BNED - Earnings call 2 2024 | Barnes & Noble Education, Inc.

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Hunter Blankenbaker

Good afternoon, everyone, and welcome to our Fiscal 2024 2nd Quarter Earnings Call.

Joining us today are Mike Huseby, Chief Executive Officer; Kevin Watson, Chief Financial Officer; and Jonathan Shar, Executive Vice President, BNED Retail and President, Barnes & Noble College.

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

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

Michael Huseby

reduction accelerate decisive our Jonathan my commentary to and September Good Day you to significantly for initiatives further joined with model It's made afternoon, and today improve ago, today. strategy year earnings our our our First that everyone, profitability. who cost thank BNED's financial announced to to working. progress Watson, pleasure quarter Hunter. the and Kevin proof provide and operational Thanks, transition initiatives us actions to points on CFO, these our We contributing efficiency introduce our and and to are Complete results together substantial second joining we success. One is significant also new already implemented is in BNED

we Before details, into the touch the from get key highlights on the quarter. I'll

to like to company's to our strategic and and teams really for our students, efforts experience their deliver administration, their commitment continued to great alumni parents, thank success a our I'd institutions, First, faculty, partners.

execute Fall Our work I'm team's to hard agility strategic the in our a Rush only successful grateful dynamic and to very environment, and truly a us their last resilience also on enabled initiatives deliver for operating but commitment. not year. over

impact programs $XXX and the $XXX business. XX% students, Program, combined FDC year-over-year and Access First to education million. In Equitable First revenue Complete, our quarter, Day to innovative Day reached our positively increased continues revenue Second, the million, second higher

an inflection Our business strategic has to Courseware point. First reached model Day transition

which evolution model achieve la to management a revenue from from align significantly with model visibility, First EBITDA the costs traditional and much à in enables us subscription-like revenues ultimately material a on and Day revenue revenue efficiency decrease Complete inventory X-wall $XX higher This course the increases million basis. offerings store. by First better per Day and year-to-date revenue of carte improve approaching to Day are BXB XX% and and operating improves exceeded revenue revenue, First

we've to $XX.X stores. EBITDA in to top growth adjusted $XX efficiency savings the operational Next, improved $XX XX% line planned operating result, a and million and annualized despite of XXX million achieved maintained second million in our We've fewer as cost consolidated increased quarter.

cash expenses improve ahead, continue efficiencies Looking improving to to operating our reduce further profitability identified additional we've and opportunities and flow.

Importantly, the in actions $X.X performance. Total we the growth compared prior X.X% million and consistent, continue and revenue sustainable million, us to have deliver more increased to our position second ahead. Shifting profitable the year or $XXX.X to taken years period. by quarter was take to

on the second quarter the from million, including Programs, increase Day primarily we which to profitability in increased la sales, sales declines $XXX footprint of a due focus First to our as lower store offset The by is our courseware partially smaller sales the XX% stores. carte of à growth

$XX.X expenses S&A continuing decrease million year. compared $XX to $XX.X Second prior million primarily EBITDA million by a XX.X%, operations from of quarter or and adjusted increased the driven by

Jonathan on the to the turning results, alternatives comment Before I'll strategic segment over our provide brief call a to discuss Retail process.

strategic is stand-alone pursuit and plans. won't best appropriate has of for the position that further on to concluded continues Board including, raises, the of broad and the Directors of best asset stakeholders company, company to range ongoing We of available business future. committed to but until its on path potential of forward and Directors our alternatives for Our review business divestitures, commenting executing disclosure growth not value be capital the to, limited this or our the required. maximize Board We're sales of a

turn I'll to over call Now Jonathan. the

Jonathan Shar

Mike. Thanks,

operating quarter, revenue EBITDA delivered growth store of by by course team growth adjusted was second driven driven enabled Retail increasing grow solid a material strong that performance us to comparable XX%. while by X.X%. sales Our revenue retail

increased Our First growth. million. primary to Day $XXX particular, XX% this programs, Day to million which revenue In XX% increased by of drivers the were First Complete $XXX

access, to participation highlights in we First the which of students. First innovative Day Day term, positive grew count course in course FDC's X.X% to on growth stores model, material our Complete and campus growth, enrollment student this but store Complete, only sales to not experienced material past transitioned affordability, fall XXX,XXX rates, impact due launched success. Since quarter which BXB the stores FDC encompassed comp convenience due we've year-over-year increasing academic XXX nearly

impressive this is believe we surface. we just are scratching growth, While the

dialogue and and already material with access active institutions the FDC XXXX 'XX that for inclusive equitable Our signed rapidly term model. suggests and contracts fiscal becoming the course spring distribution primary is

remain we scaling our ability the long-term of pipeline, our to FDC the successfully accelerate of financial and and of sustainable equitable growth strength in model. the access confident benefits Given the

growth in Partially the cafe decline Comparable and was items. These convenience with declined was sales. books The increase primarily X categories trade inventory receipts a we X.X% offsetting general discussed decrease you by emblematic by last due most delayed in and store sales X.X%. to the were Turning merchandise. quarter. impacted to declines

full benefits from were relationship at the display our Fanatics quarter, on and schools. Lids our the During

book Runbook unique in experiences staff Barnes and be to Ohio with State & exclusive X:XX the participate I at the differentiating example, Noble For an teams provide continue stores. to University our at at in around amazed branded bar lululemon of block parents, store, launch a.m. the began College how and merchandise. in-store that raise students, State lines our products forming Ohio faculty alumni

into serve shared for partners. we've As and in embedded efficiency heart a It's see students expect. that discipline, culture productivity to our been our you is provide and with will campus of our they profitability commitment to continue our growing manner to outstanding the to an before, our ability cost experience and gratifying at institutions deserve

a revenue XX%. from result, and administrative second a Adjusted retail by selling quarter EBITDA basis and increased by XX.X% XXX percent as $XX.X to expenses points $X.X million million. decreased As year-over-year of

turn I'll over our in call financial detail. results discuss the to to Kevin now more

Kevin Watson

Thanks, great It's momentum afternoon, time been an the value our joining focus a & presents our everyone. shift sustainable compelling with It's to a opportunity behind in operating and for profitable today. exciting combined a on Noble be since good on create The model, our Barnes efficiencies call to long-term you more FDC stakeholders. Jonathan, back September. with to and predictable Education

forward continued the As to to of our such, looking success transformation. contributing I'm

operating margin Consolidated growth, line continued operations cost grew $XX.X million XX.X% The million. of in million. to on savings $XX.X drove revenue and from a to actions EBITDA $XXX.X Turning by by increase our grew efficiencies second of quarter X.X% or progress further combination Xnd the X.X%. million, results fiscal point matters. $X.X and to XXXX EBITDA quarter adjusted or related XXX initiative top improving basis Consolidated

During revenues sales stable material and the with our comparable revenues, quarter, or revenues the of material XX% First is by XX% business. course $XXX.X comparable Material million and increased X.X% increase becoming store sales. Course course programs from a to total increased predictable subscription-like Complete Day general $XXX,XXX First which million in our decline was X.X% much increase business more to course by Retail to revenue Day approaching in in these a by X.X% merchandise driven growth material due store segment $XXX.X sales, offset

and Second unprofitable gross commissions XX.X%, decreased Retail stores materials year higher increased course million million, to in by profit. Retail a Gross primarily by points $X First merchandise. These quarter decline by margins in retail higher digital to administrative of contract decreases the sale Retail including material shift margin a and EBITDA of decreased gross $X costs a from by sales well to offset to First and due digital as basis X.X%. result emblematic Day prior for markdowns as related markdowns profit of due general million underperforming $XX.X million revenue. due growth lower by offset reduction selling of higher-margin of partially gross percentage a and $X.X lower-margin to reduction million to of were course year-over-year Complete closing Day period. $XXX.X as the costs and in or lower XX margin models million decreased gross the $XX.X

comprised gross to of due quarter S&A profit million on offset an second margin markdowns decrease the plan $XX million, or quarter fiscal due to of flat the compared non-GAAP million. increase lower second $X.X payroll was XXXX. gross an selling the Wholesale compensation million XX% an $X.X lower primarily increase and in XX.X% product essentially Sales quarter wholesale. was Wholesale profit gross at and by were wholesale EBITDA XXXX in $X.X The fiscal quarter the administrative The for rate The for lower costs, to savings and in of and allowances. Moving to drove cost $X.X sales initiatives and to returns to adjusted expense. primarily the million. or was partially increase decreased X.X% by sales of of expenses million. $X incentive lower in of

Moving on sheet. the balance to

period continued and the million in of $X quarter. prior Our as decreased $XXX reduce from $X.X compared additional and borrowings a borrowings to cash with million the capture at primarily end million to million of year balance first spending to $X.X million CapEx efficiencies. was quarter outstanding of to the due by $XX million the $XXX in million $XXX focus

fiscal XXXX reduction adjusted company to EBITDA driven $XX that, has the Day First continuing call retail of cost expects expected million. EBITDA company's turn the for comments. closing Mike increase be in the operations to our Regarding approximately primarily company's due and is in to of in from guidance, maintaining growth The growth adjusted continue the consolidated the over we're executed expectation actions year-over-year I'll the impact segment, to and programs implement. With to by

Michael Huseby

all a by In our company. accomplished making has Kevin. a and closing, had time are of period energized so we and we we where against more team quarter, are solid We're short headed in priorities. such excellent extremely our even and as another Thanks, strategic progress what

our the capable position focus and questions. profitable now we take We on Thank our strong turn for team I'll strategic strategy, your competitive sustainable successful of execution to you the participating operator can continue and highly call motivated our growth. so our and today. And the are in over confident to

Operator

comes first question of the with Ryan Your from line Co. Needham & MacDonald Instructions] [Operator

Matthew Shea

A here. to Shea maybe quarter the couple on Ryan. of on This is Matt strong start. me, from questions Congrats for

relative nice term about But spring see not left or for there are the the So is in Complete trending question Day spring, spring not the of are in deals if your year then you of of enough campuses still for or the X year, that incremental for how is thinking just XXXX, additional and rest commitment time the First that for the side depending for to to flip additional timing, pipeline seeing the the there to fall And model. close? about those commitments expectations? thinking wins 'XX, on

Jonathan Shar

about or by committed consistent the schools committing for really have verge It's we we transitions of actually spring. encouraged, And trends launch, pipeline, past said that have term really pipeline are would Thanks remarks, a already in with and question. fiscal on excited then the either we're fall Jonathan. 'XX the our Yes. 'XX. the as which for number It's be of the our for we're of

is the So resonate institutions to hundreds which leading campuses continues country. of the outcomes with the We're proposition of pipeline convenience, value to and having enhanced ultimately affordability, student throughout on robust. is access, conversations

the of So the accelerated incredibly pipeline our and excited program. growth Day First about Complete

Matthew Shea

like color. helpful That's have the there well. are for sounds the for the to program? or the have partners, that trending a out churn or sense to it. university going you conversations, mix remaining away customers any not from make are But Got or mean, I those conversations decision, university so it is that of within opt partners maybe Okay. with yet

Jonathan Shar

this at point. not No,

in I a terms launch all they we detailed academic would program, year. -- would campus with when. of a tuition really matter fee of really discussions and/or when it's we partners not And think the conversations if, each I within and each those when in calendars are have communicate positive, changes matter it's their of are the our say of

with. had forward. incredibly in I what Complete positive. expect to we're number momentum We've as accelerate and done we now And that great of that And Day going before, we've running the of said so campuses it's terms First

Matthew Shea

question Okay. And last me. for then

last of programs some newer an or quarter, it's rates new but rather and this noted include model, early in understanding the longer cohort no about was opt-out thinking too model, those of an gauge to schools. opt-in fall, you opt-out cohorts Just it the

your how have that little Now compare trended? the you're internal kind opt-out And to rates of into semester, expectations? a do deeper how those those

Jonathan Shar

exciting sophomore are the aspect, rates it their at campus those year First those improving and fall. Yes. us convenience, We that refer upside to with for aligned are only affordability development actually better as exceeding expectations participating, each cohorts, this experience really in and and on and again, to participation schools but of for rates freshener, even rates at it participation students the understand the we've our the more do rates model as continue the get and those mentioned students that, and and are overall, has with even comments what our are the of in participation see schools in is participate success academic we highlights each we who seen schools I Day our FDC, is And did strong FDC the which it, this, participation and number not a as our rate a year-over-year, partners. Complete impact

Operator

question Our of Fuhrman Alex the Capital. from with comes line Craig-Hallum next

Alex Fuhrman

mistaken, I'm not materials. If a I you that believe was should going I'm decline carte in this Does you than time to I Day growing. turned courseware first saw materials this. the Complete course revenue mistaken, guys said revenue not quarter First If corner, -- be dollars the in said more offset mean that material that la or you à growth point more have is in required this think enough dollar less forward, and that from this you've the

Michael Huseby

First the combined cited Yes, revenues Day program Day the Alex, I the in versus Exactly increases Mike. decline. Complete -- year-to-date, and right. First it's That's numbers were

about and with First at the sales traditional have reversing line post of the inclusive access acceptance that that courseware models has courseware we're change the crossed the you from clear inflection, to line la à other revenue that And that axis top look on is when the of strategy the predictable à some a where of declined it's those years at that it's that Y that's reversing huge. carte clear If market by much strategy think in curve, and very an we that of is combine it's model, you the equitable kind working. stream. of -- benefit right And access, together, now Day the evidence growth of a la carte the trend and more because courseware now, been Complete, line top that model trend declines, able we've years, although inflected

cost So that and structure in our allows to we more approach CapEx us certainty our as with rightsize advance each business cycle.

Alex Fuhrman

that certainly And reached like to a helpful. really That's sounds Okay. big milestone point. have

becomes struck. some comment cost I whole and been that that get that press So congratulations to on and you understand here. the I were revenue the that ask side. the know more to recurring deals Certainly team about the for like little need to guess, Day should as years after that actually I cash drop has release, having might not in did talk us until share mean Does time about is of the counterintuitively revenue facility bit collection bigger actually sounds perhaps you're it larger the you dynamic Can First a a dates. deferred you that ad and cash credit a to over semester? more just into farther It collecting of more? you predictable to the of moment to want given working nature how help on any just these the Complete you early of

Michael Huseby

more model when the predict rates improved receivables other transition opposed thing to the have was a much you the being I that of issue you participation the quickly. capital price working lot tight the going students, couldn't size capital is collect in able I about to really take transitioning of you terms a BXB and and becomes say company what and speaks what BXC. at timing ability a as it to you're predictable, I what from cash think rates in range don't I forecast really our revenue would Under have fairly more advance, be of is facilities guess to should that credit to a you the credit the working we've at collecting we're per the sale of say, and model hour the to contract what are, traditional but that old point register are, know the that the much

Day, First really Day the is. Complete what First That's

So and with exclusivity lines the our with into we it really the enter is we up service relationships financial We're that have provisions have. the we a model model strength contract the where operating with real the schools. contracts provider

on makes school school, and contracts model And we BXB and model benefit and on it more basis of build that delivery a structuring we optimize business becomes a because see can collect the see more of of so more of to from they with sense partnership benefit putting of model. much you transferring to a really a it. We that dealing we're basis you, and joint courseware the financial the it, the can working that

Operator

concludes you and that all Ladies conference Thank for joining. gentlemen, call. today's

now may You disconnect.

Barnes & Noble Education (BNED) 6 Dec 232024 Q2 Earnings call transcript