EACO Corporation Reports Record Annual Net Sales

ANAHEIM, Calif.--()--EACO Corporation (OTCQB:EACO) today reported the results for its quarter ended August 31, 2015.

Net sales, net income and earnings per share were as follows for the twelve and three months ended August 31, 2015 (dollars in thousands, except per share information):

  Twelve Months Ended August 31,  

%

2015   2014*

Change

(unaudited)
 
Net sales $140,213 $134,747 4.1%
 
Net income $3,741 $5,611 (33.3%)
 
Basic and diluted earnings per common share $0.75 $1.14 (34.2%)
 
Three Months Ended August 31,

%

2015 2014*

Change

(unaudited)
 
Net sales $35,652 $36,537 (2.4%)
 
Net income $1,052 $2,141 (50.9%)
 
Basic and diluted earnings per common share $0.21 $0.44 (52.3%)

(*Net income for the three months ended August 31, 2014 includes non-operating items relating to the sale of the Sylmar properties and gain on workers compensation settlement for a pre-tax gain of $960,000 and $592,000 respectively. Additionally, the net income for the fiscal year ended August 31, 2014 includes the sale of the Orange Park property for a pre-tax gain of $535,000.)

The Company had 313 sales employees at August 31, 2015, a decrease of 5% from 329 sales employees on August 31, 2014. The company’s sales force is divided into Sales Focus Teams (SFTs). The company had 96 SFTs as of August 31, 2015, an increase of 2% from 94 SFTs on August 31, 2014. The company continues to gain market share through its local presence business model. The decrease in headcount is a short-term adjustment, but management anticipates continued growth in both our headcount and SFTs in fiscal year 2016. The Company estimates that the annual North American market for our product is approximately $7.2 billion. The Company’s current estimated market share is 2.0% as compared to 1.9% in the prior year.

EACO Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share information)

(unaudited)

 
  August 31,   August 31,
2015 2014*
ASSETS
Current Assets:
Cash and cash equivalents $ 5,269 $ 3,480
Restricted cash, current 1,781 642
Trade accounts receivable, net 15,485 17,795
Inventory, net 16,733 14,863
Marketable securities, trading - 73
Prepaid expenses and other current assets   591   1,104
Total current assets 39,859 37,957
 
Non-current Assets:
Restricted cash, non-current 83 322
Equipment and leasehold improvements, net 1,569 1,603
Other assets   1,005   1,001
Total assets $ 42,516 $ 40,883
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable $ 9,332 $ 11,192
Accrued expenses and other current liabilities 4,349 3,508
Liabilities of discontinued operations – short-term 49 48
Liability for short sales of trading securities   1,781   642
Total current liabilities 15,511 15,390
 
Non-current Liabilities:
Liabilities of discontinued operations – long-term 35 274
Long-term debt   33   1,728
Total liabilities 15,579 17,392
 
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 860 1,065
Retained earnings   13,649   9,998
Total shareholders’ equity   26,937   23,491
Total liabilities and shareholders’ equity $ 42,516 $ 40,883
 

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2014 filed with the U.S. Securities and Exchange Commission on November 28, 2014.

 

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Income
(in thousands, except for share and per share information)
(unaudited)
 
  Three Months Ended   Twelve Months Ended
August 31, August 31,
  2015       2014     2015     2014*
Revenues $ 35,652   $ 36,537 $ 140,213   $ 134,747
Cost of revenues   25,409       27,155     99,105       97,710  
Gross margin   10,243       9,382     41,108       37,037  
Operating expenses:
Selling, general and administrative expenses   9,083       8,351     35,394       32,178  
Income from operations 1,160 1,031 5,714 4,859
Other (expense) income:
Net gain (loss) on trading securities 188 30 225 (19 )
Gain on sale of property - 960 - 1,495
Interest and other income - (11 ) 3 (307 )
Interest expense, net   (8 )     -     (14 )     -  
Total other (expense) income   180       979     214       1,169  
Income before income taxes 1,340 2,010 5,928 6,028
Provision for income taxes   401       461     2,300       1,009  
Net income from continuing operations 939 1,549 3,628 5,019
Discontinued operations:
Gain on reduction of liabilities of discontinued operations   113       592     113       592  
Net income 1,052 2,141 3,741 5,611
Cumulative preferred stock dividend   (19 )     (19 )   (76 )     (76 )

Net income attributable to common shareholders

$ 1,033     $ 2,122   $ 3,665     $ 5,535  
 
Basic and diluted earnings per share: $ 0.21 $ 0.44 $ 0.75 $ 1.14
Basic and diluted weighted average common shares outstanding 4,861,590 4,861,590 4,861,590 4,861,590
 

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2014 filed with the U.S. Securities and Exchange Commission on November 28, 2014.

 

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
  Twelve Months Ended
August 31,
  2015     2014*
Operating activities: (Unaudited)
Net income $ 3,741 $ 5,611
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 553 539
Bad debt expense 91 12
Inventory reserve 81 100
Gain on sale of Property - (1,495 )

Gain on Discontinued Ops, Workers Comp Settlement

(113 ) (986 )
Net (gain) loss on investments (225 ) 19
(Increase) decrease in:
Trade accounts receivable 2,219 (3,369 )
Inventory (1,951 ) (691 )
Prepaid expenses and other assets 509 831
Increase (decrease) in:
Trade accounts payable (47 ) 1,332
Accrued expenses and other current liabilities 841 610
Deposit Liability - (87 )
Liabilities of discontinued operations   (125 )   (1,247 )
Net cash provided by operating activities   5,574     1,179  
Investing activities:
Purchase of property and equipment (519 ) (746 )
Sale of marketable securities, trading 298 1,303
Proceeds from securities sold short 1,139 642
Proceeds from sale of property - 9,483
Change in restricted cash   (900 )   (416 )
Net cash provided by investing activities   18     10,266  
Financing activities:
Payments on revolving credit facility (1,684 ) (4,797 )
Preferred dividend (76 ) (57 )
Bank overdraft (1,827 ) 545
Payments on long-term debt - real estate held for sale - (5,397 )
Payments on long-term debt   (11 )   (11 )
Net cash used in financing activities   (3,598 )   (9,717 )
Effect of foreign currency exchange rate changes on cash and cash equivalents   (205 )   245  
Net increase in cash and cash equivalents 1,789 1,973
 
Cash and cash equivalents - beginning of period   3,480     1,507  
Cash and cash equivalents - end of period $ 5,269   $ 3,480  
 
Supplemental disclosures of cash flow information:
Cash paid for interest $ 13   $ 296  
Cash paid for taxes $ 1,342   $ 666  
 

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2014 filed with the U.S. Securities and Exchange Commission on November 28, 2014.

Contacts

EACO Corporation
Marta Arciniega
(714) 876-2490

Contacts

EACO Corporation
Marta Arciniega
(714) 876-2490