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EACO Corporation Reports Record Quarter Net Sales

EACO Corporation (OTCMKTS:EACO) today reported the results for its quarter ended May 31, 2024.

Net sales, net income and earnings per share were as follows for the three months ended May 31, 2024 (dollars in thousands, except per share information):

 

Three Months Ended

May 31,

 

%

 

2024

 

2023

 

Change

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

 

Net sales

$96,121

 

$80,249

 

19.8%

 

 

 

 

 

 

Net income

$1,184

 

$5,319

 

(77.7%)

 

 

 

 

 

 

Basic and diluted earnings per common share

$0.24

 

$1.09

 

(78.0%)

The Company had 413 sales employees at May 31, 2024, an increase of 33 employees or 8.5%, from the prior year quarter. The Company’s sales force is divided into sales focus teams (SFT’s). The Company had 110 SFT’s as of May 31, 2024, two more than the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2024. 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)

 

 

 

May 31,

 

August 31,

 

 

2024

 

2023

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

737

 

 

$

8,558

Restricted cash

 

 

10

 

 

 

10

Trade accounts receivable, net

 

 

54,059

 

 

 

46,654

Inventory, net

 

 

67,409

 

 

 

56,270

Marketable securities, trading

 

 

9,405

 

 

 

27,228

Prepaid expenses and other current assets

 

 

3,838

 

 

 

3,843

Total current assets

 

 

135,458

 

 

 

142,563

Non-current Assets:

 

 

 

 

 

 

Property, equipment and leasehold improvements, net

 

 

35,415

 

 

 

8,041

Operating lease right-of-use assets

 

 

4,498

 

 

 

9,988

Other assets, net

 

 

1,508

 

 

 

1,652

Total assets

 

$

176,879

 

 

$

162,244

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Trade accounts payable

 

$

33,614

 

 

$

22,505

Accrued expenses and other current liabilities

 

 

17,160

 

 

 

16,375

Current portion of operating lease liabilities

 

 

2,148

 

 

 

3,950

Current portion of debt

 

 

120

 

 

 

120

Total current liabilities

 

 

53,042

 

 

 

42,950

Non-current Liabilities:

 

 

 

 

 

 

Long-term debt

 

 

4,254

 

 

 

4,348

Operating lease liabilities

 

 

2,526

 

 

 

6,225

Total liabilities

 

 

59,822

 

 

 

53,523

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

 

 

(30

)

 

 

38

Retained earnings

 

 

104,659

 

 

 

96,255

Total shareholders’ equity

 

 

117,057

 

 

 

108,721

Total liabilities and shareholders’ equity

 

$

176,879

 

 

$

162,244

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2023 filed with the U.S. Securities and Exchange Commission on November 22, 2023.

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,

 

2024

 

2023

 

 

2024

 

2023

 

Net sales

$

96,121

 

$

80,249

 

 

$

259,711

 

$

233,493

 

Cost of sales

 

68,193

 

 

57,008

 

 

183,184

 

 

166,325

 

Gross margin

 

27,928

 

 

23,241

 

 

 

76,527

 

 

67,168

 

Operating expenses:

 

 

 

 

 

 

Selling, general and administrative expenses

26,314

 

 

16,277

 

 

61,129

 

 

47,568

 

Impairment on termination of lease

 

 

 

 

 

 

3,906

 

 

 

Income from operations

 

1,614

 

 

6,964

 

 

 

11,492

 

 

19,600

 

Other income (expense):

 

Net (loss) gain on trading securities

 

(24

)

 

163

 

 

 

(45

)

 

784

 

Interest and other (expense)

(44

)

 

(36

)

 

(128

)

 

(38

)

Other (expense) income, net

 

(68

)

 

127

 

 

 

(173

)

 

746

 

Income before income taxes

1,546

 

7,091

 

 

11,319

 

20,346

 

Provision for income taxes

 

362

 

 

1,772

 

 

 

2,858

 

 

5,216

 

Net income

1,184

 

5,319

 

 

8,461

 

15,130

 

Cumulative preferred stock dividend

 

(19

)

 

(19

)

 

 

(57

)

 

(57

)

Net income attributable to common shareholders

$

1,165

 

$

5,300

 

 

$

8,404

 

$

15,073

 

Basic earnings per share:

$

0.24

 

$

1.09

 

 

$

1.73

 

$

3.10

 

Diluted earnings per share:

$

0.24

 

$

1.09

 

 

$

1.73

 

$

3.09

 

Basic 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,

2024

2023

Operating activities:

 

 

Net income

$

8,461

 

$

15,130

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

Depreciation and amortization

1,247

 

1,052

 

Bad debt expense

359

 

 

 

201

 

Deferred tax provision

 

51

 

 

 

 

Net unrealized loss (gain) on trading securities

357

 

(784

)

Impairment on termination of lease

 

3,906

 

 

 

 

Changes in current assets and liabilities:

 

 

Trade accounts receivable

(7,764

)

3,913

 

Inventory

(11,139

)

 

 

(7,656

)

Prepaid expenses and other assets

98

 

1,151

 

Operating lease right-of-use assets

 

5,490

 

 

 

(1

)

Trade accounts payable

8,043

 

(1,885

)

Accrued expenses and other current liabilities

 

785

 

 

 

(2,397

)

Operating lease liabilities

(5,501

)

 

 

10

 

Net cash provided by operating activities

4,393

 

 

 

8,734

 

Investing activities:

Purchase of property, equipment, and leasehold improvements

(32,527

)

 

 

(646

)

Net sales (purchases) of marketable securities, trading

17,466

 

(23,738

)

Net cash used in investing activities

(15,061

)

 

 

(24,384

)

Financing activities:

Repayments on long-term debt

 

(94

)

 

 

(87

)

Preferred stock dividend

(57

)

(57

)

Net change in bank overdraft

3,066

 

 

 

(109

)

Net cash provided by (used in) financing activities

2,915

 

 

 

(253

)

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

(68

)

 

(135

)

Net decrease in cash, cash equivalents, and restricted cash

(7,821

)

 

 

(16,038

)

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

8,568

 

 

17,396

 

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

$

747

 

 

$

1,358

 

Supplemental disclosures of cash flow information:

Cash paid for interest

$

145

 

 

$

152

 

Cash paid for income taxes

$

8,276

 

$

7,217

 

 

Contacts

Michael Narikawa

EACO Corporation

(714) 876-2490

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