Educational Development Corp (EDUC) 2025 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to Educational Development Corporation's second-quarter fiscal Year 2025 earnings call.

女士們、先生們，下午好，歡迎參加教育發展公司 2025 財年第二季財報電話會議。

(Operator Instructions) This call is being recorded on Thursday, October 10, 2024.

（操作員說明）此通話錄音時間為 2024 年 10 月 10 日星期四。

Before beginning the call, we would like to remind you that some of the statements made today will be forward-looking and are protected under the Private Securities Litigation Reform Act of 1995.

在開始通話之前，我們想提醒您，今天所做的一些陳述具有前瞻性，並受到 1995 年私人證券訴訟改革法案的保護。

Actual results may differ materially from those expressed or implied due to a variety of factors.

由於多種因素，實際結果可能與明示或暗示的結果有重大差異。

We refer you to Educational Development Corporation's recent filings with the SEC for a more detailed discussion of the company's financial condition.

我們建議您參閱教育發展公司最近向美國證券交易委員會提交的文件，以更詳細地討論該公司的財務狀況。

I would now like to turn the conference over to Steven Hooser.

我現在想把會議交給史蒂文·胡瑟。

Please go ahead.

請繼續。

Thank you, operator, and thank you, everyone, for joining today for Educational Development Corporation's first second-quarter 2025 earnings call.

謝謝運營商，也謝謝大家今天參加教育發展公司 2025 年第一次第二季財報電話會議。

On the call with me today are Craig White, President and Chief Executive Officer; Heather Cobb, Chief Sales and Marketing Officer; and Dan O'Keefe, Chief Financial Officer.

今天與我通話的是總裁兼執行長克雷格懷特 (Craig White)；希瑟‧科布 (Heather Cobb)，首席銷售與行銷長；和財務長 Dan O'Keefe。

After the market closed, the company issued a press release announcing its results for the fiscal second quarter and year-to-date results, the release will be available on the company's website at www.educpub.com. As the operator mentioned, we will make forward-looking statements, and I suggest that you take a look at our forward-looking documents.

收盤後，該公司發布新聞稿，宣布第二財季業績和年初至今的業績，新聞稿將在公司網站 www.educpub.com 上發布。正如運營商所提到的，我們會做出前瞻性陳述，我建議您看一下我們的前瞻性文件。

With that, I'd now like to turn the call over to Craig White, the company's President and Chief Executive Officer.

現在，我想將電話轉給公司總裁兼執行長克雷格懷特 (Craig White)。

Craig?

克雷格？

Thank you, Steven, and welcome, everyone, to the call.

謝謝你，史蒂文，歡迎大家來電。

We appreciate your continued interest.

我們感謝您的持續關注。

I will start today's call with some general comments regarding the quarter then I will pass the call over to Dave and Heather to run through the financials and provide an update on our sales and marketing.

我將以一些有關本季度的一般性評論開始今天的電話會議，然後我會將電話轉給戴夫和希瑟，以了解財務狀況並提供有關我們銷售和營銷的最新信息。

Finally, I will wrap up the call with an update on our progress of the sale leaseback of our headquarters, the Hilti complex, and provide some comments on strategy and the remaining fiscal 2025 outlook.

最後，我將介紹總部喜利得綜合體售後回租的最新進展，並就戰略和 2025 財年剩餘前景提供一些評論。

During the second quarter, we ran recruiting promotions to increase our brand partner levels and offer discounts to customers, both in an effort to increase sales and generate cash flow.

在第二季度，我們開展了招募促銷活動，以提高我們的品牌合作夥伴等級並向客戶提供折扣，以增加銷售額並產生現金流。

These strategic decisions are necessary to address the covenants of our bank agreement related to our current inventory levels, coupled with the challenging macroeconomic environment, as higher inflation is reducing the discretionary spending levels of our customers.

這些策略決策對於解決與當前庫存水準相關的銀行協議條款以及充滿挑戰的宏觀經濟環境是必要的，因為通膨上升正在降低客戶的可自由支配支出水準。

Although these higher than historical discounts increase our sales in the short term, it also negatively impacts our gross margin percentage and our pretax profits for the quarter.

儘管這些高於歷史折扣的折扣在短期內增加了我們的銷售額，但也對我們本季的毛利率和稅前利潤產生了負面影響。

While we have been making these strategic decisions to focus on sales stability, our priority is focused on improving our overall operational efficiency and reducing costs.

雖然我們做出這些策略決策的重點是銷售穩定性，但我們的首要任務是提高整體營運效率和降低成本。

I will talk about some of these changes at the end of the call.

我將在電話會議結束時討論其中一些變化。

With that, I'll now turn the call over to Dan O'Keefe to provide a brief overview of the financials.

現在，我將把電話轉給 Dan O'Keefe，以提供有關財務狀況的簡要概述。

Thank you, Craig.

謝謝你，克雷格。

Our second-quarter summary compared to the prior-year second quarter, net revenues were $6.5 million compared to $10.6 million.

我們的第二季摘要與去年第二季相比，淨收入為 650 萬美元，而去年同期為 1,060 萬美元。

Our active brand partners totaled 13,900 compared to 18,100.

我們的活躍品牌合作夥伴總數從 18,100 家增加到 13,900 家。

Loss before income taxes were $2.5 million compared to income before taxes of $1.5 million.

所得稅前虧損為 250 萬美元，而稅前收入為 150 萬美元。

Net loss totaled $1.8 million compared to income of $1.1 million.

淨虧損總計 180 萬美元，而收入為 110 萬美元。

Loss per share totaled $0.22 compared to income per share of $0.13 on a fully diluted basis.

每股虧損總計 0.22 美元，而完全攤薄後每股收益為 0.13 美元。

Next to our year-to-date summary compared to the prior year.

接下來是我們與前一年相比的今年迄今為止的總結。

Net revenues of $16.5 million compared to $25.1 million.

淨收入為 1,650 萬美元，去年同期為 2,510 萬美元。

Our active brand partners from our active average brand partners totaled 13,700 compared to 20,600.

我們的活躍品牌合作夥伴的平均活躍品牌合作夥伴總數為 13,700 個，而去年同期為 20,600 個。

Loss before income taxes of $4.2 million compared to income before income taxes of $0.3 million.

所得稅前虧損為 420 萬美元，而所得稅前收入為 30 萬美元。

Loss totaled $3.1 million compared to income of $0.2 million, and loss per share totaled $0.37 compared to income per share of $0.02 on a fully diluted basis.

完全攤薄後，虧損總額為 310 萬美元，收入為 20 萬美元；每股虧損總額為 0.37 美元，而每股收入為 0.02 美元。

Now for an update on our working capital positions.

現在了解我們營運資金狀況的最新情況。

Net inventories decreased $5.3 million from $55.6 million at February 28, 2024, to $50.3 million as of August 31, 2024.

截至2024年8月31日，淨庫存減少530萬美元，從2024年2月28日的5,560萬美元減少至5,030萬美元。

Borrowings on our working capital line of credit totaled $6.1 million at the end of August with $9 million of availability at the end of the second quarter.

截至 8 月底，我們的營運資金信貸額度借款總額為 610 萬美元，第二季末可用資金為 900 萬美元。

That concludes the financial update.

財務更新到此結束。

I'll now turn the call over to Heather Cobb to talk about sales and marketing opportunities in further detail.

現在，我將把電話轉給希瑟·科布 (Heather Cobb)，進一步詳細討論銷售和行銷機會。

Heather?

希瑟？

Thank you, Dan.

謝謝你，丹。

As Craig mentioned earlier, we continue to make strategic changes to bring new initiatives for success to our brand partners on the PaperPie side.

正如克雷格之前提到的，我們將繼續進行策略變革，為 PaperPie 方面的品牌合作夥伴帶來新的成功舉措。

This included our June National Convention which happened shortly after we launched our new Storyscape travel incentive contest.

這包括我們在推出新的 Storyscape 旅行獎勵競賽後不久舉行的六月全國大會。

After convention, we held July sales promos, including a very successful dollar days incentives, where we offered several books for $1 to our customers and sold through full inventory on many of those.

大會結束後，我們舉行了 7 月份的促銷活動，其中包括非常成功的美元日獎勵活動，我們以 1 美元的價格向客戶提供幾本書，並透過全部庫存出售其中許多書籍。

In addition, we offered a summer recruiting promotion where we provided training, support, and incentives for promoting to leadership.

此外，我們也舉辦了夏季招募促銷活動，為晉升領導階層提供培訓、支援和激勵。

Our overall focus on the PaperPie side continues to be on brand partner growth and retention as well as sales strategies to move inventory.

我們對 PaperPie 的整體關注點仍然是品牌合作夥伴的成長和保留以及庫存轉移的銷售策略。

Our retail division continues to see success working with current customers as well as with new independent book stores and specialty gift shops, especially in relation to our Smart Lab Toys line of offerings.

我們的零售部門繼續與現有客戶以及新的獨立書店和特色禮品店合作取得成功，特別是在我們的智慧實驗室玩具系列產品方面。

This concludes our sales and marketing update.

我們的銷售和行銷更新到此結束。

I will turn the call back over to Craig for closing remarks.

我會將電話轉回給克雷格，讓他發表結束語。

Craig?

克雷格？

Thank you, both Heather and Dan.

謝謝希瑟和丹。

One of the biggest events in fiscal 2025 is the anticipated sale and leaseback of our headquarters building, the Hilti complex.

2025 財年最大的事件之一是我們的總部大樓喜利得綜合大樓的預期售後回租。

The proceeds from this sale will not only bring savings from reduced interest expense, but will allow us to build a positive cash position as we continue to work down our excess inventory levels which is approximately $30 million at the end of August.

此次出售的收益不僅可以減少利息支出，還可以讓我們建立積極的現金頭寸，因為我們將繼續降低過剩庫存水準（截至 8 月底約為 3,000 萬美元）。

That's $25 million to $30 million in excess.

這超出了 2500 萬至 3000 萬美元。

Selling a complex of this size is not an easy transaction as we have learned over the past 10 months.

正如我們在過去 10 個月中所了解的那樣，出售如此規模的綜合體並不是一件容易的事。

However, we remain confident in the sale based on strong leasing interest levels.

然而，基於強勁的租賃興趣水平，我們對出售仍充滿信心。

One recent improvement that is driving demand in the complex's marketability is the work we did to add a new tenant, Crusoe Energy Systems, which began occupying just under 30% of the complex on July 1, 2024.

最近推動綜合體適銷性需求的一項改進是我們增加了新租戶 Crusoe Energy Systems，於 2024 年 7 月 1 日開始佔據綜合大樓近 30% 的面積。

This new tenant not only strengthens the income of the complex, but they have committed to several capital improvements in their leased space.

這位新租戶不僅增加了綜合體的收入，而且還承諾對其租賃空間進行多項資本改善。

As we previously announced on September 19, we executed a letter of intent to sell leaseback of the Hilti complex.

正如我們之前於 9 月 19 日宣布的那樣，我們簽署了出售喜利得綜合體回租的意向書。

The agreement excludes the 17 acres of excess land, which will remain under EDC's ownership.

該協議不包括 17 英畝的多餘土地，這些土地仍屬於 EDC 的所有權。

The proceeds from the sale which is expected to be completed around the end of this calendar year is expected to fully pay back the bank leaving us with no debt, and we expect to have limited borrowing needs moving forward.

預計今年年底完成的出售所得款項預計將全額償還銀行，使我們沒有債務，並且我們預計未來的借貸需求有限。

We made other recent improvements to help reduce our costs, including changing our outbound freight carrier, which has reduced outbound parcel costs by approximately 20%.

我們最近也進行了其他改進，以幫助降低成本，包括更換出境貨運承運商，這將出境包裹成本降低了約 20%。

Making this change was not easy, but a strategic and necessary move to reduce freight costs that have increased significantly over the past several years.

要做出這項改變並不容易，但卻是降低過去幾年大幅增加的貨運成本的策略性且必要的措施。

Another cost reduction we executed after the end of the second quarter was the consolidation of our Learning and Wrap-Ups warehouse in Salt Lake City, Utah, into our Tulsa facility here in Oklahoma.

第二季末後我們執行的另一項成本削減措施是將猶他州鹽湖城的學習和總結倉庫合併到俄克拉荷馬州的塔爾薩工廠。

Savings from both these changes will improve our operational performance on a go-forward basis.

這兩項變革帶來的節省將提高我們未來的營運績效。

Lastly, I want to thank all our shareholders for their patience, our employees for their commitment to our mission, and our customers and brand partners for their loyalty during this difficult period.

最後，我要感謝我們所有股東的耐心，感謝我們的員工對我們使命的承諾，感謝我們的客戶和品牌合作夥伴在這個困難時期的忠誠。

I'm confident in our collective ability to emerge stronger and more resilient than ever before.

我相信我們的集體能力比以往任何時候都更強大、更有彈性。

Now that we have provided a summary of some recent activity, I'd like to turn the call back over to the operator for question and answer.

現在我們已經提供了一些近期活動的摘要，我想將電話轉回給接線員進行問答。

(Operator Instructions) Paul Carter, Capstone Asset Management.

（操作員說明）Paul Carter，Capstone 資產管理公司。

Talking about the building, first of all.

首先談談建築。

So this is the third investor group that you've announced buying the Hilti Complex.

這是您宣布購買喜利得綜合大樓的第三個投資者集團。

I know the first two investor groups fell through, but now you've got the Crusoe Energy lease there.

我知道前兩個投資者團體失敗了，但現在你已經獲得了克魯索能源公司的租約。

Can you just talk through a little bit more, like how confident are you that this third investor group will close on the transaction.

您能否再多談談，例如您對第三個投資者團體將完成交易有多大信心？

Yeah.

是的。

The first two groups were actually somewhat related at arms length.

前兩組其實有一定的相關性。

So I'm kind of considering the one group.

所以我正在考慮這一組。

But towards the end of that negotiation period, it got to where they were using deadlines to renegotiate the sale price, and we had full support of our bank to terminate that LOI and move on.

但在談判期即將結束時，他們利用最後期限重新談判銷售價格，我們得到了銀行的全力支持，終止了意向書並繼續前進。

(multiple speakers) the structure or the details of this transaction with this investor group, you feel, is a little bit more solid?

（多名發言者）這次交易的結構或細節跟著這個投資人群體，您覺得是不是比較紮實一點？

Yes.

是的。

Yes, I do.

是的，我願意。

So they've been on the sidelines for the last 8 to 10 months.

因此，過去 8 到 10 個月他們一直處於觀望狀態。

They put in a couple of offers, which each time was not our best offer, but they've increased their offer, and we're moving forward with them.

他們提出了幾個報價，雖然每次都不是我們的最佳報價，但他們提高了報價，我們正在與他們一起推進。

Yeah.

是的。

The only thing I would add to that, Paul, is that this new group we've disclosed as Partner Holdings, if you look at their holdings on the Internet, they have similar campuses to this.

保羅，我唯一要補充的是，我們作為合作夥伴控股披露的這個新集團，如果你在互聯網上查看他們的持股，他們有與此類似的園區。

So the Hilti complex is a campus, and some of the real estate that's underneath the management of partner holdings is similar kind of to this kind of a structure where you've got an entire complex, not just a small real estate holding.

因此，喜利得綜合體是一個園區，合作夥伴控股管理下的一些房地產類似於這種結構，您擁有整個綜合體，而不僅僅是一小部分房地產控股。

Okay.

好的。

That's great.

那太棒了。

And then so the sales price in the letter of intent is just over $38 million.

因此，意向書中的銷售價格剛超過 3,800 萬美元。

What's the net amount that you figure you'll be receiving?

您預計將收到的淨金額是多少？

Well, we haven't executed the agreement to identify what the net price is going to be.

嗯，我們還沒有執行協議來決定淨價是多少。

We've kind of got the letter of intent executed, but we're not at a point where we can disclose the net number this time.

我們已經執行了意向書，但這次我們還不能透露淨數量。

Okay.

好的。

Okay.

好的。

And then assuming that goes through, you're going to pay off your bank, will you be entering into another credit agreement with a different institution just to facilitate new inventory purchases?

然後假設這件事發生了，你要還清銀行的貸款，你會與另一家機構簽訂另一份信貸協議，只是為了促進新的庫存購買嗎？

And if so, have you thought through parameters of what that agreement might look like?

如果是這樣，您是否考慮過該協議的特定參數？

We have a couple of different interested parties to give us some small working capital needs.

我們有幾個不同的利害關係人可以為我們提供一些小額營運資金需求。

You're right that we will need to buy some inventory.

你說得對，我們需要買一些庫存。

But we're talking about a very small borrowing that will be paid back in under 12 months.

但我們討論的是一筆非常小的借款，將在 12 個月內償還。

So you're absolutely right that we do need to do some inventory replenishment and some purchases of some new titles that we've been delaying, and we expect to do that as soon as we close this agreement and move forward.

因此，您說的完全正確，我們確實需要補充一些庫存，並購買一些我們一直推遲的新遊戲，我們希望在完成本協議並繼續推進後立即做到這一點。

Great.

偉大的。

And speaking of that, so I understand that your recent inability to purchase new inventory has related to an inflated level of out of stocks, which -- and I don't know how significant is that, but can you quantify like how much has that impacted sales the last couple of quarters?

說到這一點，我了解到你們最近無法購買新庫存與缺貨水平過高有關，我不知道這有多重要，但你能量化一下缺貨的程度嗎？

Has that been sort of a meaningful drag on PaperPie's net revenues?

這是否對 PaperPie 的淨收入造成了一定程度的拖累？

I'll jump in and give my color on that question.

我會介入並就這個問題給出我的看法。

I think that, yes, absolutely, it's a factor.

我認為，是的，絕對是一個因素。

I don't know that we are in a place that we can truly say that it is representative of a specific percentage because I think it has to do a little bit with out of stock and waiting to be replenished as well as the lesser number of titles -- are you there?

我不知道我們是否真的可以說它代表了特定的百分比，因為我認為它必須與缺貨和等待補貨以及數量較少有關。

And so I think there's a number.

所以我認為有一個數字。

Paul, can you hear me?

保羅，你聽得到我說話嗎？

Oh, sorry.

哦，抱歉。

Yes, you cut out there for a moment.

是的，你暫時中斷了。

I can hear you now.

我現在能聽到你的聲音了。

No worries.

不用擔心。

No worries.

不用擔心。

No, I do think that there's a number of factors that we always say it's hard to identify any one specific factor.

不，我確實認為有很多因素，我們總是說很難確定任何一個具體因素。

The economy right now is an added insult to injury as we're dealing with the various things that we are.

現在的經濟狀況對我們來說是雪上加霜，因為我們正在處理各種各樣的事情。

And so we're actually taking this time to just make some strategic decisions on what our catalog of offerings looks like and building that out in a way that is going to be successful and sustainable for both the PaperPie and the retail divisions as we move forward.

因此，我們實際上正在利用這段時間對我們的產品目錄做出一些戰略決策，並以一種在我們前進的過程中對 PaperPie 和零售部門都將取得成功和可持續發展的方式進行構建。

Okay.

好的。

And thinking of strategies, so I know Tupperware recently filed for bankruptcy, which introduces probably quite a bit of uncertainty for their independent sales reps.

考慮策略，所以我知道特百惠最近申請破產，這可能會給他們的獨立銷售代表帶來相當大的不確定性。

What strategies are you guys using to specifically attract those Tupperware sales reps that are probably looking to do something else with their time right now.

你們使用什麼策略來專門吸引那些現在可能想利用時間做其他事情的特百惠銷售代表。

Yeah.

是的。

That's an interesting question, Paul.

這是一個有趣的問題，保羅。

We're not specifically doing any targeted outreach to those brand ambassadors or consultants that Tupperware has.

我們並沒有專門針對特百惠的品牌大使或顧問進行任何針對性的宣傳。

It's not necessarily a one-to-one where just because they're selling Tupperware, it means they're going to want to fill their time selling children's books.

這不一定是一對一的，僅僅因為他們銷售特百惠，就意味著他們想用銷售兒童讀物來打發時間。

They may want another opportunity for an arm of income that they can bring in.

他們可能希望獲得另一個可以帶來收入的機會。

And obviously, we are ready and willing and available and are making ourselves as prominent as we can with anyone who would be looking not just Tupperware.

顯然，我們已經準備好、願意並隨時準備好，並儘可能讓自己在那些不僅僅關注特百惠的人中脫穎而出。

We're working on the strategies, like I said, with our products, but also with our programs and our offerings so that we can adapt to the various different things that we're seeing in society right now and what the different generations are expecting and really wanting to see out of the direct selling industry.

正如我所說，我們正在製定我們的產品、計劃和產品的策略，以便我們能夠適應我們現在在社會上看到的各種不同的事物以及不同世代的期望並且真的很想退出直銷行業。

Okay.

好的。

Curious, do many of your brand ambassador or brand partners also sell for Tupperware?

好奇，您的許多品牌大使或品牌合作夥伴也為特百惠銷售產品嗎？

That's a great question.

這是一個很好的問題。

We don't track specifically who else they sell for.

我們不會具體追蹤它們還賣給誰。

But off the top of my head, I can't think of very many that are doing that side by side.

但從我的角度來看，我想不出有多少人在同時這樣做。

There are no further questions at this time.

目前沒有其他問題。

I will now give the call to Mr. Craig White.

我現在將致電克雷格懷特先生。

Please go ahead.

請繼續。

All right.

好的。

Thank you.

謝謝。

Yes, it has been a challenging year, but we get through the sale leaseback transaction and kind of get back to somewhat business as usual.

是的，這是充滿挑戰的一年，但我們完成了售後回租交易，並恢復了正常營業。

And I think we're poised and ready to go.

我認為我們已做好準備並準備出發。

I mean, we've gotten more efficient.

我的意思是，我們的效率提高了。

We've changed.

我們變了。

We've adapted some of our PaperPie division offerings, and we're really excited about the future.

我們已經調整了 PaperPie 部門的一些產品，我們對未來感到非常興奮。

So thanks, everyone, for joining us on our call today.

感謝大家今天加入我們的電話會議。

We appreciate your continued support and look forward to providing an additional update in January 2025.

我們感謝您的持續支持，並期待在 2025 年 1 月提供額外更新。

Thank you, and have a great day.

謝謝您，祝您有美好的一天。

Ladies and gentlemen, this concludes today's conference call.

女士們、先生們，今天的電話會議到此結束。

Thank you for your participation.

感謝您的參與。

You may now disconnect.

您現在可以斷開連線。