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EACO Corp

EACO Corporation Reports Record Annual & Quarterly Net Sales and Record Quarter Net Income

ANAHEIM, Calif.--(BUSINESS WIRE)--Nov. 21, 2024-- EACO Corporation (OTC Pink:EACO) today reported financial results for its fiscal year ended August 31, 2024.

Net sales, net income and earnings per share were as follows for the fiscal year ended August 31, 2024 (dollars in thousands, except per share information):

 

Three Months Ended August 31,

 

%

 

2024

 

2023

 

Change

 

(unaudited)

(unaudited)

 

 

 

 

Net sales

$96,520

 

$85,904

 

12.4%

 

 

 

 

 

 

Net income

$6,546

 

$6,055

 

8.1%

 

 

 

 

 

 

Basic and diluted earnings per common share

$1.34

 

$1.24

 

8.1%

 

 

 

 

Year Ended August 31,

 

%

 

2024

 

2023*

 

Change

 

(unaudited)

 

 

 

 

Net sales

$356,231

 

$319,397

 

11.5%

 

 

 

 

 

 

Net income

$15,007

 

$21,185

 

(29.2%)

 

 

 

 

 

 

Basic and diluted earnings per common share

$3.07

 

$4.34

 

(29.3%)

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2023 filed with the U.S. Securities and Exchange Commission on November 22, 2023.

The Company had 427 sales employees at August 31, 2024, an increase of 33 or 8% from the prior year quarter. The Company’s sales force is divided into sales focus teams (SFT’s). The Company had 111 SFT’s as of August 31, 2024, an increase of 4 from the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2025. The Company believes it continues to gain market share through its local presence business model.

The net income for the fiscal year ended 2024 included extraordinary items of $7.6 million in accrual expense related to an employee class action settlement agreement and an impairment loss of $3.9 million related to the termination of a lease.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1955, as amended. These forward-looking statements include, without limitation, statements related to our headcount expansion, growth in market share, and other statement that is not historical information. 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,

2024

2023*

ASSETS

 

 

Current Assets:

Cash and cash equivalents

$

843

 

$

8,558

Restricted cash

 

10

 

 

10

Trade accounts receivable, net

 

53,272

 

 

46,654

Inventory, net

 

69,602

 

 

56,270

Marketable securities, trading

 

14,748

 

 

27,228

Prepaid expenses and other current assets

 

3,526

 

 

3,843

Total current assets

 

142,001

 

 

142,563

Non-current Assets:

 

 

 

Property, equipment and leasehold improvements, net

 

35,139

 

 

8,041

Operating lease right-of-use assets

 

7,513

 

 

9,988

Other assets, net

 

3,963

 

 

1,652

Total assets

$

188,616

 

$

162,244

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current Liabilities:

 

 

 

Trade accounts payable

$

28,054

 

$

22,505

Accrued expenses and other current liabilities

 

24,933

 

 

16,375

Current portion of operating lease liabilities

 

2,708

 

 

3,950

Current portion of long-term debt

 

129

 

 

120

Total current liabilities

 

55,824

 

 

42,950

Non-current Liabilities:

 

 

 

Long-term debt

 

4,214

 

 

4,348

Operating lease liabilities

 

4,892

 

 

6,225

Total liabilities

 

64,930

 

 

53,523

Commitments and Contingencies

 

 

 

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

 

72

 

 

38

Retained earnings

 

111,186

 

 

96,255

Total shareholders’ equity

 

123,686

 

 

108,721

Total liabilities and shareholders’ equity

$

188,616

 

$

162,244

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2023 filed with the U.S. Securities and Exchange Commission on November 22, 2023.

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Income

(in thousands, except for share and per share information)

(unaudited)

 

 

Three Months Ended
August 31,

Year Ended
August 31,

 

 

2024

 

 

2023

 

 

2024

 

2023*

Revenues

$

96,520

 

$

85,904

 

$

356,231

 

$

319,397

 

Cost of revenues

 

66,835

 

 

60,656

 

 

250,019

 

 

226,981

 

Gross margin

 

29,685

 

 

25,248

 

 

106,212

 

 

92,416

 

Operating expenses:

 

 

 

 

Selling, general and administrative expenses

 

19,763

 

 

17,368

 

 

80,892

 

 

64,936

 

Impairment on termination of lease

 

–

 

 

–

 

 

3,906

 

 

–

 

Income from operations

 

9,922

 

 

7,880

 

 

21,414

 

 

27,480

 

Other (expense) income:

 

 

 

 

Net gain on trading securities

 

173

 

 

500

 

 

128

 

 

1,284

 

Interest and other expense

 

(49

)

 

(21

)

 

(177

)

 

(59

)

Other income (expense), net

 

124

 

 

479

 

 

(49

)

 

1,225

 

Income before income taxes

 

10,046

 

 

8,359

 

 

21,365

 

 

28,705

 

Provision for income taxes

 

3,500

 

 

2,304

 

 

6,358

 

 

7,520

 

Net income

 

6,546

 

 

6,055

 

 

15,007

 

 

21,185

 

Cumulative preferred stock dividend

 

(19

)

 

(19

)

 

(76

)

 

(76

)

Net income attributable to common shareholders

$

6,527

 

$

6,036

 

$

14,931

 

$

21,109

 

 

 

 

 

Basic and diluted earnings per common share:

$

1.34

 

$

1.24

 

$

3.07

 

$

4.34

 

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, 2023 filed with the U.S. Securities and Exchange Commission on November 22, 2023.

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Year Ended August 31,

 

 

 

2024

 

 

2023*

Operating activities:

 

 

 

 

Net income

 

$

15,007

 

 

$

21,185

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

1,685

 

 

 

1,398

 

Bad debt expense

 

 

454

 

 

 

614

 

Unrealized loss (gain) on trading securities

 

 

324

 

 

 

(448

)

Deferred tax provision

 

 

(2,380

)

 

 

(277

)

Impairment on termination of lease

 

 

3,906

 

 

 

–

 

Increase (decrease) in cash flow from change in:

 

 

 

 

Trade accounts receivable

 

 

(7,072

)

 

 

(2,631

)

Inventory

 

 

(13,332

)

 

 

(7,462

)

Prepaid expenses and other assets

 

 

386

 

 

 

829

 

Operating lease right-of-use assets

 

 

2,475

 

 

 

401

 

Trade accounts payable

 

 

6,668

 

 

 

(1,150

)

Accrued expenses and other current liabilities

 

 

8,610

 

 

 

1,355

 

Operating lease liabilities

 

 

(2,575

)

 

 

(392

)

Net cash provided by operating activities

 

 

14,156

 

 

 

13,422

 

Investing activities:

 

 

 

 

Additions to property, equipment, and leasehold improvements

 

 

(32,689

)

 

 

(960

)

Sale (purchase) of marketable securities, trading

 

 

12,156

 

 

 

(22,855

)

Net cash used in investing activities

 

 

(20,533

)

 

 

(23,815

)

Financing activities:

 

 

 

 

Repayments on long-term debt

 

 

(125

)

 

 

(116

)

Preferred stock dividend

 

 

(76

)

 

 

(76

)

Bank overdraft

 

 

(1,171

)

 

 

1,893

 

Net cash (used in) provided by financing activities

 

 

(1,372

)

 

 

1,701

 

Effect of foreign currency exchange rate changes on cash and cash equivalents

 

 

34

 

 

 

(136

)

Net (decrease) in cash, cash equivalents, and restricted cash

 

 

(7,715

)

 

 

(8,828

)

Cash, cash equivalents, and restricted cash - beginning of period

 

 

8,568

 

 

 

17,396

 

Cash, cash equivalents, and restricted cash - end of period

 

$

853

 

 

$

8,568

 

Supplemental disclosures of cash flow information:

 

 

 

 

Cash paid for interest

 

$

243

 

 

$

202

 

Cash paid for income taxes

 

$

8,505

 

 

$

7,473

 

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2023 filed with the U.S. Securities and Exchange Commission on November 22, 2023.

Michael Narikawa
EACO Corporation
(714) 876-2490

Source: EACO Corporation