EACO Corporation Reports Record Q1 Net Sales

ANAHEIM, Calif.--()--EACO Corporation (OTCQB:EACO) today reported the results for its quarter ended November 30, 2016.

Net sales, net income and earnings per share were as follows for the three months ended November 30, 2016 (dollars in thousands, except per share information):

  Three Months Ended November 30,  

%

2016   2015

Change

(unaudited)
 
Net sales $37,207 $34,293 8.5%
 
Net income $661 $500 32.2%
 
Basic and diluted earnings per common share $0.13 $0.10 30.0%

The Company had 314 sales employees at November 30, 2016, a decrease of 6 from the prior year. The Company’s sales force is divided into Sales focus teams (SFTs). The company had 94 SFTs as of November 30, 2016, a decrease of 2 from the prior year. Management anticipates growth in both our headcount and SFTs in fiscal year 2017. The Company continues to gain market share through its local presence business model.

EACO Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share information)

(unaudited)

 
  November 30,   August 31,
2016 2016*
ASSETS
Current Assets:
Cash and cash equivalents $ 5,088 $ 4,878
Restricted cash, current 1,864 1,425
Trade accounts receivable, net 18,620 18,797
Inventory, net 23,356 21,532
Marketable securities, trading 204 540
Prepaid expenses and other current assets   1,230   1,135
Total current assets 50,362 48,307
Non-current Assets:
Equipment and leasehold improvements, net 1,811 1,395
Other assets   885   890
Total assets $ 53,058 $ 50,592
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable $ 13,402 $ 12,727
Accrued expenses and other current liabilities 2,290 5,600
Liability for short sales of trading securities   1,864   1,425
Total current liabilities 17,556 19,752
Non-current Liabilities:
Long-term debt   4,079   -
Total liabilities 21,635 19,752
Shareholders’ Equity:
Convertible preferred stock, $0.01 par value per share; 10,000,000 shares authorized; 36,000 shares outstanding (liquidation value $900) 1 1
Common stock, $0.01 par value per share; 8,000,000 shares authorized; 4,861,590 shares outstanding 49 49
Additional paid-in capital 12,378 12,378
Accumulated other comprehensive income 671 730
Retained earnings   18,324   17,682
Total shareholders’ equity   31,423   30,840
Total liabilities and shareholders’ equity $ 53,058 $ 50,592
 

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2016 filed with the U.S. Securities and Exchange Commission on November 23, 2016.

 
EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Income

(in thousands, except for share and per share information)

(unaudited)

 
  Three Months Ended
November 30,
  2016       2015  
Revenues $ 37,207   $ 34,293
Cost of revenues   26,651       24,324  
Gross margin   10,556       9,969  
Operating expenses:
Selling, general and administrative expenses   9,387       9,134  
Income from operations 1,169 835
 
Other (expense) income:
Net loss on trading securities (102 ) (9 )
Interest expense, net   (4 )     (6 )
Total other (expense) income   (106 )     (15 )
Income before income taxes 1,063 820
Provision for income taxes   402       320  
Net income 661 500
Cumulative preferred stock dividend   (19 )     (19 )
Net income attributable to common shareholders $ 642 $ 481
Basic and diluted earnings per share: $ 0.13 $ 0.10

Basic and diluted weighted average common shares outstanding

4,861,590 4,861,590
 
EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 
  Three Months Ended
November 30,
  2016       2015  
Operating activities:
Net income $ 661 $ 500
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization 169 144
Bad debt expense 4 8
Change in inventory reserve 135 30
Net loss on investments 102 9
(Increase) decrease in:
Trade accounts receivable 173 (1,543 )
Inventory (1,959 ) (248 )
Prepaid expenses and other assets (90 ) (392 )
Increase (decrease) in:
Trade accounts payable 190 1,270
Accrued expenses and other current liabilities   (3,310 )   (2,345 )
Net cash used in operating activities   (3,925 )   (2,567 )
Investing activities:
Purchase of property and equipment (585 ) (50 )
Sale (Purchase) of marketable securities, trading 234 (831 )
Net change in securities sold short 439 370
Change in restricted cash   (439 )   (366 )
Net cash used in investing activities   (351 )   (877 )
Financing activities:
Borrowings on revolving credit facility 4,079 961
Preferred dividend (19 ) (19 )
Bank overdraft 485 1,697
Payments on long-term debt   -     (2 )
Net cash provided by financing activities   4,545     2,637  
Effect of foreign currency exchange rate changes on cash and cash equivalents   (59 )   (1 )
Net increase (decrease) in cash and cash equivalents 210 (808 )
Cash and cash equivalents - beginning of period   4,878     5,269  
Cash and cash equivalents - end of period $ 5,088   $ 4,461  
Supplemental disclosures of cash flow information:
Cash paid for income taxes $ 2,627   $ 2,194  

Contacts

EACO Corporation
Marta Arciniega
(714) 876-2490

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