105 0 Kommentare EACO Corporation Reports 3rd Quarter Net Sales, & Net Income, and Record Backlog

EACO Corporation (OTCQB:EACO) today reported the results for its quarter ended May 31, 2020.

Net sales, net income and earnings per share were as follows for the three months ended May 31, 2020 (dollars in thousands, except per share information):

Three Months Ended
May 31,

2020

2019

Change

(unaudited)

Net sales

$54,923

$57,840

(5.0)%

Net income

$1,692

$2,944

(42.5)%

Basic and diluted earnings per common share

$0.34

$0.60

(43.3)%

The Company had 357 sales employees at May 31, 2020, an increase of 17 or 5% from the prior year quarter. The Company’s sales force is divided into sales focus teams (SFT’s). The Company had 98 SFT’s as of May 31, 2020, the same amount of SFT's from the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2020. Despite the 5% decrease in net sales as a result of the Covid-19 pandemic, the Company believes it continues to gain market share through its local presence business model, increasing bookings by 5% and increasing the sales backlog to $72 Million, an increase of 16% 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, 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,
		2020		2019*
ASSETS
Current Assets:
Cash and cash equivalents	$	7,182	$	4,692
Restricted cash		69		655
Trade accounts receivable, net		28,651		31,655
Inventory, net		41,797		37,259
Marketable securities, trading		-		1,873
Prepaid expenses and other current assets		4,113		4,234
Total current assets		81,812		80,368
Property, equipment and leasehold improvements:
Held for use, net		8,539		3,717
Held for sale, net		–		6,855
Total property, equipment and leasehold improvements, net		8,539		10,572
Other assets:
Operating lease right-of-use assets		12,428		–
Other assets, net		2,008		1,938
Total assets	$	104,787	$	92,878
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable	$	16,923	$	21,138
Accrued expenses and other current liabilities		6,052		8,297
Liability for short sales of trading securities		69		655
Current portion of operating lease liabilities		2,370		–
Current portion of long-term debt		–		5,484
Total current liabilities		25,414		35,574
Non-current Liabilities:
Long-term debt		12,060		6,114
Operating lease liabilities		10,192		–
Total liabilities		47,666		41,688
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		657		876
Retained earnings		44,036		37,886
Total shareholders’ equity		57,121		51,190
Total liabilities and shareholders’ equity	$	104,787	$	92,878

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2019 filed with the U.S. Securities and Exchange Commission on November 27, 2019.

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,
		2020		2019		2020		2019
Net sales	$	54,923	$	57,840	$	167,791	$	161,185
Cost of sales		40,069		41,715		121,242		116,439
Gross margin		14,854		16,125		46,549		44,746
Operating expenses:
Selling, general and administrative expenses		12,822		12,353		38,097		35,563
Income from operations		2,032		3,772		8,452		9,183

Other income (expense):
Net gain on trading securities		384		413		775		515
Loss on sale of property		(28)		–		(130)		–
Interest and other (expense)		(40)		(128)		(224)		(330)
Other income, net		316		285		421		185
Income before income taxes		2,348		4,057		8,873		9,368
Provision for income taxes		656		1,113		2,666		2,538
Net income		1,692		2,944		6,207		6,830
Cumulative preferred stock dividend		(19)		(19)		(57)		(57)
Net income attributable to common shareholders	$	1,673	$	2,925	$	6,150	$	6,773
Basic and diluted earnings per share:	$	0.34	$	0.60	$	1.27	$	1.39
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,
	2020		2019
Operating activities:
Net income	$	6,207	$	6,830
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		860		772
Bad debt expense		33		193
Loss on sale of real property		130		–
Net gain on trading securities		(775)		(515)
(Increase) decrease in:
Trade accounts receivable		2,971		(2,499)
Inventory		(4,538)		(6,009)
Prepaid expenses and other assets		51		(1,698)
Increase (decrease) in:
Trade accounts payable		(3,782)		2,960
Accrued expenses and other current liabilities		(2,245)		(1,851)
Operating lease assets and liabilities, net		134		–
Net cash used in operating activities		(954)		(1,817)
Investing activities:
Purchase of property, equipment, and leasehold improvements		(6,032)		(825)
Proceeds from sale of real property		7,075		–
Net sales of marketable securities, trading		2,648		2,393
Net change in liabilities for short sales of trading securities		(586)		1,401
Net cash provided by investing activities		3,105		2,969
Financing activities:
Borrowings on revolving credit facility, net		1,042		3,797
Borrowings on construction loan		4,545		—
Repayments on long-term debt		(5,125)		(109)
Preferred stock dividend		(57)		(57)
Bank overdraft		(432)		(467)
Net cash (used in) provided by financing activities		(27)		3,164
Effect of foreign currency exchange rate changes on cash and cash equivalents		(219)		(38)
Net increase in cash, cash equivalents, and restricted cash		1,904		4,278
Cash, cash equivalents, and restricted cash - beginning of period		5,347		3,638
Cash, cash equivalents, and restricted cash - end of period	$	7,251	$	7,916
Supplemental disclosures of cash flow information:
Cash paid for interest	$	246	$	325
Cash paid for income taxes	$	3,405	$	3,059