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Edited Transcript of EDUC earnings conference call or presentation 15-Oct-19 8:00pm GMT

Q2 2020 Educational Development Corp Earnings Call

Tulsa Nov 16, 2019 (Thomson StreetEvents) -- Edited Transcript of Educational Development Corp earnings conference call or presentation Tuesday, October 15, 2019 at 8:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Craig M. White

Educational Development Corporation - COO

* Dan E. O’Keefe

Educational Development Corporation - Corporate Secretary & CFO

* Heather N. Cobb

Educational Development Corporation - Chief Sales & Marketing Officer

* Randall W. White

Educational Development Corporation - Chairman, President, Treasurer & CEO

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Conference Call Participants

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* Michael E. Hughes

SGF Capital Management, LP - Principal & Portfolio Manager

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and welcome to the Educational Development Second Quarter Fiscal Year 2020 Conference Call. (Operator Instructions)

I would now like to hand the conference to your speaker today, Mr. Randall White, Chief Executive Officer. Please go ahead, sir.

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [2]

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Thank you very much. Welcome to all of you on the phone here that have an interest in Educational Development Corporation. We had an interesting quarter and what I'm going to do actually introduce Heather Cobb our Chief Sales and Marketing Officer, she's on the call; Craig White, Chief Operating Officer; and Dan O'Keefe, our CFO. If you have questions for any of them specifically, you're welcome to do that also. So we have the full crew here at your disposal to ask any question you like.

And with that, while you're thinking about that, I'm going to turn it over to Dan to actually talk about our earnings release.

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Dan E. O’Keefe, Educational Development Corporation - Corporate Secretary & CFO [3]

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Thank you, Randall. For an earnings update, net revenues for the second quarter of fiscal 2020 were approximately $24.4 million, down $0.3 million or 1% from $24.7 million reported in the second quarter of fiscal 2019.

Earnings before income taxes totaled approximately $1.4 million, a decrease of $0.6 million or 30% from approximately $2 million in the second quarter of fiscal 2019. Pretax profit as a percentage of net revenues were 5.6% in the second quarter of fiscal 2020 as compared with 8.1% reported in the second quarter of fiscal 2019.

Net earnings in the second quarter of fiscal 2020 totaled approximately $1 million, a decrease of $0.5 million or 33% from approximately $1.5 million in the second quarter of fiscal 2019. Earnings per share on a fully diluted basis decreased $0.06 a share or 33% from $0.18 a share reported in the second quarter of fiscal 2019 to $0.12 reported in the second quarter of fiscal 2020.

This concludes the earnings results and I'll pass the call back to Randall.

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [4]

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Okay. Thanks, Dan.

Well, I think if you follow the stock very much, you know that the second quarter is historically the lowest net revenue quarter of the year for the UBAM division. And actually, our second quarter started a little slower than last year. However, in anticipation of that or trying to overcome that, in July, we had the 30 anniversary special.

We've actually been in the direct selling business for 30 years recognized by the Direct Selling Association as one for the last few years as one of the 100 top direct selling companies in the world. Very proud of that because it has come under some fire in the past. So in July, we thought we'd run a really nice July 30th anniversary recruiting special. We brought in over 10,000 new sales consultants in July.

Coming in July, it takes them sometimes a while to get started, sometimes not. Some of them hit the ground running. But this increase in July caused August net revenues to be up over 8% of August a year ago. Very nice to see an uptick after a couple of months of not. We like up better. And we expect this growth to continue during the fall selling season. We're very optimistic about what's happening there.

Our Publishing Division sales, which are sales to retail stores, toy stores, bookstores, they increased just under 4% over last year's quarter 2 revenues and it's primarily due to the distribution we have. And we have some excellent projections we think can happen in that division. We just have to place more emphasis on that.

We do have a new person heading that division in this past 8, 9 months and we're very enthused about the progress that she's making. It's an interesting concept. We have outside sales reps and we have inside sales reps on the phone. And the concept of it is, the outside reps go into a store and present our products. The problem is we cover a whole, a lot of territory with a guy in a car and so we supplement that with people here on the phone. And the idea is that the sales rep can go into the store in Florida and get our products in the store and then we can supplement because they can only get in there once or twice a year with the territory they have. Then we supplement with our inside sales reps. So we're very excited about our new person on that division that's working together with both of them to increase sales. And we're optimistic about that.

There's some other operations updates that we're pretty excited about. And I might let someone besides me talk a little bit about it that's a little closer to the ground on this. So I'm going to bring in Craig White, who's our Chief Operating Officer, and talk about some of the updates that we're doing that we think will have an impact on future growth. Craig?

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Craig M. White, Educational Development Corporation - COO [5]

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Thank you, Randall. Our IT department has been responsible for 2 major projects this year, the first of which is our consultant back office, which is where the salespeople can log in and get a 360-degree view of their business, be it sales, recruiting, basically anything about their business. And so this major upgrade that we're working on, number one, brings a mobile-friendly, mobile-responsive component to the back office so that they can conduct their business away from home. But secondly, one of the big things in the industry as far as IT is concerned is kind of what we say as the gamification of their business. So we'll be rolling out notifications on different things that are milestones and keystones in their business so that's another exciting part to the back office.

The second major project is our e-commerce site. And the main thing that we're doing for it is getting it to a version that is more mobile responsive and mobile-friendly. Most people that look at our statistics would say that our conversion rate of customers that complete new orders is pretty high already. We hope with it going to a mobile responsive, mobile-friendly-type environment that we increase our conversion rate even further. So it also has other features like more social media interaction and things like that. So we're very excited about those 2 projects.

On the third note, we recently entered into a partnership with PayPal to become our merchant service. And PayPal brings a lot of exciting technology possibilities so we're very excited to move forward with them and all those things that will bring.

I'd next like to pass off to Heather Cobb, our Chief Sales and Marketing Officer.

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Heather N. Cobb, Educational Development Corporation - Chief Sales & Marketing Officer [6]

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So between sales and the operations update that Craig just provided, I just wanted to add that all of these operations updates and upgrades that we're doing are really, at the end of the day, providing more options and a better experience for the end user. So for the back office, when the end user is our consultant, that it will be a better user experience. For our e-commerce site, when it comes to the customer, having the different options that PayPal provides, having it be mobile friendly, different things like that, all will be on that focus that we're looking for, which is to improve that user experience.

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [7]

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Okay. Well, let me add one more note to that. We have a pretty good rapport with our field sales force. And one night, Saturday night, about 3:30 in the morning, my phone bings me and wakes me up. And this lady says, seriously, Randall, I've got to get up and go downstairs to place an order. And her point was with PayPal you can do it on the phone. So we believe that this is going to be good for us for this to happen. Anyway, that lady thought it would.

Our second quarter is typically the softest revenue quarter, as I mentioned before and consequently because of UBAM. It's their slowest quarter. It's the summer. Schools are out and such expenses have a bigger impact on the bottom line in that quarter.

Profitability declined in the quarter compared to the previous year, a couple of reasons. We are on accrual accounting in case anybody was wondering. But still, the size we're getting, things happen to us that we try to anticipate and a couple of them are, we had big events that we spent a lot of money on.

As an example, we provide incentive travel for our field sales force. If they jump around and run fast, they can earn a contest. We never know who's going to take them because we do the very best we can to make the destination they want to go to, but we now have 35,000 thereabouts, by the way. Don't write that down because it changes every hour but approximately 35,000. And we never know if they want to go to Dominican Republic or Alaskan cruise. Well, we thought Dominican Republic was a nice place, but we offer an alternative.

We figure about $2,200 per trip. And again, give or take, that's for the airfare and the person to be on that trip. And so we budget that. And then we offer an alternative. Sometimes the family, doesn't work out for them to go on a trip or what have you and so they opt out. And we give them an opt out if they can take $2,000, basically, a comparable amount of books which they could again sell and benefit from the trip or just $1,000 cash and we never know. Well, Dominican Republic, for whatever reason, several opt outs, and we got a $350,000 refund from our trip accrual, which is our very best guess at the time.

Well, while we're on accrual accounting, that has to be taken that month. Well, that month a year ago, a $350,000 rebate from a trip for people who've earned it. Well, the next year, it's compared to an Alaskan cruise. Well, 525 people went on that, was basically $1 million. And we didn't have a rebate from that. By the way, that was all in our accrual system and it didn't show up as any blip in the month of August like it did the previous year. So these are things that happen. I hope I'm not complaining or whining about anything. It's just the way it works. I used to be an accountant, by the way, and I know how this all works.

We also got a big tax refund in the year ago in August from the state on a rebate of...

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Dan E. O’Keefe, Educational Development Corporation - Corporate Secretary & CFO [8]

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Property taxes.

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [9]

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Yes, property taxes. So these things that we really are not manipulative with. We don't know about. They come at the time when we know about them and that's where they fell. We also have many costs going up. And we're looking at things like that. And there's plenty more things to look at here to analyze our cost and try to be more profitable.

I would point out that the pretax profit of 5.6% reflects the strength of our business model even during the softest quarter of the year. While we're not just really excited by that, still we were profitable. Also, in that quarter, we used $400,000 of cash to repurchase 60,000 shares during the quarter. I think we've announced that, that we're in position of positive cash that we may from time to time buy our stock back that seems to be in the best interest of the shareholders. And we did $400,000 for that this last quarter.

We have continued our trend of declaring dividends, $0.05 during the quarter, which is equivalent to $0.10 before the split. So we're paying out the equivalent of $0.40 but now $0.20 for the year.

We expect to grow. And our practice of paying quarterly dividends, coupled with our share repurchase program, continues to make us believe that our shares are still a little bit undervalued. But don't let me guess on what's going to happen in the stock market because I didn't think this report was the best we've ever put out and the stock went up. So what do I know?

I know that this is a solid business. And while the entire direct selling industry has come under attack for unethical practices, I can assure you on this phone call, I have no hesitation to tell you there is not one thing unethical or illegal about the program we run. I tell everybody at any meeting I have, if you've got any concern about anything we are doing is not ethical or illegal, you come tell me and I'll fix it because we don't know about it.

We're a very straightforward direct selling. The reason we're in direct selling is because when we started this program, we didn't have a way to get the very best products in the world into the marketplace. And you see the results of the direct selling now that we've sold $100 million, from $25 million up to $118 million because we've been able to present the product the same way. And that's the way we think has been the most effective as trying to buy shelf space or whatever you have to do in the retail market today.

So it's been very effective for us. We have nothing to do with anybody in the industry who's paying people to sign. It's not us. We're completely honest. If anybody wants to ask a question, you just jump right in here. But we've been hurt a little bit by being painted by the same brush. And it's not us. We've been doing this for 30 years and never had a complaint.

So with all of that conversation probably more than you want to know, is there anybody who has one possible question over something I didn't cover ad nauseam?

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Dan E. O’Keefe, Educational Development Corporation - Corporate Secretary & CFO [10]

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Sorry. Jorelle, we are ready to turn the call over for questions from anybody that's on the call that would like to ask a question.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Mike Hughes with SGF Capital.

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Michael E. Hughes, SGF Capital Management, LP - Principal & Portfolio Manager [2]

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First one, in the current quarter, the November quarter and then the Feb quarter also, were there any onetime benefits in last year's expense structure that we should think about when we're kind of putting our models together like you experienced in the current quarter that made the compare difficult?

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [3]

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You're talking about the quarter coming up which will be September, October, November?

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Michael E. Hughes, SGF Capital Management, LP - Principal & Portfolio Manager [4]

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Correct.

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [5]

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Yes.

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Dan E. O’Keefe, Educational Development Corporation - Corporate Secretary & CFO [6]

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This is Dan, Mike. Yes, I'm not sure. Off the cuff we haven't really announced anything. I know that we had some benefit in the fourth quarter of last year with a rebate from one of our large suppliers that gave us -- it was, I think, $400,000 we recognized in the fourth quarter, but I don't think we had any adjustments in the third quarter that were unusual.

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Michael E. Hughes, SGF Capital Management, LP - Principal & Portfolio Manager [7]

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Okay. And how should we think about incremental operating margin, meaning for each incremental dollar in revenue, how much should fall to the bottom line prior to taxes?

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [8]

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Well, the problem with incremental profit is the UBAM is reported with the major portion of their expense is below the line in sales and commission. And so you've got -- as opposed to the retail division, it's recorded as a discount above the line. We record gross sales for a $10 book, the average discount to a store is 50%. So we show a gross sale of $10 which we don't get. We get $5 after discount and then cost of goods.

In the UBAM division, we actually get the $10 for the book and then we have expenses after that. So when you talk about incremental profit, the fastest growing and largest division is UBAM where the bigger portion of their expenses is below the line so it's not a dollar to dollar. It can look like that UBAM is the most profitable, but it's exactly the same model. On the $10 book, we -- yes, go ahead, sorry.

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Michael E. Hughes, SGF Capital Management, LP - Principal & Portfolio Manager [9]

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Right. Right. So for example, I think you're answering a different question for me which I appreciate, but let's say UBAM's quarterly revenue number was $10 million last year. I know it wasn't, but just for this example, $10 million. Let's say it went to $15 million this year. So incrementally, there would be $5 million in additional revenue. How much of that would drive to the operating income line? That's the question in the UBAM business.

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [10]

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Okay. All right. We go back to that model again that you know about. A $10 book at retail shows up in the financial statements as $10 gross sale and then you drop down to the bottom line. And basically the model is this: 25% cost of goods, 25% for this company to operate and 50% marketing cost whether it is a discount to retail store or the economic model of UBAM. So the answer I think you're looking for is, in a sale of a $10 book, we roughly have about 25% or $2.50 for us to run this business, pay the employees, have probably leftover to pay the shareholders. So incremental revenue in UBAM is more of a 25% contribution as opposed to Publishing which is a 50%. Does that confuse you?

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Michael E. Hughes, SGF Capital Management, LP - Principal & Portfolio Manager [11]

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No. I think I follow that. Appreciate that. And then the consultant count at the end of August, I think you put in the press release was 35,000. Did you say in today's call that that's the number currently as of today also?

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [12]

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No, I didn't say that. I said I hate to use that number because it changes hourly. We know when someone signs up. We don't know when they stop because they don't call and tell us, I stopped. You look back over 6 months, well, I guess they're gone and we revise that number periodically to be accurate. And I've said this many times, it's not a -- I'm trying to fool anybody. Again, we know the exact day they sign up, but if you look back in 6 months and they haven't sold anything, we take them off the active count. And it may look like something -- that's what it is. Of the 10,000, I want to put Craig on the spot here. We had 10,000 people in July, how many of them have sold in July, August or September?

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Craig M. White, Educational Development Corporation - COO [13]

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Well, I haven't looked at that since last week, but I think it's in...

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [14]

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Close enough.

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Craig M. White, Educational Development Corporation - COO [15]

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Yes. It's in the neighborhood of 7,000 have sold something and those 7,000 have sold roughly $6 million.

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [16]

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Okay. So 7,000 have sold $6 million, 3,000 sold nothing. But also remember, of the 10,000 recruits in July, back by August they recruited another 1,000 people. So that number keeps -- that's the way the business works. You have people coming and going. I've heard in the industry, you've got 1/3 coming, 1/3 going and 1/3 here. So we constantly have to keep new people because people look at this and they go, oh my gosh, it's get rich quick. No, it's not. No, it's not. You have to work. There's no free lunch here.

And some people do and they get that kit, they're so excited to get started and they just don't quite ever get started, but that's okay because we don't lose any money on the kit. And if we put 3,000 kits out there and they never sell anything, they've got a really nice box of books and someone comes over and says, oh, my gosh, these are nice books. So we don't feel like we're losing any money on the 3,000 because the 6,000 or 7,000 have already sold $6 million. I hope that helps you a little bit.

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Michael E. Hughes, SGF Capital Management, LP - Principal & Portfolio Manager [17]

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Right. I understand. Two more questions for you. You referenced, I guess, you imply the month of August, revenue was up 8% year-over-year at least in the UBAM division and then you go on to say that, that growth continued into the fall selling season. I assume you're referring to the month of September?

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [18]

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Well, we were here for the whole month of September, I'll tell you that.

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Michael E. Hughes, SGF Capital Management, LP - Principal & Portfolio Manager [19]

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Right. Right. But in the press...

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [20]

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Over here is an old woman over here who says, don't be giving out future stuff. Well, I'm telling you what I said was, we expect it to continue into the fall selling season and I wouldn't say that if it was down.

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Michael E. Hughes, SGF Capital Management, LP - Principal & Portfolio Manager [21]

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Okay. Is there any reason to believe that the early part of the quarter was an easier comparison, meaning it gets more challenging as we move into later October, November so the growth might not continue?

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [22]

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No. We monitor this on a daily, even hourly basis. We can tell you by the middle of the month generally how the month is going to come out. And you're comparing the same number of days hopefully in the month of November as you did last November, October, October. So no, it's a direct comparison and we monitor it basically hourly.

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Michael E. Hughes, SGF Capital Management, LP - Principal & Portfolio Manager [23]

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Okay. Last question for you. I think a few quarters ago Facebook made some changes that made it a little bit more challenging to hold -- I think you refer to it as online house parties. Have your consultants at this point assimilated to that change? And more importantly, do you expect any additional changes? Is there anything on the horizon with Facebook?

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Heather N. Cobb, Educational Development Corporation - Chief Sales & Marketing Officer [24]

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Great question, Mike. This is Heather. I addressed this briefly and I believe it was the last call as well. Facebook being what it is, it's hard to say whether we can anticipate any more changes or not. I would say, if you were hedging your bet, the answer is probably going to be yes. They're changing things all the time. I will tell you that the joy of our consultant base and especially our leader base is that they've faced these challenges before. And while that first one we felt a little harder, it took a little bit longer to overcome, they're quite creative when it comes to coming up with workable solutions for any of the changes that they may see on Facebook or any other platform as that may be. And so while I'm saying, yes, we do anticipate that Facebook will be changing something at some point, I will also say that I don't know that the impact will be dramatic because our field sales force is so good at overcoming those challenges.

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [25]

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It is a constant challenge.

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Michael E. Hughes, SGF Capital Management, LP - Principal & Portfolio Manager [26]

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Okay. Thank you very much. I appreciate your time.

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [27]

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I'm going to tell you something else. You didn't ask this. Our controller here in the company has been with us about 1.5 years, 2 years, probably 1.5 years, 2 years, very straightforward, honest accountant. And he decided he wanted to know more about direct selling because you hear a lot of negative stuff. So he talked his wife into signing up as a consultant. I'm not sure I even knew about at the time.

And she was very interesting. She experienced the very same thing that other people in the field do. After a couple of weeks she's I don't know if I can do this. I don't like to call my friends. I'm not a salesperson. And he's, give it a shot, come on, just don't give up so easy. And I'm paraphrasing here. And the truth is somewhere in here. And so she stayed with it and he encouraged her to find out how the business works from inside the company, which I thought was pretty insightful because I didn't encourage him to do that.

Well, at the end of the year, she walked across the stage as one of the top sales leaders in the country with over $30,000. And so I'm thinking if an accountant's wife can sell that, gosh, just do the math on 30,000 x $30,000. What is that? A lot. Just a little personal note about one of our key members in the staff that had his wife join to investigate the company, if you want to call it that, and see how it worked from the inside. Very proud of that because she had great results, but also I'd buy a book from her. Okay. Next question, do you have any more, Mike?

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Michael E. Hughes, SGF Capital Management, LP - Principal & Portfolio Manager [28]

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I don't. I appreciate your time.

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Operator [29]

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(Operator Instructions) Our next question comes from [Edward Norden], a private investor.

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Unidentified Participant, [30]

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Randall, I have a general question with all this talk about tariffs. I understand the books are made in England. Is there any additional cost involved with that, the new tariffs on the EU?

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [31]

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Well, you may know if you keep track as much as we do. We monitor daily basically through our publisher in California, Kane Miller, because we do most of our own printing there. So we're monitoring it and those tariffs that they sort of imposed, what's the difference right now?

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Dan E. O’Keefe, Educational Development Corporation - Corporate Secretary & CFO [32]

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So to kind of elaborate a little bit, Edward, of where we're at right now, our product codes have been exempt from the tariffs initially through the first couple of phases, but right now we're set for tariffs to start in mid-December. And there'll be a reprieve for a few weeks for people that have orders that are in production and things like that, but we were set for tariffs back in the first or in June as well and then we got a reprieve kind of at the last minute. So we're set for tariffs on products coming from China and bulk of our products are produced in China, about 70% of them. We're set for those tariffs to come in and to play in December.

Now having said that, Edward, we do have some mitigating factors. We do carry a large amount of inventory on hand. And this is probably going to be one of the few times that anybody says, well, it's great that you've got almost the equivalent of a whole year supply of inventory on hand. But that is -- it's a function of our business. It takes sometimes 6 to 8 months between the time that you order a product and the time that you receive it in your warehouse and can actually sell it. So because of that lead time, we do have to carry a large amount of inventory and because of that large amount of inventory, we'll have somewhat of a strategic buffer until the industry can react to it. And of course, we'll react to it similar to what the industry will do.

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [33]

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So what's the result? So I'm saying is that, not only will it affect us but it will affect everybody's competitor. So whatever tariffs we're going to have, they're going to have to. And we probably, like you said, we're probably better off because we've got a substantial inventory because we've been able to forecast our sales and have a proper amount of inventory, mostly because of the UBAM business because you've got to be in stock for that business. If you order some products from Indianapolis and it's prepaid and we don't have the book, it's a mess to get that money back to them. So we may have a lot of inventory but it meets our business model. We'll see how that all works out, but that's a good question, Ed.

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Unidentified Participant, [34]

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I have another question also. Dan, could you give me an estimate of your capital expenditures for the upcoming fiscal year?

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Dan E. O’Keefe, Educational Development Corporation - Corporate Secretary & CFO [35]

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We don't really, Ed, we don't really project or announce capital expenditures. But we can tell you, we go through a process with our Board where we put together our forecast for each year and including our capital expenditures. We've had some significant capital expenditures in the past as we've been upgrading our warehouse operation system. But with our latest upgrades, we're not forecasting any significant capital additions in the warehouse. And our IT projects, while we really have confidence in the impact it will have with the sales and with our sales force, it's not very significant when it comes to capital expenditures.

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [36]

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We're pretty much a low CapEx company. The warehouse is set. The CapEx, like you said, we probably have some software upgrades. There may be some cost in these new things we're doing here. But traditionally, we're a very low CapEx company to run our business.

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Unidentified Participant, [37]

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I see. I do have one more question for you, Randall. Are there any plans, do we have any plans in the future with the older building?

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [38]

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Yes. I'm glad you asked that because I was just over there today. What we've done is, we've leased the entire front third of that building out who have renovated it. And man, they're a whole lot better than we were over there, although I did complain because they tore my office out. But we've leased every bit of space that's available and what we didn't lease is what we are using for inventory. We are using that building, but the front half office space has been leased out to people who've done a very nice job of refurbishing it and much better than we were in it. So that we're bringing in -- what will be our annualized revenue on that?

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Dan E. O’Keefe, Educational Development Corporation - Corporate Secretary & CFO [39]

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About $140,000 annualized.

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [40]

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We'll annualize around $140,000 of revenue on a go-forward basis. Sorry, we didn't do that sooner. It just didn't seem when we were growing like crazy that's what we were concerned about. And when things slowed down, it gave us a chance. Well, let's do something with that building. And we have. And so that's, we think, that's about $150,000 of additional revenue. We'll probably find some place for it.

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Unidentified Participant, [41]

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That's great.

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Randall W. White, Educational Development Corporation - Chairman, President, Treasurer & CEO [42]

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Okay. All right. We told you everything you possibly want to know today. Is that true, no more questions?

Guys, thank you very much. I feel very bullish. I feel very strongly about where we are today. I think we've got a good management team here and I think our prospects are good. Part of our issue has been the industry itself has been attacked very significantly. But I'll tell you, I can assure you guys it has nothing to do with us. And while it's caused serious reverberations around the direct selling industry, it has nothing whatsoever to do with our business model. So with that, I wish you a happy Thanksgiving and thanks for being on the call.

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Dan E. O’Keefe, Educational Development Corporation - Corporate Secretary & CFO [43]

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Jorelle, we'll turn the call over to you.

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Operator [44]

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Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.