Educational Development (NASDAQ:EDUC)

WEB NEWS

Tuesday, April 4, 2017

Research

EDUC ($7.05) announced record unaudited net revenues for March 2017 totaling approximately $9.4 million.  This revenue level represents an increase of $2.2 million, or 31% over March 2016 revenues of approximately $7.2 million. Quote from management:

“March sales results were very encouraging with double digit growth in both our UBAM and Publishing segments.  Our Publishing segment reported sales in excess of $1.0 million, the second highest sales month in the past 17 months.  Our UBAM segment sales exceeded $8.4 million, driven by the growth in consultants.  Our current active consultant count exceeds 27,000, which is near the highest consultant count in history, despite the challenges associated with delayed shipping that occurred in the fall of 2016.  This growth shows the continued strong demand for our products and our success would not be possible without the hard work and efforts of our loyal employees, consultants and publishing sales teams.”

Tuesday, January 31, 2017

Conference Call Notes

Q3 2017 Conference Call Notes:

Funding:

So looking out ahead we must improve our capital structure and we are currently looking at a secondary stock offering to boost capital. You really can't grow -- you really can't fund a growing Company like this on bank debt…

...So we are looking at a long range how to improve capital structure and someone has got to come up with some equity, so we are looking at that...

...Tony, I totally agree with you. It is dilutive, but if you've got a $7 million cap on your bank loan and you're going to go from $110 million to maybe $200 million, you know you are going to do what you've got to do. I don't have the answers all here, but equity is one of them. I do not want -- my plan was if the profits had been comparable to the revenue and we had the stock at $15 to $18, it was $17 a year ago. At $17 you put out 1 million shares from 4 million and get up to 5 million that is not dilutive at all. And that is what I had in mind. $8, I am not crazy about that. I agree with you, but a growing Company cannot be totally funded on bank debt.

Cash Flow and Dividend Security:

That is still the case. I was discussing this with Peter Usborne last week or this week actually. I told him, I said, this Company has come full circle because when I became CEO in 1986 we had a cash flow problem and we couldn't meet payroll. And on Friday afternoon I called everybody together, which is 22 people, and we didn't have enough money to pay them. But we got money in on Monday and it all worked out. And here we are 35 years, later it came down to a specific payroll that was underfunded. And so, I personally loaned the Company the money. And I have reasonable assurance that they are going to pay me back one of these days -- I hope they will.

Well, I tell you, Jeff, when you have a cash flow problem certain things have to go. I cannot tell you what I am going to do with the dividend. But I am trying to change our capital structure because the last person who wants to stop the dividend is me because I get most of it.

So, I can't tell you what is going to happen with the dividend. I can't tell you what is going to happen with the capital structure. But promise you I am working diligently on that program to get my money back from the Company and a dividend…

Debt Covenants:

...So we think that debt to equity out of compliance will be taken care of now. We think it will be in compliance but I don't have any assurance of that. But that is what we think.

...And I would also like to address an issue we had in the financial statements in November as of November 30. We had two issues which caused a delay. One we were out of compliance with the bank covenants in debt to equity. And that is because debt to equity we have a ratio in there and we were out of compliance. However, I would mention that if you look at our statement, in the debt to equity ratio, which we were about 3.75%, and I think we had to be at 3.5, something like that.

Internal Controls and Operational Inefficiencies:

There is inefficiencies everywhere. And for lack of training we shipped to the wrong people.

Finally got down to over nine months to get for customer service and after 9,000 on the Tuesday before Christmas UPS said that is it, no more from you guys. So we just had to accept the fact that we had failures in our service and do the best to move ahead.

I answer a lot of customer service calls and I got the most irate ones

...Another one was the weakness in controls. And the weakness in controls came about from being flooded with orders and deferred revenue and then trying to reconcile that with the cash that came in and -- with the new software. I take responsibility for it. Yes, it was a nightmare trying to process all those orders. We got them done. We still are having some issues from the software Company in the direct sales to the new financial software. And there are still some reconciling items that are occurring now that we think will not happen when we roll back to our own system. So we are not totally out of the woods yet on the weakness in controls; debt to equity we will see...

I mortgaged my house when I got this Company, I will do it again. There is no problem in me being all in, I am all in. If you had breakfast this morning and you had bacon and eggs, well, that chicken was involved, that pig was committed. So I am the big fat pig. I am all in, brother.

Unhappy Distributors:

But their software did not work and it caused us significant loss of revenue and consultants and customers.

Trepidation of retail customers:

And I will tell you, if you talk to our field salespeople they are so excited about the fact that we have caught up on shipping. And there are people who've been sitting on the sidelines and said I am not going to order anything until they get that straightened out. And by the way, that includes our retail stores. It may take a little bit longer for them, but we have every hope that we will get the retail stores' business back and the customers.

Bullish conference call quotes about growth:

We recorded 35 million in sales two years ago, the past year 65 million, this year we will finish up around 110 million. And the growth continues. I am not going to throw out any large numbers here that will make everybody nervous, but the growth is continuing at least on that pace, if not better.

And that is continuing. Over the weekend we got 10,000 orders. And those orders are, again, increasing daily from last Monday -- two weeks ago Monday they are up about 80%. So, yes, and that is more cash that comes in. But we have bills to pay. We have to pay for inventory and UPS and salaries and so normal stuff. But we didn't stop -- we didn't continue to grow at an exponential rate.

So, today, I will tell you that every order that we have in this building has been shipped as of yesterday with the exception of any possible problem orders through customer service or some other unique situation. But other than that we are totally caught up, which means deferred revenue is gone. So that issue on the balance sheet of deferred revenue, which causes other compliance issues, is gone.

In January we had the largest month in our history, $14 million -- I mean, December. Excuse me, December, I am sorry, December.

The field people, this is not my forecast, but I am telling you the people in the field think that we can do 300 million this year.


Tuesday, March 15, 2016

Comments & Business Outlook

TULSA, Okla., March 14, 2016 (GLOBE NEWSWIRE) -- Educational Development Corporation (“EDC”) (NASDAQ:EDUC) (http://www.edcpub.com) today reports historic record net revenues for the fiscal year ended February 29, 2016 (unaudited).

Randall White, CEO of Educational Development Corporation, announces that the Company achieved record net revenues of $63.7 million for the fiscal year ended February 29, 2016, which surpassed last year’s previous record of $32.5 million.  Both divisions of the Company had excellent net revenue results with the home business division, Usborne Books & More (UBAM) leading the way with $52.8 million compared to $21.1 million a year ago, an increase of 151%.

UBAM had an excellent year attracting new sales associates which now total over 19,600, compared to 7,800 at the end of fiscal year 2015.  This division has now posted 33 consecutive months of net revenues gains over the same month the previous year.

This unprecedented sales growth is primarily the result of eliminating sales to Amazon and wholesale accounts four years ago to support our retail accounts and our sales consultants.

Preliminary unaudited results indicate a marked increase in pre-tax earnings for the quarter and fiscal year ending February 29, 2016.  In addition, the Company had $2.4 million in orders received in February which were unable to be processed for the month due to the heavy influx of orders and will be included in results for March and the fiscal year ending February 28, 2017.  The Company has monitored the extraordinary growth in sales, which has continued in the first month of fiscal year 2017, and expect sales to exceed $110 million for fiscal year 2017. 

To accommodate this escalating growth, the Company moved to our new location during the month of February, while continuing to ship product.  The Company continues to look for improved efficiencies in operations.  A new small-package processing machine is being installed today which should more than double our quantity shipped each day, allowing us to minimize our backlog.  UBAM will introduce new ecommerce and consultant software in the first fiscal quarter of 2017, which, along with new accounting software, is an investment of over $750,000.


Thursday, February 11, 2016

Comments & Business Outlook

TULSA, Okla., Feb. 11, 2016 (GLOBE NEWSWIRE) -- Randall White, CEO, Educational Development Corporation (“EDC”) (NASDAQ:EDUC) announces record net revenues for January 2016.

Net revenues for the month ended January 31, 2016, were a Company record for January of $4,753,100 when compared to $2,016,100 for the same month last year, an increase of 136%.

Net revenues for the home business division, Usborne Books & More (“UBAM”) were $4,037,200 for January 2016, compared to $1,199,900 for the same period in fiscal year 2015, up 236%.  The net revenue gain was primarily driven by the continued increase in the number of sales associates joining the organization, with 1,200 new consultants during the month of January 2016, compared to 200 in January last year.  At January 31, 2016, Usborne Books & More had just under 18,000 active consultants compared to 7,900 active at the same time last year.

As previously reported, the extraordinary growth in sales necessitated the Company to acquire larger facilities to accommodate the distribution of its products.  The new facilities will be operational on Monday, February 15, 2016.  Our current facility, previously for sale, has been removed from the market as it has been determined that the continued sales growth necessitates retaining the existing facility to accommodate the increased operational requirements.


Thursday, September 17, 2015

Acquisition Activity

TULSA, Okla., Sept. 16, 2015 (GLOBE NEWSWIRE) -- Educational Development Corporation ("EDC") (NASDAQ:EDUC) (http://www.edcpub.com) would like to announce we have acquired Demibooks Inc. EDC is the United States publisher of Usborne and Kane Miller books and operates a direct-to-consumer sales division, Usborne Books & More.  EDC was an early investor in Demibooks.

As part of the acquisition, EDC will continue to operate Demibooks Storytime, a curated marketplace for children's picture book apps.  Publishers can create content for Storytime using Demibooks Composer Pro, the premier book app authoring platform on the iPad.  Demibooks will discontinue Demibooks Composer Studio and a service to publish apps to the App Store.  CEO Rafiq Ahmed and CTO Dan Hotop will consult with EDC during a transition period.

Demibooks CEO Rafiq Ahmed said, "It has been a fantastic journey since Demibooks Composer first launched in 2011.  We are grateful to everyone who has helped build Demibooks along the way. We pioneered interactive book app authoring on the iPad, and have reached amazing customers in digital publishing, schools and beyond.  We have had a close working relationship with EDC since their early investment in us, and are confident the Demibooks brand and digital publishing business will continue to grow within the EDC family."

Randall White, President and CEO of EDC, stated: "We are excited for the opportunity to distribute these products through our direct marketing division.  We also see potential for licensing the Composer platform to schools and other publishers."

- See more at: http://globenewswire.com/news-release/2015/09/16/768819/10149652/en/Educational-Development-Corporation-Announces-Acquisition-of-Demibooks-Inc.html#sthash.cjiSKEQc.dpuf


Thursday, September 3, 2015

Comments & Business Outlook

TULSA, Okla., Sept. 3, 2015 (GLOBE NEWSWIRE) -- Randall White, CEO, Educational Development Corporation ("EDC") (EDUC) (http://www.edcpub.com) announces record net revenues for the month of August 2015 of $5,042,200 compared to $2,454,800 for August last year, an increase of 205%. Both divisions of EDC posted significant increases in net revenues with Usborne Books & More (UBAM) leading the way with $3,893,000 compared to $1,339,900 for August last year, an increase of 191%. EDC Publishing had net revenues of $1,149,300 compared to $1,114,900 for August last year, a 3% increase.

The Company also recorded the largest net revenue for any quarter in our history of $12,620,500. The previous record was quarter ending November 30, 2014 of $10,936,700.

Mr. White states that preliminary, unaudited results for July and August indicate a significant improvement in operational margins which resulted from the increased net revenue and cost saving programs previously implemented. The increase in UBAM's net revenue was partially due to 5,000 new sales associates joining the organization from June 15 through July 31, 2015.

Mr. White announces his purchase of EDUC stock in the open market of 5,152 shares in his individual account and 4,296 shares in his IRA.

The Board of Directors had previously authorized a $0.09 per share cash dividend, a 12.5% increase, which will be paid on September 18, 2015 to shareholders of record September 11, 2015.