Educational Development Corporation Announces Record Net Revenue for the Month of August 2016
September 14 2016 - 10:43AM
Educational Development Corporation (“EDC”) (NASDAQ:EDUC)
(http://www.edcpub.com) today reported historic record net revenues
for the month of August 2016 (unaudited).
Randall White, CEO of Educational Development Corporation,
announced that the Company achieved record net revenues of $10.0
million for the month of August compared to $5.0 million for August
last year. The Company was led by the direct sales division,
Usborne Books & More (“UBAM”), with net revenues of $9.1
million compared to $3.9 million last August.
UBAM continues to attract new sales associates, which now total
just under 25,000, compared to 8,500 at the end of August 2015.
This division has now posted 39 consecutive months of net
revenue gains over the same month the previous year.
At May 31, 2016, the Company was in violation of a certain
covenant covering its debt to equity ratio. Subsequent to that
report, the bank has increased the ratio percentage and
consequently the Company is no longer in violation. The
Company currently has a long term commitment for permanent
financing that will allow the funding of the extraordinary
growth.
The Company is experiencing extraordinary growth and ended the
quarter with a backlog in excess of $4 million of orders to be
shipped. Since December 1, 2015, the Company has acquired,
and moved to, its new facility which is a 40-acre property with a
401,000 sq. ft. office and warehouse building complex. The
former owners have leased back 181,000 sq. ft. of office space on a
15-year lease, which substantially covers the term loan payments
related to the new facility. The acquisition expands the
Company-used office and warehouse spaces from 103,000 sq. ft. to
330,000 sq. ft.
During this same period, the Company installed over $3.7 million
in software and distribution systems. This technology and
equipment includes a new warehouse management system to improve
controls over inventory movement and a state-of-the-art order
fulfillment system for greater efficiency. In addition, on
September 1, 2016, the Company installed a completely new software
program for the direct selling division to accommodate the
extraordinary growth of that division. New financial software
is scheduled to be installed October 1, 2016.
"There are a number of challenges we have faced as we adjusted
to our rapid growth, while simultaneously preparing to meet
sustained high demand in the months ahead," said White. "With
our new facility and additional equipment, we have now doubled the
number of daily shipments we can process, compared to our previous
facility. We expect that during the remainder of Fiscal Year
2017, this will increase an additional 50%. Long-term cost
savings are expected as the new technology and equipment we have
implemented will reduce our cost of labor."
Additional cost savings are also being seen as the dramatic
increase in sales volumes of a number of the Company's best-selling
series have provided a higher margin due to the related
volume-pricing breaks from its suppliers. Newly-negotiated
extended terms from its suppliers also positively impact the
Company's ability to build up inventory on hand in anticipation for
the fall selling season, and negotiations are still in progress
with remaining suppliers for extended terms. The
Company's inventory levels were $29.6 million on August 31, 2016,
compared to $13.3 million on August 31, 2015 and, with the extended
terms, the Company has an adequate amount in the credit line to
finance future inventory needs.
The Company recorded net revenues in Fiscal Year 2015 of $32.5
million, and $63.6 million in Fiscal Year 2016. The Company
is on pace to record net revenues of $120-140 million for Fiscal
Year ending February 28, 2017. The Company has previously
reported expected earnings per share in the range of $1.00-1.10 per
share, and with the improved supplier terms and efficiency, this
remains the Company's expectation.
This information may contain forward looking statements.
About Educational Development Corporation
EDC is a publishing company specializing in books for children.
EDC is the sole American distributor of the UK-based Usborne
Books and owns Kane Miller Books, specializing in children’s
literature from around the world. EDC’s current catalog contains
over 1,800 titles, with new additions semi-annually. Both
Usborne and Kane Miller products are sold via 5,000 retail outlets
and by over 24,000 direct sales consultants nationally.
Contact:
Educational Development Corporation
Randall White, (918) 622-4522
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