EACO Corporation (OTCQB:EACO) today reported the results for its quarter ended November 30, 2014.
Net sales, net income and earnings per share were as follows for the three months ended November 30, 2014 as compared to the comparable prior year quarter (dollars in thousands, except per share information):
| Three Months Ended November 30, | % | ||||||||||||||
| 2014 | 2013 | Change | |||||||||||||
| (unaudited) | |||||||||||||||
| Net sales | $ | 33,234 | $ | 31,035 | 7.1 | % | |||||||||
| Net income | $ | 376 | $ | 1,045 | (64.0 | )% | |||||||||
| Basic and diluted earnings per common share | $ | 0.08 | $ | 0.21 | (61.9 | )% | |||||||||
As of November 30, 2014 the Company’s sales team numbered 329, an increase of 3% compared to 320 employees on November 30, 2013. The company’s sale force is divided into Sales Focus Teams (SFTs). The company had 96 SFTs as of November 30, 2014, an increase of 3% from 93 SFTs on November 30, 2013. The company continues to gain market share through its local presence business model.
| EACO Corporation and Subsidiaries | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (in thousands, except share information) | ||||||||||
| (unaudited) | ||||||||||
| November 30, | August 31, | |||||||||
| 2014 | 2014* | |||||||||
| ASSETS | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 4,032 | $ | 3,480 | ||||||
| Restricted cash, current | 2,437 | 642 | ||||||||
| Trade accounts receivable, net | 16,906 | 17,795 | ||||||||
| Inventory, net | 15,382 | 14,863 | ||||||||
| Marketable securities, trading | -- | 73 | ||||||||
| Prepaid expenses and other current assets | 1,154 | 1,104 | ||||||||
| Total current assets | 39,911 | 37,957 | ||||||||
| Non-current Assets: | ||||||||||
| Restricted cash, non-current | 322 | 322 | ||||||||
| Equipment and leasehold improvements, net | 1,603 | 1,603 | ||||||||
| Other assets | 991 | 1,001 | ||||||||
| Total assets | $ | 42,827 | $ | 40,883 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Current Liabilities: | ||||||||||
| Trade accounts payable | $ | 12,097 | $ | 11,192 | ||||||
| Accrued expenses and other current liabilities | 1,796 | 3,508 | ||||||||
| Liabilities of discontinued operations – short-term | 48 | 48 | ||||||||
| Liability for short sales of trading securities | 2,437 | 642 | ||||||||
| Total current liabilities | 16,378 | 15,390 | ||||||||
| Non-current Liabilities: | ||||||||||
| Liabilities of discontinued operations – long-term | 258 | 274 | ||||||||
| Long-term debt | 2,361 | 1,728 | ||||||||
| Total liabilities | 18,997 | 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 | 1,028 | 1,065 | ||||||||
| Retained earnings | 10,374 | 9,998 | ||||||||
| Total shareholders’ equity | 23,830 | 23,491 | ||||||||
| Total liabilities and shareholders’ equity | $ | 42,827 | $ | 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 | ||||||||||||
November 30, | ||||||||||||
| 2014 | 2013 | |||||||||||
| Revenues | $ | 33,234 | $ | 31,035 | ||||||||
| Cost of revenues | 24,429 | 22,129 | ||||||||||
| Gross margin | 8,805 | 8,906 | ||||||||||
| Operating expenses: | ||||||||||||
| Selling, general and administrative expenses | 8,114 | 7,779 | ||||||||||
| Income from operations | 691 | 1,127 | ||||||||||
| Other (expense) income: | ||||||||||||
| Net (loss) gain on trading securities | (43 | ) | 91 | |||||||||
| Gain on sale of property | -- | 535 | ||||||||||
| Interest expense, net | -- | (99 | ) | |||||||||
| Total other (expense) income | (43 | ) | 527 | |||||||||
| Income from operations before income taxes | 648 | 1,654 | ||||||||||
| Provision for income taxes | 253 | 590 | ||||||||||
| Net income | 395 | 1,064 | ||||||||||
| Cumulative preferred stock dividend | (19 | ) | (19 | ) | ||||||||
Net income attributable to common shareholders | $ | 376 | $ | 1,045 | ||||||||
| Basic and diluted earnings per share | ||||||||||||
| Net income attributable to common shareholders | 0.08 | 0.21 | ||||||||||
Basic and diluted weighted average common shares outstanding | 4,861,590 | 4,861,590 | ||||||||||
| EACO Corporation and Subsidiaries | ||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||
| (in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| November 30, | ||||||||||||
| 2014 | 2013 | |||||||||||
| Operating activities: | ||||||||||||
| Net income (loss) | $ | 395 | $ | 1,064 | ||||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||
| Depreciation and amortization | 132 | 148 | ||||||||||
| Bad debt expense | 31 | 142 | ||||||||||
| Change in inventory reserve | 11 | 14 | ||||||||||
| Gain on sale of Property | -- | (535 | ) | |||||||||
| Net loss (gain) on investments | 43 | (91 | ) | |||||||||
| (Increase) decrease in: | ||||||||||||
| Trade accounts receivable | 860 | (910 | ) | |||||||||
| Inventory | (530 | ) | (235 | ) | ||||||||
| Prepaid expenses and other assets | (40 | ) | 141 | |||||||||
| Deferred tax asset | -- | (100 | ) | |||||||||
| Increase (decrease) in: | ||||||||||||
| Trade accounts payable | (262 | ) | 346 | |||||||||
| Accrued expenses and other current liabilities | (1,716 | ) | (428 | ) | ||||||||
| Deposit Liability | -- | (24 | ) | |||||||||
| Liabilities of discontinued operations | (16 | ) | (54 | ) | ||||||||
| Net cash used in operating activities | (1,092 | ) | (522 | ) | ||||||||
| Investing activities: | ||||||||||||
| Purchase of property and equipment | (133 | ) | (252 | ) | ||||||||
| Sale of marketable securities, trading | 30 | 1,041 | ||||||||||
| Net change in securities sold short | 1,795 | 1,519 | ||||||||||
| Proceeds from sale of property | -- | 1,139 | ||||||||||
| Increase in restricted cash | (1,795 | ) | (1,519 | ) | ||||||||
| Net cash (used in) provided by investing activities | (103 | ) | 1,928 | |||||||||
| Financing activities: | ||||||||||||
| Borrowings (payments) on revolving credit facility | 636 | (67 | ) | |||||||||
| Payment of preferred dividend | (19 | ) | (19 | ) | ||||||||
| Proceeds from bank overdraft | 1,169 | 343 | ||||||||||
| Payments on long-term debt - real estate held for sale | -- | (452 | ) | |||||||||
| Payments on long-term debt | (2 | ) | -- | |||||||||
| Net cash provided by (used in) financing activities | 1,784 | (195 | ) | |||||||||
| Effect of foreign currency exchange rate changes on cash and cash equivalents | (37 | ) | 70 | |||||||||
| Net increase in cash and cash equivalents | 552 | 1,281 | ||||||||||
| Cash and cash equivalents - beginning of period | 3,480 | 1,507 | ||||||||||
| Cash and cash equivalents - end of period | $ | 4,032 | $ | 2,788 | ||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||
| Cash paid for interest | $ | -- | $ | 100 | ||||||||
| Cash paid for taxes | $ | 1,342 | $ | 674 | ||||||||
