EDC(US:EDUC)2024-07-11 23:04Financial 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]