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EACO Corporation Reports Record Annual Net Sales and Record 4th Quarter Net Sales

EACO Corporation (OTCMKTS:EACO) today reported the results for its year ended August 31, 2021.

Net sales, net income and earnings per share were as follows for the year ended August 31, 2021 (dollars in thousands, except per share information):

 

Three Months Ended August 31,

 

%

 

2021

 

2020

 

Change

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

 

Net sales

$66,132

 

$57,454

 

15.1%

 

 

 

 

 

 

Net income

$3,062

 

$1,523

 

101.1%

 

 

 

 

 

 

Basic and diluted earnings per common share

$0.63

 

$0.31

 

103.2%

 

Year Ended August 31,

%

 

2021

2020*

Change

 

(unaudited)

 

 

 

 

 

 

Net sales

$237,962

 

$225,245

 

5.6%

 

 

 

 

 

 

Net income

$8,387

 

$7,793

 

6.6%

 

 

 

 

 

 

Basic and diluted earnings per common share

$1.71

 

$1.59

 

7.5%

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2020 filed with the U.S. Securities and Exchange Commission on November 30, 2020.

The Company had 342 sales employees at August 31, 2021, a decrease of 31 or 8.3% from the prior year quarter. The Company’s sales force is divided into sales focus teams (SFT’s). The Company had 100 SFT’s as of August 31, 2021, an increase of 5 from the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2021. 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, 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,

 

August 31,

2021

 

2020*

ASSETS

 

 

Current Assets:

Cash and cash equivalents

$

4,455

 

$

6,079

Restricted cash

10

 

 

2,916

Trade accounts receivable, net

 

33,929

 

 

29,667

Inventory, net

40,448

 

 

39,545

Marketable securities, trading

 

3,741

 

 

1,368

Prepaid expenses and other current assets

6,780

 

 

5,094

Total current assets

 

89,363

 

 

84,669

Property, equipment and leasehold improvements, net

8,269

 

 

8,848

Operating lease right-of-use assets

 

11,084

 

 

12,810

Other assets, net

 

1,669

 

 

1,424

Total assets

$

110,385

 

$

107,751

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current Liabilities:

 

 

 

Trade accounts payable

$

16,413

 

$

16,535

Accrued expenses and other current liabilities

10,964

 

 

6,632

Liability for short sales of trading securities

 

 

2,916

Current portion of operating lease liabilities

 

3,096

 

 

2,653

Current portion of long-term debt

 

113

 

 

5,100

Total current liabilities

 

30,586

 

 

33,836

Non-current Liabilities:

 

 

 

Long-term debt

4,585

 

 

4,807

Operating lease liabilities

 

8,092

 

 

10,289

Total liabilities

 

43,263

 

 

48,932

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

780

 

 

788

Retained earnings

 

53,914

 

 

45,603

Total shareholders’ equity

67,122

 

 

58,819

Total liabilities and shareholders’ equity

$

110,385

 

$

107,751

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2020 filed with the U.S. Securities and Exchange Commission on November 30, 2020.

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,

 

2021

2020*

2021

2020*

Revenues

$

66,132

 

 

$

57,454

 

 

$

237,962

 

 

$

225,245

 

Cost of revenues

 

51,673

 

 

 

42,626

 

 

 

177,177

 

 

 

163,868

 

Gross margin

 

14,459

 

 

 

14,828

 

 

 

60,785

 

 

 

61,377

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

10,051

 

 

 

12,929

 

 

 

48,072

 

 

 

50,936

 

Income from operations

 

4,408

 

 

 

1,899

 

 

 

12,713

 

 

 

10,441

 

Other (expense) income:

 

 

 

 

 

 

 

Net (loss) gain on trading securities

 

56

 

 

 

137

 

 

 

(807

)

 

 

912

 

Loss on Sale of Property

 

-

 

 

 

-

 

 

 

-

 

 

 

(130

)

Interest and other expense

 

(52

)

 

 

(32

)

 

 

(226

)

 

 

(256

)

Other income (expense), net

 

4

 

 

 

105

 

 

 

(1,033

)

 

 

526

 

Income before income taxes

 

4,412

 

 

 

2,004

 

 

 

11,680

 

 

 

10,967

 

Provision for income taxes

 

1,350

 

 

 

481

 

 

 

3,293

 

 

 

3,174

 

Net income

 

3,062

 

 

 

1,523

 

 

 

8,387

 

 

 

7,793

 

Cumulative preferred stock dividend

 

(19

)

 

 

(19

)

 

 

(76

)

 

 

(76

)

Net income attributable to common shareholders

$

3,043

 

 

$

1,504

 

 

$

8,311

 

 

$

7,717

 

 

 

 

 

 

 

 

Basic and diluted earnings per common share:

$

0.63

 

 

$

0.31

 

 

$

1.71

 

 

$

1.59

 

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, 2020 filed with the U.S. Securities and Exchange Commission on November 30, 2020.

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

Year Ended

August 31,

2021

2020*

Operating activities:

 

Net income

$

8,387

 

 

$

7,793

 

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

 

 

 

Depreciation and amortization

 

1,525

 

 

 

1,224

 

Bad debt expense

 

89

 

 

 

72

 

Loss on sale of real property

 

 

 

 

130

 

Net gain on trading securities

 

807

 

 

 

(912

)

(Increase) decrease in:

 

 

 

Trade accounts receivable

 

(4,351

)

 

 

1,916

 

Inventory

 

(903

)

 

 

(2,286

)

Prepaid expenses and other assets

 

(1,950

)

 

 

(346

)

Operating lease right-of-use assets

 

1,735

 

 

 

(11,512

)

Trade accounts payable

 

901

 

 

 

(3,275

)

Accrued expenses and other current liabilities

 

4,332

 

 

 

(1,665

)

Operating lease liabilities

 

(1,754

)

 

 

11,644

 

Net cash provided by (used in) operating activities

 

8,818

 

 

 

2,783

 

Investing activities:

 

 

 

Purchase of property, equipment, and leasehold improvements

 

(946

)

 

 

(6,705

)

Proceeds from sale of real property

 

 

 

 

7,075

 

Sale of marketable securities, trading

 

(3,180

)

 

 

1,417

 

Net change in liabilities for short sales of trading securities

 

(2,916

)

 

 

2,261

 

Net cash provided by (used in) investing activities

 

(7,042

)

 

 

4,048

 

Financing activities:

 

 

 

(Payments) borrowings on revolving credit facility, net

 

(5,100

)

 

 

(1,014

)

Borrowings on Construction Loan

 

 

 

 

4,448

 

Repayments on long-term debt

 

(109

)

 

 

(5,125

)

Preferred stock dividend

 

(76

)

 

 

(76

)

Bank overdraft

 

(1,023

)

 

 

(1,328

)

Net cash (used in) provided by financing activities

 

(6,308

)

 

 

(3,095

)

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

(8

)

(88

)

Net increase in cash, cash equivalents, and restricted cash

 

(4,540

)

 

 

3,648

 

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

 

8,995

 

 

 

5,347

 

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

$

4,455

 

 

$

8,995

 

Supplemental disclosures of cash flow information:

 

 

 

Cash paid for interest

$

227

 

 

$

291

 

Cash paid for income taxes

$

2,780

 

 

$

3,405

 

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2020 filed with the U.S. Securities and Exchange Commission on November 30, 2020

 

Contacts

Michael Narikawa

EACO Corporation

(714) 876-2490

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