Good day, and welcome to the Barnes & Noble Education's Fourth Quarter 2016 Earning Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Thomas Donohue. Please go ahead, sir.

Good morning, and welcome to our fourth quarter and full fiscal year 2016 earnings call. Joining us today are Max Roberts, CEO; Patrick Maloney, President of Barnes & Noble College; Barry Brover, CFO; and Kanuj Malhotra, Chief Operating Officer of Digital Education, as well as other members of our senior management team. Before we begin, I'd remind you that the statements we 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 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 may be made or discussed during this call. At the time, I'll turn the call over to Max Roberts.

Good morning and thank you for joining us today. As we reported this morning, our fourth quarter sales were approximately 295 million, an increase of almost 21 million or 7.6% over the prior period and a net loss of 2.8 million. Our fourth quarter adjusted EBITDA was 19 million, an increase of 5.9 million over the prior year. For fiscal 2016, sales were in excess of 1.8 billion representing 2% growth and adjusted EBITDA was 80.5 million. We made excellent progress in fiscal 2016. We signed 64 million of new business from 39 new stores bringing our total store locations to 751. We have continued this momentum into the fiscal year 2017 and the current pipeline for new business remains strong. In fiscal 2017, we’ve been awarded a large amount of new business in the first 60 days of this year and expect to open 32 new stores representing approximately an additional $110 million of new business. These new accounts include universities such as Georgetown, UConn, UNC Chapel Hill and they represent a record season for new store contracts awarded. Overall, higher education is extremely focused on increasing student recruitment, retention, success, and outcomes. As a result, colleges and universities are transforming their social and academic experiences. This is more than just replacing a portion of their physical course materials with digital textbooks. Schools need, expect, and require complete solutions that will empower their students and faculty and drive success in and outside of the classroom. Our acquisition of LoudCloud together with our 751 stores puts us in a unique position to help in this transformation by providing integrated solutions with print and digital products to the faculty, students and schools we serve. Sales in rental of printed textbooks remain a core driver of revenue for us. Printed textbooks are…

Thank you, Max, and good morning. Please note in my remarks this morning all comparisons will be to the fourth quarter of fiscal 2015 unless otherwise noted. Total sales for the quarter were 294.8 million, an increase of 20.8 million or 7.6%. Total sales for the full fiscal year were 1.81 billion compared with 1.77 billion from the prior fiscal year, an increase of 35 million or 2%. This increase is reflective of $77 million of sales from new stores partially offset by closed stores of 9.4 million and a comparable store sales decline of 31.7 million. As Max said, comparable store sales increased 4.5% for the quarter and decreased 1.9% for the fiscal year. For the quarter, textbook revenues increased 5.4 million in comparable stores primarily due to the later spring rushes. For the full year, comparable textbook sales decreased 3.8% or $43.9 million. For the quarter, our general merchandise sales in comparable stores increased over the prior period by 3.5 million or 2.9%. Including new stores, our general merchandise sales for the quarter were $125 million and $541 million for the full fiscal year. There continued to be an increasing percentage of our sales and generate high gross margins. Our rental income for the quarter was $75 million relatively flat with the prior year. For the full year, rental income was 228.4 million, again relatively flat 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 high margins that continued to increase. We continue to maintain our strong list of approximately 80% of course required titles available for rent at competitive pricing and a large percentage of our rentals are used textbooks, which generates our highest margin as many of these books were…

Thank you. [Operator Instructions]. We’ll take our first question from Mark Rosenkranz with Craig-Hallum Capital Group.

Hi. Great. Thanks for taking my questions and congrats on a really nice fourth quarter and full year '16.

Thank you.

I just want to start off, talking about the store openings, you say you're opening 32 and closing 12 on the year. What kind of sense are we getting in terms of timing on those? Is that more first half weighted, or could you just discuss some more on the timing on those stores?

The vast majority of the stores – the 32 stores would be opened prior to the fiscal rush, so we will get a large percentage of the annual sales. And the 12 closings, a number of which as you've heard in the past are primarily satellites and remote locations, those closings will happen, again, prior to the fall rush or as we speak.

We've had a great year. The schools are seeing the innovative solutions for the stores. They're seeing different products and opportunities they have with Promoversity, True Spirit, The Glossary to bring a localized event to their campus. And it's been one of our best years ever.

Okay, great. Thanks. That’s helpful. Switching gears talking about the guidance, the 2% to 4% sales growth and the comp growth down 2% to flat, could you just discuss a little more of what kind of assumption you make in that? You mentioned the community colleges are seeing kind of similar environment for next 12 to 24 months. How about full year? Could you maybe just talk about the kind of assumptions going into those guidance terms?

Yes, we haven’t provided guidance overall by type of school but as Max alluded to in his remarks, we would expect some volatility and continued softness in enrollment in community colleges. And we will continue to drive and look for sales opportunities to grow in the sector of schools outside of community colleges.

You saw last year that a small amount of decrease that we had in the other schools. Overall, the significance was in the community colleges. We have plans to grow our sales. We believe the publisher platform digital content will provide us a lift in sales. We see services that we can offer through the LoudCloud and at the same time provide new accounts and new business on the top line basis. But we are managing the business on an expense basis to be prepared for the community college enrollment and we overall believe that we’ll have a lift in EBITDA and continue to manage the business around this one to two circumstance.

Okay, great. Last question from me, I was wondering if you could just talk a little more about the Promoversity. It seems like it's kind of a natural extension of the business. How wide range will that be in terms of – will that be in most stores or could you just discuss little more about kind of what you saw there and what opportunity do you see --?

First of all, one of the reasons we’ve had a great year is because we operate the business on a local campus basis. We’ve build the brand of the universities that we serve and we created an affinity for that school through events and also through services and product that we offer. Promoversity is perfect. It builds the school’s brand. It gives the school the ability to have a localized opportunity for promotional merchandise and also it ties very well in with our True Spirit, which continues to build the brand with alumni and athletics.

Yes, it’s important to note that Promoversity has been a partner of ours for several years. It’s a very well-known company to us and operates on most of our campuses today providing that customized logo material for different clubs and societies on the campuses that we serve. And by acquiring them we’re going to be able to really ramp up their ability to supply all of our campuses through promoting – the type of promoting their services to all of our schools that we serve.

We’re currently on 200 campuses.

Okay, great. Well, thanks for taking my questions and congrats on a really nice quarter and year.

Thank you.

Thank you.

We’ll take our next question from Greg Pendy [ph] with Sidoti.

Hi, guys. Thanks for taking my call. Just wondering, can you give a little bit of color, maybe I missed it, but on the price matching strategy that you guys pilot tested. We learned about it last quarter. I think you rolled it out on about 11% of the campuses and you mentioned that you're going to take measured approach. Any color on how that's been going and how we should think about that over next year?

Yes, we were on 90 campuses and rolling out to 400. I'll let Patrick talk a little about the mechanics of it.

Right. It's too early to measure it. We're very early into the year. Some of the schools have become increasingly a smaller part of our annual sales. But the program is up in our stores; most of our stores and we will be actively matching Amazon and Barnes & Noble.com in like product in our stores. And from our test of the 90 schools, we are looking to have positive results and increases in margin and unit sales over the prior year in stores that we're promoting this in. It really gives our customers the confidence to go ahead and pick up the book. The price match is good through the first week of classes, so all the books that we'll be taking orders for through our Web sites over the summer months, students can shop with us with confidence, knowing that if they come in the first week of school and pick up their order and they can find a better price on Amazon.com from their retail side, this does not pertain into the marketplace pricing that both Barnes & Noble.com and Amazon operate. This is from product that is sold by and shipped from Amazon or Barnes & Noble.com.

A lot of the marketplace is previous editions and very deeply discounted. We're not matching it and our test results where we lifted overall sales volume in the stores that we tested it in and improving gross margin dollars. That's why we’re continuing to roll it out. We will watch it very, very closely to make sure that those two things continue to occur.

Okay, great. That's helpful. And then can you just – one last question. Can you just give us a little color on LoudCloud and what the opportunities that might be? I think it’s been mentioned that maybe in the K through 12 and also in the for-profit colleges, how that kind of looks and is that something that would be – we could think about in the next year or two or is that further down the road?

Yes. First of all, I’ll let Kanuj talk a little bit about the rollout and the opportunities, but first of all it has been very, very important in our new account acquisition strategy this year. For example, we have the community college at Ocean County, New Jersey. That was very important in their decision to go with us. We see it as almost table stakes in operating college book stores and that was a lot of resin [ph] behind the acquisition. Schools are looking for solutions and recruitment retention and outcomes of students and that platform provides that, and that was part of the rationale.

Yes, our primary focus is to introduce it to our existing customers as well as Max said in new account acquisitions. So I think primarily our focus is on higher ed. Opportunistically and selectively, we are in continuing discussions with a lot of the for-profit sector, especially in the for-profits where tension is a key driver of profitability and our analytic solution weighs up well against that need. K-12 is more opportunistic by nature but I think there is so much opportunity in our existing footprint and other schools that we don’t serve in higher ed and that’s where we’re focusing most of our time. And we’ve spent a lot of time introducing it to our existing accounts and rolling it through systematically all our regions and territories.

Okay, great. That’s helpful. Thank you.

[Operator Instructions]. It appears there are no further questions at this time. Mr. Donohue, I’d like to turn the conference back over to you for any additional closing remarks.

Thank you. Thank you for joining today’s call. Please note that our next scheduled financial release will be our fiscal 2017 first quarter earnings call on or about September 8. Thank you and have a good day.

That does conclude today’s conference. Thank you for your participation. You may now disconnect.