Earnings call transcript Q1 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the Barnes & Noble Education Fiscal 2024 First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator

President Relations, Vice your may conference. of Blankenbaker, you Investor begin Hunter

Hunter Blankenbaker

welcome XXXX our call. morning, to Good and fiscal first earnings quarter

Joining Chief BNED will during Huseby, Shar, Mike Miller, and EVP, & us Treasurer, Officer; & Mike and today Jonathan Affairs the Jason Development and SVP and Noble Chief College; available Executive Officer; and Q&A also Retail Executive President, be Corporate session. President, Legal Barnes Vice are Snagusky,

be quarter that Education disclaimer first by of covered Barnes our our without slide make documents. call contents press our found consent in the this any prior can and like you on for Safe contained written Education. Relations Noble of The which remind on referenced the I'd public website, Harbor As rebroadcast or are other and by the not & are Investor party used property release presentation, we Noble in today's to call & are of Barnes statements

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

to the Mike over turn I'll call now And Huseby.

Michael Huseby

X% EBITDA us by Fiscal a start consolidated solid Hunter. increasing total quarter Good and to and off improving Thanks, XXXX with is for adjusted everyone, XX%. you almost today. morning, approximately thank first joining revenue

we to strong of profitable operational model efficiencies results to continues demonstrate focus and growth. deliver strategic against taking to dedication and Day our reflect our hold executing equitable our quarter drive are momentum. first and are Complete to reductions cost clear First access team, Thanks the evidence BNED efforts the that Our initiatives

strategic impacting the of highlight review results. more are initiatives execution would a first Before two providing I like to successful quarter, our the these how and detailed Jonathan of

continued efficiency. growth First, XX $X stores, $XXX.X less and improvement and operating year our X.X%. achieved physical including ago, on this million XXX we a our focus I'll segment, discuss sales XX underperforming focus fewer virtual stores stores retail operational of increased We by despite million locations. satellite winding down total on or profitable Within versus as and

course significant growth our Gross items. comparable store driven materials, were graduation with sales by in operating products leverage. combined up drove management cost This and X.X% strength supply disciplined

expense basis restructuring cost our selling direct in revenue a administrative selling the expense. from period. by activities, a This year reduction is million yielded result which of year-over-year and percent decreased XX.X% quarterly improvement $X.X XXX fiscal administrative year XX.X% of as the Retail, points and in to prior XXXX

are Our commitment operating focus achieve characteristic to store with their these results. and teams increased discipline on cost

levels and current actively fall rush, standards labor continue rigor costs, and part-time on been to full team optimizing managing an exceptional our of productivity our in-store variable including as staffing During unmatched while tied new has experience provide implementing demanding to their deep performance members. mix they

versus Further, rush teams fall arrival despite for the make adapted customer meeting sure certain needs of our our stores well are have inventory later years. to prior

model our July As financial the of XXth. extend we more pursue and we with operating capital permanent credit complete to actively necessary amendments amend quarter, our discussed to business with and us you a the structure closed flexibility provide successfully transformation. last runway These on facilities

vendors by However, we delayed until inventory liquidity certain received and the amendments. applied provided shipping the enhancements

rush our period to have to expedite for working present mitigate impacts on such our nonstop and shared teams or been teams retail of sale sales. any our such delays store Our MBS and supported early receiving by services inventory customers

the by initiative total second course the of Day Day profitability by XX%. First Equitable year-over-year and growth revenue cornerstones plan. acceleration grew the our increased course of X.X%. models our up First In The First of Complete XX% is program, long-term quarter, Our Day material our growth which First key one is first Access of sales Day Complete, revenue drove

on Now Shar, on call the education First I'll over business. Complete turn of Retail, discuss is and impact Jonathan Day the our to to President significant higher having students,

Jonathan Shar

campus Thanks, stores Complete exciting XX% increase model, of of season XXX,XXX fall thus nearly First we Day over a have far fall Mike. back-to-school an subscription-like using representing and students, been the It's enrollment as now XXXX. a our undergraduate postgraduate XXX

add/drop the as the current in recognized GAAP which fall the up in smaller we term more primarily our relative with be recognized to for participation of expect XX%, levels, and will quarter be revenue enrollment pre amount XXXX. upon Based second quarter FDC fiscal a year billings third than

in having campus the over clear access experience, is FDC student the future. the impact conclusion to visited weeks, in be acceptance As why many strategy the that primary market positive a FDC's momentum. I that which will positive supports and has material The equitable course the reaction very our near stores last strongly model, marketplace few is such our model on FDC, FDC it's distribution

a have Noble prepared, through on from rush. As survey benefits last they with we're First full better throughout we reported that These Day students overwhelmingly this academic customer shared been achieved improved saved better had on Insights fall Complete, platform, and success. display our & you experience, College results based money quarter, Barnes ultimately

course acquiring of academic students, of to is need first textbooks term. the For new beginning required materials tasks at they one and the each accomplish

this turned First has proprietary to the process, Complete Complete technology and commitment positive of Day service. Day ease welcoming the leveraging initial event a through our into item task list First

for the fall made excellence how College service Emporia bookstore go the course recognizes example, program beyond that at award which just an a As and quick Hornet Noble acquiring nominated materials. student Heart welcoming which State easy campus for launched community and FDC this University, Barnes team & a term, of above members in a FDC

to has striking model. Model Day partner and with Complete experience student work is are Day Complete First best adoptions their marketplace clear to the be our the First deliver way provides continue to the the Access transformed believe to on Equitable motivation and accelerate leader. further to positioned The we institutions We all

learning as systems seamless advanced single invested our and FDC personalized and software, systems proprietary in academic sign-on. student an with the institution we like portal We've information, faculty such student-facing for the have and insights customer and leadership platform, and registration, ERPs, management adoption integrations

mix scale is capabilities, coupled industry's of these source largest component Additionally, assets with fulfillment and engine critical the logistics our affordable of FDC capabilities and MBS our unmatched single textbooks. Being a unique and of warehousing record us at with use flexible Day and universities executing First in of to model the us to enabling fall. experience add a colleges for and the have to this schools number serve, allowed Complete provide customized solutions we

benefit in the school has Complete First a-la-carte model cohort Day to stores the higher also of from XXXX. increased economic examined we post of margins demonstrate First fall model BNED. the Complete Day this, transition. the gross that provides Since revenue of XXXX predictability, at in the delivered Complete fall improved EBITDA To a the and inception, First and Day transition

step the nearly to versus profit First drove this of this rate doubled, the that much XX% of On to material and increased Taking course presentation, when sell-through the basis of XX% stores a-la-carte the subscription-like sales XX%. Day year-over-year and a the increasing due ease slide service you Complete, higher of see nine further, gross gross the by XX% a dollars from XXX a in approximately margin improvement can their model. the our by to investor move cohort point profit cohort

fall Furthermore, Day fall able And a XXXX Complete student dollars stores in talent also year schools increased of to fiscal that FDC the X.X% year result, of use possible XXXX. passion First year, and BNED we through our gross as team. by after is of the this, operated of as in of profit in the FDC are course, only participation All increase rates. XXXX

I'd leadership elevate like Celeste to to to and clients Bill operating executives and of teams, members It's our their Brian customers. who work team serving our commitment Sackett our others their all education. our Chris are lives some mission serving for to of and outstanding like and see recognize outstanding their inspiring Stark, who to through Dampier, Risimini-Johnson, and thank committed

review turn back to in I'll call the over to results more our detail. Mike Now

Michael Huseby

Thanks, Jonathan.

first Turning adjusted negative Consolidated $X.X to matters. revenue a from grew focus Consolidated operations on by quarter million. continuing by million. of XX.X% to related million $XXX.X million the first a results quarter $XX.X $X.X and or EBITDA X.X% or grew

low first fall our a reminder, consisting of a quarter seasonally preparation classes, for graduations period volume and summer is As rush. primarily

sales. Within revenues course Day X.X% strong first material million material, XXXX to retail total quarter increased and our $X by segment XX%. revenue Day increase an supply Complete $XXX.X revenue increased and and product graduation X.X% First Fiscal in or million driven by First course total

X.X%, million margin of retail gross year quarter First or from by decreased while $X.X $XX.X retail decreased profit gross prior of basis million the points XXX period. XX.X% by

due materials decreases lower-margin from lower These higher higher favorable as by a material were resulting percentage graduation renewals gross of course contract higher margin a as including sales mix offset well and markdowns, declined stores related margin of Course markdowns closed to contract sales. to digital products. partially costs

August agreement amendment, partnership first credit commission lower and are for for have merchandise and under commissions the part an retail by as the terms merchandise these Additionally, year gross sales emblematic impacts quarter guidance the XXXX, margin emblematic July increased trends as we margins quarter, Lids period. term impacted rates the loan in noted of estimated Each for last XXXX of general were contractual Fanatics general one of provided. reflected the Effective X, agreement.

offset lower as selling EBITDA negative million reduction $X.X Retail increased mentioned earlier. a administrative year-over-year gross I to expense to in million million the revenue, and increased noted margin $X.X and due $XX.X by by

we've of profit first expense of business in the the during reduction the change evident believe continue our volume benefits will our This lower higher second profile cost third and and we we these Importantly, to expect structure and to the continue much was quarter, adjust fundamentally quarters. business. volume to adjusted retail

wholesale. onto Moving

fiscal sales million X.X% million. to higher to sales quarter The fiscal returns by of of million to XXXX of Wholesale gross primarily first increased higher XXXX. $X.X compared of First sales the $X.X quarter sales is profit partially in by or first XX.X% prior $XX.X of was XX.X% offset million. million compared or year the the to million due $X.X allowances of quarter period or increase $X.X gross in $X.X and

costs margin profit due of quarter by the product lower first allowances, in to higher primarily offset markdowns. fiscal the rate Gross XXXX, in and partially gross and and an increase decreased returns

quarter initiatives expense. compensation plan comprised to $X.X was primarily administrative expenses and cost decrease selling to and of wholesale due by incentive This payroll million. First decreased savings XX% lower

was adjusted to due non-GAAP the $X.X the EBITDA $XXX,XXX for lower by Wholesale down margin. gross quarter million,

flow. Moving onto cash the balance sheet and

of end the borrowings increased of of programs quarter of to the $XXX at increased million operating borrowings flow Cash timing $X.X was the with increased related in Day in vendors balance as of compared period. to cash the Our million summer term. used $XXX our First adoption activities and payables million to outstanding year prior to due receivables in

XX% were to $XXX.X $XX.X year. Merchandise This or delay to first delivery the down the in discussed inventories earlier. second the quarter inventory the quarter versus million reflects from million I prior that

decreased $X.X $X.X expenditures capital from systems spend. build-out million and store quarter lower million First primarily $X.X to due million internal to by

approximately Regarding guidance, we're $XX fiscal of expectation XXXX EBITDA million. our maintaining adjusted

payroll disciplined of in two believe our receipts. delayed financial than expected First While the management other of first sales of and inventory expected, delays fall the the limit current sales during weeks Day lower impact store resulted costs and will the the rush and we inventory

Before DeMatteo board company. the members contributions departing Emily their for and Dan closing, to want to I thank Chiu

Wallander continued to and look to pleased directors new Ray Both forward Board. working perspectives welcome with closely directors relevant Steve transformation the new two we and are to Panagos BNED's highly bring them. We fresh to experience BNED and

morning are is we very Kevin as this Vice Watson Officer In announce effective tomorrow. us Executive joining addition, our that Chief pleased new Financial President and to

you to team time strong very strategic know, at As BNED's management that to important Kevin, get addition a a transformation. our agree senior he in has I'm you'll confident

quarter, first scaled solid that is we're In working. proof by summary, further our strategy we a encouraged and had points

equitable Complete a having Day model access First students, institutions and Our BNED. significant positive impact is on

corporate the on cash Our cost who improving show our through we to EBITDA I adjusted efficiency affairs each and reduction and and teams mentioned daily well actions to team and customers operating leadership. improving under that consistently people thank their unwavering other. our to are and as The actions our are profitability legal mission, senior and Miller's Jonathan field flows. want as path commitment and Mike

and and have finance are and team, for Seema others positioning success Our and exceptional [indiscernible] contributions fall led treasury Snagusky this as Paul by by our have and all led beyond. accounting Joe us significant instrumental that Jason teams Loraine made

stakeholders. create opportunity for our all to in value believe We

model opportunity grasp excites of that our that in proved opportunity and a really Our is is that's increase translate scale. within transformation this to value. us we front still positioned how What well clearly has at opportunity us are significant market and sustainable to

the turn call operator Operator? to line for open now I'll the the to over questions.

Operator

from Instructions] Needham. [Operator of the your line And question first comes MacDonald from Ryan

is Your open. line

Ryan MacDonald

feeling on taking Hi. questions. maybe effects the to of inventory about should material or emblematic side for it fall course whether you Thanks And as if the result Mike my just that general any, most, a on on knock-on just more the that where was what, side? around start the merchandise rush? we expect provide Can the little for delays. you were a clarification color

Michael Huseby

our point at don't the guidance effective we we thanks. to we end at year, this balance July are obvious, clean look became when XXst mention did got it to the We -- have July, to working to impact a opinion probably auditors. on extend, We huge consider out. as from balance the and if we on for did be but we complete you it amend Ryan, because on which the our our payables of it's any wanted XXth, had our Yes, want this outside sheet

have that publishers needed was cash fairly pent-up both. there first they they of quickly. merchandise a was not in be start to whether August, of August the the or were you So are weeks two week we then of starts where right vendors, the We And delay in weeks we got most guys creditors, after to done dates fortunately, partners, know released whether the not in largest general lot happen in the were two right and other fourth they're That trade words, Day that week to significant third that fall for really and now. and rush. Labor like of

But materials us. your our directly, of released to we helpful So There general, quite complete reacted we first and got merchandise answer pretty much cleared terms want first. of very experience was highly a stores of inventory type that and doubled rush we're up of to vendors in the in nonetheless didn't of categories course because were as August swiftly general food to getting we beverage trade very prioritize the that and the of all and weeks question terms sure convenience it students making for thing. priority in-store the be And that in when two and we publishers all other one. into a in the they come

the so financial have to this. it's to think on I had didn't we our we overplay that want results or a don't is impact mention We significant So thought to going fall rush this year it. on was but something obvious.

kids to to not of being school related the needed of but quite then parallel, prioritized students get to in highly. terms that supplies back need across of payments it's school. we as get categories care board, other And and we're or to did So general moving merchandise, prioritize the but in in taken courseware we're back

Ryan MacDonald

All right. the and on On into curious, rush gone results here. color Day the to I the First Complete, you've appreciate there. as that. good fall see I'm great interesting

of student got XXXX, cohort continues about as the on develop then Thanks. for that spring development schools you've population looked have lined of up started? as kind pipeline of that And amongst have what the to and opt-in spring think rates how First, well? like the what for rush newer we

Jonathan Shar

First there's into of question. a sort One built we then it's models. there's, model, it's the opt=out of where where can Jonathan. at schools just it's those. Ryan, students is the clarify, opt-out. And as and Thanks have Day certain isn't two to Complete there charge course Yes. tuition in for an listed And

will -- -- next at have period, for don't or the hit the we period we and So the through come opt-out add/drop many that up haven't opt-out, opt-in of the runs yet, the which institutions included weeks. It's either model few in per have which an opt-out the schools se.

participation the we're we So seeing institution really Day runs know, grow experienced one of rates view that that time. initial strong are second an opt-out over decline that is is rates things that although have and and Complete third that, First the and there's don't years the participate rates patient cohorts or

on although So where to be that's we add/drop an First to impact the good and Day year, based will so exciting we're on that materials experience and with affordability is having sort those don't those far overall of Complete student trends land, institutions. know in seen for hit haven't seeing students and providing sure we're the tracking but for all experience periods, this something that driving and it it's some I we've at metric the positive that what access

Ryan MacDonald

of part on second And that just far? the for maybe pipeline 'XX, is that so of looking how spring

Jonathan Shar

for many First Yes. active spring. conversation still We're schools to launch Day with Complete in

fact, have in conversations place. daily be focused year, which will a agreements In of which launching we're And schools is really of hundreds year now signed with some exciting. fall on still calendar the in we XXXX, next amendments in already and from having then academic

And growth have convenience. participating and access, optimistic seen those based that really about on continued it's in accelerated really impact and conversations active. are affordability the outcomes, of Day the So we're on They student we've institutions Complete. First

Ryan MacDonald

Excellent. Maybe Mike. for one more just me for

additional nice Can -- profitable stores hit a of start of wind-downs? store left I of we us of And talked of XXX of looks sense what doing stores. the you sort And of more of to guess, trough, unprofitable business for fewer of sort in impact fewer the and might when down about year-over-year to winding give side Thanks. job those is contracts? I terms like sort on there a other you the despite driving of benefit think and here off go sort this? how runway much

Michael Huseby

Yes, we something look it's constantly. a great that It's question. at

As And to improve profitability. overall you to we're serving know, stores on profitably. based is Ryan, continuing stores work with strategy our

and the level success and school. Day dependent good, So our many to healthy the long-term, call it, both profitability, at trough, stores, upon be really it stores increasing as some a is Complete a in First converting you that's us going getting to for relationship the thereby

that store and a our count stores included year fiscal virtual down XXX said, you versus As was XX ago. XX

the evidence that's in reflected is that following the we're that strategy results. So

the giving type upon, and thing, we're mentioned, as terms said, Jon of In controlled a still Jon our do quarter each that, not said, it's dependent you very that Day in with the terms with guidance on converting we we're but we'll the other doing but that and a relationship of runway I school economic to of just rate engaged going what just it the great do and because pay lot not we're about Complete, of schools impact conversations job. to First commission that

teams field the job payroll. doing Our controlling a of great

can stores. are different achieve we to pull in levers there So profitability

point. percentage much successful where contracts expectation a our know Day renewing trough. mean And But levers number becomes and we access would is higher time. when going be in we will as work go in But at stores I next a adding making at of time, year. of to that going our on equitable happen. that I lower start the those penetration, strategy is this First form that where to so sell-through it, stores call are point I some we don't of point some question that's all some number to how Complete at some back should stores to the really pulling as in than are we year answer is expect to

Ryan MacDonald

I'll for in my Thanks back questions. the taking hop queue.

Michael Huseby

Ryan. Thanks,

Operator

from Capital comes of next Craig-Hallum Your line Alex question Group. Fuhrman the from

Your open. line is

Alex Fuhrman

your would the Has been that making Can a to period help guys. Day love fewer of their comments understand And any And on a kind Hey, sales has really of just what of sales unpack little students increase? can Complete. First merchandise trip driving rest question. to Thanks trying further look as on just slower shop then been for strong schools of from first the about a my merchandise that into us just just like but you sort about books? the year? to bit for Obviously, the to that's bookstore taking you talk have this the we what is at of seasonally that smaller general bookstores? the traffic there kind transitioned negative impact was understand to a year driving you, what of get number having going impact for

Michael Huseby

make one general I'll time pick Mike. can comment has lot Jon it's rush stores of and spending Alex, up. it during our been then in a

more. driven most in if off, aren't there fewer or students Day up coming Day. store there pick in First programs students First before course, those First on Complete, First to Complete Because to through result their we're the package, of Day are of anything, the

store So who's of when in of traffic, of going show as up the a First fairly student up Complete. terms to that students to Day are terms of it's perspective, in from random scale that pick showing to up opposed a predictable more

we we of and So I'll this details. results our would any student a don't per not let sale that Jon a change then having kind basis as on the have merchandise general indicate model more I in give falloff analyzed think

Jonathan Shar

and time materials us their for they up standpoint box a store sort materials for materials most if into institution. right. fact post We of And process students that them pickup. and from exactly the have ship the through of their the on fulfillment We're to them students transition go all convenience and sort the Complete into in-store channel the serving in come students the come select, or is to actually we're the pick that's up of that No, store First Day pick them but at based of distribution. primary more seeing can real nearly

of strategies as like we to merchandising that part So the increase everything of it's and students general actually merchandising an merchandise else have store items opportunity some that that through sell to cross visit. sales in we the of strategies the

to a point a going actually that's we're traffic optimistic So that, And positive impact. just store alone. have from

think that well works So drive model are to in. the we to other that of our growth parts we business with continue looking the

Alex Fuhrman

That's most just kind contributors question, during experiencing just no sales stores of the just interpret of the driven other profitable significantly helpful. despite mean stores the that strong pretty you really in your thinking long-standing were that of quarter. biggest, Okay. the longer something operating was operating And we're I maybe pretty the mean part during months increases stores number the were merchandise strong that can small or about then the that of smaller part XXX we you're really it summer sales just by to the fact that merchandise? that to

Michael Huseby

you happen. did combination one years. summer ceremonies to fact that COVID schools a great quarter and it's But lot a year think on. more as out in in to strong in There that some very many was we of of able are in the impacts graduation just products, walk than somewhat commencement graduating surprise planned recall both we merchandising I remarks, of had of quite We that make those. in which early class things because we actually last us, prior summer, had to include group schools graduating of many and the if 'XX. weren't of spring classes the called prepared to the a frankly, first And summer our Yes, of of

as graduation and course better better expectations. much the benchmark, products with year-over-year of and So that our even performed with a

growth. part a was of contribution general big that actually the merchandise of So

As one categories, the it continue to the that out first quarter. graduation performance, see relates other but we for really to was good us stood in

weighting the impacts kind that I digital had actually margin There and number this it on virtual a online students schools year courses would many sales expected. also more is that the the campus. and The digital in thing of other we summer than the say both of this number were of

that So on even as the not merchandise well. and many for sales with summer, general did students campus having

Alex Fuhrman

really Thank you. That's helpful. Okay.

Operator

will session. end turn back the closing Mr. reached for call have now we question-and-answer our to the some I remarks. Hunter And final over Blankenbaker of

Hunter Blankenbaker

does you and Rush we're get That second with Thank December in Rob. to early you. quarter Fall look back our speaking forward to -- you, Thank call Great. our We conclude here. to to call. going on

Operator

conference Thank participation. This you concludes your for today's call.

may You now disconnect.

Barnes & Noble Education (BNED) 6 Sep 232024 Q1 Earnings call transcript