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TULSA, Oklahoma - Educational Development Corporation (NASDAQ: EDUC), a children’s book publisher and distributor, has entered into a real estate contract for the sale of its headquarters and distribution warehouse, known as the Hilti Complex, for $38.25 million. The transaction, dated September 19, 2024, involves the sale to Partner Holdings, excluding an adjacent land parcel retained by EDC.
The Hilti Complex, encompassing multiple buildings with a total of 402,000 square feet on 34 acres, will change ownership while EDC continues to operate from the space under a new lease agreement. The company will pay off existing loans with the proceeds from the sale, which is expected to improve its financial performance and cash flow.
EDC will assign the current 15-year tenant lease of approximately 183,800 square feet to Partner Holdings at closing. EDC will then lease back approximately 218,200 square feet of space. The company also has a recently announced lease/sub-lease with Crusoe Energy System for roughly half of its space under a 5-year term.
The initial lease rate for EDC’s occupied space is set at $8.52 per square foot, featuring 2.5% annual increases starting in the second year, and includes triple-net terms. The seller is responsible for utilities, insurance, property taxes, and maintenance, with the exception of roof and structural repairs, which fall to the buyer.
The deal allows Partner Holdings a right of first refusal on any future sale of the remaining 17-acre undeveloped land parcel. The closing of the contract is set to take place 30 days following a 75-day due diligence period that commenced on September 19.
EDC, established as a publisher focusing on children's books, operates under various brands, including Kane Miller Books, Learning Wrap-Ups, and SmartLab Toys. It is also the exclusive multi-level marketing distributor of Usborne Publishing's children's books in the United States.
This sale is in line with EDC's strategy to reduce borrowings and enhance shareholder value. The company anticipates strong operational cash flow in the coming years as it converts excess inventory into cash. The information regarding the sale is based on a press release statement from Educational Development Corporation.
In other recent news, Educational Development Corporation (EDC) reported a strategic shift towards prioritizing cash flow over profitability in its fiscal year 2024 earnings. Despite a net loss in the fourth quarter, the company's full fiscal year net earnings amounted to $500,000, an improvement from the previous year's loss. The fourth quarter net revenues were reported at $9 million, down from $15 million, with a reduced net loss of $1.6 million compared to $1.9 million in the same period last year.
In another significant development, EDC terminated an agreement to sell its Tulsa headquarters and distribution warehouse to Rockford Holdings. The decision was made after Rockford failed to meet the terms of the contract, leading to a mutual termination to protect the interests of the company's stakeholders. Following this, EDC leased a significant portion of the office and warehouse space to Crusoe Energy Systems, which now occupies about 25% of the complex.
In terms of board changes, EDC recently reelected Craig M. White and Dr. Kara Gae Neal as Class II Directors for another three-year term and ratified the appointment of HoganTaylor LLP as the company's independent public accounting firm for the upcoming fiscal year. Additionally, Dr. Amy Emerson (NYSE:EMR), known for her advocacy for youth literacy programs, was appointed to the board. These are among the recent developments in the company's operations.
InvestingPro Insights
As Educational Development Corporation (NASDAQ: EDUC) navigates through its real estate transaction, the company's financial metrics present a mixed picture. According to InvestingPro data, EDUC's market capitalization stands at a modest $17.34 million, reflecting a niche position in the market. Despite a challenging revenue environment with a decline of over 41% in the last twelve months as of Q1 2025, the company maintains impressive gross profit margins of 64.67%, indicating efficient cost management relative to its sales.
Investors looking for value may find EDUC's low Price/Book multiple of 0.39 particularly noteworthy, as it suggests that the stock is trading below the company's book value, which can be an indicator of potential undervaluation. However, it's important to note that EDUC is trading at a high earnings multiple, with a P/E ratio of 118.88, which could signal that the stock is relatively expensive when compared to its earnings.
Adding to the financial picture, EDUC has been profitable over the last twelve months, which is a positive sign for potential investors. However, the company does not pay a dividend, focusing instead on reinvesting earnings back into the business or using them for other corporate purposes. For those seeking additional insights, there are 7 more InvestingPro Tips available, which can provide a deeper understanding of EDUC's financial health and potential investment value.
For investors and analysts considering EDUC's stock, the InvestingPro platform offers a fair value estimate of $2.18, slightly above the previous close price of $2.00. This fair value assessment, combined with the current financial data, could help in making informed decisions regarding the company's stock. To explore further, interested parties can visit InvestingPro for comprehensive analysis and additional tips.
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