EACO Corporation Reports Q2 Results

ANAHEIM, Calif.--()--EACO Corporation (OTCQB:EACO) today reported the results for its quarter ended February 29, 2016.

Net sales, net income and earnings per share were as follows for the three months ended February 29, 2016 (dollars in thousands, except per share information):

   
Three Months Ended %
February 29, 2016     February 28, 2015 Change
(unaudited)
 
Net sales $ 34,589 $ 34,427 0.5 %
 
Net income $ 731 $ 1,119 (34.7 )%
 
Basic and diluted earnings per common share $ 0.15 $ 0.23 (34.8 )%

We had 319 sales employees on February 29, 2016. Our 319 sales employees is an increase of 2.2% from the 312 as of February 28, 2015. The sales force is divided into Sales focus teams (SFT’s) and we had 95 SFT’s as of February 29, 2016 and 91 SFT’s on February 28, 2015. We anticipate continued growth in both our headcount and SFT’s in fiscal year 2016. We estimate that the annual North American market for our product is approximately $7.2 billion and our current market share is 1.9%.

 

EACO Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share information)

 
February 29,

2016

August 31,

2015

(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 4,374 $ 5,269
Restricted cash, current 1,054 1,781
Trade accounts receivable, net 16,578 15,485
Inventory, net 17,634 16,733
Marketable securities, trading 1,084 -
Prepaid expenses and other current assets 827 591
Total current assets 41,551 39,859
Non-current Assets:
Restricted cash, non-current 74 83
Equipment and leasehold improvements, net 1,450 1,569
Other assets 1,011 1,005
Total assets $ 44,086 $ 42,516
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable $ 11,528 $ 9,318
Accrued expenses and other current liabilities 2,335 4,349
Liabilities of discontinued operations – short-term 49 49
Liability for short sales of trading securities 1,054 1,781
Total current liabilities 14,966 15,497
Non-current Liabilities:
Liabilities of discontinued operations – long-term 25 35
Long-term debt 1,018 33
Total liabilities 16,009 15,565
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 793 860
Retained earnings 14,856 13,663
Total shareholders’ equity 28,077 26,951
Total liabilities and shareholders’ equity $ 44,086 $ 42,516
       

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Income

(in thousands, except for share and per share information)

(unaudited)

 
Three Months Ended Six Months Ended
February 29, February 28, February 29, February 28,
2016     2015   2016     2015  
Revenues $ 34,589 $ 34,427 $ 68,882 $ 67,661
Cost of revenues 24,469     23,795   48,793     47,584  
Gross margin 10,120     10,632   20,089     20,077  
Operating expenses:
Selling, general and administrative expenses 9,087     8,778   18,221     17,532  
Income from operations 1,033 1,854 1,868 2,545
 
Other income(expense):
Net gain (loss) on trading securities 180 (13 ) 171 (56 )
Interest and other income (expense) 2     6   (4 )   6  

Total other income (expense)

182     (7 ) 167     (50 )
Income before income taxes 1,215 1,847 2,035 2,495
Provision for income taxes 484     728   804     981  
Net income 731 1,119 1,231 1,514
Cumulative preferred stock dividend (19 )   (19 ) (38 )   (38 )
Net income attributable to common shareholders $ 712 $ 1,100 $ 1,193 $ 1,476
Basic and diluted earnings per share: $ 0.15 $ 0.23 $ 0.25 $ 0.30
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)

 
Six Months Ended
February 29,   February 28,
2016     2015  
Operating activities:
Net income $ 1,231 $ 1,514
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 287 268
Bad debt expense 24 -
Change in inventory reserve 118 1
Net (gain) loss on investments (171 ) 56
(Increase) decrease in:
Trade accounts receivable (1,117 ) 143
Inventory (1,019 ) (708 )
Prepaid expenses and other assets (242 ) 51
Increase (decrease) in:
Trade accounts payable 962 34
Accrued expenses and other current liabilities (2,014 ) (900 )
Liabilities of discontinued operations   (10 )   (115 )
Net cash (used in) provided by operating activities   (1,951 )   344  
 
Investing activities:
Purchase of property and equipment (168 ) (164 )
(Purchase) sale of marketable securities, trading (913 ) 16
Net change in securities sold short (727 ) 1,286
Change in restricted cash   736     (1,173 )
Net cash used in investing activities   (1,072 )   (35 )
 
Financing activities:
Borrowings on revolving credit facility 987 382
Preferred stock dividend (38 ) (38 )
Bank overdraft 1,248 247
Payments on long-term debt   (2 )   5  
Net cash provided by financing activities   2,195     596  
Effect of foreign currency exchange rate changes on cash and cash equivalents   (67 )   (81 )
Net (decrease) increase in cash and cash equivalents (895 ) 824
 
Cash and cash equivalents - beginning of period   5,269     3,480  
Cash and cash equivalents - end of period $ 4,374   $ 4,304  
 
Supplemental disclosures of cash flow information:
Cash paid for interest $ 14   $ 10  
Cash paid for taxes $ 2,194   $ 1,342  

Contacts

EACO Corporation
Marta Arciniega
714-876-2490

Contacts

EACO Corporation
Marta Arciniega
714-876-2490