EDC(US:EDUC)2024-01-10 16:00Financial Performance - Net revenues for the three months ended November 30, 2023, decreased by 44.0% to $16,944,800 compared to $30,269,400 for the same period in 2022[93]. - Gross margin for the three months ended November 30, 2023, decreased by 42.2% to $11,142,400, with a gross margin percentage of 65.7% compared to 63.6% in the same period last year[93][108]. - Total operating expenses for the three months ended November 30, 2023, decreased by 36.5% to $12,083,500 compared to $19,015,300 for the same period in 2022[93]. - Operating income for the PaperPie segment decreased by 46.7% to $1,610,700 during the three months ended November 30, 2023, compared to $3,019,800 in the same quarter last year[111]. - PaperPie gross revenues decreased by $25.5 million, or 33.1%, to $51.6 million for the nine months ended November 30, 2023, compared to $77.1 million for the same period last year[112]. - Gross margin decreased by $16.9 million, or 40.4%, to $24.9 million for the nine months ended November 30, 2023, with gross margin as a percentage of net revenues decreasing to 66.2%[115]. - Total operating expenses decreased by $12.4 million, or 36.8%, to $21.3 million during the nine-month period ended November 30, 2023[116]. - Operating income of the PaperPie segment decreased by $4.4 million, or 55.0%, to $3.6 million during the nine months ended November 30, 2023[117]. - The Publishing division's net revenues decreased by $7.0 million, or 61.4%, to $4.4 million during the nine-month period ended November 30, 2023, primarily due to the stoppage of Usborne product distribution[123]. - Gross margin for the Publishing division decreased by $2.7 million, or 51.9%, to $2.5 million during the nine-month period ended November 30, 2023, with gross margin as a percentage of net revenues increasing to 56.4%[124]. Discounts and Sales - Discounts as a percentage of gross sales increased from 27.1% to 31.2%, resulting in an additional $0.9 million in discounts during the quarter[106]. - Discounts as a percentage of gross sales increased from 27.7% to 31.1%, impacting net revenues by approximately $1.8 million during the first nine months of fiscal 2024[113]. Operational Metrics - Average number of active brand partners decreased by 39.5% to 16,400 during the three months ended November 30, 2023, compared to 27,100 in the same period last year[104]. - The average number of active brand partners decreased by 9,500, or 33.1%, to 19,200 during the nine-month period ended November 30, 2023, from 28,700 in the same period a year ago[112]. Income and Expenses - Other income increased by 1,000.0% to $4,363,300 for the three months ended November 30, 2023, primarily due to the sale of the old HQ building[96]. - Interest expense increased by 16.7% to $726,200 for the three months ended November 30, 2023, compared to $600,600 in the same period last year[95]. - Income tax expense increased to $723,900 for the three months ended November 30, 2023, from $300 in the same period last year, reflecting a 100.0% increase[97]. - Total operating expenses not associated with a reporting segment decreased by 27.5% to $2,978,200 for the three months ended November 30, 2023, compared to $4,000,000 for the same period last year[94]. Cash Flow and Financing - Cash inflows from operations for the first nine months of fiscal year 2024 were $11,618,800, including net earnings of $2,161,000[128]. - Cash used in financing activities was $12,249,400, which included net payments on the line of credit of $5,636,400 and payments on term debt of $6,049,100[131]. - The Company entered into a swap transaction converting $18,000,000 of its $21,000,000 Floating Rate Term Loan to a fixed interest rate of 4.73% for two years, effective June 7, 2023[137]. - The Third Amendment to the Revised Credit Agreement reduced the Revolving Loan commitment from $13,500,000 to $4,000,000 by January 31, 2024, and increased the borrowing rate to 30-Day Term SOFR Rate + 4.50%, or 9.83% as of November 30, 2023[138]. - As of November 30, 2023, available credit under the $5,000,000 revolving line of credit was approximately $1,900[139]. - The Company is required to list its real estate property at 5402 South 122nd Ave., Tulsa, Oklahoma for sale if it fails to meet terms of the Revised Credit Agreement, with a market value of $41,970,000[140]. - Future scheduled maturities of long-term debt total $29,050,900 over the next five fiscal years, with $450,000 due in 2024 and $23,200,900 in 2028[141]. - The Fourth Amendment to the Credit Agreement, effective December 1, 2023, increases the Revolving Loan commitment to $8,000,000 and extends the maturity date to May 31, 2024[141]. Inventory and Reserves - The Company has estimated a reserve for sales returns of $0.2 million as of November 30, 2023[148]. - An allowance for doubtful accounts of $0.1 million was estimated as of November 30, 2023[149]. - Noncurrent inventory balances were $10.2 million as of November 30, 2023, with valuation allowances of $0.5 million[151]. - The total cost of inventory on consignment with brand partners was $1.4 million as of November 30, 2023[153].