Press release

EACO Corporation Reports Record 1st Quarter Net Sales

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EACO Corporation (OTC Pink:EACO) announced the results for its quarter ended November 30, 2022.

Net sales, net income and earnings per share were as follows for the quarter ended November 30, 2022 (dollars in thousands, except per share information):

 

Three Months Ended November,

%

 

2022

2021

Change

 

(unaudited)

(unaudited)

 

 

 

 

Net sales

$76,319

$63,822

19.6%

 

 

 

 

Net income

$4,711

$6,786*

(30.6%)

 

 

 

 

Basic and diluted earnings per common share

$0.97

$1.39

(30.2%)

*Includes an income benefit of $3.4 million as a result of qualified federal tax credits related to the Employee Retention Credit.

The Company had 366 sales employees at November 30, 2022, an increase of 38 or 12% from the prior year quarter. The Company’s sales force is divided into sales focus teams (SFT’s). The Company had 101 SFT’s as of November 30, 2022, the same as 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, and the impact of products offered by our competitors from time to time. 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)

 

November 30,

 

 

August 31,

2022

 

2022*

ASSETS

 

 

 

 

Current Assets:

Cash and cash equivalents

$

14,021

$

17,386

Restricted cash

10

10

Trade accounts receivable, net

 

40,335

 

44,637

Inventory, net

53,055

48,808

Marketable securities, trading

 

10,655

 

3,925

Prepaid expenses and other current assets

5,198

5,008

Total current assets

 

123,274

 

119,774

Non-current Assets:

 

 

 

 

Property, equipment and leasehold improvements, net

8,206

8,479

Operating lease right-of-use assets

 

10,645

 

10,389

Other assets, net

 

1,121

 

1,039

Total assets

$

143,246

$

139,681

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

Current Liabilities:

Trade accounts payable

$

21,246

$

21,762

Accrued expenses and other current liabilities

14,252

15,020

Current portion of operating lease liabilities

 

3,554

 

3,375

Current portion of long-term debt

 

120

 

119

Total current liabilities

 

39,172

 

40,276

Non-current Liabilities:

Long-term debt

4,435

4,465

Operating lease liabilities

 

7,285

 

7,192

Total liabilities

 

50,892

 

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

88

174

Retained earnings

 

79,838

 

75,146

Total shareholders’ equity

92,354

87,748

Total liabilities and shareholders’ equity

$

143,246

$

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

November 30,

 

 

2022

 

2021

Net sales

$

76,319

 

$

63,822

 

Cost of sales

 

54,656

 

45,644

 

Gross margin

 

21,663

 

18,178

 

Operating expenses:

Selling, general and administrative expenses

15,685

 

8,895

 

Income from operations

 

5,978

 

9,283

 

 

Other income (expense):

Net gain (loss) on trading securities

 

442

 

(56

)

Interest and other expense, net

(48

)

(52

)

Other income (expense), net

 

394

 

(108

)

Income before income taxes

6,372

 

9,175

 

Provision for income taxes

 

1,661

 

2,389

 

Net income

 

4,711

 

6,786

 

Cumulative preferred stock dividend

(19

)

(19

)

Net income attributable to common shareholders

$

4,692

 

$

6,767

 

 

Basic and diluted earnings per common share:

$

0.97

 

$

1.39

 

Basic and diluted weighted average common

shares outstanding

 

4,861,590

 

4,861,590

 

 

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

Three Months Ended

November 30,

2022

 

2021

Operating activities:

 

 

Net income

$

4,711

 

$

6,786

 

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

 

 

Depreciation and amortization

359

 

382

 

Bad debt expense

2

 

 

 

9

 

Net unrealized loss on trading securities

(487

)

56

 

Increase (decrease) in cash from changes in

 

 

Trade accounts receivable

4,300

 

(248

)

Inventory

(4,247

)

 

 

(2,094

)

Prepaid expenses and other assets

(272

)

(4,350

)

Operating lease right-of-use assets

 

(256

)

 

 

(220

)

Trade accounts payable

(407

)

1,642

 

Accrued expenses and other current liabilities

(768

)

 

 

744

 

Operating lease liabilities

 

272

 

 

 

240

 

Net cash provided by operating activities

3,207

 

 

 

2,947

 

Investing activities:

Additions to property, equipment, and leasehold improvements

(86

)

 

 

(286

)

(Purchase) sale of marketable securities, trading

(6,243

)

1

 

Net cash (used in) investing activities

(6,329

)

 

 

(285

)

Financing activities:

Payments on long-term debt

 

(29

)

 

 

(27

)

Preferred stock dividend

(19

)

(19

)

Bank overdraft

(109

)

 

 

(1,008

)

Net cash used in financing activities

(157

)

 

 

(1,054

)

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

(86

)

 

(480

)

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

(3,365

)

 

 

1,128

 

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

17,396

 

 

4,465

 

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

$

14,031

 

 

$

5,593

 

Supplemental disclosures of cash flow information:

Cash paid for interest

$

51

 

 

$

52