EACO Corporation (OTCQB:EACO) today reported the results for its quarter
ended February 28, 2019.
Net sales, net income and earnings per share were as follows for the
three months ended February 28, 2019 and 2018 (dollars in thousands,
except per share information):
|
Three Months Ended
February 28, |
% | |||||
| 2019 | 2018 | Change | ||||
| (unaudited) | ||||||
| Net sales | $52,559 | $45,041 | 16.7% | |||
| Net income | $1,961 | $1,319 | 48.7% | |||
| Basic and diluted earnings per common share | $0.40 | $0.27 | 48.1% | |||
The Company had 340 sales employees at February 28, 2019, an increase of
14 or 4.3% from the prior year quarter. The Company’s sales force is
divided into Sales Focus Teams (SFT’s). The Company had 98 SFT’s as of
February 28, 2019 an increase of 2 from the prior year quarter.
Management anticipates continued growth in both our headcount and SFT’s
in fiscal year 2019. The Company believes it continues to gain market
share through its local presence business model, increasing net sales by
17% and bookings by 10% when comparing to the prior year quarter.
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 |
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|
Condensed Consolidated Balance Sheets |
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|
(in thousands, except share information) |
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|
(Unaudited) |
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| February 28, | August 31, | |||||
| 2019 | 2018* | |||||
| ASSETS | ||||||
| Current Assets: | ||||||
| Cash and cash equivalents | $ | 3,982 | $ | 2,705 | ||
| Restricted cash, current | 818 | 933 | ||||
| Trade accounts receivable, net | 28,148 | 26,277 | ||||
| Inventory, net | 35,457 | 30,531 | ||||
| Marketable securities, trading | 1,877 | 2,846 | ||||
| Prepaid expenses and other current assets | 2,216 | 1,590 | ||||
| Total current assets | 72,498 | 64,882 | ||||
| Non-current Assets: | ||||||
| Property, equipment and leasehold improvements, net | 9,674 | 9,847 | ||||
| Other assets | 1,468 | 1,570 | ||||
| Total assets | $ | 83,640 | $ | 76,299 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Current Liabilities: | ||||||
| Trade accounts payable | $ | 20,341 | $ | 17,678 | ||
| Accrued expenses and other current liabilities | 3,599 | 7,452 | ||||
| Liability for short sales of trading securities | 818 | 933 | ||||
| Current portion of long-term debt | 148 | 146 | ||||
| Total current liabilities | 24,906 | 26,209 | ||||
| Non-current Liabilities: | ||||||
| Long-term debt | 12,723 | 8,204 | ||||
| Total liabilities | 37,629 | 34,413 | ||||
| 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 | 1,205 | 928 | ||||
| Retained earnings | 32,378 | 28,530 | ||||
| Total shareholders’ equity | 46,011 | 41,886 | ||||
| Total liabilities and shareholders’ equity | $ | 83,640 | $ | 76,299 | ||
|
* Derived from the Company’s audited financial statements included |
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| EACO Corporation and Subsidiaries | ||||||||||||
|
Condensed Consolidated Statements of Income |
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|
(in thousands, except for share and per share information) |
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|
(Unaudited) |
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| Three Months Ended | Six Months Ended | |||||||||||
| February 28, | February 28, | |||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Revenues | $ | 52,559 | $ | 45,041 | $ | 103,345 | $ | 87,212 | ||||
| Cost of revenues | 38,047 | 32,592 | 74,724 | 62,584 | ||||||||
| Gross margin | 14,512 | 12,449 | 28,621 | 24,628 | ||||||||
| Operating expenses: | ||||||||||||
| Selling, general and administrative expenses | 11,720 | 10,477 | 23,210 | 20,817 | ||||||||
| Income from operations | 2,792 | 1,972 | 5,411 | 3,811 | ||||||||
| Other (expense) income: | ||||||||||||
| Net (loss) gain on trading securities | (126) | 48 | 102 | 251 | ||||||||
| Interest and other (expense) | (125) | (130) | (202) | (231) | ||||||||
| Total other (expense) income | (251) | (82) | (100) | 20 | ||||||||
| Income before income taxes | 2,541 | 1,890 | 5,311 | 3,831 | ||||||||
| Provision for income taxes | 580 | 571 | 1,425 | 1,317 | ||||||||
| Net income | 1,961 | 1,319 | 3,886 | 2,514 | ||||||||
|
Cumulative preferred stock dividend |
(19) | (19) | (38) | (38) | ||||||||
|
Net income attributable to common shareholders |
$ | 1,942 | $ | 1,300 | $ | 3,848 | $ | 2,476 | ||||
| Basic and diluted earnings per share: | $ | 0.40 | $ | 0.27 | $ | 0.79 | $ | 0.51 | ||||
|
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 |
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|
(in thousands) |
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(Unaudited) |
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| Six Months Ended | ||||||
| February 28, | ||||||
| 2019 | 2018 | |||||
| Operating activities: | ||||||
| Net income | $ | 3,886 | $ | 2,514 | ||
|
Adjustments to reconcile net income to net cash used in operating activities: |
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| Depreciation and amortization | 503 | 498 | ||||
| Bad debt expense | 18 | 44 | ||||
| Change in inventory reserve | 107 | 123 | ||||
| Net (gain) on trading securities | (102) | (251) | ||||
| (Increase) decrease in: | ||||||
| Trade accounts receivable | (1,889) | (3,188) | ||||
| Inventory | (5,033) | (1,760) | ||||
| Prepaid expenses and other assets | (524) | (1,030) | ||||
| Increase (decrease) in: | ||||||
| Trade accounts payable | 2,206 | 2,515 | ||||
| Accrued expenses and other current liabilities | (3,853) | (1,161) | ||||
| Net cash used in operating activities | (4,681) | (1,696) | ||||
| Investing activities: | ||||||
| Purchase of property, equipment and leasehold improvements | (330) | (1,214) | ||||
| Sale (purchase) of marketable securities, trading | 1,071 | (338) | ||||
| Net change in securities sold short | (115) | (90) | ||||
| Net cash provided by (used) in investing activities | 626 | (1,642) | ||||
| Financing activities: | ||||||
| Borrowings on revolving credit facility | 4,593 | 1,525 | ||||
| Preferred dividend | (38) | (38) | ||||
| Bank overdraft | 457 | 1,145 | ||||
| Payments on long-term debt | (72) | (35) | ||||
| Net cash provided by financing activities | 4,940 | 2,597 | ||||
|
Effect of foreign currency exchange rate changes on cash and cash equivalents |
277 | 67 | ||||
|
Net increase (decrease) in cash, cash equivalents, and restricted cash |
1,162 | (674) | ||||
| Cash, cash equivalents, and restricted cash – beginning of period | 3,638 | 4,577 | ||||
| Cash, cash equivalents, and restricted cash – end of period | $ | 4,800 | $ | 3,903 | ||
| Supplemental disclosures of cash flow information: | ||||||
| Cash paid for income taxes | $ | 3,059 | $ | 2,241 | ||
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