EACO Corporation (OTCQB:EACO) today reported record results for the quarter and year ended August 31, 2016.
Net sales, net income and earnings per share were as follows for the three months and twelve months ended August 31, 2016 (dollars in thousands, except per share information):
| Three Months Ended August 31, | % | ||||||||
| 2016 | 2015 | Change | |||||||
(unaudited) | (unaudited) | ||||||||
| Net sales | $ | 39,787 | $ | 35,652 | 11.6 | % | |||
| Net income | $ | 1,245 | $ | 1,052 | 18.3 | % | |||
| Basic and diluted earnings per common share | $ | 0.25 | $ | 0.21 | 19.0 | % | |||
| Twelve Months Ended August 31, | % | ||||||||
| 2016 | 2015* | Change | |||||||
| (unaudited) | |||||||||
| Net sales | $ | 148,544 | $ | 140,213 | 5.9 | % | |||
| Net income | $ | 4,095 | $ | 3,741 | 10.5 | % | |||
| Basic and diluted earnings per common share | $ | 0.84 | $ | 0.75 | 12.0 | % | |||
* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2015 filed with the U.S. Securities and Exchange Commission on November 25, 2015.
The company had 314 sales employees at August 31, 2016, an increase of one from the 313 as of August 31, 2015. The company’s sales force is divided into Sales focus teams (SFT’s). The company had 94 SFT’s as of August 31, 2016, a decrease from 96 SFT’s the company had on August 31, 2015. Management anticipates growth in both our headcount and SFT’s in fiscal year 2017. The company continues to gain market share through its local presence business model and believes that the overall market for its products are expanding.
| EACO Corporation and Subsidiaries | |||||
Condensed Consolidated Balance Sheets | |||||
(in thousands, except share information) | |||||
| August 31, | August 31, | ||||
| 2016 | 2015* | ||||
| ASSETS | |||||
| Current Assets: | |||||
| Cash and cash equivalents | $ | 4,878 | $ | 5,269 | |
| Restricted cash, current | 1,425 | 1,781 | |||
| Trade accounts receivable, net | 18,797 | 15,485 | |||
| Inventory, net | 21,532 | 16,733 | |||
| Marketable securities, trading | 540 | - | |||
| Prepaid expenses and other current assets | 1,135 | 591 | |||
| Total current assets | 48,307 | 39,859 | |||
| Non-current Assets: | |||||
| Equipment and leasehold improvements, net | 1,395 | 1,569 | |||
| Other assets | 890 | 1,088 | |||
| Total assets | $ | 50,592 | $ | 42,516 | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||
| Current Liabilities: | |||||
| Trade accounts payable | $ | 12,727 | $ | 9,318 | |
| Accrued expenses and other current liabilities | 5,600 | 4,433 | |||
| Liability for short sales of trading securities | 1,425 | 1,781 | |||
| Total current liabilities | 19,752 | 15,497 | |||
| Non-current Liabilities: | |||||
| Long-term debt | - | 33 | |||
| Total liabilities | 19,752 | 15,565 | |||
| 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 | 730 | 860 | |||
| Retained earnings | 17,682 | 13,663 | |||
| Total shareholders’ equity | 30,840 | 26,951 | |||
| Total liabilities and shareholders’ equity | $ | 50,592 | $ | 42,516 | |
* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2015 filed with the U.S. Securities and Exchange Commission on November 25, 2015.
EACO Corporation and Subsidiaries | ||||||||||||||||
Condensed Consolidated Statements of Income | ||||||||||||||||
(in thousands, except for share and per share information) | ||||||||||||||||
(unaudited) | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| August 31, | August 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015* | |||||||||||||
| Revenues | $ | 39,787 | $ | 35,652 | $ | 148,544 | $ | 140,213 | ||||||||
| Cost of revenues | 28,055 | 25,409 | 104,981 | 99,105 | ||||||||||||
| Gross margin | 11,732 | 10,243 | 43,563 | 41,108 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative expenses | 9,600 | 9,083 | 37,122 | 35,394 | ||||||||||||
| Income from operations | 2,132 | 1,160 | 6,441 | 5,714 | ||||||||||||
| Other (expense) income: | ||||||||||||||||
| Net (loss) gain on trading securities | (91 | ) | 188 | 104 | 225 | |||||||||||
| Interest and other (expense) | (3 | ) | 59 | (17 | ) | 56 | ||||||||||
| Total other (expense) income | (94 | ) | 247 | 87 | 281 | |||||||||||
| Income before income taxes | 2,038 | 1,407 | 6,528 | 5,995 | ||||||||||||
| Provision for income taxes | 793 | 355 | 2,433 | 2,254 | ||||||||||||
| Net income | 1,245 | 1,052 | 4,095 | 3,741 | ||||||||||||
| Cumulative preferred stock dividend | (19 | ) | (19 | ) | (76 | ) | (76 | ) | ||||||||
| Net income attributable to common shareholders | $ | 1,226 | $ | 1,033 | $ | 4,019 | $ | 3,665 | ||||||||
| Basic and diluted earnings per share: | $ | 0.25 | $ | 0.21 | $ | 0.84 | $ | 0.75 | ||||||||
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, 2015 filed with the U.S. Securities and Exchange Commission on November 25, 2015.
EACO Corporation and Subsidiaries | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
| Year Ended | ||||||||
| August 31, | ||||||||
| 2016 | 2015* | |||||||
| Operating activities: | ||||||||
| Net income | $ | 4,095 | $ | 3,741 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 577 | 553 | ||||||
| Bad debt expense | 73 | 91 | ||||||
| Change in inventory reserve | 202 | 81 | ||||||
| Net (gain) on investments | (104 | ) | (225 | ) | ||||
| (Increase) decrease in: | ||||||||
| Trade accounts receivable | (3,385 | ) | 2,219 | |||||
| Inventory | (5,001 | ) | (1,951 | ) | ||||
| Prepaid expenses and other assets | (365 | ) | 509 | |||||
| Increase (decrease) in: | ||||||||
| Trade accounts payable | 1,641 | (47 | ) | |||||
| Accrued expenses and other current liabilities | 1,167 | 603 | ||||||
| Net cash provided by operating activities | (1,100 | ) | 5,574 | |||||
| Investing activities: | ||||||||
| Purchase of property and equipment | (403 | ) | (519 | ) | ||||
| (Purchase) Sale of marketable securities, trading | (436 | ) | 298 | |||||
| Net Change in securities sold short | (356 | ) | 1,139 | |||||
| Change in restricted cash | 375 | (900 | ) | |||||
| Net cash provided by investing activities | (820 | ) | 18 | |||||
| Financing activities: | ||||||||
| Payments on revolving credit facility | (33 | ) | (1,684 | ) | ||||
| Payment of preferred stock dividend | (76 | ) | (76 | ) | ||||
| Bank overdraft | 1,768 | (1,827 | ) | |||||
| Payments on long-term debt | - | (11 | ) | |||||
| Net cash (used in) financing activities | 1,659 | (3,598 | ) | |||||
| Effect of foreign currency exchange rate changes on cash and cash equivalents | (130 | ) | (205 | ) | ||||
| Net (decrease) increase in cash and cash equivalents | (391 | ) | 1,789 | |||||
| Cash and cash equivalents - beginning of period | 5,269 | 3,480 | ||||||
| Cash and cash equivalents - end of period | $ | 4,878 | $ | 5,269 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for taxes | $ | 2,227 | $ | 1,342 | ||||
* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2015 filed with the U.S. Securities and Exchange Commission on November 25, 2015.
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