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EACO Corporation Reports Record 2nd Quarter Net Sales and Record 2nd Quarter Net Income

EACO Corporation (OTCMKTS:EACO) today reported the results for its quarter ended February 28, 2023.

Net sales, net income and earnings per share were as follows for the three months ended February 28, 2023 (dollars in thousands, except per share information):

 

Three Months Ended

February 28,

 

 

 

2023

 

2022

 

% Change

 

(unaudited)

 

(unaudited)

 

 

 

 

Net sales

$76,925

 

$66,587

 

15.5%

 

 

 

 

 

 

Net income

$5,100

 

$3,407

 

49.7%

 

 

 

 

 

 

Basic and diluted earnings per common share

$1.05

 

$0.70

 

50.0%

The Company had 370 sales employees at February 28, 2023, an increase of 32 employees or 9.5%, from the prior year quarter. The Company’s salesforce is divided into sales focus teams (SFT’s). The Company had 105 SFT’s as of February 28, 2023, three more than the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2023. The Company believes it continues to gain market share through its local presence business model.

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, 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)

 

 

 

 

 

 

 

 

February 28,

 

 

August 31,

 

 

2023

 

 

2022*

ASSETS

 

 

 

Current Assets:

Cash and cash equivalents

$

5,324

$

17,386

Restricted cash

10

10

Trade accounts receivable, net

 

41,554

 

44,637

Inventory, net

53,466

48,808

Marketable securities, trading

 

21,865

 

3,925

Prepaid expenses and other current assets

3,255

5,008

Total current assets

 

125,474

 

119,774

Non-current Assets:

 

 

 

 

Property, equipment and leasehold improvements, net

8,162

8,479

Operating lease right-of-use assets

 

10,660

 

10,389

Other assets, net

 

1,436

 

1,039

Total assets

$

145,732

$

139,681

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current Liabilities:

 

Trade accounts payable

$

22,740

$

21,762

Accrued expenses and other current liabilities

10,178

15,020

Current portion of operating lease liabilities

 

3,688

 

3,375

Current portion of long-term debt

 

120

 

119

Total current liabilities

 

36,726

 

40,276

Non-current Liabilities:

 

Long-term debt

4,406

4,465

Operating lease liabilities

 

7,164

 

7,192

Total liabilities

 

48,296

 

51,933

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

89

174

Retained earnings

 

84,919

 

75,146

Total shareholders’ equity

97,436

87,748

Total liabilities and shareholders’ equity

$

145,732

$

139,681

 

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2022 filed with the U.S. Securities and Exchange Commission on November 4, 2022.

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 28,

 

February 28,

 

 

2023

 

2022

 

2023

 

2022

Net sales

$

76,925

 

$

66,587

 

$

153,244

 

$

130,409

 

Cost of sales

 

54,661

 

 

48,462

 

109,317

 

 

94,106

 

Gross margin

 

22,264

 

 

18,125

 

 

43,927

 

 

36,303

 

Operating expenses:

 

 

 

 

 

Selling, general and administrative expenses

15,606

 

 

13,439

 

31,291

 

 

22,334

 

Income from operations

 

6,658

 

 

4,686

 

 

12,636

 

 

13,969

 

 

Other income (expense):

Net (loss) gain on trading securities

 

179

 

 

(22

)

 

621

 

 

(78

)

Interest and other (expense)

46

 

 

(53

)

(2

)

 

(105

)

Other (expense) income, net

 

225

 

 

(75

)

 

619

 

 

(183

)

Income before income taxes

6,883

 

4,611

 

13,255

 

13,786

 

Provision for income taxes

 

1,783

 

 

1,204

 

 

3,444

 

 

3,593

 

Net income

5,100

 

3,407

 

9,811

 

10,193

 

Cumulative preferred stock dividend

 

(19

)

 

(19

)

 

(38

)

 

(38

)

Net income attributable to common shareholders

$

5,081

 

$

3,388

 

$

9,773

 

$

10,155

 

Basic and diluted earnings per share:

$

1.05

 

$

0.70

 

$

2.01

 

$

2.09

 

Basic weighted average common

shares outstanding

4,861,590

 

4,861,590

 

4,861,590

 

4,861,590

 

Diluted weighted average common

shares outstanding

 

4,901,590

 

 

4,901,590

 

 

4,901,590

 

 

4,901,590

 

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

 

 

 

Six Months Ended

February 28,

 

2023

 

2022

Operating activities:

 

 

Net income

$

9,811

 

$

10,193

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

Depreciation and amortization

708

751

 

Bad debt expense

182

 

 

26

 

Net unrealized (gain) loss on trading securities

(621

)

78

 

Increase (decrease) in cash from changes in:

 

 

 

 

Trade accounts receivable

2,901

(2,958

)

Inventory

(4,658

)

 

 

(4,276

)

Prepaid expenses and other assets

1,356

(1,374

)

Operating lease right-of-use assets

 

(271

)

 

 

54

 

Trade accounts payable

1,087

4,404

 

Accrued expenses and other current liabilities

 

(4,842

)

 

 

(2,524

)

Operating lease liabilities

285

 

 

(19

)

Net cash provided by operating activities

5,938

 

 

4,355

Investing activities:

 

 

Purchase of property, equipment, and leasehold improvements

(391

)

 

 

(644

)

Net (purchases) sales of marketable securities, trading

(17,319

)

(935

)

Net cash (used in) investing activities

(17,710

)

 

 

(1,579

)

Financing activities:

 

 

Repayments on long-term debt

 

(58

)

 

 

(55

)

Preferred stock dividend

(38

)

(38

)

Net change in bank overdraft

(109

)

 

 

(1,061

)

Net cash (used in) financing activities

(205

)

 

 

(1,154

)

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

(85

)

 

(455

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

(12,062

)

 

 

1,167

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

17,396

 

4,465

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

$

5,334

 

 

$

5,632

Supplemental disclosures of cash flow information:

 

 

Cash paid for interest

$

102

 

 

$

105

Cash paid for income taxes

$

7,544

 

$

3,979

 

 

Contacts

Michael Narikawa

EACO Corporation

(714) 876-2490

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