EACO Corporation Reports Record Second Quarter Net Sales

March 31, 2015 | 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		2014		Change
	(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 46^th 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,
	2015		2014*
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			2014			2015			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