EACO Corporation Reports Record Quarterly Net Sales

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

EACO Corporation EACO today reported the results for its quarter ended May 31, 2016.

Net sales, net income and earnings per share were as follows for the three months ended May 31, 2016 (dollars in thousands, except per share information):

	Three Months Ended May 31,					%
	2016		2015			Change
	(unaudited)
Net sales	$39,875		$36,900			8.1%
Net income	$1,619		$1,174			37.9%
Basic and diluted earnings per common share	$0.33		$0.24			37.5%

The Company had 317 sales employees on May 31, 2016, which reflects an increase of 2% from the 310 sales employees as of May 31, 2015. The Company's sales force is divided into Sales Focus Teams (SFT's). The Company had 94 SFT's as of May 31, 2016, an increase of 3% from 91 SFT's on May 31, 2015. Management anticipates continued growth in both our headcount and SFT's in fiscal year 2016. The Company continues to gain market share through its local presence business model. 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 2.2% as compared to 1.9% in the prior year.

EACO Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share information)
			May 31, 2016			August 31, 2015*
			(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents		$	5,339		$	5,269
Restricted cash, current			1,502			1,781
Trade accounts receivable, net			19,275			15,485
Inventory, net			19,552			16,733
Marketable securities, trading			183			-
Prepaid expenses and other current assets			750			591
Total current assets			46,601			39,859
Non-current Assets:
Equipment and leasehold improvements, net			1,375			1,569
Other assets			1,080			1,088
Total assets		$	49,056		$	42,516
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable		$	12,704		$	9,318
Accrued expenses and other current liabilities			3,688			4,433
Liability for short sales of trading securities			1,502			1,781
Total current liabilities			17,894			15,532
Non-current Liabilities:
Long-term debt			1,385			33
Total liabilities			19,279			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			893			860
Retained earnings			16,456			13,663
Total shareholders' equity			29,777			26,951
Total liabilities and shareholders' equity		$	49,056		$	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						Nine Months Ended
			May 31,						May 31,
			2016			2015			2016			2015
Revenues		$	39,875		$	36,900		$	108,757		$	104,561
Cost of revenues			28,133			26,112			76,926			73,696
Gross margin			11,742			10,788			31,831			30,865
Operating expenses:
Selling, general and administrative expenses			9,301			8,780			27,522			26,312
Income from operations			2,441			2,008			4,309			4,553
Other income(expense):
Net gain on trading securities			24			93			195			37
Interest and other (expense)			(10)			(9)			(14)			(3)
Total other income			14			84			181			34
Income before income taxes			2,455			2,092			4,490			4,587
Provision for income taxes			836			918			1,640			1,899
Net income			1,619			1,174			2,850			2,688
Cumulative preferred stock dividend			(19)			(19)			(57)			(57)
Net income attributable to common shareholders		$	1,600		$	1,155		$	2,793		$	2,631
Basic and diluted earnings per share		$	0.33		$	0.24		$	0.59		$	0.54
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
(in thousands)
(unaudited)
		Nine Months Ended
		May 31,
		2016				2015
Operating activities:
Net income		$	2,850			$	2,688
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization			433				409
Bad debt expense			39				-
Change in inventory reserve			178				48
Net gain on investments			(195)				(37)
(Increase) decrease in:
Trade accounts receivable			(3,829)				9
Inventory			(2,997)				(1,261)
Prepaid expenses and other assets			(151)				91
Increase (decrease) in:
Trade accounts payable			2,137				524
Accrued expenses and other current liabilities			(744)				183
Net cash (used in) provided by operating activities			(2,279)				2,654
Investing activities:
Purchase of property and equipment			(239)				(326)
Sale of marketable securities, trading			12				110
Net change in securities sold short			(279)				1,359
Change in restricted cash			279				(1,359)
Net cash used in investing activities			(227)				(216)
Financing activities:
Borrowings (payments) on revolving credit facility			1,352				(1,400)
Preferred stock dividend			(57)				(57)
Bank overdraft			1,248				271
Payments on long-term debt			-				8
Net cash provided by (used in) financing activities			2,543				(1,178)
Effect of foreign currency exchange rate changes on cash and cash equivalents			33				(144)
Net increase in cash and cash equivalents			70				1,116
Cash and cash equivalents - beginning of period			5,269				3,480
Cash and cash equivalents - end of period		$	5,339			$	4,596
Supplemental disclosures of cash flow information:
Cash paid for interest		$	8			$	13
Cash paid for taxes		$	2,196			$	1,071

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