EDC(US:EDUC)2024-01-11 23:31Financial Data and Key Metrics Changes - Earnings before income taxes totaled $2.7 million compared to breakeven last year, with after-tax income of $2 million versus breakeven last year, resulting in income per share of $0.24 [38] - Net revenues for the third quarter totaled $16.9 million, a decrease of $13.4 million or 44% compared to $30.3 million in the same quarter last year [43] - Average active PaperPie brand partners decreased to 16,400 from 27,100, a decline of 39% [43] - Net inventories decreased by $6.3 million from $64.3 million to $57.9 million [44] Business Line Data and Key Metrics Changes - Sales in the Publishing division were lower due to the stoppage of selling Usborne products, but this was partially offset by strong orders for SmartLab Toys and increased sales of Kane Miller books and Learning Wrap-Ups [36][42] - The PaperPie division experienced a 30% decrease in sales compared to the previous year, primarily due to lower active brand partner levels [41] Market Data and Key Metrics Changes - The company has stabilized its active brand partner count during the summer and maintained consistent levels through the fiscal third quarter, which is typically the largest sales quarter [35] Company Strategy and Development Direction - The company is focused on reducing excess inventory levels and improving long-term brand partner success, which is seen as essential for generating future brand partner success [37] - The company plans to sell its current headquarters for $40 million, with proceeds expected to pay off line of credit and term loans, thereby improving financial performance [56][57] - A new e-commerce platform is set to launch, aimed at enhancing customer experience and sales opportunities [52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving operating profitability even at a stabilized revenue level of $40 million, emphasizing the need to increase sales [68][69] - The reinstatement of quarterly dividends is a priority, but management wants to ensure profitability is on the horizon before making such decisions [71] Other Important Information - The company executed a fourth amendment to its credit agreement, increasing borrowing availability to $8 million [39] - The company has switched its credit card processor to Nexio, which has released cash reserves held during the quarter [46] Q&A Session Summary Question: What was your cash flow from operations for the quarter? - The cash flow from operations was not available during the call but was expected to be published later [63] Question: What is your ongoing CapEx looking like? - Ongoing CapEx is primarily tied to IT development, with non-IT CapEx being minimal [65] Question: Can the company achieve operating profitability at a $40 million revenue level? - Management is confident that they can achieve operating profitability at that level [69] Question: Will the company consider reinstating dividends before achieving operating profitability? - Management indicated that they would want to be confident in profitability before reinstating dividends [71] Question: Can you discuss the circumstances around the resignation of John Clerico from the Board? - His resignation was due to personal health issues and was not related to any disagreements with management [73][75]