Value Line(VALU) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited interim consolidated financial statements and management's discussion and analysis for the company Item 1. Consolidated Condensed Financial Statements This section presents Value Line, Inc.'s unaudited interim consolidated financial statements and accompanying notes Consolidated Condensed Balance Sheets The balance sheet shows total assets of $130.3 million and total shareholders' equity of $85.7 million as of October 31, 2023 Consolidated Condensed Balance Sheet Highlights (in thousands $) | Account | October 31, 2023 (unaudited) | April 30, 2023 | | :--- | :--- | :--- | | Total current assets | $65,688 | $66,076 | | Total long term assets | $64,653 | $65,000 | | Total assets | $130,341 | $131,076 | | Total current liabilities | $21,575 | $23,288 | | Total long term liabilities | $23,024 | $24,115 | | Total liabilities | $44,599 | $47,403 | | Total shareholders' equity | $85,742 | $83,673 | Consolidated Condensed Statements of Income Net income for the six months ended October 31, 2023, was $8.35 million, a decrease from $8.79 million in the prior year Statement of Income Summary (in thousands $, except per share data) | Metric | Three Months Ended Oct 31, 2023 | Three Months Ended Oct 31, 2022 | Six Months Ended Oct 31, 2023 | Six Months Ended Oct 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total publishing revenues | $9,610 | $10,066 | $19,353 | $20,010 | | Income from operations | $2,674 | $3,173 | $5,421 | $5,729 | | Net income | $3,488 | $4,330 | $8,347 | $8,788 | | Earnings per share, basic & fully diluted | $0.37 | $0.46 | $0.89 | $0.93 | Consolidated Condensed Statements of Comprehensive Income Comprehensive income for the six months ended October 31, 2023, was $7.69 million, primarily due to a $0.66 million net loss from fixed income securities Comprehensive Income Summary (in thousands $) | Metric | Three Months Ended Oct 31, 2023 | Three Months Ended Oct 31, 2022 | Six Months Ended Oct 31, 2023 | Six Months Ended Oct 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net income | $3,488 | $4,330 | $8,347 | $8,788 | | Other comprehensive income/(loss) | $(448) | $(3) | $(660) | $2 | | Comprehensive income | $3,040 | $4,327 | $7,687 | $8,790 | Consolidated Condensed Statements of Cash Flows Net cash from operating activities was $5.76 million, with $3.81 million used in investing and $5.62 million in financing activities Cash Flow Summary (in thousands $) | Activity | Six Months Ended Oct 31, 2023 | Six Months Ended Oct 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,763 | $8,599 | | Net cash used in investing activities | $(3,808) | $(17,405) | | Net cash used in financing activities | $(5,621) | $(8,229) | | Net change in cash and cash equivalents | $(3,666) | $(17,035) | Consolidated Condensed Statement of Changes in Shareholders' Equity Shareholders' equity increased from $83.67 million to $85.74 million, driven by net income offset by dividends and treasury stock purchases - Dividends declared per common share were $0.56 for the six months ending October 31, 2023, compared to $0.50 for the six months ending October 31, 2022[20][23] - The company purchased treasury stock totaling $338,000 for the six months ended October 31, 2023[19][20] Notes to Consolidated Condensed Financial Statements Notes detail accounting policies, including revenue recognition, equity method for EAM Trust, securities valuation, lease commitments, and related party transactions - The company's core business is producing investment periodicals and licensing its copyrights and proprietary ranks. It also holds a significant non-voting revenues and profits interest in Eulav Asset Management LLC (EAM)[26] - Subscription revenues are recognized ratably over the subscription life. Copyright fees are asset-based and recognized monthly as the product is delivered[32][33] - The investment in EAM Trust is accounted for using the equity method, as the company determined it is not the primary beneficiary of the Variable Interest Entity (VIE)[30][36][74] - During the six months ended October 31, 2023, 33.6% of total publishing revenues were derived from a single customer[127] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, including declines in net income and operating income, revenue trends, operating expenses, liquidity, capital resources, and critical accounting policies Results of Operations Net income fell 5.0% to $8.35 million, and total publishing revenues declined 3.3%, with operating expenses down 2.4% for the six months ended October 31, 2023 Key Performance Indicators (in thousands $) | Metric | Six Months Ended Oct 31, 2023 | Six Months Ended Oct 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Income from operations | $5,421 | $5,729 | -5.4% | | Net income | $8,347 | $8,788 | -5.0% | | Total publishing revenues | $19,353 | $20,010 | -3.3% | | Total operating expenses | $13,932 | $14,281 | -2.4% | Revenue Breakdown (in thousands $) | Revenue Source | Six Months Ended Oct 31, 2023 | Six Months Ended Oct 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Print Publications | $4,709 | $5,071 | -7.1% | | Digital Publications | $8,146 | $8,132 | 0.2% | | Copyright Fees | $6,498 | $6,807 | -4.5% | - Total product line circulation at October 31, 2023, was 5.5% below the prior year, reflecting weak investor sentiment and a shift from print to digital services[156][157] - The company's non-voting interests in EAM generated $5.85 million in income for the six-month period, a slight increase of 0.4% year-over-year[171] Liquidity and Capital Resources Working capital was $44.1 million and cash and short-term securities $59.9 million as of October 31, 2023, with operating cash flow decreasing due to timing of receivables and lower EAM distributions Liquidity Position (in thousands $) | Metric | October 31, 2023 | April 30, 2023 | | :--- | :--- | :--- | | Working Capital | $44,113 | $42,788 | | Cash and short-term securities | $59,894 | $62,064 | - Net cash from operating activities decreased primarily due to the timing of receipts for accounts receivable ($2.4 million) and lower distributions from EAM ($1.4 million)[186] - Quarterly dividend payments were $0.28 per share in fiscal 2024, totaling $5.28 million for the six-month period[188] - Management does not anticipate any borrowings during the next twelve months and reports no off-balance-sheet arrangements[190] Quantitative and Qualitative Disclosures About Market Risk The company manages market risks from interest rates and equity prices through diversified investments and provides sensitivity analyses on their potential impact - The company's primary market risks are associated with interest rates on its fixed-income securities and price fluctuations in its equity investments[196] Interest Rate Risk Sensitivity on Fixed Income Securities (in thousands $) | As of October 31, 2023 | Fair Value | 100 bp increase | 100 bp decrease | | :--- | :--- | :--- | :--- | | Investments in securities with fixed maturities | $42,906 | $41,934 | $42,439 | Equity Price Risk Sensitivity (in thousands $) | As of October 31, 2023 | Fair Value | 30% increase | 30% decrease | | :--- | :--- | :--- | :--- | | Equity Securities and ETFs | $13,064 | $16,983 | $9,145 | Controls and Procedures Management concluded that disclosure controls and procedures were effective as of October 31, 2023, with no material changes to internal control over financial reporting - The Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures were effective as of October 31, 2023[209] - There were no material changes to the company's internal control over financial reporting during the last fiscal quarter[209] PART II. OTHER INFORMATION This section covers other information including legal proceedings, risk factors, equity sales, and exhibits Legal Proceedings The company reports that there are no legal proceedings to disclose for the period - None[210] Risk Factors New risk factors have been added, reflecting management's ongoing analysis of the business environment since the last annual report - New risk factors have been added to reflect management's continuing analysis of developments in the Company's business environment[211] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 3,546 common shares for approximately $150,000 under a $3 million share repurchase program approved in October 2022 Issuer Purchases of Equity Securities (Quarter Ended Oct 31, 2023) ($) | Period | Total Shares Purchased | Average Price Paid per Share | Maximum Dollar Value Remaining for Repurchase | | :--- | :--- | :--- | :--- | | August 2023 | 413 | $48.47 | $1,526,000 | | September 2023 | 1,324 | $47.43 | $1,463,000 | | October 2023 | 1,809 | $37.33 | $1,396,000 | | Total | 3,546 | $42.40 | $1,396,000 | - The Board of Directors approved a share repurchase program on October 21, 2022, authorizing the repurchase of up to $3,000,000 of the company's common stock[215] Mine Safety Disclosures This item is not applicable to the company - Not applicable[216] Other Information The company has never adopted a Rule 10b5-1 trading arrangement, and no directors or executive officers adopted or terminated one recently - Value Line has never adopted a Rule 10b5-1 trading arrangement, and no directors or executive officers adopted or terminated one during the recent fiscal quarters[217] Exhibits This section lists exhibits filed with the Form 10-Q, including SOX certifications and Inline XBRL documents - Exhibits include Section 302 and 906 certifications and Inline XBRL data files[221]