EACO Corporation (OTCQB:EACO) today reported the results for its quarter ended February 28, 2015.
Net sales, net income and earnings per share were as follows for the three months ended February 28, 2015 as compared to the comparable prior year quarter (dollars in thousands, except per share information):
| Three Months Ended February 28, | % | ||||||||||||||
| 2015 | 2014 | Change | |||||||||||||
| (unaudited) | |||||||||||||||
| Net sales | $ | 34,427 | $ | 30,922 | 11.3 | % | |||||||||
| Net income | $ | 1,100 | $ | 90 | 1122.2 | % | |||||||||
| Basic and diluted earnings per common share | $ | 0.23 | $ | 0.02 | 1050.0 | % | |||||||||
The Company’s productivity gain from operations contributed to the Company’s 11.3% net sales growth for the quarter versus the same quarter a year ago, while the sales team numbered 312, a decrease of 3.4% from the 323 employees on February 28, 2014. The Company’s sales force is divided into Sales Focus Teams (SFTs). The Company had 91 SFTs as of February 28, 2015, a decrease of 5% from 96 SFTs on February 28, 2014. Decrease in headcount is a short term adjustment, but management anticipates continued growth in both our headcount and SFTs in the future. The Company has continued to gain market share through its local presence business model. The Company has opened their 46th facility in Fort Lauderdale, FL, on March 16, 2015.
The Company estimates that the annual North American market for our product is approximately $7.2 billion. The Company’s current estimated market share is 2.3% as compared to 2.1% in the prior year.
| EACO Corporation and Subsidiaries | ||||||||||
Condensed Consolidated Balance Sheets | ||||||||||
(in thousands, except share information) | ||||||||||
(unaudited) | ||||||||||
| February 28, | August 31, | |||||||||
| 2015 | 2014* | |||||||||
| ASSETS | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 4,304 | $ | 3,480 | ||||||
| Restricted cash, current | 1,929 | 642 | ||||||||
| Trade accounts receivable, net | 17,652 | 17,795 | ||||||||
| Inventory, net | 15,570 | 14,863 | ||||||||
| Marketable securities, trading | - | 73 | ||||||||
| Prepaid expenses and other current assets | 1,059 | 1,104 | ||||||||
| Total current assets | 40,514 | 37,957 | ||||||||
| Non-current Assets: | ||||||||||
| Restricted cash, non-current | 208 | 322 | ||||||||
| Equipment and leasehold improvements, net | 1,499 | 1,603 | ||||||||
| Other assets | 995 | 1,001 | ||||||||
| Total assets | $ | 43,216 | $ | 40,883 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Current Liabilities: | ||||||||||
| Trade accounts payable | $ | 11,482 | $ | 11,192 | ||||||
| Accrued expenses and other current liabilities | 2,608 | 3,508 | ||||||||
| Liabilities of discontinued operations – short-term | 48 | 48 | ||||||||
| Liability for short sales of trading securities | 1,929 | 642 | ||||||||
| Total current liabilities | 16,067 | 15,390 | ||||||||
| Non-current Liabilities: | ||||||||||
| Liabilities of discontinued operations – long-term | 160 | 274 | ||||||||
| Long-term debt | 2,115 | 1,728 | ||||||||
| Total liabilities | 18,342 | 17,392 | ||||||||
| 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 | 984 | 1,065 | ||||||||
| Retained earnings | 11,462 | 9,998 | ||||||||
| Total shareholders’ equity | 24,874 | 23,491 | ||||||||
| Total liabilities and shareholders’ equity | $ | 43,216 | $ | 40,883 | ||||||
* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2014 filed with the U.S. Securities and Exchange Commission on November 28, 2014. | ||||||||||
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 28, | February 28, | |||||||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||
| Revenues | $ | 34,427 | $ | 30,922 | $ | 67,661 | $ | 61,957 | ||||||||||||||||
| Cost of revenues | 23,795 | 22,412 | 47,584 | 44,541 | ||||||||||||||||||||
| Gross margin | 10,632 | 8,510 | 20,077 | 17,416 | ||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
Selling, general and administrative expenses | 8,778 | 8,027 | 17,532 | 15,806 | ||||||||||||||||||||
| Income from operations | 1,854 | 483 | 2,545 | 1,610 | ||||||||||||||||||||
| Other (expense) income: | ||||||||||||||||||||||||
| Net (loss) on trading securities | (13 | ) | (148 | ) | (56 | ) | (57 | ) | ||||||||||||||||
| Gain on sale of property | - | - | - | 535 | ||||||||||||||||||||
| Interest and other income (expense) | 6 | (112 | ) | 6 | (211 | ) | ||||||||||||||||||
| Total other (expense) income | (7 | ) | (260 | ) | (50 | ) | 267 | |||||||||||||||||
| Income before income taxes | 1,847 | 223 | 2,495 | 1,877 | ||||||||||||||||||||
| Provision for income taxes | 728 | 114 | 981 | 704 | ||||||||||||||||||||
| Net income | 1,119 | 109 | 1,514 | 1,173 | ||||||||||||||||||||
| Cumulative preferred stock dividend | (19 | ) | (19 | ) | (38 | ) | (38 | ) | ||||||||||||||||
Net income attributable to common shareholders | $ | 1,100 | $ | 90 | $ | 1,476 | $ | 1,135 | ||||||||||||||||
| Basic and diluted earnings per share: | $ | 0.23 | $ | 0.02 | $ | 0.30 | $ | 0.23 | ||||||||||||||||
Basic and diluted weighted average common shares outstanding | 4,861,590 | 4,861,590 | 4,861,590 | 4,861,590 | ||||||||||||||||||||
EACO Corporation and Subsidiaries | ||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||
| (in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Six Months Ended | ||||||||||||
| February 28, | ||||||||||||
| 2015 | 2014 | |||||||||||
| Operating activities: | ||||||||||||
| Net income | $ | 1,514 | $ | 1,173 | ||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||
| Depreciation and amortization | 268 | 297 | ||||||||||
| Bad debt expense | - | 58 | ||||||||||
| Change in inventory reserve | 1 | 22 | ||||||||||
| Gain on sale of Property | - | (535 | ) | |||||||||
| Net loss on trading securities | 56 | 57 | ||||||||||
| (Increase) decrease in: | ||||||||||||
| Trade accounts receivable | 143 | (1,144 | ) | |||||||||
| Inventory | (708 | ) | 128 | |||||||||
| Prepaid expenses and other assets | 51 | 139 | ||||||||||
| Deferred tax asset | - | (43 | ) | |||||||||
| Increase (decrease) in: | ||||||||||||
| Trade accounts payable | 46 | (128 | ) | |||||||||
| Accrued expenses and other current liabilities | (900 | ) | (198 | ) | ||||||||
| Deposit Liability | - | (24 | ) | |||||||||
| Liabilities of discontinued operations | (115 | ) | (102 | ) | ||||||||
| Net cash provided by (used in) operating activities | 356 | (300 | ) | |||||||||
| Investing activities: | ||||||||||||
| Purchase of property and equipment | (164 | ) | (405 | ) | ||||||||
| Sale of marketable securities, trading | 16 | 921 | ||||||||||
| Proceeds from securities sold short | 1,286 | 1,576 | ||||||||||
| Proceeds from sale of property | - | 1,139 | ||||||||||
| Change in restricted cash | (1,173 | ) | (1,576 | ) | ||||||||
| Net cash (used in) provided by investing activities | (35 | ) | 1,655 | |||||||||
| Financing activities: | ||||||||||||
| Borrowings on revolving credit facility | 382 | 186 | ||||||||||
| Preferred dividend | (38 | ) | (38 | ) | ||||||||
| Bank overdraft | 247 | 6 | ||||||||||
| Payments on long-term debt - real estate held for sale | - | (362 | ) | |||||||||
| Payments on long-term debt | 5 | 124 | ||||||||||
| Net cash provided by (used in) financing activities | 596 | (332 | ) | |||||||||
Effect of foreign currency exchange rate changes on cash and cash equivalents | (93 | ) | 139 | |||||||||
| Net increase in cash and cash equivalents | 824 | 1,162 | ||||||||||
| Cash and cash equivalents - beginning of period | 3,480 | 1,507 | ||||||||||
| Cash and cash equivalents - end of period | $ | 4,304 | $ | 2,669 | ||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||
| Cash paid for interest | $ | 10 | $ | 212 | ||||||||
| Cash paid for taxes | $ | 1,342 | $ | 674 | ||||||||
Contacts:
Marta Arciniega, 714-876-2490
