Educational Development Corporation Announces Fiscal Fourth Quarter and Fiscal 2025 Results

Rhea-AI Summary

Educational Development Corporation (NASDAQ: EDUC) reported challenging financial results for fiscal 2025. Net revenues declined to $34.2 million from $51.0 million year-over-year, with Q4 revenues at $6.6 million versus $9.0 million. The company posted a net loss of $(5.3) million for the year, compared to a gain of $546,400 in 2024. Average active PaperPie Brand Partners decreased to 12,300 from 18,300. Despite revenue challenges, EDC made significant progress in debt reduction and inventory management. The company reduced inventory levels from $55.6M to $44.7M, generating $10.9M in cash flow. Combined with fiscal 2024, EDC has reduced bank debts and vendor payables by $16.9M. Notably, EDC executed a Purchase Sale Agreement with TG OTC, LLC for their headquarters building, with closing expected by September 2025. The sale proceeds will be used to fully pay down remaining bank debts.

Positive

• Reduced vendor payables by $2.0 million and bank debts by $3.1 million
• Successfully decreased inventory levels by $10.9 million, from $55.6M to $44.7M
• Executed Purchase Sale Agreement for headquarters building with TG OTC, LLC, which will eliminate remaining bank debt
• Will retain ownership of 17 acres of excess land after building sale
• Improved Q4 loss before income taxes by $0.7 million compared to previous year

Negative

• Net revenues declined 33% to $34.2 million from $51.0 million
• Posted net loss of $(5.3) million compared to previous year's profit of $546,400
• Average active PaperPie Brand Partners decreased 33% to 12,300 from 18,300
• Q4 revenues dropped 26% to $6.6 million from $9.0 million
• Carrying approximately $30M in excess inventory at current revenue levels

Insights

Financial Analyst

EDC reports significant losses with revenue down 33% YoY, though debt reduction efforts show progress amid challenging retail environment.

Educational Development Corporation's fiscal 2025 results paint a concerning picture with revenues declining 33% to $34.2 million from $51.0 million in the prior year. The company reported a substantial net loss of $5.3 million (-$0.63 per share), compared to a modest profit of $546,400 ($0.07 per share) last year.

The deterioration in performance stems largely from a significant erosion in the company's direct sales network, with average active PaperPie Brand Partners dropping 33% from 18,300 to 12,300. This direct sales channel weakness appears to be a major driver behind the revenue collapse.

While concerning, management has been focused on a deliberate strategy prioritizing cash flow over profitability to address debt concerns. This approach has yielded some positive results, with EDC reducing vendor payables by $2.0 million and bank debt by $3.1 million during fiscal 2025. Over the past two fiscal years, the company has reduced combined bank debt and vendor payables by $16.9 million.

A critical part of EDC's liquidity improvement strategy has been inventory reduction, decreasing from $55.6 million to $44.7 million, generating $10.9 million in cash flow. However, management notes they still have approximately $30 million in excess inventory at current revenue levels, suggesting continued margin pressure as they liquidate this inventory.

The company's most significant strategic development is the announced sale-leaseback agreement for their headquarters building with TG OTC, LLC. This transaction, expected to close by early September, could potentially eliminate all remaining bank debt. Notably, EDC will retain 17 acres of excess land after the sale, which would strengthen their balance sheet.

The Q4 figures show modest sequential improvement in operating losses, suggesting cost-cutting measures are having some impact despite continued revenue challenges. Looking ahead, much hinges on the successful completion of the headquarters sale-leaseback transaction and the company's ability to stabilize its direct sales network while navigating what management describes as a "difficult economic period of high inflation."

Tulsa, Oklahoma--(Newsfile Corp. - May 19, 2025) - Educational Development Corporation (NASDAQ: EDUC) ("EDC", or the "Company"), a publishing company specializing in books and educational products for children, today reports financial results for the fiscal fourth quarter and fiscal year ended February 28, 2025.

Fiscal Year Summary Compared to the Prior Year

• Net revenues of $34.2 million compared to $51.0 million.
• Average active PaperPie Brand Partners totaled 12,300 compared to 18,300.
• Loss before income taxes totaled $(6.9) million.
• Net loss totaled $(5.3) million.
• Earnings (loss) per share totaled $(0.63), compared to a gain of $0.07, on a fully diluted basis.
  

Fourth Quarter Summary Compared to the Prior Year Fourth Quarter

• Net revenues for the quarter were $6.6 million compared to $9.0 million.
• Average active PaperPie Brand Partners totaled 9,400 compared to 15,500.
• Loss before income taxes were $(1.5) million, a $0.7 million improvement over past fiscal fourth quarter.
• Net Loss totaled $(1.3) million an improvement of $0.3 million over past fiscal fourth quarter.
• Loss per share totaled $(0.16) compared to loss per share of $(0.19), on a fully diluted basis.
  

Per Craig White, Chief Executive Officer, "Throughout fiscal 2025, we continued to run promotions with discounted pricing, prioritizing cash flow over profitability to reduce debt and lower inventory as part of our plan with the bank. These tactical decisions have generated cash which was used to pay down debt and past due invoices with our vendors. The positive outcome from these decisions allowed us to reduce our vendor payables by $2.0 million and reduce our bank debts, including our revolver and our two term loans, by a combined $3.1 million. As we have stated previously, reducing our bank debts and related interest expense has been the top priority in the short-term to appease our bank."

"During fiscal 2025, we reduced our inventory levels from $55.6 million to $44.7 million, generating $10.9 million of cash flows. We remain focused on reducing our excess inventory, which approximates $30M at current revenue levels, and the cash flow generated from inventory reductions is expected to further strengthen our financial position. Our Company has as history of being very conservative with our operations and we are confident that the cash flow generated from reducing excess inventory levels will help us through difficult economic times."

"In Comparison to last year, during fiscal 2024 we had two unusual transactions that created profitability. First, the receipt of an Employee Retention Credit of $3.8 million and, second, $4.0 million gain from the sale of our old headquarters building. The proceeds from these transactions, along with the cash flow generated from inventory reductions in fiscal 2024 of $8.2 million, allowed us to reduce our bank borrowings from $45.7 million to $33.9 million. So, on a combined basis, during fiscal 2024 and 2025 we have reduced our bank debts and vendor payables by $16.9 million."

"While these results are significant, we have also continued to focus on reducing our operating expenses, most evidenced by our reduced fourth quarter losses on much lower revenue levels. I am proud of the efforts of our team to stay focused on cost reductions during this difficult economic period of high inflation and the resulting reduced disposable income of our customers."

"Our strategic direction remains to strengthen our financial position through the sale and leaseback of our headquarters building, the "Hilti Complex." This transaction will bring financial value to our shareholders and the proceeds from the sale are expected to fully pay down all of our remaining bank debts, eliminating interest expense which has challenged our profitability. Following the completion of the transaction, we expect to continue operations with minimal, if any, bank borrowings."

"I am pleased to announce that we recently executed a Purchase Sale Agreement with a new buyer, TG OTC, LLC. We have been working with the principals of TG OTC, LLC over the past several months to solidify the key business items within the agreement, including our lease back terms. Under the agreement, EDC will retain ownership of the 17 acres of excess land following the sale, which will strengthen our balance sheet. TG OTC, LLC will have 90 days to perform their due diligence, and we expect to close the transaction by early September. The proceeds from the sale will be used to fully pay down our debts and provide ongoing operational liquidity."

EDUCATIONAL DEVELOPMENT CORPORATION
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
		Three Months Ended February 29 (28),						Twelve Months Ended February 29 (28),
		2025			2024			2025			2024
NET REVENUES		$	6,636,300		$	8,968,400		$	34,191,000		$	51,030,300
EARNINGS (LOSS) BEFORE INCOME TAXES			(1,530,000	)		(2,213,700	)		(6,855,000	)		734,500
INCOME TAXES			(184,500	)		(599,100	)		(1,591,400	)		188,100
NET EARNINGS (LOSS)		$	(1,345,500	)	$	(1,614,600	)	$	(5,263,600	)	$	546,400
EARNINGS (LOSS) PER SHARE		$	(0.16	)	$	(0.19	)	$	(0.63	)	$	0.07
DIVIDENDS PER SHARE		$	-		$	-		$	-		$	-
WEIGHTED AVERAGE NUMBER OF COMMON AND EQUIVALENT SHARES OUTSTANDING
Basic			8,583,494			8,266,032			8,348,971			8,269,971
Diluted			8,583,494			8,308,448			8,348,971			8,285,230

 

Fiscal 2025 Earnings Call

Date: Monday, May 19, 2025
Time: 3:30 PM CT (4:30 PM ET)
Dial-in number: (800) 717-1738
Conference ID: 95306

The conference call will be broadcast live and audio replays will be available following the event at www.edcpub.com/investors.

About Educational Development Corporation (EDC)

EDC began as a publishing company specializing in books for children. EDC is the owner and exclusive publisher of Kane Miller Books ("Kane Miller"); Learning Wrap-Ups, maker of educational manipulatives; and SmartLab Toys, maker of STEAM-based toys and games. EDC is also the exclusive United States MLM distributor of Usborne Publishing Limited ("Usborne") children's books. EDC-owned products are sold via 4,000 retail outlets and EDC and Usborne products are offered by independent brand partners who hold book showings through social media, book fairs with schools and public libraries, in individual homes, as well as other in-person events and internet sales.

Contact:
Educational Development Corporation
Craig White, (918) 622-4522

Cautionary Statement for the Purpose of the "Safe Harbor" Provision of the Private Securities Litigation Reform Act of 1995.

The information discussed in this Press Release includes "forward-looking statements." These forward-looking statements are identified by their use of terms and phrases such as "may," "expect," "estimate," "project," "plan," "believe," "intend," "achievable," "anticipate," "continue," "potential," "should," "could," and similar terms and phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they do involve certain assumptions, risks and uncertainties and we can give no assurance that such expectations or assumptions will be achieved. Known and unknown risks, uncertainties and other factors may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, our success in recruiting and retaining new brand partners, our ability to locate and procure desired books, our ability to ship the volume of orders that are received without creating backlogs, our ability to obtain adequate financing for working capital and capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, the COVID-19 pandemic, as well as those factors discussed in our Annual Report on Form 10-K for the year ended February 28, 2025, all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this paragraph and elsewhere in our Annual Report on Form 10-K for the year ended February 28, 2025 and speak only as of the date of this Press Release. Other than as required under the securities laws, we do not assume a duty to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, changes in expectations or otherwise.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/252634

FAQ

What were EDUC's fiscal 2025 financial results?

EDUC reported net revenues of $34.2M (down from $51.0M), with a net loss of $(5.3M) and loss per share of $(0.63), compared to previous year's gain of $0.07 per share.

How much debt and inventory reduction did Educational Development Corporation achieve in fiscal 2025?

EDC reduced vendor payables by $2.0M and bank debts by $3.1M, while decreasing inventory levels by $10.9M from $55.6M to $44.7M.

What is EDUC's plan for its headquarters building?

EDUC executed a Purchase Sale Agreement with TG OTC, LLC for their headquarters building, expected to close by September 2025. Proceeds will fully pay down remaining bank debts while retaining 17 acres of excess land.

How many PaperPie Brand Partners does EDUC have in 2025?

EDUC's average active PaperPie Brand Partners decreased to 12,300 in fiscal 2025, down from 18,300 in the previous year.

What were Educational Development Corporation's Q4 2025 results?

Q4 net revenues were $6.6M (down from $9.0M), with a net loss of $(1.3M) and loss per share of $(0.16), showing a $0.7M improvement in loss before income taxes.