MRO Magazine

EACO Corporation Reports Record Quarterly Net Sales


June 29, 2016
By Business Wire News

ANAHEIM, Calif.

EACO Corporation (OTCQB:EACO) today reported the results for its quarter ended May 31, 2016.

Net sales, net income and earnings per share were as follows for the three months ended May 31, 2016 (dollars in thousands, except per share information):

   
Three Months Ended May 31,%
2016  2015Change
(unaudited)
 
Net sales $39,875 $36,900 8.1%
 
Net income $1,619 $1,174 37.9%
 
Basic and diluted earnings per common share $0.33 $0.24 37.5%
 

The Company had 317 sales employees on May 31, 2016, which reflects an increase of 2% from the 310 sales employees as of May 31, 2015. The Company’s sales force is divided into Sales Focus Teams (SFT’s). The Company had 94 SFT’s as of May 31, 2016, an increase of 3% from 91 SFT’s on May 31, 2015. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2016. The Company continues to gain market share through its local presence business model. The Company estimates that the annual North American market for our product is approximately $7.2 billion. The Company’s current estimated market share is 2.2% as compared to 1.9% in the prior year.

   
EACO Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share information)
 
May 31,

2016

August 31,

2015*

(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 5,339 $ 5,269
Restricted cash, current 1,502 1,781
Trade accounts receivable, net 19,275 15,485
Inventory, net 19,552 16,733
Marketable securities, trading 183
Prepaid expenses and other current assets 750 591
Total current assets 46,601 39,859
Non-current Assets:
Equipment and leasehold improvements, net 1,375 1,569
Other assets 1,080 1,088
Total assets $ 49,056 $ 42,516
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable $ 12,704 $ 9,318
Accrued expenses and other current liabilities 3,688 4,433
Liability for short sales of trading securities 1,502 1,781
Total current liabilities 17,894 15,532
Non-current Liabilities:
Long-term debt 1,385 33
Total liabilities 19,279 15,565
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 893 860
Retained earnings 16,456 13,663
Total shareholders’ equity 29,777 26,951
Total liabilities and shareholders’ equity $ 49,056 $ 42,516
 
* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2015 filed with the U.S. Securities and Exchange Commission on November 25, 2015.
 
   
EACO Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except for share and per share information)
(unaudited)
 
Three Months EndedNine Months Ended
May 31,May 31,
2016  20152016  2015
Revenues $ 39,875 $ 36,900 $ 108,757 $ 104,561
Cost of revenues 28,133 26,112 76,926 73,696
Gross margin 11,742 10,788 31,831 30,865
Operating expenses:
Selling, general and administrative expenses 9,301 8,780 27,522 26,312
Income from operations 2,441 2,008 4,309 4,553
 
Other income(expense):
Net gain on trading securities 24 93 195 37
Interest and other (expense) (10) (9) (14) (3)
Total other income 14 84 181 34
Income before income taxes 2,455 2,092 4,490 4,587
Provision for income taxes 836 918 1,640 1,899
Net income 1,619 1,174 2,850 2,688
Cumulative preferred stock dividend (19) (19) (57) (57)
Net income attributable to common shareholders $ 1,600 $ 1,155 $ 2,793 $ 2,631
Basic and diluted earnings per share $ 0.33 $ 0.24 $ 0.59 $ 0.54
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,
2016    2015
Operating activities:
Net income $ 2,850 $ 2,688
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization 433 409
Bad debt expense 39
Change in inventory reserve 178 48
Net gain on investments (195) (37)
(Increase) decrease in:
Trade accounts receivable (3,829) 9
Inventory (2,997) (1,261)
Prepaid expenses and other assets (151) 91
Increase (decrease) in:
Trade accounts payable 2,137 524
Accrued expenses and other current liabilities   (744)   183
Net cash (used in) provided by operating activities   (2,279)   2,654
 
Investing activities:
Purchase of property and equipment (239) (326)
Sale of marketable securities, trading 12 110
Net change in securities sold short (279) 1,359
Change in restricted cash   279   (1,359)
Net cash used in investing activities   (227)   (216)
 
Financing activities:
Borrowings (payments) on revolving credit facility 1,352 (1,400)
Preferred stock dividend (57) (57)
Bank overdraft 1,248 271
Payments on long-term debt  

  8
Net cash provided by (used in) financing activities   2,543   (1,178)
Effect of foreign currency exchange rate changes on cash and cash equivalents   33   (144)
Net increase in cash and cash equivalents 70 1,116
 
Cash and cash equivalents – beginning of period   5,269   3,480
Cash and cash equivalents – end of period $ 5,339 $ 4,596
 
Supplemental disclosures of cash flow information:
Cash paid for interest $ 8 $ 13
Cash paid for taxes $ 2,196 $ 1,071

EACO Corporation
Marta Arciniega
(714) 876-2490