EXHIBIT 99.1 - Press release
For Immediate Release Contacts
November 14, 2005 Brian Beckwith, President & CEO
Michael DeMarco, Chief Financial Officer
(201) 712-0090
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Peoples Educational Holdings, Inc. Announces Third Quarter Results
Saddle Brook, New Jersey, November 14, 2005 - Peoples Educational Holdings, Inc.
(Nasdaq: PEDH) today reported revenue of $14.9 million, for its third quarter
ending September 30, 2005, up 12.7% from the same period in 2004. Nine month
year-to-date revenue was $28.4 million, an increase of 8.1% from the comparable
period in 2004. Net income for the three and nine-month periods ended September
30, 2005 was $1,033,000 and $186,000, compared to $1,170,000 and $1,491,000 in
2004. Earnings per share, on a diluted basis, was $0.21 for the quarter as
compared to $0.30 in 2004. Nine month year-to-date earnings per share, on a
diluted basis, was $0.04 as compared to $0.38 in the prior year.
"We are pleased by our return to profitability in the third quarter after an
unprofitable first half resulting primarily from major investments in product
development, marketing and infrastructure. Near-term revenue growth has also
been encouraging, as the latest trailing three-month period (i.e. August through
October) is up approximately 25% over the same period in the prior year,
including a 21% increase in Test Preparation and Assessment. We feel we are well
positioned to deliver strong growth in earnings over the next year as we
leverage our continuing revenue growth." said Brian Beckwith, President and CEO.
Summary
Test Preparation and Assessment product line revenue for the third quarter of
2005 was $6.3 million, an increase of 7.8% from the same period in 2004. Test
Preparation and Assessment product line revenue for the nine-month period was
$15.5 million, a decrease of 1.1% compared to the same period in 2004. The
revenue fluctuation from 2004 to 2005 is due to several factors including the
timing of a large sales order and changes in state learning standards and test
formats. During the nine months ended September 30, 2004, we received and billed
a large district order, of approximately $536,000; no such billing took place
for the nine months ended September 30, 2005. We have however received an order
from that same district during the fourth quarter of 2005 in the amount of
$303,000 of which approximately $240,000 is expected to be recognized as revenue
in 2005.
College Preparation product line revenue was up for both the three and
nine-month periods. For the quarter College Prep revenue was $6.9 million, an
increase of $528,000 over the same period in the prior year. Nine-month revenue
was $11.1 million, an increase of $1.1 million from the prior year. Revenue from
the two major college publishers for the quarter and nine-month period
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was up $425,000 and $924,000 respectively from the prior year. The proprietary
products and the new distribution agreements within this line accounted for the
balance of the increases.
Instruction revenue for the third quarter increased from $227,000 in 2004 to
$776,000 for the same period in 2005. Revenue for the nine-month period
increased from $669,000 to $1,637,000. The increase was primarily a result of
the growth of our new state-specific, standards-based materials, as we continue
to shift our strategic focus away from the older general remedial and
multicultural products within this line.
Professional Development revenue for the three and nine month periods was
$48,000 and $185,000 respectively. There was no revenue in 2004 for this product
line as it was still under development.
Gross Profit was $5.8 million and $12.0 million for the three and nine month
periods respectively compared to $5.4 million and $12.1 million for the same
periods in the prior year. Gross Profit percentage decreased from 43.7% to 41.1%
for the quarter and from 45.9% to 42.1% for the nine-month period. The decrease
is due to an increase in prepublication cost amortization as a result of our
continued commitment to the development of new product, and an increase in
direct costs as a percentage of revenue due to product revenue mix.
Operating expense for the quarter increased from $3.5 million to $3.9 million in
2005. For the nine-month period, expenses increased from $9.5 million in 2004 to
$11.4 million. Both the quarter and YTD increases are due to the following:
- Increased expenses related to our new product and product line
launches including promotion, exhibit, book sample, catalog,
internet and travel expense.
- Investment in our sales infrastructure to support current and
long-term revenue growth.
- Increases in salaries and related expenses, general corporate
overhead and increases in accounting expenses as a result of
Sarbanes-Oxley compliance requirements.
Net income for the quarter was $1,033,000, a $137,000 decrease from the prior
year. Nine-month net income was $186,000 compared to $1,491,000 in 2004.
The decrease in net income for both the three and nine-month periods were
primarily due to higher direct costs, as a percent of revenue, due to product
revenue mix and an increase in prepublication cost amortization, as a result of
an increase in the number of published titles. In addition, selling, marketing,
general and administrative expenses increased as a result of planned, broad
scale, new product line launches.
The Company is projecting full year 2005 revenue to be approximately $36
million, which would represent an increase of 10% over 2004.
Net income is projected to be less than one-half million dollars for 2005,
compared to $1.4 million in 2004.
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Change in Fiscal Year-End
The Company has made the decision to change its fiscal year end from December
31st to May 31st. This will more closely align our financial year-end with our
revenue cycle and our customers purchasing cycle. This is in line with the
approach taken by several other large publishers. This change will be effective
May 31st 2006.
As a result of this change the Company's largest revenue months will occur in
the first half of its fiscal year. The Company will be providing guidance on its
May 31, 2006 five-month stub period in conjunction with its 4th quarter earnings
call.
Conference Call and Webcast Details:
Live Conference Call
Monday, November 14, 2005, 11 a.m. Eastern
US: 800-638-4930
International: 617-614-3944
Live Audio Webcast:
http://phx.corporate-ir.net/playerlink.zhtml?c=184416&s=wm&e=1155859
Webcast Replay (available approximately two hours after conference call ends
through November 14, 2006.)
http://phx.corporate-ir.net/playerlink.zhtml?c=184416&s=wm&e=1155859
About Peoples Educational Holdings, Inc.
Peoples Educational Holdings, Inc., is a publisher and marketer of print and
electronic supplementary educational materials for the K-12 school market. The
Company focuses its efforts in four market areas:
1. Test Preparation and Prescriptive Assessment materials
targeted to state-specific standardized tests
2. College Preparation materials for academically rigorous high
school programs
3. Instruction materials are standards based, state specific
products that focus on challenging concepts required by state
standards
4. Professional Development materials are print based products
for the training and continuing education of teachers
The Company's proprietary products are supplemental in nature, meaning that they
are predominately soft-cover, high gross profit margin titles that can be sold
efficiently through the Company's direct sales force, as well as through
catalogs, direct mail, telemarketing, and independent commission sales
representatives. Distributed products are both basal and supplemental in nature.
This press release contains forward-looking statements regarding the Company and
its markets as defined in section 21E of the Securities Exchange Act of 1934.
These forward-looking
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statements involve a number of risks and uncertainties, including (1) demand
from major customers, (2) effects of competition, (3) changes in product or
customer mix or revenues and in the level of operating expenses, (4) rapidly
changing technologies and the Company's ability to respond thereto, (5) the
impact of competitive products and pricing, (6) local and state levels of
educational spending, (7) ability to retain qualified personnel, (8) ability to
retain its distribution agreements in the College Preparation market, (9) the
sufficiency of the Company's copyright protection, and (10) ability to continue
to rely on the services of a third party warehouse, and other factors as
discussed in the Company's filings with the SEC. The actual results that the
Company achieves may differ materially from any forward-looking statements due
to such risks and uncertainties. The Company undertakes no obligation to revise
any forward-looking statements in order to reflect events or circumstances that
may arise after the date of this report. Readers are urged to carefully review
and consider the various disclosures made by the Company in this press release
and the reports the Company files with the Securities and Exchange Commission
that attempt to advise interested parties of the risks and factors that may
affect the Company's business and results of operations.
Peoples Publishing Group, Inc., Saddle Brook, NJ
Investor Contact: Michael DeMarco
Press Contact: Michael DeMarco
Phone: 201-712-0090
investorrelations@peoplespublishing.com
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