Educational Development (EDUC) 15 Oct 192020 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. And welcome to the Educational Development Second Quarter Fiscal Year 2020 Conference Call.

At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]

to conference like today, your now Mr. would hand to the speaker I Executive White, Officer. Randall Chief ahead, go Please sir.

in very you here interest on you the Development Thank much. phone those Welcome have to all Educational Corporation. an

introduce the quarter O'Keefe, interesting our and and I'm do Chief an have White, Heather she's Chief and our on We Cobb, officer, Dan Craig going CFO. what to actually call. Marketing Officer Sales Operating

questions So to for if we have any welcome also. you specifically do them that of you're have,

full at here the to disposal And question actually that any release. our have it that, thinking talk ask we So turn earnings to crew with your like. to to I you Dan want about over while about you're

Thank Randall. you,

XXXX X% For $X.X second of decrease million, taxes an fiscal million approximately earnings $XX.X net from fiscal for the income totaled update, the of million, million $X fiscal approximately $X.X million XXXX. were down revenues second or the XXXX. in quarter reported of million or approximately a in $XX.X before XX% quarter from $X.X Earnings quarter of second

and earnings revenues quarter all a fiscal call Pretax the $X.X decreased second to XXXX. fiscal percentage decrease a Randall. X.X% fully or XXXX XXXX from the second second a of quarter basis in approximately in million in XX% of second the XXXX. per as share compared or net fiscal on results approximately second concludes million reported as earnings were the diluted with $X.XX to quarter quarter of $X.XX a reported the XX% X.X% in and This second fiscal fiscal reported $X pass million, XXXX. of quarter share in Earnings back profit the share $X.XX of Net quarter in from XXXX fiscal totaled of of $X.X the

little of if that historically the the lowest net the much second you quarter Thanks, I stock our revenue the year. UBAM And second than the Okay. follow division. very is started last quarter Well, actually think slower a year Dan. for you know quarter

to in years in the is some We've that that few by that overcome business over XX years actually the we one anticipation a to anniversary However, past. in Direct fire which the the for have direct or special. been for in XXX recognized very direct XX it of one trying selling selling Association in top Selling has the last world, under July, come of proud because companies

thought done brought July sometimes July while really consultants we July special. in sales in have We July. new in over a Coming XX,XXX we you nice So anniversary in not. started, recruiting XXth sometimes takes

uptick the season. of an this and in Sometime we you expect ground a continue But see caused to ago, selling increased during August up very fall over we year growth up months in nice this net the running. to X% it not, of of -- revenues a August to hit July couple like be after better

We're there. very optimistic what's about happening

net making. earnings. stores, X% increased two can it's due distribution we projections last retail Our And stores, sales new about we just our that. think have. to stores, sales published they months. emphasis is the year's have have concept. in which place the just that do some And toy And interesting primarily past We that have to under over we nine happen book excellent quarter division we It's in we're more progress eight, a division enthused an he That division. on heading this person very

sales the inside reps have we and on reps sales phone. outside have We

products [Diana so of people given with that phone a and on a whole of and with territory the here in products. And into reps go is because we the it year and Clark], the outside with once can the and concept go rep then a into can sales they The problem a twice can the our territory get we the is have. there store get present our that the or only in store in and lot you've they is idea supplement store supplement Florida

it inside Then our sales reps. from supplement we

working closely our and So ground increase about optimistic on we talk them new we're a are personnel about this. about The besides that's excited like we're that very both bit vision might to is excited with together little operations me another this that. to about reasons the that's and it, sales someone little of to it update I

doing the So White, future I our an we Craig Chief Officer about that on think to we're that will who is have Craig? want updates of bring Operating impact talk some in and growth.

And Randall. this department been year. our two you, responsible projects has for IT Thank major

Consultant Office Back basically can XXX-degree first it sales our business. in a and is their which business, is of log where people be recruiting, view anything their the which The of about sales, get

upgrade office, far so major this component away IT mobile-friendly, business things as concerned their is can that their we're gamification big one as But industry and is business. the the to back the secondly, so from of they And of kind say that one Number the we brings responsive is mobile home. in working of conduct on. a what

So we'll milestones on different be that rolling and in things keystones their notifications out are business.

the exciting part another So to back-office. that's

rate customers the e-commerce already. look that to mobile-friendly. completing going is statistics We it And would and a more further. thing second conversion is mobile with site we're hope to our people pretty even conversion rate The friendly our it our type we is orders that environment for mobile at of responsive, version main our high responsive a that say mobile that increase major to getting is most it project doing and that

more like things other that. has features media like also interactions it and social So

And excited technology on a a a to lot And two of into service. third PayPal So projects. with we're merchant exciting about we've entered our very become note, recently those possibilities. PayPal partnership brings

Officer. to I'd off Heather very move all Marketing Chief those with pass like Cobb, So bring. to that things next to excited will our we're forward and them Sales and those And

update are end and the to just just update between Craig of I wanted end a operations the operations provided, better and day that at that that So add for more experience of providing options really all the we're the user. these upgrades and sales doing

like So when consultant be is end experience and the better it we're and the user our improve provides, when that that having that to having our things for PayPal experience. different user on user back is will site, comes be e-commerce the different options it that for for mobile-friendly, a and focus office that customer all which be the will it looking that to

one that. add to me let Well, note Okay.

night phone dings and by an and morning point me the And my got about seriously phone. pretty a have you salesforce downstairs up up field place do order. I've like with in was good get We report and X:XX can it the to it wakes to go our PayPal says, night, and on one Saturday Randall

to that going way for for good a this happen, this is way So be that it was. us to believe we new

quarter it's is second of Our quarter. before as our because UBAM typically mentioned consequently the slowest it's quarter revenue and I is and because softest

bottom Some out schools are bigger in have the a and impact line such quarter. that expenses on

of previous year, for in reasons. couple quarter decline the a Profitability

a but that of jump of to to on money for can contest. provide want here are know example, still things in size them they it anybody an they we and to If us best can events are couple getting, XX,XXX the salesforce. as we never we our we by destination do every the accrual them have to We because fast who's We anticipate but don't down the run we changes and accounting take incentive write on go to very hour. that have thereabouts field they a make was we because happen a way, wondering, going the lot win travel to big try we case we're now spend

be and Well, would give Republic or trip. that's what relax go never that all XX,XXX figure want per they on And we nice approximately if an again about take we person, Republic and that to person to turn we alternative to But up, place trip. cruise. the for offer thought or $X,XXX we in airfare be we know a the Dominic Dominican

budget we and that then alternative. we an so And offer

family have or for the Sometimes trip on what the go work out them doesn't to you.

reason, $X,XXX very a cash. And opt out, Dominican if them $XXXX from from whatever of we the we could and is comfortable several out trip and time. basic amount benefit and give just or they our got sell can never refund And $XXX,XXX they again opt for at Republic, we know opt the take so which with accrual out which best trip guess books an they

is in and accrual we while we're up Well, that earned way and a complete was with amount, By in you that didn't and taken that system the people million on who like cruise. rebates trip Well, show has of did XXX that be the a it. it's it $X in month. relax to all a that basically have people month $XXX,XXX any on previous that. the the Well, from our year. rebate went blip it Well, from the year didn't August accrual next accounting as

I I'm complain by I way and are So an happened. whining works. this I anything, way just accountant not be and it's to know these the used have the things hope about works. all how the it

in a rebate tax state --yes property refund of got in on the also big or from a ago We year the August taxes.

about We don't not are that's and time commit that where them fell. know So we manipulative these to don't we and really know things We about. they with.

that there's netting more We more at cost plenty things costs also to to analyze and going here up our look try we're looking things be and have profitable. to and like at

reflects pretax softest year. The even our business X.X quarter the profit -- the would point the I of that out strength during at the model of

we excited shares profitable. is repurchase in And While the are we're just quarter. use in also to we it $XXX,XXX really it, XX,XXX that of still about quarter not cash

we to And the our time in seems from that cash made that have to to in we're last be of interest quarter. announced of I we back shareholders. time did the that this think stock position best positive we for that $XXX,XXX buy

of in declaring We before which dividends equivalent the to quarter $X.XX it's have continued our plan the split. trend

of the now for $X.XX paying are about we equivalent So year. the but $X.XX

solid the out entire illegal can not unethical I we on that thing know coming one I is so a the history because We of what's let paying continues and growth went put me repurchase coupled are guess don't happen quote program this share But to no about that while us on program or them. still up assure think run. the unethical practices, for attack make quarterly hesitation you with way and to I call, is practice industry stock undervalued. put under bit there selling have this I on out to the dividends phone is direct believe our business market tell you our stock best you expect going to shares the that our

in the been up that's to of any $XXX get we Direct we tell the about. sold got into to the media illegal, we see world this We're effective we're present doing direct products someone it's tell we have very a that know and you to program from very of straightforward also $XXX me estimate selling doing, start I we when because don't million the a Selling. in is now because And sell didn't if to and able ethical marketplace. million the about everybody best million it are come you've product being not it's reason I'll space. anything in we selling The we're think direct this or the most the concern way the because way buy you face $XX

market Or to have what retail in today. a do you

for been very it's us. So effective

been you for We anybody have painted right If honest. to in little jump We're with hurt here. just us. we've do ask complaint. wants industry who's anybody same it's paying this to by brush us. never it's been XX not a and We've being sign, not nothing question, years had completely to a by bit and the a But people in

to cover was So with didn't ad has that you more is something that possible know probably nauseam? conversation all there than one question of I who want anybody

to the call we questions ready are on would over like anybody the ask turn that to a from question. for call Joel, that's

[Operator Instructions]

Hughes, Our SGF question Mike Capital. from comes first

open. is now line Your

Good afternoon. questions. Thanks for taking my

benefits one, kind the putting current in and made then First to difficult? quarter models about together that November in quarter that experienced year's when the like the also should in were expense think sub we're current compare structure quarter you there our one time of the last we quarter any

be would about the up talking November? You're quarter which coming September, October,

Correct.

This yes. Mike, yes. not is I'm So, [cup]. sure off Dan, and probably

it our third We was one haven't don't I gave of fourth I fourth had year really we large think in adjustments benefit some from rebate any were of quarter recognized anything. announced that we know with in in a had the that the But think suppliers us, the last quarter I quarter. $XXX,XXX usual.

in should meaning much should we taxes? how how to line the and think each incremental margins operating dollar Okay for to revenue incremental prior about bottom fall

problem Well, UBAM below is is with and expense incremental their with in profit the the sales of reported commission. the is the portion major line

And a store book the line. so opposed a it's for to the you've average is XX%. as sales We division, discount record as retail $XX got the above for discount recorded gross

we of then a goods. for book. the $XX have the get get show of actually division, after don't the We cost after So UBAM discount sale we which gross $X $XX that. In And and expenses get. then we we the

portion line. the of incremental talk expenses you about division the below when profit, is UBAM, fastest-growing is the largest their bigger and So where

It profitable We like dollar. the a model $XX yes, -- exactly not did look to it's same dollar sorry. can is a not but UBAM it's go ahead book. not that on So

Right.

that for me year. this But example say you're question I So know the let's just it million year, business. income $X example, let's but I be million of that's answering $XX $XX a wasn't $XX think the would say number so there which different UBAM would question million, was last million revenue. the I quarterly for How for revenue in operating incrementally appreciate. UBAM's went in the to additional line drive this to it much

all Okay, right.

economic Then that you retail in know model to $XX you the cost. go for the operate as back sale. cost of and financial $XX book XX% UBAM. is model down company up gross the basically model XX% a goods; You this is marketing statements line this. and that discount to of it drop XX% about at store a shows to Whether retail bottom the again or

for have left for of is think looking roughly the $XX a book, have probably to about sale a pay or pay employees, to the XX So shareholders. the answer run business, you're I we $X.XX us in this over

So opposed that is XX. a revenue which XX% as confuse UBAM in is incremental of more contribution a publishing to you? Does

No.

I the today's of think XX,XXX. count the at the was press I that currently you August, put as of then that's I think And appreciate in today on I that. number end consultant you that. release call follow the also? Did say

don't number they don't signs someone to because changes use I that I call and because No. us know know said didn't hourly. when say stop they I word tell that. We I hate it when that because up. We stopped.

We they're six back times said that not You to and at sold like it's XX,XXX periodically on had them up, or and know count, in that fool look we take is. July, am again we months I here. of look exact And if and and it have I'm the many you what six I've many so spot in to accurate. July. over it's People How put but them may months -- August ago, well we things, off back many look it active anybody, September? this be guess in trying Craig signed the not the gone to that's something I number going XX,XXX, you people revised and

that Well, those sold last neighborhood X,XXX sold I million. it's haven't looked it roughly I something week, have having enough. think have and in at since $X the but X,XXX Yes, of

they also But remember of X,XXX recruits so by nothing. X,XXX another in sold people. $X so recruited million, XX,XXX July back Okay August X,XXX the

that's number that -- way So business the keeps the works.

and third third coming heard an you've and I've a going and industry coming people here. have You in got going. third

it's at to my So No go, because new gosh, it's and keep quick. not. this not. get rich have oh ,it's No, people look we constantly people

free lunch There's no work. to here. have You

and ever And they're on people we that they money and just don't get don't so because get excited okay started. kit, started to do they that's some the quite get But kit. any lose

gosh, comes, books. put anything, we nice nice kits got and they sell of if never are and oh really And someone there X,XXX my out they've books a box these

So hope a because we're buy or bit. you the any $X X,XXX on that I we it's don't X,XXX X,XXX money helps feel little like million. losing

you. questions more Right. for I understand. Two

guess that of continued division. month revenue that go you're the fall the into I the in imply I on X% then And you UBAM referring least assume of season. growth You selling referenced was the say year-over-year at up month you August to September. to

month here September were whole we for I'll the of Well, you tell that.

but Right -- the press in

Well, here's to the expected an given said old stuff. out don't our you what was And season. telling into continue I was Well, selling fall woman that over any-- here. I'm Don't be we it wouldn't down. be say giving I future

comparison? challenging the continue. to was October, growth any there that later easier might Meaning move November, of the quarter early more into we Is the it reason Okay. an believe gets so as part not

monitor by generally come November, of October, number you're basically month did a of direct no even We is to it's No. the can of November going you tell it daily same and basis. we hopefully last And so on that this month a October. hourly. as you month in comparison how middle the hourly the We monitor out. days comparing

for last question you. Okay,

Facebook a think bit a some that hold. few I made ago more changes made challenging quarters it to little

assimilated consultant you it refer do horizon think this anything to changes that on more parties. or point you online additional expect house Have And change? with importantly, any your to Facebook? I as the at

your be creative I probably yes. you I things time. if base little that took tell changing challenges to not. first bit were the one that they've is say you overcome. before. would all of we say while joy Heather. Facebook up comes They're quite our be. changes it our changes is workable call are Facebook little to last longer Great for harder, felt that any is addressed on I platform whether it's as can faced we question, leader this is, Mike. I any a what that it other as a believe solutions of may they to in, And well. the They it This see anticipate to being briefly will these may the the bet, when it anymore hedging with was And that hard consultant base going or the and answer coming especially or

be challenges. I'm also at at the do I be so I yes, some because that salesforce we say know that don't good while changing will will impact field that overcoming dramatic anticipate so those will point. Facebook And is saying, our something

It is a constant challenge.

Thank Okay. your time. I much. you very appreciate

something Let didn't going else, I'm ask me to -- this. you tell

in has half you hear company us accountant about of year lot a honest negative years, and decided controller about the direct because and and selling here with been Our he years, year two know half straightforward more probably to wanted very two he stuff.

I talked a that interesting. he wife sure do experienced know and up a the don't sales of After as other to this. not too. I'm the weeks his I She people I'm feel like I was said, to call same consultant. my she person. knew So time even if she into don't couple friends. very about signing a can not I thing very

And the out thought, come the shot, across a works one so on, of encouraged easy stayed find over country so company, year don't of and and is here of Well, I here. stage and end how leaders with was the somewhere it it pretty the she because insightful up give the business the to didn't he encourage The she him walked from XX,XXX. which keep in top at in to I is her with sales as give -- do he inside the that. the truth paraphrasing I'm

a the wife is times, on just an that, if do And gosh, accountant's so I'm can thinking XX,XXX lot. math what XX,XXX sell

to you and team personal very bought one his the I that about has members wife proud that to worked because how our she that But results. book staff company, the join investigate it Just if want the see it on from of also great her. from and had a call note inside, of

more, have You any question? mike? next Okay,

your don't. you. Thank time. I appreciate I

comes question from Northern next Our with Private a Edward Investor.

now is open. line Your

new there all with additional are with understand any question I costs on general the this involved England. Is tariff. about tariff the in a have talk EU? I made that Randall, a that books

in, we we of do Well, keep Miller, California, through most Kane our because basically printing may if own daily there. know you as track publisher we're we you do, monitor our in

and right So this we're are monitoring [Indiscernible] now. that they saving tariffs it

start a So the of products been-- where our right the phases. a couple set we few or for initially to of and well exempt that for approved production we codes we now like back Edward But are kind But things at then reprieve through in in as from the have we've have minute. first have bit, right we're for the that mid-December to a in little we tariffs and got of that. elaborate been for orders people are kind tariff set at were first now, weeks in it June and tariffs last

So is coming and China about for China on tariffs we're a bulk in produced products of products set from our them. of XX%

We're for tariffs come into those December. play set in to

supply that, you months And our order do that between a great some of takes and your receive Now says, to a of that having of hand. times six the anybody almost few be large of eight have equivalent you sell Edward, in of we it. carry can the a to the well, a on one the probably year warehouse it going But got it's time -- is sometimes actually business. it's times mitigating We product hand. is that that inventory It said inventory factors. whole this you've amount on and function do

And, of we of will what to to a will similar it because do. can that of the inventory So until have react inventory large of because of strategic a have course, it. the industry somewhat that and to react we of buffer we will do carry lead to industry amount time, amount large

will us is not So affect affect everybody's but that will competitor. saying it what he's only also

been proper a be of have have got probably because going so we're amount substantial tariff to stock our able of to inventory, we've and whatever they better have you've said going UBAM because for we more because off So and to in like Business, because a we are got you sales we've forecast business. to inventory too it probably that

and If and it's you we a money to mess back prepaid get products them. it's Indianapolis some the have don't that from to book, order

have inventory but our lot may we least a of So model. business at

So but a that's that's where question. out, good see you'll how all works that

Dan, another me question for give capital you of also. have estimate upcoming an could I your expenditures year? fiscal

We forecast What We've announce project warehouse tell we past a as significant capital our go board for don't upgrading our process we've some our year and put expenditures. really we each the together or we can where through with including operation in expenditures. expenditures had our a capital been system. it our latest in with with projects, expenditure. And comes capital forecasting our salesforce, it's very But impact not the the to when significant warehouse. our we have in and upgrades, with it have additions will the IT sales not we're while really any the capital significant confidence capital

and software said said, kind run like our things and new may there to CapEx, we're CapEx a you here. business. company traditionally a for some We're I from But costs of company. very we're low CapEx products The pretty warehouse low the upgrades these be much doing

question the future do Randall. with any there older any I have plans And do you, see. building? I one have more you plans, the Are in for

lot front when better there. because we've asked it were done renovated there was over we've we I today. that Yes. entire building leased have out Glad you that a who of whole is over and What it man third looks just

but we the it is office much refurbishing that's better nice bit done my Although, very we of we but are available office space in leased I who've what they has of people inventory. building the that it. front and out, and a every half been and complain using we've for using didn't We're space out that did when lease job tore than leased to were what

will that's in, our on So revenue what -- bringing that? annualized be we're

That's annualized. $XXX,XXX

on $XXX,XXX basis. go-forward around annualize of will We revenue a

but about think work. we a it do and were we place gave some additional find when $XXX,XXX have we like do Sorry, just were and of some concerned down slow we that we what and to going that and that's let's of let so revenue, didn't center, crazy that's [Indiscernible] chance we seem me didn't building that's about

That's great, thanks.

End of Q&A

All feel want very you know very Guys, you right. possibly today. are we feel that very I to I true? No much. more you today. strong We thank everything told about questions. where bullish. Okay. Is

had the significantly. think I And a when got our of industry think our We've are I been team part But here. itself very has is tell we've good. I issue prospects you assure business attacked good model. to with has our while to and I serious nothing with do nothing can direct you called guys has it's that it it around this industry, reverberations selling whatsoever do management

I So for Thanksgiving. wish with that, Happy you the call. a And thanks being on

And Joel, you. over will to the I call turn

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

now disconnect. may You