EACO - EACO Corporation Reports Record Quarter Net Sales

June, 27 2024 04:01 PM Eaco Corp

EACO Corporation (OTCMKTS:EACO) today reported the results for its quarter ended May 31, 2024.

Net sales, net income and earnings per share were as follows for the three months ended May 31, 2024 (dollars in thousands, except per share information):



Three Months Ended May 31,

%


2024

2023

Change


(unaudited)

(unaudited)









Net sales

$96,121

$80,249

19.8%







Net income

$1,184

$5,319

(77.7%)







Basic and diluted earnings per common share

$0.24

$1.09

(78.0%)

The Company had 413 sales employees at May 31, 2024, an increase of 33 employees or 8.5%, from the prior year quarter. The Company’s sales force is divided into sales focus teams (SFT’s). The Company had 110 SFT’s as of May 31, 2024, two more than the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2024. 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, 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)


May 31,

August 31,


2024

2023
ASSETS






Current Assets:






Cash and cash equivalents

$
737


$
8,558
Restricted cash


10



10
Trade accounts receivable, net


54,059



46,654
Inventory, net


67,409



56,270
Marketable securities, trading


9,405



27,228
Prepaid expenses and other current assets


3,838



3,843
Total current assets


135,458



142,563
Non-current Assets:






Property, equipment and leasehold improvements, net


35,415



8,041
Operating lease right-of-use assets


4,498



9,988
Other assets, net


1,508



1,652
Total assets

$
176,879


$
162,244
LIABILITIES AND SHAREHOLDERS’ EQUITY






Current Liabilities:






Trade accounts payable

$
33,614


$
22,505
Accrued expenses and other current liabilities


17,160



16,375
Current portion of operating lease liabilities


2,148



3,950
Current portion of debt


120



120
Total current liabilities


53,042



42,950
Non-current Liabilities:






Long-term debt


4,254



4,348
Operating lease liabilities


2,526



6,225
Total liabilities


59,822



53,523
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


(30
)


38
Retained earnings


104,659



96,255
Total shareholders’ equity


117,057



108,721
Total liabilities and shareholders’ equity

$
176,879


$
162,244

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2023 filed with the U.S. Securities and Exchange Commission on November 22, 2023.

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,


2024


2023


2024


2023

Net sales

$
96,121


$
80,249


$
259,711


$
233,493

Cost of sales


68,193



57,008



183,184



166,325

Gross margin


27,928



23,241



76,527



67,168

Operating expenses:












Selling, general and administrative expenses


26,314



16,277



61,129



47,568

Impairment on termination of lease


–



–



3,906



–

Income from operations


1,614



6,964



11,492



19,600

Other income (expense):












Net (loss) gain on trading securities


(24
)


163



(45
)


784

Interest and other (expense)


(44
)


(36
)


(128
)


(38
)
Other (expense) income, net


(68
)


127



(173
)


746

Income before income taxes


1,546



7,091



11,319



20,346

Provision for income taxes


362



1,772



2,858



5,216

Net income


1,184



5,319



8,461



15,130

Cumulative preferred stock dividend


(19
)


(19
)


(57
)


(57
)
Net income attributable to common shareholders

$
1,165


$
5,300


$
8,404


$
15,073

Basic earnings per share:

$
0.24


$
1.09


$
1.73


$
3.10

Diluted earnings per share:

$
0.24


$
1.09


$
1.73


$
3.09

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)


Nine Months Ended May 31,


2024

2023
Operating activities:




Net income

$
8,461


$
15,130

Adjustments to reconcile net income to net cash provided by operating activities:






Depreciation and amortization


1,247



1,052

Bad debt expense


359



201

Deferred tax provision


51



–

Net unrealized loss (gain) on trading securities


357



(784
)
Impairment on termination of lease


3,906



–

Changes in current assets and liabilities:






Trade accounts receivable


(7,764
)


3,913

Inventory


(11,139
)


(7,656
)
Prepaid expenses and other assets


98



1,151

Operating lease right-of-use assets


5,490



(1
)
Trade accounts payable


8,043



(1,885
)
Accrued expenses and other current liabilities


785



(2,397
)
Operating lease liabilities


(5,501
)


10

Net cash provided by operating activities


4,393



8,734

Investing activities:






Purchase of property, equipment, and leasehold improvements


(32,527
)


(646
)
Net sales (purchases) of marketable securities, trading


17,466



(23,738
)
Net cash used in investing activities


(15,061
)


(24,384
)
Financing activities:






Repayments on long-term debt


(94
)


(87
)
Preferred stock dividend


(57
)


(57
)
Net change in bank overdraft


3,066



(109
)
Net cash provided by (used in) financing activities


2,915



(253
)
Effect of foreign currency exchange rate changes on cash and cash equivalents


(68
)


(135
)
Net decrease in cash, cash equivalents, and restricted cash


(7,821
)


(16,038
)
Cash, cash equivalents, and restricted cash - beginning of period


8,568



17,396

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

$
747


$
1,358

Supplemental disclosures of cash flow information:






Cash paid for interest

$
145


$
152

Cash paid for income taxes

$
8,276


$
7,217

View source version on businesswire.com: https://www.businesswire.com/news/home/20240627732407/en/

Michael Narikawa
EACO Corporation
(714) 876-2490

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

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