Educational Development Corporation (NASDAQ:EDUC) Q2 2025 Earnings Conference Call October 10, 2024 4:30 PM ET Company Participants Steven Hooser - Investor Relations Craig White - President and Chief Executive Officer Dan O'Keefe - Chief Financial Officer and Secretary Heather Cobb - Chief Sales and Marketing Officer Conference Call Participants Paul Carter - Capstone Asset Management Operator Good afternoon, ladies and gentlemen, and welcome to the Educational Development Corporation's Second Quarter Fisc ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 2024 OR ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number: 000-04957 EDUCATIONAL DEVELOPMENT CORPORATION | --- | --- | |----------------------------------------------------------------------|-- ...

EXHIBIT 99.1 EDUCATIONAL DEVELOPMENT CORPORATION ANNOUNCES FISCAL 2025 SECOND QUARTER RESULTS TULSA, OK, October 10, 2024—Educational Development Corporation ("EDC", or the "Company") (NASDAQ: EDUC), a publishing company specializing in books and educational products for children, today reports financial results for the fiscal second quarter ended August 31, 2024. Second Quarter Summary Compared to the Prior Year Second Quarter ● Net revenues were $6.5 million compared to $10.6 million. ● Average active Pap ...

. ● . | --- | --- | |-----------------------------------------------|-------| | | | | Educational Development Corporation Announces | | | Fiscal 2025 Second Quarter and Year to Date | | | Results | | October 10, 2024 4:00 PM EDT | Source: Educational Development Corporation Tulsa, Oklahoma--(Newsfile Corp. - October 10, 2024) - Educational Development Corporation (NASDAQ: EDUC) ("EDC", or the "Company"), a publishing company specializing in books and educational products for children, today reports financia ...

. . . Educational Development Corporation Announces Extension of Credit Agreement with BOKF October 07, 2024 4:00 PM EDT | Source: Educational Development Corporation Tulsa, Oklahoma--(Newsfile Corp. - October 7, 2024) - Educational Development Corporation (NASDAQ: EDUC) (the "Company") announced it has executed the Sixth Amendment ("Amendment") to the Existing Credit Agreement ("Amendment") with BOKF, NA (the "Lender"). The Amendment, effective October 3, 2024, extends the maturity date to January 4, 2025 ...

Group 1 - Educational Development Corporation (EDC) will host its Fiscal Year 2025 Second Quarter Earnings Call on October 10, 2024, at 3:30 PM CT (4:30 PM ET) [2][3] - The earnings call will feature presentations from key executives including Craig White (CEO), Heather Cobb (Chief Sales and Marketing Officer), and Dan O'Keefe (CFO) [3] - Participants can join the call via phone at (800) 717-1738, with a Conference ID of 47709, and audio replays will be available post-event [3] Group 2 - EDC specializes in publishing children's books and owns brands such as Kane Miller Books, Learning Wrap-Ups, and SmartLab Toys [4] - The company is the exclusive U.S. distributor for Usborne Publishing Limited's children's books, with products sold through 4,000 retail outlets and independent brand partners [4]

. . . Educational Development Corporation Terminates Sale and Leaseback of Hilti Complex with Rockford Holdings September 18, 2024 4:23 PM EDT | Source: Educational Development Corporation Tulsa, Oklahoma--(Newsfile Corp. - September 18, 2024) - Educational Development Corporation (NASDAQ: EDUC) ("EDC", the "Company" or "Seller") (http://www.edcpub.com) today announced that on September 12, 2024, the Company terminated its agreement with Rockford Holdings ("Rockford" or "Buyer") after receiving notice that ...

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Unaudited Q1 FY2025 financial statements show a **$1.28 million** net loss and decreased total assets Key Financial Performance Metrics | Financial Metric | May 31, 2024 ($) | May 31, 2023 ($) | | :--- | :--- | :--- | | **Net Revenues** | $9,993,400 | $14,524,000 | | **Gross Margin** | $6,459,500 | $9,373,600 | | **Net Loss** | $(1,279,000) | $(872,800) | | **Basic & Diluted Loss Per Share** | $(0.15) | $(0.11) | Key Balance Sheet Items | Balance Sheet Item | May 31, 2024 ($) | February 29, 2024 ($) | | :--- | :--- | :--- | | **Total Assets** | $88,010,800 | $90,105,000 | | **Total Liabilities** | $43,706,800 | $44,654,300 | | **Total Shareholders' Equity** | $44,304,000 | $45,450,700 | - The company identified conditions raising **substantial doubt** about its ability to continue as a going concern, planning to sell real estate to mitigate this[56](index=56&type=chunk)[54](index=54&type=chunk) - Subsequent to quarter-end, the company executed a **contract to sell its Hilti Complex for $35.5 million**, intending to use proceeds to pay off outstanding debt[128](index=128&type=chunk)[155](index=155&type=chunk) [Notes to Condensed Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) Notes detail accounting policies, liquidity, debt, and segment performance, highlighting a **going concern** warning - The company listed its **Hilti Complex for sale** in Q3 FY2024, with a carrying value of **$18.3 million** as of May 31, 2024[34](index=34&type=chunk)[35](index=35&type=chunk) Debt Structure as of May 31, 2024 | Debt Component | May 31, 2024 Balance ($) | | :--- | :--- | | Line of credit | $5,598,100 | | Floating rate term loan | $17,037,500 | | Fixed rate term loan | $11,113,400 | | **Total term debt** | **$28,150,900** | - The company **did not meet the minimum purchase requirements** under its distribution agreement with **Usborne Publishing Limited**, giving Usborne the **right to terminate** the agreement[95](index=95&type=chunk) Segment Performance Q1 FY25 | Segment | Net Revenues (Q1 FY25, $) | Loss Before Income Taxes (Q1 FY25, $) | | :--- | :--- | :--- | | PaperPie | $8,900,300 | $771,100 | | Publishing | $1,093,100 | $231,600 | | Other (Corp. Expenses) | N/A | $(2,749,700) | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a **31.2% decline in net revenues** from PaperPie and Publishing segments, facing liquidity challenges Q1 FY2025 vs Q1 FY2024 Financial Performance | Metric | Q1 FY2025 ($) | Q1 FY2024 ($) | % Change | | :--- | :--- | :--- | :--- | | Net Revenues | $9.99M | $14.52M | -31.2% | | Gross Margin | $6.46M | $9.37M | -31.1% | | Net Loss | $(1.28M) | $(0.87M) | +46.7% | - PaperPie division's revenue declined due to a **significant drop in the average number of active brand partners**, from **23,200 in Q1 FY24 to 13,400 in Q1 FY25**, following a **rebranding from 'Usborne Books & More'** and economic factors[161](index=161&type=chunk) - Publishing division's net revenues **decreased by 42.1%** primarily due to **discontinued sales of Usborne products to retail customers**, with **Usborne sales accounting for $1.3 million** in the prior-year quarter[167](index=167&type=chunk) - The company **generated $1.2 million in cash from operating activities**, largely due to a **$2.8 million decrease in inventory**, used for debt payments and operations[144](index=144&type=chunk)[169](index=169&type=chunk)[146](index=146&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company qualifies as a smaller reporting company - Quantitative and qualitative disclosures about market risk are not applicable as the company qualifies as a **smaller reporting company**[182](index=182&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective with no material changes in internal financial reporting controls - Disclosure controls and procedures were concluded to be **effective** based on an evaluation at the end of the period[17](index=17&type=chunk)[183](index=183&type=chunk) - No material changes occurred in internal control over financial reporting during the first quarter[184](index=184&type=chunk) [PART II. OTHER INFORMATION](index=29&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is not a party to any material legal proceedings - The company reports no material legal proceedings[207](index=207&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) This section is not applicable for this quarterly report - This section is noted as not applicable in the report[185](index=185&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares repurchased in Q1 FY2025; **376,393 shares** remain under the 2019 repurchase plan Shares Repurchased During Q1 FY2025 | Period | Total of Shares Purchased | | :--- | :--- | | March 1 - 31, 2024 | 0 | | April 1 - 30, 2024 | 0 | | May 1 - 31, 2024 | 0 | - The 2019 stock repurchase plan has **376,393 shares** remaining available for repurchase with no expiration date[20](index=20&type=chunk)[185](index=185&type=chunk) [Defaults Upon Senior Securities](index=29&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - There were no defaults upon senior securities during the period[208](index=208&type=chunk) [Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reports no mine safety disclosures - There are no mine safety disclosures to report[21](index=21&type=chunk) [Other Information](index=29&type=section&id=Item%205.%20Other%20Information) No other information is reported under this item [Exhibits](index=30&type=section&id=Item%206.%20Exhibits) Exhibits filed with Form 10-Q include credit agreement amendments and CEO/CFO certifications - Exhibits include various amendments to the Credit Agreement, with the **Fifth Amendment effective May 31, 2024**, incorporated by reference[22](index=22&type=chunk) - Certifications from the CEO and CFO pursuant to **Sections 302 and 906 of the Sarbanes-Oxley Act of 2002** are included as exhibits[22](index=22&type=chunk)

Financial Data and Key Metrics Changes - Net revenues decreased to $10 million from $14.5 million year-over-year [4] - Average active brand partners fell to 13,400 from 15,000 at the end of the last fiscal year [4] - Loss before income taxes increased to $1.7 million from a loss of $1.2 million in the prior year [4] - Net loss totaled $1.3 million compared to $0.9 million, with loss per share increasing to $0.15 from $0.11 on a fully diluted basis [4] Business Line Data and Key Metrics Changes - The revenue split between PaperPie and the Publishing division was approximately 85% to 15% [33] - A promotional event in June resulted in the addition of over 3,700 new brand partners, maintaining the active brand partner count around 15,000 [13][19] Market Data and Key Metrics Changes - The company reported a decrease in net inventories by $2.9 million, from $55.6 million to $52.7 million [25] - The company is experiencing high inflation affecting discretionary spending, which has impacted sales [24] Company Strategy and Development Direction - The anticipated sale and leaseback of the headquarters building, the Hilti Complex, is a significant event for fiscal 2025, expected to generate $35.5 million [14][28] - The company is focusing on cost-cutting measures and leveraging IT to enhance sales force efficiency [9] - The strategy includes reducing excess inventory, which was approximately $30 million at year-end [14] Management's Comments on Operating Environment and Future Outlook - Management expressed incremental confidence in stabilizing the brand partner count at around 15,000, despite a challenging macroeconomic environment [36] - The company is optimistic about the fall selling season, anticipating improved cash flow from inventory turnover [30] Other Important Information - The company has a working capital line of credit of $5.5 million at the end of February 2024, with $1.4 million available at the end of the first quarter [11] - A new tenant has been secured for approximately half of the 220,000 square feet of leased space, improving monthly cash flow [15] Q&A Session Summary Question: How is the $10 million of net revenue split between PaperPie and your Publishing division? - The split is approximately 85% to 15% [33] Question: How confident are you in stabilizing your brand partner count at 15,000? - Management is incrementally more confident as market conditions stabilize [36] Question: What is the expected net amount from the building sale after commissions? - The expected net amount is $34.5 million after commissions and expenses [47] Question: What does your banker think about starting to buy back stock or pay dividends? - The banker is not in favor of stock buybacks or dividends until after the sale transaction is executed [59] Question: How will you address the excess inventory? - The company plans to reduce inventory through sales promotions and expects to turn it into cash during the fall selling season [60][61]

Financial Performance - Net revenues for the first quarter were $9.99 million, a decrease of 31.5% compared to $14.52 million in the prior year[3] - Net loss for the quarter was $(1.28) million, compared to $(0.87) million in the same quarter last year, representing a 46.6% increase in loss[3] - Loss per share was $(0.15), compared to $(0.11) in the prior year, indicating a 36.4% increase in loss per share[3] Operational Changes - Average active PaperPie Brand Partners decreased to 13,400 from 23,200 year-over-year, but increased to 15,015 as of February 29, 2024[1] - The company added over 3,700 new Brand Partners in June, increasing total active Brand Partners to 14,700[9] Cash Flow and Financing - The company generated $2.9 million in positive cash flows from inventory reductions, covering historically negative cash outflows[15] - A lease agreement for approximately half of the Hilti Complex is expected to generate $1.0 million in new cash flow annually, aiding in the return to profitability[2] - A sale/leaseback agreement for the Hilti Complex totaling $35.5 million is expected to fully pay back bank borrowings and minimize future borrowing needs[16] - The company maintains a $4.5 million line of credit post-building sale to ensure adequate financing for future operations[16] Strategic Focus - The company is focused on improving children's literacy and plans to share profitability with shareholders through dividends in the future[10]