Educational Development (EDUC) 12 May 222022 Q4 Earnings call transcript

Thank you for joining the Educational Development Corporation's Third (sic) [Fourth] Quarter Earnings Call.

Before beginning the call, 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. 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. With that, I'd like to turn the call over to Craig White, the company's President and Chief Executive Officer. begin. now may you Sir,

Thank you, today Marketing call. me Officer. to and welcome, Heather Cobb, everyone, Financial are Chief and O'Keefe, the our Dan With our and Chief Officer; Sales

increases in we profitability. at levels pleased the net that company. consultants look as in COVID-created all As demand business quarter our signaled of previous fiscal results continue in our levels calls, pre-pandemic resulting to average prepandemic I'm and and we in number our fourth compared record exceeded to we given with revenues our have from of continued

Now capital in create our The but This this decided dividend address allocation part for COVID room, dividend. to sheet. to at shareholder positive been always strong levels we as protect unchanged, and record a priority our to have the elephant has highs, the to the balance our long-term temporarily remains our suspend tailwind, company solely the strategy given inventory decision is are return. of strategy

As our a Chief the our year plan Dan that, for call our our to will remains to this Officer, now XXXX. is this of priority. I a over year, later dividends, and reinstate turn historical O'Keefe, to brief the fiscal levels overview Financial provide normalize inventory financials With our

Craig. Thanks,

$XX.X have for decrease fiscal $XXX.X to XX.X% reported the year. a million from of $XX.X $X.XX fully compared to million, of million to $XX.X totaled per decrease fiscal million And $X.X a diluted a $XX.X So XX.X% of totaled million some for a XXXX. Craig that fiscal XXXX. decrease basis. year to fully to reported the for with last $X or of million XXXX income year taxes $XXX.X highlights, million, totaled year or EDC. some $X.X finally, XXXX happened million, down recent discuss $X.XX, on million our for basis Earnings events on share a Net in net XX.X% as earnings compared totaled fiscal diluted compared revenues XX.X% compared And before mentioned, or fiscal earnings

might working to As was our our fiscal balance with from that read filed $XX capital increased subsequent -- in quarter. earlier million and of million inventory. of line footnote, sheet the event XX-K to strengthen XXXX we ended We million you the today this $XX during ended year approximately $XX our year have the

peak next inventory revenue inventory We amount expect see of into level a our X turning quarters. this the over cash to significant be and and

working earlier, I'll now the basis. dividend, line, our addition temporary cash a Craig turn back quarter, million a to call This the a Craig. to causing as our on over announced financial report. position concludes capital about In will by increase $X And

to I'd couple of Thanks, like items Dan. A with. begin

growth revenue second not fiscal a XXXX largest the our experienced the decline. also we model Our company's while year share pretax per profits, model, generates a and of decline revenues, reflects periods our remain that to strong, but earnings in profits And business strength only of overall increase which our was history. in of

views, with happened continued groups results opportunities. still to but over teams. sales fiscal a XXXX. this the Publishing hand there further sales work to for into sales could me and It's our without and pandemic sales have now our UBAM let Heather fiscal normal XXXX Our about our not Both out environment talk the efforts consultants sales hard not world

Greg. Thanks,

and Publishing experience last in Division from During the our year. increase division a sales an quarter, our we fourth UBAN in to continued when decrease sales to compared

year. $XX.X for in the fourth the and million million Division Our Publishing sales totaled $X.X quarter

fiscal XXXX. sales grew fiscal growth Publishing over year and 'XX million fiscal a represented or $X.X Division's million our XXXX in Publishing over largest Our year XX.X% sales of XX.X% $XX.X

to in came While these normal temporarily resulted sales new activities existing customers record during was the sales. stores our business of to that able and with of this Publishing several some fiscal team from 'XX, were growth closed add sales that customers return gained

to to million sales full-time as to UBAM pandemic. children count fiscal we returning returning of Throughout their XX% fourth and in due active of our school. the the declined anomalies work year primarily 'XX, to the fiscal with seen well quarter have $XX.X Our decline was consultants 'XX, last due to consultant

that are above consultant our have declining, Although have been levels we experienced. the counts still they pre-pandemic

Our count which count has increase XXXX was prepandemic increased our fourth consultant fiscal revenues the fourth count in averaged XX% of active XX,XXX. than consultant This our over averaged levels. quarter, active when quarter consultant XX,XXX higher in the driven

our In and re-consent. new help consultants new more technology-based consultant efforts, and be which introduce anticipate addition, lead sales to will expanding reaching in we to ultimately growth their to successful we recruiting overall tools customers continue

quarter, out fourth online rolled the we platform. During our new training

field our Some we've several includes with platform sales enhancements that made touchpoints force. with this

new haven't scheduled as regularly for in the us leaders to have reach so office in leader consultants done allow that well meetings as ways which past. consultant we new these come We these to meetings, and

that to also e-commerce -- will additional update, it well We add customer as easier and back allow our cost mobility additional will enhancements other for website, additional Craig. us plan to the concludes features. improve which and I'll This features develop call it e-commerce this and We're on that allow experiences. as about very back new roll over website consultant bring our to will new make us excited turn to our to site as do to business sales our

published capital. continued see Thanks, from our of recently Heather. is financials working impact other high levels will One you our

over increase rebalance next or are inventory and to inventory the return into capital quarters. borrowings. increased working temporary Need have cash levels and increased few levels will We

will borrowings to a As inventory within pay XXXX. fiscal we normalized expect the to turns cash, be to back working and our capital down

understands now was March inventory the in heard I inventory and seeing from me clear the just -- levels last couple first fiscal the want of calls February, that April everyone Now XXXX. this quarter in sure purchased we're make that of of to is fiscal you've to say that was

means January, inventory And of of purchases XX those in which later, And inventory at November, were it's now year. kind October, days end our so fiscal due. coming to the the XXX just December, levels coming peaked

line to that's working be why increased. our needed capital So

this first we fiscal XXXX, of During to quarter our headwinds have some impact of due inflation. experienced division UBAN sales of against the

generate give other additional to steel to and challenging environment. excited impacted sales taken by pandemic, energize have to an UBAN also and grants. in X prices channels that forced increased recently book this turn our We're fuel levels. spur In towards sales rebounding to the our channels spending see help fairs levels, and online effort and school revenues, a UBAN sales tools areas. customers positive introduced These boots been we fair As consultants prices down sales to at and pre-pandemic record have from slow negatively in specials on have were have them including back new force

up and will investors. Now the current from have call I information, questions to that our we historical open provided

[Operator is Instructions] Schenker]. question the first Our from line [Walter of

have has the if report, this report, or and the the to these the the you're either been conference theoretically you XX just today at it might which would next for have unsettling day, call report it so be going especially after the market. should not at hours as to is close the after be X:XX, to news the be I earnings, end First, beginning report nothing make day going ensuing which that you're of end day, will but a has to of the do to fact that do call with the the conference of with should complaint,

increase we year. million to we'll XX% at in me like So go I've in bring got XX-odd, I Since we of to that it me, got now million. that said the I Should we're to compare of it back I shares. it? million now to inventory? compare back to have and front $XX-some-odd last up have that I roughly had think, If we to take look don't XXXX, XXXX, was $XX sales in You in we'd gotten how that, sales, the have -- relative I excess inventory going off $XX the my it about

Well, inventory. it. exactly that you're I estimate more million like looking accurate. $XX It's at I we have to excess million understand how not would $XX

flat, free therefore, nice them over or $XX.X of are grow, the regard forward, up. understand for despite million that going to of the going but years inventory. debt, sales will assuming free So paying remain that's And what are years, it split in up ago flat is be earnings million I to X to I it had this, you're to flow couple going where that down cash it we're would if and $XX difference the last above to well if been will sales call

No.

we're... if that Okay. we're Good be to flat And point. didn't going specify though. We

I Not. mean...

I'm sorry, go ahead.

use understand I making I'm assumption, a the just assumptions. no, no No, thing. generalized that. I

issue is a the the and is dividend last remains the year, elimination function inventories levels. that again, financial and did and debt basically roughly. but this being of, temporarily is And this I longer realize redundant, you as earn position $X of so or

correct. Right.

Or was issue I dividend? a more you run it know to into thought prudent was covenant -- caused borrow you covenant? you the just a And cut that you on do there that also it to had money, to did but

just in not saying we time, any what covenant this going the a prudent. prudent into I'm issue felt decision. We at time. At that it future run have was it there. a not near just was issue I'm did was this just to

have Okay. financial are, realize do debt to you it. we to you have And both get the your as need thought lastly, there of to cut a dividend? the the it? a -- may would largest what condition father, here, do to reinstitute shareholders if you since to sense talked in can Is we you And know and I relative Board, like a company reinstitute we be either we

it's in It's on third something be likely have based necessarily statistics, to but I mind. the quarter. not

missed quarter. be back in we've the quarter So and third the second

it. to my didn't million XX were if you neighborhood opinion, from $XX Now but have to have to But and level ranges details, specific talk down line would $XX to that we in capital working about we're million get we're absolutely when it. XX inventory turning to into our down I between to $XX the cash reinstate in it of million, down the getting give And projected.

exception, at going exceed with hope still for Okay. this not my minor And [indiscernible] just but revenues and forecast, I year, year to statement I not that fact I should but some point would of the hope you since last know year. forecast, looking a earning lastly, guess said you're had forecast.

we model, Yes, to prices I sales right turn anything. to gas let's in are our external that too There's our start or believe forecast. prices children's economy now. purchase the books and discretionary We down, that's say mean forecast I in food and sales pressures until believe many close our economic position. if and can't

So these would pressures feel very economic were if good. reduced, we all

Walter, Craig’s right just I’d course, seen with going seen of to put now current, the months, and, of the add We couple kind for on out we’ve comment of war last Ukraine in the what’s some there. indicator to key following being levels as of of that our current why sheet. protected now. jump inflation impact with That’s as a balance we’ve we’re the our up, we right as can immediate environment

with and against children’s – fuel, We’re these have buying to what or with consumers we this inflation books, seeing families books. or purchases children’s on of distinguish food are of between that as are typically headwinds

said, current seen want change. Craig the longer when term. don’t know be prepared we’ve some so And for a – for going we we to – is when this environment We to and as pressure,

And to so want now. conservative just right be we

from line the of is [indiscernible]. question next Speakers,

of And impressed question concerned a adaptability researching the is after ever one a having or are recent changed you some very the kind my about that before XXXX. in And shooter] one-dimensional having and since IT around you about that as for background, that people company I've [straight the change without of an of palm a company. been it very I've by of lot right market is came the now. uncertainty to And things been type. But time Craig, that there's with management. understanding have So do has sell are a of things try XXXX started to has the that been suddenly I punches,

I IT round of of please? free background? with kind to I into this. And specific and important, Sometimes, people examples they to have what do are relationships take business want is yourself appreciate the you in that to transitioned examples, the very how role want manage to like the people. things as experts I know, give What opposed would can from out and especially your you from think you surround CEO and counsel feel specific And

Sure. that Officer and personality, done, Sales you a been I've quiet lot But Dan what Well, there's X room that experts, and I understand maybe to a more, I a is obviously, behind well, straw Heather. Randall myself Marketing Chief recognize I've whole our with but not CFO, them. and have and person, of big our

instituted And level next the so over. taking doing we're face that weekly because our in let's share down, not company. and the directors of monthly I've at kind the of lion's calls the they're work

directors, X level them. ever the there's of Our It's it's strongest of been.

So from I the he to feel company. very different the about easing we're on Randall, working culture comes company. within working say gentleman, negative and on communication anything the well in trying but I'm generation. older like not a We're

that. managed like relationships the culture bit UPS, and trying communication. my improve vendors, I previous software In the a so things role, with And change I'm to

all I've had working under great leadership for with years. groups. been those Randall's I've XX relationships So of

I of things. transition. numbers the same transition. some the has The and But So Board consistent those of to management been what basically I throughout kind throughout team need the been have learned the

So my success. own I and appreciate about I opportunity, the sentiment excited that to am driven I'm absolutely create your

know a don't your I if little question, bit... but, So that that's answers

the I also a helpful. by pack follow-up the been from also expect the the Are production CEO it's lines to have forth changes certainly -- I've really that the but the see you there. adaptability can production I showing failed lines through I'm line, not whether mention letter the software, That's through that picking so soon? for we and And metal or and there? to hoping -- company, you your A question. impressed you

Yes. Yes, one. report absolutely. is usually where An annual have we

weeks, So that will X right? X, be out in the next

Joseph the from of question Fuller. next Speakers, line

I So question. a had

you appreciate of because you're advantages demand. wondering I I at the So of know this the cost. all about that a on bought inventory one talking lower bought of I'm effect having inflation is

other -- forward, over inventory now? do that? as to sort additional you you Going on as you hold of to the plan replenished have this Are down have on view planned is? going the year go of to that? have next much How cost also gets any before sort do? What's the then side, price sort of And do the increases any you line that

Good question.

all ever the So it prices in was here inventory board raised at costs. prices and across fact, our ever. We’ve lower only where of is We’ve increased not there necessary.

next that be anticipate printed no are major reminded So prices changes or wholesale I some Yes. year like book. would the X, back changes, me but pricing on that there has of over that. might the nothing the the And Dan

are raising done And we’ve great low. that’s I job there prices, So think the our some of prices key. challenges to keeping a

like had haven’t, I said, We wholesale any changes.

increases the few would over price be next a or prudent. year So X probably

from is question line Next of Instructions] [indiscernible]. [Operator the

me? hear you Can

can. We

right. All

Okay.

So I have X questions. really quick

they stock Looking of about looks buying down more that. the you or complicated reason share at announcement, because on X%. Is do that it for were by earnings back count something have went and X% the like the sort or

changes. We've of any now, significant not Well, I ownership share had aware wasn't that.

We haven't with additional or long-term were any stock any of some that XXXX issued back issued last shares plan. incentive bought outside associated our year stock

Yes.

that So if right at shares, members but in we When position, know a act better that shouldn't but anything, now. we'll will can't little do cash gone have back they look we're outstanding the you healthier bit, buying a down.

Okay.

there the outstanding. So XX the 'XX, ended, for is table the it XX shows million announcement, months X.XXX. I'm the of months, X.XXX in there it was looking at And February for ended just shares

I'm unless have tables missing something, don't we around. So sorry,

quick. looking real we're Yes, at that

you're to want make little a at. what looking I bit

went for went down also at months, and X was diluted about months, but least diluted the basic the the the Now the for down. XX same,

confirm, that, let Yes, correction, and to shares. make correction haven't Other that. to But we we Randy, look we me a plan, really long-term the on have a... need than we make a incentive had haven't. at and we And will just

table. mistake correct It a go just if that. even then better that and look ahead Maybe Yes. in you may

Okay.

that sales fiscal it's next the through question the now margin. profit second thinking, current net to the for profitability, And X know then right if to can't the at next is project your inventory, you're next less year, for buy plus the earnings net to my And X look I is, but you that quarters, I'm what in future. one like quarter, you around working of So X.X% when you the a you're cost have minus said, going the or just revenues. were thing or

possible able So going can probably know now, are you or is quarter Or announcement, a you changes some try X? the of sort And It's profitability. at on I to you able you be think you that are -- to you're all? to not so say preserve statement? for profitable said that fair in able not comment may you making be, to where whether you're a

Yes.

of So part by there's, business our a is Randy is affected seasonality.

third quarter followed And largest -- quarter typically is So third profitable then about quarter it's usually last then it is by fourth is the is second quarter. quarter. and and the then quarter have the and we revenue our first most our the the quarter

she I'm giving the quarter. So least by usually the business when our Heather also of because of X seasonality but don't fourth fourth look quarters amount quarter typically as has of is our but here, historical we it's smallest our fiscal typically, caught quarter. X is -- quarters, of quarter our year, at profitability, the course, you you the But to listening it, me forecast, it's

Okay.

a... next the couple quite, So of been have quarters

some. I'll We invent crystal ball, buy

Randall tell if sold these website you, anybody's me look I know can sort the you personal to bought any plans and buy even you any think? this, what enough me, tell stock your question, I stock in you or but any has see Do may there already, but you at Or at guess, can't for is for can't correct. probably even for you a X plans a insider. levels? Heather there's I to maybe know but Dan, there are Are of I some you really do This stock know --

offer We our XXX(k) our stock plan. through

And to us have you I our the that. have quarter. some plan see you'll filings if so that shares of each year. back, through in can bought we the that us XXX(k) revisit And past each We stock we go you don't -- continually for buy show to X X Form tell continually

saw I that. Yes. Yes.

are continually of We shares and -- good buy plan buy invest. certainly And there that we to prices, buy. then announced So it. opportunities. today's we do we attractive. And we at It's it's very outside the do when

Okay.

personally the made didn't statement comments you to the you do really what I ask gentleman the Is after address about mean going much. you anyway. really that, Or to hours and future? but it if a earnings that consider the don't your XX you like conference Just it's to in call a don't had advancement. first had do I that do you think next that you after going matter the market call day care your I had to announcement, what I your may is something really think. it's consider right

do earnings advisers. try an -- do have Relations within Since Investor from in is X-part what And a But announcement we we to call we to XX-hour be consistent try what do try a we period. in we're doing. the to we

to is up to take Certainly, fair automate more or want and And as bit a to will everybody certainly that. comment We best there's with practices. that them. we do the if

we and our comment Relations we take improvements. make this up if will group with can So see some Investor

do certainly what companies way. problem Yes. wouldn’t any doing, have with of lot it you’re that I a

had the after morning, reported the just that this closed little market after own company on call yesterday, market Another bit open. that they a I

think don’t matters So really a I lot. it

Speakers, next question Jung. of line the Jon from is

about Craig, does you that each last? in of them I something the purchased requirements And much long wonder have year? agreement with if terms provides you books How your you're you of could the the how most Usborne, of with from have them any tell me do you contract selling. who content

original how million, is very for requirements any which I agreement, have much Well, low not do number. purchase. $X.X I say we said that we think, very, a the No,

So the contract is evergreen.

taking yes, of is gone over I'm trade, So new we've the we're to Peter she company, there. -- a Nicola our where CEO be seems Usborne's more over more and through daughter, and and new transition

the we've well forward. with work relationship So we attempted can her, that -- have so and I to moving improve

Okay.

number with no So contracts that there are of specifics years a Usborne of or any help are is? terms in relationship current gone your what

Right. nothing. Correct. No,

we to we an be XXXX. Jon, that back have That’s So with XX-K our to as agreement. and just dates Usborne the attachment current a filed contract it to clear,

As Craig it, in it small. outlined, has very very, purchase it’s some requirements but

we’ve last it’s from $XX years, it. less for couple I than million. $X been of And less think, year million said, than as Craig buying close the to a them

those So we’re Any minimum meet certainly requirements. questions? – other we

further questions. No

have In fact, we one more.

is from question [indiscernible] of the Next line

I have X questions.

decline? analysis your this so detailed XX% to secondly, February consultant how this you're been from database, First, cash online That's with decline you that of increased slow the consultants a And insolvency? cost haven't the I today. market consider of the first is company's quarter another number Why the fallen until consultants does have in to a end in, question. much that able of

earlier consultant those which the fallen heard searches correct. We've the statistics I'm XXXX, not how call said absolutely where not good got I've on That's in to people that, do Well, science. and but our numbers query you from not we're first we is extrapolate sure the other of at. numbers. are a question, peak trying in our

accurate. numbers are So the we've told you

-- then it remember question, I don't second was. and even the So what

Solvency.

Yes, solvency.

last is profitable. were year, thing very key we the So

We be going expect to profitable forward.

think we a as last I announced, year, made $X.XX share. we

to expect this be profitable We year.

historical at year. the financials company EDC profitable will a look find the been going that you late back you has if into I 'XXs, think our over

and be that sure, no think, we have about concerns So solvency. profitable we'll we forward going for

final now comments. Thank turn Instructions] I'll Craig call participating. White you back for [Operator the for over to

you, Jessie. Thank

know that well. question address, not me Just the many very people to about asking I me personally, like

I’m to my coat am sugar values all going those I that things. shooter. a core it, it, spin of straight One not is

I’m Randell doesn’t and ways. Dan we -- that positive as right heading move Now mean we’re in do a back And try positive at immediately to day, the depending tough we necessarily forward. then we make or have, and direction nature. a on. together decisions Anything well. a be move sales. on we have look the I to the collaborator get doing all every believe Heather nature for going that to a to of I and We -- that problem negative decision realist. I’m and any vacillate. a single I to and don’t I and problem that options that by pull and now the resolution then best we’re can I We to move on. increase we I

coming as new hired evidenced of is calls a by out. of we up The have lot field right We a this now couple week. absolutely incentives had

So we’re getting looking forward back. to

you, we’ll call. the you thank and on everyone, next see So

call. to the thank for wanted all joining conference. I today's you concludes This

may You disconnect. now