EDUCATIONAL DEVELOPMENT CORP Q4 FY2025 earnings call

• Decreased sales in the fourth quarter influenced by fewer active PaperPie Brand Partners and external pressures like inflation.
• Increased discounts to boost sales and turn excess inventory into cash for debt repayment, a short-term strategy.
• Book Friday promotion on e-commerce platform with strong engagement.
• Successful launch of shipping subscription program The Pass with two tiers and early adoption success.
• Concluded StoryScape travel incentive and launched A Piece of the Story sales incentive.
• 2025 StoryMakers Summit with smaller, intimate gatherings for brand partners.
• Progress on sale leaseback of Hilti Complex, executed purchase sale agreement with new buyer, expect completion in next 120 days.

For the fiscal fourth quarter compared to the prior year fourth quarter, net revenues were $6.6 million vs $9 million. Average active PaperPie Brand Partners were 9,400 vs 15,500. For fiscal 2025 year-to-date, net revenues totaled $34.2 million vs $51 million, and average active PaperPie Brand Partners were 12,300 vs 18,300. Loss before income taxes for the fourth quarter was $1.5 million vs $2.2 million prior year, and for fiscal 2025 year-to-date, it was $6.9 million vs $700,000 income prior year.

• Expect to complete the sale of the Hilti Complex within the next 120 days.
• Proceeds from the sale will fully pay back the bank debt.
• Plan to start purchasing new titles once the building is sold and operate on own cash flow.
• Aim to be conservative in rebuilding the business, reducing interest expense and working towards profitability.

• Fluctuations in consumer behavior due to inflation and shifting discretionary spending.
• Difficulty in acquiring new brand partners.
• Impact of increased discounting on gross margin.
• Uncertainty around the timing and terms of the Hilti Complex sale.

Q: Can you disclose who the buyer of the Hilti Complex is and the agreed price?

A: Choosing not to disclose buyer at this time, price is $35,150,000 as in the press release.

Q: Why the large quarter-over-quarter drop in average active brand partners?

A: Due to seasonality and a significant recruiting special last summer causing those who joined to drop off.

Q: Extent of discounts being forced vs choice?

A: A combination, choosing to discount to reduce inventory and generate cash, demand for product still exists.

Q: Picture of the company in 1.5-2 years?

A: Will use excess funds from building sale to purchase new titles, aim to be profitable, reduce interest expense, and operate on own cash flow.

Q: Investor perception of the company?

A: Stock has held steady, investors understand the need to sell the building and get back to normal operations.

Q: Plan for undeveloped land from the Hilti Complex sale?

A: Multiple options like selling later or using for warehouse if business grows, currently better to hold for maximizing value.