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

March, 29 2023 04:01 PM Eaco Corp

EACO Corporation (OTCMKTS:EACO) today reported the results for its quarter ended February 28, 2023.

Net sales, net income and earnings per share were as follows for the three months ended February 28, 2023 (dollars in thousands, except per share information):


Three Months Ended February 28,



2023

2022

% Change

(unaudited)

(unaudited)








Net sales
$76,925

$66,587

15.5%






Net income
$5,100

$3,407

49.7%






Basic and diluted earnings per common share
$1.05

$0.70

50.0%

The Company had 370 sales employees at February 28, 2023, an increase of 32 employees or 9.5%, from the prior year quarter. The Company’s salesforce is divided into sales focus teams (SFT’s). The Company had 105 SFT’s as of February 28, 2023, three more than the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2023. 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,


2023


2022*
ASSETS





Current Assets:





Cash and cash equivalents
$
5,324

$
17,386
Restricted cash

10


10
Trade accounts receivable, net

41,554


44,637
Inventory, net

53,466


48,808
Marketable securities, trading

21,865


3,925
Prepaid expenses and other current assets

3,255


5,008
Total current assets

125,474


119,774
Non-current Assets:





Property, equipment and leasehold improvements, net

8,162


8,479
Operating lease right-of-use assets

10,660


10,389
Other assets, net

1,436


1,039
Total assets
$
145,732

$
139,681
LIABILITIES AND SHAREHOLDERS’ EQUITY





Current Liabilities:





Trade accounts payable
$
22,740

$
21,762
Accrued expenses and other current liabilities

10,178


15,020
Current portion of operating lease liabilities

3,688


3,375
Current portion of long-term debt

120


119
Total current liabilities

36,726


40,276
Non-current Liabilities:





Long-term debt

4,406


4,465
Operating lease liabilities

7,164


7,192
Total liabilities

48,296


51,933
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

89


174
Retained earnings

84,919


75,146
Total shareholders’ equity

97,436


87,748
Total liabilities and shareholders’ equity
$
145,732

$
139,681

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2022 filed with the U.S. Securities and Exchange Commission on November 4, 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,


2023

2022

2023

2022
Net sales
$
76,925

$
66,587

$
153,244

$
130,409

Cost of sales

54,661


48,462


109,317


94,106

Gross margin

22,264


18,125


43,927


36,303

Operating expenses:








Selling, general and administrative expenses

15,606


13,439


31,291


22,334

Income from operations

6,658


4,686


12,636


13,969










Other income (expense):








Net (loss) gain on trading securities

179


(22
)

621


(78
)
Interest and other (expense)

46


(53
)

(2
)

(105
)
Other (expense) income, net

225


(75
)

619


(183
)
Income before income taxes

6,883


4,611


13,255


13,786

Provision for income taxes

1,783


1,204


3,444


3,593

Net income

5,100


3,407


9,811


10,193

Cumulative preferred stock dividend

(19
)

(19
)

(38
)

(38
)
Net income attributable to common shareholders
$
5,081

$
3,388

$
9,773

$
10,155

Basic and diluted earnings per share:
$
1.05

$
0.70

$
2.01

$
2.09

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,

2023

2022
Operating activities:




Net income
$
9,811


$
10,193

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




Depreciation and amortization

708



751

Bad debt expense

182



26

Net unrealized (gain) loss on trading securities

(621
)


78

Increase (decrease) in cash from changes in:




Trade accounts receivable

2,901



(2,958
)
Inventory

(4,658
)


(4,276
)
Prepaid expenses and other assets

1,356



(1,374
)
Operating lease right-of-use assets

(271
)


54

Trade accounts payable

1,087



4,404

Accrued expenses and other current liabilities

(4,842
)


(2,524
)
Operating lease liabilities

285



(19
)
Net cash provided by operating activities

5,938



4,355

Investing activities:




Purchase of property, equipment, and leasehold improvements

(391
)


(644
)
Net (purchases) sales of marketable securities, trading

(17,319
)


(935
)
Net cash (used in) investing activities

(17,710
)


(1,579
)
Financing activities:




Repayments on long-term debt

(58
)


(55
)
Preferred stock dividend

(38
)


(38
)
Net change in bank overdraft

(109
)


(1,061
)
Net cash (used in) financing activities

(205
)


(1,154
)
Effect of foreign currency exchange rate changes on cash and cash equivalents

(85
)


(455
)
Net increase (decrease) in cash, cash equivalents, and restricted cash

(12,062
)


1,167

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

17,396



4,465

Cash, cash equivalents, and restricted cash - end of period
$
5,334


$
5,632

Supplemental disclosures of cash flow information:




Cash paid for interest
$
102


$
105

Cash paid for income taxes
$
7,544


$
3,979

View source version on businesswire.com: https://www.businesswire.com/news/home/20230329005849/en/

Michael Narikawa
EACO Corporation
(714) 876-2490

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

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