Educational Development (EDUC) investor relations material

Executive summary

• Net revenues for the quarter were $7.0 million, down from $11.1 million year-over-year, with net income of $7.8 million driven by a $12.2 million gain from the Hilti Complex sale.

• The sale of the Hilti Complex eliminated all bank debt, removed operational restrictions, and improved annual cash flow by $1 million, positioning for future growth.

• Launched Gathered Goods, a new in-house fundraising program with higher margins and digital reach, and implemented an AI task force for operational improvements.

• Focused on rebuilding brand partner counts, refreshing marketing for Gen Z, and leveraging AI for operational efficiency.

• Both PaperPie and Publishing segments experienced significant revenue declines due to lower sales volumes, fewer active brand partners, and ongoing economic pressures.

Financial highlights

• Q3 net revenues were $7.0 million (down from $11.1 million year-over-year); average active brand partners fell to 5,100 from 12,400.

• Q3 net earnings were $7.8 million (EPS $0.91) versus an $800,000 loss (EPS -$0.10) last year, driven by a $12.2 million gain from the building sale; excluding this, pre-tax loss was $1.6 million.

• Year-to-date net revenues were $18.7 million, down from $27.6 million; net earnings $5.4 million (EPS $0.63) versus a $3.9 million loss (EPS -$0.47) last year.

• Inventory reduced from $44.7 million to $39.1 million, generating $5.6 million in cash flow.

• Ended the quarter with $3.4 million cash, $800,000 receivables, $2.0 million accounts payable, and zero bank debt.

Outlook and guidance

• Expecting new product arrivals in late spring and early summer to energize sales and brand partners.

• Management plans to continue reducing inventory and focus on rebuilding the PaperPie Brand Partner base to pre-pandemic levels.

• Exploring new banking relationships, with plans to secure a credit line in the coming months.

• Improved liquidity expected to support operations into fiscal 2027.