EACO Corporation (OTCQB:EACO) today reported the results for its quarter ended November 30, 2013.
Net sales, net income and earnings per share were as follows for the three months ended November 30, 2013 (dollars in thousands, except per share information):
Three Months Ended November 30, | |||||
2013 | 2012 | Change | |||
(unaudited) | |||||
Net sales | $31,035 | $29,260 | 6% | ||
Net income | $1,064 | $383 | 178% | ||
Basic and diluted earnings per common share | $0.21 | $0.08 | 163% |
As of November 30, 2013, the Company's sales team numbered 320 employees, an increase of 5% compared to 304 employees on November 30, 2012. The Company's sales force is divided into Sales Focus Teams (SFTs). The Company had 93 SFTs as of November 30, 2013, an increase of 9% from 85 SFTs on November 30, 2012, with the average size decreasing to 3.4 employees per SFT from 3.6 employees per SFT at November 30, 2012.
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) | |||||||
November 30, 2013 | August 31, 2013 | ||||||
ASSETS | (unaudited) | ||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 2,788 | $ | 1,507 | |||
Restricted cash, current | 1,519 | -- | |||||
Trade accounts receivable, net | 15,206 | 14,438 | |||||
Inventory, net | 14,493 | 14,272 | |||||
Marketable securities, trading | 445 | 1,395 | |||||
Assets held for sale | -- | 460 | |||||
Prepaid expenses and other current assets | 606 | 619 | |||||
Total current assets | 35,057 | 32,691 | |||||
Non-current Assets: | |||||||
Restricted cash, non-current | 548 | 548 | |||||
Real estate properties held for leasing, net | 7,244 | 7,283 | |||||
Equipment and leasehold improvements, net | 1,395 | 1,396 | |||||
Deferred tax asset | 1,812 | 1,712 | |||||
Other assets, principally deferred charges, net of accumulated amortization | 722 | 850 | |||||
Total assets | $ | 46,778 | $ | 44,480 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current Liabilities: | |||||||
Trade accounts payable | $ | 10,004 | $ | 9,315 | |||
Accrued expenses and other current liabilities | 2,452 | 2,880 | |||||
Securities sold short, at fair value | 1,519 | -- | |||||
Liabilities of discontinued operations - short-term | 153 | 146 | |||||
Liabilities of assets held for sale | -- | 362 | |||||
Current portion of long-term debt | 138 | 172 | |||||
Total current liabilities | 14,266 | 12,875 | |||||
Non-current Liabilities: | |||||||
Liabilities of discontinued operations - long-term | 2,349 | 2,410 | |||||
Deposit liability | 63 | 87 | |||||
Long-term debt | 11,274 | 11,397 | |||||
Total liabilities | 27,952 | 26,769 | |||||
Shareholders' Equity: | |||||||
Convertible preferred stock, $0.01 par value per share; 10,000,000 shares authorized; 36,000 shares outstanding at November 30, 2013 and August 31, 2013 (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, 2013 and August 31, 2013 | 49 | 49 | |||||
Additional paid-in capital | 12,378 | 12,378 | |||||
Accumulated other comprehensive income | 890 | 820 | |||||
Retained earnings | 5,508 | 4,463 | |||||
Total shareholders' equity | 18,826 | 17,711 | |||||
Total liabilities and shareholders' equity | $ | 46,778 | $ | 44,480 | |||
EACO Corporation and Subsidiaries Condensed Consolidated Statements of Income (in thousands, except for share and per share information) (Unaudited) | ||||||
Three Months Ended November 30, | ||||||
2013 | 2012 | |||||
Revenues | $ | 31,035 | $ | 29,260 | ||
Cost of revenues | 22,129 | 21,159 | ||||
Gross margin | 8,906 | 8,101 | ||||
Selling, general and administrative expenses | 7,779 | 7,260 | ||||
Income from operations | 1,127 | 841 | ||||
Non-operating income (expense): | ||||||
Net gain (loss) on trading securities | 91 | (22 | ) | |||
Gain on sale of property | 535 | -- | ||||
Interest expense, net | (99 | ) | (167 | ) | ||
Total non-operating income (expense) | 527 | (189 | ) | |||
Net income before income taxes | 1,654 | 652 | ||||
Provision for income taxes | 590 | 269 | ||||
Net income | 1,064 | 383 | ||||
Cumulative preferred stock dividend | (19 | ) | (19 | ) | ||
Net income attributable to common shareholders | $ | 1,045 | $ | 364 | ||
Basic and diluted earnings per share | $ | 0.21 | $ | 0.08 | ||
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, | ||||||
2013 | 2012 | |||||
Operating activities: | ||||||
Net income | $ | 1,064 | $ | 383 | ||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||
Depreciation and amortization | 148 | 180 | ||||
Bad debt expense (recovery) | 142 | (18) | ||||
Change in inventory reserve | 14 | (62) | ||||
Gain on sale of building | (535) | -- | ||||
Net (gain) loss on trading securities | (91) | 22 | ||||
(Increase) decrease in: | ||||||
Trade accounts receivable | (910) | (56) | ||||
Inventory | (235) | (823) | ||||
Prepaid expenses and other assets | 141 | 330 | ||||
Deferred tax asset | (100) | 58 | ||||
Increase (decrease) in: | ||||||
Trade accounts payable | 346 | 142 | ||||
Accrued expenses and other current liabilities | (428) | (582) | ||||
Deposit liability | (24) | (74) | ||||
Liabilities of discontinued operations | (54) | (39) | ||||
Net cash used in operating activities | (522) | (539) | ||||
Investing activities: | ||||||
Purchase of property and equipment | (252) | (345) | ||||
Sale (purchase) of marketable securities, trading | 1,041 | (223) | ||||
Proceeds from sale of property | 1,139 | -- | ||||
Proceeds from securities sold short | 1,519 | 831 | ||||
Increase in restricted cash | (1,519) | (832) | ||||
Net cash provided by (used in) investing activities | 1,928 | (569) | ||||
Financing activities: | ||||||
Net (payments) borrowings on revolving credit facility | (67) | 150 | ||||
Bank overdraft | 343 | 691 | ||||
Preferred dividend | (19) | (19) | ||||
Borrowing of long-term debt | -- | -- | ||||
Payments on long-term debt for assets held for leasing and held for sale | (452) | (243) | ||||
Net cash (used in) provided by financing activities | (195) | 579 | ||||
Effect of foreign currency exchange rate changes on cash and cash equivalents | 70 | 100 | ||||
Net increase (decrease) in cash and cash equivalents | 1,281 | (429) | ||||
Cash and cash equivalents - beginning of period | 1,507 | 2,568 | ||||
Cash and cash equivalents - end of period | $ | 2,788 | $ | 2,139 | ||
Supplemental disclosures of cash flow information: | ||||||
Cash paid for interest | $ | 100 | $ | 169 | ||
Cash paid for taxes | $ | 674 | $ | 196 |
EACO Corporation
Marta Arciniega, (714) 876-2490