EACO Corporation Reports Record Quarterly Net Sales and Record 3rd Quarter Net Income

Rhea-AI Summary

EACO Corporation (OTCMKTS:EACO) reported strong financial results for the quarter ending May 31, 2022. Net sales reached $77,797 thousand, up 24.1% from $62,676 thousand in the previous year. Net income surged 73.1% to $5,330 thousand, with earnings per share increasing to $1.09 from $0.63 in 2021. Despite a slight decrease in sales employees, management anticipates continued growth in headcount and sales focus teams (103 teams) for fiscal year 2022, benefiting from their local presence business model.

Positive

• Net sales increased by 24.1% year-over-year to $77,797 thousand.
• Net income rose by 73.1% to $5,330 thousand.
• Earnings per share increased to $1.09, up from $0.63.

Negative

• Sales employees decreased by 2.6% to 340.

ANAHEIM, Calif.--(BUSINESS WIRE)-- EACO Corporation (OTCMKTS:EACO) today reported the results for its quarter ended May 31, 2022.

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

		Three Months Ended May 31,				%
		2022		2021		Change
		(unaudited)		(unaudited)
Net sales		$77,797		$62,676		24.1%
Net income		$5,330		$3,080		73.1%
Basic and diluted earnings per common share		$1.09		$0.63		73.0%

The Company had 340 sales employees at May 31, 2022, a decrease of 9 (2.6%) from the prior year quarter. The Company’s sales force is divided into Sales focus teams (SFT’s). The Company had 103 SFT’s as of May 31, 2022 the same from the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2022. 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, the impact of products offered by our competitors from time to time, and the impact of the Covid-19 pandemic. 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)
		May 31,			August 31,
		2022			2021*
ASSETS
Current Assets:
Cash and cash equivalents	$	5,427		$	4,455
Restricted cash		10			10
Trade accounts receivable, net		42,718			33,939
Inventory, net		47,493			40,448
Marketable securities, trading		4,835			3,741
Prepaid expenses and other current assets		7,500			6,780
Total current assets		107,983			89,363
Non-current Assets:
Property, equipment and leasehold improvements, net		7,974			8,269
Operating lease right-of-use assets		10,668			11,084
Other assets, net		1,411			1,669
Total assets	$	128,036		$	110,385
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable	$	19,316		$	16,413
Accrued expenses and other current liabilities		11,194			10,964
Current portion of operating lease liabilities		3,233			3,096
Current portion of long-term debt		119			113
Total current liabilities		33,862			30,586
Non-current Liabilities:
Long-term debt		4,492			4,585
Operating lease liabilities		7,592			8,092
Total liabilities		45,946			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		282			780
Retained earnings		69,380			53,914
Total shareholders’ equity		82,090			67,122
Total liabilities and shareholders’ equity	$	128,036		$	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 May 31,							Nine Months Ended May 31,
			2022			2021				2022			2021
Net sales		$	77,797		$	62,676			$	208,206		$	171,830
Cost of sales			56,207			45,826				150,313			125,504
Gross margin			21,590			16,850				57,893			46,326
Operating expenses:
Selling, general and administrative expenses			14,547			12,800				36,881			38,021
Income from operations			7,043			4,050				21,012			8,305
Other income (expense):
Net gain (loss) on trading securities			213			196				135			(863	)
Interest and other (expense)			(48	)		(45	)			(153	)		(174	)
Other income (expense), net			165			151				(18	)		(1,037	)
Income before income taxes			7,208			4,201				20,994			7,268
Provision for income taxes			1,878			1,121				5,471			1,943
Net income			5,330			3,080				15,523			5,325
Cumulative preferred stock dividend			(19	)		(19	)			(57	)		(57	)
Net income attributable to common shareholders		$	5,311		$	3,061			$	15,466		$	5,268
Basic and diluted earnings per share:		$	1.09		$	0.63			$	3.18		$	1.08
Basic and diluted 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)
		Nine Months Ended May 31,
		2022				2021
Operating activities:
Net income		$	15,523			$	5,325
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			1,122				1,136
Bad debt expense			54				62
Loss on sale of real property			–				–
Net unrealized (gain) loss on trading securities			(135	)			863
Increase (decrease) in cash from changes in:
Trade accounts receivable			(8,843	)			(3,239	)
Inventory			(7,045	)			(861	)
Prepaid expenses and other assets			(462	)			1,568
Operating lease right-of-use assets			416				1,400
Trade accounts payable			3,959				2,895
Accrued expenses and other current liabilities			230				(1,291	)
Operating lease liabilities			(363	)			(1,454	)
Net cash provided by operating activities			4,456				6,404
Investing activities:
Purchase of property, equipment, and leasehold improvements			(827	)			(757	)
Net (purchases) sales of marketable securities, trading			(959	)			(4,419	)
Net change in liabilities for short sales of trading securities			–				(2,916	)
Net cash (used in) investing activities			(1,786	)			(8,092	)
Financing activities:
Payments on revolving credit facility, net			–				(5,100	)
Borrowings on construction loan			–				–
Repayments on long-term debt			(87	)			(82	)
Preferred stock dividend			(57	)			(57	)
Net change in bank overdraft			(1,056	)			144
Net cash (used in) financing activities			(1,200	)			(5,095	)
Effect of foreign currency exchange rate changes on cash and cash equivalents			(498	)			223
Net increase (decrease) in cash, cash equivalents, and restricted cash			972				(6,560	)
Cash, cash equivalents, and restricted cash - beginning of period			4,465				8,995
Cash, cash equivalents, and restricted cash - end of period		$	5,437			$	2,435
Supplemental disclosures of cash flow information:
Cash paid for interest		$	153			$	172
Cash paid for income taxes		$	3,979			$	2,509

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220822005057/en/

Michael Narikawa

EACO Corporation

(714) 876-2490

Source: EACO Corporation

FAQ

What were EACO's net sales for the quarter ending May 31, 2022?

EACO reported net sales of $77,797 thousand for the quarter ending May 31, 2022.

How much did EACO's net income increase in the last quarter?

EACO's net income increased by 73.1% to $5,330 thousand for the quarter.

What is the earnings per share for EACO for the quarter ending May 31, 2022?

EACO's earnings per share for the quarter ending May 31, 2022, is $1.09.

How has EACO's sales employee count changed compared to last year?

EACO's sales employee count decreased by 2.6% to 340 employees compared to the previous year.