EACO Corporation Reports 2012 Second Quarter Earnings

ANAHEIM, Calif.--(BUSINESS WIRE)--EACO Corporation (OTCQB:EACO) today reported the results for the quarter ended February 29, 2012.

Net sales, net income and earnings per share were as follows for the three month periods ended February 29, 2012 and February 28, 2011 (dollars in thousands, except per share information):

	Three Months Ended
	February 29, 2012	February 28, 2011	Change
	(unaudited)
Net sales/revenue	$27,426	$25,005	10%
Net income	$403	$533	(24%)
Basic and diluted earnings per common share	$0.08	$0.11	(27%)

As of February 29, 2012, the Company’s sales team numbered 286 employees an increase of 13% from the 254 employees on February 28, 2011. The Company’s sales force is divided into Sales Focus Teams (SFT). The Company had 82 SFT’s as of February 29, 2012, an increase of 11% from 74 SFT’s on February 28, 2011.

EACO Corporation and Subsidiaries Condensed Consolidated Balance Sheets (in thousands, except share information)
	February 29, 2012		August 31, 2011
ASSETS	(unaudited)
Current Assets:
Cash and cash equivalents	$	1,858	$	1,368
Trade accounts receivable, net		13,390		12,348
Inventory, net		11,585		11,389
Marketable securities, trading		761		892
Prepaid expenses and other current assets		456		320
Deferred tax asset, current		1,055		1,062
Total current assets		29,105		27,379
Non-current Assets:
Restricted cash		720		632
Real estate properties held for leasing, net		9,929		10,085
Equipment and leasehold improvements, net		953		972
Deferred tax asset		2,318		2,623
Other assets, principally deferred charges, net of accumulated amortization		1,149		1,187
Total assets	$	44,174	$	42,878
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable	$	9,287	$	8,541
Accrued expenses and other current liabilities		1,511		2,325
Liability for short sales of trading securities		172		--
Liabilities of discontinued operations – short-term		147		147
Current portion of long-term debt		790		778
Total current liabilities		11,907		11,791
Non-current Liabilities:
Liabilities of discontinued operations – long-term		2,636		2,708
Deposit liability		147		147
Long-term debt		15,880		15,626
Total liabilities		30,570		30,272
Shareholders’ Equity:
Convertible preferred stock, $0.01 par value per share; authorized 10,000,000 shares; 36,000 shares outstanding at February 29, 2012 and August 31, 2011 (liquidation value $900)		1		1
Common stock, $0.01 par value per share; authorized 8,000,000 shares; 4,861,590 shares outstanding at February 29, 2012 and August 31, 2011		49		49
Additional paid-in capital		12,378		12,378
Accumulated other comprehensive income		524		554
Retained earnings (accumulated deficit)		652		(376	)
Total shareholders’ equity		13,604		12,606
Total liabilities and shareholders’ equity	$	44,174	$	42,878

EACO Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (in thousands) (Unaudited)
	Six Months Ended
	February 29, 2012			February 28, 2011
Operating activities:
Net income	$	1,028		$	1,133
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		409			385
Bad debt expense		46			--
Change in inventory reserve		(50	)		--
Net gain on trading securities		(347	)		(393	)
(Increase) decrease in:
Trade accounts receivable		(1,088	)		(1,106	)
Inventory		(146	)		(803	)
Prepaid expenses and other assets		(126	)		(85	)
Deferred tax asset		312			--
Increase (decrease) in:
Trade accounts payable		(36	)		428
Accrued expenses and other current liabilities		(814	)		(271	)
Liabilities of discontinued operations		(72	)		(94	)
Net cash used in operating activities		(884	)		(806	)
Investing activities:
Purchase of property and equipment		(206	)		(176	)
Sale of marketable securities, trading		478			226
Short sales of marketable securities, trading		172			143
Change in restricted cash		(88	)		234
Net cash provided by investing activities		356			427
Financing activities:
Net borrowings on revolving credit facility		650			600
Bank overdraft		782			--
Payments on long-term debt		(384	)		(129	)
Net cash provided by financing activities		1,048			471
Effect of foreign currency exchange rate changes on cash and cash equivalents		(30	)		37
Net increase in cash and cash equivalents		490			129
Cash and cash equivalents - beginning of period		1,368			1,260
Cash and cash equivalents - end of period	$	1,858		$	1,389
Supplemental disclosures of cash flow information:
Cash paid for interest	$	379		$	391
Cash paid for taxes	$	415		$	158

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, 2012			February 28, 2011			February 29, 2012			February 28, 2011
Gross sales	$	27,426		$	25,005		$	53,887		$	50,661
Cost of goods sold		19,946			18,334			39,073			37,198
Gross profit		7,480			6,671			14,814			13,463
Operating expenses:
Selling, general and administrative expenses		6,850			5,891			13,324			11,859
Total operating expenses		6,850			5,891			13,324			11,859
Income from operations		630			780			1,490			1,604
Non-operating income (expense):
Gain on sale of trading securities		62			247			62			253
Unrealized gain (loss) on trading securities		92			(69	)		285			140
Interest expense, net		(178	)		(190	)		(359	)		(385	)
Total non-operating income (expense)		(24	)		(12	)		(12	)		8
Net income before income taxes		606			768			1,478			1,612
Provision for income taxes		203			235			450			479
Net income		403			533			1,028			1,133
Undeclared cumulative preferred stock dividend		(19	)		(19	)		(38	)		(38	)
Net income attributable to common shareholders	$	384		$	514		$	990		$	1,095
Basic and diluted earnings per share	$	0.08		$	0.11		$	0.20		$	0.23
Basic and diluted weighted average common shares outstanding		4,861,590			4,861,590			4,861,590			4,861,590