EACO Corporation Reports Record Q1 Net Sales

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

EACO Corporation EACO today reported the results for its quarter ended November 30, 2015.

Net sales, net income and earnings per share were as follows for the three months ended November 30, 2015 (dollars in thousands, except per share information):

     
Three Months Ended November 30, %  
2015 2014 Change
(unaudited)
 
Net sales $ 34,293 $ 33,234 3.2 %
 
Net income $ 500 $ 395 26.6 %
 
Basic and diluted earnings per common share $ 0.10 $ 0.08 25.0 %
 

The Company had 329 sales employees as of November 30, 2015 and November 30, 2014. The Company's sales force is divided into Sales focus teams (SFTs). The Company had 96 SFTs as of November 30, 2015; the SFTs is the same number as a year ago. Management anticipates continued growth in both our headcount and SFTs in fiscal year 2016. The Company continues to gain market share through its local presence business model and estimates that the annual North American market for our product is approximately $7.2 billion. The Company's current estimated market share is 1.9% as compared to 1.8% for the prior year.

       

EACO Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share information)

(unaudited)

 
November 30, August 31,
2015 2015*
ASSETS
Current Assets:
Cash and cash equivalents $ 4,461 $ 5,269
Restricted cash, current 2,151 1,781
Trade accounts receivable, net 17,020 15,485
Inventory, net 16,951 16,733
Marketable securities, trading 822 -
Prepaid expenses and other current assets 975 591
Total current assets 42,380 39,859
 
Non-current Assets:
Restricted cash, non-current 79 83
Equipment and leasehold improvements, net 1,475 1,569
Other assets 1,013 1,005
Total assets $ 44,947 $ 42,516
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $ 12,285 $ 9,318
Accrued expenses and other current liabilities 2,009 4,349
Liabilities of discontinued operations – short-term 49 49
Liability for short sales of trading securities 2,151 1,781
Total current liabilities 16,494 15,497
 
Non-current Liabilities:
Liabilities of discontinued operations – long-term 30 35
Long-term debt 992 33
Total liabilities 17,516 15,565
 
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 859 860
Retained earnings 14,144 13,663
Total shareholders' equity 27,431 26,951
Total liabilities and shareholders' equity $ 44,947 $ 42,516
 

* Derived from the Company's audited financial statements included in its Form 10-K for the year ended August 31, 2015 filed with the U.S. Securities and Exchange Commission on November 25, 2015.

   

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Income

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

(unaudited)

 
Three Months Ended
November 30,
2015         2014  
Revenues $ 34,293 $ 33,234
Cost of revenues 24,324     24,429  
Gross margin 9,969     8,805  
Operating expenses:
Selling, general and administrative expenses 9,134     8,114  
Income from operations 835 691
 
Other (expense) income:
Net loss on trading securities (9 ) (43 )
Interest expense, net (6 )   -  
Total other (expense) income (15 )   (43 )
Income before income taxes 820 648
Provision for income taxes 320     253  
Net income 500 395
Cumulative preferred stock dividend (19 )   (19 )
Net income attributable to common shareholders $ 481 $ 376
Basic and diluted earnings per share: $ 0.10 $ 0.08

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,
2015   2014
Operating activities:
Net income $ 500 $ 395
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization 144 132
Bad debt expense 8 31
Change in inventory reserve 30 11
Net (gain) loss on investments 9 43
(Increase) decrease in:
Trade accounts receivable (1,543) 860
Inventory (248) (530)
Prepaid expenses and other assets (392) (40)
Increase (decrease) in:
Trade accounts payable 1,270 (262)
Accrued expenses and other current liabilities (2,340) (1,716)
Liabilities of discontinued operations   (5)   (16)
Net cash used in operating activities   (2,567)   (1,092)
Investing activities:
Purchase of property and equipment (50) (133)
(Purchase) Sale of marketable securities, trading (831) 30
Proceeds from securities sold short 370 1,795
Change in restricted cash   (366)   (1,795)
Net cash used in investing activities   (877)   (103)
Financing activities:
Borrowings on revolving credit facility 961 636
Preferred dividend (19) (19)
Bank overdraft 1,697 1,169
Payments on long-term debt   (2)   (2)
Net cash provided by financing activities   2,637   1,784

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

  (1)   (37)
Net increase (decrease) in cash and cash equivalents (808) 552
Cash and cash equivalents - beginning of period   5,269   3,480
Cash and cash equivalents - end of period $ 4,461 $ 4,032
Supplemental disclosures of cash flow information:
Cash paid for income taxes $ 2,194 $ 1,342

EACO Corporation
Marta Arciniega, 714-876-2490

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