Educational Development Stock Earnings Reports

EDC reported a weak fiscal Q3 driven by lower revenues and deliberate discounting to convert excess inventory to cash. Q3 net revenue was $11.1M (down from $16.9M a year ago) with a net loss of $0.8M (loss per share $0.10); year-to-date net revenue was $27.6M with a $3.9M net loss. Management emphasized that increased discounting is a temporary tactic to reduce roughly $30M of excess inventory and pay down bank borrowings; inventory decreased by $8.8M during the period to $46.8M. Borrowings on the working capital line totaled $4.3M with $1.2M availability, and the company has an amendment extending the line to April 4 to allow time for a planned sale of its Hilti Complex headquarters. Management expects proceeds from the building sale (asset purchase terms consistent with the prior LOI) to fully repay bank debt, leave EDC with no debt, and improve cash flow and margins once normal pricing/promotion resumes. Operational initiatives include a launched shipping subscription, expanded Black Friday “Book Friday” promotion, regional StoryMaker Summits, an online fundraiser rollout, a potential brand-ambassador/affiliate channel, and continued focus on retail SmartLab Toys. The near-term investor watch items are the Hilti Complex closing timeline (initial due diligence expires Jan 19 with a possible 30-day extension, target close by early March), inventory monetization progress, and reacceleration of product purchasing and brand-partner recruitment after debt is repaid.