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

June, 29 2021 04:01 PM Eaco Corp

EACO Corporation (OTCMKTS:EACO) today reported the results for its quarter ended May 31, 2021.

Net sales, net income and earnings per share were as follows for the three months ended May 31, 2021 (dollars in thousands, except per share information):


Three Months Ended May 31,

%

2021

2020

Change

(unaudited)

(unaudited)








Net sales
$62,676

$54,923

14.1%






Net income
$3,080

$1,755

75.5%






Basic and diluted earnings per common share
$0.63

$0.36

75.0%

The Company had 349 sales employees at May 31, 2021, a decrease of 8 or 2.2% from the prior year quarter. The Company’s sales force is divided into Sales focus teams (SFT’s). The Company had 103 SFT’s as of May 31, 2021, an increase of 5 or 5% 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, 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,


2021


2020*
ASSETS





Current Assets:





Cash and cash equivalents
$
2,425

$
6,079
Restricted cash

10


2,916
Trade accounts receivable, net

32,844


29,667
Inventory, net

40,406


39,545
Marketable securities, trading

4,924


1,368
Prepaid expenses and other current assets

3,546


5,094
Total current assets

84,155


84,669
Non-current Assets:





Property, equipment and leasehold improvements, net

8,469


8,848
Other assets:





Operating lease right-of-use assets

11,410


12,810
Other assets, net

1,404


1,424
Total assets
$
105,438

$
107,751
LIABILITIES AND SHAREHOLDERS’ EQUITY





Current Liabilities:





Trade accounts payable
$
19,574

$
16,535
Accrued expenses and other current liabilities

5,341


6,632
Liability for short sales of trading securities

–


2,916
Current portion of operating lease liabilities

2,501


2,653
Current portion of long-term debt

116


5,100
Total current liabilities

27,532


33,836
Non-current Liabilities:





Long-term debt

4,609


4,807
Operating lease liabilities

8,987


10,289
Total liabilities

41,128


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

1,011


788
Retained earnings

50,871


45,603
Total shareholders’ equity

64,310


58,819
Total liabilities and shareholders’ equity
$
105,438

$
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 May 31,


Nine Months Ended May 31,



2021



2020



2021



2020

Net sales

$
62,676


$
54,923


$
171,830


$
167,791

Cost of sales


45,826



40,069



125,504



121,242

Gross margin


16,850



14,854



46,326



46,549

Operating expenses:












Selling, general and administrative expenses


12,800



12,732



38,021



38,007

Income from operations


4,050



2,122



8,305



8,452














Other income (expense):












Net gain on trading securities


196



384



(863
)


775

Loss on sale of property


–



(28
)


–



(130
)
Interest and other (expense)


(45
)


(40
)


(174
)


(224
)
Other income, net


151



316



(1,037
)


421

Income before income taxes


4,201



2,438



7,268



8,963

Provision for income taxes


1,121



683



1,943



2,693

Net income


3,080



1,755



5,325



6,270

Cumulative preferred stock dividend


(19
)


(19
)


(57
)


(57
)
Net income attributable to common shareholders

$
3,061


$
1,736


$
5,268


$
6,213

Basic and diluted earnings per share:

$
0.63


$
0.36


$
1.08


$
1.28

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)





Nine Months Ended May 31,


2021

2020
Operating activities:




Net income

$
5,325


$
6,270

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






Depreciation and amortization


1,136



860

Bad debt expense


62



33

Loss on sale of real property


–



130

Net loss (gain) on trading securities


863



(775
)
(Increase) decrease in:






Trade accounts receivable


(3,239
)


2,971

Inventory


(861
)


(4,538
)
Prepaid expenses and other assets


1,568



51

Operating lease right-of-use assets


1,400



(12,428
)
Increase (decrease) in:






Trade accounts payable


2,895



(3,781
)
Accrued expenses and other current liabilities


(1,291
)


(2,309
)
Operating lease liabilities


(1,454
)


12,562

Net cash provided by (used in) operating activities


6,404



(954
)
Investing activities:






Purchase of property, equipment, and leasehold improvements


(757
)


(6,032
)
Proceeds from sale of real property


–



7,075

Net (purchases) sales of marketable securities, trading


(4,419
)


2,648

Net change in liabilities for short sales of trading securities


(2,916
)


(586
)
Net cash (used in) provided by investing activities


(8,092
)


3,105

Financing activities:






(Repayment) borrowings on revolving credit facility, net


(5,100
)


1,042

Borrowings on construction loan


–



4,545

Repayments on long-term debt


(82
)


(5,125
)
Preferred stock dividend


(57
)


(57
)
Net change in bank overdraft


144



(433
)
Net cash (used in) provided by financing activities


(5,095
)


(28
)
Effect of foreign currency exchange rate changes on cash and cash equivalents


223



(219
)
Net (decrease) increase in cash, cash equivalents, and restricted cash


(6,560
)


1,904

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


8,995



5,347

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

$
2,435


$
7,251

Supplemental disclosures of cash flow information:






Cash paid for interest

$
172


$
246

Cash paid for income taxes

$
2,509


$
3,405

View source version on businesswire.com: https://www.businesswire.com/news/home/20210629006013/en/

Marta Arciniega
EACO Corporation
(714) 876-2490

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

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