BusinessWire

EACO Corporation Reports 3rd Quarter Net Sales, & Net Income, and Record Backlog

ANAHEIM, Calif.--(BUSINESS WIRE)--#earnings--EACO Corporation (OTCQB:EACO) today reported the results for its quarter ended May 31, 2020.

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

 

Three Months Ended
May 31,

%

 

2020

2019

Change

 

(unaudited)

(unaudited)

 

 

 

Net sales

$54,923

$57,840

(5.0)%

 

 

 

 

Net income

$1,692

$2,944

(42.5)%

 

 

 

 

Basic and diluted earnings per common share

$0.34

$0.60

(43.3)%

The Company had 357 sales employees at May 31, 2020, an increase of 17 or 5% 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 May 31, 2020, the same amount of SFT's from the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2020. Despite the 5% decrease in net sales as a result of the Covid-19 pandemic, the Company believes it continues to gain market share through its local presence business model, increasing bookings by 5% and increasing the sales backlog to $72 Million, an increase of 16% 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, 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,

2020

 

2019*

ASSETS

 

 

 

 

Current Assets:

Cash and cash equivalents

$

7,182

$

4,692

Restricted cash

69

655

Trade accounts receivable, net

 

28,651

 

31,655

Inventory, net

41,797

37,259

Marketable securities, trading

 

-

 

1,873

Prepaid expenses and other current assets

4,113

4,234

Total current assets

 

81,812

 

80,368

Property, equipment and leasehold improvements:

Held for use, net

8,539

3,717

Held for sale, net

 

 

6,855

Total property, equipment and leasehold improvements, net

 

8,539

 

10,572

Other assets:

 

 

 

 

Operating lease right-of-use assets

 

12,428

 

Other assets, net

 

2,008

 

1,938

Total assets

$

104,787

$

92,878

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

Current Liabilities:

Trade accounts payable

$

16,923

$

21,138

Accrued expenses and other current liabilities

6,052

8,297

Liability for short sales of trading securities

69

655

Current portion of operating lease liabilities

 

2,370

 

Current portion of long-term debt

 

 

5,484

Total current liabilities

 

25,414

 

35,574

Non-current Liabilities:

Long-term debt

12,060

6,114

Operating lease liabilities

 

10,192

 

Total liabilities

 

47,666

 

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

657

876

Retained earnings

 

44,036

 

37,886

Total shareholders’ equity

57,121

51,190

Total liabilities and shareholders’ equity

$

104,787

$

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
May 31,

 

Nine Months Ended
May 31,

 

 

2020

 

2019

 

2020

 

2019

Net sales

$

54,923

$

57,840

$

167,791

$

161,185

Cost of sales

 

40,069

 

41,715

121,242

 

116,439

Gross margin

 

14,854

 

16,125

 

46,549

 

44,746

Operating expenses:

 

 

Selling, general and administrative expenses

12,822

 

12,353

38,097

 

35,563

Income from operations

 

2,032

 

3,772

 

8,452

 

9,183

 

Other income (expense):

Net gain on trading securities

 

384

 

413

 

775

 

515

Loss on sale of property

 

(28)

 

 

(130)

 

Interest and other (expense)

(40)

 

(128)

(224)

 

(330)

Other income, net

 

316

 

285

 

421

 

185

Income before income taxes

2,348

4,057

8,873

9,368

Provision for income taxes

 

656

 

1,113

 

2,666

 

2,538

Net income

1,692

2,944

6,207

6,830

Cumulative preferred stock dividend

 

(19)

 

(19)

 

(57)

 

(57)

Net income attributable to common
shareholders

$

1,673

$

2,925

$

6,150

$

6,773

Basic and diluted earnings per share:

$

0.34

$

0.60

$

1.27

$

1.39

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,

2020

2019

Operating activities:

 

 

Net income

$

6,207

$

6,830

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

 

 

 

Depreciation and amortization

860

772

Bad debt expense

33

 

 

193

Loss on sale of real property

 

130

 

 

Net gain on trading securities

(775)

(515)

(Increase) decrease in:

 

 

 

Trade accounts receivable

2,971

(2,499)

Inventory

(4,538)

 

 

(6,009)

Prepaid expenses and other assets

51

(1,698)

Increase (decrease) in:

 

 

 

Trade accounts payable

(3,782)

2,960

Accrued expenses and other current liabilities

(2,245)

 

 

(1,851)

Operating lease assets and liabilities, net

 

134

 

 

Net cash used in operating activities

(954)

 

 

(1,817)

Investing activities:

Purchase of property, equipment, and leasehold improvements

(6,032)

 

 

(825)

Proceeds from sale of real property

 

7,075

 

 

Net sales of marketable securities, trading

2,648

2,393

Net change in liabilities for short sales of trading securities

(586)

 

 

1,401

Net cash provided by investing activities

3,105

 

 

2,969

Financing activities:

Borrowings on revolving credit facility, net

1,042

 

 

3,797

Borrowings on construction loan

 

4,545

 

 

Repayments on long-term debt

 

(5,125)

 

 

(109)

Preferred stock dividend

(57)

(57)

Bank overdraft

(432)

 

 

(467)

Net cash (used in) provided by financing activities

(27)

 

 

3,164

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

(219)

 

(38)

Net increase in cash, cash equivalents, and restricted cash

1,904

 

 

4,278

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

5,347

 

3,638

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

$

7,251

 

$

7,916

Supplemental disclosures of cash flow information:

Cash paid for interest

$

246

 

$

325

Cash paid for income taxes

$

3,405

$

3,059

 


Contacts

Marta Arciniega
EACO Corporation
(714) 876-2490