Educational Development Corporation
Q4 2019 Earnings Call Transcript

Published: 5 Jun 2019

[Operator:]

Good day, ladies and gentlemen, and welcome to the Educational Development Corporation Fourth Quarter and Fiscal 2019 Results Conference Call.At this time, all participants are in a listen-only mode. Later we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call maybe recorded.I'd now like to introduce your host for today’s conference, Mr. Randall White, President and CEO of Educational Development Corporation. Mr. White, you may begin.

[Randall White:]

Thanks, Josh. Welcome to our company investor call. Here with me today are Heather Cobb, our Chief Sales and Marketing Officer; Craig White, our Chief Operating Officer; and Dan O'Keefe, our Chief Financial Officer. We’re going to start, we have pretty good report here for you. As usual, we will have Dan start and give us a brief review of the fiscal year.

[Dan O'Keefe:]

Great, thanks Randall. Net revenues for the fiscal year grew $6.8 million or 6.1% from approximately $112 million reported in fiscal 2018 to $118.8 million reported in fiscal 2019. Earnings before income taxes grew approximately $1.4 million or 17.9% from approximately $7.8 million in fiscal 2018 to $9.2 million in fiscal 2019.Net earnings after taxes grew approximately $1.5 million or 28.8% from approximately $5.2 million in fiscal 2018 to $6.7 million in fiscal 2019. Earnings per share on a fully diluted basis increased $0.17 per share or 26.6% from $0.64 per share reported in fiscal 2018 to $0.81 per share reported in fiscal 2019. This concludes the fiscal 2019 earnings results. And I'll pass the call back to Randall.

[Randall White:]

Okay. On average, best year. We could have done little better job -- or something. Okay, 7.6%, not bad $120 million, just $119 million, we continue to have growth in both divisions, the retail, retail outlets increased most. Again it's much smaller number but we're excited to see that revenue grow and a lot of it is one major customer by the way and it's made up the bulk of that but we didn't see growth, it didn't meet, it didn't meet our internal expectations today.When you've had 8% growth, 6%, 7% certainly doesn't much of down here. But our fourth quarter revenues grew 5.2% on pure active consultants which is kind of interesting that’s because both we had the previous same quarter last year. This indicates that our active consultant sell more, like more commissions and were more successful. This along with other changes in the organization.We still had confidence that the consultant count can still continue to grow. The headcount I think every year, every call I’ll tell you the headcount is a staff number. And it really gets down to what people feel. We recently returned from the city travel trip and I was talking to even people on the trip and we talked about headcount and we just left things like we always know when someone starts because they sent an application and even like it.We never know when they stop because sometimes you'll stop and after six months we can’t let them and then someone come back and sell again, it is a tough number, the thing that if we haven't, we haven't had the capital growth and that's what we're -- that's what we’re concentrating on as we go into the New Year.That's we hope accomplish by technology that we're developing to make it more mobile friendly to the consultants. I say the world has changed out there in last four, five years. These people, these young girls unlike myself, unlike myself they want to touch that phone, have a drone delivered to them in about 30 minutes. So it's getting.We have to really stay on top of technology and that's what we do along with other incentive stuff. The industry as a whole had a decline. So we're outperforming the industry which is not anything that we're very proud of but we're ahead of other companies in the industry.We don't compare ourselves with them much anyway but we're constantly trying to build the business. I have extreme confidence in it, we have the very best product, value products in the industry and we had people first every day of the benefit, they spent with them and the family. So it's a matter of finding those people out there who want your organization and be a part of an honest ethical business and earn little part time income.So in addition to our revenue growth, we also continue to make operational improvements that increase our bottom line. Our pre-tax profits grew 17.9% and thanks to the new tax laws by the way taxes after earnings increased by 28%, all fiscal year 2018.Now we want to open this up, if anybody have any questions, I've been around a long time. So I want to give you a little bit of history. Well, I guess I have to know that stuff better. Let me take a couple things before I get into that. You may notice that we've had some swings on the balance sheet. One of them is inventory and our inventory increased $7 million. But let me tell some breakdown of why that happened, $1.3 million of that inventory was new stock, we brought in associated with the Spanish title that we were launching in our product line.So we have inventory where we can launch it. So we have started somewhat on Spanish. So that's some improvement in and then $2.5 million addition stock was actually brought in at the end of the year due to an incentive from our supplier.We got pretty nice cash incentive to purchase inventory and when you look at it, what we got and will actually cost us, carrying cost. So we did that and it’s inventory that we’ll sell at in the next few periods and it was certainly economical for us to do that. We do expect this inventory balance, inventory turnover to inventory sales level.From these earnings, we also distributed about $1.2 million to our shareholders. We used our excess cash after dividend payments primarily to expand inventory products which we expect to bring in new revenues. And we also win a buyback, we bought some stock this past year. We feel lot of degree of cash and offset value, we think low value, we will continue to add on what we’ve been doing.Okay. I will say one more thing. I’ve been here long time you know and here has been history, five years ago or not long ago, our pre-tax earnings for the year were $875,000, five years later today we had just over $9 million in pre-tax earnings.I think I’m disappointed with that. I'm sure some are there is pretty spectacular growth and we feel like, I feel like that that drive and appreciate it here, we continue that strongly was five years ago we’re again still in that technology and we expect to regain some sales force and with that, if there was any particular thing at all that interval and you have a question, just start now.

[Dan O'Keefe:]

So Josh, let’s turn it over to you for questions.

[Randall White:]

Okay. Well, I guess that's because it was just a good explanation, not your lack of interest. But either case maybe, thank you guys for coming on the call. We're looking forward to you coming up and trying to regain growth. Thanks for being part of the call guys.

[Dan O'Keefe:]

Thank you, everyone.

[Operator:]

Thank you. Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone have a wonderful day.