Jan 4, 2018   SOURCE: BusinessWire

EACO Corporation Reports Record 1st Quarter Net Sales & Net Income

EACO Corporation (OTCQB:EACO) today reported the results for its quarter ended November 30, 2017.

Net sales, net income and earnings per share were as follows for the three months ended November 30, 2017 (dollars in thousands, except per share information):

           
Three Months Ended November 30, %
2017       2016 Change
(unaudited)
 
Net sales $ 42,171 $ 37,207 13.3 %
 
Net income $ 1,195 $ 661 80.8 %
 
Basic and diluted earnings per common share $ 0.24 $ 0.13 84.6 %
 

The Company had 328 sales employees as of November 30, 2017, an increase of 12 from the prior year quarter. The Company’s sales force is divided into sales focus teams (SFT). The Company had 96 SFT as of November 30,2017, an increase of 2 from the prior year quarter. Management anticipates continued growth in both our head count and SFT in fiscal year 2018. The Company believes it continues to increase market share through its local presence business model, increasing net sales by 13% and bookings by 25% 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)
 
      November 30,       August 31,
2017 2017*
ASSETS
Current Assets:
Cash and cash equivalents $ 3,604 $ 3,870
Restricted cash, current 594 707
Trade accounts receivable, net 22,227 21,339
Inventory, net 26,764 26,791
Marketable securities, trading 2,146 1,596
Prepaid expenses and other current assets   2,010   1,354
Total current assets 57,345 55,657
Non-current Assets:
Property, equipment and leasehold improvements, net 9,854 9,256
Other assets   949   867
Total assets $ 68,148 $ 65,780
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable $ 14,050 $ 13,364
Accrued expenses and other current liabilities 4,692 4,545
Liability for short sales of trading securities 594 707
Current portion of long-term debt   142   139
Total current liabilities 19,478 18,755
Non-current Liabilities:
Long-term debt   12,514   12,193
Total liabilities 31,992 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 895 747
Retained earnings   22,833   21,657
Total shareholders’ equity   36,156   34,832
Total liabilities and shareholders’ equity $ 68,148 $ 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
November 30,
2017       2016
Revenues $ 42,171 $ 37,207
Cost of revenues   29,992     26,651  
Gross margin   12,179     10,556  
Operating expenses:
Selling, general and administrative expenses   10,340     9,387  
Income from operations 1,839 1,169
 
Other (expense) income:
Net gain (loss) on trading securities 203 (102 )
Interest expense, net   (101 )   (4 )
Total other income (expense)   102     (106 )
Income before income taxes 1,941 1,063
Provision for income taxes   746     402  
Net income 1,195 661
Cumulative preferred stock dividend   (19 )   (19 )
Net income attributable to common shareholders $ 1,176 $ 642
Basic and diluted earnings per share: $ 0.24 $ 0.13

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,
2017       2016
Operating activities:
Net income $ 1,195 $ 661
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization 251 169
Bad debt expense 4 4
Change in inventory reserve 31 135
Net (gain) loss on trading securities (203 ) 102
(Increase) decrease in:
Trade accounts receivable (892 ) 173
Inventory (4 ) (1,959 )
Prepaid expenses and other assets (738 ) (90 )
Increase (decrease) in:
Trade accounts payable 322 190
Accrued expenses and other current liabilities   147     (3,310 )
Net cash used in operating activities   113     (3,925 )
Investing activities:
Purchase of property, equipment and leasehold improvements (849 ) (585 )
(Purchase) sale of marketable securities, trading (347 ) 234
Net change in securities sold short (113 ) 439
Change in restricted cash   113     (439 )
Net cash used in investing activities   (1,196 )   (351 )
Financing activities:
Borrowings on revolving credit facility 359 4,079
Preferred dividend (19 ) (19 )
Bank overdraft 364 485
Payments on long-term debt   (35 )   -  
Net cash provided by financing activities   669     4,545  
Effect of foreign currency exchange rate changes on cash and cash equivalents   148     (59 )
Net (decrease) increase in cash and cash equivalents (266 ) 210
Cash and cash equivalents - beginning of period   3,870     4,878  
Cash and cash equivalents - end of period $ 3,604   $ 5,088  
Supplemental disclosures of cash flow information:
Cash paid for income taxes $ -   $ 2,627