Good day and welcome to the Barnes & Noble Education First Quarter 2019 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Tom Donohue. Please go ahead, sir..

Thank you. Good morning and welcome to our first quarter fiscal 2019 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 our Safe Harbor disclaimer contained in our press release and public documents.

The contents of this call are the property of Barnes & Noble Education and are 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 maybe made or discussed during this call.

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

Thanks, Tom. Good morning, everyone and thank you for joining us today. We are pleased with the results of our first quarter of fiscal 2019. We have a very seasonal business and the first quarter is a low sales activity quarter relative to our total fiscal year sales of 17% of what we are guiding to for the Europe.

Nonetheless, we are very excited about what has been accomplished from an operational standpoint this quarter. We continue to transform and expand the digital offerings of our BNC and MBS businesses and grow our direct-to-student segment through significant investment in internal product development, content and strategic acquisitions.

Our MBS, Student Brands and LoudCloud acquisitions continue to provide us with the significant synergy, cash flow and talent benefits that we expected when we close these transactions. Importantly, we continue to deliver on our stated company purpose for BNED serving all who work to elevate their lives through education.

This purpose grounds us in all we do strategically and operationally. Higher education continues to transform rapidly. We remained focused on thinking strategically and acting decisively to ensure that we are offering the content, products and services our customers are demanding.

There is nothing more important to us than the students, educators and institutions we serve. By innovating and adapting our unique asset platform to market changes, we are accomplishing our strategy of transforming our BNC and MBS businesses, while simultaneously developing and growing our new [DSS] business.

We believe our strategy is sound and well-understood by our people. Now, we can focus our energy and financial resources on relentless execution. An example of leveraging our unique asset platform to adapt to market changes is our role in the center of the new publisher rental programs.

As we announced earlier this year, we entered into agreements with McGraw-Hill Education and Pearson to distribute their affordable rental programs both in our stores and through our MBS wholesale channel. We are now in the process of successfully implementing these programs in our [fall rush] season.

Our involvement with these rental programs is an example of how we are using our unique asset platform, including MBS’ advanced distribution facility in Missouri and our deep relationships with publishers and more than 3,500 college bookstores to innovate and transact these services.

These programs offer different financial model than MBS’ historical wholesale model. In a publisher rental transaction, we don’t take titles of the books, but rather earn a fee on each book rented. This results in lower average unit revenue, which should optimize margin and cash flow.

Yesterday, we announced an expanded partnership with OpenStax, a leading provider of open educational resources to streamline distribution of their print titles through all MBS channels.

We currently offer OpenStax print content in our BNC stores and have built numerous courses in our LoudCloud courseware content catalog on a foundation of OpenStax’s digital content. Open Educational Resources or OER is growing in popularity among students and the professors who adopt them.

We are proud to play a role in furthering the accessibility of OER in campuses nationwide as part of our ongoing mission to offer more affordable and accessible courseware solutions.

First Day, which is BNC’s inclusive access aggregation distribution platform is another initiative we continued to expand this quarter in response to institutional demand Inclusive access is the solution adopted by faculty for a particular course or by an institution at large.

These models drive down costs for students, ensure that they receive their materials on or before the first day of the class and provide a higher unit sell-through for the company and our publishing partners.

We are pleased to have launched our next generation First Day platform on approximately 100 campuses for selected courses this semester with more to come for the spring.

Within our BNC and MBS segments, we continue to maintain the strength in our central position in aggregating and distributing both physical and digital educational content, which is a critical strategic imperative for both businesses.

Since our acquisition of MBS in February of last year, we have clearly demonstrated the power of BNC and MBS working together and how that synergy optimizes our leadership position in distribution and in institutional and publishing services. Last quarter, we introduced DSS, our new reporting segment.

This offers direct student products and services that help students study and learn more effectively. DSS is the segment devoted to the development execution and marketing digital products focused on student success including Student Brands as well as tutoring and test prep services offered through our partnership with the Princeton Review.

Our DSS team has achieved some very important and exciting accomplishments recently. First, we have begun to experience meaningful revenue synergy opportunities between our Student Brand properties and the BNC store footprint.

StudyMode, a Student Brands product that helps students improve their writing performance was offered through more than 150 BNC e-commerce sites this quarter, allowing students the ability to add a StudyMode subscription to their cart at a point of purchase on their bookstore website.

We are energized by the results of this initial rollout and expect to have this functionality on the majority of our BNC and MBS e-commerce sites for the fall rush period, consistent with our strategy to maximize return on acquisitions in all assets – assets of all BNED properties.

The sale and rental course materials on BNC and MBS websites represent a natural point of attachment to Student Brands writing services and our other digital products.

Leveraging our physical and digital store footprint allows us to grow our base of subscribers very profitably given the low cost of acquisition to our proximity to over 6 million students in our book store operations.

Beginning in the fourth quarter of fiscal 2018, we started to significantly invest in the internal development of digital content, products and services to join the existing offerings in DSS segment.

We broke out DSS into its own segment to allow transparency into the growth and investment in this arena as we fundamentally believe that there is a large addressable market and an opportunity to grow and scale a subscriber base revenue and cash flow.

As we previously stated, we intend to expand both internal – through both internally developed products and strategic acquisitions and partnerships.

Our guidance for full year 2019 includes planned capital expenditures related to both development of our student learning platform and development of proprietary content that we believe we are uniquely positioned to monetize.

The initial market evidence of this investment became a reality last week with the launch of our student learning hub on Bartleby.com and our introduction of Bartleby Textbook Solutions, an internally developed solution that we will discuss further momentarily.

To provide background on the Bartleby hub, Bartleby.com is one of the existing Student Brand assets that has demonstrated tremendous ability to drive user acquisition via SEO, providing a strong foundation for our hub of products and services.

Our new Bartleby.com site is also home to existing services offered through Bartleby Writing in addition to Bartleby Technical Solutions. With a focus on STEM subjects, Bartleby Textbook Solutions complements our high-quality existing Bartleby write services allows us to offer support across the breadth of subjects.

We believe that Bartleby Textbook Solutions will become a significant product offering for DSS. The product provides access to thousands of technical solutions written by subject matter experts.

In giving students step by step explanations to complex problems, Bartleby Textbook Solutions ensures that users not only get the correct answer, but that they also understand how to solve the problem on their own come exam time.

Through our own internal development and our ability to offer proprietary content based on our unique data related to course materials and student demand, we are using this product to be the centerpiece of our student success hub.

Bartleby offers the most affordable quality digital homework and study subscription available to students presently covering 280 titles and derivative franchises across 22 STEM subjects and adding on average over 1,000 solutions per day.

This initial product offering will continue to iterate as we expand the library of proprietary content and solutions. With Bartleby, our aim is to supplement the support the fact that the institutions already provide.

More than half of all faculty appointments are adjunct or part-time and these professors often balance teaching and non-academic professional schedules. Academic resource centers are an invaluable part of every college campus, but they are not accessible on a 24/7 basis, often require appointments and are not always available online.

So, Bartleby fills those gaps and accounts for limited institutional bandwidth. It allows us to provide students with academic assistance on demand available for them whenever and wherever inside or outside our footprint of managed stores in the U.S. or internationally on a lunch break, at work or in their dormitory on the night before an exam.

Bartleby is still in its early stages, but this is a high-quality product that was initially developed in a relatively condensed period of time. We are confident that it will expand significantly with our continued investment and ongoing development efforts to improve its competitive positioning.

For instance in the coming months, we will be expanding students’ ability to ask questions and receive answers to their most important questions about learning concepts and questions. Bartleby exists in a large market of competitors, but very few are scaled and none have unique platform of assets and access to students that we have.

Our proximity to over 6 million students and our managed store footprint and the ability to attach to the sales and rental of course materials coupled with SEO driven user acquisition will serve as strong assets to scale bartleby.com.

As we move past our initial rollout and continued to enhance our capabilities within DSS, we will provide further insight into our expectations of growth and measurements of success for Bartleby.

I also want to say that I could not be more proud of our DSS team for what they have accomplished in a relatively short period of time as well as our entire organization which worked extremely hard to collaborate, prioritize and deliver the initial bartleby.com release on time and on budget.

You may have also seen our press release this morning announcing our acquisition of PaperRater.com. PaperRater is a leading website that offers students a suite of writing services that include a plagiarism checker, writing revision tools and an AI-based auto grading scoring system to help them improve multiple facets of writing.

PaperRater has more than 18 million submissions of English language content adding millions of pieces of new content each year from essays and dissertations to personal narratives and speeches, represents a significant expansion of our digital content library.

PaperRater will further strengthen our existing proprietary content database as well as significantly increase monetization opportunities for the websites we purchased in the Student Brands acquisition last August.

Our goal is to provide services to students throughout the entire writing process and PaperRater allows us to accelerate our plans to provide a triple-play writing service that bundles plagiarism detection, writing revision and essay auto scoring capabilities to our existing and prospective users as we build out our ecosystem of student services.

The operations of PaperRater will become part of the DSS segment and I expect it to be accretive to BNED’s EBITDA, net income and cash flow in fiscal year 2019. We are very excited about this acquisition. We will have more to share on its benefits and synergies in the coming months.

At BNED, we are actively transforming our business to deliver long-term growth and value creation and continue to execute our strategy for change. We are focused both on transforming our BNC and MBS businesses while also investing in proprietary content and development for digital solutions.

We are confident that our growing digital capabilities will create significant value for our shareholders going forward. We are excited and optimistic about what we have accomplished thus far in fiscal 2019 and look forward to keeping you updated. I will now turn it over to Barry for the financial review..

Thank you, Mike. Please note that the first quarter ended on July 28, 2018 and consisted of 13 weeks. All comparisons will be to the first quarter of fiscal 2018 unless otherwise noted. Effective with the fourth quarter of fiscal 2018, we have commenced reporting for our three segments BNC, MBS and DSS.

In addition, unallocated shared service costs will be reported in corporate services, which includes corporate level expenses and other governance and executive functions including areas such as accounting, treasury and legal.

As part of our fiscal 2018 year end release, we provide historical quarterly data for each segment for fiscal year ‘18 and fiscal year ‘17. As Mike noted earlier BNED is a highly seasonal business and our first quarter has historically been a period of low sales.

Total sales for the quarter were $337.5 million compared with $355.7 million from the prior year.

This decrease of $18.2 million or 5% was primarily driven by a $4.8 million decrease at the BNC segment, a $9.5 million decrease from the MBS segment and a larger elimination of $9.6 million reflecting increased sales for MBS to BNC and anticipation of the fall rush, partially offset by $5.7 million from the DSS segment.

Comparable store sales at BNC decreased by 2.2% in the quarter which is consistent with the prior year period. Again, historically the first quarter is the lowest sales quarter to BNC. Comparable store textbook sales for the quarter decreased by 5% compared to a prior year decrease of 7.9%.

While unit sales trends improved as compared with the prior year period, lower average selling prices of course materials driven by lower publisher prices resulting from a shift to lower cost and more affordable solution continued in the summer sessions.

General merchandise comparable store sales for the quarter increased by 1% compared with 3.3% increase in the prior year as strong graduation and computer product sales exceeded the declines in school supply and convenience product sales.

Net sales for MBS in the first quarter were $130.3 million compared with $139.8 million in the prior year period and decreased by $9.5 million or 6.8%. MBS Wholesale net sales were $88.4 million and decreased by $4.1 million or 4.4%. MBS Wholesale gross sales increased as compared to the prior year but was offset by increased returns reserves.

MBS direct sales were $41.9 million and decreased by $5.4 million or 11.4%. This decrease was primarily attributable to the timing of our shipments for fall rush. The second quarter is the second largest quarter for MBS direct.

In addition, sales for the quarter were impacted by lower sales at K-12 accounts and sales decreases related to closed stores, partially offset by sales increases in higher Ed and new store sales.

DSS sales were $5.7 million in the quarter reflecting the operating results of Student Brands, which generate sales through subscriptions to its digital properties. There are no comparisons for last year as Student Brands was acquired in the second quarter of last fiscal year.

Our rental income for the quarter was $19.6 million, a decrease of $1.1 million or 5.3%. The rental revenue is impacted by the increase in digital products and the lower prices of course materials. Gross margins increased by 2.2% to $66.6 million or 19.7% of sales in the quarter improving by 140 basis points compared with the prior year period.

The improved margin rate for the quarter reflects the addition of Student Brands in the DSS segment, which generates high margins. The margin at BNC for the quarter was 20.1% or 40 basis points higher than the previous year.

This increase was primarily attributable to a favorable sales mix and higher margins as a result of lower markdowns partially offset by higher costs related to contracts. The gross margin rate at MBS was 20.5% in the first quarter compared with 19.7% in the prior period.

Excluding these, incremental cost of sales of $2.2 million for the fair value adjustment related to the acquisition, the gross margin rate for last year was actually 21.3%. The margin decrease is due to an unfavorable sales mix at MBS Direct with a shift in sales from physical to digital products partially offset by higher margins at MBS Wholesale.

The gross margin rate for DSS was 97.8% for the first quarter driven by the high margin Student Brands subscription revenue earned. As a reminder, operating costs for Student Brands are recorded in selling and administrative expenses.

Selling and administrative expenses in the first quarter decreased by $0.8 million or 0.8% compared with the prior year period.

The decreases at BNC 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 $0.2 million or 1.8% driven by lower advertising and professional services.

Corporate services decreased by $0.9 million or 14.4% as a result of lower bonus expenses and insurance expenses. DSS selling and administrative expenses of $2.8 million includes costs related to Student Brands as well as ongoing costs with developing new DSS properties and products, including our digital offerings.

Interest expense was $3.5 million for the quarter compared to $3 million in the prior year. The increase is primarily the result of higher average borrowings due to the acquisitions of Student Brands. The effective tax rate for the fiscal first quarter was 26.6% compared with 40.6% in the prior year period.

The decrease in the tax rate is the result of the U.S. Tax Reform Act and the lower tax rate results in a lower benefit in the first quarter, which is a loss. The fiscal first quarter loss was $38.6 million or $0.82 per diluted share compared with a loss of $34.8 million or $0.75 per diluted share in the prior year period.

The adjusted EBITDA was flat at $32.5 million for the quarter as compared with the prior year period. BNC adjusted EBITDA for the quarter was negative $29.7 million, an improvement of $2.3 million compared with the prior year period.

Higher gross margins and decreases in selling and administrative expenses exceeded the impact of the comparable store sales decline. MBS adjusted EBITDA for the quarter was $14.9 million, a decline of $2.9 million compared with the prior year period.

This decrease was primarily driven by lower sales and lower gross margins, partially offset by lower selling and administrative expenses. DSS adjusted EBITDA for the quarter was $2.8 million reflecting the earnings of Student Brands and partially offset by the development of the company’s new Bartleby product which was recently launched.

Corporate services adjusted EBITDA was negative $5.5 million, an improvement of $0.9 million as compared to the prior year period as a result of the previously discussed expense reductions.

With gross profit eliminations of $15 million was $3.4 million higher compared with the prior year period due to an increase in each our segment sales from MBS to BNC.

Important to know and consistent with prior years, we expect such profit will be recognized in the second quarter as BNC sales through the inventory that was purchased from MBS and was on hand at BNC at the end of the first quarter.

Our cash balance at the end of the quarter was $13.3 million and we had $230.2 million in outstanding borrowings, an increase of $10.1 million. The lower cash and higher borrowings compared with last year are the result of the Student Brands acquisition partially offset by the positive cash flow generated from operations.

In fiscal year ‘19 we continue to expect the average debt to be approximately $135 million with peak borrowings of approximately $250 million, which would be fully repaid after the fall rush and with additional borrowings until the end of the fiscal year a similar pattern to fiscal year of 2018.

At the end of the quarter inventory decreased by $40.8 million compared to last year. The lower inventory levels are primarily at BNC and comprised of improvements in textbook purchasing as well as timing of receipts for back-to-school. Accounts payable at the end of the quarter decreased by $47.8 million compared with last year.

The decrease is due to the lower purchases and inventory levels along with the timing of vendor payments. CapEx for the first quarter was $8.2 million compared with $7.9 million in the prior year. The increase from the prior year is the result of the investments in digital content within DSS, partially offset by decreases within both BNC and MBS.

Cash flows from operating activities improved by $28.9 million as compared with the prior year period, primarily due to the improvements in working capital. Currently our BNC store count is 753, having opened 13 new stores and closed 28 in the quarter.

As of today, we have signed contracts to open an additional 23 stores in fiscal year ‘19, bringing our total new stores to 36 locations with $57 million in estimated annual sales, while we have additional known closings of only one store at this time.

Included in the closings for the fiscal year, our four stores that will be moving to an MBS Direct virtual store, this was one of the synergies as part of the acquisition that we have discussed. Our MBS Direct store count is 684 having signed 17 while closing nine during the fiscal quarter.

For fiscal 2019 as of today, MBS has contracts to add nine additional new stores with estimated annual sales of $1.2 million with no known closings. This results in total projected new stores for fiscal 2019 of 26 locations with $7.8 million in estimated annual sales.

Turning to our fiscal 2019 outlook, our guidance remains unchanged from our June 20 Investor Call and our expectations are that consolidated sales will be in the range of $2.2 billion to $2.3 billion before inter-company eliminations.

This guidance reflects the expected comparable store sales decline at BNC to be in the mid single-digit percentage point range year-over-year.

The company expects consolidated fiscal year 2019 adjusted EBITDA to be relatively comparable to fiscal year 2018 in a range of $110 million to $125 million, reflecting the expected comparable store sales decline at BNC and increased cost associated with developing new DSS and other digital offerings.

Capital expenditures are projected to be approximately $60 million, increasing over fiscal year 2018 primarily due to our anticipated investments in digital content required to offer new planned DSS product offerings. With that, we will open the call to questions. Operator, please provide the instructions for those interested in asking a question..

Thank you. [Operator Instructions] We will take our first question from Alex Fuhrman with Craig-Hallum..

Great. Thank you very much for taking my question. I wanted to ask about the potential growth of the DSS segment here. It sounds like you mentioned in your prepared remarks that you are starting to see a lot of synergies of rolling out some of these Student Brands products across some of the campuses where you have a presence on the BNC side.

Can you talk a little bit about what specifically you are doing to drive that revenue growth? Is it marketing the digital assets in your physical bookstores? And then curious how you see PaperRater fitting into that now that you have made that acquisition as well?.

Hey Alex, it’s Kanuj. So primarily, we started with a small test that we increased over the course of the summer. It was primarily using our commerce sites and really presenting the StudyMode writing services product merchandised in the cart when students are looking they have the ability to search across all the websites and see it, their banner ads.

So, it’s really primarily initially been just online over the summer. As we are rolling through the fall, it’s sort of a more multimedia approach where it’s both going to be in-store as well as on the commerce sites.

PaperRater we think it’s just – our research, our product focused groups have shown there is a strong need for plagiarism detection and writing revision as well as the auto scoring, which allows us to really get a lot of content, which we can publish on the websites, which monetizes in the form of more subscriptions, but we are very excited about PaperRater.

We think it really rounds out a suite of services, so we can help students work across different points of the writing journey and we would envision marketing in similar fashions through the websites and online..

Great, that’s really helpful. Thanks..

Sorry, one other point, Alex, I would point out that we have actually bought the site from the owners of 123HelpMe.

So, we have an experience with having worked with them before, understanding the quality of content that they have which we were able to increase the monetization rates post purchase on the order of multiples, in the order of 2 to 4 times what they saw.

So, we are very excited about it for multiple reasons, not the least of which is our prior experience with the owner and the sorts of businesses he had built..

Great. That’s really helpful. Thank you.

And then if I could just ask as we are kind of getting into the fall rush season on a lot of campuses, do you have a sense of what you are expecting from the fall semester and what type of textbook level of buying you have purchased to here in the fall semester?.

It’s really we are just starting, Alex, this is Patrick, by the way, we are just really starting the fall rush season and it’s just way too early to tell. But we will be monitoring it closely and we are ready for this.

Our first day growth has been significant year-over-year, that’s our inclusive access platform, which is growing in popularity with schools across the country. We are on approximately 100 campuses this fall.

We will see those sales come through in Q2 once we settle all the accounts with the students that go into the LMS and receive their learning materials on the very first day of class. So we are very, very excited about the progress that we made there..

Great, thank you very much..

Thank you. We will take our next question from Greg Pendy..

Hi guys. Thanks for taking my question.

Just I guess one real quick one on, I know it’s not seasonally important, but I think last year you said there were less courses offered in the summer, was that similar this year just for year-over-year comparison?.

Greg, this is Patrick. We haven’t broken down all of the data yet from the summer. But my guess would be, yes it was probably fewer courses again as schools look to reduce their expenses at this time of the year. So I would expect it would, but we haven’t gone through and done an analysis of it yet..

Okay.

And then just one more, last quarter you kind of mentioned the competitive environment for the bidding process, is there any kind of update or thoughts since then just how you think the competitive overall environment is on new contracts?.

Greg, what we have done is we have fully analyzed every one of the contracts that we were not successful in either winning or we lost the school. We have completed all that. We are looking at everything that we do in marketing ourselves, we feel very confident in the future.

We have had a good year so far a new business which was up from last year’s signings at this point in time. So we are confident about it and we are looking and analyzing what happened where we [were at] last year. And moving forward we are very confident that we can continue to grow our footprint..

One of the other comments Greg, this is Mike is that we are trying through MBS Direct and other means that we will disclose later trying to give our competitive position as many arrows to shoot as possible in terms of alternatives for customers, potential partners whether they want to be in-store virtual or hybrid or there are some other emerging platforms.

So we are – we have got the bases covered now by virtue of the primarily the MBS acquisition with MBS Direct, but also looking at other ways to partner and acquire assets that we have a full capability of all the different models that are out there right now..

Okay, that’s helpful. Thanks a lot..

Thank you. We will take our next question from Michael Schechter [ph]..

Good morning, Mike.

Given the proxy drop last night of the level of stock have you given any thoughts you buying back stock to offset the dilution from compensation, RSUs and options?.

Yes. As you know, our stock price is volatile being our trade is on very, very low volumes as you saw this morning when it opened some of the headline. Actually one of the headlines was picked up wrong by one of the other big services, I am saying that’s why it dropped. But yes, we consider that all the time as you know we have done it in the past.

I think we do currently as a Board we view the potential for valuation increase and impact on stock price, the investment in our DSS and other digital services, BNC and MBS is the better use of capital at the moment.

You're asking me to react to I guess the stock price dropped this morning, but the stock went up last few weeks, it goes up and goes down on very low volume.

And to be honest we are more concerned with what we are doing with the assets that we have because we think if you look at what we are doing in terms of investing to create value it’s probably a better use of our capital.

I mean what you are asking is whether we want to take the company private, I think because that would be the ultimate stock buyback. Otherwise, we are not going to have much of it.

You would have to buyback a lot of stock to have any impact on the stock price, I mean that’s been our experience thus far having done it under an authorization that we had 2 years ago that we acted upon.

So yes, of course, we will consider it, it’s a matter for the Board and we have a Board meeting, regularly scheduled Board meeting end of September, we will consider then if not before again..

I think you have misunderstood a little bit, I was just talking about offsetting the dilution from option issuance given where the stock price is?.

Well, we don’t have any options per se, we have in terms of stock compensation are you talking about?.

Yes, I mean the RSUs and stock and other forms of stock..

Yes.

What we have tried to do there during stock buyback is that I don’t know if you read – did you read the proxy yet?.

I did..

Okay. What you will see is that we have actually reduced the burn rate substantially from the prior year. We had some of our NEOs give up contractual rights that they had for stock this year in order to make that happen.

So, that was at the suggestion at the behest of our compensation committee that and very diligently looking at the question of what is the burn rate relative to our peers and Mike, what do we need to issue in terms of stock to keep our talent and also attract talent as we are trying to transform the company in a very complex environment.

It’s not easy to attract talented people that have digital skills and digital transformation skills if you don’t give them some equity interest in the company.

And our peer burn rate is what it is, but it’s lower than some of the highers and it’s higher than some of the lowers, but it’s been dealt with by our comp committee in a matter that they feel comfortable with which they would be happy to discuss with you directly if you want to contact them..

I will take it offline..

Okay..

Thank you. [Operator Instructions] At this time, we have no further questions. I will turn it back to Mr. Donohue for closing remarks..

Thank you and thank you for joining our call today. Our next scheduled financial release will be our fiscal 2019 second quarter earnings, which will be on or about December 6. Thank you..

Thank you. Ladies and gentlemen, this concludes today’s conference. You may now disconnect..