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EACO Corporation Reports Record Quarterly Net Sales and Record 2nd Quarter Net Income

EACO Corporation (OTCMKTS:EACO) today reported the results for its quarter ended February 28, 2022.

Net sales, net income and earnings per share were as follows for the three months ended February 28, 2022 (dollars in thousands, except per share information):

 

Three Months Ended

February 28,

 

 

2022

2021

% Change

 

(unaudited)

(unaudited)

 

 

 

 

Net sales

$66,587

$55,751

19.4%

 

 

 

 

Net income

$3,407

$1,394

144.4%

 

 

 

 

Basic and diluted earnings per common share

$0.70

$0.28

150.0%

The Company had 338 sales employees at February 28, 2022, a decrease of 5 employees or 1.5%, from the prior year quarter. The Company’s sales force is divided into sales focus teams (SFT’s). The Company had 102 SFT’s as of February 28, 2022, two more than the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2022. 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)

 

 

February 28,

 

August 31,

2022

 

2021*

ASSETS

 

 

 

 

 

Current Assets:

 

 

Cash and cash equivalents

$

5,622

 

$

4,455

Restricted cash

 

10

 

10

Trade accounts receivable, net

 

36,861

 

 

33,939

Inventory, net

 

44,724

 

40,448

Marketable securities, trading

 

4,598

 

 

3,741

Prepaid expenses and other current assets

 

8,416

 

6,780

Total current assets

 

100,231

 

 

89,363

Non-current Assets:

 

 

 

 

 

Property, equipment and leasehold improvements, net

 

8,162

 

8,269

Operating lease right-of-use assets

 

11,030

 

 

11,084

Other assets, net

 

1,407

 

 

1,669

Total assets

$

120,830

 

$

110,385

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current Liabilities:

 

 

Trade accounts payable

$

19,756

 

$

16,413

Accrued expenses and other current liabilities

 

8,440

 

10,964

Current portion of operating lease liabilities

 

3,385

 

 

3,096

Current portion of long-term debt

 

119

 

 

113

Total current liabilities

 

31,700

 

 

30,586

Non-current Liabilities:

 

 

Long-term debt

 

4,425

 

4,585

Operating lease liabilities

 

7,784

 

 

8,092

Total liabilities

 

41,737

 

 

43,263

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

 

325

 

780

Retained earnings

 

64,069

 

 

53,914

Total shareholders’ equity

 

76,822

 

67,122

Total liabilities and shareholders’ equity

$

120,830

 

$

110,385

*

 

Derived from the Company’s audited financial statements included in its Form 10-K for the year

ended August 31, 2021 filed with the U.S. Securities and Exchange Commission on July 6, 2022.

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Income

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

(unaudited)

 

 

 

 

Three Months Ended

 

Six Months Ended

February 28,

 

February 28,

 

2022

 

2021

 

2022

 

2021

Net sales

$

66,587

 

 

$

55,751

 

 

$

130,409

 

 

$

109,154

 

Cost of sales

 

48,462

 

 

 

40,727

 

 

 

94,106

 

 

 

79,678

 

Gross margin

 

18,125

 

 

 

15,024

 

 

 

36,303

 

 

 

29,476

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

13,439

 

 

 

12,540

 

 

 

22,334

 

 

 

25,221

 

Income from operations

 

4,686

 

 

 

2,484

 

 

 

13,969

 

 

 

4,255

 

 

   

 

 

Other income (expense):

 

   

 

 

Net (loss) gain on trading securities

 

(22

)

 

 

(506

)

 

 

(78

)

 

 

(1,059

)

Interest and other (expense)

 

(53

)

 

 

(60

)

 

 

(105

)

 

 

(129

)

Other (expense) income, net

 

(75

)

 

 

(566

)

 

 

(183

)

 

 

(1,188

)

Income before income taxes

 

4,611

 

 

1,918

 

 

 

13,786

 

 

3,067

 

Provision for income taxes

 

1,204

 

 

 

524

 

 

 

3,593

 

 

 

822

 

Net income

 

3,407

 

 

1,394

 

 

 

10,193

 

 

2,245

 

Cumulative preferred stock dividend

 

(19

)

 

 

(19

)

 

 

(38

)

 

 

(38

)

Net income attributable to common shareholders

$

3,388

 

 

$

1,375

 

 

$

10,155

 

 

$

2,207

 

Basic and diluted earnings per share:

$

0.70

 

 

$

0.28

 

 

$

2.09

 

 

$

0.45

 

Basic weighted average common

shares outstanding

 

4,861,590

 

 

4,861,590

 

 

 

4,861,590

 

 

4,861,590

 

Diluted weighted average common

shares outstanding

 

4,901,590

 

 

 

4,901,590

 

 

 

4,901,590

 

 

 

4,901,590

 

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

Six Months Ended

February 28,

2022

2021

Operating activities:

 

 

Net income

$

10,193

 

$

2,245

 

Adjustments to reconcile net income to net cash provided by

(used in) operating activities:

 

 

Depreciation and amortization

751

 

751

 

Bad debt expense

26

 

 

 

55

 

Loss on sale of real property

 

 

 

 

 

Net unrealized loss on trading securities

78

 

1,059

 

Increase (decrease) in cash from changes in:

 

 

Trade accounts receivable

(2,958

)

866

 

Inventory

(4,276

)

 

 

(635

)

Prepaid expenses and other assets

(1,374

)

1,298

 

Operating lease right-of-use assets

 

54

 

 

 

847

 

Trade accounts payable

4,404

 

561

 

Accrued expenses and other current liabilities

 

(2,524

)

 

 

(2,579

)

Operating lease liabilities

(19

)

 

 

(928

)

Net cash provided by operating activities

4,355

 

 

 

3,540

 

Investing activities:

Purchase of property, equipment, and leasehold improvements

(644

)

 

 

(290

)

Net (purchases) sales of marketable securities, trading

(935

)

(3,846

)

Net change in liabilities for short sales of trading securities

––

 

 

 

(1,622

)

Net cash (used in) investing activities

(1,579

)

 

 

(5,758

)

Financing activities:

Payments on revolving credit facility, net

––

 

 

 

(5,100

)

Repayments on long-term debt

 

(55

)

 

 

(53

)

Preferred stock dividend

(38

)

(38

)

Net change in bank overdraft

(1,061

)

 

 

2,526

 

Net cash (used in) financing activities

(1,154

)

 

 

(2,665

)

Effect of foreign currency exchange rate changes on cash and

cash equivalents

(455

)

 

9

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

1,167

 

 

 

(4,874

)

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

4,465

 

 

8,995

 

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

$

5,632

 

 

$

4,121

 

Supplemental disclosures of cash flow information:

Cash paid for interest

$

105

 

 

$

121

 

Cash paid for income taxes

$

3,979

 

$

2,509

 

 

Contacts

Michael Narikawa

EACO Corporation

(714) 876-2490

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