Barnes & Noble Education Inc (BNED) 2017 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Barnes & Noble Education Fourth Quarter and Full Year 2017 Earnings Conference Call. Today's call is being recorded.

At this time, I'd like to turn the conference over to Mr. Thomas Donohue. Please go ahead, sir.

Thank you. Good morning, and welcome to our fourth quarter and full fiscal year ended April 29, 2017, earnings call. Joining us today are Max Roberts, our CEO; Patrick Maloney, President of Barnes & Noble College; Barry Brover, CFO; Kanuj Malhotra, Chief Operating Officer, Digital Education; 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 contents of this call are for the property of Barnes & Noble Education and are not for rebroadcast or use by any other party without written consent from Barnes & Noble Education.

During this call, we'll 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.

I'd also like to tell you that following the completion of our acquisition of MBS, we are reporting 2 segments: Barnes & Noble College Booksellers, LLC, or BNC; and MBS Textbook Exchange, LLC, or MBS. And our fourth quarter and full year results include the 9 weeks of MBS results between the acquisition date of February 27, 2017 and our fiscal year end. Prior to the acquisition, BNC was our only reportable segment. At this time, I'll turn the call over to Max Roberts.

Thanks, Tom. Good morning, everyone, and thank you for joining us. On today's call, I will provide a summary of our results, our high-level view of the higher education marketplace and the strategic and competitive initiatives we executed this past year to strengthen Barnes & Noble Education and enhance our ability to deliver solutions designed to help our partner institutions achieve student success.

Finally, I will review our fiscal 2018 outlook. After that, Barry will discuss our fiscal 2017 fourth quarter and full year results in more detail.

In fiscal 2017, we made solid progress in many areas, increasing sales by approximately 2% at BNC, continuing to sign new business and growing our market share. For the full year, adjusted EBITDA, excluding the 9 weeks of MBS's results, was $82.5 million, an increase of $2 million over fiscal 2016. We also made excellent strides in new business wins for fiscal 2017. Along with MBS, we now have a complete solution to provide schools with physical, virtual, hybrid physical-virtual bookstore solutions. We have received an enthusiastic response from the marketplace regarding our product and service offerings.

At BNC, during fiscal 2017, we signed new contracts with estimated annual sales of $118 million, representing 38 new physical stores while only closing 20 physical stores, bringing our total store locations to 769. MBS Direct, our virtual bookstore solution, has demonstrated solid performance, signing 80 new contracts representing $17 million in estimated revenue in fiscal 2017. We now operate almost 1,500 physical and virtual bookstores serving over 6 million students in higher ed and K-12. This momentum has continued into physical -- fiscal 2018, as the current pipeline for new business remains strong. In fiscal 2018 so far, we have been awarded new contracts with estimated annual sales of $50 million for BNC and $8 million of estimated annual sales for MBS Direct. We are remaining competitive, and we're winning in the marketplace.

In fiscal 2017, we significantly enhanced our digital services and content platforms. Our agreement with Unizin, a consortium of 22 leading universities, allows us to bring our predictive analytic solutions to a wide audience of advisers and faculty, both in and out of the BNC footprint. And it also strengthens our position as a significant player in driving student success and outcomes.

This year, we also launched our Courseware product, a digital solution built on a foundation of Open Education Resources or OER and is enhanced with content such as quizzes, videos and self-assessments for students along with analytics tools that allow faculty to monitor student performance. Today's students require more advanced, multi-formatted methods of learning. And since acquiring LoudCloud in 2016, we've continued to cultivate our digital platform to meet these needs.

Higher education is in the midst of significant change with increasing focus on student affordability and success, while at the same time, experiencing enrollment decreases. As a result, many of the major publishers are more aggressively shifting from physical to digital options, reducing prices, pursuing direct-to-consumer models and piloting rental programs for new editions.

MBS is a supply-driven business and is dependent upon an adequate supply of new and used books. In the past, publishers have traditionally sold new books to MBS to be resold to MBS customers. In 2017 and continuing into fiscal 2018, the major publishers have refrained from making these sales. In addition, for the first time since 2008, our general merchandise sales were impacted with unfavorable trends similar to other clothing and general merchandise retailers. Of course, such significant change is also accompanied by great opportunity. And in response to these near-term trends, our strategy is to: one, continue to work with our campus partners to increase student success and outcomes by embracing all publisher content, including publisher-hosted digital content, digital on platform content and traditional print textbooks, while at the same time, enforcing our channel exclusivity and working to eliminate counterfeit or unauthorized content. Two, we're going to continue to aggressively grow our physical and virtual bookstore locations to expand our sales opportunities. Three, we're going to grow our digital educational services and digital content businesses through LoudCloud using our analytics and OER capabilities, leveraging these solutions through our existing client footprint and other strategic partnerships. Four, we're going to grow our general merchandise sales via web and mobile sales, including Promoversity and our True Spirit athletic and alumni websites and further maximize in-store promotions and events. Five, we will pursue opportunistic acquisitions and partnerships, as we did with MBS, to either grow our student base or enhance or complement our digital or other product offers -- offerings. Six, we're going to aggressively manage our cost structure by allocating capital and expense spending using a disciplined process based on the best use and return. And, seven, integrate MBS to achieve the benefits and the synergies of this important acquisition.

Let me speak just a few moments on these strategies in more detail. Sales and rental of printed textbooks remain a core driver of revenue. Printed textbooks are still the format of choice for most students and we continue to focus on new ways to improve the profitability of our textbook business. We're also improving our competitive response in our core business by accelerating our online marketplace programs and competitive pricing. With our acquisition of MBS, students and faculty now have unprecedented access to the largest inventory of low-cost course materials, creating maximum savings for our students.

We have worked and will continue to work with our publishers as we deliver on our goal of providing student access to authentic, affordable options for their textbooks and course materials. We also are best positioned to provide legitimate content for our partners. We continue to drive our digital strategy and our plans to grow our digital education services and digital content businesses. Through the transformative and tactical development, our LoudCloud platform provides schools with analytics, OER courseware and competency-based learning solutions. We provide one package, one solution on one platform. We're now a delivery channel and also a content creator, and we're moving quickly and effectively to scale our business in this very fragmented market. While the evolution toward digital solutions has been slower than some originally anticipated, we saw an increasing shift toward a broader adoption of digital solutions in fiscal 2017 and have derived significant benefits from the timing of our LoudCloud acquisition in 2016. Our agreement with Unizin establishes -- enables us to provide a best-in-class analytic solution to a wide audience of advisers and faculty.

Now moving on to our higher-margin general merchandise. We are focusing on growing the sales via web and mobile channel and maximizing in-store promotions and events. In addition to the many products and service we offer our campus partners, another important aspect of our business is our ability to partner with schools to promote their brands, therefore -- thereby strengthening relationships with faculty, alumni, parents and students. True Spirit, our alum and athletic focused e-commerce sites along with Promoversity are great examples of this effort. We have implemented True Spirit websites for 61 schools, extending our reach directly to alumni and athletics fans and also creating additional sales, branding and marketing opportunities for us and also our partners. We plan to launch True Spirit sites for another 30 schools in 2018. Through Promoversity, we can more quickly and efficiently personalize our vast GM assortment to meet the needs of all students, faculty, alumni and fans.

We will continue to creatively adjust our general merchandise strategies to meet the ever-changing needs of our customer offer -- of our customers, offering them the most convenient and personalized shopping experience using the shopping channel that they choose.

Another key aspect of our strategy, which we have focused on since becoming a public company, is our pursuit of strategic transactions to complement and strengthen our core and digital businesses. The recent acquisitions of LoudCloud, Promoversity and MBS are examples of our ongoing commitment to enhance our core digital services content and student services business.

Finally, as we execute these initiatives, we remain extremely focused on expense management. As Barry will detail in a few minutes, we have made significant process -- progress in 2017 and will continue to drive efficiencies at the individual store level as well as at our corporate offices as we look to tailor our expense structure to respond to our sales outlook. We completed the MBS acquisition in February and have completed the first step in the integration of this strategic asset into BNED. We are now focusing on optimizing inventory and increasing margins both at our college stores and MBS.

In fiscal 2017, we laid the foundation to achieve the strategy in fiscal 2018. For fiscal 2018, all areas of our combined company will focus on our ability to help our partner institutions achieve student success while continuing to strengthen Barnes & Noble Education.

As we look ahead, it's clear that community college enrollments run countercyclical to employment outlook. Consistent with National Student Clearinghouse projections, we believe there will be short-term fluctuations, and overall enrollments, particularly at community colleges, may continue to decrease over the next 12 months. We recognize and are adapting to these short-term challenges. But the value of higher education over the long term is still widely acknowledged as positive, and our mission is to help improve the quality and affordability of the education partners that we serve.

Before I turn the call over to Barry, I would like to take a moment to discuss our outlook for fiscal 2018. We're comfortable with and we'll continue to give annual guidance on sales, comp sales and CapEx. We are not giving guidance on EBITDA or adjusted EBITDA at this time. While we believe the near-term trends for higher education remains strong, there are important industry trends that impact our ability to provide guidance in the short term.

They are: one, enrollment trends, especially in community colleges; two, continued performance reactions from the publishing community, including the pricing of textbooks, (inaudible) rental programs, content creation like OER and digital conversion by students as well as diminished wholesale supply from publishers to MBS; three, it's a general confusion by students as to the type and quantity of content to purchase. And with respect to investment opportunities in support of our strategy, it remains our objective to pursue opportunities that are accretive to earnings and EBITDA. However, we may encounter good long-term opportunities that are not immediately accretive to BNED. And finally, we anticipate a lack of improvement in general retail trends in the near term. Therefore, we have and for the time being decided not to provide EBITDA outlook.

It is a pivotal time in the industry with unprecedented uncertainty and change. We have and will continue to position our company as a leading provider of content and educational services for our campus partners and students.

In conclusion, we remain very competitive as evidenced by the new business that we are winning both in our core business and also with respect to new services such as analytics, OER and other services aimed at student affordability and improved outcomes. These market wins are the best validation of our relevance and strategies.

With that, I would like to turn it over to Barry for the detailed financial review.

Thank you, Max, and good morning. Please note, in my remarks this morning, all comparisons will be to the fourth quarter of fiscal 2016 unless otherwise noted.

Total sales for the quarter were $342.8 million, an increase of $48 million or 16.3%. Total sales for the full fiscal year were $1.87 billion compared with $1.81 billion from the prior fiscal year, an increase of $66.4 million or 3.7%. The quarter and the full year includes $34.1 million of sales from MBS for the last 2 months of the year. For the full year, we realized incremental sales of $109.5 million from new stores, partially offset by a decrease in sales related to closed stores of $23.8 million and a comparable store sales decline of $50.6 million.

In addition, our service revenue, which includes revenue from Promoversity and LoudCloud along with our brand partnership income, increased by $5.8 million compared with last year, as we further derive revenue from outside our footprint and monetize our customer base. Comparable store sales increased 1.4% for the quarter and decreased 3% for the fiscal year. Textbook revenue increased for the quarter $2.9 million in comparable stores, primarily due to the later spring rushes. For the full year, comparable store textbook sales decreased 4% or $46.1 million.

For the quarter, our general merchandise sales in comparable stores increased over the prior year by $0.6 million or 0.5%. Including new stores, our general merchandise sales for the quarter were $135.5 million and $571 million for the full fiscal year and continues to be an increasing percentage of our sales, which generates higher gross margins. Our rental income for the quarter was $76.7 million, an increase of 2.3% compared with the prior year. For the full year, rental income was $235.4 million, an increase of 3.1% when compared with the prior fiscal year.

Rental income continues to be a very important part of our value proposition to our students and contributes higher margins. We continue to maintain our strong list of approximately 80% of course-required materials available for rent at competitive pricing and a large percentage of our rentals by used textbooks, which generates our highest margin as many of these textbooks were previously rented.

Gross profit for the quarter was $122.5 million, an increase of $16.5 million or 15.5% due to higher sales and approximately $4.7 million of gross profit from MBS. Gross margin was 35.7%, down 30 basis points with the prior year. The gross margin for the full year was 24.4%, down 70 basis points from the prior year. The decrease in gross margin was impacted by the low-margin rate at MBS, which is the result of the fixed warehouse and operating cost during the seasonally low sales period. In addition, BNC had increased markdowns on textbooks, lower rental margins and higher costs related to college and university contracts, partially offset by improved shrink results and a favorable sales mix.

Selling and administrative expenses increased $9.7 million or 11.1% to $96.9 million for the fourth quarter. For the fourth quarter, selling and administrative expenses were 28.3% of sales compared with 29.6% of sales in the prior year. $8.3 million of the increase relates to S&A expenses associated with MBS. Excluding MBS, BNC S&A expenses continued to decrease as a percentage of sales as a result of continued expense rationalization and leveraging the higher sales. For the full fiscal year, selling and administrative expenses increased by $6.3 million or 1.7% to $379.1 million. The increase was due to expenses for MBS. Excluding MBS, BNC S&A expenses continued to decrease in absolute dollars and as a percentage of sales, as digital and comp store payroll and expense savings offset the incremental S&A expenses associated with new stores. Digital expenses including Yuzu and expenses associated with LoudCloud decreased by $11.2 million for the full fiscal year due to the digital restructuring and lower cost structure associated with the digital restructuring that occurred in Q4 last year.

During the fourth quarter, we recorded transaction costs of $7 million primarily related to the MBS acquisition. The full year transaction costs are $9.6 million. Our adjusted EBITDA was $25.6 million for the quarter, an increase of $6.8 million compared to the prior year. For BNC, adjusted EBITDA was $29.8 million for the quarter, an increase of $11 million from the prior year. Adjusted EBITDA for MBS for the quarter was a loss of $3.6 million. The fourth quarter for MBS is the seasonally lowest sales quarter as they build inventory for the fall back-to-school selling season. For the full year, adjusted EBITDA was $78.3 million, a decrease of $2.2 million from the prior year, with BNC contributing $82.5 million, while MBS had a loss of $3.6 million.

The effective tax rate for the fiscal year was 46.9% compared with 96.9% in the prior year and reflects the impact of certain nondeductible expenses, principally nondeductible compensation expense, partially offset by state net operating losses, benefiting the company as a result of the spend as well as certain income tax credits.

Fourth quarter net income was $0.2 million or $0.00 per diluted share compared to a net loss of $2.8 million or $0.06 per diluted share in the prior year period. Non-GAAP adjusted earnings was $4.5 million compared to non-GAAP adjusted earnings of $3 million in the prior year period. Full year net income was $5.4 million or $0.11 per diluted share compared with $0.1 million or $0.00 per diluted share in the prior fiscal year. Non-GAAP adjusted earnings was $12.3 million compared with $15.5 million in the prior fiscal year.

The current year's fiscal quarter has 46.9 million diluted shares outstanding, while the prior year has 47.2 million diluted shares outstanding. Our cash balance at the end of the year was $19 million. In addition, we had outstanding borrowings of $159.6 million, which includes $100 million under the [FILO]. The increased borrowings as compared to last year was a direct result of the acquisition of MBS. We continue to have sufficient availability under our credit facility and expect borrowings during fiscal 2018 to peak at approximately $250 million and be fully repaid during the fiscal year.

For the full fiscal year, cash flow from operations was $68 million, a $15.1 million decrease as compared to the prior year, primarily related to the inclusion of the MBS operating activities, changes in working capital and changes in deferred tax balances. Merchandise inventories increased by $121.3 million as compared to the prior year. MBS added $138.5 million of inventory, while BNC inventory decreased by $16.6 million or 5.3%. During our fiscal fourth and first quarters, MBS builds up its inventory in advance of the peak selling season in Q1.

Accounts payable increased by $40.6 million from $152 million to $192.7 million primarily related to the addition of MBS. Capital expenditures for the fourth quarter were $8.2 million compared with $13.1 million in the prior year period and on a full year basis was $34.7 million compared with $50.8 million last year.

Turning to fiscal 2018 outlook. Currently, based upon contracts signed to date, BNC expects to open 23 stores in fiscal 2018, while closing 13 stores. Included in the closed stores are 5 locations where we will close a satellite location and continue to operate the main store, 2 stores with annual sales below $1 million and 6 stores with average sales below $1.5 million. Annual sales associated with the new stores signed for fiscal 2018 is approximately $50 million, while sales associated with the 2018 store closings is $10 million. This results in $40 million in estimated annual sales for net new stores. MBS has to date signed 46 virtual contracts for an additional $8 million of estimated annual sales in 2018.

For fiscal 2018, the company expects sales at BNC to be relatively flat, while BNC comparable store sales are expected to decline in the low to mid-single-digit percentage point range year-over-year. In addition, the company expects consolidated sales to be in the range of $2.25 billion to $2.35 billion before intercompany eliminations. Capital expenditures are expected to be approximately $50 million, an increase from fiscal 2017, primarily due to the new store growth at BNC.

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

(Operator Instructions) And we will hear from Mark Rosenkranz with Craig-Hallum Capital Group.

Starting off, now you've had 9 weeks under the hood at MBS, just wondering if you could talk a little more on some of the inventory optimization and procurement savings you discussed in the last call. Just where you kind of see the opportunities throughout fiscal '18?

Sure. Thanks for your question, Mark. Good to talk to you again. We've already started, as a matter of fact, at -- on this -- at the end of the fiscal year to maximize the inventory by transferring excess inventory that we had at the college businesses and the MBS to be liquidated. Patrick and his team, and Dave have spent a tremendous amount of time going through the process of how we can best liquidate the inventories and also achieve optimal purchasing. And it's in the early stages, and we expect it to be maximized throughout fiscal 2018. It has already started and helped us with this fiscal year. Patrick, you want to add anything on that?

Sure, Max. Mark, I couldn't be more happy with the way that the 2 management teams have blended and are working together. Everything has been extremely positive with their interactions, as we expected. It would be, because of our long-term relationship with management teams. In addition to the inventory that Max spoke about, we're also focused on increased new business for both companies, expanding our product offerings across all of these different formats that we serve as well as monetizing our customer base further. So -- and we are looking to expand the use of the MBS warehouse and distribution center to benefit the Barnes & Noble College stores.

Okay. Great. That's helpful. And then kind of switching gears to the general merchandise, how much would you say the pressure you've been seeing recently have been related to kind of changing consumer behavior versus some of the enrollment trends you've been seeing? And just kind of going forward in '18, how much kind of comprises the mix in terms of your expectation?

Great question. I'll talk a little bit about our general sales trend. As you noticed, for the year we were $50 million down. Without the community colleges, it would have been $23 million. And for the first time since 2008, we had a decrease in general merchandise sales and consequently that was $14 million. So our sales and profitability would've dramatically changed for the general merchandise if the general merchandise were to remain stable. I believe it's a combination of obviously there is less -- there are less students in higher ed and that is a definite trend that is supported. What is also interesting is the decrease in enrollments, both in community colleges and many of the private schools and other schools are in full-time based students as opposed to part-time based. And that significantly, A, affects the number of transactions after register along with the student possibly being -- spending greater amount of time on the campus. So it is a level of traffic decrease. And there is clearly apathy by the consumer across all retail channels, general merchandise channels, both traditional stores and other formats in clothing and general merchandise. So it's a combination of both. It's hard to determine because our transactions, obviously, are down because of enrollments, but we're being very aggressive. We're -- our web sales are continuing to grow. We have one of the best omnichannels that exists. We are powering up our social media, our web programs, our marketing programs along with optimization of SEM and SEO. So at the end of the day, we're -- and we'll also be putting in a tremendous amount of events and promotions within the stores. We are not going to sit passively behind. One of the reasons for the guidance is, we will react to this decrease, and we will promote, and we will spend marketing dollars to regain that customer, and it is tied also to the enrollment issues. So we're not passively waiting for the consumer to come back.

And we will continue to Hamed Khorsand with BWS Financial.

First question on the general merchandise inventory line. So that is all -- the increase is all attributable to MBS?

Barry.

Yes. When we're talking about our comp general merchandise sales, it's pure B&C. If your question is on the inventory levels on our balance sheet, the increase in inventory levels is entirely related to MBS as the B&C stores actually experienced a inventory decrease.

Okay. And then you made several references to authentic textbooks, and I'm going to just assume that's related to what Follett was going through or is going through. With that said, and going back to your commentary on MBS and its relationship with publishers, wouldn't that in itself want publishers to sell more to MBS and then have MBS then fulfill more sales to universities and other schools?

It's a great question. We're not going to comment on -- any litigation of the industry or competitors or anything along that line. As you may have listened to a lot of the publishers' earnings calls, they are maximizing their inventories. I think that's had a short-term effect on what they would sell to MBS. And -- but absolutely we believe that, that is an opportunity to source -- from publishers, bring it back to the level. But at the same time, we're reacting very rapidly to this decrease and have other alternatives for sourcing.

Okay. And then related to that, did you know that publishers were reluctant to increase their sales or push sales to MBS before you acquired it?

No. This is -- this happens within the current season, and this is the inventory investment period for MBS and each year it stands on its own and the sources stand on their own. And at the end of the day, next year, we could have excess inventories from publishers, and we may have no inventory from publishers. But the sourcing season was post transaction. We believe that, that -- I want to go back to the MBS. MBS has already been vital to our strategy. I think it's disappointing that the stock price has not reflected the MBS valuation in there, but the company needs a virtual solution. The company needs a lower cost of inventory acquisition and MBS provides those. And as a matter of fact, in the contract managed bookstore industry, there has never been a contract operator that didn't have a wholesale operation and this really completes the portfolio, our competitors have it. And it has more advantages than just the sourcing of inventory and used books. It's a very strategic asset. That quite frankly, I can honestly say we have not received the value we deserve on.

I wouldn't disagree with the undervaluation in the stock price with regards to MBS. One last question though. Going forward, is -- are you not going to provide EBITDA guidance or is that something you're just not going to do for right now?

Harry, this is Barry. We will evaluate it on a quarter-by-quarter basis at this point in time, as we go into our peak selling season with all of the changes in the industry, as Max talked to. We do not think it was appropriate to provide a guidance.

The -- it's very hard to predict enrollments, at 700 admissions -- 759 admission sites throughout the United States. And given the apathy of the retail consumer, as I said the first time since 2008, we've ever seen a decline. It's -- we feel that the investment that we have to make in order to promote sales, the investment that we have to make to -- in our digital businesses, which is growing, and we really believe clearly now that the digital future is both content and analytics and that's a combined process and that will improve outcomes as opposed to just traditional content. And we are fully entrenched in that business through LoudCloud and Kanuj's digital operations. So given all of those factors, it really doesn't makes sense. And compounded also is last year our guidance you would have basically had $80 million -- $90 million. We wound up at $82.5 million. That's a very narrow range to be trying to predict given an industry that has decreases in enrollments, a level of retail question as to whether that side nationwide will turn around. So, basically, we're not giving any guidance until we can stabilize.

Our next question will come from Greg Pendy with Sidoti.

I guess, just 2 quick questions. One, if I'm not mistaken, this year, again, you're cycling sort of a later buying period. So is this becoming the new normal that we should be thinking about when we look out to 2018, where the business is becoming arguably a little bit less seasonal quarter-to-quarter, as you start to see later buying periods in both the spring and fall rush?

This is Barry. This is -- our selling season for rush is really dependent on when the school opens and goes back to class, whether it's the fall or post-Christmas period. So it's going to fall quarter-to-quarter between the second half and the first half. You kind of have to look at it 6 months and 6 months. And that's the best way -- that's the way we manage it, and there is really no predictability as to how the sales will fall.

Okay. That's helpful. And then I guess, just one follow-up and I'm sorry, if I missed it. I know you went into a lot of detail on the SG&A cuts. If I'm not mistaken, the original guidance, as you switched to the lower cost LoudCloud platform, was roughly about $12 million in savings alone. And as we look out to 2018, how should we be thinking about that? Is that something that we're going to go and continue on that run rate? Or do you think that the SG&A as possible other areas?

We certainly have not. As we're not giving EBITDA guidance, we're not in a position to give S&A guidance either. The digital savings that we talked about last fiscal year, we delivered a decrease in expenses this year of $11.2 million as a result of the restructuring. So we're proud of our ability to be able to deliver as we had discussed. We will -- as we will be adding new stores, that will increase our S&A, and we will continue to look at opportunities to better improve our cost structure and better leverage our sales, to be able to take more to the bottom line in this time of changing industry dynamics and lower comp sales.

(Operator Instructions) And with no additional questions in the queue, I'd like to turn the conference back over to Mr. Tom Donohue.

Thank you for joining us today. Please note that our next scheduled financial release will be our fiscal 2018 first quarter earnings in -- which should be on or about September 6. Thank you very much.

Thank you, ladies and gentlemen, again. That does conclude today's conference. Thank you all, again, for your participation.