MRO Magazine

EACO Corporation Reports Record Second Quarter Net Sales

By Business Wire News   



ANAHEIM, Calif.

EACO Corporation (OTCQB:EACO) today reported the results for its quarter ended February 28, 2015.

Net sales, net income and earnings per share were as follows for the three months ended February 28, 2015 as compared to the comparable prior year quarter (dollars in thousands, except per share information):

           
Three Months Ended February 28,%
2015      2014Change
(unaudited)
 
Net sales $ 34,427 $ 30,922 11.3 %
 
Net income $ 1,100 $ 90 1122.2 %
 
Basic and diluted earnings per common share $ 0.23 $ 0.02 1050.0 %
 

The Company’s productivity gain from operations contributed to the Company’s 11.3% net sales growth for the quarter versus the same quarter a year ago, while the sales team numbered 312, a decrease of 3.4% from the 323 employees on February 28, 2014. The Company’s sales force is divided into Sales Focus Teams (SFTs). The Company had 91 SFTs as of February 28, 2015, a decrease of 5% from 96 SFTs on February 28, 2014. Decrease in headcount is a short term adjustment, but management anticipates continued growth in both our headcount and SFTs in the future. The Company has continued to gain market share through its local presence business model. The Company has opened their 46th facility in Fort Lauderdale, FL, on March 16, 2015.

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 2.3% as compared to 2.1% in the prior year.

 
EACO Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share information)

(unaudited)

 
     February 28,      August 31,
20152014*
ASSETS
Current Assets:
Cash and cash equivalents $ 4,304 $ 3,480
Restricted cash, current 1,929 642
Trade accounts receivable, net 17,652 17,795
Inventory, net 15,570 14,863
Marketable securities, trading 73
Prepaid expenses and other current assets   1,059   1,104
Total current assets 40,514 37,957
 
Non-current Assets:
Restricted cash, non-current 208 322
Equipment and leasehold improvements, net 1,499 1,603
Other assets   995   1,001
Total assets $ 43,216 $ 40,883
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable $ 11,482 $ 11,192
Accrued expenses and other current liabilities 2,608 3,508
Liabilities of discontinued operations – short-term 48 48
Liability for short sales of trading securities   1,929   642
Total current liabilities 16,067 15,390
 
Non-current Liabilities:
Liabilities of discontinued operations – long-term 160 274
Long-term debt   2,115   1,728
Total liabilities 18,342 17,392
 
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 984 1,065
Retained earnings   11,462   9,998
Total shareholders’ equity   24,874   23,491
Total liabilities and shareholders’ equity $ 43,216 $ 40,883
 

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2014 filed with the U.S. Securities and Exchange Commission on November 28, 2014.

 
 

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Income

(in thousands, except for share and per share information)

(unaudited)

 
     

Three Months Ended

     

Six Months Ended

February 28,

February 28,

2015      20142015      2014
Revenues $ 34,427 $ 30,922 $ 67,661 $ 61,957
Cost of revenues   23,795     22,412     47,584     44,541  
Gross margin   10,632     8,510     20,077     17,416  
Operating expenses:

Selling, general and administrative expenses

  8,778     8,027     17,532     15,806  
Income from operations 1,854 483 2,545 1,610
 
Other (expense) income:
Net (loss) on trading securities (13 ) (148 ) (56 ) (57 )
Gain on sale of property 535
Interest and other income (expense)   6     (112 )   6     (211 )
Total other (expense) income   (7 )   (260 )   (50 )   267  
Income before income taxes 1,847 223 2,495 1,877
Provision for income taxes   728     114     981     704  
Net income 1,119 109 1,514 1,173
Cumulative preferred stock dividend   (19 )   (19 )   (38 )   (38 )

Net income attributable to common shareholders

$ 1,100   $ 90   $ 1,476   $ 1,135  
 
Basic and diluted earnings per share: $ 0.23 $ 0.02 $ 0.30 $ 0.23

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)
 
     Six Months Ended
February 28,
2015      2014
Operating activities:
Net income $ 1,514 $ 1,173
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 268 297
Bad debt expense 58
Change in inventory reserve 1 22
Gain on sale of Property (535 )
Net loss on trading securities 56 57
(Increase) decrease in:
Trade accounts receivable 143 (1,144 )
Inventory (708 ) 128
Prepaid expenses and other assets 51 139
Deferred tax asset (43 )
Increase (decrease) in:
Trade accounts payable 46 (128 )
Accrued expenses and other current liabilities (900 ) (198 )
Deposit Liability (24 )
Liabilities of discontinued operations   (115 )   (102 )
Net cash provided by (used in) operating activities   356     (300 )
 
Investing activities:
Purchase of property and equipment (164 ) (405 )
Sale of marketable securities, trading 16 921
Proceeds from securities sold short 1,286 1,576
Proceeds from sale of property 1,139
Change in restricted cash   (1,173 )   (1,576 )
Net cash (used in) provided by investing activities   (35 )   1,655  
 
Financing activities:
Borrowings on revolving credit facility 382 186
Preferred dividend (38 ) (38 )
Bank overdraft 247 6
Payments on long-term debt – real estate held for sale (362 )
Payments on long-term debt   5     124  
Net cash provided by (used in) financing activities   596     (332 )

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

  (93 )   139  
Net increase in cash and cash equivalents 824 1,162
Cash and cash equivalents – beginning of period   3,480     1,507  
Cash and cash equivalents – end of period $ 4,304   $ 2,669  
Supplemental disclosures of cash flow information:
Cash paid for interest $ 10 $ 212
Cash paid for taxes $ 1,342 $ 674
 

EACO Corporation
Marta Arciniega, 714-876-2490

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