Q1 2021 Educational Development Corp Earnings Call

Thank you for standing by and welcome to the educational development corporations first quarter fiscal 2021 earnings conference call.

At this time, all participants are willing to listen only mode.

After the speakers presentation, there will be a question did answer session to ask me question. During this session you would need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like the in the conference over to your presenter Mr. Randall White. Thanks.

Please go ahead Sir.

Okay Erika thank you.

Welcome everyone to the quarterly investors call.

I would tell you carry in the room with me we have had their khobar chief sales and marketing officer claim White, our Chief operating officer, and Dan Oh piece, our Chief Financial Officer Woman do first is handed off to Dan to give you a review of the quarterly results.

Thank you Randy.

Mirrors, our first quarter results for fiscal 2021 net revenues for the first quarter were approximately 38.3 million up 10.7 million for 38.8% from approximately 27.6 million reported in the first quarter fiscal 2020.

Pre tax profits for the first quarter totaled 2.6 million an increase of 800000 over the pretax profit of 1.8 million reported in the first quarter last year.

Pre tax profit as percentage of net revenues increased from 6.7% in the first quarter of last year to 6.9% in the first quarter fiscal 2021.

Net earnings in the first quarter of fiscal 2021 totaled 1.9 million compared to approximately 1.4 million reported in the first quarter fiscal 2020.

Pre tax earnings grew 41.6% over the first quarter last year.

Earnings per share on a fully diluted basis increased six cents per share from 17 cents reported in the first quarter fiscal 2020 to 23 cents per share reported in the first quarter fiscal 2021.

Earnings.

For sure for the quarter increased 35.3% over last year.

This concludes the earnings results and I'll pass the call back to win [laughter]. Okay. Dan. Thank you well guys wanted a heck of a quarter.

And it kind of an unusual quarter two because march started out with our first kind of hint about the virus to cold 19.

Well, thanks change for everybody in the world during a period of course it goes back to February but for US we started seeing at March and what happened was our March was down well, let me tell you what happen publishing.

Bush was down because stores closed the are sent to a library sales, which in any of that face to face like this and what have you will basically nonexistence because that was gone.

The the you Amtrust homes were disrupted all the country and our 10 heads as square a 90 day rate of abatement, Oh, Okay, well I'll tell you we granted there because we got a pretty good deal with our tenet and so we said, okay. So quarterly sales down 25.

Or sent in March.

Not to Kinda give me that forecast However April came.

And well did April came in strong.

For whatever reason, we just got inundated with orders and.

We handled it our ability to take these on the Internet and process. These went off basically without a hitch I'm not saying they want a few glitches here and there, but we handle that volume.

60% up in April after 20, but im not talking about April April compared to last April all our comparisons. So the same as last year. So you can have a benchmark.

So that's been up 60% in April we going Oh, Yeah lab is good.

Well during that period at the end of March we've applied for PPP loan that was pretty popular around the country. We had no problem. It was granted we got $1.44 million to keep our workforce employed and by the way in March our warehouse is working to 32 hours a week.

That's how far down we work in keeping our people working.

Well.

Mmm April exciting and then again two weeks isn't necessarily a trend yet.

We were Monica, Dave as you might imagine.

When they came.

And it got better.

It is amazing so what you have here, we reported a quarter, we didnt probably tell you the man, but if you go to pencil write this down marched down 25%.

April 69.

Hundred 16 somewhere in that range incredible graph looks like a check mark down and into.

And.

And during the month of April and May.

We added.

10700, new consultants. So it's it's just it was incredible because may was.

16 million in less May was seven around 7 million. So is quite amazing turnaround now.

Dance guys pad over there so if I get out get into forward looking statements that get ahead of myself will have to issue a press release pad ready because the thinking about it is people need to know what parity. Some people do you know because our volume is of stock trading has been phenomenal in the last 30 days.

We had like you said 800000 church I didnt like four or five days almost a lot. When our average is 27000. So apparently somebody will must think they know things and it's to me I want people have the same information. So I will tell you that and our momentum has continued in quarter two.

Accelerated.

We just completed the largest revenue and that's in our history.

This was in July This June June, which generally is a lowest month of the year a big not sure October November December.

And June exceeded our biggest revenue meant in history.

This cause a lot of happiness and a lot of Oh, my gosh heavily on handler.

It's it's we would do this in 2016, if anybody on the call might remember that inglis brutal, but we got through it. So we do have some experience with it and so we started looking ahead all away into that Manson Hing, if you did that comparison.

Of what June wants to June last year. If you if you move it on into what June was compared to October November December.

Oh, a staggering numbers. So that's what we're looking at and we finished the highest number of active consultants in our history.

This with adding 6000 more in June it's run if there is somewhere around.

Again active consolidated guys don't don't like this you lap lip number because it changes every day.

We know when they start we don't know when they start so but it's somewhere around 39000 active sales recruits.

End of May.

June June.

Which is again not indicator.

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We thank you need to know that trend here.

What's happening because some of you may warning why is this stock doing what it is.

And I want everybody to have as much information is lacking.

Legally tell you.

And maybe just little bit more.

On.

June revenues for publishing started to come back a few stores dart opening in restocking that helped.

We hope this will continue that you know you look around and stores opening on close again is very uncertain time in the retail industry I'm sure you don't want to tell you there.

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We've we've we've had these extraordinary growth before interest in 2016, and where we have many data that is it 2016 again or anyway, I'm, saying that and so we're looking ahead at.

Significant expansion of our facilities to handle the kind of volumes that may be coming I'm not forecasting it it may be coming and our number one focus for could focus is keeping up with increased demand through the fall selling season.

Which months can be typically three times, what they were in the summertime. So you guys can do the math on that so it's been an extraordinary time here.

Strain on our facilities in that.

In March we will work in 32 hours.

This week, we are working can our daily and Sunday, So our warehouse who is on a 58, how are weak and we havent not shift.

Oh, My Gosh, guys. It's amazing here and we're looking ahead at capital expenditures not significant but how you can see if these things materializes. It looks like they are how are we going to handle this must business and you might you might think.

What makes you think it three gross this guy, but I will tell you when you look at our industry and as Rick sales industry.

We see companies doing 500 million 600 million.

Well I won't comment very much product, but ours is better so it is not.

Like it hasn't been seen before in our industry because we have people now who are making the most money they ever made in their lives in their commissions and overrides and by the Lake if anybody gets all concerned about that let me take another I've been here 35 years and the Formula here has not changed.

And is 25, 25, 50, basically 50% for marketing, 25% for cost of goods and 25% rest to run the company and the more they make the more we make it a formula. So we had people who now making over $300000 salespeople in the field staying home with their families.

And promoting literacy is just an incredible time and I can't say, how proud I am at the company and impact when making on families and maybe little bit on literacy too so.

We're looking out ahead, we have people come in the schools will have the fans our pipeline to make a bigger.

And adding additional shifts and with that without getting too for deep into this.

Why don't we just let somebody asked the question if there's one possible thing I didn't tell you can ask it now.

As a reminder to ask a question you'll need to press star one on your telephone to withdraw your question press the pound key.

Stance I hope, we can have acuity roster.

[noise] [noise] [noise]. Your first question comes from Edward Norton.

<unk>.

Hello, Ed.

Hi, Randall I want to thank you for raising the dividend I thought that was a nice.

Wait Gal can.

You.

Good day ACA status report on your renters I'm, a little concerned with this corona virus on their ability as a record year the biggest distributor in Oklahoma, but you're also being landlord, what's the situation with the renters.

We have basically one ran here we have a couple then it is an old building that we want a couple of years Adam. So it's not we don't really care. The one we care about is a company that last year.

At 400 million Aftertax profit I'm not worried about them. We gave him a 90 day abatement not even linking our eyes, because we have a sweetheart deal here with that company because their rent pace, our mortgage were basically leaving here free and a 400000 square.

Good incredible facility on 40 acres and and their mortgage pace. There and then plays our mortgage so a threed a 90 day abatement always he was entity as middle East. So we'll get it issues out there further and we have a great relationship with them and I was happy to accommodate them does.

During the construction business. They did their business did go down but there is a leading.

Supplier of the components that they provide for the construction industry. So they're incredibly solid international company don't worry about them.

Okay great.

My other question ran I wouldn't I'd like to know your thoughts you know.

Stock price has been on rocket ship.

Month.

I would like to know your thoughts on selling some stocks and pay off some of this debt to build up your balance sheet and also decrease the amount of insist that would pay every year. Thank you.

And I guess, you're talking about selling treasury stock.

So yes.

That's kind of tricky to do by the way, but we don't need to sell stock to pay off the entire amount of debt, we have and let me leave it at that.

Are you understand guys out there that all these orders that come in or prepaid.

So if we ship a million dollars in a day, we've gotten a million dollars cashing before we ever ship. It. So we're a very nice cash producing company and.

We could.

Pay off our debt if we elected to do that what happens is when you have cash you make a decision do you invest it in the future in building well, we don't really need much we're not a we're not a company it needs a lot of.

Fixed assets.

We do need inventory next thing you can do you can pay down debt, we've been increasing dividends I like a dividend because I get most of it but you know we have to look at what's best for your company, we raised it hey.

Look around their school to see what happens if were flush with cash.

That's an go decision we make quarterly.

And at this is Dan just to add to Randles comment you know well there is dead on the balance sheet. We really don't look at that point, Dan is the dead on this building and with our tenants paying the mortgage payment for us, we don't really viewed as debt, meaning it to us. It's just it we've got a great asset we've.

Got to a mortgage on it and our tenet.

As rentals and early yours is a very viable tenant.

You know, they're making the payments for us. So we don't do it isn't or shareholders' best interest for us to pay it off and when I see state I see appeal evaluate our company and come out with knowledgeable in mice and say, we're all Ordan Dare I say you need to pull your head out.

No im having a dead.

Yeah really you won't see the we have too much there okay.

Whatever I don't think so and data.

If you got I'd worry about us more than our tenant there are 7 billion dollar sales companies, while I think there they're going be okay.

Okay, well I realize that you paid off one of the loans on the small on the older building here, which is a great help.

But I was just thinking you know from being a private investor and one of the Wall Street point of view these companies like <unk>.

Companies that have right now with a lot of cash on the balance sheet and no debt and I think that would help.

You know the price decreased as you noticed yeah.

Okay, I pay off debt to pay off of that this 100% cover by rent is okay.

There might be better use of cash because we get in more than than we pay so I.

I don't even we don't consider that debt because some people that they pay it are pretty big boys, but that said, we talked about and pay off debt increased dividend.

Increased my salary of all these things coming up and advise voted down a salary so far but dividend will look at.

Okay anybody else out.

I said.

And as a reminder, if you would like to ask a question at this time simply press Star then the number one on your telephone keypad.

And there are no further questions at this time.

Are you Kidding me did anybody want to say, Hey, Randall your awesome come on.

I get something here, we had the best quarter in our life and you got nothing bring it come on about Oh right brother, Okay.

All information you want to know just we'd go home.

Really.

Well, thanks for being on here, though I see a lot of good pals on a Jeremy.

Well, let you in Chicago.

You could jump on is that good job ran on me.

I don't know Marissa you workforce, you can say, what a good job or something.

Okay Knutsen.

Alright, Okay, hey, thanks for being on the call and the next quarter is going to be better. Thank you everybody.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

At discipline.

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