Educational Development Corp (EDUC) 2021 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Educational Development Corporation Fiscal 2021 Third Quarter Earnings Conference Call. (Operator Instructions) Please be advised, today's conference is being recorded. (Operator Instructions) It's now my pleasure to hand the conference over to Chief Executive Officer, Randall White. Please go ahead, sir.

Holly, thank you very much. Great introduction there. The first I'm going to do is -- thing I'm going to do is introduce who's here on the call with me. I've got Craig White, who's our Chief Operating Officer; I've got Dan O'Keefe, who's our Chief Financial Officer; and I've got Heather Cobb, Chief Sales and Marketing Officer.

I think the first item agenda today that I'm going to hand it over to Dan and just give us the information about our third quarter results. Dan?

Thanks, Randall. Here are our third quarter results. Net revenues for the third quarter of fiscal 2021 were approximately $66.8 million, up $26 million or 64% from approximately $40.8 million reported in the third quarter of fiscal 2020.

Pretax profits for the third quarter totaled $5.8 million, an increase of $2 million over the pretax profits of $3.8 million reported in the third quarter of last year. Pretax profit as a percent of net revenues decreased from 9.4% in the third quarter of fiscal 2020 to 8.7% in the third quarter of fiscal 2021.

Earnings in the third quarter of fiscal '21 totaled $4.3 million compared to approximately $2.7 million reported in the third quarter of fiscal 2020. Net earnings grew by 59.3% over the third quarter last year. Earnings per share on a fully diluted basis increased $0.18 a share from $0.33 a share reported in the third quarter of fiscal 2020 to $0.51 a share reported in the third quarter of fiscal 2021. Earnings per share for the quarter increased 55% over last year.

This concludes the earnings results, and I will pass the call back over to Randall.

Okay. Dan, thanks. Well, I think you can see that we keep reporting record sales. Very happy about that. And I think one of the most critical things is during this busy Christmas season, we kept up with the shipments. That's really important when we have an Internet business, and we think we may have been right there with the leaders on shipping. I think we were within 2 or 3 days from receiving orders getting shipped out the door.

However, along with that, we had some nonreocurring expenses that I thought I might tell you about. We increased our shipping charge to the consumer for the first time in about 8 years. We added $1 a box. And of course, we're very concerned about that. We didn't know what it would do to affect our revenue, but it seemed to had very little effect. So we're happy about that. So we were able to increase the revenue.

Unfortunately, during that same period of time, UPS had a freight rate increase as well as the surcharge, the surcharge on their largest customer because, apparently, we were clogging the system. Not quite familiar with that economic theory, but that was theirs. But I will tell you that the surcharge has now expired. And we have negotiated a new contract, a lower price for the upcoming year.

We had -- the net of those 2 things, our increase in revenue and the increase in shipping, actually was a negative $350,000 or so for the quarter. So the fact that they will not be reoccurring, I think that our increase will, largely will, we think that we'll see increasing on margins coming up.

Also, I've got a couple of other things that I don't want to talk about, but for one thing, because of putting in an extra night shift and another temporary line, we have estimated that this quarter was impacted about $575,000 with additional cost. The second shift is certainly not efficient as the first shift, but you got to do it. And we're happy about customer service, not happy about the cost.

Now why do I think this nonreocurring? Well, I'm going to turn you over to Craig here for a minute. Craig, what do you think that -- how are we going to do with these reoccurring charges?

Thank you, Randall. So just to kind of reiterate a little bit, we put up a temporary pick line in the middle of the third quarter, and it wasn't as efficient. It was completely a temporary line. It was up and running mid-October, and we actually tore it down mid-December to make room for our new CapEx project. Now while it only lasted 6 to 8 weeks, we did ship about 45,000 orders on the temporary pick line. So it was necessary but not the height of efficiency.

We tore it down to start our new CapEx project in that same space, which is a double decker, pick and packing ship lines using a mezzanine. So it's 2 stories. So we will basically a little bit more than double our current capacity, which would allow us to not have a second shift this next year. So it should be up and running. The project should be complete the 1st of April to mid-April, so that should be much more efficient.

Also, as Randall mentioned, we did have some increased freight costs from UPS. They had an pandemic surcharge throughout most of the year; and then a peak surcharge in the third quarter, which ends tomorrow. But we signed a new contract also in October, which basically capped some of our surcharges but also such that we have a better discount structure going forward. So we will recoup all of our surcharges that we paid in those last couple quarters. So very happy about that.

Also, what I wanted to mention was that the second shift, it was very difficult to have a stable workforce for that second shift. We were constantly hiring and training new people. So that added a bit to our, what we'll say, onetime nonrecurring cost because we shouldn't have that second shift this next year.

So anyway, thanks, Randall. I'll hand it back to you.

Okay. Yes, we're excited about that. A 2-deck, latest technology pick and packing system is incredible. We feel like that this is installed online some time in what?

Around 1st of April.

Around 1st of April? Yes. Without these, what we call, onetime reoccurring, and they are nonreocurring because the surcharges are stopped tomorrow, that we feel like that when we do our analysis that without those charges, we would have hit a little over 10% pretax, which is what our -- that's what our goal is. We did about 8.7%. Now last quarter, we did about 9.5%. But as we reported, we had a $350,000 blue bird in there from a onetime revenue of having a virtual conference.

But without these things on a go-forward basis, our margins are not declining. If someone in your backroom there is telling you, "Oh, no, alert, their margins are going down," we've got it fixed. It's fixed, guys. And we just have to invest, which we have to make it more efficient, which we're doing.

Now our growth continues to be driven from our increased volume of active consultants in the UBAM division. And to give us a little update on these active consultant status, Heather Cobb, our Chief Marketing Officer, would you kind of talk to us a little about that?

I'd be happy to. Thanks, Randall. Last November, we ended with 32,900 active consultants. And this November, we closed with just over 60,000 active consultants. And as we've shared on previous calls, I'll just share again, some of the factors that we believe have contributed to that growth over the past year, there's not any one thing, but we do see a combination of things that have caused this growth to happen.

We are experiencing an increased demand for supplemental or replacement, nontraditional income to lost income due to COVID-19 pandemic. We also started in June a new lower-priced entry kit for new consultants. In the past, we have done new consultant kit specials, which have lasted about a month. But we shifted our focus and made that available to everyone, basically every day, and we believe that, that's had a significant impact on the number of people choosing to join our company.

In addition, in February, we rolled out a new consultant success program called Climb. By the time we entered this quarter, we feel like that had really taken fold, and people were using that to the maximum potential available. We saw technology improvements, both customer-facing and with our consultant back-office product suite as well as continued and increased demand for educational products to use in the home, not only for teaching, but also some of our activity books and items to use for keeping younger sibling busy if you were teaching children while they were distance learning at home. So we feel like all of those factors combined really have had an impact over the year, which has caused this significant increase.

So now, I'll pass the call back to Randall for further information.

Yes. Heather, in Investor Day, I think that's real critical because some people think that our business was [affected] by COVID. And once it's -- if it's ever solid, by the way, that will drop back. We're not expecting that at all because, as Heather says, that's what's not driving our sales right now. It's more people out there, feet on the street. So we're expecting the increase to continue, and it has right along. We got going again in January, and we're pretty happy with what's coming in.

Now another element I might want to mention, we're pretty -- we have a pretty nice balance sheet. During this past year, we paid $8 million in long-term debt. So today, the balance -- and we eliminated all short-term debt, by the way. And today, our current debt level, we have $9 million.

$11 million.

We have $11 million in debt, and that's secured by 2 buildings, which have a value of about $35 million. So we think we're very conservative in that area. Plus, we increased the dividend from $0.24 annually to $0.40, all from our cash flow.

You will see on the balance sheet that we have $31 million cash. I love that. It's great. The problem is we have to have increased inventory as our sales increase. So if we build our inventory, it's already ordered. It's on the way. It's on the water. Unfortunately, one ship is partially underwater that we had 11 containers on, but we have significant inventory coming in. And by the fourth quarter into the second quarter, that will be -- the cash will be gone and we may even dip into a bit over the line, but that's because we're building inventory to allow for the sales that we anticipate in this coming year.

With that, I hope I've explained that we do feel like that our profit margin is increasing once we eliminate these onetime nonreocurring and get our efficiency back to the level it has been.

So with that, why don't I -- if there's absolutely one thing I did not cover or Heather or Craig, please feel free to ask a question, and we'll have an answer for you.

(Operator Instructions) Our first will come from the line of [Bill Anderson] with Baird.

Bard. B-A-R-D, not Baird. But anyway, I got on the call late. And I haven't -- I don't know if you've released the Q. But I'm wondering, is there any leverage in this model as your sales are increasing more than your operating income or earnings per share even though you're buying back stock? Did you cover that? Or is there something I'm missing there?

We haven't bought stock back in a while, but when you talk about is there leverage in our model, we have a pretty -- our model basically is we have 25 -- we allocate 25% for cost of goods, we allocate 50% for marketing costs and about 25% left to run our operations, have a profit and pay dividends. So that model has been the same for about 30-some years. And so while we have nice increases in revenue, it doesn't fall through incrementally as some companies do because we have to make the -- what falls to incrementally is the fact that the overhead general investment go up significantly with the revenue. But other than that, I think that's a pretty nice fall through that we have -- the profit level has fallen through nicely. Is that your question?

Well, yes, I mean there's no economies of scale. There's no volume discounts from the publishers as you...

We do have, by the way, and we get volume discounts for all of them. And I guess that's why we can have profits exceed -- profit percent exceed revenue growth, which we have. So it's not...

I didn't see that this quarter. Your operating income was up less percentage basis than the revenue increase and same with the earnings per share, right? Or am I missing something?

Okay. No, no, you're not missing something other than being late, but I'll forgive you for that. We have some nonreocurring expenses. You're welcome. We had nonreocurring expenses. If you want to compare to last quarter, last quarter, as reported, we had a $350,000 blue bird because of the profit we made on the virtual convention. But that didn't occur again in this quarter, of course. But in this quarter, we had a freight increase from UPS and we had a surcharge from UPS. They put a surcharge on their largest customers because we were clogging their system.

We also then increased our shipping charge for the first time in 8 years, but it didn't totally offset it, and that cost us around $325,000. We had to put in some -- an extra line to accommodate the volume. It was as efficient as the regular lines that we run, and we have estimated that to be about $575,000. And for the 2 of those, if you -- and by the way, we're putting in a complete new 2-tiered picking and packing system that will come on in April that will get everything back on one shift and we think will get us back on the margins that we have, and we expect that to be 10% on a go-forward basis.

So these are temporary things when we had a slight -- the difference from the profit margin in the second quarter to the third quarter was about in dollars, $700,000, and we have identified about $800 million to $1 million in nonreocurring charges. So without those, we would be around a 10% pretax margin.

Okay. That explains it. That's what I wanted to know. Like I said, I didn't see the Q. When did -- did you publish the Q yet? Or...

Yes, we published the Q...

Is that available?

In the morning. Yes, it's available.

Okay. That was -- so that's what I want to know. So say, on a given 10% increase in revenue, there is a little -- you should at least see a 10% increase in operating income and earnings per share. I mean that's kind of what I'm trying to get at.

We think so. We have some unusual things this quarter that I'd say a growth like this -- when you grow like this, it doesn't happen accidently. And I will tell you that one of the best things that happened to us that we didn't have an outage in our system. A lot of companies because of the volume on the Internet this year due to, I guess, COVID, some fairly large companies had outages, and we didn't. We went right through it and had great customer service, but we spent lot of money to do that, but we're putting in a new system to eliminate that. So yes, I agree with you that if you sell more, you should make more. And that's what -- that's what I think's going to happen.

Do you think margins are going to be back to normal in Q4?

Four is already halfway done. The surcharge didn't expire until tomorrow. Q4 is the smallest quarter in the year. It's hard to increase margins in the fourth quarter because overhead tends to stay the same unless volume then doesn't blend well for that. But let's move that out to the first quarter, and I would say, yes.

Our next question will come from the line of Denis Amato, private investor.

I had one comment and then one question. Comment was you had a great quarter, and the stock didn't respond even in a good market, and I suspect it has to do just with what you guys were talking about a minute ago. And it might have been prevented if you had put that explanation in the news release because you sort of didn't get the credit for what was really a pretty good quarter, I think, because a lot of people probably thought just what I heard on the call a minute ago that margins were shrinking when, in fact, they weren't. So that's my comment. The question, can you...

Denis, let me address the comment just a minute. You're right. Traditionally, if you look back, I've been doing this -- I came in as an accountant in 19 blah, blah, and we reported about the same for all these years when we report quarter to the same quarter the previous year. And I see -- because I got a call from what I would call a friendly funds, who said, "Hey, here's your problem." I said, we have a great report. What's going wrong? He said, "Well, people think your margins are going down because they're not better than the second quarter." I said, "Oh, okay. So see, after all these years that I've been here, I still learn stuff." We will address that, and I agree with you. We had awfully good report, yet the stock was down.

Right. My question had to do with maybe getting a little more clarity on exactly how you obtain new consultants. I went on the website the other day, and I noticed there was very little on there. If somebody heard about your company and was interested in becoming a consultant, there was very little on the website about how they would go about that. So I was just curious how that process worked.

Heather, do you want to talk about that? How do we get new recruits besides 1-800-weloveyou?

Yes, yes. We actually don't do much advertising or promotion from the corporate standpoint. At this point, as I shared at the end of the third quarter, we have a little over 60,000 active consultants, and our reliance is upon them to tell their friends and family about the business opportunity without knowing exactly what website you were on. Our consultants are outfitted basically with an e-commerce site that they have available to offer the opportunity, which has a joint page and different things like that. And so they do it through parties. They do it through conversations. They do it through just wearing the UBAM logo attire out into the community, and people seeing it are asking them questions. So there's various different ways.

Hey, Denis, I'm going to give you straight in the horse's mouth on how we do it because we have a controller who's been here -- how long now?

Three years.

Three years. He's a controller in the company, and he wanted to know more about how this direct selling multilevel marketing work. So he signed his wife to be a consultant because he wanted to study it from the end. He didn't tell us that. So he just signed her up and because he wanted to make sure he was involved in a 100% honest, ethical company. He told me this later, by the way. And so he did, and he is standing here. And why don't you tell us your experience that you had with how this worked.

Yes. I think going into -- my wife didn't really know much about EDC or UBM at all. It was really me pushing her for about 2 months to sign up to be part of the company. She signed up not actually hosting the party, which I think is probably not the norm. Most people will host a party first. They will see the rewards and benefits that they get from that, see the success of their consultants and then sign up that way, which I think is more of the traditional way, and that's actually how her team has been built, is through hosting those parties.

But what I can say from our personal experience is this company from the consultant side, her side of things, has absolutely been a blessing, not only financially, but also for our children, stocking up the book shelves that we had at home and also being a blessing to other families such as ours.

And he had to encourage her a bit. I'm going to add to his story. He's kind of shy. He had to encourage her a bit because she -- after a while, I don't know, she's I'll just keep trying a little bit, and she did. And in our first year, achieved enough success that she's ever walked across the stage. And yes, I understand that she's earned the trip or 2 of you to go to Hawaii.

That's correct.

I don't know how that's going to work and the employee going to Hawaii because we're in the financial area. I guess then he may take your spot. But anyway, I thought you might like to hear that from a person who actually did it. His wife did it. She's lovely, might had something to do with it, but she's had great success, but she had encouragement from her husband.

And Denis, I'll just add I was on the corporate website, and I was just surprised there was something there...

I was going to add one comment that'll answer your question. Our corporate website is more geared towards -- we have 2 sales divisions. We have our UBAM division, which is our primary division driving our growth right now. But we also sell through our retail division, which we call publishing, and we have about 4,000 different retail accounts. And so our corporate website is kind of not geared towards either one of those to -- it's more inclusive of both of them.

Yes, I understand. And I was just surprised there wasn't someplace to click to find more information about how to become a consultant.

I think if you Google that, you'll get way more attention you might imagine.

Our next question will come from the line of [Joseph Buller], private investor.

Two questions actually. So the first question is, I know you said that the increase on sales, you think, now is being driven by the number of active consultants rather than by people educating more at home because of the pandemic. I'm wondering, what's the basis for that conclusion? Is it the type of titles that are being sold? Or why are you making that conclusion?

Well, I'll mention the conclusion because what's driving it now is we have some very, very successful people in the organization. We allocate 50% of every retail dollar for marketing. And in retail store, that means you sell a $10 book to Barnes & Noble for $5, they sell it for $10. And then the direct selling division, they sell it for $10, but there's $5 of commissions, overrides incentives, what have you.

You now have people who make a lot of money, and we have to be careful about this because FTC wants you to give averages. So I can tell you we are working on that. But I also will tell you a story that will bring a tear to your eye that 5 years ago, this lady was a school teacher in Texas, tried to join and her credit card declined on a $75 charge. She had no money, but we worked it out with her somehow. I didn't know about it. And last month, in November, she made $60,000. Well, while we're -- while she's limited in telling people that because everybody didn't make $60,000, including me, but she actually did. And that drives -- people say, you can make that much money selling these. And yes, you can. And while everybody doesn't make $60,000, we have a pretty high average on what people actually earn compared to the industry because we have to include every person who signs up even if they don't sell a book in the average.

But I will tell you, people talking to each other, maybe not posting it on Facebook or -- but just talking to their groups about, oh, come over to me tonight because this is in our new home. And it's not a lie. That's how they occurred, that's how they bought it. But we have to be very careful now that we don't have exaggerated income claims, and they're not exaggerated. They're just that person's income. So that's what driving it now when people hear that you actually can stay at home with your children and be with them and earn enough money to stay home is a real driver in recruiting. And I think Heather wants to add a little bit more to that.

I just want to comment -- I know you asked specifically about if we saw a difference in the type of folks that they're buying. I would say not necessarily that as much as just seeing the categories that they're buying from. We offered some learning from home categories very early on during the pandemic back in late March, early April and saw those categories being shopped from a whole lot more than they are now, which is one of the indicators to us that we have reached basically pure momentum as opposed to just what ended up being a little bit of the catalyst for this group.

Appreciate it. The second question one I had is sort of related, which is I know you said that part of the reason for the increase in the number of active consultants is people looking for additional income or other jobs, given the pandemic economy. As hopefully, that improves dramatically over the course of the year, how much attrition are you expecting? Have you've been able to forecast? Are you going to get in the number of consultants from people going back to work and so on?

Well, that's a hard one to guess. It's just a guess because what a lot of people are finding out is when they thought they had a solid job and worked there for 10 years, all of a sudden, they got furloughed. And will it ever come back? Or they -- in the back of their head, "You know what, this has been kind of fun. I'll make a little money. I'm going to keep it going on the side just in case." And I think the bulk of our people are part time. And so if they go back to work and they keep doing this on the side, that's fine, too.

By the way, we missed an entire market in this COVID thing from the school and library. We've missed probably $35 million by not being able to have school book fairs or what we call face-to-face end. Like if you have a Green River Festival and they'll have booths out there and people sell the books that way, we haven't had any of that. So we think we can have an increased volume from that and the fact that people have wonderful stories about what this thing has done for their family. They've been those stay at home and be with their children. So there's an awful lot of factors here that I'm not sure that I have the answer to, but I think that we're going to continue to grow.

And our next question will come from the line of Ed Norcini, private investor.

I have a question about the pick and pack line. It sounds very interesting. Correct me if I'm wrong, is this kind of like having a train going down the road and putting another container on top of the train and the train pulls 2 containers instead of 1? Is that something like that? In other words...

That's pretty good analogy. That's a pretty good analogy because I was just out there. And what happens, you've got the pick and pack, and then you've got a mezzanine right above it, and there'll be people working it. But it's 2 floors, and the technology is way improved because you can introduce an order at the front of the line instead of the back of the line, where you have to go through all the sections. So not only are we increasing our output, we are significantly increasing the technology that handles the order. And so we're pretty excited about that. It's pretty space age for us.

Well, so you actually don't need to hire more people to do the same -- to do the double output. Is that correct? Sort of in that...

Well, that's not quite correct. With that second floor up there, there's still have to have people up there doing it. So what's efficient about it is it's all going to be on the day shift. The night shift can be fairly unproductive.

I see. Okay. My other question, Randall, last year, you had about 30,000 consultants in January, February 2020. Now you have roughly 60,000. Your inventory last year was at 30 million. I just checked the 10-Q. The inventory now is at 47 million. Is that an adequate inventory to handle your capabilities right now? Or are you -- do you plan...

Ed, I will tell you, if you could contact all of our 60,000 people and ask them how much they're going to sell next year, I'd be a little more confident in the answer. We think that we have adequate inventory. Although today, we probably still have 100 or more titles out of stock. And generally, that kills you when you have an out of stock of an item. But this year, the -- we sold so much that we sold what we had. And I think our consultants just said, "Hey, we're going to make the very best of this. We got the very best thing going since night baseball, and we're going to sell what we got." And they've done that, and we're giving it back in as fast as we can. And we're geared up to have a significant increase in sales, and you can only do it. You can't do it from an empty shelf. So we have inventory coming in that we think will adequately service the non-sales we have.

I see. Also for Dan. I'm looking at the balance sheet. Last year about this time, there was like $9 million in accounts payable. Right now, there's $45 million in accounts payable. Why aren't these bills getting paid?

Dan, one second. Let me tell you why. Because about 3 years ago, we kind of got behind, and I called all the suppliers and got increased terms. And so now instead of having 30- to 60-day terms, we have 120-day terms for most of our vendors. So we have credit. So that we have $31 million of cash. Yes, we've got a bunch of payables, but that's -- but we've got the inventory. We're solid from my viewpoint. So that's my fault that we got the vendors to give us better terms. Dan?

You talk now. I think you do a great job answering it. Just you're conscious there, Ed. We do pay all our bills when they're due.

Yes.

We've got $31 million of cash and we've got a $10 million line of credit that's not taxed, so we definitely have the ability with cash and our line of credit to cover every payable that's on the balance sheet.

Okay. Great. Also, while I have you on the phone, Dan. Can you summarize a [HEICO]? Or did they pay all the rent last year for 2020? And going forward, 2021, did you have to make any concessions to them?

Yes, yes. So -- and Ed, we've kind of talked about this on some of the previous calls and some of the previous disclosures in the Qs. Hilti is a worldwide tool manufacturer. They're second to DEWALT, I think, on worldwide sales. They do about $5 billion a year in which they do about $2.5 billion in North America. And the Tulsa campus that we're on, we call it the Hilti campus because they originally built it in the '80s. And about 4 years ago, they made a worldwide decision to divest of all real estate and just invest in growth, which gave us, Randall and Craig and Heather, the opportunity to come over here and buy this wonderful complex on 40 acres, 400,000 square-foot building on 40 acres for $23 million and it is a fantastic facility. And Hilti's rent now is more than our mortgage payment. Well, it was more than our original mortgage payment. We paid down $8 million for that mortgage payment.

So when we originally -- so their lease payment covers our original note. Now it's a source of income to us. This year, when the pandemic hit Hilti worldwide when -- they're in every city with office space. They went to every landlord and said, "Can we have 90 days of rent deferral to help through the pandemic?" And in exchange for that 90-day deferral, they offered to extend their leases 90 days on all their locations. And Randall, in a very thoughtful way, immediately jumped on it and said, "Absolutely, we'll do that for you guys," because they're such a great tenant for us. They do so many things here at the complex that we're at that is not only community-based but just to help us as well. It's just a great relationship.

If you can see this building, the room we're in right now, all the furniture, everything in here was left to us by Hilti. Every time they get new furniture, we get new furniture. They left over $1 million worth of pallet racks in the warehouse. They left, I don't know how much of these lighted cubicles they left in the space. So I'll tell you, we have an incredible tenant. And when they wanted a 3-month deferral on rent, I said, giddy up. We got the best deal here that you could ever imagine, and we're very happy about it. And they're great customers. We've got 10 more years on their original lease with a 5-year option. So Hilti is -- they're incredible, and we love them. They take care of us.

Our next question is a follow-up from [Bill Anderson] with Bard.

Yes. I'd just like to reiterate what the one gentleman said about the website. I think it would behoove you to spend a little money on the site. It's pretty archaic, I guess, would be a word.

I think the answer to that is we don't really put much emphasis on that because the main emphasis on the website for the direct selling side of the business, that's the only people who want to go to that website, maybe an investor to find something. And if you get nothing else, you got a phone number on there, call me, because I want to know anything. We just don't use that website for...

And to your point there, Randall, we do -- and to Bill. Bill, we do have that as a project. Craig, do you want to kind of talk about that?

Yes, I mean our -- we've almost doubled our IT stacks in the last 12 months. So that is a project for probably the first quarter of next fiscal year. So...

It's not a high priority for us because we don't recruit from it. That's done another way. It's just out there. And yes, we may look archaic. It's just not our emphasis because we don't think it's a revenue-generating project. But not to say it couldn't be better. If you think that website's bad, you got to look at our front door.

Hilti got a big door in there for you.

No, no. They've got a big fence when they spend $0.25 million on it. We got a door that's gray and goes inside the warehouse. But we're happy because we're very conservative here and don't want to spend shareholders' money excessively because I'm the largest one.

Well, I'm speaking as an investor, and I think you want to...

Bill, sorry, just to further kind of some of Craig's comments, and Heather's too. We do have a very robust UBAM website, and every one of our 60,000 consultants has their own website that we host for them. And so we have over 60,000 different websites that we host that are all tied to our e-commerce system. So I think what we're trying to say to you, you're not necessarily seeing the business side of our e-commerce, you're seeing our -- just our corporate website, which to your point, it needs to be updated, and we agree completely. But I encourage you to go to myubam.com, www.myubam.com, and kind of it's -- it would give you an image of the websites that all of our consultants use.

Yes. We're not exactly paying IT in Oklahoma. It's just not the site that we had to work on because let me tell you, when you go from 20,000 to 60,000 consultants that are female, there are a lot of needs that are expressed there and we try to stay up with them the very best we can, right?

Well, I know you've been spending money on technology over the years. So I assume there had to be a better interface with your consultants. But from the standpoint of an investor, it's not a good sign. So...

No, I hear you.

And that's what I'm speaking from. So...

I tell you as I actually saw it that I hear you, and it's a little bit of an embarrassment, but it's not as bad as our front door.

Okay. We must have covered everything. And could I say one more time before everybody goes? Our profit margins are not declining. So if that's why you're selling stock off, all you guys that shorted that stock, too bad for you because the news is only going to get better, but you just picked your poison. Short our stock, people have done it before, we'll see how that comes out. Oh, I'm off the call.

So anyway, hey, everybody makes their own decisions. I want you to have every bit of knowledge you have about this company because it's an amazing company. I can't be more proud of it, and we're growing, and it's profitable. Seven years -- 6 years ago, we made $875,000 pretax for the whole year. This year, we'll probably do, I don't know, $16 million, $18 million. So we're doing something right here. And thank you guys for being investors or future investors. And if you have any other calls, you can actually call me, and I'll talk to you. Thanks for being on the call.

Once again, we'd like to thank you for participating on today's conference call. You may now disconnect.