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EACO Corporation Reports Fourth Consecutive Quarter of Double Digit Sales Growth

EACO Corporation (OTCQB:EACO) today reported the results for the first quarter ending November 30, 2012.

Net sales, net income and earnings per share were as follows for the three months ended November 30, 2012 (dollars in thousands, except per share information):

 
  Three Months Ended November 30,  
2012   2011 Change
(unaudited)
 
 
Net sales/revenue $ 29,260 $ 26,461 11 %
 
Net income $ 383 $ 625 (39 )%
 
Basic and diluted earnings per common share $ 0.08 $ 0.12 (33 )%
 

As of November 30, 2012, the Company’s sales team numbered 304 employees an increase of 12% from 272 employees on November 30, 2011. The Company’s sales force is divided into Sales Focus Teams (SFTs). The Company had 85 SFTs as of November 30, 2012, an increase of 4% from 82 SFTs on November 30, 2011, with the average size going from 3.3 employees to 3.7 employees per SFT.

The current annual estimated North American market for the products the Company distributes is $6.7 billion. The Company’s current estimated market share is 1.7%.

 

EACO Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share information)

 
 

November 30,

  August 31,
2012 2012
ASSETS (unaudited)
Current Assets:
Cash and cash equivalents $ 2,139 $ 2,568
Restricted cash, current 831 --
Trade accounts receivable, net 14,046 13,972
Inventory, net 13,074 12,189
Marketable securities, trading 398 197
Prepaid expenses and other current assets 472 464
Assets held for sale 1,521 1,521
Deferred tax asset, current   265   290
Total current assets 32,746 31,201
 
Non-current Assets:
Restricted cash, non-current 549 548
Real estate properties held for leasing, net 8,201 8,253
Equipment and leasehold improvements, net 1,332 1,106
Deferred tax asset 2,053 2,111
Other assets, principally deferred charges, net of accumulated amortization   788   1,110
Total assets $ 45,669 $ 44,329
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
Current Liabilities:
Trade accounts payable $ 10,352 $ 9,519
Accrued expenses and other current liabilities 1,850 2,482
Liability for short sales of trading securities 831 --
Liabilities of discontinued operations – short-term 146 146
Liabilities of assets held for sale 1,163 1,113
Current portion of long-term debt   430   555
Total current liabilities 14,772 13,815
 
Non-current Liabilities:
Liabilities of discontinued operations – long-term 2,528 2,567
Deposit liability 73 147
Long-term debt   12,939   12,907
Total liabilities 30,312 29,436
 
Shareholders’ Equity:
Convertible preferred stock, $0.01 par value per share; 10,000,000 shares authorized; 36,000 shares outstanding at November 30, 2012 and August 31, 2012 (liquidation value $900) 1 1
Common stock, $0.01 par value per share; 8,000,000 shares authorized; 4,861,590 shares outstanding at November 30, 2012 and August 31, 2012 49 49
Additional paid-in capital 12,378 12,378
Accumulated other comprehensive income 557 478
Retained earnings   2,372   1,987
Total shareholders’ equity   15,357   14,893
Total liabilities and shareholders’ equity $ 45,669 $ 44,329
 
 

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Income

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

(Unaudited)

 
  Three Months Ended
November 30,
2012   2011
Sales $ 29,260 $ 26,461
Cost of goods sold   21,159     19,071  
Gross profit   8,101     7,390  
 
Operating expenses:
Selling, general and administrative expenses   7,260     6,530  
Total operating expenses   7,260     6,530  
Income from operations 841 860
 
Non-operating income (expense):
Gain on sale of trading securities 33 --
Unrealized (loss) gain on trading securities (55 ) 193
Interest expense, net   (167 )   (181 )
Total non-operating (expense) income   (189 )   12  
Net income before income taxes 652 872
Provision for income taxes   269     247  
Net income 383 625
Cumulative preferred stock dividend   (19 )   (19 )
 
Net income attributable to common shareholders $ 364   $ 606  
 
Basic and diluted earnings per share $ 0.08 $ 0.12
 
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,

2012   2011
 
Operating activities:
Net income $ 383 $ 625
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization 180 188
Bad debt recovery (18 ) --
Change in inventory reserve (62 ) (15 )
Net gain on trading securities (22 ) (193 )
(Increase) decrease in:
Trade accounts receivable (56 ) 6
Inventory (823 ) (1,291 )
Prepaid expenses and other assets 305 108
Deferred tax asset 83 152
Increase (decrease) in:
Trade accounts payable 142 298
Accrued expenses and other current liabilities (582 ) (815 )
Deposit liability (74 ) --
Liabilities of discontinued operations   (39 )   (27 )
Net cash used in operating activities   (583 )   (964 )
 
Investing activities:
Purchase of property and equipment (345 ) (155 )
Purchase of marketable securities, trading (179 ) (86 )
Short sales of marketable securities 831 --
Change in restricted cash   (832 )   (4 )
Net cash used in investing activities   (525 )   (245 )
 
Financing activities:
Net borrowings (payments) on revolving credit facility 150 (700 )
Bank overdraft 691 261
Preferred dividend (19 ) --
Borrowing of long-term debt -- 1,600
Payments on long-term debt   (243 )   (192 )
Net cash provided by financing activities   579     969  
Effect of foreign currency exchange rate changes on cash and cash equivalents   100     224  
Net decrease in cash and cash equivalents (429 ) (16 )
 
Cash and cash equivalents - beginning of period   2,568     1,368  
Cash and cash equivalents - end of period $ 2,139   $ 1,352  
 
Supplemental disclosures of cash flow information:
Cash paid for interest $ 169   $ 186  
 
Cash paid for taxes $ 196   $ 415  

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