Good day, ladies and gentlemen, and welcome to the Scholastic Reports Fiscal 2017 Third Quarter Results Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to turn the call over to Mr. Gil Dickoff, Senior Vice President and Treasurer. Sir, you may begin.

Thank you very much, Sophie, and good morning, everyone. Before we begin, I would like to point out that the slides for this presentation are available on our Investor Relations website at investor.scholastic.com. I would also like to note that this presentation contains certain forward-looking statements, which are subject to various risks and uncertainties, including the condition of the children’s book and educational materials markets and acceptance of the company’s products in those markets as well as other risks and factors identified from time-to-time in the company’s filings with the SEC. Actual results could differ materially from those currently anticipated. Our comments today include references to certain non-GAAP financial measures as defined in Regulation G. The reconciliation of these non-GAAP financial measures with the relevant GAAP financial information and other information required by Regulation G is provided in the company’s earnings release, which is also posted on the Investor Relations website at investor.scholastic.com. Now, I would like to introduce Dick Robinson, the Chairman, CEO, and President of Scholastic to begin today’s presentation.

Thank you, Gil. Good morning and thank you for joining us today. After an exceptional performance in the first-half of the fiscal year, particularly in trade. The third quarter sales in our book club and trade channels dropped by $20 million compared to the prior year. However, because of the cost reductions we put – programs we put in place earlier this year in clubs and fairs, segment operating income for the Children’s Book Group declined by only $1.9 million in the quarter. Reading club revenues were affected by lower than expected sales of media titles and a segmentation strategy, which did not work effectively, resulting in fewer sponsored reading club orders and lower revenue per order. Of course, we are disappointed with this result, but we are confident we can recover momentum in the club business next fall through enhanced product and incentive programs, as well as improved marketing strategies. In trade, sales dropped in the quarter by $8 million compared to the prior year, almost entirely because of the comparisons to the very strong performance of the adult coloring books last year. However, at the end of the third quarter, we are still $99 million head of the prior year in trade revenues, primarily due to the strength of Harry Potter and the Cursed Child Parts One and Two, and the Fantastic Beasts and Where to Find Them film script. Scholastic strategy to build on our leading position for global children’s books and significantly grow our education business in the U.S. and around the world is underpinned by a carefully developed three-year investment plan in transformational technology. We are investing to ensure that our infrastructure remains ahead of the curve, enabling us to leverage our unique market position and customer relationships to grow our market share and reduce…

Thank you very much, Maureen. And operator, we are now ready to open the lines for questions.

[Operator Instructions] And we do have a question from the line of Barry Lucas with Gabelli & Company. Your line is now open.

Thank you and good morning. Dick, could you maybe talk a little bit about what the change at the top of the Department of Education may or may not mean in terms of directions given to local school districts and how they respond?

Well, thank you, Barry, good morning. We discussed this a little bit on the last call, where you asked a very good question in the same vein. Clearly, the initial Trump budget includes a significant reduction in education spending. Over time as these – as this budget gets discussed and finally formulated, we really don’t believe the funding environment will change significantly in education, as most people in our society rank education along with jobs and healthcare as their major concerns. We – our three-year plan in education, which we’re building now, Barry, as you know, is one based on improving our market share, as we still have a relatively small portion of a very significant spending that currently is available for pre-K to 6 core literacy in the schools. So from our point of view, we are forging ahead with our education development thinking about market share of the existing funding, which may go down a little bit. But we still feel we have significant opportunities in growing our Education business. I know you’re also interested in the switch in terms of charter schools.

Yes.

We are expanding our charter school focus on sales, and we’re expecting some increase – the trend is already there in charter schools. There’s not a huge amount of new money devoted to charter schools in the new budget. But clearly, there will be some acceleration in the development of charter schools and we will be there with our special sales effort to focus on those growing number of charter schools.

Great. Thanks, Dick. The two kind of timeline questions, one in terms of the – not just the rental space, but in terms of the construction of the new building and when you really anticipate moving people back in? And then secondarily, in terms of time, as you implement the new – I would say the new technology maybe you can just tell us what inning you are in? When do we really see the larger benefits of the investments that are being made? Thank you.

Let me start with the latter question and I may turn to Maureen as well to supplement whatever I have to say. We’re in the process of a three to four-year of technology transformation. We believe that we’ll begin to see significant improvements there in fiscal 2019, and then they will accelerate in fiscal 2020. But we do believe that our – in our core longer-term strategy is to significantly lower our cost base by the use of this transformational technology and also to improve our marketing focus and capability to increase sales in a very strategic way as a result of the technology investments we’re now making, which are quite sweeping and really affect all aspects of the company. I’ll ask Maureen to come back to that, but let me answer your retail question of the building question first. We are really on target with our building renovation and we will be moving some people in July. And we will be completed by the end of 2017, and we’ll have moved everybody back into the building at that time. As you know, we have half of our staff is relocated elsewhere during this year, which has increased our operating expenses during the year. But we’re really excited about this real estate project. It’s going really well. It’s going to be a fantastically more efficient office and with all a lot of new technology enabling our workforce to do a better job. And on the retail side, which I know has been a concern of yours. We continue to believe that the premium retail on Broadway and Soho remains one of the most desirable places in the world to sell clothing, apparel, accessories to youthful market that they crowd these streets every day and especially on weekends and fill the…

Great. Thanks, Maureen.

Thank you. [Operator Instructions] I’m showing no further questions at this time. This does conclude today’s question-and-answer session. I would now like to turn the call back to Mr. Richard Robinson, Chief Executive Officer, President, and Chairman for any closing remarks.

Thank you all for listening to our third quarter story. We’ll look forward to talking to you again in July at our year-end conference. We’ll talk – we’ll see you then. Thank you all for listening today.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day.

Thank you, Chelsea, very much.

You’re welcome.

Very smooth call. Have a good day now. Bye-bye.