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EACO Corporation Reports 1st Quarter Net Sales and Net Income

·6 min read

EACO Corporation (OTCQB:EACO) today reported the results for three months ended November 30, 2020.

Net sales, net income and earnings per share were as follows for the three months ended November 30, 2020 (dollars in thousands, except per share information):

Three Months Ended November 30,

%

2020

2019

Change

(unaudited)

(unaudited)

Net sales

$53,403

$56,040

(4.7)%

Net income

$851

$1,917

(55.6)%

Basic and diluted earnings per common share

$0.17

$0.39

(56.4)%

The Company had 373 sales employees at November 30, 2020, an increase of 24 or 6.4% from the prior year quarter. The Company’s sales force is divided into Sales focus teams (SFT’s). The Company had 101 SFT’s as of November 30, 2020, an increase of 2 from the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2021. The Company believes it continues to gain market share through its local presence business model.

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, the impact of products offered by our competitors from time to time, and the impact of the Covid-19 pandemic. 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,

2020

2020*

ASSETS

Current Assets:

Cash and cash equivalents

$

6,665

$

6,079

Restricted cash

3,202

2,916

Trade accounts receivable, net

28,033

29,667

Inventory, net

39,616

39,545

Marketable securities, trading

791

1,368

Prepaid expenses and other current assets

4,388

5,094

Total current assets

82,695

84,669

Non-current Assets:

Property, equipment and leasehold improvements, net

8,650

8,848

Other assets:

Operating lease right-of-use assets

12,393

12,810

Other assets, net

1,414

1,424

Total assets

$

105,152

$

107,751

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

Trade accounts payable

$

16,334

$

16,535

Accrued expenses and other current liabilities

5,909

6,632

Liability for short sales of trading securities

3,202

2,916

Current portion of operating lease liabilities

2,585

2,653

Current portion of long-term debt

2,939

5,100

Total current liabilities

30,969

33,836

Non-current Liabilities:

Long-term debt

4,781

4,807

Operating lease liabilities

9,833

10,289

Total liabilities

45,583

48,932

Commitments and Contingencies

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

706

788

Retained earnings

46,435

45,603

Total shareholders’ equity

59,569

58,819

Total liabilities and shareholders’ equity

$

105,152

$

107,751

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2020 filed with the U.S. Securities and Exchange Commission on November 30, 2020.

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Income

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

(unaudited)

Three Months Ended
November 30,

2020

2019

Net sales

$

53,403

$

56,040

Cost of sales

38,951

40,144

Gross margin

14,452

15,896

Operating expenses:

Selling, general and administrative expenses

12,681

12,602

Income from operations

1,771

3,294

Other (expense):

Net loss on trading securities

(553)

(80)

Loss on sale of real property

(102)

Interest and other expense, net

(69)

(119)

Other (expense), net

(622)

(301)

Income before income taxes

1,149

2,993

Provision for income taxes

298

1,076

Net income

851

1,917

Cumulative preferred stock dividend

(19)

(19)

Net income attributable to common shareholders

$

832

$

1,898

Basic and diluted earnings per common share:

$

0.17

$

0.39

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,

2020

2019

Operating activities:

Net income

$

851

$

1,917

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization

377

259

Bad debt expense

3

Loss on sale of property

102

Net loss on trading securities

553

80

(Increase) decrease in:

Trade accounts receivable

1,634

2,175

Inventory

(71)

(2,472)

Prepaid expenses and other assets

716

(729)

Operating lease right-of-use assets

417

Increase (decrease) in:

Trade accounts payable

666

(2,266)

Accrued expenses and other current liabilities

(723)

(737)

Operating lease liabilities

(524)

Net cash provided by (used in) operating activities

3,896

(1,668)

Investing activities:

Additions to property, equipment, and leasehold improvements

(179)

(2,393)

Proceeds from sale of property

7,075

Sale of marketable securities, trading

24

1,388

Net change in liabilities for short sales of trading securities

286

2,167

Net cash provided by investing activities

131

8,237

Financing activities:

(Payments) borrowings on revolving credit facility, net

(2,187)

513

Borrowings on Construction Loan

1,701

Repayments on long-term debt

(5,125)

Preferred stock dividend

(19)

(19)

Bank overdraft

(867)

104

Net cash used in financing activities

(3,073)

(2,826)

Effect of foreign currency exchange rate changes on cash and cash equivalents

(82)

(212)

Net increase in cash, cash equivalents, and restricted cash

872

3,531

Cash, cash equivalents, and restricted cash - beginning of period

8,995

5,347

Cash, cash equivalents, and restricted cash - end of period

$

9,867

$

8,878

Supplemental disclosures of cash flow information:

Cash paid for interest

$

48

$

122

Cash paid for income taxes

$

$

View source version on businesswire.com: https://www.businesswire.com/news/home/20210106005809/en/

Contacts

Marta Arciniega
EACO Corporation
(714) 876-2490