EDUCATIONAL DEVELOPMENT CORP Q3 FY2025 earnings call

• General: Third quarter pretax losses were $1.3 million last year without a $4 million gain on warehouse sale, this year's $1.1 million pretax loss reflects operational improvements and cost efficiencies. Increased discounting to boost sales and reduce inventory for debt paydown.
• Financials: Net revenues down, loss before taxes, net loss, working capital inventory decrease.
• Sales and marketing: Launched shipping subscription with positive feedback, expanded Black Friday promotion, 5 StoryMaker Summits in 2025 in regional settings, focus on expanding brand partner success.
• Hilti Complex sale: Letter of intent executed in Sept 2024, asset sale agreement in Oct, due diligence expires Jan 19 with option to extend 30 days, expecting completion by early March, proceeds to pay back bank debt, reduce interest, and work down inventory.

In the third quarter, net revenues were $11.1 million compared to $16.9 million in the prior year third quarter. Loss before income taxes totaled $1.1 million compared to income of $2.7 million in the prior year. Year-to-date, net revenues totaled $27.6 million compared to $42.1 million in the prior year, with a loss before income taxes of $5.3 million compared to income before taxes of $2.9 million. Net inventories decreased $8.8 million from $55.6 million at February 28, 2024 to $46.8 million at November 30, 2024. Borrowings on the working capital line of credit totaled $4.3 million at the end of November 2024 with $1.2 million of availability.

• Continue short-term discounting strategy until building sale and debt payback, then return to historical pricing. - Expect completion of Hilti Complex sale by early March, with proceeds to fully pay back bank and limit future borrowing needs.

• Delayed Hilti Complex sale closing due to buyer group's other priorities affecting year-end close plans. - Continued headwinds including MLM reputation, economic conditions, and brand partners waiting and seeing regarding business stability.

Q: About new markets and IT implementation.

A: SmartLab Toys as new market, IT projects like e-commerce, shipping subscription, online fundraiser, brand ambassador program.

Q: News from Usborne.

A: Waiting for restrictions to lift for normal purchases.

Q: Clarification on real estate sales contract.

A: LOI vs asset purchase agreement, due diligence timeline, extension to April 4.

Q: Brand partner numbers.

A: Decrease due to economy, MLM reputation, brand partners waiting, but positive response to new titles and mission.