Lincoln Educational Services Corporation (NASDAQ:LINC) Q3 2023 Earnings Call Transcript

Lincoln Educational Services Corporation (NASDAQ:LINC) Q3 2023 Earnings Call Transcript November 6, 2023

Lincoln Educational Services Corporation beats earnings expectations. Reported EPS is $0.07, expectations were $0.06.

Operator: Good day, and thank you for standing by. Welcome to the Lincoln Educational Services Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Michael Polyviou. Please go ahead.

Michael Polyviou: Thank you, Crystal. Good morning, everyone. Before the market opened today, Lincoln Educational Services issued its news release reporting financial results for the third quarter ended September 30, 2023. The release is available on the Investor Relations portion of the company’s corporate website at www.lincolntech.edu. Joining us today on the call are Scott Shaw, President and CEO; and Brian Meyers, Chief Financial Officer. Today’s call is being recorded and is being broadcast live on the company’s website and a replay of the call will be archived also on the company’s website. Statements made by Lincoln’s management on today’s call regarding the company’s business that are not historical facts may be forward-looking statements as the term is identified in Federal Securities laws.

The words may, will, expect, believe, anticipate, project, plan, intend, estimate and continue, as well as similar expressions are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results. The company cautions you that these statements reflect current expectations about the company’s future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond the company’s control that may influence the accuracy of the statement and the projections upon which the segment and statements are based. Factors that may affect the company’s results include, but are not limited to the risks and uncertainties discussed in the Risk Factors section of the annual report on Form 10-K and the quarterly report on Form 10-Q filed with the Securities and Exchange Commission.

Forward-looking statements are based on the information available at the time those statements are made and management’s good faith belief as of the time with respect to future events. All forward-looking statements are qualified in their entirety by this cautionary statement and Lincoln undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events or otherwise after the date thereof. Now, I would like to hand the call over to Scott Shaw, President and CEO of Lincoln Educational Services. Scott, please go ahead.

Scott Shaw: Thanks, Michael, and good morning, everyone. Our transformative growth strategy continued to generate exceptional results during the third quarter as revenue increased 10.5%. After realizing 18% student start growth during our second quarter, students start growth during the third quarter surpassed 7%. These top line results exceeded our expectations and as Brian will review during his prepared remarks, we are increasing our guidance for the full-year. Our top line growth was achieved through student growth, a 3 percentage point increase in average student population, and a 6.8% increase in average revenue per student. The continued rollout of our hybrid instructional platform, which we call Lincoln 10.0, also contributed to increasing our average revenue per student growth.

As we’ve discussed with you in the past, the hybrid model combines hands-on learning at campus facilities, while delivering a greater component of classroom work through online instruction. It enables our students to work part-time or manage other commitments, while they pursue their Lincoln Education, and it’s specifically designed to help a higher percentage of students to graduate. The hybrid model also standardizes our programs across campuses with on-campus time slots of morning, afternoon, and evening courses and with consistent start dates that provide greater flexibility, efficiency, and overall capacity at our existing campuses. The rollout of our hybrid model at most campuses coupled with adding existing proven programs at select campuses positions us to drive higher campus and company’s profitability in the long-term once we complete our transition in the model — transition to the model in 2025.

During the third quarter, our exceptional students’ start growth was driven by the increased number of leads generated by our marketing programs. This lead generation is occurring across the board, both geographically as well as from a curriculum perspective, and is accompanied by a healthy conversion rate of those leads. What we find particularly encouraging is that this lead generation student start growth is nearly all organic. There is little if any contribution from recently started programs since their launch dates were delayed due to later than expected regulatory approval. Once our recent initiatives start to contribute to student starts, we are very well positioned to continue student start growth. During the third quarter, we saw a shift in the marketplace beginning to take hold.

From both a geographic and curriculum perspective, we are experiencing increased demand for Lincoln’s programs, and this increased demand is occurring despite a continued very low unemployment rate and exceptional GDP growth. It appears that more and more people are interested in acquiring real hands-on skills that lead to solid careers. There are a number of factors driving this increased interest. First, many people are questioning the value of a four-year degree and the accompanying debt. Many students that eventually do graduate with a four-year degree don’t have the marketable or applicable skills that today’s employers demand. At Lincoln, we strive to provide strong ROI programs that lead to solid, in-demand careers, and we deliver these programs in a supportive environment that focuses on graduating and placing students.

Also, the careers we offer will most likely not be replaced by artificial intelligence or be offshore, adding security to a student’s career decision. With our country’s growing need for middle skills tradespeople, we feel good about our positioning and long-term growth opportunities. We also believe that being aligned with industry also drives interest in our programs. For example, in the past year, we have launched two Tesla programs, one in Denver and the second in Columbia, Maryland, and in Nashville, we launched our first specialized training program for Truck OEM Peterbilt. Both companies approach Lincoln since we are known for quality graduates and our ability to be a strong partner focused on helping our students, while supporting each company’s specific needs.

During the second quarter of 2024, we will start to layer on starts at our new Atlanta campus, as well as the first programs developed under our replication strategy. Further out, our new lease in Nashville gives us twice the space that we have at the new Atlanta facility, and when we open the new Nashville facility in the first-half of 2025, it will include two new programs in addition to the current Nashville market offerings. During this quarter, we purchased a new facility in Levittown, Pennsylvania, which when opened during the first-half of 2025, will house our programs serving the Philadelphia market. This new facility gives us the space to expand our offerings in Philadelphia beyond automotive to include HVAC, welding, and electrical.

And the facility has space to add additional programs or partnerships. Brian will review our strategy regarding the purchase of this facility and our near-term plans during his comments. We remain on track to achieve our objective to develop 10 new programs under the replication strategy. Many of these programs are already in some stage of development and will begin enrolling during 2024. The remainder are planned to be open during the first-half of 2025. They all deploy the Lincoln 10.0 platform and we remain on target to realize our three-year profitability goals for each of these 10 programs. At the same time, we continue to pursue our strategy of opening one new campus per year. Atlanta will welcome our first classes during the second quarter of next year, and last Friday we announced our plans to expand into the Houston, Texas market.

Our first campus in Houston will be located in the heart of one of Houston’s busiest commercial corridors and strategically located for both student convenience and maximum graduate exposure to area hiring managers. The new Houston campus will represent our second campus in Texas, and it’ll allow us to take advantage of the country’s fourth largest employment market. The new campus will feature an approximately 100,000 square foot training center offering career opportunities in the auto, diesel, welding, HVAC, and electrical fields. Of the 2.4 million jobs that are expected to become available nationwide in these industries by 2032, over 290,000 of those jobs are projected to be in Texas. Over the next two years, as we layer on new campus openings and the program replication strategy, we consistently expand our opportunities to increase overall student starts, while we remain focused on continuing the impressive organic start growth at existing programs.

Our strategy in a successful execution fuels our long-term optimism for Lincoln to prepare increasing number of students for good paying, rewarding, and essential careers, while helping American Corporations close their skills gap. Our new campus’ program replication strategy, the Lincoln 10.0 platform, and improving the efficiencies and effectiveness of our financial aid programs are requiring, as we have said in the past, increased investments during 2023. Some of these initiatives require us temporarily to double up on processes so that we maintain our high level of service. During the third quarter, these investments were primarily recognized in SG&A expenses and supported our strong student start growth and higher lead generation. Brian will provide more details, as well as the progress we have made on bringing these increases down during his remarks.

Recently, the Department of Ed issued its long-awaited updated rule on gainful employment. The rule establishes specific debt-to-income percentages that educational programs must achieve. The data used to establish the percentages won’t be available until July 1st of next year. We have some small programs that might be impacted by the rules implementation which wouldn’t come until two years after the July 1st 2024 data setting date. We expect that others with a larger presence in the curriculums most likely to be impacted by the rule setting will challenge the rule, which has been successfully done in the past. The bottom line is that we are required to take, sorry, the bottom line is that if we are required to take some action, we don’t expect the action to have much impact on our EBITDA growth and that programs potentially impacted aren’t part of our replication strategy or new campus development plans.

2023 is shaping up to be a very strong year for Lincoln and we are positioned to continue our growth in 2024 and beyond. We should start to see improvement in our operating efficiency by the second-half of next year, but we expect to continue to make investments in replicating programs and opening up new campuses for the foreseeable future. The interest in our programs and the new hybrid teaching model is quite strong and employers continue to face increasing challenges when it comes to finding trained employees. At the same time, I noted earlier in my remarks how we are seeing an increased number of prospective students looking for alternatives to four-year college. Our strong graduation and placement rates provide excellent reference points.

And our balance sheet, which has never been stronger, is enabling Lincoln to expand our programs and locations, which will create long lasting benefits to our students, our graduates, our instructors, our corporate partners, and increasing returns to our shareholders. I also want to announce that we will be hosting a virtual Investor Day from our new Atlanta campus sometime in the first-half of next year. More information on this event will be made available at the beginning of the new year. Now I’d like to turn the call over to Brian, so he can review some of our financial highlights during the quarter as well as our increased guidance. Brian?

Brian Meyers: Thanks, Scott. Good morning and thank you for joining our third quarter earnings call. Before I begin my prepared remarks with Veterans Day being celebrated in a few days, I would like to take a moment to thank our veterans, our students, alumni, and instructors who have sacrificed and served to protect our great nation. As Scott highlighted, we are very pleased with our significant progress made towards our long-term strategic growth plan. With the addition of the Houston and Atlanta campuses, we’ll be expanding our footprint to 23 campuses in 2025. Moreover, the relocation of our existing Philadelphia and Nashville campuses will enable us to expand our program offerings, growing our student population and adding to our earnings.

In terms of the Philadelphia campus relocation, as previously mentioned, we purchased a facility in Levittown, Pennsylvania to serve as the future campus location. We are now pursuing a sale lease back agreement, which should enable us to recover our initial investment of $10 million and reinvest the proceeds in the facility build out. Accordingly, as of quarter-end, the purchase price of this facility is presented on the balance sheet as assets held for sale. Turning to the P&L results, which excludes the transitional segment, the pre-opening costs of our new Atlanta, Georgia campus, and non-recurring items. As a reminder, the transitional segment includes the Somerville, Massachusetts campus for which we have completed the successful teach-out of the final students as of the end of October.

We’ll continue to incur some limited expenses through the end of the year. Revenue during the quarter increased 10.5% or $9.4 million to $99.5 million. The increase in revenue was mainly driven by student stock growth of 7.1% and average revenue per student growth of 7.3%. To expand on those drivers, the student stock growth was mainly derived from organic programs, and the increase in average revenue per student was mainly attributed to tuition increases, combined with the acceleration revenue recognition, particularly for students enrolled in our evening programs under our new hybrid teaching model. Operating expenses were $96 million in line with our expectations after adjustments for non-recurring items detailed in our adjusted EBITDA calculation reflected in our Q3 earnings release.

The main expense increases over the prior year were instructional expenses, largely due to our population growth and merit increases, planned increases in marketing investments, which are generating greater returns as evidenced by our flat cost per start during the quarter and our higher bad debt expense due to higher student accounts receivable. We ended the quarter with higher levels of receivables due in part to our initiative to transition our financial aid process, which continues. Adjusted EBITDA was $6.1 million, compared to $7.4 million, after excluding non-recurring items detailed in our Q3 earnings release. Although 2023 is slightly behind last year, we are pleased with this result as our growth has delivered performance that was slightly above our internal plan given our high-level investments this year.

Diluted EPS was $0.07 based on $30.7 million weighted average shares outstanding. Now turning to the balance sheet and cash flow. We ended the quarter with a strong balance sheet with approximately $70 million of total cash and no debt outstanding. During the quarter, we earned approximately 900,000 of interest income and $1.9 million for the nine months. Cash used in operating activities was approximately $6.7 million. This quarter, we experienced some delays in our cash collections, leading to a higher accounts receivable balance and the previously mentioned increase in bad debt expense. In addition, our income tax payments materially increased in the third quarter, compared to prior year. We paid nearly $4 billion more of income taxes this year, since we have fully utilized our federal NOLs to offset our taxable income.

In terms of state NOLs, we have approximately $30 million of gross NOLs to utilize in 2023 and beyond, which will reduce our future state tax liability. Capital expenditures during the quarter were $17.8 million, which includes $10 million for the purchase of our Levittown, Pennsylvania facility. It also includes the buildout of our new Atlanta campus. Lastly, we are updating our guidance to reflect our continued strong performance in Q4 business momentum. We’re raising revenue outlook to be between $370 million and $375 million. We’re raising the lower end of the range of adjusted EBITDA. We now expect to range between $24 million to $26 million. We’re raising our adjusted income outlook to range between $12 million and $14 million. In terms of student starts, we’re increasing our projections to range between 8% to 11%.

And lastly, we’re refining our capital expenditures outlook to range between $30 million and $33 million. Capital expenditures guidance includes the new Atlanta build out, but excludes recently purchased facility in Levittown, Pennsylvania. In terms of stock-based compensation, we expect it to be approximately $5 million for the year, and Q4 stock expense to be around $800,000. In conclusion, throughout the first nine months of 2023, we have consistently achieved better-than-anticipated results across our key performance metrics. We remain focused on our key growth initiatives. And I want to acknowledge the entire team’s efforts and contributions in delivering another strong performance this past quarter. I’ll turn the call back over to the operator, so we can take your questions.

Operator?

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Q&A Session

Operator: Thank you. [Operator Instructions] And our first question will come from Alex Paris from Barrington Research. Your line is open. Please check that your line is not on mute. And Mr. Paris, if you’d like, you can please try rejoining by using the call me option and we’re going to move on to the next caller. And our next question will come from Steven Frankel from Rosenblatt Securities. Your line is open.

Steven Frankel: Good morning. I wonder, Scott, if you could give us a little more color on the nice momentum here in start? Do you think this is reflecting the fact that students no longer feel some of those inflationary pressures that was keeping people on the sidelines or is there something else going on that you think is driving the changes?

Scott Shaw: Thanks, Steven, and good morning. I think it’s a number of things. You are right, last year during the summertime, gas prices were quite high, which really impacts our students on a day-to-day basis. And while gas prices aren’t as low as they’ve been maybe historically, it doesn’t seem to be impacting students as much. There is still continued lots of talk about inflation, but I guess what I have to attribute it to is there just seems to be this stronger interest overall, as I mentioned, in our types of programs. And I think based off of what I hear, somewhat anecdotally as well as what I read out there, certainly the current generation is thinking much more speculatively, I guess, about college. And so I think there are more people interested in doing what we do, and I think more people are seeing value in working with their hands.

And so I think there are a number of things that are frankly working in our favor. And I anticipate that, that should continue for quite some time just because there is strong demand out there and you constantly are seeing articles about the need and demand for people that work with their hands. So a lot of things are certainly working in our favor. That’s for sure.

Steven Frankel: And then on the cost side, how are you doing in attracting and retaining staff?

Scott Shaw: Yes, good question. The good news is we’re doing better. Our turnover in staff is down year-over-year. We are seeing frankly more applicants per person that we’re looking for. So we think that bodes well. That means maybe the employment market is softening for some as we’re seeing stronger demand and more interest, and things have definitely stabilized from where they were.

Steven Frankel: Okay, That’s great for me. Thank you. I’ll jump back in the queue.

Scott Shaw: Thanks, Steven.

Operator: Thank you. And our next question will come from Alex Paris from Barrington Research. Your line is open. And again, please check your mute button to make sure that you’re not muted. And Mr. Parris, we’re unable to hear you. If you’re able to disconnect and try dialing back in using the call me feature. We’ll go to your question next. And speakers, please stand by. We’ll move to our next question. And our next question is going to come from Eric Martinuzzi from Lake Street Capital Markets. Your line is open.

Eric Martinuzzi: Hey, congrats on the good numbers and the strong outlook. I wanted to drill down on the new student starts. You talked about kind of just an overall appetite for you know folks questioning maybe the value of a four-year degree just within your program, so I’m wondering if you could stratify into kind of the transportation and skilled trades versus healthcare and other? Are you seeing it equally across those two different categories?

Scott Shaw: Yes, we are actually seeing it across kind of all of our programs. Obviously, some are stronger than others, but you don’t see a difference between whether it’s a healthcare program or a skilled trades program or an automotive program. They’re all up from last year, which is a really promising sign, as well as geographically we don’t see any softening in any particular markets as well.

Eric Martinuzzi: And then as far as the centralized financial aid just that conversion of enrollment to start is that having some impact or not really?

Scott Shaw: It’s not having the impact on our starts, I mean, I think if anything we started more students as we mentioned than we anticipated. So we still are working out some bugs in that area to make that more efficient. It’s not nearly where we want it to be. But our objective is to make the whole process around financial aid much more user friendly for our students and their families. And we’re going to continue to work in that direction.

Brian Meyers: And Eric, to highlight what Scott mentioned, in our earnings release, we do disclose the transportation was up 7.6% and healthcare was up 5.8%.

Eric Martinuzzi: Okay, appreciate the clarification there. The cash, Brian, we finished out September at $70 million. You did say that that includes the $10 million that was spent for Levittown, but you expect to get that back and then turn that into investment in Levittown with the sales lease back and that there’s some Atlanta build out in there. But how do we think about kind of a normalized cash balance post the puts and takes for Levittown and Nashville investment and remaining Atlanta investment?

Brian Meyers: Right, so at year-end, obviously, we’re going to put out what our CapEx is going to be, which is going to be significant last year with the announcement with Houston and building out national and Philadelphia. What I’ll say is, you know, for the fourth quarter, even with significant capital expenditures and like we mentioned that we’re going to be looking to do a sale lease back, to get the purchase price for Philly, I think our cash balance will be similar to the nine months. So it’ll be approximately $70 million we’re anticipating, even with the capital expenditures in the fourth quarter.

Eric Martinuzzi: Got it. Okay. And then the tuition, I know it’s probably planning stages for 2024, but you’ve benefited, your revenue growth has benefited from tuition increase this year. What’s the plan for next?

Scott Shaw: But we’re looking at tuition increases right now. There will be tuition increases. It might not be across the board as it was in this year, but we’re looking by program, the ones that have significant enrollments with smaller gaps, so we’re analyzing that today, and we will have tuition increases. Probably it could be anywhere from 2% to 5%.

Eric Martinuzzi: Okay, congrats again on the quarter. Thanks for taking my questions.

Scott Shaw: Thank you.

Operator: Thank you. [Operator Instructions] And our next question will come from Raj Sharma from B. Riley. Your line is now open.

Raj Sharma: Hi, thank you for taking my questions. Again, a solid performance, congratulations.

Scott Shaw: Thanks, Raj.

Raj Sharma: Sure. I wanted to ask you about just sort of the overall operating margin. How should we look at, you know, given the transition to the hybrid model, overall operating margin increase or change going forward. Can you talk about that, what you see — what you expect, and also related to that or the operating costs per quarter, we had higher costs per quarter this year, are we tracking to your model and what should we see that going forward?

Scott Shaw: Sure. So, I mean, certainly our objective is to move this company to a higher profitability than where we are today with getting it up to the mid-teens EBITDA margin in a couple of years. As we highlighted in this current year, we have some increased costs as we make some of the investments that we believe are necessary to help us achieve those goals. And with the new program replications and new campuses, and as we increase our top line more, we will start seeing more drop to the bottom line, but you really aren’t going to probably see significant amounts into the latter half of next year going into 2025. And so certainly from quarter-to-quarter there could be some variances, but there’s no reason why this company won’t be in the mid-teens from an EBITDA perspective in the coming years.

And your other question, we are tracking towards our internal plan. Instructional was increased, but we were budgeted to increase. And the good news, a lot of that was due to our increased population and merit increases. And marketing, actually our marketing was down from our original budget simply because there’s delays in some of our program replications. Since it got delayed, we cut back the marketing there. But even though we were over for the year, we were on plan with that. And as I think I said in my prepared remarks, marketing is still doing very well. You know, we had flat costs for start, so we’re not paying a lot more for that. We’re not paying more for that incremental for students.

Raj Sharma: And should we see the operating expenses again in the mid-90s going forward every quarter?

Scott Shaw: Yes, we’ll put out, you know, for next quarter our guidance. But yes, we’re still transitioning to our hybrid model. So we’ll still have some costs there. So the savings won’t be as material for 2024. And similar with our rollout of our new financial aid model. We’re probably not going to experience the savings in 2024 as well.

Raj Sharma: Got it. And then just following, just moving on the two campuses, the Atlanta campus and then the Houston 1, could you talk about, so we should start to see first quarter, second quarter, and the new year would be the start of Atlanta enrollments. Can you give an idea of what sort of revenues and EBITDA contribution you’re expecting from Atlanta and then relative to that, the Houston, is that — that’s largely primarily only in auto and industrial school? And is that a similar sort of a top line and bottom line contribution?

Scott Shaw: Yes, so basically both reflect the new model that we have for new campuses, Raj. So as we said and as we lay out an investor presentation, these campuses should ramp up to low-20s in million dollars of revenue and about $5 million of EBITDA about three years or so after opening up, 3 to 3.5 years after opening up. So we anticipate that to be the same. Yes, they are both focused on automotive and skilled trades. Basically these new models, these new campuses, we’ve taken the best of what we’ve got as far as highest profitable programs and greatest demand for those marketplaces. So they really should serve those areas well and as we say and as I just said it will be low-20s in revenue and about $5 million to $6 million EBITDA each once they’re up and running.

Raj Sharma: Right. And this week we’ll have a new Q3 investor presentation and you’ll see the new updated Atlanta model included in there for 2024? So 2024, it’ll have minor growth in revenue, not growth, and not too robust revenue, and it’ll have EBITDA losses, which will be added back the first year of opening in our adjusted EBITDA, and used them all to have no revenue next year, that will open up in 2025?

Scott Shaw: And I do want to add Philadelphia is almost like a new campus. Today Philadelphia, excuse me, is our only campus with one program and that’s automotive. And we’ve been serving the Philadelphia market for over 60-years. When we move to the new facility, and that starts up and running in the first-half of 2025, we’ll have the benefit of having an electrical program, an HVAC program, and a welding program, as well to complement the auto. And as I said, we’ve been in that market for 60-years, good name brand recognition, and we know from our research that those three additional programs are in strong demand. So it’s almost like opening up another new campus, frankly, in that marketplace.

Raj Sharma: Great, great. Thank you for answering my questions. I’ll take this offline. Thank you. Good luck.

Scott Shaw: Thanks. Appreciate it.

Brian Meyers: Thank you, Raj.

Operator: Thank you. [Operator Instructions] Thank you. And I am showing no further questions from our phone lines. I’d like to turn the conference back over to Scott Shaw for any closing remarks.

Scott Shaw: Thank you, operator. We want to thank you for joining us today and for your continued interest and support. Our performance through the first nine months of 2023 demonstrates that we are achieving our objectives and we remain steadfast on continuing our growth. We have a dedicated team and their efforts in pursuit of excellence allow us to help our students achieve their career goals. We look forward to updating you on our full-year 2023 results during Q1 of 2024. Until then, have a happy Thanksgiving and a safe and joyous holiday season. Thank you, everyone.

Michael Polyviou: Thank you. Crystal, actually somebody did just pop in. As Scott was closing out, is he still available?

Operator: Yes. I just…

Operator: And pardon me, we do have a question from Robert Puopolo from Epic Partners. Your line is open.

Robert Puopolo: Hi Scott, sorry about the last minute entry here. Congratulations by the way, excellent growth.

Scott Shaw: Thank you.

Robert Puopolo: Two questions first, as you look at capital expenditures, sort of, the guidance this year, $30 million to $33 million, do you distinguish between growth capital expenditures and maintenance CapEx or can you? I suspect Levittown would be growth, but — and perhaps Atlanta too, but was curious if you could shed some light there?

Scott Shaw: Sure. So typically, we look at 1% to 2% of revenue as far as what would be maintenance, CapEx, and all the rest is growth. So you can see that the vast majority of our CapEx this year, as well as what will happen next year are all focused on growth opportunities, which is why we feel really good about our growth opportunities in general, because not only as we mentioned getting good organic growth, but we’re going to be able to add and replicate some of our most successful programs into other markets, as well as enter new markets completely like Houston. So we believe these are really solid investments.

Brian Meyers: Right, so added a $33 million about $25 million is really growth related to the Atlanta program expansions.

Robert Puopolo: Okay, great, thank you. Follow-up question in — and perhaps I’ve missed it, but in previous quarters there’ve been discussions about stock repurchase plans and authorizations and so forth and how much had been purchased. Any updates as it relates to that?

Scott Shaw: Sure. Well, the update was we didn’t make any new purchases and as we continue to drive. I think performance our objective is to drive stock price up through those initiatives and so to the extent we see greater opportunity or the board decides that there’s an opportunity to buy back stock, we certainly will do that. But right now, we’re using these resources to help fund, I believe, a good, solid growth for our company.

Brian Meyers: And since we announced the plan, the repurchase plan, we repurchase 1.7 million shares for a little over $10 million.

Robert Puopolo: Super. Thank you very much.

Scott Shaw: Great. Thank you.

Michael Polyviou: Thank you, Crystal.

Scott Shaw: And thanks again everyone. I still wish you have a happy Thanksgiving and a joyous holiday season. Thanks everyone.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.