EACO Corporation Reports Record 1st Quarter Net Sales

Rhea-AI Summary

EACO Corporation (EACO) reported its financial results for the quarter ended November 30, 2023. Net sales increased by 5.2% to $80.255 million, but net income and earnings per share declined by 62.2% and 62.3% respectively compared to the same quarter in 2022. The company also saw an increase in sales employees and sales focus teams, with plans for further growth in fiscal year 2024.

Positive

• None.

Negative

• Net income and earnings per share declined by 62.2% and 62.3% respectively compared to the same quarter in 2022.

ANAHEIM, Calif.--(BUSINESS WIRE)-- EACO Corporation (OTC Pink:EACO) announced the results for its quarter ended November 30, 2023.

Net sales, net income and earnings per share were as follows for the quarter ended November 30, 2023 (dollars in thousands, except per share information):

	Three Months Ended November 30,		%
	2023	2022	Change
	(unaudited)	(unaudited)
Net sales	$80,255	$76,319	5.2%
Net income	$1,779	$4,711	(62.2%)
Basic and diluted earnings per common share	$0.36	$0.97	(62.3%)

The Company had 413 sales employees at November 30, 2023, an increase of 47 or 13% from the prior year quarter. The Company’s sales force is divided into sales focus teams (SFT’s). The Company had 109 SFT’s as of November 30, 2023, an increase of 8 from the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2024. 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)
			November 30,							August 31,
			2023							2023
ASSETS
Current Assets:
Cash and cash equivalents			$		6,499					$		8,558
Restricted cash					10							10
Trade accounts receivable, net					46,051							46,654
Inventory, net					60,256							56,270
Marketable securities, trading					4,227							27,228
Prepaid expenses and other current assets					4,148							3,843
Total current assets					121,191							142,563
Non-current Assets:
Property, equipment and leasehold improvements, net					35,519							8,041
Operating lease right-of-use assets					4,216							9,988
Other assets, net					1,760							1,652
Total assets			$		162,686					$		162,244
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable			$		26,345					$		22,505
Accrued expenses and other current liabilities					14,118							16,375
Current portion of operating lease liabilities					2,130							3,950
Current portion of debt					3,201							120
Total current liabilities					45,794							42,950
Non-current Liabilities:
Long-term debt					4,317							4,348
Operating lease liabilities					2,225							6,225
Total liabilities					52,336							53,523
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					(93)							38
Retained earnings					98,015							96,255
Total shareholders’ equity					110,350							108,721
Total liabilities and shareholders’ equity			$		162,686					$		162,244

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2023 filed with the U.S. Securities and Exchange Commission on November 22, 2023.

EACO Corporation and Subsidiaries Condensed Consolidated Statements of Income (in thousands, except for share and per share information) (unaudited)
		Three Months Ended
		November 30,
		2023			2022
Net sales		$	80,255		$	76,319
Cost of sales			56,683			54,656
Gross margin			23,572			21,663
Operating expenses:
Selling, general and administrative expenses			17,217			15,685
Impairment on termination of lease			3,906			––
Income from operations			2,449			5,978
Other (expense) income:
Net (loss) gain on trading securities			(44)			442
Interest and other expense, net			(9)			(48)
Other (expense) income, net			(53)			394
Income before income taxes			2,396			6,372
Provision for income taxes			617			1,661
Net income			1,779			4,711
Cumulative preferred stock dividend			(19)			(19)
Net income attributable to common shareholders		$	1,760		$	4,692
Basic and diluted earnings per common share:		$	0.36		$	0.97
Basic and diluted weighted average common shares outstanding			4,861,590			4,861,590

EACO Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited)
		Three Months Ended
		November 30,
		2023			2022
Operating activities:
Net income		$	1,779		$		4,711
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			317				359
Bad debt expense			47				2
Deferred tax provision			(67)				—
Net unrealized loss (gain) on trading securities			210				(487)
Impairment on termination of lease			3,906				––
Increase (decrease) in cash from changes in
Trade accounts receivable			556				4,300
Inventory			(3,986)				(4,247)
Prepaid expenses and other assets			(346)				(272)
Operating lease right-of-use assets			5,772				(256)
Trade accounts payable			190				(407)
Accrued expenses and other current liabilities			(2,257)				(768)
Right of use liabilities			(5,820)				272
Net cash provided by operating activities			301				3,207
Investing activities:
Additions to property, equipment, and leasehold improvements			(31,701)				(86)
Proceeds (purchase) from sale of marketable securities, trading			22,791				(6,243)
Net cash used in investing activities			(8,910)				(6,329)
Financing activities:
Borrowing on revolving credit facility			3,081				—
Payments on long-term debt			(31)				(29)
Preferred stock dividend			(19)				(19)
Bank overdraft			3,650				(109)
Net cash provided (used) by financing activities			6,681				(157)
Effect of foreign currency exchange rate changes on cash and cash equivalents			(131)				(86)
Net (decrease) in cash, cash equivalents, and restricted cash			(2,059)				(3,365)
Cash, cash equivalents, and restricted cash - beginning of period			8,568				17,396
Cash, cash equivalents, and restricted cash - end of period		$	6,509		$		14,031
Supplemental disclosures of cash flow information:
Cash paid for interest		$	296		$		51
Cash paid for income taxes		$	674		$		—

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240116473010/en/

Michael Narikawa

EACO Corporation

(714) 876-2490

Source: EACO Corporation

FAQ

What are EACO Corporation's (EACO) financial results for the quarter ended November 30, 2023?

EACO Corporation (EACO) reported net sales of $80.255 million, a 5.2% increase from the same quarter in 2022. However, net income and earnings per share declined by 62.2% and 62.3% respectively.

How many sales employees did EACO Corporation (EACO) have at November 30, 2023?

EACO Corporation (EACO) had 413 sales employees at November 30, 2023, an increase of 47 or 13% from the prior year quarter.

What are the future growth plans for EACO Corporation (EACO) in fiscal year 2024?

Management anticipates continued growth in both headcount and sales focus teams (SFT’s) in fiscal year 2024, believing in gaining market share through its local presence business model.