Q4 2024 Educational Development Corporation Earnings Call
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Speaker Change: Good afternoon, ladies and gentlemen, and welcome to the educational Development Corporation fiscal year 2024 earnings call at this time all right.
Speaker Change: Listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call. It acquired image assistance. Please press star zero for the operator. This call is being recorded on just the may 31st 2024.
Speaker Change: I would now like to turn the conference over to John Beisner. Please go ahead.
Unknown Executive: Thank you, Operator, and good afternoon, everyone. Thank you for joining us today for Educational Development Corporation's Fourth Quarter and Fiscal Year Earnings Call. On the call with me today are Craig White, President and Chief Executive Officer, Heather Cobb, Chief Sales and Marketing Officer, and Daniel OKeefe, Chief Financial Officer. After the market closed this afternoon, the company issued a press release announcing its results for the fiscal third quarter. The release is available on the company's website at www.edcpub.com.
John Beisner: Thank you operator, and good afternoon, everyone.
John Beisner: Thank you for joining us today for educational development Corporation fourth quarter and fiscal year earnings call.
John Beisner: On the call with me today are Craig White, President and Chief Executive Officer.
John Beisner: Heather Cobb, Chief sales, and marketing officer, and Dan O'keefe, Chief Financial Officer.
Speaker Change: After the market closed this afternoon the company issued a press release announcing its results for the fiscal third.
Speaker Change: Third quarter.
Speaker Change: The release is available on company's website at www.
Speaker Change: E D C P U b dot com.
Unknown Executive: Before turning to prepare remarks, I would like to remind you that some of the statements made today will be forward-looking and are protected under the Private Securities Litigation Reform Act of 1995. However, actual results may differ materially from those expressed or implied due to a variety of factors. We refer you to Educational Development Corporation's recent filings with the SEC for a more detailed discussion of the company's financial conditions. With that, I would like to turn the call over to Craig White, the company's President and Chief Executive Officer.
Before turning to your prepared remarks, I would like to remind you that some of the statements made today will be forward looking and are protected under the private Securities Litigation Reform Act with 1995.
Speaker Change: Actual results may differ materially from those expressed or implied due to a variety of factors.
Speaker Change: We refer you to educational development Corporation's recent filings with the SEC for a more detailed discussion of the company's financial condition.
Speaker Change: With that I would like to turn the call over to Craig White Company's President and Chief Executive Officer right.
Craig M. White: Thank you, John, and welcome everyone to the call. I really appreciate your continued interest.
Craig M. White: Thank you John and welcome everyone to the cause I really appreciate your continued interest.
Daniel E. OKeefe: I will start today's call with some general comments regarding the quarter, then I will pass the call over to Dan <unk> to run through the financials and provide an update on our sales and marketing efforts.
Craig M. White: I will start today's call with some general comments regarding the quarter, then I will pass the call over to Dan and Heather to run through the financials and provide an update on our sales and marketing efforts. Finally, I will wrap up the call with an update on our progress with the sale lease back of our headquarters, the healthy complex, and provide some comments on strategy and fiscal 2025 outlook. Our fourth quarter, as well as the previous quarters of fiscal 2024, were driven by tactical decisions to prioritize cash flow over profitability.
Daniel E. OKeefe: I will wrap up the call with an update on the progress of sale leaseback of our headquarters to healthy complex and provide some comments on our strategy in fiscal 2025 outlook.
Speaker Change: Our fourth quarter as well as the previous quarters of fiscal 2024 were driven by the tactical decisions to prioritize cash flow over profitability.
Craig M. White: During the year, we ran several promotions to energize our current sales force and customers by offering discounts on our products as well as the freight we charge and ship. These decisions were necessary in these difficult economic times when high inflation is eating at the discretionary spending of our customers, coupled with our higher than normal inventory level.
Speaker Change: During the year, we ran several promotions to energize, our sales force and customers by offering discounts on our products as well as the freight we charge in shipments these.
Speaker Change: These decisions were necessary in these difficult economic times when high inflation is eating of the discretionary spending of our customers coupled with our higher than normal inventory levels.
Daniel E. OKeefe: We have continued our strategic focus on differentiated ways to reduce expenses, as evidenced by the reduced loss numbers reported on lower revenue levels. Although I'm not pleased to report a loss, these loss reductions show the continued improvements we are making in the long-term strength of our unique business model. With that, I'll now turn the call over to Dan Okeefe to provide a brief overview of the financials. Dan. Thank you, Craig. Net revenues for the quarter, or for the fourth quarter summary compared to the prior year fourth quarter, were $9 million compared to $15 million.
Speaker Change: We have continued our strategic focus on differentiated ways to reduce expenses evidenced by the reduced loss numbers reported on lower revenue levels.
Daniel E. OKeefe: Average active Paper Pie brand partners totaled 15,500 compared to 26,100. Losses before income taxes were $2.2 million, compared to a loss of $2.6 million in the fourth quarter last year. Net loss totaled $1.6 million compared to $1.9 million. Losses per share for the quarter totaled $0.19 compared to a loss of $0.24 on a fully diluted basis.
Speaker Change: Although I'm not pleased to report a loss. These loss reduction show. The continued improvements we are making in the long term strength of our unique business model.
Daniel E. OKeefe: Fiscal year summary compared to the prior year. Net revenues of $51 million compared to $87.8 million, active average premier average active brand paper by brand partners totaled 18,300 compared to 28,000. Earnings before income taxes were $0.7 million, an increase of $4.1 million. Net Earnings Total. $500,000, an increase of $3 million; earnings per share totaled $0.07 compared to a loss per share of $0.31 on a fully diluted basis.
Speaker Change: With that I'll now turn the call over to Dan O'keefe will provide a brief overview of the financials Dan. Thank you Craig.
Daniel E. OKeefe: Net revenues for the quarter or for the fourth quarter summary, compared to the prior year fourth quarter net revenues were $9 million compared to $15 million.
Daniel E. OKeefe: Average active paper Pie brand partners totaled 15500 compared to 26100.
Daniel E. OKeefe: Loss before income taxes were $2 2 million compared to a loss of $2 $6 million in the fourth quarter last year.
Daniel E. OKeefe: Net loss totaled $1 6 million compared to $1 9 million.
Speaker Change: Loss per share for the quarter totaled 19 cents compared to a loss was 24 cents on a fully diluted basis.
Speaker Change: Fiscal year summary, compared to the prior year net.
Net revenues of $51 million compared to $87 8 million.
Speaker Change: Our active average Premier average active brand Paperboy brand partners totaled 18300 compared to 28000.
Speaker Change: Earnings before income taxes.
Speaker Change: $7 million, an increase of $4 1 million.
Speaker Change: Net earnings totaled.
Speaker Change: 500000, an increase of $3 million.
Speaker Change: Earnings per share totaled seven cents compared to a loss per share of 31 on a fully diluted basis.
Daniel E. OKeefe: To update everyone on our inventory and working capital levels, net inventories decreased $8.2 million from $63.8 million at February 28, 2023 compared to $55.6 million at February 29, 2024. Now for the working capital update. Our working capital line of credit borrowed was 5.5 million at the end of February 2024, with 2.5 million available. That concludes the financial update. I will now turn the call over to Heather Cobb to talk about sales and marketing opportunities in further detail.
Speaker Change: To update everyone on our inventory and working capital levels.
Speaker Change: Net inventories decreased $8 2 million from $63 8 million at February 28, 2023.
Speaker Change: Compared to $55 6 million at February 29, 2024 now.
Speaker Change: Now for working capital update.
Speaker Change: Our working capital line of credit borrowed was $5 5 million at the end of February 2024, with $2 5 million of availability.
Speaker Change: That concludes the financial update I will now turn the call over to Heather Cobb to talk about sales and marketing opportunities in further detail Heather.
Heather N. Cobb: As Craig mentioned earlier, we continue to make strategic changes to bring new initiatives for success to our brand partners. One highly anticipated change was the launch of our new e-commerce system in January. This new e-commerce platform was developed to not only improve the shopping experience with additional shopping opportunities but also allow mobile shopping and is device agnostic.
Speaker Change: Dan.
Speaker Change: Greg mentioned earlier, we continue to make strategic changes to bring new initiatives for success to our brand partners one highly anticipated change with the launch of our new E Commerce system in January.
Heather N. Cobb: This new E Commerce platform was developed to not only improve the shopping experience with additional shopping opportunities that allows also medical shopping and is device agnostic. The new platform was developed over the past two years with countless hours of work from our I T Department and sales and marketing plans.
Heather N. Cobb: The new platform has been developed over the past two years with countless hours of work from our IT department and sales and marketing team. The effort to bring this project to implementation was monumental, and the results have been exciting to watch, from customers visiting 8 pages on average during their visit to almost 200,000 sessions within the first week of rollout. Implementing a new e-commerce system for our brand partners and our customers is a business distraction and a sales disruptor, but our brand partners have rallied behind the adoption of this new platform.
Speaker Change: The effort to bring this project to implementation with monumental and the results have been exciting to watch from customers visiting eight pages on average during their visit to almost 200000 sessions within the first week of rollout.
Speaker Change: Implementing a new ecommerce system for our brand partners and our customers is a business disruption in our sales disruptor, but our brand partners rally behind the adoption of this new platform.
Heather N. Cobb: We also ran sales during the launch of our platform during the fourth quarter to promote acceptance and familiarity. Our IT team and sales and marketing teams have done a great job of identifying, prioritizing, and implementing enhancements over the past three months, and I am proud to say we are now working on new modifications that we believe can further improve sales. We expect this to be the foundation on which more impactful projects can be developed and have already begun work on some of those with our partners. All of these things are important aspects of our strategy to increase sales and brand partner headcount.
We also ran sales during the launch of our platform during the fourth quarter to promote acceptance and familiarity.
Speaker Change: Our it team and sales and marketing teams have done a great job of identifying prioritizing and implementing enhancements over the past three months and I am proud to say we are now working on new modifications that we believe can further improve sales. We expect this to be the foundation on which more impactful projects can be developed.
Speaker Change: We've already begun work on some of those with Archstone.
Speaker Change: All of these things are important aspects of our strategy to increase sales and brand partner head count.
Heather N. Cobb: This year, we also proudly launched our Buy One, Give One campaign, a testament to our commitment to literacy, learning, and community engagement. By partnering with national charities each quarter, we are able to donate products to these organizations based on customer purchases from select categories. The response to this campaign has been overwhelmingly positive, allowing both our customers and brand partners to play a significant role in supporting communities in need. Now, switching to our Retail Sales team.
Speaker Change: This year, we also proudly launched our buy one get one campaign, a testament to our commitment to literacy learning and community engagement by partnering with national charities. Each quarter, we are able to donate products to these organizations based on customer purchases from select categories. Their response to this campaign has been overwhelmingly.
Speaker Change: Positive, allowing both our customers and brand partners to play a significant role in supporting communities in need.
Speaker Change: Now switching to our retail sales team. They continue to focus on opening new accounts and selling through our established customer accounts. The introduction of our Smart lab choice line has successfully captured the interest of our retail partners, providing them with innovative scheme focused products that are both educational and engaging way.
Heather N. Cobb: They continue to focus on opening new accounts and selling to our established customer accounts. The introduction of our Smart Lab Toys line has successfully captured the interest of our retail partners, providing them with innovative STEAM-focused products that are both educational and engaging. We plan to continue the introduction of new products from Kane Miller and Smart Lab Toys in fiscal 2025, which we expect will continue to have a positive impact on sales within this division.
Speaker Change: Plan to continue the introduction of new products from Kane Miller and smartwatch late in fiscal 2025, which we expect will continue to have a positive impact on the sales within this division.
Heather N. Cobb: The Smart Lab Toys product line compliments our existing offerings from Kane Miller and Learning Rapid. The overall catalog offering to our retail customers provides quality learning products, especially books, that span not only different age ranges but also genres, topics, and interests of children and families. Diversifying our offerings allows us the opportunity to attract and reach different consumers through both bookstores as well as toy and gift establishments.
Speaker Change: Heartland toys product line complements our existing offerings from Kane Miller and learning wrap ups.
Speaker Change: Overall catalog offering to our retail customers provides quality learning products, especially books, that's being not only different age ranges, but also genres and topics and interests of children and families diversifying our offerings allows us the opportunity to attract and reach different consumer has three basic stores as well as S toy and gift establishes.
Craig M. White: This concludes our sales and marketing update. I will turn the call back over to Craig for closing remarks. Craig. Thank you both, Heather.
Speaker Change: This concludes our sales and marketing update I will turn the call back over to Craig for closing remarks, Greg. Thank.
Craig M. White: Thank you both, Heather and Dan. I want to reiterate the focus from our last several quarters, which remained in the fourth quarter, which was to drive sales. We're trying to get cash in to pay our bank back. And so everything we did was to provide cash flow and not focus on profitability.
Craig M. White: Thank you Bev Heather and Dan I wanted to reiterate the focus from our last several quarters, which remained in the fourth quarter, which was too.
Craig M. White: But one of, if not the biggest event in fiscal 2025, is the anticipated sale and lease back of our headquarters building, the Hilti complex. The proceeds from this sale will not only bring savings from reduced interest expense but allow us to build a positive cash position as we continue to work down our excess inventory level, which was approximately $30 million at year end. We've been working with our brokers and reviewing several interested buyers' offers. The Hilti Complex is a large investment and requires an ample due diligence period in structured financing for interested parties.
Craig M. White: Drive sales, we're trying to get cash into payer bank back and so everything we did was to provide cash flow and not focus on profitability, but one of if not the biggest event in fiscal 'twenty to 'twenty five as the anticipated sale and leaseback of our headquarters building the Hilton complex.
Speaker Change: The proceeds from this sale will not only bring savings from reduced interest expense, but allow us to build a positive cash position as we continue to work down our excess inventory level, which was approximately $30 million.
And we.
Speaker Change: We've been working with our brokers and reviewing several interested buyers offers the Hilton complex has a large investment and requires an ample due diligence period and structured financing for interested parties.
Craig M. White: We, along with our brokers, are actively engaged in selling the Hilti Complex and paying off our debt, and we look forward to providing you with an update very soon. Lastly, I want to thank all of our shareholders for their patience, our employees for their commitment to our mission, and our customers and brand partners for their loyalty during this difficult period. I'm confident in our collective ability to emerge stronger and more resilient than ever before.
Speaker Change: We along with our brokers are actively engaged with selling the Hilton complex and paying off our debt and we look forward to providing you with an update very soon.
Speaker Change: Lastly, I want to thank all of our shareholders for their patience our employees for their commitment to our mission and our customers and brand partners for their loyalty.
Speaker Change: During this difficult period.
Speaker Change: And our collective ability to emerge stronger and more resilient than ever before.
Craig M. White: Now that we have provided a summary of some recent activity, I will now turn the call back over to the operator for questions and answers. Operator? Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you have a question, please press star followed by the.
Now that we have provided a summary of some recent activity I'll now turn the call back over to the operator for questions and answers.
Speaker Change: Sure.
Operator: Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you have a question, please press star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. If you would like to cancel your request, please press part 2. Please ensure you lift the handset before pressing any key. One moment, please, for your first question.
Speaker Change: Thank you, ladies and gentlemen, we will now conduct the question and answer session. If you have a question. Please press star followed by the number one on your Touchtone phone.
Speaker Change: You wouldn't hear a prompt that your hand, that's been raised.
Speaker Change: If you would like to cancel your request please press star two.
Speaker Change: Please state who you lift the handset before pressing any keys one moment. Please for your first question.
Speaker Change: Okay.
Paul: Paul are you there.
Unknown Attendee: Thank you very much for taking my call. Yeah, just on the building. First of all, I know a couple of months ago, you had a letter of intent from an untrusted party, and I think that was to have been completed by yesterday. Based on your comments, it sounds like maybe that's not happening with that group, but you're back at, I guess, marketing the property to others. Could you just talk through that a little bit, please?
Speaker Change: Very much for taking my call.
Speaker Change: Yeah, just on the building first of all so I know.
Speaker Change: A couple of months ago, you had a letter of intent from.
Paul: They are interested party and I think that was to have been completed by yesterday based on your comments. It sounds like maybe that's not happening with that group, but youre back at.
Speaker Change: I guess marketing the property to others could you just talk through that a little bit. Please.
Craig M. White: Well, I will say... That group is not gone. We're still moving forward with them. But I really can't comment too much on the building.
Speaker Change: Well I will say.
That group has not gone, we're still moving forward with Sam, but I really can't comment too much on the buildings.
Speaker Change: <unk>.
Speaker Change: Transaction is where we're really actively working with several groups that are involved in this transaction. So.
Speaker Change: That group is still involved.
Craig M. White: Oh, okay. And then I guess how does that impact your revolving loan? I know the maturity date is next Friday. Do you anticipate an extension? Is your bank being pretty understanding of this delay?
Speaker Change: Okay.
Speaker Change: And then.
Speaker Change: I guess, how does that impact the <unk>.
Speaker Change: Your revolving loan I know the maturity date is mixed Friday do you anticipate a.
Speaker Change: Yeah.
Speaker Change: An extension.
Speaker Change: Is your bank be pretty.
Speaker Change: Pretty understanding of distillate.
Craig M. White: They are. I have regularly scheduled calls with the bank. They are supportive of our progress. They are kept in the loop every step of the way of the process. They've been kept abreast of any offers and our counter offers. And so, yes, they've been very supportive.
Speaker Change: They are I have regularly scheduled calls with the bank they are.
Speaker Change: Supportive of our progress they are kept in the loop every step of the way of the process they've been kept abreast of any offers and our counter offers.
Speaker Change: And so yes, they've been very supportive.
Craig M. White: Okay, so it's reasonable to expect another amendment, aka filing, before next Friday.
Speaker Change: Okay. So it's reasonable to expect a another amendment.
Speaker Change: K filing.
Before next Friday.
Craig M. White: That would be reasonable.
Speaker Change: That would be reasonable.
Speaker Change: Okay.
Unknown Attendee: Great. And then, um, so in your press releases, when you talk about the average brand partner count, the last few, you've used the word stabilization or referenced that the numbers have stabilized. I know you didn't do that this quarter.
Speaker Change: Great and then.
Speaker Change: So I know in your press releases when you talk about average.
Speaker Change: Our brand partner Count the last few you've used the word stabilization or a reference that the numbers have stabilized I know you didn't this quarter and I understand with the E. Commerce site, that's provided a little bit of disruption, but is that sort of process of stabilizing.
Unknown Attendee: And I understand that with the e-commerce site, that's provided a little bit of disruption. But is that sort of process of stabilizing the brand partner count? Is that, I guess, unstabilized at this point? Or do you anticipate sort of a flattening of that 15,500, give or take it, and, you know, hopefully, get some lift in the coming quarter?
Speaker Change: Brand partner count as that.
Speaker Change: I guess, there's an unstable I say at this point or do you anticipate.
Speaker Change: It's sort of a flattening of that 15500 give or take and hopefully get some some lift in the coming quarters.
Heather N. Cobb: That's a great question, Paul. Hi, this is Heather.
Speaker Change: Great question, Paul Hi, This is Heather.
Heather N. Cobb: If your crystal ball happens to be clearer than mine I will definitely take that on loan.
Heather N. Cobb: If your crystal ball happens to be clearer than mine, I will definitely take that on loan. Yeah, we definitely saw the disruption that I mentioned during the rollout of e-commerce. I think that, as Craig has mentioned, and we continue to refer to, the economy continues to be a factor that we're trying to navigate and traverse through. Our ultimate goal is to have a full stabilization and, in fact, an increase in our brand partner headcount, and we continue to work in that direction.
Heather N. Cobb: Yeah, we definitely saw the disruption that I mentioned during the rollout of the E Commerce and <unk>.
Heather N. Cobb: I think that as Craig has mentioned and we continue to refer to you. The economy continues to be a factor and that we're trying to navigate and traversed through our ultimate goal is to.
Speaker Change: They have a full stabilization and in fact, an increase of our brand partner head count and we continue to work in that direction.
Heather N. Cobb: And then just lastly, for me, in the past, you've referenced what your excess inventory is or, I guess, indirectly, kind of what level of inventory you're comfortable holding. With the business being sized as it is today, what do you think is kind of a reasonable or a targeted level of inventory once you, you know, liquidate the excess inventory? At what level do you see that number?
Speaker Change: Great. Thanks for that Heather and then just lastly for me.
Speaker Change: In the past you've referenced what your excess inventory is or I guess indirectly kind of what level of inventory you're comfortable holding with the business.
Speaker Change: Being sized as it is today, what do you think is kind of a reasonable or a targeted level of inventory once you.
Speaker Change: Liquidate excess inventory like what what level do you see that number of beam.
Craig M. White: Well, it kind of moves with revenue, right? But if you're saying what the target inventory level for a $50 million company, a $51 million company where we landed this last fiscal year, it would be in the $20 to $25 million range.
Speaker Change: Well, it's kind of moves with revenue right, but if youre, saying what would be the target inventory level for a 50 million dollar company $51 million company, where we landed this last fiscal year will be in the 20% to $25 million range.
Unknown Attendee: Okay, excellent. Well, terrific. Thanks. Thanks very much. That's it for me. Thank you, Paul. Once again.
Speaker Change: Okay excellent.
Speaker Change: Well terrific. Thanks, very much that's it for me.
Paul: Thank you Paul.
Operator: Once again, if you have a question, please press star 1 on your telephone keypad, https://www.heathercotter.com There are no further questions at this time, please continue.
Paul: Once again, if you have a question. Please press star one on your telephone keypad.
Speaker Change: There are no further questions at this time please continue.
Craig M. White: All right. Thanks, everyone, for joining us on our call today. We appreciate your continued support and look forward to providing an additional update in July of 2024.
Speaker Change: Alright, thanks, everyone for joining us on our call today. We appreciate your continued support and look forward to providing you additional update in July of 2024. Thank you everyone have a great day.
Operator: Thank you, everyone. Have a great day. Thank you. Ladies and gentlemen, this concludes today's conference call. Thanks for your participation. You may now disconnect.
Operator: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: Thank you, ladies and gentlemen, the scope of today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Okay.