Eaco Corporation Reports Record Annual Net Sales, Annual Net Income, Quarterly Net Sales and 4th Quarter Net Income

ANAHEIM, Calif.--(BUSINESS WIRE)--EACO Corporation (OTCQB:EACO) today reported the results for its year ended August 31, 2019.

Net sales, net income and earnings per share were as follows for the three months and year ended August 31, 2019 (dollars in thousands, except per share information):

	Three Months Ended August 31,		%
	2019	2018	Change
	(unaudited)	(unaudited)
Net sales	$60,056	$54,349	10.5%
Net income	$2,602	$2,181	19.3%
Basic and diluted earnings per common share	$0.53	$0.44	20.5%
	Year Ended August 31,		%
	2019	2018*	Change
	(unaudited)
Net sales	$221,241	$193,284	14.5%
Net income	$9,432	$6,949	35.7%
Basic and diluted earnings per common share	$1.92	$1.41	36.2%

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2018 filed with the U.S. Securities and Exchange Commission on November 28, 2018.

The Company had 347 sales employees at August 31, 2019, an increase of 11 or 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 August 31, 2019 an increase of 2 from the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2020. The Company believes it continues to gain market share through its local presence business model, increasing quarterly net sales and net income by 10.5% and 19.3% respectively when compared 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 Condensed Consolidated Balance Sheets (in thousands, except share information) (unaudited)
		August 31,
		2019		2018*
ASSETS
Current Assets:
Cash and cash equivalents	$	4,692	$	2,705
Restricted cash		655		933
Trade accounts receivable, net		30,799		26,277
Inventory, net		37,259		30,531
Marketable securities, trading		1,873		2,846
Prepaid expenses and other current assets		4,234		1,590
Total current assets		79,512		64,882
Non-current Assets:
Property, equipment and leasehold improvements, net		10,572		9,847
Other assets		1,938		1,570
Total assets	$	92,022	$	76,299
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable	$	21,138	$	17,678
Accrued expenses and other current liabilities		7,441		7,452
Liability for short sales of trading securities		655		933
Current portion of long-term debt		5,484		146
Total current liabilities		34,718		26,209
Non-current Liabilities:
Long-term debt		6,114		8,204
Total liabilities		40,832		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		876		928
Retained earnings		37,886		28,530
Total shareholders’ equity		51,190		41,886
Total liabilities and shareholders’ equity	$	92,022	$	76,299

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2018 filed with the U.S. Securities and Exchange Commission on November 28, 2018.

 

EACO Corporation and Subsidiaries Condensed Consolidated Statements of Income (in thousands, except for share and per share information) (unaudited)
		Three Months Ended August 31,						Year Ended August 31,
		2019			2018			2019			2018
Revenues	$	60,056		$	54,349		$	221,241		$	193,284
Cost of revenues		43,569			39,024			160,008			138,255
Gross margin		16,487			15,325			61,233			55,029
Operating expenses:
Selling, general and administrative expenses		12,650			12,245			48,213			44,705
Income from operations		3,837			3,080			13,020			10,324
Other (expense) income:
Net (loss) gain on trading securities		(88	)		86			427			273
Interest and other expense		(145	)		(124	)		(475	)		(477	)
Other expense, net		(233	)		(38	)		(48	)		(204	)
Income before income taxes		3,604			3,042			12,972			10,120
Provision for income taxes		1,002			861			3,540			3,171
Net income		2,602			2,181			9,432			6,949
Cumulative preferred stock dividend		(19	)		(19	)		(76	)		(76	)
Net income attributable to common shareholders	$	2,583		$	2,162		$	9,356		$	6,873
Basic and diluted earnings per common share:	$	0.53		$	0.44		$	1.92		$	1.41
Basic and diluted weighted average common shares outstanding		4,861,590			4,861,590			4,861,590			4,861,590

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2018 filed with the U.S. Securities and Exchange Commission on November 28, 2018.

 

EACO Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited)
	Year Ended August 31,
	2019			2018*
Operating activities:
Net income	$	9,432		$	6,949
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		1,047			1,009
Bad debt expense		340			106
Change in inventory reserve		151			(156	)
Net gain on trading securities		(427	)		(273	)
(Increase) decrease in:
Trade accounts receivable		(4,862	)		(5,044	)
Inventory		(6,879	)		(3,888	)
Prepaid expenses and other assets		(3,012	)		(655	)
Increase (decrease) in:
Trade accounts payable		3,313			4,009
Accrued expenses and other current liabilities		(11	)		2,914
Net cash (used in) provided by operating activities		(908	)		4,971
Investing activities:
Purchase of property, equipment, and leasehold improvements		(1,772	)		(1,600	)
Sale (purchase) of marketable securities, trading		1,400			(977	)
Net change in liabilities for short sales of trading securities		(278	)		226
Net cash used in investing activities		(650	)		(2,351	)
Financing activities:
Borrowings (payments) on revolving credit facility, net		3,495			(3,853	)
Repayments on long-term debt		(247	)		(128	)
Preferred stock dividend		(76	)		(76	)
Bank overdraft		147			317
Net cash provided by (used in) financing activities		3,319			(3,740	)
Effect of foreign currency exchange rate changes on cash and cash equivalents		(52	)		181
Net increase (decrease) in cash, cash equivalents, and restricted cash		1,709			(939	)
Cash, cash equivalents, and restricted cash - beginning of period		3,638			4,577
Cash, cash equivalents, and restricted cash - end of period	$	5,347		$	3,638
Supplemental disclosures of cash flow information:
Cash paid for interest	$	475		$	466
Cash paid for income taxes	$	3,107		$	2,055

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2018 filed with the U.S. Securities and Exchange Commission on November 28, 2018.