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EACO Corporation Reports Record 3rd Quarter Net Sales

EACO Corporation (OTCMKTS:EACO) today reported the results for its quarter ended May 31, 2023.

Net sales, net income and earnings per share were as follows for the three months ended May 31, 2023 (dollars in thousands, except per share information):

 

Three Months Ended

May 31,

 

%

 

2023

 

2022

 

Change

 

(unaudited)

(unaudited)

 

 

 

Net sales

$80,249

 

$77,797

 

3.2%

 

 

 

 

 

 

Net income

$5,319

 

$5,330

 

(0.2%)

 

 

 

 

 

 

Basic and diluted earnings per common share

$1.09

 

$1.09

 

0.0%

The Company had 378 sales employees at May 31, 2023, an increase of 38 or 11.2% from the prior year quarter. The Company’s sales force is divided into Sales focus teams (SFT’s). The Company had 108 SFT’s as of May 31, 2023, an increase of 5 from the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2023. The Company believes it continues to gain market share through its local presence business model.

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, the impact of products offered by our competitors from time to time, and the impact of the Covid-19 pandemic. 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)

 

May 31,

 

August 31,

2023

 

2022*

ASSETS

 

 

Current Assets:

Cash and cash equivalents

$

1,348

 

$

17,386

Restricted cash

 

10

 

 

10

Trade accounts receivable, net

 

40,523

 

 

44,637

Inventory, net

 

56,464

 

 

48,808

Marketable securities, trading

 

28,447

 

 

3,925

Prepaid expenses and other current assets

 

3,755

 

 

5,008

Total current assets

 

130,547

 

 

119,774

Non-current Assets:

 

 

 

Property, equipment and leasehold improvements, net

 

8,073

 

 

8,479

Operating lease right-of-use assets

 

10,390

 

 

10,389

Other assets, net

 

1,141

 

 

1,039

Total assets

$

150,151

 

$

139,681

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current Liabilities:

 

 

 

Trade accounts payable

$

19,768

 

$

21,762

Accrued expenses and other current liabilities

 

12,623

 

 

15,020

Current portion of operating lease liabilities

 

3,801

 

 

3,375

Current portion of long-term debt

 

120

 

 

119

Total current liabilities

 

36,726

 

 

40,276

Non-current Liabilities:

 

 

 

Long-term debt

 

4,377

 

 

4,465

Operating lease liabilities

 

6,776

 

 

7,192

Total liabilities

 

47,465

 

 

51,933

Commitments and Contingencies

 

 

 

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

 

39

 

 

174

Retained earnings

 

90,219

 

 

75,146

Total shareholders’ equity

 

102,686

 

 

87,748

Total liabilities and shareholders’ equity

$

150,151

 

$

139,681

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2022 filed with the U.S. Securities and Exchange Commission on November 4, 2022.

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Income

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

(unaudited)

 

 

Three Months Ended

May 31,

 

Nine Months Ended

May 31,

 

2023

 

2022

 

2023

 

2022

Net sales

$

80,249

 

 

$

77,797

 

 

$

233,493

 

 

$

208,206

 

Cost of sales

 

57,008

 

 

 

56,207

 

 

 

166,325

 

 

 

150,313

 

Gross margin

 

23,241

 

 

 

21,590

 

 

 

67,168

 

 

 

57,893

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

16,277

 

 

 

14,547

 

 

 

47,568

 

 

 

36,881

 

Income from operations

 

6,964

 

 

 

7,043

 

 

 

19,600

 

 

 

21,012

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Net gain on trading securities

 

163

 

 

 

213

 

 

 

784

 

 

 

135

 

Interest and other expense

 

(36

)

 

 

(48

)

 

 

(38

)

 

 

(153

)

Other income (expense), net

 

127

 

 

 

165

 

 

 

746

 

 

 

(18

)

Income before income taxes

 

7,091

 

 

 

7,208

 

 

 

20,346

 

 

 

20,994

 

Provision for income taxes

 

1,772

 

 

 

1,878

 

 

 

5,216

 

 

 

5,471

 

Net income

 

5,319

 

 

 

5,330

 

 

 

15,130

 

 

 

15,523

 

Cumulative preferred stock dividend

 

(19

)

 

 

(19

)

 

 

(57

)

 

 

(57

)

Net income attributable to common shareholders

$

5,300

 

 

$

5,311

 

 

$

15,073

 

 

$

15,466

 

Basic and diluted earnings per share:

$

1.09

 

 

$

1.09

 

 

$

3.10

 

 

$

3.18

 

Basic and diluted weighted average common shares outstanding

 

4,861,590

 

 

 

4,861,590

 

 

 

4,861,590

 

 

 

4,861,590

 

Diluted weighted average common shares outstanding

 

4,901,590

 

 

 

4,901,590

 

 

 

4,901,590

 

 

 

4,901,590

 

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

Nine Months Ended

May 31,

2023

 

2022

Operating activities:

 

 

Net income

$

15,130

 

$

15,523

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

Depreciation and amortization

1,052

 

1,122

 

Bad debt expense

201

 

 

 

54

 

Net unrealized (gain) on trading securities

(784

)

(135

)

Increase (decrease) in cash from changes in:

 

 

Trade accounts receivable

3,913

 

(8,843

)

Inventory

(7,656

)

 

 

(7,045

)

Prepaid expenses and other assets

1,151

 

(462

)

Operating lease right-of-use assets

 

(1

)

 

 

416

 

Trade accounts payable

(1,885

)

3,959

 

Accrued expenses and other current liabilities

 

(2,397

)

 

 

230

 

Operating lease liabilities

10

 

 

 

(363

)

Net cash provided by operating activities

8,734

 

 

 

4,456

 

Investing activities:

Purchase of property, equipment, and leasehold improvements

(646

)

 

 

(827

)

Net (purchases) of marketable securities, trading

(23,738

)

(959

)

Net cash (used in) investing activities

(24,384

)

 

 

(1,786

)

Financing activities:

Repayments on long-term debt

 

(87

)

 

 

(87

)

Preferred stock dividend

(57

)

(57

)

Net change in bank overdraft

(109

)

 

 

(1,056

)

Net cash (used in) financing activities

(253

)

 

 

(1,200

)

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

(135

)

 

(498

)

Net (decrease) increase in cash, cash equivalents, and restricted cash

(16,038

)

 

 

972

 

Cash, cash equivalents, and restricted cash - beginning of period

17,396

 

 

4,465

 

Cash, cash equivalents, and restricted cash - end of period

$

1,358

 

 

$

5,437

 

Supplemental disclosures of cash flow information:

Cash paid for interest

$

152

 

 

$

153

 

Cash paid for income taxes

$

7,217

 

$

3,979

 

 

Contacts

Michael Narikawa

EACO Corporation

(714) 876-2490

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