EACO Corporation Reports Record Annual Net Sales

ANAHEIM, Calif.--(BUSINESS WIRE)--

EACO Corporation EACO today reported the results for its quarter ended August 31, 2015.

Net sales, net income and earnings per share were as follows for the twelve and three months ended August 31, 2015 (dollars in thousands, except per share information):

		Twelve Months Ended August 31,				%
		2015		2014*		Change
		(unaudited)
Net sales		$140,213		$134,747		4.1%
Net income		$3,741		$5,611		(33.3%)
Basic and diluted earnings per common share		$0.75		$1.14		(34.2%)
		Three Months Ended August 31,				%
		2015		2014*		Change
		(unaudited)
Net sales		$35,652		$36,537		(2.4%)
Net income		$1,052		$2,141		(50.9%)
Basic and diluted earnings per common share		$0.21		$0.44		(52.3%)

(*Net income for the three months ended August 31, 2014 includes non-operating items relating to the sale of the Sylmar properties and gain on workers compensation settlement for a pre-tax gain of $960,000 and $592,000 respectively. Additionally, the net income for the fiscal year ended August 31, 2014 includes the sale of the Orange Park property for a pre-tax gain of $535,000.)

The Company had 313 sales employees at August 31, 2015, a decrease of 5% from 329 sales employees on August 31, 2014. The company's sales force is divided into Sales Focus Teams (SFTs). The company had 96 SFTs as of August 31, 2015, an increase of 2% from 94 SFTs on August 31, 2014. The company continues to gain market share through its local presence business model. The decrease in headcount is a short-term adjustment, but management anticipates continued growth in both our headcount and SFTs in fiscal year 2016. The Company estimates that the annual North American market for our product is approximately $7.2 billion. The Company's current estimated market share is 2.0% as compared to 1.9% in the prior year.

EACO Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share information)
(unaudited)
		August 31,			August 31,
		2015			2014*
ASSETS
Current Assets:
Cash and cash equivalents		$	5,269		$	3,480
Restricted cash, current			1,781			642
Trade accounts receivable, net			15,485			17,795
Inventory, net			16,733			14,863
Marketable securities, trading			-			73
Prepaid expenses and other current assets			591			1,104
Total current assets			39,859			37,957
Non-current Assets:
Restricted cash, non-current			83			322
Equipment and leasehold improvements, net			1,569			1,603
Other assets			1,005			1,001
Total assets		$	42,516		$	40,883
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable		$	9,332		$	11,192
Accrued expenses and other current liabilities			4,349			3,508
Liabilities of discontinued operations – short-term			49			48
Liability for short sales of trading securities			1,781			642
Total current liabilities			15,511			15,390
Non-current Liabilities:
Liabilities of discontinued operations – long-term			35			274
Long-term debt			33			1,728
Total liabilities			15,579			17,392
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			860			1,065
Retained earnings			13,649			9,998
Total shareholders' equity			26,937			23,491
Total liabilities and shareholders' equity		$	42,516		$	40,883
* Derived from the Company's audited financial statements included in its Form 10-K for the year ended August 31, 2014 filed with the U.S. Securities and Exchange Commission on November 28, 2014.

EACO Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except for share and per share information)
(unaudited)
		Three Months Ended								Twelve Months Ended
		August 31,								August 31,
			2015				2014				2015			2014*
Revenues		$	35,652			$	36,537			$	140,213			$	134,747
Cost of revenues			25,409				27,155				99,105				97,710
Gross margin			10,243				9,382				41,108				37,037
Operating expenses:
Selling, general and administrative expenses			9,083				8,351				35,394				32,178
Income from operations			1,160				1,031				5,714				4,859
Other (expense) income:
Net gain (loss) on trading securities			188				30				225				(19	)
Gain on sale of property			-				960				-				1,495
Interest and other income			-				(11	)			3				(307	)
Interest expense, net			(8	)			-				(14	)			-
Total other (expense) income			180				979				214				1,169
Income before income taxes			1,340				2,010				5,928				6,028
Provision for income taxes			401				461				2,300				1,009
Net income from continuing operations			939				1,549				3,628				5,019
Discontinued operations:
Gain on reduction of liabilities of discontinued operations			113				592				113				592
Net income			1,052				2,141				3,741				5,611
Cumulative preferred stock dividend			(19	)			(19	)			(76	)			(76	)
Net income attributable to common shareholders		$	1,033			$	2,122			$	3,665			$	5,535
Basic and diluted earnings per share:		$	0.21			$	0.44			$	0.75			$	1.14
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, 2014 filed with the U.S. Securities and Exchange Commission on November 28, 2014.

EACO Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
		Twelve Months Ended
		August 31,
			2015			2014*
Operating activities:		(Unaudited)
Net income		$	3,741			$	5,611
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			553				539
Bad debt expense			91				12
Inventory reserve			81				100
Gain on sale of Property			-				(1,495	)
Gain on Discontinued Ops, Workers Comp Settlement			(113	)			(986	)
Net (gain) loss on investments			(225	)			19
(Increase) decrease in:
Trade accounts receivable			2,219				(3,369	)
Inventory			(1,951	)			(691	)
Prepaid expenses and other assets			509				831
Increase (decrease) in:
Trade accounts payable			(47	)			1,332
Accrued expenses and other current liabilities			841				610
Deposit Liability			-				(87	)
Liabilities of discontinued operations			(125	)			(1,247	)
Net cash provided by operating activities			5,574				1,179
Investing activities:
Purchase of property and equipment			(519	)			(746	)
Sale of marketable securities, trading			298				1,303
Proceeds from securities sold short			1,139				642
Proceeds from sale of property			-				9,483
Change in restricted cash			(900	)			(416	)
Net cash provided by investing activities			18				10,266
Financing activities:
Payments on revolving credit facility			(1,684	)			(4,797	)
Preferred dividend			(76	)			(57	)
Bank overdraft			(1,827	)			545
Payments on long-term debt - real estate held for sale			-				(5,397	)
Payments on long-term debt			(11	)			(11	)
Net cash used in financing activities			(3,598	)			(9,717	)
Effect of foreign currency exchange rate changes on cash and cash equivalents			(205	)			245
Net increase in cash and cash equivalents			1,789				1,973
Cash and cash equivalents - beginning of period			3,480				1,507
Cash and cash equivalents - end of period		$	5,269			$	3,480
Supplemental disclosures of cash flow information:
Cash paid for interest		$	13			$	296
Cash paid for taxes		$	1,342			$	666
* Derived from the Company's audited financial statements included in its Form 10-K for the year ended August 31, 2014 filed with the U.S. Securities and Exchange Commission on November 28, 2014.

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