EACO Corporation Reports Record Quarterly Net Sales & Income

ANAHEIM, Calif.--()--EACO Corporation (OTCQB:EACO) today reported the results for its quarter ended May 31, 2014.

Net sales, net income and earnings per share were as follows for the three months ended May 31, 2014 (dollars in thousands, except per share information):

       
Three Months Ended May 31,

%

2014     2013

Change

(unaudited)
 
Net sales $36,253 $31,368 15.6%
 
Net income $2,297 $1,284 78.9%
 
Basic and diluted earnings per common share $0.47 $0.26 80.8%
 

The Company’s sales team numbered 323 employees on May 31, 2014 and May 31, 2013. The sales force is divided into Sales Focus Teams (SFT’s). The Company had 97 SFT’s as of May 31, 2014, an increase of 5% from 92 SFT’s on May 31, 2013. The Company continues to gain market share through its local presence business model.

       

EACO Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share information)

 
May 31, August 31,
2014 2013*
ASSETS (unaudited)
Current Assets:
Cash and cash equivalents

 

$

1,688

 

$

1,507

Restricted cash, current -- --
Trade accounts receivable, net 17,396 14,438
Inventory, net 15,039 14,272
Marketable securities, trading 1,835 1,395
Assets held for sale 7,483 7,988
Prepaid expenses and other current assets   400   619
Total current assets 43,841 40,219
 
Non-current Assets:
Restricted cash, non-current 548 548
Equipment and leasehold improvements, net 1,338 1,396
Deferred tax asset 2,601 1,712
Other assets   445   605
Total assets

 

$

48,773

 

$

44,480

 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable

 

$

11,507

 

$

9,315

Accrued expenses and other current liabilities 3,555 2,880
Liabilities of discontinued operations – short-term 153 146
Liabilities of assets held for sale   4,883   5,397
Total current liabilities 20,098 17,738
 
Non-current Liabilities:
Liabilities of discontinued operations – long-term 2,257 2,410
Deposit liability 63 87
Long-term debt   5,160   6,534
Total liabilities 27,578 26,769
 
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 891 820
Retained earnings   7,876   4,463
Total shareholders’ equity   21,195   17,711
Total liabilities and shareholders’ equity

 

$

48,773

 

$

44,480

 

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2013 filed with the U.S. Securities and Exchange Commission on November 29, 2013.

 
       

EACO Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except for share and per share information)
(Unaudited)

 
Three Months Ended Nine Months Ended
May 31, May 31,
2014     2013 2014     2013
Revenues $ 36,253     $ 31,368 $ 98,210     $ 89,148
Cost of revenues   26,014       22,405   70,555       64,038
Gross margin   10,239       8,963   27,655       25,110
 
Selling, general and administrative expenses   8,021       7,708   23,827       22,318
Income from operations 2,218 1,255 3,828 2,792
 
Non-operating income (expense):
Net gain (loss) on trading securities 8 85 (49) (34)
Gain on sale of property -- 240 535 780
Interest expense, net   (85)       (158)   (296)       (491)
Total non-operating (expense) income   (77)       167   190       255
Net income before income taxes 2,141 1,422 4,018 3,047
(Benefit) provision for income taxes   (156)       138   548       739
Net income 2,297 1,284 3,470 2,308
Cumulative preferred stock dividend   (19)       (19)   (57)       (57)
 
Net income attributable to common shareholders $ 2,278     $ 1,265 $ 3,413     $ 2,251
 
Basic and diluted earnings per share $ 0.47 $ 0.26 $ 0.70 $ 0.46
 
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,
2014   2013
Operating activities:
Net income

 

 

$

3,470

 

$

2,308

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 406 464
Bad debt expense 14 58
Change in inventory reserve 76 (62)
Gain on sale of real estate property (535) (780)
Net loss on trading securities 49 34
(Increase) decrease in:
Trade accounts receivable (2,972) 472
Inventory (843) (1,435)
Prepaid expenses and other assets 390 83
Deferred tax asset (889) 670
Increase (decrease) in:
Trade accounts payable 941 (829)
Accrued expenses and other current liabilities 675 (561)
Deposit liability (24) (60)
Liabilities of discontinued operations   (146)   (111)
Net cash provided by operating activities   612   251
 
Investing activities:
Purchase of property and equipment (458) (631)
(Purchase) sale of marketable securities, trading (489) 37
Proceeds from securities sold short 619
Proceeds from sale of property 1,139 2,830
Change in restricted cash     (620)
Net cash provided by investing activities   192   2,235
 
Financing activities:
Payments on revolving credit facility (1,366) (985)
Preferred dividend (57) (57)
Bank overdraft 1,251 (92)
Payments on long-term debt - real estate held for sale (396)
Payments on long-term debt   (126)   (1,663)
Net cash used in financing activities   (694)   (2,797)
Effect of foreign currency exchange rate changes on cash and cash equivalents   71   224
Net increase (decrease) in cash and cash equivalents 181 (87)
Cash and cash equivalents - beginning of period   1,507   2,568
Cash and cash equivalents - end of period

 

$

1,688

 

$

2,481

Supplemental disclosures of cash flow information:

Cash paid for interest

$

299

$

512

 

Cash paid for taxes

$

666

$

196

 

Contacts

EACO Corporation
Marta Arciniega, 714-876-2490

Contacts

EACO Corporation
Marta Arciniega, 714-876-2490