EACO Corporation Reports Record Annual Net Sales, Annual Net Income, Quarterly Net Sales and 4th Quarter Net Income

EACO Corporation (OTCQB:EACO) today reported the results for its year ended August 31, 2018.

Net sales, net income and earnings per share were as follows for the three months and year ended August 31, 2018 (dollars in thousands, except per share information):

  Three Months Ended August 31,  

%

2018   2017

Change

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(unaudited)

(unaudited)

 
Net sales $54,349 $42,181 28.8%
 
Net income $2,181 $1,364 59.9%
 
Basic and diluted earnings per common share $0.44 $0.28 57.1%
 
Year Ended August 31,

%

2018 2017*

Change

(unaudited)
 
Net sales $193,284 $156,954 23.1%
 
Net income $6,949 $4,051 71.5%
 
Basic and diluted earnings per common share $1.41 $0.82 71.9%
 

* Derived from the Companys audited financial statements included in its Form 10-K for the year ended August 31, 2017 filed with the U.S. Securities and Exchange Commission on November 22, 2017.

The Company had 336 sales employees at August 31, 2018, an increase of 20 from the prior year quarter. The Companys sales force is divided into sales focus teams (SFTs). The Company had 96 SFTs as of August 31, 2018, an increase of 2 from the prior year quarter. Management anticipates continued growth in both our headcount and SFTs in fiscal year 2019. The Company believes it continues to gain market share through its local presence business model, increasing net sales by 29% and bookings by 35% when comparing to the prior year quarter.

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 EACOs 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,
2018

2017*

ASSETS
Current Assets:
Cash and cash equivalents $ 2,705 $ 3,870
Restricted cash, current 933 707
Trade accounts receivable, net 26,277 21,339
Inventory, net 30,531 26,487
Marketable securities, trading 2,846 1,596
Prepaid expenses and other current assets   1,590   452
Total current assets 64,882 54,451
Non-current Assets:
Property, equipment and leasehold improvements, net 9,847 9,256
Other assets   1,570   2,073
Total assets $ 76,299 $ 65,780
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities:
Trade accounts payable $ 17,678 $ 13,364
Accrued expenses and other current liabilities 7,414 4,545
Liability for short sales of trading securities 139 707
Current portion of long-term debt   933   139
Total current liabilities 26,164 18,755
Non-current Liabilities:
Long-term debt   8,249   12,193
Total liabilities 34,413 30,948
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 928 747
Retained earnings   28,530   21,657
Total shareholders equity   41,886   34,832
Total liabilities and shareholders equity $ 76,299 $ 65,780
 

* Derived from the Companys audited financial statements included in its Form 10-K for the year ended August 31, 2017 filed with the U.S. Securities and Exchange Commission on November 22, 2017.

 

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,

  2018      

2017

    2018      

2017*

 
Revenues $ 54,349   $ 42,181 $ 193,284   $ 156,954
Cost of revenues   39,024       30,061     138,255       112,184  
Gross margin   15,325       12,120     55,029       44,770  
Operating expenses:
Selling, general and administrative expenses   12,245       10,098     44,705       38,455  
Income from operations 3,080 2,022 10,324 6,315
 
Other (expense) income:
Net gain on trading securities 86 24 273 208
Interest and other expense   (124 )     (100 )   (477 )     (181 )
Total other (expense) income   (38 )     (76 )   (204 )     27  
Income before income taxes 3,042 1,946 10,120 6,342
Provision for income taxes   861       582     3,171       2,291  
Net income 2,181 1,364 6,949 4,051
Cumulative preferred stock dividend   (19 )     (19 )   (76 )     (76 )
Net income attributable to common shareholders $ 2,162     $ 1,345   $ 6,873     $ 3,975  
 
Basic and diluted earnings per common share: $ 0.44 $ 0.28 $ 1.41 $ 0.82

Basic and diluted weighted average common shares outstanding

4,861,590 4,861,590 4,861,590 4,861,590
 

* Derived from the Companys audited financial statements included in its Form 10-K for the year ended August 31, 2017 filed with the U.S. Securities and Exchange Commission on November 22, 2017.

 

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 

Year Ended

August 31,

  2018      

2017*

 
Operating activities:
Net income $ 6,949 $ 4,051
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 1,009 785
Bad debt expense 106 96
Change in inventory reserve (156 ) 87
Net gain on trading securities (273 ) (208 )
(Increase) decrease in:
Trade accounts receivable (5,044 ) (2,638 )
Inventory (3,888 ) (5,346 )
Prepaid expenses and other assets (655 ) (247 )
Increase (decrease) in:
Trade accounts payable 4,009 (30 )
Accrued expenses and other current liabilities   2,858     (1,027 )
Net cash provided by (used in) operating activities   4,915     (4,477 )
Investing activities:
Purchase of property, equipment, and leasehold improvements (1,600 ) (8,646 )
Purchase of marketable securities, trading (977 ) (848 )
Net change in liabilities for short sales of trading securities 226 (718 )
Change in restricted cash   (207 )   737  
Net cash used in investing activities   (2,558 )   (9,475 )
Financing activities:
(Payments) borrowings on revolving credit facility (3,816 ) 6,967
Repayments on long-term debt (128 ) (35 )
Preferred stock dividend (76 ) (76 )
Bank overdraft 317 671
Borrowings on long-term debt       5,400  
Net cash (used in) provided by financing activities   (3,703 )   12,927  
Effect of foreign currency exchange rate changes on cash and cash equivalents   181     17  
Net decrease in cash and cash equivalents (1,165 ) (1,008 )
Cash and cash equivalents – beginning of period   3,870     4,878  
Cash and cash equivalents – end of period $ 2,705   $ 3,870  
Supplemental disclosures of cash flow information:
Cash paid for interest $ 466   $ 182  
Cash paid for income taxes $ 2,055   $ 2,833  
 

* Derived from the Companys audited financial statements included in its Form 10-K for the year ended August 31, 2017 filed with the U.S. Securities and Exchange Commission on November 22, 2017.

Marta Arciniega
EACO Corporation
(714) 876-2490

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