Q4 2020 Earnings Call

The session you'll need to press star one in your telephone. Please be advised that today's conference is being recorded if you require any for those systems. Please press star zero, Oh, not only to have the conference over to speaking today Mr. Randall White. Thank you. Please go ahead Sir.

Well. Thank you very much welcome everyone to their quarterly Investor call.

Here in a room with this on the call today, our Heather Cob, our chief sales and marketing Officer. We also had great White, our chief operating officer, and Dan I'll keep our Chief Financial Officer got a bunch of cheese here you got turned over to one of them right now Dan give us through stuff on the earnings results all right I'll give a quick update on the fourth quarter and then the.

Here, and then turn right back over so net revenues for the fourth quarter fiscal 2020 were approximately 20.2 million down 3.4 million or 14.

7% from approximately 23 million afforded in the fourth quarter fiscal 2019.

Pre tax profit however was consistent between the fourth quarters of last year in this year at 3.5%.

Net earnings in the fourth quarter fiscal 20 remain consistent with net earnings reported last year as well with just a right around the half a million.

Earnings per share in a fully diluted basis decreased a one cents per share from seven cents reported in the fourth quarter last year to six cents reported in the fourth quarter of physical 2020.

Now onto our full fiscal 2020 results.

Net revenues for the fiscal 2020 were approximately 113 million down 5.8, or 4.9 5.8 million or 4.9% from approximately 118.8 maiden reported in fiscal 2019.

Pre tax profits as a percentage of net revenues decreased from 7.7% in fiscal 2019% to 6.9% in fiscal 2020, primarily associated with the reduced net revenues.

Net earnings in fiscal 2020 were 5.6 million down 1.1 million or 15.5% from net earnings reported in fiscal 2019 of approximately 6.7 million.

And earnings per share on a fully diluted basis decreased 13 cents from 81 cents a sure reported in fiscal 2019 to 68 cents a share reported in fiscal 2020.

Rental this concludes the fourth quarter in fiscal 2020 results, then I'll turn the call back over to you.

Okay, Dan Thank you very much well.

Fiscal year 2020.

Definitely behind this 90 days old information, probably most of you have it.

They were below our expectations, but still a second largest you we'd ever had hundred 13 million.

And 7.6 million pretax is only about five years ago, we made 875000 whole year. So it's it's what was disappointing.

Nobody jump off a cliff over here during the fourth quarter. We this is information on the goal we get we impacts are are.

Earnings and sales.

While we introduced new crude promotion programs and.

In the back office program from IP, and our which consultants used to run their individual businesses.

I will focus office, but it was building the foundation for the year that we're now in.

Almost 90 days into it I will tell you is terrific Houston the highlights March.

Much revenue was down 25% not a real good highlight but that's what they were were impacted by retail division the store closings analyzed by anything so that our retail side was down about 60 or 70%.

We also have a lot of sales through school in library, which are a book fairs those are pretty much Neil.

Any direct business, we have what people do loose.

That was impacted.

So the the consultants were disrupted by all the above and all that has gone on our tenant which is a pretty big Guy I did about 7 billion and made 400 million. After tax probably came just wanted to rent abatement, yeah, Okay, let's do that and we did.

We also on March or April 2nd.

Because of these results from March we applied for a PPP loan.

And we were.

Granted that $1.44 million you on of course, they ask is how many employees you haven't and what you pay him. The one the other clients. So we were granted the.

We've gotten alone.

April came around well thank you April.

Our business exploded.

And so much in fact that 40 days after we got the alone.

We have no short term debt and we paid back.

Nobody ask us to we want you promise to but we kinda like to do the honest unethical playing in this company. We educational development Corporation is just to this kind of the way, we operator business. So we paid it back.

And after that.

Just keeps getting better.

You Bam Division, which I mentioned to you in the fourth quarter, we really set the stage for for this year and it took.

It took whole fashion, we even thought.

April is up about.

60% over April last year, and that's without any the school library business. So we're very happy about that we also got 5000, new sales recruits pretty amazing.

For that.

May it looks like.

We don't have about that number again, so we could very likely have 10000, new sales recruits in this quarter and interestingly enough.

New people to join now they're out here to make money and you know what they do.

And we've got some people who have really Mason come on and May sales at a very short amount of time.

We after being down 25%, we have already provide guidance that will be somewhere between 36, and a half to 38 and a half million I think as compared to about 27 million in the first quarter last year, So where we're pretty happy about.

Thanks are going here very fortunate.

That's best must story, so why don't we.

Let somebody ask them they want to know.

You buy any questions.

As a reminder to ask the question you will be the press star one of your telephone to withdraw your question press the pound King please standby, while we've compiled the candy roster.

I may have told you everything you want to know which is a that's okay.

I see today in our stock is trading at 51000 shares on an uptick.

Which.

Got you got a lack of market were 60000 shares can get in 60000 shares can get out that's a free market.

Very interesting day.

Got a question.

We do other question from Anthony Tiron, So with key equity investors. Please proceed.

Hi, congratulations on great improvement you've had up what I'm.

Concerns about is as the covert.

Process kind of recovers hopefully we get a toward recovery do you see this is a one time effect that you're going to get over the next several months and that things will kind of stabilize again or is this a beginning of a new trend.

Well.

Yes, you will my opinion, everybody knows me I'm always positive because I think we had the very best products in the World, We had an outstanding Salesforce and there and they're making money. We we see a trend like it was in 2016 and anybody who's here in 2016. It grew so fast.

It about killed US we went from 35 went from 25 35 million 35 to 65 and 65 to 106 and that's 65 to 106 about did the sand. So this year, we seen we're seeing a same growth and we're prepared for it.

There are a lot of factors and I wish I could tell you know all the answers Anthony but I will tell you that we're seeing a lot of people who had really great jobs.

And last them right and some other call back and some on and we're seeing a little bit of thought process of you know what this is a pretty nice.

Side gig I'm going to keep that just in case for a fallback in an appeal, saying like main Dennis and I was what I was doing so there's many factors I I can only tell you we have not had a day.

In the last two months that wasn't better the same day a week before that it gets better every week every week every week I have not seen one negative trend since the first of April now that I know, one and half mous in a row is not exactly trend.

But.

We've been here long time, and we've seen a real positive thing and.

There's some great stories here.

In this organization and.

They are the ones that drive the sales growth the people in the field right.

I think the issue is the unemployment rate now is God knows what it is it's a 20% or its 25% and obviously there are a lot of people at home and not working at it not knowing and whether they're going to go back and I think this represents good opportunity and I guess, if you can prove that this is something that they can make some living at and you have.

Got a big Winter then at that point.

I think that's what you're saying.

I am saying that Anthony and I will tell you that we are in a bubble that anyone who has educational material for children.

You are in a good spot some of our customers, we sell to home school curriculums and right now home schooling has taken a whole different viewpoint because people are not sure school is going to open or not.

And we're seeing our customers frantic to buy product from us for their curriculum. They write curriculum and they use our books in that so we're still it is come from other places and bear in mind, we've had hardly any impact from the school business that comes back that used to be about 50% of our business.

My close you me his understanding here, she's smiling and frowning at the same time.

Okay.

So the school business is about.

It's about 15% and we were up 60 without that so it's not like when a died of marketed by goes back to work I don't write down at all I think that people have discovered a products and.

They are working for them.

And I think the trend.

We're going to the trends going to continue.

Yeah, Anthony I had a hot I'll just some then real quick to say you know what did they wanted to thing happens with this business is once you start to generate momentum its really hard stop it so well some people may go back and workforce and schools may start to open back up we may see society.

Back to whatever sense of normal they will were generating thats amazing positive momentum.

People are having success and what are the key ingredients have continued success in the direct selling industry. It's early success and so were seeing that happen with all of these new consultants that have joined in April and even may that they're having early success and while that doesn't.

Typically guarantees you can't ever do that with salesperson.

What it does it shows that the potential is there for it to continue indefinitely.

I will give you kept your other let me give you the policy facts.

The one thing we had to cancel or convention.

And for people come to convention they have to pay there all the expenses.

And that June cost them around $702000, depending where they fly in from drive in from and where they say what have you. So we're going to have a virtual convention and we were talking about it Oh My gosh, you think that we could possibly have 2000 people, who would sign up and have a virtual convention. So we had a day when a day that was.

I'm sitting here is also a new when registration began and we were hoping to get 2000.

Oh, My Gosh before that day was out we had over 5000 people. This year over this and now we're up.

6200 usual thank for your last year it costs us.

258000 to put this one or Nick cost was that.

This is probably a profit this year, let me tell you won't let me.

The most policy thing about direct selling companies.

People do this in heaven legitimate product that that is suitable to the public and they make money they tell people.

I'm going to give you two stories on we'll do a quick we have to ladies here.

One of them.

Her family Hernandez minuscule teachers and they were teaching abroad won a contract they came back to the United States because I missed your families. They had very little money, a personal contact and said well when she comes is party, but she didn't really in bought her because she knew she didn't have any money and didn't want to badger her very interesting and.

Somehow she found out about it and she got on the party and joined and.

Gosh.

She well she is very successful now and.

Has probably how many people to download thousands one of our one of our top five earners in the country, while Uh huh.

On someone who is hesitant and here's another one even better and the school teacher.

That.

Was on the party and wanted to join in so she did enter credit card.

Wouldn't wouldn't go the credit card got denied to buy the initial keep the first get to get started well fast forward about four years.

That person.

Earned $35000 last month or down on did over <unk> billion dollars alone. So we had when you have success like that from nice people school teachers, just right Rick people, who earn over 200000 Threeone thousand dollars a year doing this.

Sometimes you can't stop momentum because other people say well I think I can do that I'm not sure I know what you can so there's a lot of factors Anthony that come into this but we are extremely proud of our organization that that people have built a successful business and he meant honest ethical business like we run and we're very proud.

And also them.

That's great that's correct that that that that's that's very positive is this I think once you get them into the processes as well I think what you're saying is there going to see that there's a potential here, whether how quickly the recovery comes becomes less relevant.

There's a business here, whether there was a recovery or not and you know in my opinion, it's got to take a little bit of time, everybody says you know the fourth quarter is gonna be good everything's going to recover but the scientists tell us it's going to take a year year and a half to.

Optimistically to get a vaccine and that'd be able to distributed across the world to do everything else or whatever so this may last a little bit longer than I think people suspect. So that you know it indicates that there may be positive for the business too and you don't go from.

I think you're probably right and I will tell you that we'd never missed a day here, we redeemed in the central business and we take extra precautions everyone's hazard future taken we walk down everything to do times a day, we're very very cautious and we have had not had one incident among about just under 200 and.

Yes, so okay great.

Also a my I might also tell you that as a business has grown and ramped up we have been able to handle it and Craig Who's our chief operating officer.

We find a way we went from March only being able to keep our warehouse busy for 32 hours by April we were into overtime and the second shift and we are up in.

Two shifts and on overtime to stay up with the demand.

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Thanks, What's your largest order that you want to talk a bit about how we're handling the business right.

Right.

Randall mentioned, we go from a month or terminated Dan on for a month.

Mark record record month, so we had to.

Evaluate or infrastructure as far as our software that handles taking orders.

And revamped our revamp that too.

Handled a volume.

We're hiring people in the warehouse and we've had a few 14000 order incoming Dave and asset that yesterday, we shipped 15000 in between the two shifts so.

We can certainly handled the volume right now most days are between 8000 12000 incoming orders so we're positioned to handle.

Being able to keep up but we have a lot of potential we can expand our second shift we can get to a third shift we've got all kinds of auctions there to expand our.

Capability as far as production out so and we're handling it finds this right now actually the missing two is technology everyday every day, we're making a little tweaks to the system.

The most dislike 15000 orders a day, it's been really interesting to watch in what's accounts you go in handling business and.

That income for people, so very very proud of the place and we think that.

We're just getting started someone else must think that today, because we closed 675 on 61000 shares has a big trading day.

Our stock.

And there was one an uptick like that.

Someone must be leak announced some information other than me.

Yeah, and all of that they should be look you know I was with you guys back five six years ago and I remember the problems you had when the volume went up and you couldn't keep up with the volume and it would go at night and day and you don't have the warehouse and it seems such it's different story now than it was four or five years ago. When it was so difficult to do that ramp up.

And now you're ready for it which is which is great to see I have to comment.

I remember.

Are you, saying Oh, there's a system.

It's really nice to have someone who does he was here I know during that period time I ran a third shift have money fund.

But we did what it took and today the technology is so much improved.

Every debt that is little nuances and and the process 15000 win back then we can we couldn't get out 8000. So there is the big change here and.

Our forecast is for the year has certainly increased over what we thought it was going to be and we month, which cause she problems and things like ordering inventory.

We got about a four month lead time on inventory. So if we run out of stock of the product is four to five months to get it back in so you sitting here today.

What about or in $5 million to $10 million inventory because you think this trend is going to continue.

So what we've done because of 2016, we're going to err on the high side and that is what are the inventory that we think is going to happen because the worst is it takes a little bit longer sell it. So we think we're prepared in every area to handle the growth that we're saying it's come so it's nice to see Anthony.

Somebody has been around the while.

Okay. Thank you for for you.

Comprehensive answer I appreciate it good luck.

Thank you.

Again for anyone else that looked like to ask your question. Please press star one in your telephone keypad.

And at the time there no further questions. Thank you.

Okay, well gosh, thank you very much.

We're very fortunate in here and well humble is normally we're not associated with me.

I do feel.

Appreciate and humble about a lot of things that have happened our company, we were prepared for on and we.

Got a break or too with some things here and there but.

We're very appreciative of what has happened here.

The support of most of the shareholders. So thanks for being on a call and.

We'll be here another 90 days, thank you guys.

This concludes today's conference call. Thank you for participating you may now disconnect.

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