Press release

EACO Corporation Reports Record 1st Quarter Net Sales

0
Sponsored by Businesswire

EACO Corporation (OTC Pink:EACO) announced the results for its quarter ended November 30, 2023.

Net sales, net income and earnings per share were as follows for the quarter ended November 30, 2023 (dollars in thousands, except per share information):

 

Three Months Ended

November 30,

%

 

2023

2022

Change

 

(unaudited)

(unaudited)

 

 

 

 

Net sales

$80,255

$76,319

5.2%

 

 

 

 

Net income

$1,779

$4,711

(62.2%)

 

 

 

 

Basic and diluted earnings per common share

$0.36

$0.97

(62.3%)

The Company had 413 sales employees at November 30, 2023, an increase of 47 or 13% from the prior year quarter. The Company’s sales force is divided into sales focus teams (SFT’s). The Company had 109 SFT’s as of November 30, 2023, an increase of 8 from the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2024. 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,

 

 

2023

 

2023

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,499

 

$

8,558

Restricted cash

 

 

10

 

 

10

Trade accounts receivable, net

 

 

46,051

 

 

46,654

Inventory, net

 

 

60,256

 

 

56,270

Marketable securities, trading

 

 

4,227

 

 

27,228

Prepaid expenses and other current assets

 

 

4,148

 

 

3,843

Total current assets

 

 

121,191

 

 

142,563

Non-current Assets:

 

 

 

 

 

 

Property, equipment and leasehold improvements, net

 

 

35,519

 

 

8,041

Operating lease right-of-use assets

 

 

4,216

 

 

9,988

Other assets, net

 

 

1,760

 

 

1,652

Total assets

 

$

162,686

 

$

162,244

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Trade accounts payable

 

$

26,345

 

$

22,505

Accrued expenses and other current liabilities

 

 

14,118

 

 

16,375

Current portion of operating lease liabilities

 

 

2,130

 

 

3,950

Current portion of debt

 

 

3,201

 

 

120

Total current liabilities

 

 

45,794

 

 

42,950

Non-current Liabilities:

 

 

 

 

 

 

Long-term debt

 

 

4,317

 

 

4,348

Operating lease liabilities

 

 

2,225

 

 

6,225

Total liabilities

 

 

52,336

 

 

53,523

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

 

 

(93)

 

 

38

Retained earnings

 

 

98,015

 

 

96,255

Total shareholders’ equity

 

 

110,350

 

 

108,721

Total liabilities and shareholders’ equity

 

$

162,686

 

$

162,244

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2023 filed with the U.S. Securities and Exchange Commission on November 22, 2023.

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Income

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

(unaudited)

 

 

Three Months Ended

 

 

November 30,

 

 

2023

 

2022

Net sales

 

$

80,255

 

$

76,319

Cost of sales

 

 

56,683

 

 

54,656

Gross margin

 

 

23,572

 

 

21,663

Operating expenses:

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

17,217

 

 

15,685

Impairment on termination of lease

 

 

3,906

 

 

––

Income from operations

 

 

2,449

 

 

5,978

 

 

 

 

 

 

 

Other (expense) income:

 

 

 

 

 

 

Net (loss) gain on trading securities

 

 

(44)

 

 

442

Interest and other expense, net

 

 

(9)

 

 

(48)

Other (expense) income, net

 

 

(53)

 

 

394

Income before income taxes

 

 

2,396

 

 

6,372

Provision for income taxes

 

 

617

 

 

1,661

Net income

 

 

1,779

 

 

4,711

Cumulative preferred stock dividend

 

 

(19)

 

 

(19)

Net income attributable to common shareholders

 

$

1,760

 

$

4,692

Basic and diluted earnings per common share:

 

$

0.36

 

$

0.97

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,

 

 

2023

 

2022

Operating activities:

 

 

 

 

 

 

Net income

 

$

1,779

 

$

4,711

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

317

 

 

359

Bad debt expense

 

 

47

 

 

2

Deferred tax provision

 

 

(67)

 

 

Net unrealized loss (gain) on trading securities

 

 

210

 

 

(487)

Impairment on termination of lease

 

 

3,906

 

 

––

Increase (decrease) in cash from changes in

 

 

 

 

 

 

Trade accounts receivable

 

 

556

 

 

4,300

Inventory

 

 

(3,986)

 

 

(4,247)

Prepaid expenses and other assets

 

 

(346)

 

 

(272)

Operating lease right-of-use assets

 

 

5,772

 

 

(256)

Trade accounts payable

 

 

190

 

 

(407)

Accrued expenses and other current liabilities

 

 

(2,257)

 

 

(768)

Right of use liabilities

 

 

(5,820)

 

 

272

Net cash provided by operating activities

 

 

301

 

 

3,207

Investing activities:

 

 

 

 

 

 

Additions to property, equipment, and leasehold improvements

 

 

(31,701)

 

 

(86)

Proceeds (purchase) from sale of marketable securities, trading

 

 

22,791

 

 

(6,243)

Net cash used in investing activities

 

 

(8,910)

 

 

(6,329)

Financing activities:

 

 

 

 

 

 

Borrowing on revolving credit facility

 

 

3,081

 

 

Payments on long-term debt

 

 

(31)

 

 

(29)

Preferred stock dividend

 

 

(19)

 

 

(19)

Bank overdraft

 

 

3,650

 

 

(109)

Net cash provided (used) by financing activities

 

 

6,681

 

 

(157)

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

 

 

(131)

 

 

(86)

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

 

 

(2,059)

 

 

(3,365)

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

 

 

8,568

 

 

17,396

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

 

$

6,509

 

$

14,031

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

Cash paid for interest

 

$

296

 

$

51

Cash paid for income taxes

 

$

674

 

$