EDC(US:EDUC)2026-01-13 22:01Revenue Performance - Product revenues for the three months ended November 30, 2025, decreased by $3.9 million, or 36.9%, to $6.7 million compared to $10.6 million for the same period in 2024[86]. - PaperPie net revenues decreased by $8.1 million, or 33.6%, to $16.0 million for the nine-month period ended November 30, 2025, compared to $24.1 million in the same period last year[102]. - Publishing division's net revenues decreased by $0.7 million, or 20.6%, to $2.7 million during the nine-month period ended November 30, 2025, from $3.4 million in the same period last year[112]. Active Brand Partners - The average number of active brand partners decreased by 7,300, or 58.9%, to 5,100 in Q3 fiscal 2026 from 12,400 in Q3 fiscal 2025[96]. - The average number of active brand partners decreased by 7,100, or 53.4%, to 6,200 during the nine-month period ended November 30, 2025, from 13,300 in the same period a year ago[102]. - Approximately 20.0% of active Brand Partners maintained consignment inventory at the end of the third quarter of fiscal year 2026[138]. Gross Margin - Gross margin for the three months ended November 30, 2025, decreased by $2.3 million, or 37.1%, to $3.9 million, with gross margin as a percentage of net revenues at 62.1% compared to 62.9% in the prior year[98]. - Gross margin decreased by $5.4 million, or 36.0%, to $9.6 million for the nine-month period ended November 30, 2025, with gross margin as a percentage of net revenues decreasing to 60.1% from 62.1%[104]. - Gross margin for the Publishing division decreased by $0.5 million, or 25.0%, to $1.5 million during the nine-month period ended November 30, 2025, with gross margin as a percentage of net revenues at 55.7%[113]. Operating Income and Expenses - Total operating expenses for the PaperPie segment decreased by $1.7 million, or 33.3%, to $3.4 million during the three-month period ended November 30, 2025[99]. - Total operating expenses decreased by $4.9 million, or 36.0%, to $8.7 million during the nine-month period ended November 30, 2025, from $13.6 million in the same period last year[105]. - Operating income for the PaperPie segment decreased by $0.5 million, or 50%, to $0.5 million during the three months ended November 30, 2025[100]. - Operating income for the PaperPie segment decreased by $0.3 million, or 23.1%, to $1.0 million during the nine-month period ended November 30, 2025, with operating income as a percentage of net revenues at 6.0%[106]. Other Income and Expenses - Other income increased by $11.8 million to $12.5 million for the three months ended November 30, 2025, primarily due to a gain of $12.2 million from the sale of the Hilti Complex[89]. - Interest expense decreased by $0.2 million, or 33.3%, to $0.4 million for the three months ended November 30, 2025, due to the sale of the Hilti Complex and the payoff of outstanding indebtedness[88]. - Income tax expense increased by $3.1 million to $2.8 million for the three months ended November 30, 2025, with an effective tax rate of 26.7% compared to 24.8% in the prior year[90]. Cash Flow and Inventory Management - Cash inflows from operations totaled $4,004,600 during the first nine months of fiscal year 2026, resulting from net earnings of $5,432,200[117]. - Cash used in financing activities was $31,031,200, primarily for paying down existing term debt and line of credit[122]. - The Company expects to reduce excess inventory levels to generate cash flow and support ongoing operations[123]. - Noncurrent inventory balances prior to valuation allowances were $17.5 million and $16.3 million at November 30, 2025, and February 28, 2025, respectively[136]. - Noncurrent inventory valuation allowances were $0.8 million at November 30, 2025, and $0.7 million at February 28, 2025[136]. - Management has estimated a valuation allowance for both current and noncurrent inventory, including the reserve for consigned inventory, of $1.3 million and $1.2 million at November 30, 2025, and February 28, 2025, respectively[139].