EACO Corporation Reports Record Q3 Net Sales

ANAHEIM, Calif.--()--EACO Corporation (OTCQB:EACO) today reported the results for its quarter ended May 31, 2017.

Net sales, net income and earnings per share were as follows for the three months ended May 31, 2017 (dollars in thousands, except per share information):

  Three Months Ended May 31,   %
2017   2016 Change
(unaudited)
Net sales $ 40,282 $ 39,875 1.0 %
 
Net income $ 1,278 $ 1,619 (21.1 )%
 
Basic and diluted earnings per common share $ 0.26 $ 0.33 (21.2 )%
 

The Company had 320 sales employees at May 31, 2017, an increase of 3 from the prior year. The Company’s sales force is divided into Sales focus teams (SFT’s). The company had 94 SFT’s as of May 31, 2017 an increase of 3 from the prior year. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2017. The Company believes it continues to gain market share through its local presence business model, increasing revenue by 1.0% and bookings by 5% when comparing to the prior year period.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

Any statements set forth in this news release that are not entirely historical and factual in nature, including without limitation, statements related to our future growth are forward-looking statements. These forward-looking statements are based on our current expectations and are inherently subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. The potential risks and uncertainties include, but are not limited to, our ability to hire and retain additional qualified employees, our ability to open additional sales offices, and to gain market acceptance for our products, the pricing and availability of our products, the success of our sales and marketing programs, and the impact of products offered by our competitors from time to time. In addition to these factors and any other factors mentioned elsewhere in this news release, the reader should refer as well to the factors, uncertainties or risks identified in EACO’s most recent Form 10-K and all subsequent Form 10-Q reports filed by us with the SEC. The forward-looking statements included in this release speak only as of the date hereof, and EACO does not undertake any obligation to update these forward-looking statements to reflect subsequent events or circumstances.

   
EACO Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share information)

(unaudited)

 
May 31, August 31,
2017 2016*
ASSETS
Current Assets:
Cash and cash equivalents $ 5,407 $ 4,878
Restricted cash, current 1,682 1,425
Trade accounts receivable, net 19,149 18,797
Inventory, net 26,021 21,532
Marketable securities, trading 113 540
Prepaid expenses and other current assets 1,077 1,135
Total current assets 53,449 48,307
Non-current Assets:
Property, equipment and leasehold improvements, net 9,151 1,395
Other assets 896 890
Total assets $ 63,496 $ 50,592
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable $ 12,819 $ 12,727
Accrued expenses and other current liabilities 3,614 5,600
Liability for short sales of trading securities 1,682 1,425
Current portion of long-term debt 139 -
Total current liabilities 18,254 19,752
Non-current Liabilities:
Long-term debt 11,776 -
Total liabilities 30,030 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 727 730
Retained earnings 20,311 17,682
Total shareholders’ equity 33,466 30,840
Total liabilities and shareholders’ equity $ 63,496 $ 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

May 31,

Nine Months Ended

May 31,

2017       2016   2017       2016  
Revenues $ 40,282 $ 39,875 $ 114,773 $ 108,757
Cost of revenues 28,759     28,133   82,123     76,926  
Gross margin 11,523     11,742   32,650     31,831  
Operating expenses:
Selling, general and administrative expenses 9,660     9,301   28,356     27,522  
Income from operations 1,863 2,441 4,294 4,309
 
Other (expense) income:
Net gain on trading securities 303 24 177 195
Interest and other (expense) (40 )   (10 ) (76 )   (14 )
Total other (expense) income 263     14   101     181  
Income before income taxes 2,126 2,455 4,395 4,490
Provision for income taxes 848     836   1,709     1,640  
Net income 1,278 1,619 2,686 2,850
Cumulative preferred stock dividend (19 )   (19 ) (57 )   (57 )
Net income attributable to common shareholders $ 1,259   $ 1,600   $ 2,629   $ 2,793  
 
Basic and diluted earnings per share: $ 0.26 $ 0.33 $ 0.54 $ 0.57
Basic and diluted weighted average common
shares outstanding
4,861,590 4,861,590 4,861,590 4,861,590
 
 

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
Nine Months Ended

May 31,

2017     2016  
Operating activities:
Net income $ 2,686 $ 2,850
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization 550 433
Bad debt expense 61 39
Change in inventory reserve 7 178
Net gain on investments 177 (195 )
(Increase) decrease in:
Trade accounts receivable (413 ) (3,829 )
Inventory (4,496 ) (2,997 )
Prepaid expenses and other assets 52 (151 )
Increase (decrease) in:
Trade accounts payable (981 ) 2,138
Accrued expenses and other current liabilities   (1,986 )   (745 )
Net cash used in operating activities   (4,343 )   (2,279 )
Investing activities:
Purchase of property and equipment (8,306 ) (239 )
Sale of marketable securities, trading 250 12
Net change in securities sold short 257 (279 )
Change in restricted cash   (257 )   279  
Net cash used in investing activities   (8,056 )   (227 )
Financing activities:
Borrowings on revolving credit facility 6,515 1,352
Preferred dividend (57 ) (57 )
Bank overdraft 1,073 1,248
Borrowings on long-term debt   5,400     -  
Net cash provided by financing activities   12,931     2,543  
Effect of foreign currency exchange rate changes on cash and cash equivalents   (3 )   33  
Net increase in cash and cash equivalents 529 70
Cash and cash equivalents - beginning of period   4,878     5,269  
Cash and cash equivalents - end of period $ 5,407   $ 5,339  
Supplemental disclosures of cash flow information:
Cash paid for interest $ 75   $ 8  
Cash paid for income taxes $ 2,833   $ 2,196  
 

Contacts

EACO Corporation
Marta Arciniega
(714) 876-2490

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