EACO - EACO Corporation Reports Record Quarterly Net Sales and Record 3rd Quarter Net Income

August, 22 2022 04:01 PM Eaco Corp

EACO Corporation (OTCMKTS:EACO) today reported the results for its quarter ended May 31, 2022.

Net sales, net income and earnings per share were as follows for the three months ended May 31, 2022 (dollars in thousands, except per share information):



Three Months Ended May 31,

%


2022

2021

Change


(unaudited)

(unaudited)





Net sales

$77,797

$62,676

24.1%







Net income

$5,330

$3,080

73.1%







Basic and diluted earnings per common share

$1.09

$0.63

73.0%

The Company had 340 sales employees at May 31, 2022, a decrease of 9 (2.6%) 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, 2022 the same from the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2022. 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,


2022


2021*
ASSETS





Current Assets:





Cash and cash equivalents
$
5,427

$
4,455
Restricted cash

10


10
Trade accounts receivable, net

42,718


33,939
Inventory, net

47,493


40,448
Marketable securities, trading

4,835


3,741
Prepaid expenses and other current assets

7,500


6,780
Total current assets

107,983


89,363
Non-current Assets:





Property, equipment and leasehold improvements, net

7,974


8,269
Operating lease right-of-use assets

10,668


11,084
Other assets, net

1,411


1,669
Total assets
$
128,036

$
110,385
LIABILITIES AND SHAREHOLDERS’ EQUITY





Current Liabilities:





Trade accounts payable
$
19,316

$
16,413
Accrued expenses and other current liabilities

11,194


10,964
Current portion of operating lease liabilities

3,233


3,096
Current portion of long-term debt

119


113
Total current liabilities

33,862


30,586
Non-current Liabilities:





Long-term debt

4,492


4,585
Operating lease liabilities

7,592


8,092
Total liabilities

45,946


43,263
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

282


780
Retained earnings

69,380


53,914
Total shareholders’ equity

82,090


67,122
Total liabilities and shareholders’ equity
$
128,036

$
110,385






* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2021 filed with the U.S. Securities and Exchange Commission on July 6, 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,



2022


2021



2022


2021

Net sales

$
77,797

$
62,676


$
208,206

$
171,830

Cost of sales


56,207


45,826



150,313


125,504

Gross margin


21,590


16,850



57,893


46,326

Operating expenses:










Selling, general and administrative expenses


14,547


12,800



36,881


38,021

Income from operations


7,043


4,050



21,012


8,305












Other income (expense):










Net gain (loss) on trading securities


213


196



135


(863
)
Interest and other (expense)


(48
)

(45
)


(153
)

(174
)
Other income (expense), net


165


151



(18
)

(1,037
)
Income before income taxes


7,208


4,201



20,994


7,268

Provision for income taxes


1,878


1,121



5,471


1,943

Net income


5,330


3,080



15,523


5,325

Cumulative preferred stock dividend


(19
)

(19
)


(57
)

(57
)
Net income attributable to common shareholders

$
5,311

$
3,061


$
15,466

$
5,268

Basic and diluted earnings per share:

$
1.09

$
0.63


$
3.18

$
1.08

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,


2022

2021
Operating activities:




Net income

$
15,523


$
5,325

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






Depreciation and amortization


1,122



1,136

Bad debt expense


54



62

Loss on sale of real property


–



–

Net unrealized (gain) loss on trading securities


(135
)


863

Increase (decrease) in cash from changes in:






Trade accounts receivable


(8,843
)


(3,239
)
Inventory


(7,045
)


(861
)
Prepaid expenses and other assets


(462
)


1,568

Operating lease right-of-use assets


416



1,400

Trade accounts payable


3,959



2,895

Accrued expenses and other current liabilities


230



(1,291
)
Operating lease liabilities


(363
)


(1,454
)
Net cash provided by operating activities


4,456



6,404

Investing activities:






Purchase of property, equipment, and leasehold improvements


(827
)


(757
)
Net (purchases) sales of marketable securities, trading


(959
)


(4,419
)
Net change in liabilities for short sales of trading securities


–



(2,916
)
Net cash (used in) investing activities


(1,786
)


(8,092
)
Financing activities:






Payments on revolving credit facility, net


–



(5,100
)
Borrowings on construction loan


–



–

Repayments on long-term debt


(87
)


(82
)
Preferred stock dividend


(57
)


(57
)
Net change in bank overdraft


(1,056
)


144

Net cash (used in) financing activities


(1,200
)


(5,095
)
Effect of foreign currency exchange rate changes on cash and cash equivalents


(498
)


223

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


972



(6,560
)
Cash, cash equivalents, and restricted cash - beginning of period


4,465



8,995

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

$
5,437


$
2,435

Supplemental disclosures of cash flow information:






Cash paid for interest

$
153


$
172

Cash paid for income taxes

$
3,979


$
2,509

View source version on businesswire.com: https://www.businesswire.com/news/home/20220822005057/en/

Michael Narikawa
EACO Corporation
(714) 876-2490

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

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