EACO - EACO Corporation Reports 2nd Quarter Net Sales and Net Income

March, 30 2021 04:01 PM Eaco Corp

EACO Corporation (OTCMKTS:EACO) today reported the results for its quarter ended February 28, 2021.

Net sales, net income and earnings per share were as follows for the three months ended February 28, 2021 (dollars in thousands, except per share information):



Three Months Ended




February 28,

February 29,

%


2021

2020

Change


(unaudited)

(unaudited)


Net sales

$

55,751

$

56,828

(1.9)%











Net income

$

1,394

$

2,598

(46.3)%











Basic and diluted earnings per common share

$

0.28

$

0.53

(47.2)%

The Company had 361 sales employees at February 28, 2021, an increase of 10 or 3%, from the prior year quarter. The Company’s sales force is divided into sales focus teams (SFT’s). The Company had 100 SFT’s as of February 28, 2021, two more than 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)












February 28,


August 31,




2021



2020*
ASSETS








Current Assets:








Cash and cash equivalents

$

2,817

$

6,079
Restricted cash



1,304



2,916
Trade accounts receivable, net



28,746



29,667
Inventory, net



40,180



39,545
Marketable securities, trading



4,155



1,368
Prepaid expenses and other current assets



3,818



5,094
Total current assets



82,695



84,669
Non-current Assets:








Property, equipment and leasehold improvements, net



8,387



8,848
Other assets:








Operating lease right-of-use assets



11,963



12,810
Other assets, net



1,402



1,424
Total assets

$

102,772

$

107,751
LIABILITIES AND SHAREHOLDERS’ EQUITY








Current Liabilities:








Trade accounts payable

$

19,622

$

16,535
Accrued expenses and other current liabilities



4,053



6,632
Liability for short sales of trading securities



1,294



2,916
Current portion of operating lease liabilities



2,609



2,653
Current portion of long-term debt



116



5,100
Total current liabilities



27,694



33,836
Non-current Liabilities:








Long-term debt



4,638



4,807
Operating lease liabilities



9,405



10,289
Total liabilities



41,737



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



797



788
Retained earnings



47,810



45,603
Total shareholders’ equity



61,065



58,819
Total liabilities and shareholders’ equity

$

102,772

$

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

Six Months Ended

February 28,

February 29,

February 28,

February 29,


2021


2020


2021


2020

Net sales
$
55,751

$
56,828

$
109,154

$
112,868

Cost of sales

40,727


41,029


79,678


81,173

Gross margin

15,024


15,799


29,476


31,695

Operating expenses:








Selling, general and administrative expenses

12,540


12,673


25,221


25,275

Income from operations

2,484


3,179


4,255


6,420










Other income (expense):








Net (loss) gain on trading securities

(506
)

471


(1,059
)

391

Loss on sale of property

–


–


–


(102
)
Interest and other (expense)

(60
)

(65
)

(129
)

(184
)
Other (expense) income, net

(566
)

406


(1,188
)

105

Income before income taxes

1,918


3,532


3,067


6,525

Provision for income taxes

524


934


822


2,010

Net income

1,394


2,598


2,245


4,515

Cumulative preferred stock dividend

(19
)

(19
)

(38
)

(38
)
Net income attributable to common shareholders
$
1,375

$
2,579

$
2,207

$
4,477

Basic and diluted earnings per share:
$
0.28

$
0.53

$
0.45

$
0.92

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)



Six Months Ended

February 28, 2021

February 29, 2020
Operating activities:



Net income
$
2,245


$
4,515

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





Depreciation and amortization

751



506

Bad debt expense

55



14

Loss on sale of real property

–



102

Net (loss) gain on trading securities

1,059



(391
)
(Increase) decrease in:





Trade accounts receivable

866



931

Inventory

(635
)


(2,852
)
Prepaid expenses and other assets

1,279



(958
)
Operating lease right-of-use assets

856



–

Increase (decrease) in:





Trade accounts payable

561



(2,243
)
Accrued expenses and other current liabilities

(2,579
)


(3,245
)
Operating lease liabilities

(928
)


–

Net cash provided by (used in) operating activities

3,530



(3,621
)
Investing activities:





Purchase of property, equipment, and leasehold improvements

(290
)


(4,591
)
Proceeds from sale of real property

–



7,075

Net (purchases) sales of marketable securities, trading

(3,846
)


1,370

Net change in liabilities for short sales of trading securities

(1,622
)


1,731

Net cash (used in) provided by investing activities

(5,758
)


5,585

Financing activities:





(Repayment) borrowings on revolving credit facility, net

(5,100
)


3,192

Borrowings on construction loan

–



3,342

Repayments on long-term debt

(53
)


(5,125
)
Preferred stock dividend

(38
)


(38
)
Net change in bank overdraft

2,526



(147
)
Net cash (used in) provided by financing activities

(2,665
)


1,224

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

9



(249
)
Net (decrease) increase in cash, cash equivalents, and restricted cash

(4,884
)


2,939

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

8,995



5,347

Cash, cash equivalents, and restricted cash - end of period
$
4,111


$
8,286

Supplemental disclosures of cash flow information:





Cash paid for interest
$
121


$
17

Cash paid for income taxes
$
2,509


$
3,395

View source version on businesswire.com: https://www.businesswire.com/news/home/20210330005977/en/

Marta Arciniega
EACO Corporation
(714) 876-2490

Company Name:	Eaco Corp
Stock Symbol:	EACO
Market:	OTC
Website:	eacocorp.com

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