Educational Development Corporation Announces Fiscal Fourth Quarter and Fiscal 2024 Results
Educational Development (NASDAQ: EDUC) reported its fiscal fourth quarter and fiscal year results for the period ending February 29, 2024. The company saw net revenues of $51.0 million for the fiscal year, down from $87.8 million the previous year. Fourth-quarter net revenues also fell to $9.0 million from $15.0 million. Despite the revenue decline, earnings before income taxes improved by $4.1 million to $0.7 million. Net earnings for the fiscal year increased to $0.5 million, translating to earnings per share of $0.07, compared to a loss per share of $(0.31) last year. The company reported a net loss of $(1.6) million for the fourth quarter, an improvement of $0.3 million from the previous year.
EDC launched a new e-commerce platform in January to enhance user experience. Inventory levels were reduced by $8.2 million, helping cover operating losses and reducing bank debt from $45.7 million to $33.9 million. The company also plans a sale/leaseback of its headquarters, potentially further reducing borrowings.
- Earnings before income taxes improved by $4.1 million to $0.7 million.
- Net earnings for the fiscal year increased by $3.0 million to $0.5 million.
- Earnings per share improved to $0.07 from a loss of $(0.31).
- Net loss for the fourth quarter improved by $0.3 million.
- Successful launch of a new e-commerce platform in January.
- Inventory levels reduced by $8.2 million, generating cash flows.
- Bank debt reduced from $45.7 million to $33.9 million.
- Potential sale/leaseback of headquarters to further reduce borrowings.
- Fiscal year net revenues declined from $87.8 million to $51.0 million.
- Fourth-quarter net revenues fell from $15.0 million to $9.0 million.
- Average active PaperPie Brand Partners decreased from 28,000 to 18,300 for the year.
- Average active PaperPie Brand Partners fell from 26,100 to 15,500 in the fourth quarter.
- Fourth-quarter loss before income taxes was $(2.2) million.
Insights
Educational Development Corporation (EDC) reported notable financial results for fiscal year 2024 compared to the previous year. The company experienced a significant drop in net revenues, from
Despite lower revenues, EDC managed to improve its earnings before income taxes by
Net earnings also saw a significant improvement, transitioning from a loss of
In the short term, EDC's financial stability appears to be bolstered by strategic cost-cutting measures and inventory management. However, the long-term success will depend on the company's ability to rejuvenate its revenue streams and sustain profitability.
The drastic reduction in average active PaperPie Brand Partners from 28,000 to 18,300 year-over-year signifies a potential decline in the company's network marketing effectiveness. This drop, coupled with a decrease in fourth-quarter partners from 26,100 to 15,500, suggests challenges in maintaining and growing the consultant base, which is pivotal for EDC’s direct selling model.
The introduction of a new e-commerce platform in January aims to enhance the user experience for brand partners and customers, potentially driving consultant growth and revenue. However, the current economic environment, characterized by high inflation and increased living costs, poses significant hurdles. Families with small children, EDC's target market, might prioritize essential expenses over discretionary spending on educational products.
In the long term, EDC’s focus on reducing debt through strategic sales and inventory management could free up resources for marketing and product innovation, essential for attracting and retaining brand partners. However, the company's ability to navigate economic pressures and retain consumer interest in an increasingly digital marketplace remains crucial. Investors should watch for updates on the sale/leaseback agreement of their headquarters, which could significantly impact financial stability and operational flexibility.
EDC's strategic moves to reduce bank borrowings and related interest expenses by leveraging cash flows from inventory reductions and asset sales indicate a proactive approach to managing financial health. The planned sale/leaseback of their headquarters, appraised at approximately
The ongoing enhancements to the e-commerce platform suggest a shift towards digital transformation, essential for keeping up with market trends and consumer preferences. However, the company’s ability to execute these enhancements effectively will determine their impact on revenue growth and partner retention. Furthermore, the receipt of a
Overall, EDC's current strategies reflect a balanced approach to navigating economic challenges and positioning for future growth. However, long-term success hinges on revitalizing sales and effectively leveraging digital platforms to enhance customer and partner engagement.
Tulsa, Oklahoma--(Newsfile Corp. - May 21, 2024) - Educational Development Corporation (NASDAQ: EDUC) ("EDC", or the "Company"), a publishing company specializing in books and educational products for children, today reports financial results for the fiscal fourth quarter and fiscal year ended February 29, 2024.
Fiscal Year Summary Compared to the Prior Year
- Net revenues of
$51.0 million compared to$87.8 million . - Average active PaperPie Brand Partners totaled 18,300 compared to 28,000.
- Earnings before income taxes improved by
$4.1 million to$0.7 million . - Net earnings totaled
$0.5 million , an increase of$3.0 million . - Earnings per share totaled
$0.07 , compared to loss of$(0.31) , on a fully diluted basis.
Fourth Quarter Summary Compared to the Prior Year Fourth Quarter
- Net revenues were
$9.0 million compared to$15.0 million . - Average active PaperPie Brand Partners totaled 15,500 compared to 26,100.
- Loss before income taxes were
$(2.2) million , a$0.4 million improvement. - Net Loss totaled
$(1.6) million an improvement of$0.3 million . - Loss per share totaled
$(0.19) compared to loss per share of$(0.24) , on a fully diluted basis.
Per Craig White, Chief Executive Officer, "In January, we launched our new e-commerce platform, significantly improving the overall user experience for both our Brand Partners and Customers. Our team continues to work on additional enhancements to this site, which should result in consultant growth and overall improvements to revenue-related activity. We continued to face the headwinds of high inflation and its impact on our target customers, families with small children. These customers have seen record increases in food costs, coupled with high fuel costs, which put constraints on other discretionary purchases. We have a long history of weathering difficult periods and we continue to implement differentiated tactics to ensure we generate positive cash flows, while minimizing our operating losses during these times. We will continue to look for strategic ways to further reduce spending and limit our capital expenses including the purchases of future inventory."
"During fiscal 2024, we reduced our inventory levels from
"Additionally, in November we announced the planned sale/leaseback of our Headquarters facility which has recently appraised for approximately
| EDUCATIONAL DEVELOPMENT CORPORATION | ||||||||||||||||||||||
| CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||||||||||||||||||||
| Three Months Ended February 29 (28), | Twelve Months Ended February 29 (28), | |||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| NET REVENUES | $ | 8,968,400 | $ | 14,980,400 | $ | 51,030,300 | $ | 87,829,000 | ||||||||||||||
| EARNINGS (LOSS) BEFORE INCOME TAXES | (2,213,700) | (2,607,700) | 734,500 | (3,426,900) | ||||||||||||||||||
| INCOME TAXES | (599,100) | (688,000) | 188,100 | (922,000) | ||||||||||||||||||
| NET EARNINGS (LOSS) | $ | (1,614,600) | $ | (1,919,700) | $ | 546,400 | $ | (2,504,900) | ||||||||||||||
| EARNINGS (LOSS) PER SHARE | $ | (0.19) | $ | (0.24) | $ | 0.07 | $ | (0.31) | ||||||||||||||
| DIVIDENDS PER SHARE | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
| WEIGHTED AVERAGE NUMBER OF COMMON AND EQUIVALENT SHARES OUTSTANDING | ||||||||||||||||||||||
| Basic | 8,266,032 | 8,404,233 | 8,269,971 | 8,157,704 | ||||||||||||||||||
| Diluted | 8,308,448 | 8,404,233 | 8,285,230 | 8,157,704 | ||||||||||||||||||
Fiscal 2024 Earnings Call
Date: Tuesday, May 21, 2024
Time: 3:30 PM CT (4:30 PM ET)
Dial-in number: (800) 717-1738
Conference ID: 57633
The conference call will be broadcast live and audio replays will be available following the event at www.edcpub.com/investors.
About Educational Development Corporation (EDC)
EDC began as a publishing company specializing in books for children. EDC is the owner and exclusive publisher of Kane Miller Books ("Kane Miller"); Learning Wrap-Ups, maker of educational manipulatives; and SmartLab Toys, maker of STEAM-based toys and games. EDC is also the exclusive United States MLM distributor of Usborne Publishing Limited ("Usborne") children's books. EDC-owned products are sold via 4,000 retail outlets and EDC and Usborne products are offered by independent brand partners who hold book showings through social media, book fairs with schools and public libraries, in individual homes, as well as other in-person events and internet sales.
Contact:
Educational Development Corporation
Craig White, (918) 622-4522
Investor Relations:
Three Part Advisors, LLC
Steven Hooser (214) 872-2710
Cautionary Statement for the Purpose of the "Safe Harbor" Provision of the Private Securities Litigation Reform Act of 1995.
The information discussed in this Press Release includes "forward-looking statements." These forward-looking statements are identified by their use of terms and phrases such as "may," "expect," "estimate," "project," "plan," "believe," "intend," "achievable," "anticipate," "continue," "potential," "should," "could," and similar terms and phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they do involve certain assumptions, risks and uncertainties and we can give no assurance that such expectations or assumptions will be achieved. Known and unknown risks, uncertainties and other factors may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, our success in recruiting and retaining new brand partners, our ability to locate and procure desired books, our ability to ship the volume of orders that are received without creating backlogs, our ability to obtain adequate financing for working capital and capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, the COVID-19 pandemic, as well as those factors discussed in our Annual Report on Form 10-K for the year ended February 29, 2024, all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this paragraph and elsewhere in our Annual Report on Form 10-K for the year ended February 29, 2024 and speak only as of the date of this Press Release. Other than as required under the securities laws, we do not assume a duty to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, changes in expectations or otherwise.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/209981
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