Q2 2021 Educational Development Corp Earnings Call
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Earnings Conference call at this time, all participants are on a listen only mode I would now like to hand, the conference over to your speaker today Mr. Randall White. Please go ahead Sir.
Oh, Hello, there investors welcome to our call today before we get started like for you guys to know that today is a unique day in our history. We closed at the highest all time price in our history 1917 is when I show, but that's the first time is close or 19.
But.
The best is yet to come. This is just to start with me today I have had their call more chief sales and marketing officer also have Craig Barnes, our chief operating officer.
Dan will keep our CFO.
And I'm going to hand, it over to Dan while ideal of Irish dig in the background. So I'm not going to go down our thanks Randall.
As a brief summary of our second quarter results net revenues for the second quarter of fiscal 21, 2021 were approximately 59.3 million up 34.8 million or 143% from the approximately 24.2 million reported in the second quarter of fiscal 2020.
Pre tax profit for the second quarter totaled 5.8 million, an increase of 4.4 million over the pre tax profit of 1.4 million reported in the second quarter last year pre.
Pretax profit as a percentage of net revenues increased from 5.7%.
The second quarter of fiscal 2000, 29.8%.
Second quarter fiscal 2021.
Net earnings in the second quarter of fiscal 2021, 22.3 million compared to approximately 1 million reported in the second quarter of fiscal 2014.
Net earnings grew 322% over the second quarter last year.
Earnings per share on a fully diluted basis increased 39 cents a share from 12 cents a share reported in the second quarter fiscal 2020 to fill.
To 51 cents per share in the second quarter of fiscal 2021.
Earnings per the Hershey.
Per share for the quarter increased 325% over last year. This can.
This concludes the earnings results then I'll pass the call back over to the man doing the Irish It ran away [laughter] Oh, Thanks, Dan, but I've got to screen shows are you guys and Lucky I didn't buy who's on call. So good Sailosi Oh pals here on the call.
Incredible incredible month I do have one.
Apology and that is the quarter. So good my apologies to those people who shorted it with the move on a revenue growth. You then was 162%. It's been amazing we started out with about 36000 active consultants, we ended up with over 50000.
At the end of the quarter pretty amazing growth and.
Houston, It's just a great story here so.
She's I didn't do it all or very little amount of past the marquees I don't Heather.
Tell us how why were so successful Heather. Thank you Randall [laughter] well I wish there was a single key factor, but I think that actually one of the reasons that led us to that significant increase in the number of consultants and were so.
Several factors and so the first one I would say is that we have increased demand for educational onboard investing products in the home and as we know people were not forced to do distance learning learning from home and we were able to do the in adjusted that very quickly. In addition to that we.
We also saw an increased demand for supplemental non traditional income that's why it's either to supplement or replace lost income from the COVID-19 pandemic.
We in February introduced a new consultant success program called Cline, we feel like the fact that this allows our consultants to experience success sooner has led to some of the significant growth.
Another item is that we have implemented several technology improvements and better customer facing and with our consultants and back office product suite, they had easier and more streamlined access to the data that they need to run their business smoothly and successfully.
One of the biggest factor I think was our convention attendance since we had to make the change to a virtual convention due to the challenges with Kobe. We saw almost 10000 people attend our convention presentation. They had the opportunity over a three day period to hear from some of our top field leaders.
Who cast vision and we feel that the fact that this message was able to get out to almost 10000 of our field in.
In conjunction with the last factor that I want to share, which is a lower priced entry kit for new consultants I think that all of those paired together have attributed to the success that we've had now I'd like to pass the call over to Craig to discuss some of the recent customer facing and consultant facing technology improvement.
Heather.
As.
[laughter] I'm over warehouse operations as well as I T.
She will give a brief update on warehouse operations.
So in the last few years, we've had to handle.
Big growth since I've developed trends over the last few years is whenever we got to certain levels. This is what we would need to do we are.
We are constantly evaluating production levels I know, what we should be getting out each day. So.
So I'm constantly evaluating where we're at and what we need to be able to get out the current level of sales. So we have in the second quarter. We added a second shift which has been very successful and I've.
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Had to pivot a bit on some of our construction projects. So we're we're moving ahead and able to handle this the sales growth. So we're excited about what with that will provide us.
Now from that and I T standpoint, as Heather mentioned, we implemented a new back office, which means that the software that our sales people log into the sea Theirselves reports or new recruits and all those things you did a major major overhaul.
At the start of this fiscal year and it worked on throughout the summer as well.
We introduced a mobile friendly version of the back office software. We have also now move that software to the cloud so that we can handle whatever growth.
Whatever growth we need to.
We have also started adding text alerts tourist salespeople for certain milestones and we will continue to add those text alerts and trying to kind of the game of fly the back office. If you will so we're very excited about that we have.
We've also added in stock notifications for our customers, which means they can go to our E. Commerce site give us their email address on products that they want to be notified for when it comes back in stock.
Okay. So in the last couple of months, we send out.
80 to 90000.
Email notifications of in stock items and those have resulted in.
Well.
Well over half a million closer to a million dollars in sales just from those notifications. So we're very excited about what that can provide us.
Things are going very well and warehouse operations as well as I T operation.
Now I'd like to pass the call back to Randy Okay. Thanks, Greg.
By the way I've got Craig handed down here and I just want to tell you because most you guys know how old I am truly want to reassure you that we.
Very strong management group here very proud of the three and what they've done.
Heather.
People are going to ask how we grow.
Got to wonder, how they're going to get from 50000 to 100, well here's a formula I'm on a put a message out today due to our sales consultants for each one of them to go try to find one friend so by the end the week, we should have 100000 [laughter] they'll go down.
[laughter], that's not a forecast that's just how it works we wish it was that easy it's not but that's the theory of how it works well tell you little bit about the publishing division is not doing well because as you know.
The retail struggling right now and for the quarter, our sales were down 13.5% not a big deal to us while we wait out this situation we're in but that's much better because then the yen over the first quarter last year, we were down 31%, we're making improvement there we have great products they'll sell retail stores.
Most of the stores are back open.
So moving onto.
The profit.
Growth and what happens as you noticed we went from 12 cents to 51, that's a product of.
Having financial management here that.
We get we bring extra money, we don't spend it so we're now spin or cost over larger basin.
Sounds more profitable.
The theory of it.
We have a lower cost, but also I would tell you that.
Things happen in the quarter that may not happen again.
As I mentioned about the convention, we went from having a can issue about.
Just one or 2000 people do you have in 10000 virtual and while the one that will people here, we didn't recover our costs.
We did.
Going virtual very interesting how that all came about but.
But we're we're a nice model here because the the growth and you ban we have we have a great story about about five years ago, a teacher, who had no money John.
I tried to join and are critical to decline is only about $75 to joint but a credit card decline somehow they got it figured out and a month ago. She made $55000 for the month now that is not ever.
Average that's not by the way I'm not telling you everybody does it I'll tell you what this one Lady did we have other people are doing very well, but.
But the model is the same and the more they make the more we make and so we're very excited about that we don't the model doesn't change guys.
Best part about it is maybe it's all these orders they were shipping our prepaid they they come in on credit card or whatever and were shipping over a million dollars a day, which means we're bringing in about a million dollars like cash.
So what happens is we have a lot of cash here.
And we have no short term borrowings now.
And we paid down 7 million $7.2 million a building that so the only debt we have lifted about $11 million on this building, which is about a $35 million complex and its Hilti Corporation they have a.
Monthly rental of 104040.
1400, 14000, a month, we get at least redneck for men and we pay out about 80 in principle and interest now so very nice cash flow and.
And what are you going to use all that money we at into.
I'll, just had $22 million cash and very little debt. There's about three choices you pay down debt you accretion David and we bought back shares or you can give me a big bonus this.
This quarter, we chose to pay down debt and then we increased the dividend 67%.
The dividend now 10 cents, a pretty nice I think use of our cash to reward to shareholders. So with that with that there must be somebody that has a question about one thing possibly didn't cover so from that we'll turn it over somebody asked me a question.
As a reminder to ask a question need to press star one on your telephone keypad withdraw your question press the pound or has he.
Sam I don't recall the cure in a roster.
Okay.
Josh.
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34 day for your guys. So if I'm willing to do she assay kits.
Hi, Chris Good question I mean.
We have a question from the line of Bob Bradshaw, He's a private investor. Please go ahead.
Hey, Randy can you hear me there.
We can Bob how are you doing.
Super Great day for you well you were working hard obviously around the lake. So it's not just us figure out in a way.
Awesome I guess, that's the case.
Comment I had is is that.
I I think you know what you did with the conference this year, which was pretty amazing and you kind of really to me glossed over to a little bit I think it was a really big deal and I know, it's cool off in the future, but I'd kind of like to know how you're prepping for next year and then the second thing is as I.
I thought I heard from you previously about some rather big efficiencies in the warehouse and getting away from having to have a third shift and just down to two shifts could you talk a little bit about that as well.
[noise] well among let him tell you about the conference because it turned out way better than we thought because we like that conference, where we can see face to face our consultants, but we were able to project our message over 10000 people became way more effective I guess and so you're looking at.
Sometimes a hybrid or something if you drew out either yeah, Bob I think we'd be fairly short sighted to say that we want to go just back to a live event and but I also think that there's definitely some of the things that the live event and can provide that a virtual event cannot I think there is a place to do.
Possibly some sort of a hybrid for both.
And hopefully we'll have the opportunity to do so next year, if not we feel like we're poised and ready to just continue with another virtual event.
Hey, Bob on the efficiency in a warehouse.
Craig address them, because it's something that we do every day is to try to pick up some little nuance that will increase it the productivity.
Well, we have always been pretty efficient on the first shift it's adding a whole second shift which is roughly a 125 people.
They don't just come in and perfectly production. The first day. So that took a couple of weeks. There's some turnover so getting the second shift up to speed. You know is where we gained I wouldnt say efficiency necessarily but great productivity I will say.
We are poised and ready to have a third shift when it will be ready.
I don't think greg's taken up credit because.
Yeah, you bring in new people when you walk out to you than that look is efficiency should be who we had our largest shipping day in history, we shipped 1.3 million.
Last week in one day, and that's without the new line, which will be ready when we're ready. So were October November December our biggest months and we're today shipping yet Dan's recent grace pad here that's the.
That's we're geared up to have a big third quarter.
Okay. Thank you Randall.
You bet. Thanks Edward.
Edward.
Edward went away.
We didnt.
And your next question is from the line of Edward Garcinia. Please go ahead.
Thank you can you hear me Randall.
I can't it how you doing.
Good I want to thank you for raising the dividend great.
Great help for us investors and also reduce the debt the company I know the company getting stronger when you reduce your debt answered my question there John.
And there are you, you're saying that you're running into two lines to two production lines right now.
Do you foresee a third shift coming in November or.
That's my answer.
Yeah, I'll do what what we have here is our regular operation with two shifts and we set up a temporary line.
To add a another complete line and another shift.
For October November December if we need it and we're right on the brink of trying to get that staffed but so yes, well hey, you welcoming about the dividend because I get most of it so I like it too and I like low debt, but then again I'm not 25, so yeah, well I think you guys the team.
Really knocked the cover off the ball this year with that during the pandemic being able to.
Thank you so much he did and getting people work safely from home and also ramping up the distribution.
The distribution and production side.
I have a question is.
Pellets that pain are right now.
There is a lot.
Hannah Tiger Yeah.
Oh, yes, there there's 7 billion dollar company you don't think he to worry about them not worry about us more than them now.
Okay, all right well, thanks, again for a great year, Randall and Uh Huh.
Hello, I hope continue for your great success in the future. Thanks again.
Ed Thanks for the thanks for your comments it looks like we got Derek Im going up.
Okay.
Thanks, Ed.
Hi, Derik molten your line is open.
Hi, congratulations on the quarter and Onyx successful pad.
Maybe a question for Heather.
Maybe just give us a little bit of color on you know.
[laughter] how are the sales consultants haven't set success in the field is it primarily through social media.
How they're they're making sales today I know that business has changed quite a bit and then maybe as people are going starting to go back to school what kind of feedback are you getting from from the peak.
The people in the field.
Yeah, I would say you know one of the things about our field sales reps and I think it's happened over the last several years.
Several years actually as they adapt really well and you know we were already I would say probably primarily online and so we did not have to make a full 180 pivot that some companies dead and so we were already poised and ready to be where the customers were going to be so the majority of our.
Sales do come from online, but I also have to give credit to our school in Library Division, who really tried to work with in whatever confines they needed to to get books to the schools I know in the spring, especially when the shutdown happened quickly and they were working in a very.
Close contact with and school administrators, who were trying to get back packs of back directly to kids and different things like that and so we were able to adapt and we were able to really serve our customers and the way that they needed and that continues to be the case and we've just recently launched Sam cash option virtual.
Fares, so that schools have additional options with us as they go back and so I think really and I know it may sound may sound, a little crazy, but it was kind of business as usual for us and we just had a little bit a pivot to make but really the biggest thing that we do it.
He need to serve our customers in a way that they need us to you, which our sales people do amazingly well hey.
Hi, Derek let me add just one thing to that you want to what's going to happen in school and everything went back to normal whatever normal is well, we're down probably $5 million in retail that will come back and we're down probably 15 million in the school in library and loose like we'll have people go through Greene County.
Three cents won't have a booth outdoors those are gone. So we think the loss in that school book fairs and face to face sales are about 15 million. So we could rebound there also so.
Good Thanks will happen and by the way anybody in this marketplace. We are today that selling educational products for the home are doing very well we have customers that are doing very well and I'll tell you. We are all very thankful and a bit humble about the fact that we are in the right place at the right time and it's we're just.
We'll take advantage of it.
Well, congratulations and thanks for your time.
Hi, Thanks there.
Anybody else.
$19.17 well historic day.
Any other questions.
And then if you like to add on your question. Please press star one.
Okay, I guess theres not much more questions you can ask the $19.17 and I think we're just getting started so thanks.
Thanks for being a part of our our group and you haven't bought any shares you should I think this is a great company to own and a great company to work for so thanks for being a part of our our investor call.
Thank you everyone.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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