EACO Corporation Reports Record 2nd Quarter Net Sales and Record 2nd Quarter Net Income

Rhea-AI Summary

EACO (OTCMKTS:EACO) reported a positive financial performance for the quarter ended February 29, 2024, with an 8.3% increase in net sales, 7.8% growth in net income, and 7.6% rise in earnings per share. The company also expanded its sales force by 11.6% and increased its sales focus teams by five. Management foresees further growth in headcount and SFT's in fiscal year 2024, attributing market share gains to its local presence business model.

ANAHEIM, Calif.--(BUSINESS WIRE)-- EACO Corporation (OTCMKTS:EACO) today reported the results for its quarter ended February 29, 2024.

Net sales, net income and earnings per share were as follows for the three months ended February 29, 2024 (dollars in thousands, except per share information):

	Three Months Ended
	February 29, 2024		February 28, 2023		% Change
	(unaudited)		(unaudited)
Net sales	$83,335		$76,925		8.3%
Net income	$5,498		$5,100		7.8%
Basic earnings per common share	$1.13		$1.05		7.6%

The Company had 413 sales employees at February 29, 2024, an increase of 43 employees or 11.6%, 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 February 29, 2024, five more than 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)
		February 29,				August 31,
		2024				2023
ASSETS
Current Assets:
Cash and cash equivalents		$	3,984			$	8,558
Restricted cash			10				10
Trade accounts receivable, net			46,987				46,654
Inventory, net			63,753				56,270
Marketable securities, trading			1,678				27,228
Prepaid expenses and other current assets			3,170				3,843
Total current assets			119,582				142,563
Non-current Assets:
Property, equipment and leasehold improvements, net			35,537				8,041
Operating lease right-of-use assets			4,692				9,988
Other assets, net			1,534				1,652
Total assets		$	161,345			$	162,244
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable		$	27,986			$	22,505
Accrued expenses and other current liabilities			8,209				16,375
Current portion of operating lease liabilities			2,245				3,950
Current portion of debt			120				120
Total current liabilities			38,560				42,950
Non-current Liabilities:
Long-term debt			4,286				4,348
Operating lease liabilities			2,625				6,225
Total liabilities			45,471				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			(48	)			38
Retained earnings			103,494				96,255
Total shareholders’ equity			115,874				108,721
Total liabilities and shareholders’ equity		$	161,345			$	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								Six Months Ended
		February 29, 2024				February 28, 2023				February 29, 2024				February 28, 2023
Net sales		$	83,335			$	76,925			$	163,590			$	153,244
Cost of sales			58,308				54,661				114,991				109,317
Gross margin			25,027				22,264				48,599				43,927
Operating expenses:
Selling, general and administrative expenses			17,598				15,606				34,815				31,291
Impairment on termination of lease			–				–				3,906				–
Income from operations			7,429				6,658				9,878				12,636
Other income (expense):
Net (loss) gain on trading securities			23				179				(21	)			621
Interest and other (expense)			(75	)			46				(84	)			(2	)
Other (expense) income, net			(52	)			225				(105	)			619
Income before income taxes			7,377				6,883				9,773				13,255
Provision for income taxes			1,879				1,783				2,496				3,444
Net income			5,498				5,100				7,277				9,811
Cumulative preferred stock dividend			(19	)			(19	)			(38	)			(38	)
Net income attributable to common shareholders		$	5,479			$	5,081			$	7,239			$	9,773
Basic earnings per share:		$	1.13			$	1.05			$	1.49			$	2.01
Diluted earnings per share:		$	1.12			$	1.04			$	1.48			$	2.00
Basic weighted average common shares outstanding			4,861,590				4,861,590				4,861,590				4,861,590
Diluted weighted average common shares outstanding			4,901,590				4,901,590				4,901,590				4,901,590

EACO Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited)
	Six Months Ended
	February 29, 2024				February 28, 2023
Operating activities:
Net income	$	7,277			$	9,811
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		806				708
Bad debt expense		135				182
Deferred tax provision		40				–
Net unrealized loss (gain) on trading securities		267				(621	)
Impairment on termination of lease		3,906				–
Changes in current assets and liabilities:
Trade accounts receivable		(468	)			2,901
Inventory		(7,483	)			(4,658	)
Prepaid expenses and other assets		751				1,356
Operating lease right-of-use assets		5,296				(271	)
Trade accounts payable		3,404				1,087
Accrued expenses and other current liabilities		(8,166	)			(4,842	)
Operating lease liabilities		(5,305	)			285
Net cash provided by operating activities		460				5,938
Investing activities:
Purchase of property, equipment, and leasehold improvements		(32,208	)			(391	)
Net sales (purchases) of marketable securities, trading		25,283				(17,319	)
Net cash used in investing activities		(6,925	)			(17,710	)
Financing activities:
Repayments on long-term debt		(62	)			(58	)
Preferred stock dividend		(38	)			(38	)
Net change in bank overdraft		2,077				(109	)
Net cash provided by (used in) financing activities		1,977				(205	)
Effect of foreign currency exchange rate changes on cash and cash equivalents		(86	)			(85	)
Net decrease in cash, cash equivalents, and restricted cash		(4,574	)			(12,062	)
Cash, cash equivalents, and restricted cash - beginning of period		8,568				17,396
Cash, cash equivalents, and restricted cash - end of period	$	3,994			$	5,334
Supplemental disclosures of cash flow information:
Cash paid for interest	$	145			$	102
Cash paid for income taxes	$	8,276			$	7,544

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240328153225/en/

Michael Narikawa

EACO Corporation

(714) 876-2490

Source: EACO Corporation

FAQ

What is the ticker symbol for EACO ?

The ticker symbol for EACO is OTCMKTS:EACO.

What were the net sales for EACO in the quarter ended February 29, 2024?

EACO reported net sales of $83,335 for the quarter ended February 29, 2024.

How much did EACO 's net income increase by in the quarter ended February 29, 2024?

EACO 's net income increased by 7.8% in the quarter ended February 29, 2024.

What was the percentage change in earnings per share for EACO in the quarter ended February 29, 2024?

EACO saw a 7.6% rise in earnings per share for the quarter ended February 29, 2024.

How many sales employees did EACO have at the end of February 29, 2024?

EACO had 413 sales employees at the end of February 29, 2024, representing an increase of 11.6% from the prior year quarter.

How many sales focus teams (SFT's) did EACO have as of February 29, 2024?

EACO had 109 sales focus teams (SFT's) as of February 29, 2024, which was five more than the prior year quarter.

What does EACO anticipate in terms of headcount and SFT's growth in fiscal year 2024?

EACO anticipates continued growth in both headcount and sales focus teams (SFT's) in fiscal year 2024.

How does EACO attribute its market share gains?

EACO attributes its market share gains to its local presence business model.