EACO - EACO Corporation Reports Record 3rd Quarter Net Sales

June, 28 2023 07:00 PM Eaco Corp

EACO Corporation (OTCMKTS:EACO) today reported the results for its quarter ended May 31, 2023.

Net sales, net income and earnings per share were as follows for the three months ended May 31, 2023 (dollars in thousands, except per share information):



Three Months Ended May 31,

%


2023

2022

Change


(unaudited)

(unaudited)





Net sales

$80,249

$77,797

3.2%







Net income

$5,319

$5,330

(0.2%)







Basic and diluted earnings per common share

$1.09

$1.09

0.0%

The Company had 378 sales employees at May 31, 2023, an increase of 38 or 11.2% from the prior year quarter. The Company’s sales force is divided into Sales focus teams (SFT’s). The Company had 108 SFT’s as of May 31, 2023, an increase of 5 from 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)





May 31,

August 31,

2023

2022*
ASSETS



Current Assets:



Cash and cash equivalents
$

1,348

$

17,386
Restricted cash


10



10
Trade accounts receivable, net


40,523



44,637
Inventory, net


56,464



48,808
Marketable securities, trading


28,447



3,925
Prepaid expenses and other current assets


3,755



5,008
Total current assets


130,547



119,774
Non-current Assets:



Property, equipment and leasehold improvements, net


8,073



8,479
Operating lease right-of-use assets


10,390



10,389
Other assets, net


1,141



1,039
Total assets
$

150,151

$

139,681
LIABILITIES AND SHAREHOLDERS’ EQUITY



Current Liabilities:



Trade accounts payable
$

19,768

$

21,762
Accrued expenses and other current liabilities


12,623



15,020
Current portion of operating lease liabilities


3,801



3,375
Current portion of long-term debt


120



119
Total current liabilities


36,726



40,276
Non-current Liabilities:



Long-term debt


4,377



4,465
Operating lease liabilities


6,776



7,192
Total liabilities


47,465



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


39



174
Retained earnings


90,219



75,146
Total shareholders’ equity


102,686



87,748
Total liabilities and shareholders’ equity
$

150,151

$

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 May 31,

Nine Months Ended May 31,


2023

2022

2023

2022
Net sales

$

80,249


$

77,797


$

233,493


$

208,206

Cost of sales



57,008




56,207




166,325




150,313

Gross margin



23,241




21,590




67,168




57,893

Operating expenses:








Selling, general and administrative expenses



16,277




14,547




47,568




36,881

Income from operations



6,964




7,043




19,600




21,012










Other income (expense):








Net gain on trading securities



163




213




784




135

Interest and other expense



(36
)



(48
)



(38
)



(153
)
Other income (expense), net



127




165




746




(18
)
Income before income taxes



7,091




7,208




20,346




20,994

Provision for income taxes



1,772




1,878




5,216




5,471

Net income



5,319




5,330




15,130




15,523

Cumulative preferred stock dividend



(19
)



(19
)



(57
)



(57
)
Net income attributable to common shareholders

$

5,300


$

5,311


$

15,073


$

15,466

Basic and diluted earnings per share:

$

1.09


$

1.09


$

3.10


$

3.18

Basic and diluted 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)



Nine Months Ended May 31,

2023

2022
Operating activities:



Net income
$
15,130


$
15,523

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





Depreciation and amortization

1,052



1,122

Bad debt expense

201



54

Net unrealized (gain) on trading securities

(784
)


(135
)
Increase (decrease) in cash from changes in:





Trade accounts receivable

3,913



(8,843
)
Inventory

(7,656
)


(7,045
)
Prepaid expenses and other assets

1,151



(462
)
Operating lease right-of-use assets

(1
)


416

Trade accounts payable

(1,885
)


3,959

Accrued expenses and other current liabilities

(2,397
)


230

Operating lease liabilities

10



(363
)
Net cash provided by operating activities

8,734



4,456

Investing activities:





Purchase of property, equipment, and leasehold improvements

(646
)


(827
)
Net (purchases) of marketable securities, trading

(23,738
)


(959
)
Net cash (used in) investing activities

(24,384
)


(1,786
)
Financing activities:





Repayments on long-term debt

(87
)


(87
)
Preferred stock dividend

(57
)


(57
)
Net change in bank overdraft

(109
)


(1,056
)
Net cash (used in) financing activities

(253
)


(1,200
)
Effect of foreign currency exchange rate changes on cash and cash equivalents

(135
)


(498
)
Net (decrease) increase in cash, cash equivalents, and restricted cash

(16,038
)


972

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

17,396



4,465

Cash, cash equivalents, and restricted cash - end of period
$
1,358


$
5,437

Supplemental disclosures of cash flow information:





Cash paid for interest
$
152


$
153

Cash paid for income taxes
$
7,217


$
3,979

View source version on businesswire.com: https://www.businesswire.com/news/home/20230628852840/en/

Michael Narikawa
EACO Corporation
(714) 876-2490

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

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