Ambassadors Group, Inc. ( EPAX) Q3 2010 Earnings Call October 21, 2010 11:30 am ET Executives William Sennet - Director of Market Research Jeff Thomas - President & CEO Peg Thomas - EVP Tony Dombrowik - CFO & SVP Kristi Gravelle - VP of Finance and Accounting Susannah Stoltz - Discovery Student Adventures Analysts Greg Mckinley - Dougherty & Company Mike Roarke - McAdams Wright and Ragen James Bellessa - D. A. Davidson & Company Greg Mckinley - Dougherty & Company Wilson Jaeggli - Southwell Partners Russ Silvestri - SKIRITAI Capital DeForest Hinman - Walthausen & Company Erica Niemann - Lane Five Capital Greg McKinley - Dougherty & Company Presentation Operator
These forward looking statements include without limitation, statements that relate to expectations concerning matters that are not historical facts. Word such as projects, believes, anticipates, plans, expects, intends, estimates and similar words and expressions are intended to identify forward-looking statements.These forward-looking statements reflect our beliefs or current expectations with respect to among other things, trends in the travel industry, our business and growth strategies, our ability to integrate acquired businesses, future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies such as legal proceedings, financial results and fluctuations in our current results of operations. Forward looking statements involve certain risk and uncertainties that could cause actual results to differ materially from anticipated results. These and other risks are discussed in greater detail in the Ambassadors Group's periodic reports filed with the SEC. All forward looking statements are expressly qualified in their entirety by these factors and all related cautionary statements. We do not undertake any obligation to update any forward looking statements. With that, I will hand the call over to Jeff. Jeff Thomas Thank you. Good morning. Thank you for joining our call. Before discussing our results I'd like to talk about some of the people that we have on the phone this morning. First Kristi Gravelle, who has done a great job as serving as interim CFO for the past 11 months, will transition to Vice President Finance Accounting, where she will remain a critical member of our team. This is a promotion from her position as controller. Second our new CFO and Senior Vice President Tony Dombrowik is also on the call for starting with our company only three days ago. I am pretty sure that this will be the only call that Tony doesn't have a lot to say.
Tony joins us from Red Lion Hotels Corporation, where he has been since 2003. He joined Red Lion Hotels as Director [counting], growing and expanding to executive roles of Senior Vice President Corporate Controller ultimately followed by a promotion to Senior Vice President and Chief Financial Office in 2008.We are pleased that Tony and the Team look forward to his contributions. Regarding our business results, there are several key things that we want to cover on our call this morning. First we posted 7.1 million net income for Q3, 2010. In these challenging times we are pleased that we are reporting profits and continuing to strengthen our balance sheet, although our longer term goal is to renew our growth and achieve full financial recovery. We completed in our summer travel season 2010 without major incident, our program quality saving is measured by net promoter scores improved across the board. The 2011 our Enrolled Revenue is up 7% as of October, 17 compared to last year at the same time. More importantly enrolled revenue for our largest most important product line Ambassadors is up 11% year-over-year. We attribute this increase in the Student Ambassadors enrolled revenue to continued incremental improvements and execution, while concentrated sales and marketing effort, and fewer negative economic impacts. Although we are still early in the process, we are pleased with our current enrolled revenue position for 2011. As we have said before, since having this downturn our customers behavior has deferred from our prior [norms] which makes forecasting a challenge. We still several more reach mainly in our key application enrollment season than we need to maintain our momentum. In addition we can show that we have successful retention program during the winter months. BookRags online study guide and research sites down slightly in gross receives and gross margin as we expected we had lower advertising revenue which was nearly offset by increases in content sales. Discovery Student Adventures has now completed its four year of travel operations. During the year we travel approximately 125 students.
The program for both students and teachers is very strong as expected and as it needs to be. The 2011 travel this point in time Discovery has generated twice as much business from interest from teachers and have drove nearly 150 seats for travel in 2011. This is what wasn't expected that significantly had a rush and had about 30 students enrolled. We continue to believe that Discovery brand distribution network and product content will benefit our shipments in the longer term.Read the rest of this transcript for free on seekingalpha.com