accounts for approximately 78% of revenue and 51% of adjusted EBITDA, MBS accounts for approximately 21% of revenue and 44% of adjusted EBITDA, and DSS accounts for approximately 1% of revenue and 5% of adjusted EBITDA.

Two years from now, fiscal 2021, we expect those relative financial contributions to shift substantially. Assuming no incremental acquisition results in a relative stabilization of our core business, we expect our higher margin DSS business to generate approximately 25% of adjusted EBITDA, while still contributing only about 5% of consolidated revenue.

In order to achieve our vision of being a market leader in either the first or second largest provider of any service we offer, we will continue to adapt and invest in people, process and technology to accelerate the pace of our digital initiatives. We are also taking actions to improve our sales effectiveness and to aggressively manage our cost structure to achieve the proper balance of short-term profitability and liquidity objectives with our longer-term strategy centered on digital and e-commerce growth and growing our managed physical and virtual store footprint.

Last quarter, we announced the soft launch of our student learning hub on Bartleby.com, which features existing services offered through Bartleby Writing as well as a new internally developed product Bartleby Textbook Solutions. Our initial Bartleby product development was accomplished in a relatively condensed period of time and is still nascent. All of us that are involved with Bartleby are very positive about its daily progress and longer term potential to add value to our customers and our company. Each day, we are significantly expanding the number of solutions we offer.

For the upcoming spring semester, we expect to have one million Bartleby Textbook Solutions available. We continue to expand and enhance the Bartleby product, adding new titles and adding functionality, such as Expert Q&A. This coming spring semester, which includes seasonally heavy January selling season, we will be broad selling Bartleby Textbook Solutions at point of purchase in our stores in addition to cross promoting Bartleby through our e-commerce sites, leveraging our access to students, while they are purchasing their course materials.

This quarter, we also completed the previously announced acquisition of PaperRater, which added millions of pieces of content to our growing content library, from essays and dissertation to personal narratives and speeches. Our goal is to provide services to students throughout the entire writing process. PaperRater allows us to accelerate those plans by providing plagiarism detection, writing revision tools, and an AI-based autograde scoring system to help students improve their writing skills.

In our Barnes & Noble College segment, second quarter comp store sales declined 5.6%, primarily due to a decrease of 8.1% in textbook sales. The lower textbook sales reflect decreasing enrollments as well as higher-than-expected declines in average sales prices of course materials. Approximately, 50% of our comparable textbook sales decline relates to lower average published reports material prices, resulting from a shift to lower cost more affordable solutions.

We recognize the importance of shifting to meet the growing demand for more affordable digital courseware. Inclusive Access programs, including our own First Day platform, are being offered and adopted at an increasing rate. Our close relationships with our campus partners and the deep integration we have established with their systems gives us a unique advantage in delivering digital content using the Inclusive Access model. Such delivery model migrations take time for more widespread adoption, but the relative economics for customers, publishers and BNED are very compelling. With the higher sell-through rates of these models, we expect our sales to students enrolled in the courses to rise over -- to over 90% as compared to 35% on average today. These increased sell-through expectations have been confirmed by the Inclusive Access adoptions we have implemented thus far. This quarter, sales through our First Day Inclusive Access platform increased by over 80% as compared to the prior year.

Another significant factor contributing to the BNC sales decrease was the impact of net new store sales lost. The revenue loss from our previously disclosed 28 store closings was greater than sales from the new stores signed by approximately $15 million.

As discussed, during our fourth quarter 2018 earnings call, we experienced a more aggressive competitive market in fiscal year 2018 for certain large contract renewals. In response, we have refreshed our positioning, our go-to-market approach, and sharpened our focus on how we communicate our strengths and advanced capabilities to both existing and potential new campus partners. While we will not chase new business opportunities that clearly create untenable economic returns, we will fight even harder and with more effective messaging tools to retain existing campus partners and earn new profitable business.

Importantly, we have recently and significantly expanded our ability to customize the bookstore management solutions we offer. For example, at the University of Michigan in Ann Arbor where we operate a central campus bookstore and a north campus bookstore, MBS's virtual distribution capabilities allowed us to continue course material fulfillment on the central campus store underwent renovation. For the next 18 months, all Ann Arbor students will order textbooks online through their dedicated BNC branded virtual book store and MBS will fulfill the orders through its advanced, highly automated warehouse.

At the North Campus Bookstore, we will sell all general merchandise products and act as a course material pickup location. That's a seamless solution that ensure the needs of both the students and the university -- administration on that. Because of the automated warehouse and virtual store capabilities we acquired through MBS, we can now offer customized and flexible store management fulfillment options to any existing or future customer.

In our MBS segment, total sales were $119 million for the quarter, a decrease of $15.9 million as compared to the prior year. These results were below our expectations, primarily due to two factors. First was a lower publisher rental penetration than anticipated. The rollout was slowed by publishers' offerings of lower priced loose-leaf and other options to meet the needs of independent and other non-BNC stores, we could not fully implement rental for the first semester of launch. Nonetheless, we remain positive about the role MBS is playing as a publisher -- rental distributor and continue to aggressively push the timelines to ensure we are fulfilling our role as the most relevant service provider in the industry.

Again, this program has a different financial model than MBS's store wholesale model. The publisher retains title to the books and we earn a fee on each book rented. This results in lower reported revenue, but we'll optimize margin and cash flow as MBS never hesitate titles to the inventory.

The second factor to the lower sales at MBS Wholesale was overall lower net sales of traditional wholesale products impacted by higher return reserves. Barry will provide further detail on this in a few moments.

We're pleased with the improvements in gross margins and net income we posted despite the quarterly revenue shortfall versus our expectations. We remain confident in the value MBS brings to this company, including providing BNC with the ability to liquidate non-returnable textbook inventory at higher margins; and in a critical virtual bookstore capabilities, MBS contributes to our solution suite.

Through MBS, we've also strengthened relationships with key content providers, such as OpenStax. As previously reported this fall, MBS provide (technical difficulties) store partners. This expanded agreement is in line with BNED's ongoing mission to provide affordable, accessible course materials for students nationwide, including our own LoudCloud courseware, which was built on a foundation of open educational resources, including OpenStax.

Both our physical and virtual bookstores play a vital role in helping to grow and scale our DSS segment. In the coming months, we will continue to enhance our DSS offerings and implement more aggressive marketing campaigns both in and outside of our store footprint. As our DSS offerings improve with additional content and learnings, we will invest accordingly in the marketing and sales efforts necessary to increase awareness and positive customer engagement.

We are confident that we will be able to effectively leverage our relationships with our campus partners and the more than six million students we've served through our BNC and MBS bookstores.

An important element of our vision is to provide more value to the campus partners we served by working with them to design high value First Day bundles that include not only tuition basic courseware, but also our proprietary or other sponsored digital learning products. We believe we can help our campus partners provide a truly compelling price value proposition, that is better and more affordable than what is being offered today.

Moving forward, we remain focused on managing the BNC and MBS business for margin and cash flow as they evolve their products and business models, including transitioning to more integrated digital solutions.

At the end of the quarter, BNED had approximately $20 million in cash and no debt. Net cash improved by approximately $40 million year-over-year, demonstrating strong free cash flow generation. We will continue to invest in both capital and expense resources to develop and scale our digital capabilities for both the DSS and core businesses. We have refreshed and implemented our new marketing strategies, and both BNC and MBS are focused on delivering more positive renewal and new business outcomes in the spring semester.

While revenue from our core business is below our expectations for the fall rush, it only confirms our strategy and operating imperatives of moving to digital delivery as rapidly as we can. We are making critical investments in people and systems as we move higher percentage of our offerings to digital, including our core e-commerce business, courseware and direct to student study tools. These solutions will allow us to attract new customers and retain existing ones.

As a management team, we will allocate capital and manage our cost structure to balance the objectives of maintaining an acceptable level of short-term profitability and cash flow with our long-term growth objectives, which require investment ahead of the related revenue generation in returns. It's important to understand that we are in the midst of such an investment cycle to sustain the competitive relevance and growth of this company. We have a strong grasp by the industry trends and are taking the appropriate actions to improve our ability to service the market where it's headed.

We're excited about all has been accomplished in the first half of fiscal 2019, and look forward to continue development and digital oriented growth in the second half of the year. I'd now turn it over to Barry for the financial review.

Barry Brover -- Executive Vice President and Chief Financial Officer

Thank you, Mike. Please note that the second quarter ended on October 27, 2018, and consisted of 13 weeks. All comparisons will be to the second quarter of fiscal 2018, unless otherwise noted.

Total sales for the quarter were $814.8 million compared with $886.9 million from the prior year. This decrease of $72.1 million, or 8.1%, was comprised of $54.1 million decrease from the BNC segment, a $15.9 million decrease from the MBS segment, and a higher elimination of intercompany sales of $2.2 million, reflecting increased sales from MBS to BNC, partially offset by an increase of $24 million from the DSS segment.

Comparable store sales at BNC decreased by 5.6% for the quarter as compared to a 4.4% decline in the prior year period. Comparable store textbook sales for the quarter decreased by 8.1% as compared to a prior year decrease of 5%.

Textbook sales continued to be impacted by the lower average selling prices of course materials, enrollment declines specifically at community colleges and student purchases from publishers directly and other online providers.

General merchandise comparable store sales for the quarter increased by 1.8% compared with a 1.9% decrease in the prior year, driven by the strong growth of graduation products, computer and supply products, and improvements in cafe and convenience product sales trends.

Net sales for MBS in the first quarter were $119 million compared with $134.9 million in the prior year period, a decrease of $15.9 million or 11.8%.

MBS's Wholesale net sales were $37.9 million, a decrease of $9.6 million or 20.2%. MBS Wholesale sales decreased as compared to the prior year period due to lower net sales impacted by higher returns reserves. With the fall wholesale selling season, the largest portion of which occurred in the first quarter, gross sales declined by approximately 1%, but due to higher returns reserves, net sales declined by $13.7 million or 9.8%.

Due to changes in inventory allocations, sales to non-BNC stores declined, while sales to BNC stores increased. BNC stores typically have a higher returns than non-BNC stores, which often have returned limitations.

Historically, approximately 80% of the textbooks returned in the fall are resold immediately in the spring with the majority resold in the summer for the following fall. As such, we expect to resell the majority of the books that were returned in fiscal year '19. We've made changes to the allocation of books for this selling season in order to maximize our net sales.

MBS Direct Sales were $81.1 million, a decrease of $6.3 million or 7.2%. The decrease was primarily attributable to lower comparable store sales and the impact of closed stores net of new store signed.

DSS sales were $4.9 million in the quarter compared with $4.5 million in the prior year period. These sales reflect the operating results of Student Brands, which generate sales through subscriptions through its digital properties. The integration into BNC and MBS stores contributed to the 10% increase in sales. The consolidated gross margin rate increased to 25.9% of sales in the quarter, improving by 130 basis points compared with the prior year period, excluding last year's impact of the purchase accounting adjustments related to the MBS acquisition.

The improved margin for the quarter reflects the addition of Student Brands in the DSS segment, which generates high margins. The BNC margin rates improved with a favorable sales mix and the continued benefits of being able to liquidate non-returnable inventory through MBS, partially offset by higher occupancy costs. The MBS margin rates improved with higher margins at wholesale due to a lower cost of supply, partially offset by lower margins at MBS Direct, impacted by a shift from physical to digital products.

Selling and administrative expenses in the second quarter were flat compared with the prior year period. The decreases at BNC of $1.4 million or 1.5% were primarily the result of decreases in comp store payroll and operating expenses, a decrease in net new store payroll and operating expenses, and a decrease in infrastructure costs, including LoudCloud digital operations.

MBS expenses decreased by $1 million or 7.5%, driven by lower payroll and operating expenses.

Corporate services increased by $1.3 million as a result of higher payroll and stock comp expenses and professional expenses.

Last year, in Q2, selling and administrative expenses included one-time benefits related to the CEO transition.

In DSS, selling and administrative expenses of $3.4 million, increased by $1.2 million, primarily due to ongoing costs associated with the development of Bartleby Textbook Solutions, as well as costs related to Student Brands and other digital offerings. We continue to rationalize our expenses in our BNC and MBS businesses as we look to invest in the DSS products and services.

The effective tax rate for the fiscal second quarter was 22.1% compared with 40.6% in the prior year period. In the quarter, we continue to recognize additional benefits related to the US Tax Reform Act.

The fiscal second quarter net income was $59.7 million or $1.25 per diluted share compared with net income of $48.4 million or $1.03 per diluted share in the prior year period. The adjusted EBITDA was $95.4 million for the quarter, a decrease of $7 million as compared with the prior year period. As expected, EBITDA benefited from the profit realized from the sales eliminations from the first quarter as BNC either sold or returned the majority of the inventory purchase from MBS.

Our cash balance at the end of the quarter was $20 million. There were no outstanding borrowings compared with $41.8 million in outstanding borrowings last year. The higher cash and lower borrowings compared with last year are the result of the increased cash flow generated from operations.

In fiscal 2019, we expect average debt to be approximately $150 million with peak borrowings were approximately $250 million (ph). We expect additional borrowings between now and the end of the fiscal year a similar pattern to fiscal 2018.

CapEx for the second quarter was $14.9 million compared with $14.5 million in the prior year. The increase from the prior year is the result of investments in digital content within DSS and an investment at MBS partially offset a decreases at BNC.

Currently, our BNC store count is 773, having opened 21 new stores while closing 1 in the quarter. As of today, we have signed contracts to open an additional 2 stores in fiscal year 2019, bringing our total new stores to 36 locations with $57 million in estimated annual sales, while we have one additional known (ph) store closing.

Our MBS store count is 677, having signed 9, while closing 16 during the fiscal quarter. For fiscal 2019, as of today, MBS has contracts to add five additional new stores with no closings. This results in total projected new stores for MBS in fiscal '19 of 31 locations with $9.4 million in estimated annual sales.

Turning to our fiscal 2019 outlook. For fiscal 2019, we expect consolidated sales to be in the range of $2.2 billion to $2.3 billion before intercompany eliminations and consolidated adjusted EBITDA to be in the range of $110 million to $125 million. The current outlook is expected to be at the low-end of those ranges. Capital expenditures are expected to be approximately $50 million, $10 million lower than the previously disclosed outlook and increasing over fiscal 2018, primarily due to investments in digital content required to develop and offer new DSS products.

With that, we will open the call for questions. Operator, please provide the instructions for those interested in asking a question.

Questions and Answers:


Certainly. (Operator Instructions) And we do have our first question already from Mark Rosenkranz from Craig Hallum. Mark, your line is open.

Mark Rosenkranz -- Craig-Hallum Capital Group -- Analyst

Hey. Good morning, everyone. Thanks for taking my questions.

Michael Huseby -- Chairman and Chief Executive Officer

Good morning, Mark.

Barry Brover -- Executive Vice President and Chief Financial Officer

Good morning, Mark.

Mark Rosenkranz -- Craig-Hallum Capital Group -- Analyst

Good morning. In the quarter, you had a couple of larger initiatives launched between the First Day Initiative and the first quarter with Bartleby. Just wondering if you could give a little more color on some of the interactions you've seen with students with regards for the semester? Any learnings on how things have gone on the Bartleby side in terms of how they've been studying through the semester and just how the First Day customers, have you seen any differences between this year and last year and typical customers that are not on the First Day program?

Michael Huseby -- Chairman and Chief Executive Officer

This is Mike Hughes, Mark. I think, first off, Bartleby is, as you said, with soft launch was launched kind of in the middle of a rush to front-end, but really it's a developing product and I think it's a kind of early to share any kind of detail, feedback on that. I think that, like I said in the comments, we're encouraged by it, but I think we disclosed we have about 250 titles that we ingested into part of the fall. We haven't put any real marketing dollars behind it and we're being careful about that until we have the product that we feel is at a level that we want, but the money behind it to really to blast it out there. So there's not a lot to say about -- Kanuj is here, Mr. Malhotra, who is heading DSS, you can comment on what we're seeing in terms of learnings, but it's very, very early.

Kanuj Malhotra -- Executive Vice President, Corporate Development and President, Digital Student Solutions

Yeah. I think that's right Mark. Only additional comment I'd say, I would make -- as we track initial user engagement and it's been very positive. There's a lot of time spent on site by the students and they are very deeply invested in the content that we do have. What Mike said were, we're looking forward to expand the additional capabilities as well as Q&A, which we'll have in spring. So we're very excited about what it's going to be.

Michael Huseby -- Chairman and Chief Executive Officer

I'll let Patrick talk about Inclusive Access.

Patrick Maloney -- Executive Vice President, Operations and President, Barnes & Noble College

Yes, Mark. It's Patrick. We had a significant growth, very large growth in our First Day Initiatives, which is our platform for Inclusive Access. We're approximately 100 campuses for the fourth semester. We increased our sales over the previous quarter by -- last year's quarter by over 80% and the feedback has been extremely positive from the students to faculties in the institutions. We've developed very strong relationship with the major publishing partners in supplying their content and we look to continue to grow that in the spring semester with more schools joining the program. So very positive, continuing to see more than 90% sell-through through the program, meaning that 90% of the students are getting the materials and we could do follow through their tuition or built post program to their accounts, a very positive results.

Mark Rosenkranz -- Craig-Hallum Capital Group -- Analyst

Okay, great. That's very helpful. Thank you. And then just a shorter housekeeping question. The net impact to EBITDA for the first half of the year from intercompany eliminations was about a $2 million loss for Q1 and Q2, do you expect that to come back in the second half year?

Barry Brover -- Executive Vice President and Chief Financial Officer

Yeah, Mark, this is Barry. That's really just a function of the movement of inventory and how much inventory that BNC retained at the end of the quarter, but there's is a continuous ebb and flow of the inventory, where BNC will ultimately will turn back the unsold inventory to MBS, which will work through that elimination.

Mark Rosenkranz -- Craig-Hallum Capital Group -- Analyst

Okay, great. Thanks for taking my questions, and good luck going into the holidays and next semester.

Barry Brover -- Executive Vice President and Chief Financial Officer

Thank you.

Michael Huseby -- Chairman and Chief Executive Officer

Thank you.


And your next question comes from Greg Pendy of Sidoti. Greg, your line is open.

Greg Pendy -- Sidoti & Company -- Analyst

Hi, guys. Thanks for taking my questions. Just wanted to zero-in a little bit on the DDS. I guess the longer-term growth target you mentioned around 25% of EBITDA, I just kind of wanted to understand what were the thoughts behind that? I mean the division kind of grew around 10%, I guess, year-over-year in the quarter, and then just I'm assuming, do you expect as you're putting in more services in DDS for those margins to sort of maintain what you're getting out of Student Brands?

Michael Huseby -- Chairman and Chief Executive Officer

This is Mike, yeah, definitely -- DSS is being designed as a SaaS type margin business and right now the only thing that's in student in DSS are Student Brands and generally saying there really aren't revenue in terms of the company and on then the development costs behind the development of Bartleby, which is a direct to student product. But as I said in my comments, we don't view DSS in isolation, we view DSS as also being a supplier into bundle for the institutional offerings, it's something we obviously need to get going on and start testing, but we can't really do that effectively until we have a quality of product, which means that we have to adjust more content, which is why the CapEx guidelines are where they are this year, they are a little higher than they were last year. So just from a context perspective, Greg, looking at DSS in where the growth will come from in two years, we're not assuming that's coming from any acquisitions, we're assuming that's coming from the growth of what we are developing now, in other words, Bartleby and Bartleby Writing, which is in essence Student Brands product augmented by the acquisition of PaperRater.

So that's all occurred within the last -- less than nine months to a year and it requires patience, both on our part, which we don't have a lot of and obviously investors have even less of, but it's trying to pay a picture over that. This company is changing, it's not changing overnight, it's changing very, very rapidly though and profound changes and that as it relates to your question in DSS, that revenue contribution on a relative basis isn't going to change much, but the EBITDA is going to change substantially as we start to scale the DSS product, both by selling inside the footprint, outside the footprint and then starting to bundle it on such a seasonal basis that the scale of this success will really start, I think, become apparent in the next fiscal year, fiscal year next fall, which sounds like a long way off, but it really isn't, we're starting to plan for that right after the spring wash ends in February.

Greg Pendy -- Sidoti & Company -- Analyst

Okay. That's helpful. And then I guess just from a subscribers in the Student Brands existing platform, are you starting to see -- I think, when you acquainted it had a lot of non-US subscribers, maybe in Latin America, are you starting to see as your marketing it toward your college campus is the mix of US increasing?

Patrick Maloney -- Executive Vice President, Operations and President, Barnes & Noble College

Yes, it's definitely increasing. What we said, we launched it in the spring primarily online, but going forward we're going to be marketing both Student Brands and Bartleby in-store as well as through our e-commerce channel. So it's definitely seen for the Student Brands products and increase -- the early results were very encouraging, this past rush (ph) and we're very excited about the spring and our ability to penetrate in the millions of students we serve, also we are very comfortable about the fundamental demand for students needing help with writing and the writing training, so we think the confluence of those Brands lends itself very well to continued subscriber growth as we go forward.

Greg Pendy -- Sidoti & Company -- Analyst

Okay. That's helpful. And then I guess just one final one, I assume the guidance where you are putting tax this year, is it still -- I think it was 28% for the year?

Barry Brover -- Executive Vice President and Chief Financial Officer

Yeah. This is Barry. Greg, it will probably be a little lower with the discrete items that we picked up and the benefits that we picked up in the quarter.

Greg Pendy -- Sidoti & Company -- Analyst

Okay. All right. That's helpful. Thanks a lot.


(Operator Instructions) And we have no further questions at this time, so I'll turn the call back over to Mr. Donohue.

Thomas Donohue -- Senior Vice President, Treasurer and Investor Relations

Thank you, and thank you for joining today's call. Please note that our next scheduled financial release will be our fiscal 2019 third quarter earnings, which will be on or about March 6th. Thank you.


And this does conclude today's conference call. You may now disconnect.

Duration: 36 minutes

Call participants:

Thomas Donohue -- Senior Vice President, Treasurer and Investor Relations

Michael Huseby -- Chairman and Chief Executive Officer

Barry Brover -- Executive Vice President and Chief Financial Officer

Mark Rosenkranz -- Craig-Hallum Capital Group -- Analyst

Kanuj Malhotra -- Executive Vice President, Corporate Development and President, Digital Student Solutions

Patrick Maloney -- Executive Vice President, Operations and President, Barnes & Noble College

Greg Pendy -- Sidoti & Company -- Analyst

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