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EACO Corporation Reports Record Second Quarter Revenues

EACO Corporation (OTCQB:EACO) today reported the results for its quarter ended February 28, 2014.

Net sales, net income and earnings per share were as follows for the three months ended February 28, 2014 (dollars in thousands, except per share information):

 
Six Months Ended February 28, %
2014   2013 Change
(unaudited)
Net sales $61,957 $57,780 7.2%
 
Net income $1,173 $1,024 14.6%
 
Basic and diluted earnings per common share $0.23 $0.20 15%
 
Three Months Ended February 28, %
2014 2013 Change
(unaudited)
 
Net sales $30,922 $28,520 8%
 
Net income $109 $641 -83.0%
 
Basic and diluted earnings per common share $0.02 $0.13 -84.6%
 

As of February 28, 2014, the Company’s sales team numbered 323 employees, an increase of 5% from the 308 employees on February 28, 2013. The Company’s sales force is divided into Sales Focus Teams (SFT’s.) The Company had 96 SFT’s as of February 28, 2014, an increase of 14% from 84 SFT’s on February 28, 2013.

We estimate that the annual North American market for our products is approximately $6.7 billion. The Company’s current estimated market Share is 1.8% as compared to 1.7% in the prior year.

   
EACO Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share information)

 
February 28, August 31,
2014 2013
ASSETS (unaudited)
Current Assets:
Cash and cash equivalents $ 2,669 $ 1,507
Restricted cash, current 1,576 --
Trade accounts receivable, net 15,524 14,438
Inventory, net 14,122 14,272
Marketable securities, trading 417 1,395
Real estate properties held for sale 7,494 7,988
Prepaid expenses and other current assets 655 619
Total current assets 42,457 40,219
 
Non-current Assets:
Restricted cash, non-current 548 548
Equipment and leasehold improvements, net 1,394 1,396
Deferred tax asset 1,755 1,712
Other assets 430 605
Total assets $ 46,584 $ 44,480
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable $ 9,193 $ 9,315
Accrued expenses and other current liabilities 2,682 2,880
Securities sold short, at fair value 1,576 --
Liabilities of discontinued operations – short-term 153 146
Liabilities of assets held for sale 4,917 5,397
Total current liabilities 18,521 17,738
 
Non-current Liabilities:
Liabilities of discontinued operations – long-term 2,301 2,410
Deposit liability 63 87
Long-term debt 6,714 6,534
Total liabilities 27,599 26,769
 
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 959 820
Retained earnings 5,598 4,463
Total shareholders’ equity 18,985 17,711
Total liabilities and shareholders’ equity $ 46,584 $ 44,480
 

Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2012 filed with the U.S. Securities and Exchange Commission on November 29, 2013.

     

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,
2014   2013 2014   2013
Revenues 30,922 28,520 61,957 57,780
Cost of revenues 22,412 20,474 44,541 41,633
Gross margin 8,510 8,046 17,416 16,147
 
Selling, general and administrative expenses 8,027 7,350 15,806 14,610
Income from operations 483 696 1,610 1,537
 
Non-operating (expense) income:
Net loss on trading securities (148) (97) (57) (119)
Gain on sale of property - 540 535 540
Interest expense, net (112) (166) (211) (333)
Total non-operating (expense) income (260) 277 267 88
Net income before income taxes 223 973 1,877 1,625
Provision for income taxes 114 332 704 601
Net income 109 641 1,173 1,024
Cumulative preferred stock dividend (19) (19) (38) (38)
 
Net income attributable to common shareholders $90 $622 $1,135 $986
 
Basic and diluted earnings per share 0.02 0.13 0.23 0.20
 
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,
2014     2013
Operating activities:
Net income $ 1,173 $ 1,024
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 297 316
Bad debt expense 58 5
Change in inventory reserve 22 (62)
Gain on sale of real estate property (535) (540)
Net loss on trading securities 57 119
(Increase) decrease in:
Trade accounts receivable (1,144) 5
Inventory 128 (1,218)
Prepaid expenses and other assets 139 24
Deferred tax asset (43) 450
Increase (decrease) in:
Trade accounts payable (128) (165)
Accrued expenses and other current liabilities (198) 344
Deposit liability (24) (27)
Liabilities of discontinued operations   (102)   (74)
Net cash (used in) provided by operating activities   (300)   201
 
Investing activities:
Purchase of property and equipment (405) (123)
Sale (purchase) of marketable securities, trading 921 (579)
Proceeds from securities sold short 1,576 724
Change in restricted cash (1576) (724)
Proceeds from sale of property   1,139   650
Net cash provided by (used in) investing activities   1,655   (52)
 
Financing activities:
Net borrowings on revolving credit facility 186 734
Preferred dividend (38) (38)
Bank overdraft 6 (111)
Payments on long-term debt (124) (1,604)
Payments on long-term real estate held for sale   (362)   -
Net cash (used in) financing activities   (332)   (1,019)
Effect of foreign currency exchange rate changes on cash and cash equivalents   139   156
Net increase (decrease) in cash and cash equivalents 1,162 (714)
 
Cash and cash equivalents - beginning of period   1,507   2,568
Cash and cash equivalents - end of period $ 2,669 $ 1,854
 
Supplemental disclosures of cash flow information:
Cash paid for interest $ 212 $ 339
 
Cash paid for taxes $ 674 $ 196
 
Non-cash investing activities:
Transfer of real estate properties held for leasing – net to assets

held for sale

$ 7,206 $ -
Non-cash financing activities:
Transfer of long-term debt to liabilities of assets held for sale $ 4,917 $ -

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