Press release

EACO Corporation Reports Record Annual Net Sales & Net Income and Record Quarter Net Sales & Net Income

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EACO Corporation (OTC Pink:EACO) today reported the results for its year ended August 31, 2022.

Net sales, net income and earnings per share were as follows for the year ended August 31, 2022 (dollars in thousands, except per share information):

 

Three Months Ended August 31,

 

%

 

2022

2021

 

Change

 

(unaudited)

(unaudited)

 

 

 

 

Net sales

$84,356

$66,132

 

27.6%

 

 

 

 

 

Net income

$5,785

$3,062

 

88.9%

 

 

 

 

 

Basic and diluted earnings per common share

$1.19

$0.63

 

88.9%

 

Year Ended August 31,

 

%

 

2022

2021*

 

Change

 

(unaudited)

 

 

 

 

 

Net sales

$292,562

$237,962

 

22.9%

 

 

 

 

 

Net income

$21,308

$8,387

 

154.1%

 

 

 

 

 

Basic and diluted earnings per common share

$4.37

$1.71

 

155.6%

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2021 filed with the U.S. Securities and Exchange Commission on July 6, 2022.

The Company had 345 sales employees at August 31, 2022, an increase of 5 or 1% from the prior year quarter. The Company’s sales force is divided into sales focus teams (SFT’s). The Company had 101 SFT’s as of August 31, 2022, an increase of 1 from the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2023. The Company believes it continues to gain market share through its local presence business model.

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 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)

 

 

 

 

 

 

 

 

August 31,

 

 

August 31,

 

 

2022

 

 

2021*

ASSETS

 

 

 

 

Current Assets:

Cash and cash equivalents

$

17,386

$

4,455

Restricted cash

10

10

Trade accounts receivable, net

 

44,637

 

33,929

Inventory, net

48,808

40,448

Marketable securities, trading

 

3,925

 

3,741

Prepaid expenses and other current assets

5,008

6,780

Total current assets

 

119,774

 

89,363

Non-current Assets:

 

 

 

 

Property, equipment and leasehold improvements, net

8,479

8,269

Operating lease right-of-use assets

 

10,389

 

11,084

Other assets, net

 

1,039

 

1,669

Total assets

$

139,681

$

110,385

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

Current Liabilities:

Trade accounts payable

$

21,762

$

16,413

Accrued expenses and other current liabilities

15,020

10,964

Current portion of operating lease liabilities

 

3,375

 

3,096

Current portion of long-term debt

 

119

 

113

Total current liabilities

 

40,276

 

30,586

Non-current Liabilities:

Long-term debt

4,465

4,585

Operating lease liabilities

 

7,192

 

8,092

Total liabilities

 

51,933

 

43,263

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

174

780

Retained earnings

 

75,146

 

53,914

Total shareholders’ equity

87,748

67,122

Total liabilities and shareholders’ equity

$

139,681

$

110,385

 

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2021 filed with the U.S. Securities and Exchange Commission on July 6, 2022.

 

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,

 

 

2022

 

 

2021

 

2022

 

 

2021*

Revenues

$

84,356

 

$

66,132

 

$

292,562

 

$

237,962

 

Cost of revenues

 

58,747

 

51,673

 

209,060

 

177,177

 

Gross margin

 

25,609

 

14,459

 

83,502

 

60,785

 

Operating expenses:

Selling, general and administrative expenses

17,089

 

10,051

 

53,970

 

48,072

 

Income from operations

 

8,520

 

4,408

 

29,532

 

12,713

 

Other (expense) income:

Net (loss) gain on trading securities

 

(348

)

56

 

(213

)

(807

)

Interest and other expense

(48

)

(52

)

(201

)

(226

)

Other income (expense), net

 

(396

)

4

 

(414

)

(1,033

)

Income before income taxes

8,124

 

4,412

 

29,118

 

11,680

 

Provision for income taxes

 

2,339

 

1,350

 

7,810

 

3,293

 

Net income

 

5,785

 

3,062

 

21,308

 

8,387

 

Cumulative preferred stock dividend

(19

)

(19

)

(76

)

(76

)

Net income attributable to common shareholders

$

5,766

 

$

3,043

 

$

21,232

 

$

8,311

 

 

Basic and diluted earnings per common share:

$

1.19

 

$

0.63

 

$

4.37

 

$

1.71

 

Basic and diluted weighted average common

shares outstanding

 

4,861,590

 

4,861,590

 

4,861,590

 

4,861,590

 

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2021 filed with the U.S. Securities and Exchange Commission on July 6, 2022.

 

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Year Ended

August 31,

 

2022

 

 

2021*

Operating activities:

 

 

Net income

$

21,308

 

$

8,387

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

Depreciation and amortization

1,491

 

1,525

 

Bad debt expense

38

 

 

 

89

 

Loss on sale of property

 

 

Net loss on trading securities

213

 

807

 

(Increase) decrease in:

 

 

Trade accounts receivable

(10,746

)

(4,351

)

Inventory

(8,360

)

 

 

(903

)

Prepaid expenses and other assets

2,402

 

(1,950

)

Operating lease right-of-use assets

 

695

 

 

 

1,735

 

Trade accounts payable

6,390

 

901

 

Accrued expenses and other current liabilities

4,056

 

 

 

4,332

 

Operating lease liabilities

 

(621

)

 

 

(1,754

)

Net cash provided by operating activities

16,866

 

 

 

8,818

 

Investing activities:

Additions to property, equipment, and leasehold improvements

(1,701

)

 

 

(946

)

Sale of marketable securities, trading

(397

)

(3,180

)

Net change in liabilities for short sales of trading securities

 

 

 

(2,916

)

Net cash (used in) investing activities

(2,098

)

 

 

(7,042

)

Financing activities:

Payments on revolving credit facility, net

 

 

 

(5,100

)

Repayments on long-term debt

 

(114

)

 

 

(109

)

Preferred stock dividend

(76

)

(76

)

Bank overdraft

(1,041

)

 

 

(1,023

)

Net cash (used in) financing activities

(1,231

)

 

 

(6,308

)

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

(606

)

 

(8

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

12,931

 

 

 

(4,540

)

Cash, cash equivalents, and restricted cash – beginning of period

4,465

 

 

8,995

 

Cash, cash equivalents, and restricted cash – end of period

$

17,396

 

 

$

4,455

 

Supplemental disclosures of cash flow information:

Cash paid for interest

$

205

 

 

$

227

 

Cash paid for income taxes

$

3,222

 

$

2,780

 

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2021 filed with the U.S. Securities and Exchange Commission on July 6, 2022.