EACO Corporation (OTCQB:EACO) today reported the results for its year ended August 31, 2017.
Net sales, net income and earnings per share were as follows for the three months and year ended August 31, 2017 (dollars in thousands, except per share information):
| Three Months Ended August 31, | % | ||||||||||||||
| 2017 | 2016 | Change | |||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
| Net sales | $ | 42,181 | $ | 39,787 | 6.0 | % | |||||||||
| Net income | $ | 1,364 | $ | 1,245 | 9.6 | % | |||||||||
| Basic and diluted earnings per common share | $ | 0.28 | $ | 0.25 | 12.0 | % | |||||||||
| Year Ended August 31, | % | ||||||||||||||
| 2017 | 2016* | Change | |||||||||||||
| (unaudited) | |||||||||||||||
| Net sales | $ | 156,954 | $ | 148,544 | 5.7 | % | |||||||||
| Net income | $ | 4,051 | $ | 4,095 | (1.1 | )% | |||||||||
| Basic and diluted earnings per common share | $ | 0.83 | $ | 0.83 | 0 | % | |||||||||
* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2016 filed with the U.S. Securities and Exchange Commission on November 23, 2016.
The Company had 316 sales employees at August 31, 2017, an increase of 2 from the prior year. The Company’s sales force is divided into Sales focus teams (SFT’s). The company had 94 SFT’s as of August 31, 2017, the same number from the prior year. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2018. The Company believes it continues to gain market share through its local presence business model, increasing net sales by 6.0% and bookings by 5% when comparing to the prior year.
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) | ||||||||||
| August 31, | August 31, | |||||||||
| 2017 | 2016* | |||||||||
| ASSETS | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 3,870 | $ | 4,878 | ||||||
| Restricted cash, current | 707 | 1,425 | ||||||||
| Trade accounts receivable, net | 21,339 | 18,797 | ||||||||
| Inventory, net | 26,791 | 21,532 | ||||||||
| Marketable securities, trading | 1,596 | 540 | ||||||||
| Prepaid expenses and other current assets | 1,354 | 1,135 | ||||||||
| Total current assets | 55,657 | 48,307 | ||||||||
| Non-current Assets: | ||||||||||
| Property, equipment and leasehold improvements, net | 9,256 | 1,395 | ||||||||
| Other assets | 867 | 890 | ||||||||
| Total assets | $ | 65,780 | $ | 50,592 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Current Liabilities: | ||||||||||
| Trade accounts payable | $ | 13,364 | $ | 12,727 | ||||||
| Accrued expenses and other current liabilities | 4,545 | 5,600 | ||||||||
| Liability for short sales of trading securities | 707 | 1,425 | ||||||||
| Current portion of long-term debt | 139 | - | ||||||||
| Total current liabilities | 18,755 | 19,752 | ||||||||
| Non-current Liabilities: | ||||||||||
| Long-term debt | 12,193 | - | ||||||||
| Total liabilities | 30,948 | 19,752 | ||||||||
| 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 | 747 | 730 | ||||||||
| Retained earnings | 21,657 | 17,682 | ||||||||
| Total shareholders’ equity | 34,832 | 30,840 | ||||||||
| Total liabilities and shareholders’ equity | $ | 65,780 | $ | 50,592 | ||||||
* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2016 filed with the U.S. Securities and Exchange Commission on November 23, 2016.
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, | |||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016* | |||||||||||||||||||||
| Revenues | $ | 42,181 | $ | 39,787 | $ | 156,954 | $ | 148,544 | ||||||||||||||||
| Cost of revenues | 30,061 | 28,055 | 112,184 | 104,981 | ||||||||||||||||||||
| Gross margin | 12,120 | 11,732 | 44,770 | 43,563 | ||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Selling, general and administrative expenses | 10,098 | 9,600 | 38,455 | 37,122 | ||||||||||||||||||||
| Income from operations | 2,022 | 2,132 | 6,315 | 6,441 | ||||||||||||||||||||
| Other (expense) income: | ||||||||||||||||||||||||
| Net gain on trading securities | 24 | (91 | ) | 208 | 104 | |||||||||||||||||||
| Interest and other (expense) | (100 | ) | (3 | ) | (181 | ) | (17 | ) | ||||||||||||||||
| Total other (expense) income | (76 | ) | (94 | ) | 27 | 87 | ||||||||||||||||||
| Income before income taxes | 1,946 | 2,038 | 6,342 | 6,528 | ||||||||||||||||||||
| Provision for income taxes | 582 | 793 | 2,291 | 2,433 | ||||||||||||||||||||
| Net income | 1,364 | 1,245 | 4,051 | 4,095 | ||||||||||||||||||||
| Cumulative preferred stock dividend | (19 | ) | (19 | ) | (76 | ) | (76 | ) | ||||||||||||||||
| Net income attributable to common shareholders | $ | 1,345 | $ | 1,226 | $ | 3,975 | $ | 4,019 | ||||||||||||||||
| Basic and diluted earnings per share: | $ | 0.28 | $ | 0.25 | $ | 0.83 | $ | 0.83 | ||||||||||||||||
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, 2016 filed with the U.S. Securities and Exchange Commission on November 23, 2016.
EACO Corporation and Subsidiaries | ||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||
| (in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Year Ended | ||||||||||||
| August 31, | ||||||||||||
| 2017 | 2016* | |||||||||||
| Operating activities: | ||||||||||||
| Net income | $ | 4,051 | $ | 4,095 | ||||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||
| Depreciation and amortization | 785 | 577 | ||||||||||
| Bad debt expense | 96 | 73 | ||||||||||
| Change in inventory reserve | 87 | 202 | ||||||||||
| Net gain on investments | (208 | ) | (104 | ) | ||||||||
| (Increase) decrease in: | ||||||||||||
| Trade accounts receivable | (2,638 | ) | (3,385 | ) | ||||||||
| Inventory | (5,346 | ) | (5,001 | ) | ||||||||
| Prepaid expenses and other assets | (247 | ) | (365 | ) | ||||||||
| Increase (decrease) in: | ||||||||||||
| Trade accounts payable | (30 | ) | 1,641 | |||||||||
| Accrued expenses and other current liabilities | (1,027 | ) | 1,167 | |||||||||
| Net cash used in operating activities | (4,477 | ) | (1,100 | ) | ||||||||
| Investing activities: | ||||||||||||
| Purchase of property and equipment | (8,646 | ) | (403 | ) | ||||||||
| Purchase of marketable securities, trading | (848 | ) | (436 | ) | ||||||||
| Net change in securities sold short | (718 | ) | (356 | ) | ||||||||
| Change in restricted cash | 737 | 375 | ||||||||||
| Net cash used in investing activities | (9,475 | ) | (820 | ) | ||||||||
| Financing activities: | ||||||||||||
| Borrowings on revolving credit facility | 6,967 | (33 | ) | |||||||||
| Repayments on long-term debt | (35 | ) | - | |||||||||
| Preferred dividend | (76 | ) | (76 | ) | ||||||||
| Bank overdraft | 671 | 1,768 | ||||||||||
| Borrowings on long-term debt | 5,400 | - | ||||||||||
| Net cash provided by financing activities | 12,927 | 1,659 | ||||||||||
| Effect of foreign currency exchange rate changes on cash and cash equivalents | 17 | (130 | ) | |||||||||
| Net decrease in cash and cash equivalents | (1,008 | ) | (391 | ) | ||||||||
| Cash and cash equivalents - beginning of period | 4,878 | 5,269 | ||||||||||
| Cash and cash equivalents - end of period | $ | 3,870 | $ | 4,878 | ||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||
| Cash paid for interest | $ | 182 | $ | 9 | ||||||||
| Cash paid for income taxes | $ | 2,833 | $ | 2,199 | ||||||||
* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2016 filed with the U.S. Securities and Exchange Commission on November 23, 2016.
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