Scholastic Corporation (NASDAQ:SCHL) Q3 2025 Earnings Call Transcript

Scholastic Corporation (NASDAQ:SCHL) Q3 2025 Earnings Call Transcript March 20, 2025

Scholastic Corporation beats earnings expectations. Reported EPS is $-0.05, expectations were $-0.78.

Operator: Good day, and thank you for standing by. Welcome to the Scholastic Reports Third Quarter Fiscal Year 2025 Results. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jeffrey Mathews.

Jeffrey Mathews: Hello, and welcome, everyone, to Scholastic’s fiscal 2025 third quarter earnings call. Today on the call, I’m joined by Peter Warwick, our President and Chief Executive Officer; and Haji Glover, our Chief Financial Officer and Executive Vice President. As usual, we posted the accompanying investor presentation on our IR website at investor.scholastic.com, which you may download now if you’ve not already done so. We would like to point out that certain statements made today will be forward-looking. These forward-looking statements, by their nature, are subject to various risks and uncertainties, and actual results may differ materially from those currently anticipated. In addition, we will be discussing some non-GAAP financial measures as defined in Regulation G.

The reconciliation of those measures to the most directly comparable GAAP measures may be found in the company’s earnings release and accompanying financial tables filed this afternoon on a Form 8-K. This earnings release has also been posted to our Investor Relations website. We encourage you to review the disclaimers in the release and investor presentation, and to review the risk factors disclosed in the company’s annual and quarterly reports filed with the SEC. Should you have any questions after today’s call, please send them directly to our IR e-mail address, investor_relations@scholastic.com. And now I’d like to turn the call over to Peter Warwick to begin this afternoon’s presentation.

Peter Warwick: Thanks, Jeff, and good afternoon, everyone. Thank you for joining us. Scholastic performed solidly in our third quarter. We achieved modest revenue growth and improved operating results relative to a year ago. Strong performance in our Children’s Books segment and the addition of 9 Story Media Group contributed to these positive results in spite of increasing pressure on spending by families and schools on books and educational materials. Overall, these results reflected Scholastic’s unique strengths in engaging kids with great books and quality children’s media. We remain committed to our capital allocation priorities, investing in our growth initiatives and returning over $35 million to shareholders through share repurchases and dividends last quarter.

Scholastic maintains a strong balance sheet with modest debt and significant options to unlock additional liquidity for debt reduction and enhancing shareholder returns, including through our significant owned real estate assets. Haji will expand on this topic later. Looking ahead, we now forecast full year adjusted EBITDA of approximately $140 million, consistent with the low end of our fiscal 2025 guidance. Revenue is forecast to be up modestly year-over-year, reflecting the intensifying spending headwinds that we saw last quarter and that we expect to continue into the fourth quarter. As we manage these external factors, we’ve executed cost-saving actions that we expect to benefit both this fiscal year and fiscal 2026. Before going into our operating results, I’d like to comment on the macro environment and the headwinds that Scholastic and many of our peers are navigating.

First, as many major U.S. retailers have recently reported, consumers have begun taking a more cautious approach to spending in today’s environment, including in discretionary categories like Children’s Book purchases, as seen when analyzing Circana Bookscan data. Second, recent uncertainty around federal education policy and funding mechanisms is causing some schools and school districts to delay or pause purchases of instructional materials. This has contributed to a further cyclical slowdown in the supplemental curriculum market where Scholastic’s education business focuses. We expect both trends to continue into our current fourth quarter. Third, we’ve been actively navigating fast-changing U.S. trade policy and global tariffs, like many other retailers and manufacturers with global supply chains and footprints.

As we outlined last quarter, our supplier diversification and flexible sourcing processes give us distinct advantages as we mitigate and hedge against tariffs and other risks today. Where we are not able to avoid tariffs, we have opportunities to protect gross margins through modest and targeted price increases. For the remainder of this fiscal year and the first half of fiscal 2026, we still expect minimal tariff-related exposure on our inventory costs as we have already purchased most inventory needs for this time period. Haji will discuss further the expected impact of tariffs next fiscal year and beyond. With that, I’ll turn to the highlights across our business segments. In the Children’s Book Publishing and Distribution segment, revenues and profits increased, driven by improved results in both Book Fairs and Book Clubs within our School Reading Events, or SRE division.

Fairs benefited from higher fair count in the quarter as we remain on track to meet this year’s target of 90,000 fairs. Notwithstanding the impact of increasing pressure on consumer spending, which we saw slightly impact transaction volumes, revenue per fair was in line with prior year, reflecting higher transaction sizes driven by our strong merchandising capabilities. We were encouraged by increased participation in our new Share the Fair program last quarter, Share the Fair enables schools to collect contributions digitally from the school community to support students who need help buying books. We see this as a long-term opportunity to increase student and family participation, ultimately contributing to the size and impact of Scholastic Book Fairs.

Looking ahead, we continue to expect modest growth in fiscal 2025, driven by higher fair counts and new merchandising and sales initiatives, partly offset by modestly lower participation reflecting continued pressure on families’ discretionary spending in quarter 4. In Book Clubs also within SRE, we continue to benefit from new strategies implemented at the start of the school year. In quarter three, student participation and revenue per sponsor as well as order volumes rose year-over-year, demonstrating positive engagement from the teachers and families who participate in our clubs. We remain focused on continuing this momentum and enhancing our offerings to increase teacher participation in the 2025, ’26 school year. Turning to our Trade Publishing division, which is also within the Children’s Books segment, results were in line with the prior year, driven by the global success of new best-selling titles, offset by a modest decline in backlist sales consistent with industry trends, as I previously mentioned.

Upon its publication at the beginning of last quarter, the 13th book in Dav Pilkey’s best-selling Dog Man series, Dog Man: Big Jim Begins, immediately became the number one best-selling book across all categories in the U.S. and Canada, and the number one best-selling Children’s Books in the U.K. and Australia. It has remained at the top of best seller list already selling almost 2.5 million copies globally. Dav Pilkey’s worldwide author tour, the January release of the Dog Man movie and the extensive promotion in school Book Fairs including specially branded Dog Man events, boosted sales of Big Jim Begins and earlier titles in the Dog Man series as well as Dav’s other best-selling series Captain Underpants and Cat Kid Comic Club. In the midst of this global phenomenon, we’re very excited about the 14th Dog Man book, Big Jim Believes which we will publish globally this coming fall.

Other newly published Scholastic titles added to our presence on bestseller list last quarter, including the new Hunger Games deluxe editions and box set and our new graphic novel Wings of Fire number 8: Escaping Peril. Given their ability to engage kids, particularly striving readers, graphic novels are dominating children’s publishing and Scholastic dominates graphic novels, currently holding 12 of the top 15 spots in The New York Times graphic novel Best Seller list. Looking at the quarter ahead, earlier this week, Scholastic published the highly anticipated fifth book in Suzanne Collins’ worldwide best-selling Hunger Games series, Sunrise on the Reaping, which was released simultaneously in the U.S., Canada, U.K., Australia and New Zealand.

The book was already at the top of best seller lists based on strong preorders for print, e-book and audio. Print preorders alone were up over 65% compared to the fourth Hunger Games book in spring of 2020. We’re optimistic that the excitement around this newest title as well as Lionsgate’s movie adaptation scheduled to be released in November 2026 will support strong sales of the entire series in the fourth quarter through fiscal 2027 and beyond as we continue to bring new fans and readers to The Hunger Games franchise. In the Entertainment segment, revenue and adjusted EBITDA benefited from the strategic acquisition of 9 Story Media Group in June. We’re excited about the progress and early successes our combined Scholastic Entertainment team has made.

As we’ve discussed previously, major streaming platforms and studios have slowed production spending in green lights impacting near-term demand for production service work and delaying but not canceling some promising Scholastic produced projects. Though we’re encouraged by recent momentum across the industry, we expect more productions to be green lit in the year ahead compared to last. With the benefit of 9 Story’s capabilities, we’ve significantly expanded the reach and monetization of Scholastic’s current media library and IP on streaming platforms, especially through dedicated Scholastic IP channels on YouTube, the top platform for kids media consumption. Across Scholastic channels, Clifford Classic, Goosebumps, The Magic School Bus and our Scholastic Classic hub channel, Scholastic content had nearly 10 million views on YouTube last month, up almost 40x from a year ago.

And kids and families spent close to 3 million hours a month watching our high-quality beloved stories and animation. In the short time since these channels launched last summer, the strong momentum and engagement has unlocked brand exposure for Scholastic and contributed to incremental advertising revenue and e-commerce sales. In addition to our reach on YouTube, we now have 700 half hours of Scholastic content on leading video-on-demand platforms, including Peacock, the Roku Channel and Tubi. To serve the tremendous demand for quality content on YouTube, especially among parents for their kids, we’ve accelerated production and development for that platform. We’re especially excited about a new values and faith-based YouTube media property, we believe kids, based on the, We Believe series of young Children’s Books, which our talented Make Believe Ideas team created in-house.

We look forward to launching this channel with e-commerce integration in time for the Easter holiday next month. Turning now to Education Solutions. As expected, third quarter sales and profits declined as lower spending on supplemental curriculum remains a headwind for this business. During the quarter, we continue to be encouraged by the strength of our state and community Literacy Partners business, driven by increased participation in state-sponsored programs as our partners continue investing to expand kids access to books outside of school. We remain excited about our product development pipeline of new literacy programs aligned with current reading pedagogies, reaching the market in time for the 2025, ’26 school year, which we expect to begin to contribute to results next fiscal year.

For the remainder of the year, we expect schools and districts to continue to delay purchases of supplemental materials impacted further by uncertainty around federal education policy and funding, as I discussed earlier. In response to the decline in this segment sales and profitability over the past two years, we’ve begun a strategic review of the Education Solutions business with the goal of optimizing its long-term potential. I believe in this business, given our deep focus on reading and literacy and our commitment to serving teachers and schools as well as a growing number of state philanthropic and community partners seeking to support literacy. We look forward to providing more details on our year-end call. In the International segment, revenues and profits increased, driven by our major markets including Canada, the U.K. and New Zealand, all of which benefited from strong sales of Dog Man: Big Jim Begins.

We saw success with both print and digital education products including a new multiyear contract with the Ministry of Education in New Zealand. We continue to pursue opportunities to organize and invest in this business to drive growth, including expanding our education and English language offerings in emerging markets. Looking ahead, we continue to expect modest growth in these major markets relative to fiscal 2024. And now I’ll turn the call over to Haji to review our fiscal 2025 third quarter results and provide additional details around our updated outlook and actions to drive shareholder value for the remainder of the year and beyond.

Haji Glover: Thank you, Peter, and good afternoon, everyone. Today, I will refer to our adjusted results for the third quarter, excluding onetime items. Please refer to our press release tables and SEC filings for a complete discussion of onetime items and a reconciliation with related GAAP figures. As Peter discussed earlier, third quarter revenues increased and operating loss improved from a year ago. In the third quarter, revenues increased 4% to $335.4 million, and profitability improved by multiple measures. The company’s seasonally adjusted operating loss was $20.9 million, an improvement from $30.6 million in the prior year period. Adjusted EBITDA was $6 million relative to a loss of $7.2 million a year ago. Net loss improved to $1.3 million from a loss of $23.3 million in the prior year period.

On a per diluted share basis, adjusted loss improved to $0.05 compared to a loss of $0.80 last year. Turning to our segment results. In Children’s Book Publishing and Distribution, revenues for the third quarter increased 5% to $203.3 million, primarily reflecting growth in both Book Fairs and Book Club channels. Segment adjusted operating income was $7.6 million, up from $2.8 million in the prior year period, reflecting higher revenues and School Reading Events. Within SRE, Book Fairs revenues were $110.7 million in the third quarter, an increase of 8%, primarily reflecting the larger number of fairs held in December compared to the prior year period, which contributed to higher fair count in the third quarter. Revenue per fair was in line with prior year, close to record levels and significantly higher than pre-pandemic levels.

We expect fair count to contribute to modest growth in our Book Fairs business this school year, offsetting the consumer spending headwinds we expect to continue in the fourth quarter. Book Club revenues were $15.2 million in the quarter, an increase of 14%. We’re encouraged by higher order volumes and revenue per sponsor in this business after strategically transitioning Book Clubs to a smaller, more profitable core business in fiscal 2024. We continue to adapt various offerings to improve teacher engagement for the next school year. In our Trade Publishing division, revenues were $77.4 million in the third quarter, in line with the prior year. We expect new releases in the fourth quarter, especially Sunrise on the Reaping to positively impact results in the fourth quarter in spite of the softness in the retail markets as consumers pull back on discretionary spending.

Turning to our Entertainment segment. Revenues were $12.8 million, reflecting the contribution of 9 Story. Segment adjusted operating loss was $2.4 million compared to $0.1 million a year ago. The current year period includes $2.3 million in incremental amortization expense on intangible assets related to the acquisition. On a pro forma basis, 9 Story revenues were down relative to prior year period, primarily driven by anticipated delays in production green lights. As Peter discussed, we remain encouraged by recent momentum we’ve seen, and are simultaneously focused on production and development work on video-on-demand platforms. We continue to expect company-wide synergies to benefit this segment in fiscal 2026 and beyond. Turning to Education Solutions.

Segment revenues were down 16% to $57.2 million in the third quarter, primarily reflecting lower spending by schools and school districts on supplemental curriculum products. Segment adjusted operating loss was $6.9 million in the third quarter compared to a loss of $0.8 million in the prior year period. Given the high flow-through of revenue in this business, lower revenue significantly impacted operating margins and profitability. As Peter noted, our teams are developing new supplemental products for schools, which we expect to begin to contribute to fiscal 2026 results. Looking at the remainder of the year, we anticipate growth in our state and community partnerships, driven by expanded participants and state-sponsored programs. We continue to move forward with investments in this important business segment.

Given the loss of operating leverage on lower sales, we’re focused on accelerating our sales growth, while also aligning spending with our updated top line outlook. Over the long term, we’re focused on optimizing the business to reach its potential and position it for success. Finally, International segment revenues were $59.3 million in the third quarter. Excluding the $2.7 million year-over-year impact of unfavorable foreign currency exchange, segment revenues were up $2.9 million, reflecting higher revenues in major markets, particularly in Canada and the U.K. Segment adjusted operating results improved to a loss of $2 million compared to a loss of $5.9 million in the prior year period, reflecting higher revenues and continued optimization of this business to drive growth.

We continue to expect modest growth in our major markets and operational efficiencies to drive improvements in operating margins and contribution in the International segment year-over-year. Unallocated overhead cost of $17.2 million in the third quarter decreased from $26.6 million in the prior year period, primarily driven by lower employee-related costs. Now turning to cash flow and the balance sheet. In the quarter, net cash used by operating activities was $12 million compared to net cash provided of $13.1 million in the prior year period. This decrease was primarily driven by lower customer remittance on decreased sales and higher interest payments related to the company’s borrowings, partly offset by lower cash taxes. Free cash used in the third quarter was $30.7 million, compared to $7.1 million in the prior year period, primarily reflecting lower cash flow from operations.

At quarter end, the company had borrowings of $275 million under the recently upsized unsecured revolving credit facility to fund the acquisition of 9 Story Media Group and working capital needs. At the end of the quarter, net debt was $189.4 million compared to a net cash position of $107.7 million at the end of fiscal 2024, primarily reflecting the 9 Story Media Group acquisition and cash returned to shareholders through dividends and share repurchases. We believe our strong balance sheet provides significant flexibility with modest debt and non-operating assets that could be monetized and deployed in accordance with our capital allocation priorities, if and when the company chose to and market conditions permitted. As disclosed in our quarterly and annual filings with the SEC, Scholastic owns is 355,000 square foot, headquarters building in Soho, New York City.

Within that building, there are 26,600 square feet of premium retail space that are currently under lease and expected to generate $11.1 million in rental revenue in fiscal year 2026, based on currently held lease agreements. Of the remaining 328,400 square feet of Class A office space, 108,000 square feet are currently being marketed, as we consolidate our use of the building. Offsetting gains on potential monetization transactions, the New York City headquarters has a sizable tax basis, reflecting the purchase of 555 Broadway in 2014 for approximately $255 million and subsequent improvements, less accumulated depreciation. In addition to the New York City headquarters building, Scholastic owns its distribution facilities, including three warehouses with 1,459,000 square feet of space and 162 acres of related land, situated in and around Jefferson City, Missouri.

These facilities capacity is approximately 70% utilized at the moment. The tax basis on these assets is low, reflecting many years of accumulated depreciation. We continue to return excess cash to shareholders in the third quarter through our regular dividend and open market share repurchases consistent with our capital allocation priorities. We repurchased 1.45 million shares last quarter for $30 million. Together with our regular dividend, we returned over $35 million in the third quarter. Our Board of Directors has authorized an additional $53.4 million for repurchases, increasing our current share buyback authorization to $100 million. The company expects to continue purchasing shares, from time to time as conditions allow, on the open market or in negotiated private transactions for the foreseeable future.

Turning to our outlook. In the fourth quarter, we expect modest revenue growth compared to the prior year period, supported by the release of the fifth Hunger Games book and solid results in School Reading Events as we navigate increasing spending pressures in particular for Education Solutions. As Peter noted, we now anticipate adjusted EBITDA of approximately $140 million at the low end of our original guidance range of $140 million to $150 million, and modest revenue growth year-over-year compared to our prior guidance of 4% to 6% growth. The outlook for full year free cash flow remains between $20 million and $30 million, reflecting our planned CapEx in this year’s larger-than-usual working capital investments. In the third quarter, largely based on the external factors discussed today, we proactively targeted and executed on cost-saving initiatives.

As I discussed on December’s earnings call, we’ve reduced discretionary and non-revenue-generating expenses in consulting and non-priority functions and businesses. We also froze hiring in these areas and executed a series of strategic departmental reorganizations globally. We’re taking additional cost actions in the fourth quarter and tightly managing cost as we close out the year. We expect these onetime and ongoing cost actions to benefit results in the current fiscal year and going forward in fiscal 2026. Beyond this fiscal year, we’ll continue to focus on optimizing our business and aligning spending with our long-term strategy and growth priorities. And finally, I would like to address the impact of new tariffs on our business. As Peter noted, we continue to expect minimal tariff-related exposure on our inventory costs for the remainder of fiscal 2025 and the first half of fiscal 2026.

Beyond that, we’re focused on proactively managing tariff-related costs within the current volatile environment. Books are generally excluded from the current tariff increases. Scholastic’s primary exposure to these incremental tariffs is on non-book products, including novelty items, which we currently source from countries with tariff increases, including China. Like most U.S. publishers, we also source paper from Canada, which currently is subject to new tariffs. Based on our current sourcing arrangements, and implemented or announced tariffs, we currently expect an incremental impact on our cost of product next year in the mid-single-digit millions range. As we’ve done for the past 10 years, we’ll continue to work to actively reduce the tariff impact through alternate source of arrangements, changes to our product specifications and modest price increases as necessary.

Overall, we remain confident that our global scale, highly optimized supply chain and pricing power will help mitigate against material tariff-related exposure. We’ll continue to monitor the complex situation around tariffs and provide further updates on our year-end call. Thank you for your time today. I’ll now hand the call back to Peter for his final remarks.

Peter Warwick: Thank you, Haji. In conclusion, after achieving solid results in our third quarter, Scholastic is now focused on achieving modest revenue growth in the fourth quarter and managing costs as we navigate short-term headwinds for the remainder of the fiscal year. Despite these near-term pressures, we remain confident in Scholastic’s long-term growth opportunity and are committed to continuing our plans to grow in our core and adjoining markets, where Scholastic’s brand, IP and distribution channels present compelling growth opportunities to meet kids, families and schools essential needs to educate, inform and engage kids. Thank you very much. Now let me turn the call over to Jeff.

Jeffrey Mathews: Thank you, Peter. With that, we will open the call for questions. Operator?

Q&A Session

Operator: [Operator Instructions] Our first question comes from the line of Brendan McCarthy with Sidoti. You may proceed.

Brendan McCarthy: Great. Good afternoon, everybody. Thanks for taking my questions here. I just wanted to start off in the Trade channel. I know you mentioned your pretty favorable outlook on frontlist title sales from The Hunger Games title and the new Dog Man release. Just kind of wondering how we can think about backlist sales given consumer pressure, but also the prospect that some of these frontlist titles may drive stronger backlist sales of earlier titles in the series. Just kind of wondering how we can think about that going forward.

Peter Warwick: Thank you. It’s Peter here. One of the great things about successful frontlist titles, particularly the Dav Pilkey that we’ve just published and also the Suzanne Collins is that it drives their backlist sales as well. So one of the ways in which we can improve backlist performance is actually through very successful frontlist performance with titles from key authors. And I think it’s something that we will continue to see because the great benefit we’ve got going forward, particularly in the fourth quarter — this fourth quarter with Suzanne Collins and then with the new Dog Man book coming in our next financial year, I think that it’s that successful frontlist publishing, which can really help to drive backlist sales. And that’s really what we’re focusing on right now.

Brendan McCarthy: Got it. Peter, and I wanted to turn to Education Solutions. It sounds like this quarter was impacted by a slowdown in sales at the school level and at the state level. Just curious if you’ve seen — has there been a change in the funding level for school districts and states? Or has it simply just been a case of the states and school districts pausing spending for the moment?

Peter Warwick: I think for the most part, it’s been a question of schools and districts being more cautious. As you know, schools funding is 90% of that comes from state and local. Where there’s been some concern is about the amount of federal funding that there might be going forward. I think everybody expects that federal funding for things like Title 1 and so on is going to continue. But I think it is important that a number of these schools are holding on to some of their funds. Just as kind of pausing so that they can see what things work out like during the next few months. And one other factor that we need to take into account is that schools are putting in quite a lot of focus on their core curriculum needs. We are primarily a supplemental provider.

And therefore, in keeping with the other supplemental education providers that we know that has also had some impact on purchasing, which has impacted us. That’s a cyclical impact because what tends to happen is that once schools get their materials for core curriculum, they then buy in supplemental materials to suit the particular part of the country or the city or whatever it might happen to be so that they’ve got an overall both curriculum and library resources to support the students that they’re actually educating.

Brendan McCarthy: Got it. And as a follow-up, looking at funding on the federal level, we’ve seen headlines around the Department of Education and cutbacks there. I guess going forward, more from a broad level, do you expect any material changes in funding, I guess, more broadly?

Peter Warwick: Not necessarily because I think that a lot of funding is congressionally mandated and therefore, it’s not suddenly going to be turned off, we don’t believe or anything like that. What we are seeing is the continuing — the continuation of a trend that we’ve seen, which is more spending is actually being done at a state and local level and rather than from federal. So it’s continuing that. We also see a continuing trend of really more parent choice in the way that funding is done so that you will see that in charter schools and private schools and parochial schools, these are opportunities for us going forward because they’re more likely to be good hunting grounds as it were for our people going forward.

Brendan McCarthy: That makes sense. And in the Education Solutions business, I know you mentioned a strategic review is in the process. Can you provide additional color on what that might entail? Are you considering a sale or maybe something more internally led?

Peter Warwick: No, at the moment, this is internally led in the sense that what we want to do is to make sure that we’re putting our resources into the right places going forward. We’re getting some help in doing that. I mean we’ve got a tremendously powerful brand. And this is a business where we believe that we’ve got the right to win. And I think we just want to make sure, given that we’ve had these stresses and strains, alongside some other supplemental publishers as well. But we want to make sure that we’re absolutely doing the right thing in order to be successful in part of the market, which is absolutely core to Scholastic’s history.

Brendan McCarthy: Got it. And one more question for me on the real estate side. I appreciate the color on the asset base there. Just curious if you can provide maybe what a collective fair value might be of the warehouse in Missouri as well as the New York City headquarter buildings.

Haji Glover: Yes, Brendan, this is Haji Glover. How are you doing?

Brendan McCarthy: Hi Haji. Good. How’re you?

Haji Glover: All right. So on the real estate, we can’t really — well, we won’t provide an estimate on the number or what the properties are worth. But what we wanted to do is really give our investor base an opportunity to actually have all the information in one place. So that’s the reason why we’re putting it out there. But I’m sure that any investor with the information would be provided can come up with — based on the rental income and some cap rates, they can come up with a valuation.

Brendan McCarthy: Understood. That makes sense. Thanks, Haji. Thanks, Peter. That’s all from me.

Haji Glover: Thank you, Brendan.

Peter Warwick: Thanks. Bye-bye, now.

Operator: Thank you. And this concludes our Q&A. I will pass the call back to management for any closing remarks.

Peter Warwick: Well, it’s Peter here. Thank you, everyone, for joining today’s call and for your continued support. I’d like to thank all of our Scholastic employees for their great work so far this year. And we would also like to thank our shareholders for their continued support. We look forward to executing on our plan for fiscal 2025 and continuing to make progress towards realizing Scholastic’s long-term opportunities. Thank you.

Operator: Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect.