EACO - EACO Corporation Reports Record Annual Net Sales

October, 27 2020 04:01 PM Eaco Corp

EACO Corporation (OTCQB:EACO) today reported the results for its year ended August 31, 2020.

Net sales, net income and earnings per share were as follows for the year ended August 31, 2020 (dollars in thousands, except per share information):



Three Months Ended August 31,

%


2020

2019

Change


(unaudited)

(unaudited)





Net sales

$
57,454

$
60,056

(4.3
%)







Net income

$
1,523

$
2,602

(41.5
)%







Basic and diluted earnings per common share

$
0.31

$
0.53

(41.8
)%



Year Ended August 31,

%


2020

2019*

Change


(unaudited)







Net sales

$
225,245

$
221,241

1.8
%







Net income

$
7,793

$
9,432

(17.4
)%







Basic and diluted earnings per common share

$
1.59

$
1.92

(17.5
)%

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2019 filed with the U.S. Securities and Exchange Commission on November 27, 2019.

The Company had 373 sales employees at August 31, 2020, an increase of 26 or 7% 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 August 31, 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, the impact of the Covid-19 pandemic, 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, and the impact of products offered by our competitors from time to time. 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)


August 31,

August 31,

2020

2019*
ASSETS



Current Assets:



Cash and cash equivalents
$
6,079

$
4,692
Restricted cash

2,916


655
Trade accounts receivable, net

29,667


31,655
Inventory, net

39,545


37,259
Marketable securities, trading

1,368


1,873
Prepaid expenses and other current assets

5,094


4,234
Total current assets

84,669


80,368
Property, equipment and leasehold improvements:



Held for use, net

8,848


3,717
Held for sale, net

–


6,855
Total property, equipment and leasehold improvements, net

8,848


10,572
Other assets:



Operating lease right-of-use assets

11,512


–
Other assets, net

1,424


1,938
Total assets
$
106,453

$
92,878
LIABILITIES AND SHAREHOLDERS’ EQUITY



Current Liabilities:



Trade accounts payable
$
16,535

$
21,138
Accrued expenses and other current liabilities

6,632


8,297
Liability for short sales of trading securities

2,916


655
Current portion of operating lease liabilities

2,493


–
Current portion of long-term debt

–


5,484
Total current liabilities

28,576


35,574
Non-current Liabilities:



Long-term debt

9,907


6,114
Operating lease liabilities

9,151


–
Total liabilities

47,634


41,688
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

788


876
Retained earnings

45,603


37,886
Total shareholders’ equity

58,819


51,190
Total liabilities and shareholders’ equity
$
106,453

$
92,878

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2019 filed with the U.S. Securities and Exchange Commission on November 27, 2019.

EACO Corporation and Subsidiaries Condensed Consolidated Statements of Income (in thousands, except for share and per share information) (unaudited)



Three Months Ended August 31,

Year Ended August 31,


2020

2019*

2020

2019*
Revenues

$
57,454


$
60,056


$
225,245


$
221,241

Cost of revenues


42,626



43,569



163,868



160,008

Gross margin


14,828



16,487



61,377



61,233

Operating expenses:








Selling, general and administrative expenses


12,929



12,650



50,936



48,213

Income from operations


1,899



3,837



10,441



13,020










Other (expense) income:








Net (loss) gain on trading securities


137



(88
)


912



427

Loss on Sale of Property


-



-



(130
)


-

Interest and other expense


(32
)


(145
)


(256
)


(475
)
Other income (expense), net


105



(233
)


526



(48
)
Income before income taxes


2,004



3,604



10,967



12,972

Provision for income taxes


481



1,002



3,174



3,540

Net income


1,523



2,602



7,793



9,432

Cumulative preferred stock dividend


(19
)


(19
)


(76
)


(76
)
Net income attributable to common shareholders

$
1,504


$
2,583


$
7,717


$
9,356










Basic and diluted earnings per common share:

$
0.31


$
0.53


$
1.59


$
1.92

Basic and diluted weighted average common shares outstanding


4,861,590



4,861,590



4,861,590



4,861,590

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2019 filed with the U.S. Securities and Exchange Commission on November 27, 2019.

EACO Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited)


Year Ended August 31,

2020

2019*
Operating activities:



Net income
$
7,793


$
9,432

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



Depreciation and amortization

1,224



1,047

Bad debt expense

72



340

Loss on sale of real property

130



–

Net gain on trading securities

(912
)


(427
)
(Increase) decrease in:



Trade accounts receivable

1,916



(5,718
)
Inventory

(2,286
)


(6,728
)
Prepaid expenses and other assets

(346
)


(3,012
)
Operating lease right-of-use assets

(11,512
)


–

Increase (decrease) in:



Trade accounts payable

(3,275
)


3,313

Accrued expenses and other current liabilities

(1,665
)


845

Operating lease liabilities

11,644



–

Net cash provided by (used in) operating activities

2,783



(908
)
Investing activities:



Purchase of property, equipment, and leasehold improvements

(6,705
)


(1,772
)
Proceeds from sale of real property

7,075



–

Sale of marketable securities, trading

1,417



1,400

Net change in liabilities for short sales of trading securities

2,261



(278
)
Net cash provided by (used in) investing activities

4,048



(650
)
Financing activities:



(Payments) borrowings on revolving credit facility, net

(1,014
)


3,153

Borrowings on Construction Loan

4,448



342

Repayments on long-term debt

(5,125
)


(247
)
Preferred stock dividend

(76
)


(76
)
Bank overdraft

(1,328
)


147

Net cash (used in) provided by financing activities

(3,095
)


3,319

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

(88
)


(52
)
Net increase in cash, cash equivalents, and restricted cash

3,648



1,709

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

5,347



3,638

Cash, cash equivalents, and restricted cash - end of period
$
8,995


$
5,347

Supplemental disclosures of cash flow information:



Cash paid for interest
$
291


$
475

Cash paid for income taxes
$
3,405


$
3,107

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2019 filed with the U.S. Securities and Exchange Commission on November 27, 2019

View source version on businesswire.com: https://www.businesswire.com/news/home/20201027006118/en/

Marta Arciniega
EACO Corporation
(714) 876-2490

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

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