EDC(US:EDUC)2022-05-12 14:16Financial Data and Key Metrics Changes - For fiscal year 2022, net revenues totaled $142.2 million, a decrease of $62.4 million or 30.5% compared to $204.6 million in fiscal 2021 [6] - Earnings before income taxes for fiscal year 2022 were $11.2 million, down $6 million or 34.9% from $17.2 million in fiscal 2021 [6] - Net earnings decreased to $8.3 million from $12.6 million, a decline of 34.1% [6] - Earnings per share on a fully diluted basis were $0.98, down 34.7% from $1.50 [7] Business Line Data and Key Metrics Changes - Publishing Division sales increased to $2.9 million in Q4 and $13.3 million for the year, representing a growth of $4.6 million or 53.6% over fiscal 2021 [11] - UBAM sales declined by 35% to $17.6 million in Q4, primarily due to the return to normalcy post-pandemic [13] - Active consultant count averaged 37,500 in Q4, which is 19% higher than the same quarter in fiscal 2020 [14] Market Data and Key Metrics Changes - The company ended fiscal year 2022 with approximately $73 million in inventory, expected to peak and normalize over the next three quarters [8] - The company has experienced headwinds against UBAM sales due to inflation impacting consumer spending [20][33] Company Strategy and Development Direction - The company has temporarily suspended its dividend to protect its balance sheet amid high inventory levels, with plans to reinstate dividends once inventory normalizes [4] - New technology-based tools and an online training platform have been introduced to support consultants in reaching new customers [15] - The company is optimistic about rebounding sales from channels negatively impacted by the pandemic, such as school book fairs [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current economic pressures, including inflation and rising fuel prices, which are affecting consumer spending on discretionary items like children's books [31][33] - The company remains committed to profitability and expects to turn inventory into cash, which will help in reducing debt levels [29][66] Other Important Information - The company increased its working capital line from $20 million to $25 million to strengthen its balance sheet [7] - Management emphasizes the importance of communication and culture within the company during the transition of leadership [39] Q&A Session All Questions and Answers Question: Concerns about the timing of the conference call - An analyst expressed dissatisfaction with the timing of the conference call being 24 hours after the earnings report [22] Question: Inventory levels and sales comparison - An analyst inquired about the excess inventory levels and their implications for cash flow [23] - Management estimated excess inventory to be around $15 million to $20 million [23] Question: Dividend reinstatement conditions - An analyst asked about the conditions under which the dividend might be reinstated [28] - Management indicated that a reduction in working capital line to between $10 million to $15 million could lead to reinstatement [29] Question: Future earnings expectations - An analyst questioned whether the company expects revenues to exceed last year [30] - Management acknowledged the uncertainty due to economic pressures but expressed hope for revenue growth [31] Question: Impact of inflation on pricing - An analyst asked about potential price increases due to inflation [41] - Management indicated that while some price increases may be necessary, there would be no wholesale changes [42] Question: Share count changes - An analyst noted a decrease in share count and inquired about the reasons [45] - Management clarified that there have been no significant share buybacks or changes outside of the long-term incentive plan [46] Question: Solvency concerns - An analyst raised concerns about the impact of declining consultants on the company's solvency [63] - Management reassured that the company remains profitable and has no concerns about solvency [66]