Ladies and gentlemen, thank you for standing by and welcome to the National Research Corporation Third Quarter 2017 Conference Call. During this presentation, all participants will be in a listen-only mode. Afterwards, we’ll conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, November 8, 2017. I would now like to turn the conference over to Mr. Mike Hays, Chief Executive Officer for National Research Corporation. Please proceed, sir.

Thank you, Jason, and welcome, everyone to National Research’s 2017 Third Quarter Earnings Call. My name is a Mike Hays, the Company’s CEO. And joining me on the call today is Kevin Karas, our Chief Financial Officer. I would like at this point to ask Kevin to review with us conditions regarding any forward-looking statements that may be made as part of today’s call. Kevin?

Thank you, Mike. This conference call includes forward-looking statements related to the Company that involves risks and uncertainties that could cause actual results or outcomes to differ materially from those currently anticipated. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For further information about the facts that could affect the Company’s future results, please see the Company’s filings with the Securities and Exchange Commission. Mike?

Thanks, Kevin, and again, welcome, everyone. For our call today, Kevin has prepared remarks regarding our third quarter and year-to-date 2017 performance. After which, we will go directly to any questions that you may have. So please feel free to enter your questions or enter the question queue as Kevin shares our financial highlights. Kevin?

Thanks, Mike. Our total contract value at the end of the third quarter totaled $123.6 million, representing 7% growth over the same period last year. Healthcare system clients with agreements for multiple solutions represented 25%, 21%, excuse me, of our client base at the end of the third quarter of 2017, up from 19% at the same time last year. Subscription-based revenue agreements at the end of the third quarter of 2017 represented 93% of total recurring contract value. Third quarter 2017 revenue was $29 million, an increase of 7% over the third quarter of 2016, and this growth was comprised entirely of organic growth from adding new clients and increasing contract value for existing clients. Consolidated operating income for the third quarter of 2017 was $7.1 million or 25% of revenue compared to $7.3 million or 27% of revenue for the same period last year. Total operating expenses increased by 11% to $21.8 million for the third quarter of 2017 compared to $19.7 million for the same period last year. Direct expenses increased 7% to $12.3 million for the third quarter of 2017, up from $11.5 million for the same period of 2016. Direct expenses as a percent of revenue were consistent at 42% for the third quarter of both 2017 and 2016. Our variable direct expenses as a percent of revenue decreased compared to last year as incremental variable cost of product expenses from revenue growth in the quarter were offset by decreased expenses from changes in data collection methodologies. At the same time, our fixed direct expenses increased as additional resources were allocated for client services. Selling, general and administrative expenses increased to $8.4 million for the third quarter 2017 compared to $7.1 million for the same period last year. SG&A expenses in 2017 included $975,000 of expenses associated with the proposed recapitalization. SG&A expenses were 29% of revenue for the third quarter of 2017 compared to 26% of revenue for the same period in 2016. Our depreciation and amortization expenses stayed consistent at $1.1 million for the third quarters in both 2017 and 2016. The provision for income taxes totaled $3.0 million for the third quarter 2017 compared to $2.6 million for the same period in 2016. The effective tax rate was 42% in the third quarter of 2017 compared to 35% for the same period in 2016. The increase in the effective rate was primarily due to $384,000 of additional tax expense related to nondeductible expenses associated with the proposed recapitalization. Net income for the third quarter was $4.2 million in 2017 compared to $4.7 million in 2016. Our diluted earnings per share decreased to $0.09 for Class A shares and $0.57 per share for Class B shares for the quarter ended September 30, 2017, down from $0.11 per share for Class A shares and $0.66 for Class B shares for the quarter ended September 30, 2016. With that, I’ll turn the call back to Mike.

Thank you, Kevin. And that completes our prepared remarks for today’s call. So Jason, I’d like to open the call to questions please.

[Operator Instructions] Our first question comes from the line of Frank Sparacino from First Analysis.

Kevin, maybe for you. If I look at the expenses during the quarter and back out the $975,000. The expenses were still up materially from Q3. So I was hoping if you could just add a little bit of color there in terms of the stepped-up investment.

Frank, this is Kevin. I think that one of the other areas we did have some additional investment was in recruiting expenses, is we’re looking to for some key positions that, in our kind of middle management. We’re spending a little more in the third quarter than we would have last year. So I think that’s one of the areas. Other than that, I can’t think of anything else really significant right now in the quarter.

Okay. And then maybe one other for me. Just in terms of sort of the new sales activity, obviously, year-to-date tracking a little bit low where we were last year. But is there anything you’re doing today or may be heading into 2018 in terms of trying to accelerate the new sales activity? And any thoughts on just sort of the performance year-to-date in overall market there?

Frank, this is Mike. We’re consistently adding additional sales associates, so while that’s not any new news going into 2018, that potentially could impact sales hopefully in a positive way. But I don’t know that we have changed anything or have anything on our plate to materially alter what we’ve done historically in the sales front.

[Operator Instructions] At this time, Mr. Hays, there are no further questions. I’ll turn the call back to you for your closing remarks.

Thank you, Jason, and thanks, everyone, for your time today. Kevin and I look forward to reporting our progress next quarter. Thank you.

Ladies and gentlemen, that does conclude today’s conference call. We thank you for participating. I ask that you please disconnect your lines.