EDUC - Earnings call 3 2024 | Educational Development Corporation

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Operator

Good afternoon, ladies and gentlemen and welcome to the Educational Development Corporation's Third Quarter Fiscal Year 2024 Earnings Call. [Operator Instructions] This call is being recorded on Thursday, January 11, 2024.

Before beginning the call, we 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. 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 condition.

to conference like Hooser, to now Relations. Investor would turn over the Steven I ahead. go Please

Steven Hooser

Allen, you, joining Development Earnings for for afternoon, us Educational Call. Quarter Third Thank Corporation's good today and everyone. Thank you

today me Heather O’Keefe, Officer; Sales Chief with call Officer. Chief the are White, Chief Cobb, and President Officer; Marketing Craig and Financial Executive and Dan On

website third After at on its results announcing the press a release available closed market is the www.edcpub.com. this quarter. fiscal issued the release afternoon, company's the company The for

as and statements. With call to being would Additionally, Chief to noted, prepared and and Officer. conference like President over Executive the today's there operator Craig? Craig remarks are company's White, turn now that, recorded the call forward-looking the are I

Craig White

will Thank quarter, you, and on to the start marketing. regarding general provide then with and Dan, through update Steven. the the comments some Heather, Welcome, call everyone, call I financials will an call. today's pass I run over and to to sales the

wrap up some I XXXX comments Finally, fiscal and the outlook. will strategy on with call

quarter as have which this levels the seen stabilize brand count at partner remain largest and summer our are we our sales traditionally fiscal year. third through We is our quarter, active encouraged of consistent

approximately our our sales the year, During quarter, third the PaperPie XX% division third due the within levels. lower partner decreased to from primarily last quarter active brand

lower also to The of were Usborne our this quarter due sales products. division Publishing in the stoppage selling

new entered due part our into year. in distribution last that with of was this to reminder, a May Usborne agreement As Publishing we

Books SmartLab sales strong product in products. partially by for orders our of and Toys, sales Wrap-Ups with line were along decrease the Learning increased Usborne Kane Miller However, new offset

and only of we about for XX all especially have initial at SmartLab through we growth Toys, to the the introduced quarter. be third our excited We within opportunities when products the continue where look demand products

partner engage promotions easier will generates excess and changes our new to freight brand our our brand offered O'Keefe we to charges operating third the reduce I to goals overview brand it success, long-term inventory levels to now partners quarter that make strategically brief and with partners to for Brand that increase provide improve intentionally over impacted profits demand our #X turn aligned During and the and our reduced future customers. quarter, sales that, were continues to call Dan of partner financials. a be focus. With success. our success Dan? These

Dan O'Keefe

a compared last Thank you, for Craig. third in the this results To or quarter net XX,XXX or of million compared to third XX% decrease active PaperPie $XX.X quarter million, compared million in the XX%. brand year, fiscal last the to XX,XXX totaled our XX,XXX a year, decrease for last to third third revenues quarter year. quarter third $XX.X Average $XX.X totaled the of quarter quarter partners

at $X.X November everyone taxes year. in for third income decreased to totaled compared million last XX, compared year. last breakeven at XXXX, per quarter November million earnings breakeven million working levels, XX, $X our capital and before totaled $X.XX. To net level the income from inventories compared million update the quarter Earnings and $X.X $XX.X on to to $XX.X a of inventory million XXXX. totaled before share Income taxes After-tax

capital for Now a update. working

XXXX. was Our the $X the of XX, on capital quarter of line November borrowed working credit million at end

the is XX Hilti purchase XXXX step-down maturity to also outlined million sale quarter, company in as talk from requirements the processor recently pay the inventory of with during from the and the $X our and concludes Craig be August now new quarter, about listed reserves from the the million released which end Heather? XX, from bank. Subsequent our used company bank. Also the will opportunities to of Hilti our to quarter, extended executed of Complex, call the November, period in between further in credit credit $XX.X which the marketing which agreement credit Cobb Complex enables down the to the agreement was to briefly. in million million amendment line card with to The company line with cash will increased of X, detail. credit $X.X PayPal the fourth on December XXXX, over I'll to of financial third the Nexio, line the a credit XXXX. to borrowing held expected and and turn company's of availability the its term quarter. That March January the of to $X During met increased and update, Heather majority switched sale our the touch credit The May to of loans during of XX, sales us proceeds

Heather Cobb

you, Thank Dan.

new mentioned bring to continue As Craig earlier, to make we success partners. changes to brand our

and sales XX% previous As communications their from third ability of promotions, during to prices. retail purchase we pricing aware an off making them sent partners example, to products several ran from to site-wide customers, XX% brand the the discounted marketing including at quarter,

offering partners In well on This customers e-commerce shipping in has charges at in with and our from flat addition, Craig shipping brand as alike. orders mentioned, free received change shipping effect been $XX. September, $X we began taking rate our

sales for mission recognizable also the build momentum reflection, the country. as PaperPie, learning we reveal communities are marking for of On more around the like for foundation outward of our rebrand to marks more celebrated us opportunity the our milestone of by this sustain changes completion Not January provides of logo, This This provides and this a positive of marks anniversary assessment new it also this the the direct and celebration year, our in and of name, first literacy colors rebrand. an and is the division. and introduction just initiated Xrd gathering of good around brand. but the anniversary intrinsically, important

our of PaperPie. the new launch will this e-commerce Another be platform significant month for later upcoming improvement

brand We stunning partners are with visually more intuitive, thrilled to our a customers and share experience. mobile-friendly a allowing efficient for with and the platform, our opportunity

established Our retail new sales team to on selling customers. our and focus continues to opening accounts

stated SmartLab Craig addition sales products. Toys us Miller the alongside the for our earlier, has provided Kane of line momentum of Wrap-Ups some and Learning line As

We expect which have to will continue SmartLab introduce continuing on XXXX, are division. fiscal positive we sales to in this new impact a Toys the within

sales our will concludes turn and update. Craig call to I over This marketing for remarks. back Craig? closing the

Craig White

Heather you, and Thank both Dan.

up about to for like some before the Now I'd questions. opening call changes recent talk

COVID. $X.X second from maintain who employee During we Act offered the quarter, funds the CARES during credit. government-sponsored employers These in the million of retention were to part funds received employees

sold our old financial bank. headquarters Paying listed focus excess performance. existing the is which and cash The debts the the $X.X building, pay has our funds and million. for used for from term improve been warehousing primarily as were used down this we During flow our our expense sale third our to for quarter, primary interest loans with our overall will down reduce received

profile, The our and To are continue this our our sale office loans of of consisting feet improving recently proceeds headquarters all we line financial expected bank. for of square approximately have focus from and with term of of our XXX,XXX pay current credit $XX million. this to space listed warehouse

executing removing the profitability. to approximately and is shareholders the continue period leaseback normal the a of contingent proposing long X interest listing, property The strategic of our years. of terminal operations. our building part and business offers are we to be our a agreed on history the bank As lease this leaseback leaseback selling believe in path of and interest to We expense best direction. received and will have back restoring is long-term Repaying our debts future fastest the

We from excess a expect reducing generate to amount of significant also cash inventory our levels.

this XX, sales channels impact through our inventory. on will approximately have November and overall million we of of have a XXXX, existing excess our As liquidity $XX profitability. inventory Selling significant

reducing the During continued focus on our we also costs. quarter,

our a cut While of to to This practice and for every magic our line there look quarterly shareholders. improving results. plan priority laser-focused return and has profitability, we our we to we been for be no our to are opportunity is profitability, shareholders. paying bottom continues top reinstate and way to past wand myself dividends our on Once to

Now question the call over recent that summary provided back activity, I'll we for Operator? to some answers. a of have operator and turn the

Operator

first Your Paul from of Carter Asset comes Management. Capstone Instructions] question [Operator

already is line open. Your

Paul Carter

it the down like for was about inventory your quarter So just $X looks million.

if So what was have that? operations quarter, your you cash the for flow from

Dan O'Keefe

Well, flow -- front published I that cash in we're publishing have today at the operations, later will from It don't of be Q XX:XX o'clock. the me.

headquarters from sale the the So old of our which gain profitability of million. the approximately was generated $X a building, overall quarter driven for

an viewpoint, the tax So not But line, quarter. we profitable. were for a before profitable at operational were from profitability we

Paul Carter

cash positive $X million, -- operating thinking offset been loss? I'm have But some to flow have your if Right. there that from came down the might would operations inventory

Dan O'Keefe

credit. line down with the million down at our operational of would from have November. to we of pay bank flow credit inventory in of losses we in -- as $X used that of generated million million, all call, $X was the mentioned from Paul, dropping If million flow. -- That $X reduced line I to with the $X million reduction, in end the cash $XX.X And our million $X of inventory cash

Paul Carter

recently, I you're Okay. right e-commerce CapEx new thinking just but of later been cash What's CapEx items. about know of of other month. CapEx Great. pretty platform And sort kind there's I And your that ongoing like? of is imagine launching flow, low you're looking then kind it's your at you've -- this now? sort the what running

Dan O'Keefe

primarily Our of to systems. development ongoing CapEx is our our IT tied internal

But our CapEx, as year, platform. we been a than reduced launch year. significant is that's non-IT now new ready getting we're Our the CapEx of less in IT dollars significantly spent our e-commerce but to hundred thousand a a couple last amount

to reduced So for but we next what or we're reduced greatly a year, have budget will now, CapEx, from our was expecting greatly CapEx right this be be year. we it it -- our -- from don't

Paul Carter

sort Great. picture. just Okay. of bigger And

typically. $XX quarter a I you your like million. good third is So revenue third quarter for was know net quarter

that running the right of give or So net of annual now, million of at neighborhood revenue, like run of an you're kind seasonally take. adjusted, $XX it rate somewhere in means

you that on something depending $XX can if gross a I revenue you're level, profitability that in even at So you'll that take profits net operating of lot to you you be building? forward going in at don't the different growth, doing assume once million rent sort $XX expense stabilize consistent of million confident factors, to I are of $XX with your the you like, level? But know, just the course. increase million, to on If sell going guess, get have you no like, that

Craig White

will a anticipate that We we've months. building, still last our do be confident great We net X deal just that can expense lease positive. selling feel our Yes. from -- a reduced we payments in and the interest the expenses the

that's So cash back will the to the a in expense. to bank. pay X short-term biggest kind of the say we've also last in things I months, generate had But do strategy to

as of those as things historical not Some profitable levels. were our

So normal operations. still to or kind we'll going forward, that remain whether have will to evaluate of we to can necessary back be get that

million. Now costs. addressing so level everything we're as much the but be. we we're we're to only There's normalized and big of low kind sales, to cut of a happy as sales. to we doing about going $XX with We're Personnel not is increase expense, that can do can

at that we can not to need point. do. increase So cutting sales more there's We much this

Paul Carter

do sales, guess EDC but is, whatever at don't, or because stabilizes I I know of books are computers sort the of need the of get or of looking gist $XX my question If if is, million, have to rather increase than want Yes. you was to on is mean, to? question operating just Like you able that at just I I to their issues you profitability? you. kids mean sort macro what that

Craig White

Yes, we can.

Paul Carter

Okay.

in And Okay. a quarterly and the and know mentioned, then your reinstating the I dividend for big pretty you Board. priority is mentioned you you've Great. past,

to profitability So -- if I or get net to even operating don't of GAAP even profitability. get you you like know kind to have

to see dividend the profitability down you can going sort to be inventory, you would working get profitability cash of your positive, the if you operating horizon? consider If starting you're free before on up you're flow

Craig White

That's anything horizon on a want some we -- good in but there's that would question. the possible, definitely the profitability some say way be hurdles we confident There I to would before reinstate right is is it. is now.

maybe quarter it's but I this always next anticipate something looking or So we're quarter, at. don't even

Paul Carter

gears shifting That's right. then All bit. Okay. helpful. just And a little

almost know John of XX I kind Since it years. resigned a Clerico for So of after, you've Chairman been on and he Board. from I of the couple you looks months all a was at that Director Board abruptly It couple think now. ago, the your it's around months pretty the discuss all? of Lead -- your deal. Can a committees, big circumstances Can was Independent that's been obviously you like

Craig White

it's He XX kind and in left. years somewhat Yes. issues no Yes, no it, summer, other -- he old. was -- he's the there disagreement. ways. health in just personal. his of in was time around was was in why There spend He sure. He had circumstances back fight looking some the no There to

So just it was him. for time

Paul Carter

Hilti it Because I decision timing Okay. do had right with was that just wondering the I sort And sell -- of was it. to headquarters. it the closely the aligned mean pretty of to to if anything

Craig White

He coincidence. He agreed. disagree with no did had our not to building. discrepancies sell decision he Yes, or disagreements the That with just was management. a

Paul Carter

Okay.

Okay, great.

Dan O'Keefe

sale. consent on vote unanimous for a was building to list the It the

And before ideal mentioned, of a is Director Committee as replacement is is Audit NASDAQ guidelines will age a not financial expert, in accounting. he agreed that in necessarily to the accounting resigned and further in say an has in for from long public his Chair, and a that So history the Board. I Stoots public he partner Brad Craig his Board

of with year. we happy and last Committee replacement -- addition the member Audit so very the new for we're board the And the

Paul Carter

Okay.

side So I NASDAQ now. on with not know you're right

Where add You independent another are director. of in the to process need you that?

Craig White

question. Good Yes.

industry. of July. We to which from that is next candidates have candidates Annual until got weeks. our Shareholders interviewing the Very going MLM Meeting, some in the next solid in couple start I'm I've

very So feel our we're positive -- possibilities about there. very

Paul Carter

probably to public Okay. going kind either size no a public reduce of doing sort like wonder at question, to traded that you Is any a going take mean, But have and you obviously, doing conversely company, just last doing might palatable. of I this something large company. you're point an dark transaction And extremely in picture. be thought sort wouldn't a Because costs? company. of sort are I your then kind being investor or shareholder considered? you point of of transaction big of like view, the high, I from dark just costs publicly of of think, really longer a being a Have transaction company something the guys hurt relative or private would

Dan O'Keefe

kind recommendations recommendation holds, direction. is what or Not outside always nor of anything that have recommendations we've in made management future that a discussed our we what management or with to Board from from the the any But holds not go approach. There's an private. future made been right? Board to anybody any the We've approached by

Paul Carter

Okay. All others. over the me. right. pass Well, to that's floor it I'll for

very thank So much. you

Craig White

Thank you, Paul.

Dan O'Keefe

Thanks, have Paul. way. by to back, the you Good

Operator

Philip next investor. private question Smith, comes from Your

Unknown Analyst

the I the Usborne of just had purchases a status contractually quick book. regarding required from question

Craig White

many, any any the publishers space many are they of not have have thing. met contractual to have kind many, going Good understand agreement, question. they're they same the not this holds, but are, take given we not us the -- what we facing environment action. that indication where They in

pressing for So now they're right that. not

anticipate to don't concern I that's future. in So the a be going short-term

Unknown Analyst

Okay.

it making any pushing is this at Nicola, back So demand and point?

Craig White

yes, point. the this -- environment. at understands Not She's she

Operator

next Private Our comes from question Investor. Daniel Balchen,

Unknown Analyst

the the the it, how figure you got how is a I've question. Toys, Board at the at like you -- how how Do value fair short of have stuff. valuation Wrap-Ups, that business value Board of you have at does a sort for of sort Learning company the they moment? SmartLab for like thinks you value Do have in company, just look different of just the parts that -- worth some in how you terms is mind look sort it, much a the of guys

Dan O'Keefe

Well, Certainly, to doesn't feel our lots at ways that of real the what team management of look the there's -- value the reflective that. trading is is. value

book value a a have We share. $X of

-- mean we on books. I our goodwill So no and have

all $XX book less in buildings for think the -- trying And looking we're I because so of value the don't are building And buildings. it to get we're buildings million. carrying than million, is $XX value back Mean we're at the first. carrying level actual the that value reflect selling that and inventory the the and to

Unknown Analyst

value is the $XX.X of And that the books. on costs like like got Yes. you've money? sort value present inventory? all after sort sort sort net present worth million on today's of everything, that is of what in -- of there's inventory Because and there a of obviously, is net But do have you those a that of

Dan O'Keefe

it's worth value carrying sure for have to down. believe because Well, it we write otherwise, the we'd

are our that books carrying for. our value I we of of them retail mean sell So the typically XX% about value

Unknown Analyst

Right.

Dan O'Keefe

worth we million. definitely believe of the is So $XX the carrying value inventory

Unknown Analyst

in separate And Wrap-Ups just trajectory the the business, SmartLab a growth thing? of that that of that? sort the sort of the sort be of terms books, selling like to Could what's business of of Learning Yes. within Toys, Usborne sort

Dan O'Keefe

that repeat one you Can time? question more

Unknown Analyst

Learning and in of something to products? is question should The other is Usborne weather SmartLab the that business investors separately selling treat on the part Toys Wrap-Ups

Dan O'Keefe

or few kind couple different. we No, very it's the other goods product SmartLab sell. Usborne just of another in just well. times excited. But We're another going lines because cost between Learning very this versus Wrap-Ups and some and books focused mean different. product of a line that I it's Sales of significantly SmartLab, are not new. we is presentation they're of our

over We have next a the great XX months. release plan

that. differently shouldn't else So But anything than treated sell. we're be about excited they we

Operator

the Please time. to further at hand no White. proceed. this questions I call There over Craig are would

Craig White

Thank you.

does today mark day So news, regain me we them, late and NASDAQ $X one confirmation have a But a while little about expect a to threshold the thus no surprised. bit compliance. don't we little itself, above asked a of breaking from bit final tenth

will future. have near about that don't again worry the anticipate in we we that, to So that's something

piece thank news good update call January a everyone, that's support. there. But in joining of look continued to us an forward providing for on appreciate Have you. a We the of day. your additional So you, good Thank today. anyway, We XXXX.

Operator

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

Educational Development (EDUC) 11 Jan 242024 Q3 Earnings call transcript