Educational Development Corp (EDUC) 2017 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Educational Development Corporation Fiscal Year 2017 Results Conference Call.

My name is Bruce, and I'll be your coordinator for today.

(Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

For opening remarks and introductions, I would like to turn the call over to Randall White, President and CEO of Educational Development Corporation.

Please go ahead, sir.

Okay.

Randall White.

Well, welcome, guys, to our second annual investor call.

I'll try to do a little better than the first one.

You guys take notes and keep track of what I say, so I'll try to make sure I don't offend anybody this time.

Well, we've had some great results.

And what we want to do on this call, we have a new CFO, and so I'd like to introduce him and let him go over the financial results a little bit.

And then I'll come back and talk and also have questions.

So Dan O'Keefe has been here about 90 days and has made a pretty good impact on things so far, and we're really happy about that.

And he also brought a new controller with him.

So we've -- we're really happy with what's happening here.

So Dan, if you want to talk about our financial results, Dan O'Keefe.

Thank you, Randall.

This is Dan O'Keefe.

And I'll walk through the fiscal year results in comparison to the last year.

Quickly here, net revenues were $106,628,100, which was an increase of $43,009,800 over 2016, representing a 68% growth in revenue.

Last year's revenue in 2016 was $63,618,300.

Revenue growth was primarily driven by our UBAM division.

Our UBAM revenues for 2017 were $97,620,600.

That is an increase of $44,833,700 or 85% over last year's numbers of $52,786,900.

Our Publishing division revenues were $9,007,500 in 2017.

That is a decrease of $1,823,900 or a 17% decrease over 2016 numbers of $10,831,400.

Gross margins for 2017 were $78,014,600 or 73% of revenue versus 2016 gross margins of $43,124,100 or 68%.

Earnings per share on a diluted -- fully diluted basis for 2017 were $0.70 per share versus 2016 earnings per share of $0.52 a share, which is an increase of $0.18 a share or 34%.

That is a full reading of the financial performance of 2017 versus 2016, and I'll turn the call back over to Randall White, our President and CEO.

One thing, Dan, we might have mentioned there, it was pointed out in the 10-K that we had to write off software that we'd purchased that didn't work, was not successful at all, and that was a $0.15 impairment to the financial results.

So had we not had that, we'd have $0.85 a share, but we did, so we had $0.70.

Second straight year of amazing revenue growth.

We've gone from $35 million to $106 million in 2 years.

And it's -- as I told you before, it's harder than I thought; everybody was really excited about all that growth.

But when you try to do it, it's a real challenge.

But quite a milestone for us to hit $100 million in sales.

I never really imagined that would happen.

But it's pretty -- we hit new benchmarks when that happens.

We've been in our facility now a full year.

And we're about to get most of the kinks worked out and getting the technology working.

And we've got lots of improvements in that area that we'll talk about.

We put in 4 pieces of software last year and 3 of them worked.

That's not too bad, I guess.

I wish the fourth one had worked a little better.

But we've gone back to our proprietary system and have beefed it up, and it's working much better.

So we're in good shape there.

We -- the software pieces we have are inventory tracking in the warehouse, and we also have accounting systems.

And then the [Pixelite] is a piece of software also.

So integrating all of those has been a challenge, but we've done it.

This time last year, we were already about 40,000 orders behind in getting them shipped.

And today, we're shipping what came in yesterday.

So we have improved our productivity significantly.

And we expect that may even be increased, because this next week we're putting in additional software that will, we think, improve productivity by somewhere between 50% and 100%.

We've already implemented some technology where the people who put the books in the box, our packers, they are now equipped with a computer and a scanner.

So now every order, instead of being quality-controlled by individuals, it'll be done electronically.

So they put it in the box, they scan the barcode, and when -- if it's not complete, it tells you.

And so we think that quality control will be significantly enhanced.

And to give you an idea of the improvement that's possible here, in October, November and December last year, this past year, we shipped 25,000 customer service orders.

That generally means some kind of problem.

If it comes through customer service, we shipped it wrong, or they think we did anyway.

And if you assess a fairly reasonable amount to each order of $40, because you've already shipped it once, you've got to ship it again, it's got to go through the whole process, so $40 is a fairly good number for what that costs per order.

So that was $1 million in 3 months.

And we're down now to a very low, low number.

And technically, we should be 99% accurate, but we'll see how that works.

But we're very excited about the improvement in there, in that area.

And that gives you benefits in many ways.

Because we got up to about 17 people in customer service just trying to answer the phone, and we couldn't even do it.

So now that department has been cut back a little bit.

We're not totally through there, but we want to have enough people to handle any problems we have all the way through the fall.

So the improvement there is significant.

That $1 million is just down the drain.

And so this new technology will really help us there.

Again, it's just been night and day, even since last time I talked to you.

At one point in time last year, we could ship about 8,000 orders a day.

And there was a time in December when we had 127,000 orders.

I was here, everybody was here.

I had my wife here and my grandchildren.

We were all at it.

But it's like Don Quixote and the windmill.

I'd go home at night and kind of curl up in a ball, knowing there's no way that we could ship them.

So we got through it, barely.

We lost a lot of consultants.

We lost customers.

And now we're trying to rebuild that.

And we do that by, again, the best products in the world and being able to ship on time.

And what we're seeing is a lot of people who had been on the sidelines who actually told us, "I'm not selling any more until you guys figure out how to ship them accurately?" And we get that.

So we're in a rebuilding process.

And we've never had a drop in sales where we were not reporting an increase over the same month the previous year.

That's how we keep track.

We compare January to January.

And so while we didn't have 100% growth in the last 3 or 4 months, it's not below the previous year.

So we're on track to be significantly up over the $106 million.

We feel like we're rebuilding the field sales force and their confidence in us.

And that's key.

Because the ladies out there are independent contractors and they work if they feel like it.

And whereas most of the people on this call, and certainly the people in this room, we don't get to choose whether we get up in the morning or whether we go to work.

So if these ladies have had a bad experience like we -- they sold a book to the next-door neighbor and it took us 4 months to ship it and we shipped the wrong one, she's not very happy about that.

And so we're trying to rebuild confidence in that way.

And people are posting to their groups and on Facebook about "Wow, it's exciting; I placed an order yesterday and I got it" or "2 days ago and I've already gotten it." So -- and it was right, which is -- these are all things that rebuild confidence in the field and we think we will reinstate the growth.

The thing that we were concerned about, I was, when we went off of the software that we purchased to run the back office for the consultants -- and by the way, these are people who were known in the industry.

And the direct selling industry is kind of a cottage industry.

Even though there's a lot of money involved, there's very few participants in it.

I don't know, 100 direct selling -- I mean, I don't know how many there are.

And people who do software for them, it's kind of a small group.

And to have -- we picked one that was sort of in the middle of the range, and we had a lot of confidence in it and -- but it just never worked.

And so the idea of going back to our system that we went away from was a little bit scary.

But it got so bad in the field, we actually had a revolt with the salespeople.

Literally, they said, "You either get rid of that company or we're leaving." And it got to that point.

It was pretty hostile.

And we were fighting a lot of different things.

So February 1st, is that the day we went off that?

We got off February 1st.

Yes, we went off February 1st, and the field sales force was so excited that in the month of February we recruit -- or next 40...

60 days.

...60 days we recruited 4,200 new salespeople.

So that was the start, to get rid of failed software, and then rebuild our shipping and get back to normal, which I think we are.

And so we're in excellent shape, again, shipping second day from when we get it.

And another and very encouraging thing, we're getting geared up for our national convention, which is held here in Tulsa every year.

And last year, we had about -- we had around 1,200 participants that came to the convention.

And this year, we have over 1,700 registered.

So that's a pretty significant increase, and also an indication that maybe the things that we're doing is working to rebuild our confidence.

It's all about confidence.

These ladies, they'll forgive you; they don't forget.

So we're counting on having a convention that reignites and re-enthuses the field sales force and gets this growth back in a manner that we now can handle it.

So we feel like that we can handle the business coming in.

Anything else you guys want to add?

Somebody ought to add something.

Okay, you ready to open this up for questions?

Yes, let's open it up for questions.

If there is any possible thing that I didn't mention in my monologue, feel free to ask a question.

I see a lot of people who were on the call the last time.

So somebody surely must have a question.

Well, you'll have to open it up for questions.

Bruce, are you still with us?

(Operator Instructions) And our first question comes from [Joseph Smitter].

I thought it was a very good quarter.

Just a couple questions.

I noticed the gross margin was up significantly recently, but the operating and selling expenses as a percentage of revenue also went up by sort of a similar amount.

I was wondering sort of what was the reason for the increase in the operating and selling expenses going up?

And going forward, what do you see that happening?

And then also, if I could ask a second question, the capital expenditures, I understand, with the growth and the new software and warehouse, those are high, are you expecting those to come down significantly in the near future?

Okay.

Well, I think you, Joseph, you broke the first rule, which was to only ask 1 question, but I think you asked 2 there.

I'm sorry.

No problem, no problem.

I'll try to remember both of them here.

I'll start with the first one, which was on the gross margin performance and the selling, G&A operating expense line.

The selling, operating -- selling, G&A operating expense line has gone up year-over-year from 2016 to 2017, primarily associated with the additional payroll expenses and facility expenses associated with the growth in our business and the additional resources we had to employ during the backlog process and trying to get caught up, which started in the second half of the year.

As Randall said earlier, we were -- about this time last year we had already 40,000 orders backlogged, meaning that we were trying to get caught up.

And so we -- the way a lot of times you have to solve those problems is by throwing people at it.

And so we had a lot of additional staff, not only in our warehouse, but also in our customer service department.

We had to increase the staff there.

We increased the staff almost across the board in all of our departments to be able to work down that backlog and get the -- get our daily capacity increased to be able to get those orders out.

So that's really what drove the increase in the selling, G&A.

Gross margin has been increasing.

It's primarily associated with lower cost of goods.

We've been getting some discounts from our largest vendors, and those discounts are translating into higher gross margin percentages.

So that's the answer to the first question that you had.

Let me also -- let me add something here.

Guys, when you're looking at the overall financial statements of the company, you're looking at 2 separate businesses combined.

You're looking at a direct sales division and you're looking at a wholesale business selling to retail stores.

So let me give you a little math here.

If a book sells for $10, let's say we paid $2.50 for it.

We sell it to Barnes & Noble for $5 and they sell it for $10.

In the Direct Sales division, you sell it for $10, but there's about $5 of cost -- commissions, overrides, the incentives -- all the stuff that roll into it.

So we get $5 from a $10 book.

So when you put those 2 together, we report, the Publishing division, at the revenue we get, which is $5.

We report the direct sales at $10.

So what happens, it looks like, as the business grows in the direct selling, it looks like the gross margin is drastically increasing.

It really isn't.

You just -- it's a different mix.

The business hasn't changed in 10 years.

Retail and UBAM are 2 completely different divisions that we -- you can't look at them separately.

So our gross margin is picking up a little bit, but it's not any drastic thing.

It's just the way the mix of the business comes in.

Joseph, I'll go ahead and move to your second question, I think, which was...

Capital expenditures.

On the capital expenditures.

We do have some capital expenditures planned for this year to increase -- continue to increase the capacity and throughput capacity of the company, increase the daily distribution capability.

So there will be some CapEx this summer.

We're planning on redoing 2 of our pick lines and, as Randall talked about earlier, redoing our packing process.

And on a combined basis, I think those capital expenditures are just under $2 million, to enhance and increase our daily throughput here.

Let me add one more thing.

I think my answer was kind of confusing.

I'm sure it was.

Okay.

When you report on our net revenue, the net revenue is $5 from our Publishing; it's $10 from UBAM.

But the expenses, then, that we talked about, the commissions, are below the line, whereas all your costs are out of that on the Publishing side.

So the gross margin looks like it's increasing because the business that is increasing is a UBAM, where the major costs are below that line.

So again, our margins are increasing a little bit, but that's because of the mix of business.

So I don't know if that helps or not.

And our next question comes from Jeff (inaudible).

Quick question on inventory.

So to what level do you think it needs to reach later in the year to take into account the busy fall selling season?

You ended the year at close to about $34 million something.

How high do you think it's going to need to be?

Jeff, I'm sorry, this is Dan.

We missed the center of that question.

So is there a way you can repeat the question?

Because we didn't hear it very clearly.

Yes.

Basically, how high do you think inventory levels need (inaudible) selling season?

Okay.

I got that.

Yes.

Here's the thing, guys.

Inventory got too high last year.

Because we forecast around $150 million in sales.

Well, because we couldn't ship it out the door, we couldn't get it out the door, we had inventory to cover that amount of sales.

So what we feel like, and I'm not putting words in Dan's mouth, he's the one who's doing all the forecasting, but I will say that it won't go up near drastic like that again, because 2 big factors.

For one thing, when you go from 50,000 to 100,000 copies of a book, you get a reduction, but it may not be worth it to buy that many at one time.

So we can buy smaller amounts of inventory and plan that a little better so that we don't have that size of an increase on inventory going forward.

Because it went up $14 million last year, again, one, because we bought for sales that we weren't able to fill; and second, we can buy in even more economic quantities.

So I don't see that kind of an increase.

And I'm -- by the way, Dan has been here 3 months and I've been here 35 years.

We don't agree on that.

But I think it's going to be $31 million, probably about -- I don't see it being below $36 million, $38 million.

But we'll see.

Okay, great.

And if you do have an increase in inventory, do you feel like your line of credit is sufficient to reach those levels?

Dan, you're up, buddy.

So that's something we're continuing to work on, Jeff.

So we're working with our current lender right now to make sure that we've got an adequate line to handle our growth.

That's the real discussion, or the real challenge that we have as a company is, with this rapid growth, making sure that we've got a working capital facility that can handle the growth pace that we're on for the next 24 months.

And we're currently working with our primary lender to make sure that we've got a working capital facility that can grow with the growth of our top line revenues.

That, in addition to the fact, this is a cash business.

And our cash was impacted last year by the way we purchased it.

And we've gotten all our vendors now, especially Kane Miller, to give us terms like Usborne.

So all these factors come together that affect our cash.

Our inventory won't go up as much, and we feel like with the -- with our margins increasing that we also will be generating more cash.

And those things all fit together, that we feel pretty comfortable that we have the facility in place to handle the growth.

Okay, great.

Well, welcome Dan.

It's great to have you with the company.

Great quarter, great year and we'll look forward to more great things ahead.

(Operator Instructions) And our next question comes from Joseph (inaudible).

Hey, Randall.

[Joe Geraci].

Thanks for holding the call, first of all.

Great quarter, second of all.

I just -- can I ask 2?

Sure.

We're going to give you -- you've been around a long time.

We'll give you 2. I get to make the rules.

Okay, sounds good.

That's what the CEO title brings with you.

So how much do you rely on recruiting and any revenues that you derive specifically from recruiting, that is, someone buying a box?

So that's number one.

Number two, are you caught up on your orders, to the extent that you can be?

In other words, is it back in line with what usual delivery would look like a couple years ago?

And third, you know, there's been some folks try to characterize the business, the MLM business, which has a certain factor to it that isn't attractive to everybody, but is it even possible with your type of product to channel stuff, or Herbalife?

So those are my 3 questions.

Okay.

I'm on a -- I think I've got the drift of them.

First of all, I think what you're asking me is, our business relies on recruiting and what revenue I -- what revenue do we derive from that.

Well, I'll tell you we make no money on recruiting.

What we -- we are not a consumer organization.

Most direct sales companies are in the health and beauty age, which we call potions and lotions, something you swallow or rub on you and you've got to buy some more next month.

That's not what we do.

What they do is recruit people who use the product.

Now of course our consultants use the products for themselves, for their children, of course they do, but not like a consumable like beauty aids.

So our kits are designed to get product in the hand of the consultant so they have something to sell from.

It is not a moneymaking process.

You basically make no money until someone sells a book.

Direct sales for us, multi-level marketing for us, in my opinion -- not my opinion -- my thought process is this, it's just a compensation structure.

It's the only way that I know of that a small company in Tulsa, Oklahoma, which has the best products in the world, can get 27,000 people out telling somebody about them.

I don't know any other way to do that.

I jumped on the e-mail bandwagon, but we run it 100% honest and ethical.

And nobody makes any money until you sell a book.

And so when you get your kit, that's basically the price of the kit when shipping it.

So we sell kits for $50.

The other direct selling companies, they'll have things that cost $3,000 to sign up.

I don't care what anybody else does.

It's got nothing to do with us.

You make money when you sell a book.

That was your first question.

And the next one was...

Are we caught up.

Caught up.

I guess you weren't listening a while ago when I told you that -- sorry, Joe -- that a year ago we had 40,000 orders behind; today we're shipping what came in yesterday.

We are caught up 100% on shipping.

Now we do have a convention coming up this week, and we use our own employees to run that.

We may get a little -- a day or two behind, something like that.

But other than that, I'm very proud of what has happened in the warehouse.

It is so much more efficient.

It's a different world out there.

There was a time when we'd have 500 hours overtime in 2 weeks.

That's done.

We don't even have a night shift right now.

We're doing more in 8 hours than we did in 10.

Incredible efficiency in the warehouse and there's more coming with the technology that we're installing.

So I think that was your question.

We've caught up.

And then...

MLM.

And then MLM, what was your question about MLM?

Is it even possible -- can you hear me?

Sorry.

Yes.

Is it even possible to channel stuff or is that -- I mean, there's just no way for you to really do...

All right.

Joe...

So, Joe, let me point you to a number real quick, and then I'll turn it back over to Randall.

So we -- in our 10-K we disclosed that we had just under 25,000 new consultants that we add in the year.

And so if $100 -- if a new kit is $100, that's $2.5 million of our $100 million of revenue that's associated with a new consultant.

And then the rest of our business, the other $104 million, is associated with sales activities.

So 98% of our business is not tied to the new consultant coming on board.

It's tied to what Randall said earlier: our consultants selling books, or us selling books through our Publishing division.

Does that answer your question?

One more point there, too.

We made a point -- one more point on that, that there are equations to see if multi-level marketing is fraudulent.

Well, we're so far away from that.

Our statistics are 89 -- well, actually 89.9%, 90% of our orders go straight to the customer -- 90%.

That means 10% are going to our consultants.

Well, that 10% doesn't mean that they're buying them.

It means that they have held a home show and they're all shipped to the consultant, who then distributes them to her neighbors.

So this idea of us selling to each other and doing an old 40-year-old Amway, that's gone.

That's years ago.

That's not what we do.

We take orders and we ship them directly to the consumer.

Now what we have is a consignment program, which you may have heard of.

And the way that works is, we have $31 million of inventory in our warehouse.

I would much rather it be in the hands of a salesman than in our warehouse.

So what we do to compete with book fairs like Scholastic, Scholastic will come into a school and do a $15,000 book fair.

Well, these -- our sales consultants don't have the -- they can't afford to buy that kind of inventory.

So we put that out on a consignment.

We track it.

We know where it is.

We don't always get it back.

At year-end, what was the number?

$1.2 million?

$1.2 million of consignment.

We had about $1.2 million at cost of consignment out to our salespeople.

And against that we had a $300,000 reserve, because we don't get it all back.

I will tell you, if a -- and by the way, of that $1.2 million, was it 80% that had $600 or less?

85%.

85% of $1.2 million people had less than $1,000 of inventory.

Well, these are people getting started or been around a while and they want to do a show, an exhibit.

It's very exciting on a weekend to get on Facebook, all over the United States there's booths set up.

It could be the Bixby Green Corn Festival.

It could be the Apple -- Wisconsin Apple festival.

And they've got a booth set up selling books, a mobile bookstore.

And we sell millions of dollars that way that we wouldn't be able to do if they had to buy that inventory.

So we put it out on consignment, they sell it, they reconcile it back, pay us the money.

And we don't get it all back.

If you have a -- I will tell you that, if you've got $1,000 worth of inventory in Indiana and your car breaks down, guess who doesn't get paid?

That's fine.

We've got reserves.

It's in the financial statements.

So we know that we have some loss in inventory, but it's a very lucrative part of our business.

So one more, then.

So what you're telling me is, at any given point in time, give or take, 4% of inventory is on the street, if you will, unpaid for?

Yes, I guess so.

4%?

4%.

And so just to -- you're saying $1.2 million divided by the $34 million of total inventory.

Okay.

Yeah, that's about right, with a reserve against it.

Okay.

I'm going to sneak one more in.

Do you feel comfortable in making any earnings projections for this year, or sales, or anything to give some guidance?

Hell, yes.

Hell, yes, I do, I feel like it, and I'm going to tell you right now.

And all of a sudden there's a piece of duct tape going across my mouth.

Get that away from me, boys.

Get that away.

I want to tell you everything because I'm so excited I can't stand it.

But there are people who get on this call who like to attack me, and they like to find stuff that I've done.

Dan does have a pad issued.

It's called an 8-K pad.

He follows me around, and if I say something I'm not supposed to, he immediately files an 8-K.

Earnings guidance, we're -- I really feel good about where we're headed.

The key thing about guidance is you've got to -- we're a small company, and we've got a new accounting system, and putting guidance out for a small company like us isn't the greatest thing to do.

So we prefer not to give earnings guidance and let the results speak for themselves.

If you recall last year, I did give earnings guidance because it was there.

We had the -- we had everything in place.

We had the volume.

And I thought we would do $150 million.

I gave out the forecast on that and earnings guidance should have made so and so.

Well, it was not because of the business.

It was because of our inability to ship it.

And so that's why we missed our sales and earnings from last year, the guidance I gave earlier.

And was -- I was penalized for it.

I get that.

So I've learned a little bit.

But I'll tell you, the things we have seen in the last few months have -- are carrying forward.

There are many -- we've negotiated many contracts that cut our costs.

And we feel like that we have finally got our operations under control and our cost structure under control.

And so I am optimistic about next year.

And our next question comes from Joseph Smitter.

I'm going to ask you something else you got in a little bit of trouble with on the last call, which is the capital structure.

I mean, long -- I understand, and I appreciate when you did the 8-K saying that you weren't planning to issue more stock at the current stock prices.

Long term, though, do you see, hopefully when the stock price keeps rising, do you see another equity issue to sort of alleviate the issue with having sufficient funds and so on?

Guys, I guess I wasn't used to people hanging on my every word in that last call, because I got a call that said, "What the heck?" They said, "The moment you said issue stock, there were people getting off the call selling right there."

What I said was, at some point in time, well, I hope I live that long, but we're a $100 million company and we have adequate financials, financial backing, financial resources to do what we need.

I would like to think at some point in time, let's say when the stock is $40, how about that, that we might issue a little bit.

Sounds good.

Yes, that's what I'm thinking.

When the stock gets there.

We have no intentions on issuing a secondary offering right now.

Zero.

However, down the road, when that stock gets up there, it would be nice, $30, to issue 1 million shares and put a real equity base in here.

No plans for that.

I don't know anybody that wants to buy 1 million shares at $30, but if you know of anybody, (918) 798-6013 is my cell phone.

And our next question comes from [Brent Slay].

My question deals with the declining sales on the publishing side.

Do you have any innovative marketing plans to increase these sales and get those on a positive projection?

Brent, yes, here's what happened.

Last year, in the fall, we had 127,000 orders.

Well, you have a choice of what you ship.

You can ship to the division that's going 100% or you can ship to the division that's had about $10 million for the last 3 years.

We didn't punish the Publishing division but...

The key thing, this is Dan, sorry, the key thing that happened during the second half of the year that we disclosed in the 8-K, too, is that the delay in those orders going out and the increased lead times that we had throughout the second half of the year caused a lot of our Publishing orders to cancel, because we couldn't get the orders out by the Christmas holiday season time frame.

And so, as Randall was saying, that we had to focus on UBAM orders, but at the same time we had a lot of orders canceling that were Publishing orders, just because of the delays and the lead times associated with our backlog.

And what we're doing about that is, as an example, as we speak, we have 4 people in New York at the New York Toy Show.

Is that where they are?

(inaudible)

Oh, no, BookExpo, I'm sorry, BookExpo, where there will be 5,000 exhibitors and probably thousands of people who'll be coming through with us dragging them out of the aisles and showing them products.

And the main thing we'll be telling them, "By the way, this year, if you submit an order, we'll actually fill it." So that's our innovative plans for Publishing.

We don't -- we're not trying to grow the Publishing division to be $20 million, to double it, because the only way you can do that is to go into places that we don't want to go.

We don't want to be in Sam's.

We don't want to be in Costco.

Because if you sell into discount stores, the consultants call me up, and they're really mad about that.

And so the growth engine is UBAM.

But we want to maintain that $10 million and hopefully increase it to $11 million through retail bookstores.

But that market is totally changing.

There's not going to be books stores left.

About 70% of our business now comes from toy and gift.

And those are smaller stores that have to have some unique product to get people in there to keep them from going to Target.

And so that's a huge part of our business.

And also, you've got Barnes & Noble, who is our largest customer, and they're unique in that they have their own ideas.

And we're not a big player with them, although for us it's a lot of money.

But that can come and go with Barnes & Noble.

But our [innovate] is we are trying to get the business back.

Yes, we are trying to get the retail stores back in.

They're just not as many of them as there used to be over 3, 4 years ago.

And at this time, I'm showing no further questions.

Oh, come on, you guys.

I've got all afternoon.

Surely there's something that I have not covered yet.

I guess when your stock goes up $3 in one day, what else is there to say, right?

So, Heather?

Heather's got nothing.

Craig, technology is great, huh?

All right.

Well, if you don't have any questions, we'll wrap this up, in that I feel like the last year was a painful year to get through.

We learned a lot.

We beefed up our technology.

We have UPS in here at least once a week.

As a matter of fact, they're here today.

They're an incredible partner.

And because of our sales volume, when I was telling you about the technology of putting a computer on every packing station and a scanner, UPS is supplying that.

That's just part of our rewards for doing a lot of business with them.

And that was $50,000 in technology that they're installing this week.

So we had a tough year.

I had a tough year by telling you what we were going to do and I didn't do it, and then you guys punished me.

But that's all right.

I -- my father was a school superintendent.

And he said that this teacher, this student -- I mean this parent came to him one day and says, "You know what?

Next time Randy gets in trouble, punish the kid next to him, because he learns a lot by watching."

Well, I learned a lot last year by watching what happened.

And so I'm a little more careful about what I'm telling you.

But we have an incredible business here.

We have thousands of women out there who supplement their income, and some full-time.

We have several people now who make in excess of $100,000 working around their family from their home.

And I'm very proud of that, the impact that we've had on families and getting the very best books in the world out in the hands of our consumers.

So this is our year, guys.

I think there's a movie about bird watching.

It was the best year that was -- do you know that movie?

Whatever it was.

This is our good year.

We've got it coming up.

And we've got a lot of good things that are happening here, the reduction in the price of our products.

We had one series of books called Shine-A-Light, and they were in Chick-fil-A in a promotion.

But that book, we paid $3 for it when we bought it, 5,000 at a time.

We're now buying them 50,000 to 100,000 and it's $2.

We expect to sell a million copies of that series of books this year at additional dollar less.

So that's about $1 million savings in cost of goods.

Many things like this are happening in the building.

And especially with Rick, our Controller, and Dan, our CFO, we actually can report it correctly.

And we're very excited about the results that we're having.

Any other questions from anybody?

No.

All right.

Dan?

Heather, go out and sell something, Heather.

We're going to have -- if you want to have a little fun, come to Tulsa next week, 1,700 women, all -- they're all mine, they're coming to convention, and we get to inspire them and motivate them and get them out there selling books.

So it's a big time, a celebration that we survived last year and the best is yet to come.

So thank you, guys, for being on this call.

I appreciate it.

You have my e-mail if anybody needs to follow up.

And I guess this is going to be recorded and archived.

So thanks very much.

Thanks, everybody.

Ladies and gentlemen, thank you very much for your participation in today's conference.

And this does conclude the program.

You may all disconnect.

Everyone, have a great day.