Q1 2022 Educational Development Corp Earnings Call

Good day, and thank you for standing by and welcome to the first quarter fiscal 'twenty 'twenty 2 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

That's the question during the session you will need the press star 1 on your telephone if you require any further assistance. Please press star zero.

Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Randall White CEO and President. Please go ahead.

Okay. Thank you very much.

And welcome to that.

Can you share on the call was the.

And last week.

The earnings reports, the oldest of especially just kind of like that and give us the debt.

Quarterly high.

Right.

Alright, Thank you Randall.

And so for the.

First quarter results, our net revenues.

For the first quarter of fiscal 2022 were approximately 48 million and increase of $2.5 million or 7% from approximately $38.3 million reported and the first quarter of fiscal 'twenty 'twenty 1.

Pre tax profit increased $2.1 million from approximately $2.6 million to $4.7 million, representing an increase of approximately 81%.

Net earnings and the first quarter of fiscal 2022 totaled $3.4 million compared to $1.9 million last year, representing an increase of $1.5 million or 79%.

Earnings per share on a fully diluted basis for the quarter totaled 41 cents per share compared to 21 or 23 per share with weighted and the first quarter of last year and increase of 78%.

This concludes the earnings results and I'll pass the call back over to Randall.

Hello, and thanks.

Well first quarter is pretty solid.

And instead of only 7% of staff lots.

Not the greatest for that.

Also the homestead.

And the logic.

The earnings shot up 80, which on cash.

Josh for it.

Okay.

So the Exxon.

Yes.

Awesome.

Hum.

The quarter of last year was really strong because we started it.

Probably the issues, but those are kind of comes on at the day.

Yes.

First of all of them.

Not really part of it.

Hum.

Sounds good.

Uh huh.

The.

The quarter, because when you think the path.

Yeah.

Okay.

And needs.

Sky watch it because of the.

And the Trump question Mike.

Cost of injections.

For.

Total debt.

Plus we have the right.

So yes these are older.

And I ask for something that I'm.

I'm 1 of the pets all over the Craig.

And we've got coming up.

Okay, Thanks, Randall, which give you a little update and operations and <unk>.

And as you may have heard and previous quarter Investor calls, we have the Capex project in the warehouse to basically double our picking and packing and shipping capacity.

Line 708 are operational fully tested we're just waiting for the final stages to be done before we start using it. So we will we will shift to those lines for the next few weeks.

And they are much more efficient with higher output and.

And lower labor requirements.

So adding these 2 lines will basically double our are shifting capacity.

Which will keep the storm there.

The 1 shift for the foreseeable future, which is much more efficient than second and third shifts.

So again, that's going to be up and running here and the next couple of weeks and we're very excited about that.

As far as an update and we're moving into the testing phase for our new E. Commerce version, we've been working on this for what seems like a while but we're in the very final stages of developing development and moving into testing.

And this new e-commerce platform improves the customer online shopping experience.

<unk> mobile friendly and basically takes us to the state of the of Mark state of the market.

We expect increased shopping cart closures and increased return customer activity with the with just new ecommerce platform, we can send marketing emails and abandoned cart emails and it's really.

The state of the market. So again, we're we're doing out with that and the next.

The 6 to 8 weeks so.

We're gearing up for the fall selling season operationally and.

So we're looking forward to.

The next few months, our heaviest time of the year.

With that I'll give it back to you Randall.

Hey, yeah. Thanks.

And we're pretty excited about.

And what's happened.

And we've got to go on for Scott because it tells US we missed.

And I tried to explain this in the long form for that.

Maybe got a little confused.

The last year.

Moving out on the about $30 million of Red.

Last year.

Does not.

And theres or price.

And then.

Every weekend.

Normally we will have a booth 1 of them.

Our consultants will allow the festival and.

The combination of skilled workforce.

And those are coming back each for all of it.

And the searches are skilled sales and also people having place so we're and thank you.

And could we have the pretty good year. So that's the historical apparently the nation.

I think liana for your order, but I think now and we'll just open it up for questions from the west.

Thank you and as a reminder to ask and audio question. Please press star 1 and your telephone.

Stronger question press the pound key please standby, while we compile the Q&A roster.

Yes.

Okay.

Okay.

Again to ask and answer your question. Please press Star 1 and your first question comes from the line of Bobby and the HERA.

Okay.

Hello.

Hello first question should be quite obvious.

Q2 trading how has it gone softball, so we've got 5 of 6 weeks.

Yeah.

Of the corridor and going so far is that what you're saying.

The current quarter the.

We've got the results for Q1 house.

Q2 started.

Well.

And then I suppose.

We don't and.

The current.

And then.

Your line keeps cutting and so I don't upon here of everything you say.

Okay, well and I'm, saying it.

And restrictive about what we can say, we havent even as.

As of yet, but all of them.

All of you that we were facing a tough quarter for the second quarter last year was the biggest 1 of ever and it was huge and we're.

And likely.

And I don't know would probably not want to exceed that sales, but I will tell you. The way our forecast is the point, we feel lot of by the end of the year, we will make up for this strong second quarter and be up for the year and that's just the that's just the.

Forecast is the way we feel here by the way things for pulling so far.

I wish I could give you more and you've answered, but I will tell you so far.

Our sales and lower than the second part of last year, so far so far but we're encouraged by how the picking up we had our first millions of dollars shipping day for.

For the first time and a wall coming and so we were happy with where it's going.

And we had a tough quarters and compared to you.

Okay, Yes, yes.

And the loss last year was a very good Q2.

So the outcome of a few other questions. So I'll, just kind of along with them.

Sure.

Okay. So.

And then I'm going to switch back to what I said that.

Shortly.

But my next next thing of all want to ask about the sales agents and so now typically around 50.57600 by the end of last year.

And then slipped down.

And 255100.

And you've previously said that.

The more sales agents and the more sales basically.

So 2 parts to it how is that.

Has that carried on slipping and.

And how will that affect both sales and earnings per share.

Okay.

I'll tell you.

I tried to tell you guys every time.

The number in play saw number we know and yes lineup. The start we don't know when they quit and I will tell you.

Certainly the more salespeople you have sure.

They have more sales.

The step that's.

Necessarily main job for a couple of thousand out of.

Out of 55000 and that our <unk>.

Sales of all the and thank you buy that much because you have people and <unk>.

Joining the get all excited about it and daughters name of selling thing and that's okay. Because we don't lose any money on the new kit.

And the answer to your question the and.

And it's also seasonal and cyclical.

And as Rob So far is alarming to us.

It may seem like an excuse of all of my gosh, that's a trend there's no trends here and yet you'll see a trend if we have any more in the October November and December and.

So, but I will tell you 1 more time line.

And when we grew so much Bobby we didn't want the ceiling.

And the people on the office, we Didnt surviving and Sydney, we didn't run the contest, we didn't do anything to try to get and shipped out the door and so now thanks.

For level out and we started.

For the incentives to get more recruits and it's just a normal business cycle and I'll tell you.

And that is going to happen the.

But we haven't done anything in Europe, and the strength of up again to increase our head count and sales people.

Randall clearly Adam let.

Let me add a little bit to that.

Bobby So the summer is the natural attrition time, we count active consultants as if they have had sales from the last 6 months. So now we're reaching people that made it through the easy.

Christmas selling time, and maybe Havent done anything and the last several months of where this is the natural time for people to drop off 6 months after our biggest selling season.

Okay. So basically.

Bobby Let me, let me of what you think the drop them off doesn't mean, they're not still true.

<unk>, we just don't count them for you. So you guys know or not.

And putting it with people who don't sell anything if they sales something next month, where all of that GAAP keep again, so and.

And that won't happen.

Correct, Okay, Yeah, Yeah cool, that's fine I think all of them.

The last piece as well and Thats why I was asking you volume because I didn't I'm not well equipped to make the decision and I can see that the numbers of down but I didn't know how long I mean, you are not it is and.

The U S.

And while I'm hearing is it sounds it's very normal at this time of the year. So you will not even.

You pay any worried at all about where you are not at all worried do you think your sales of the carry on and hopefully going up anyhow.

Is that correct, yes, right and then.

And and earnings per share as well like the I'll just touch upon the air.

Actually with you will reduce shipping costs and you'll reduce the publishing costs and now you've got this new line.

Line 7 and 8.

Working as well you would expect the actual margins to be Hawaii, and if that your earnings your profits would actually rise even if your sales of flat slightly down and Q2 the.

Does that sound correct.

That's the way, we think because there's and there's some other things that are coming but the.

The flat sales quarter, we will have increased earnings yes, that's true.

Yeah.

All right. Good that's all understood some of it will.

And.

That sounds good.

And also just touching upon something related but do you ever so I don't have that.

The history.

And with the company, but do you ever.

Do you have a lot of offers that the do.

The discount books and he thought something like you're doing a lot less of a more recent.

And <unk>.

Or is that just something that you don't have a need to do anyhow.

I think Bob and the way we feel.

And my problem.

And we feel that this is all bookshelf very fairly priced.

We are and direct sales and the most direct sales of companies. The products are classes could be insulated and I'm, just saying that the none of my business all of a bunch of training of the price 1 of the bad and the price you pay and Vic sales division for the same philosophy and sites are Boston and notebook and that's.

Fair now and people.

Run specials discount them, we did we discourage that but again.

We don't control of everything.

And it doesn't discourage discounting because of the books are reasonably priced at this point the average.

Parts of the book is about $10 and.

And so we can think theyre fairly for us now and don't need the essakane.

That's cool and that's good.

So no difference to normal the tool.

And so quite nice okay and then.

You've touched upon the and the main website just now you've called out just now.

Sort of staying within probably 8 weeks you hoped to get not in the life.

And then you've also got and invest the web sites as well that you will rebound the thing do you of any.

And indication of when that's going to go live.

Yes.

Yes, our main focuses of our ecommerce site. We do have a few of the junior developers working on that and I actually didn't get enough day before coming in here, but we expect that and around the same timeframe and the next 6 weeks or so.

Good.

Let me, let me make some comments here I think 1 of the biggest single thing. So just wanted to think of this company is that new website. The go online the cars yet.

We are very impatient.

<unk> now not just in our company, but everywhere and the aid you expect the latest and technology and we think this new e-commerce shopping and it rolls out which will be mobile friendly.

And we're very encouraged about the positive impact that's 1 of the half.

Yes cool.

Yeah, it's something I noticed from 1 line for.

And instead of a look to your website is.

Compared to some of the the clinical and more modern the web sites for the companies that keep the website more of Tonight.

And that was quite a difference so yeah, I think I think you're right I think there's a.

Few things that could be improved and the it sounds like you're on the right truck there as well.

Okay.

They want more thank you probably got 1 of our corporate website, which we pay very little attention to do although since the last call without trying to pay more attention, we look kind of day off.

More of it with a quarter of.

The website, but we don't do any business on it we try to concentrate.

And 99% of all happens towards the income producing activity, which all of the E Commerce site for the sales consultants, but.

And how do you see the need to be a little more professional and out of corporate websites and the works on that too.

Right, Okay, Okay and.

Yeah, that's fine I mean, okay. That's good thank you.

And you you've answered.

Questions I had and it sounds like again going into right direction. So thanks a lot.

Thanks for your question, Bobby anybody else Guy so I'm so much cash.

<unk>.

I can to ask and answer your question. Please press star 1 on your telephone keypad.

And your next question comes from the line of Joseph Polar.

Pablo about on the sales consultant question. So so my understanding was that the the large increase in sales consultants was at least to some extent due to the during the pandemic people didn't have the jobs and so on.

And so people were looking for some supplementary income.

And and thus I would've expected.

And as people go back to work you would get some natural drop off do does that also and I guess your answer to the last question I didn't sense that you were sort of expecting necessarily drop after that and am I am I incorrect and the assumptions.

And now no Youre correct.

We're not expecting that the drop off.

The split things I'd say, you see it evil had been and.

And what can come home and now they don't want to go back once you've kind of interesting and also the Sydney and maybe their job more than the stable as they thought they might hang on for this part time and get portions of our people all of our time and actually have full time jobs, but.

And we were competing with a lot of things. So it gives the theres the whole.

Thing going on and the.

And in the countries a day about employment and.

And whatever and we're adjusting to it but I will tell you that we paid $80 million and commissions.

Last year, 2 of our salespeople and I can't be more of that with it and these are the moms and at home and their children and their families and Kim and can make a living and that allowed us to pay it all very proud of that and so I think on a go forward basis.

Some of the biggest impact and any that people have learned and if they can make significant income doing this without having to get out the labor fuel and so we'll just see as it goes along but I'll tell you we've got.

We've got of core nucleus of.

Number that like how much money and they May then don't 1 of them like list. So we'll see how that develops and.

It's a good question.

And we're now.

Moving forward to bringing more people.

You always have turnover. So that's I hope that helps answer the question, yes. Thank you.

Good day.

Hey, Joseph also arent our concerns these day and age. These millennials are always looking for multiple income streams. So they may be doing other things alongside our business as well so and and.

To add to your to answer your question a little bit more we don't know why they sign up with US we don't know why they stopped so we don't anticipate.

Dissipate any major drop off though.

Okay.

Thank you.

That that was a good point.

The young people and also the ease of the Internet of things the way they do it.

Some of our people are involved and 2 or 3 companies and and the easier we make it the more will drift or stay with us.

Net as appose of others because of this we have a lot of the.

And when they go on the sides of the buy something and leave the cloud open and we're not sure why so all of these things we're trying to address the Nike and easy to check out by the board.

Net.

The.

The only thing the biggest impact on this company and the next day and use all of that IP the products for the rest of the World now we've got to make the program the easy and the world too.

So that's what we're that's what we're addressing.

Again to ask Antonio question Press Star 1.

Okay.

Okay.

And your next question comes from the line of Ron Van Watson.

Okay.

Hi, I'm, just looking at your website and.

Sure.

I think the 1 thing is lacking there is that there.

Is your independent agents need to.

When you get onto the main page 2 being the kind of tell what you're all of the boat you just said $80 million revenue from.

And I'm selling books, I think of little bit of marketing on your website might might help that they also noticed when you download you try and download the publishing credit App. It just goes to a file of our directory here.

And that should get fixed but like you said I think <unk> got some major potential if you kind of hype up you're a webpage of little bit into the independent sellers that youre looking for.

Yes.

Couldn't agree more.

And we are addressing it and I will tell you that of course, the number 1 income producing website all of the consultants, which you don't have access. So you have access to ours and we have ignored it and.

And so look forward and I.

And we deserve that and are working on that because.

That's a good margin into 2 or in terms of the law. So we definitely agree with that and I. Appreciate your comments by the way.

Thank you.

Hey, Ron and I think you were looking at the corporate side, the EDC and <unk> Dot com the site are.

For the ramp up our sales force uses.

And dot com.

And that's why it's very hard.

With my Eubam M why you'd be a M dot com.

Okay.

Okay. Thank you.

Okay.

And there are no other questions at this time.

Okay, Alright, and then I guess, we can wrap up.

Yes.

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

Thank you everyone.

Okay.

And in line.

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Yes.

And then.

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