Savvy Trades and Investments

[larrybaz]

EDUC positive on the day despite eliminating the dividend and lowering their revenue guidance a tad.

From the 8-K:

On February 7 2017, Educational Development Corporation (“the Company”) and MidFirst Bank (“the Lender”) entered into a Fourth Amendment Loan Agreement. This amendment granted a waiver related to the “Debt to Worth Ratio” of our Loan Agreement with which we were in violation of at the time our financial statements dated November 30, 2016 were filed. In addition, the agreement deleted the “Debt to Worth Ratio” provision and substituted a new covenant “Minimum Tangible Net Worth” calculation, along with a modification in the “Funded Debt to EBITDA Ratio” to an "Adjusted Debt to EBITDA Ratio”. Management believes these changes in covenants have a favorable impact on covenant compliance and management does not expect to be out of compliance in the foreseeable future. Finally, the amendment suspends dividends and stock buybacks.



The Company has experienced extraordinary growth the past two years. Net revenues in Fiscal Year 2015 were $33 million, Fiscal Year 2016 $64 million, and Fiscal Year ending February 2017 projected to reach $109 million. This growth has required the Company to invest in additional inventory, warehouse fulfillment equipment and software upgrades. Management believes it is in the best interest of the shareholders to suspend the dividend and focus all resources and cash requirements toward financing future growth.