EACO Corporation Reports All Time Record Quarter Net Sales

ANAHEIM, Calif.--()--EACO Corporation (OTCQB:EACO) today reported the results for its quarter ended May 31, 2018, reporting an increase in the Company’s net income by 76% over the prior year quarter.

Net sales, net income and earnings per share were as follows for the three months ended May 31, 2018 (dollars in thousands, except per share information):

 
  Three Months Ended  
May 31,

%

2018   2017

Change

(unaudited)
 
Net sales $51,723 $40,282 28.4%
 
Net income $2,253 $1,278 76.3%
 
Basic and diluted earnings per common share $0.46 $0.26 76.9%
 

The Company had 328 sales employees at May 31, 2018, an increase of 8 from the prior year quarter. The Company’s sales force is divided into Sales Focus Teams (SFTs). The Company had 96 SFTs as of May 31, 2018, an increase of 2 from the prior year quarter. Management anticipates continued growth in both our headcount and SFTs in fiscal year 2018 and through fiscal year 2019. The Company believes it continues to gain market share through its local presence business model, increasing net sales by 28.4% and bookings by 30% when comparing to the prior year quarter.

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 headcount expansion and 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,
2018

2017*

ASSETS
Current Assets:
Cash and cash equivalents $ 2,977 $ 3,870
Restricted cash, current 823 707
Trade accounts receivable, net 24,347 21,339
Inventory, net 29,471 26,487
Marketable securities, trading 2,678 1,596
Prepaid expenses and other current assets   1,858   452
Total current assets 62,154 54,451
Non-current Assets:
Property, equipment and leasehold improvements, net 9,927 9,256
Other assets   1,898   2,073
Total assets $ 73,979 $ 65,780
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable $ 16,614 $ 13,364
Accrued expenses and other current liabilities 4,822 4,545
Liability for short sales of trading securities 823 707
Current portion of long-term debt   145   139
Total current liabilities 22,404 18,755
Non-current Liabilities:
Long-term debt 11,822 12,193
Other non-current liabilities   51  
Total liabilities 34,277 30,948
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 907 747
Retained earnings   26,367   21,657
Total shareholders’ equity   39,702   34,832
Total liabilities and shareholders’ equity $ 73,979 $ 65,780
 

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2017 filed with the U.S. Securities and Exchange Commission on November 22, 2017.

 
 

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Income
(in thousands, except for share and per share information)
(Unaudited)
 
  Three Months Ended   Nine Months Ended
May 31, May 31,
  2018       2017     2018       2017  
Revenues $ 51,723   $ 40,282 $ 138,935   $ 114,773
Cost of revenues   36,647       28,759     99,231       82,123  
Gross margin   15,076       11,523     39,704       32,650  
Operating expenses:
Selling, general and administrative expenses   11,643       9,660     32,460       28,356  
Income from operations 3,433 1,863 7,244 4,294
 
Other (expense) income:
Net gain (loss) on trading securities (65 ) 303 186 177
Interest and other income (expense)   (122 )     (40 )   (353 )     (76 )
Total other (expense) income   (187 )     263     (167 )     101  
Income before income taxes 3,246 2,126 7,077 4,395
Provision for income taxes   993       848     2,310       1,709  
Net income 2,253 1,278 4,767 2,686
Cumulative preferred stock dividend   (19 )     (19 )   (57 )     (57 )

Net income attributable to common shareholders

$ 2,234 $ 1,259 $ 4,710 $ 2,629
Basic and diluted earnings per common share: $ 0.46 $ 0.26 $ 0.97 $ 0.54

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,
  2018       2017  
Operating activities:
Net income $ 4,767 $ 2,686
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 752 550
Bad debt expense 70 61
Change in inventory reserve 157 7
Net (gain) loss on trading securities (186 ) 177
(Increase) decrease in:
Trade accounts receivable (3,078 ) (413 )
Inventory (3,141 ) (4,496 )
Prepaid expenses and other assets (1,231 ) 52
Increase (decrease) in:
Trade accounts payable 3,084 (981 )
Accrued expenses and other current liabilities   328     (1,986 )
Net cash provided by (used in) operating activities   1,522     (4,343 )
Investing activities:
Purchase of property, equipment and leasehold improvements (1,423 ) (8,306 )
(Purchase) sale of marketable securities, trading (896 ) 250
Net change in securities sold short 116 257
Change in restricted cash   (116 )   (257 )
Net cash used in investing activities   (2,319 )   (8,056 )
Financing activities:
(Payments) borrowings on revolving credit facility (260 ) 6,515
Preferred dividend (57 ) (57 )
Bank overdraft 166 1,073
Borrowings of long-term debt - 5,400
Payments on long-term debt   (105 )   -  
Net cash (used in) provided by financing activities   (256 )   12,931  
Effect of foreign currency exchange rate changes on cash and cash equivalents   160     (3 )
Net (decrease) increase in cash and cash equivalents (893 ) 529
Cash and cash equivalents - beginning of period   3,870     4,878  
Cash and cash equivalents - end of period $ 2,977   $ 5,407  
Supplemental disclosures of cash flow information:
Cash paid for income taxes $ 2,241   $ 2,833  
Cash paid for interest $ 375   $ 75  
 

Contacts

Marta Arciniega
EACO Corporation
(714) 876-2490

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