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EACO Corporation Reports Record 1st Quarter Net Sales

January 7, 2020 GMT

ANAHEIM, Calif.--(BUSINESS WIRE)--Jan 7, 2020--

EACO Corporation (OTCQB:EACO) today reported the results for its quarter ended November 30, 2019.

Net sales, net income and earnings per share were as follows for the three months ended November 30, 2019 (dollars in thousands, except per share information):

 

 

Three Months Ended

November 30,

 

%

 

 

2019

 

2018

 

Change

 

 

(unaudited)

 

(unaudited)

 

 

 

 

 

  

Net sales

 

$

56,040

 

$

50,786

 

10.3

%

 

 

 

 

 

 

 

Net income

 

$

1,917

 

$

1,925

 

(0.4

)%

 

 

 

 

 

 

 

Basic and diluted earnings per common share

 

$

0.39

 

$

0.39

 

0.0

%

The Company had 349 sales employees at November 30, 2019, an increase of 13 or 4%, from the prior year quarter. The Company’s sales force is divided into sales focus teams (SFT’s). The Company had 98 SFT’s as of November 30, 2019, an increase of 2 from the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2020. The Company believes it continues to gain market share through its local presence business model, increasing quarterly net sales by 10% and bookings by 7% when comparing to the prior year quarter.

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)

 

November 30,

 

August 31,

 

2019

 

2019*

ASSETS

 

 

 

 

Current Assets:

  

Cash and cash equivalents

 

$

6,056

 

$

4,692

Restricted cash

 

 

2,822

 

 

655

Trade accounts receivable, net

 

 

29,477

 

 

31,655

Inventory, net

 

 

39,731

 

 

37,259

Marketable securities, trading

 

 

405

 

 

1,873

Prepaid expenses and other current assets

 

 

4,798

 

 

4,234

Total current assets

 

 

83,289

 

 

80,368

Property, equipment and leasehold improvements:

 

 

 

 

Held for use, net

 

 

5,529

 

 

3,717

Held for sale, net

 

 

 

6,855

Total property, equipment and leasehold improvements, net

 

 

5,529

 

 

10,572

Other assets:

 

 

 

 

Operating lease right-of-use assets

 

 

13,532

 

Other assets, net

 

 

2,103

 

 

1,938

Total assets

 

$

104,453

 

$

92,878

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

Current Liabilities:

 

 

 

 

Trade accounts payable

 

$

18,853

 

$

21,138

Accrued expenses and other current liabilities

 

 

7,653

 

 

8,297

Liability for short sales of trading securities

 

 

2,822

 

 

655

Current portion of operating lease liabilities

 

 

2,499

 

Current portion of long-term debt

 

 

2,152

 

 

5,484

Total current liabilities

 

 

33,979

 

 

35,574

Non-current Liabilities:

 

 

 

 

Long-term debt

 

 

6,442

 

 

6,114

Operating lease liabilities

 

 

11,156

 

Total liabilities

 

 

51,577

 

 

41,688

Commitments and Contingencies (Note 8)

 

 

 

 

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

 

 

664

 

 

876

Retained earnings

 

 

39,784

 

 

37,886

Total shareholders’ equity

 

 

52,876

 

 

51,190

Total liabilities and shareholders’ equity

 

$

104,453

 

$

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
November 30,

 

 

2019

 

2018

Net sales

 

$

56,040

 

 

$

50,786

 

Cost of sales

 

 

40,144

 

 

 

36,677

 

Gross margin

 

 

15,896

 

 

 

14,109

 

Operating expenses:

 

 

 

 

Selling, general and administrative expenses

 

 

12,602

 

 

 

11,490

 

Income from operations

 

 

3,294

 

 

 

2,619

 

 

 

 

 

Other (expense) income:

 

 

 

 

Net (loss) gain on trading securities

 

 

(80

)

 

 

228

 

Loss on sale of property

 

 

(102

)

 

 

Interest and other expense

 

 

(119

)

 

 

(77

)

Other expense, net

 

 

(301

)

 

 

151

 

Income before income taxes

 

 

2,993

 

 

 

2,770

 

Provision for income taxes

 

 

1,076

 

 

 

845

 

Net income

 

 

1,917

 

 

 

1,925

 

Cumulative preferred stock dividend

 

 

(19

)

 

 

(19

)

Net income attributable to common shareholders

 

$

1,898

 

 

$

1,906

 

 

 

 

 

Basic and diluted earnings per common share:

 

$

0.39

 

 

$

0.39

 

Basic and diluted weighted average common shares outstanding

 

 

4,861,590

 

 

 

4,861,590

 

 

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

Three Months Ended
November 30,

 

2019

2018

Operating activities:

 

 

 

Net income

 

$

1,917

 

$

1,925

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

Depreciation and amortization

 

 

259

 

 

247

 

Bad debt expense

 

 

3

 

 

 

10

 

Inventory write-downs

 

 

294

 

 

198

 

Loss on sale of real property

 

 

102

 

 

 

Net loss (gain) on trading securities

 

 

80

 

 

(228

)

(Increase) decrease in:

 

 

 

 

Trade accounts receivable

 

 

2,175

 

 

(144

)

Inventory

 

 

(2,766

)

 

 

(2,727

)

Prepaid expenses and other assets

 

 

(729

)

 

(911

)

Increase (decrease) in:

 

 

 

 

Trade accounts payable

 

 

(2,266

)

 

2,743

 

Accrued expenses and other current liabilities

 

 

(644

)

 

 

(1,669

)

Net cash used in operating activities

 

 

(1,575

)

 

 

(556

)

Investing activities:

 

 

 

Purchase of property, equipment, and leasehold improvements

 

 

(2,393

)

 

 

(188

)

Proceeds from sale of real property

 

 

7,075

 

 

 

Net sales of marketable securities, trading

 

 

1,388

 

 

550

 

Net change in liabilities for short sales of trading securities

 

 

2,167

 

 

 

(771

)

Net cash provided by (used in) investing activities

 

 

8,237

 

 

 

(409

)

Financing activities:

 

 

 

Borrowings on revolving credit facility, net

 

 

420

 

 

 

1,099

 

Borrowings on construction loan

 

 

1,701

 

 

 

Repayments on long-term debt

 

 

(5,125

)

 

 

(36

)

Preferred stock dividend

 

 

(19

)

 

(19

)

Bank overdraft

 

 

104

 

 

 

(385

)

Net cash (used in) provided by financing activities

 

 

(2,919

)

 

 

659

 

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

 

 

(212

)

 

158

 

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

 

 

3,531

 

 

 

(148

)

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

 

 

5,347

 

 

3,638

 

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

 

$

8,878

 

 

$

3,490

 

Supplemental disclosures of cash flow information:

 

 

 

Cash paid for interest

 

$

122

 

 

$

77

 

Cash paid for income taxes

 

$

 

$

 

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20200107006028/en/

CONTACT: Marta Arciniega

EACO Corporation

(714) 876-2490

KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA

INDUSTRY KEYWORD: HARDWARE RETAIL CONSUMER ELECTRONICS TECHNOLOGY SPECIALTY

SOURCE: EACO Corporation

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PUB: 01/07/2020 04:01 PM/DISC: 01/07/2020 04:01 PM

http://www.businesswire.com/news/home/20200107006028/en