EACO Corporation Reports Record Annual Net Sales and Record 4th Quarter Net Sales

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06/30/2022 - 08:59 AM

ANAHEIM, Calif.--(BUSINESS WIRE)-- EACO Corporation (OTCMKTS:EACO) today reported the results for its year ended August 31, 2021.

Net sales, net income and earnings per share were as follows for the year ended August 31, 2021 (dollars in thousands, except per share information):

	Three Months Ended August 31,		%
	2021	2020	Change
	(unaudited)	(unaudited)

Net sales	$66,132	$57,454	15.1%

Net income	$3,062	$1,523	101.1%

Basic and diluted earnings per common share	$0.63	$0.31	103.2%

	Year Ended August 31,		%
	2021	2020*	Change
	(unaudited)

Net sales	$237,962	$225,245	5.6%

Net income	$8,387	$7,793	6.6%

Basic and diluted earnings per common share	$1.71	$1.59	7.5%

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2020 filed with the U.S. Securities and Exchange Commission on November 30, 2020.

The Company had 342 sales employees at August 31, 2021, a decrease of 31 or 8.3% from the prior year quarter. The Company’s sales force is divided into sales focus teams (SFT’s). The Company had 100 SFT’s as of August 31, 2021, an increase of 5 from the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2021. 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,
	2021		2020*
ASSETS
Current Assets:
Cash and cash equivalents	$	4,455	$	6,079
Restricted cash		10		2,916
Trade accounts receivable, net		33,929		29,667
Inventory, net		40,448		39,545
Marketable securities, trading		3,741		1,368
Prepaid expenses and other current assets		6,780		5,094
Total current assets		89,363		84,669
Property, equipment and leasehold improvements, net		8,269		8,848
Operating lease right-of-use assets		11,084		12,810
Other assets, net		1,669		1,424
Total assets	$	110,385	$	107,751
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable	$	16,413	$	16,535
Accrued expenses and other current liabilities		10,964		6,632
Liability for short sales of trading securities		–		2,916
Current portion of operating lease liabilities		3,096		2,653
Current portion of long-term debt		113		5,100
Total current liabilities		30,586		33,836
Non-current Liabilities:
Long-term debt		4,585		4,807
Operating lease liabilities		8,092		10,289
Total liabilities		43,263		48,932
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		780		788
Retained earnings		53,914		45,603
Total shareholders’ equity		67,122		58,819
Total liabilities and shareholders’ equity	$	110,385	$	107,751

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2020 filed with the U.S. Securities and Exchange Commission on November 30, 2020.

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,
	2021			2020*			2021			2020*
Revenues	$	66,132		$	57,454		$	237,962		$	225,245
Cost of revenues		51,673			42,626			177,177			163,868
Gross margin		14,459			14,828			60,785			61,377
Operating expenses:
Selling, general and administrative expenses		10,051			12,929			48,072			50,936
Income from operations		4,408			1,899			12,713			10,441
Other (expense) income:
Net (loss) gain on trading securities		56			137			(807	)		912
Loss on Sale of Property		-			-			-			(130	)
Interest and other expense		(52	)		(32	)		(226	)		(256	)
Other income (expense), net		4			105			(1,033	)		526
Income before income taxes		4,412			2,004			11,680			10,967
Provision for income taxes		1,350			481			3,293			3,174
Net income		3,062			1,523			8,387			7,793
Cumulative preferred stock dividend		(19	)		(19	)		(76	)		(76	)
Net income attributable to common shareholders	$	3,043		$	1,504		$	8,311		$	7,717

Basic and diluted earnings per common share:	$	0.63		$	0.31		$	1.71		$	1.59
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, 2020 filed with the U.S. Securities and Exchange Commission on November 30, 2020.

EACO Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

	Year Ended August 31,
	2021			2020*
Operating activities:
Net income	$	8,387		$	7,793
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		1,525			1,224
Bad debt expense		89			72
Loss on sale of real property		–			130
Net gain on trading securities		807			(912	)
(Increase) decrease in:
Trade accounts receivable		(4,351	)		1,916
Inventory		(903	)		(2,286	)
Prepaid expenses and other assets		(1,950	)		(346	)
Operating lease right-of-use assets		1,735			(11,512	)
Trade accounts payable		901			(3,275	)
Accrued expenses and other current liabilities		4,332			(1,665	)
Operating lease liabilities		(1,754	)		11,644
Net cash provided by (used in) operating activities		8,818			2,783
Investing activities:
Purchase of property, equipment, and leasehold improvements		(946	)		(6,705	)
Proceeds from sale of real property		–			7,075
Sale of marketable securities, trading		(3,180	)		1,417
Net change in liabilities for short sales of trading securities		(2,916	)		2,261
Net cash provided by (used in) investing activities		(7,042	)		4,048
Financing activities:
(Payments) borrowings on revolving credit facility, net		(5,100	)		(1,014	)
Borrowings on Construction Loan		–			4,448
Repayments on long-term debt		(109	)		(5,125	)
Preferred stock dividend		(76	)		(76	)
Bank overdraft		(1,023	)		(1,328	)
Net cash (used in) provided by financing activities		(6,308	)		(3,095	)
Effect of foreign currency exchange rate changes on cash and cash equivalents		(8	)		(88	)
Net increase in cash, cash equivalents, and restricted cash		(4,540	)		3,648
Cash, cash equivalents, and restricted cash - beginning of period		8,995			5,347
Cash, cash equivalents, and restricted cash - end of period	$	4,455		$	8,995
Supplemental disclosures of cash flow information:
Cash paid for interest	$	227		$	291
Cash paid for income taxes	$	2,780		$	3,405

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2020 filed with the U.S. Securities and Exchange Commission on November 30, 2020