EX-99.1 2 tm232555d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

Michael Narikawa  
EACO Corporation  
(714) 876-2490 January 4, 2023

 

EACO CORPORATION REPORTS RECORD 1st QUARTER NET SALES

 

ANAHEIM, CALIFORNIA January 4, 2023– EACO Corporation (OTC Pink:EACO) announced the results for its quarter ended November 30, 2022.

 

Net sales, net income and earnings per share were as follows for the quarter ended November 30, 2022 (dollars in thousands, except per share information):

 

   Three Months Ended November,   % 
   2022   2021   Change 
   (unaudited)   (unaudited)     
Net sales  $76,319   $63,822    19.6%
                
Net income  $4,711   $6,786*   (30.6%)
                
Basic and diluted earnings per common share  $0.97   $1.39    (30.2%)

 

 

*Includes an income benefit of $3.4 million as a result of qualified federal tax credits related to the Employee Retention Credit.

 

 

The Company had 366 sales employees at November 30, 2022, an increase of 38 or 12% from the prior year quarter. The Company’s sales force is divided into sales focus teams (SFT’s). The Company had 101 SFT’s as of November 30, 2022, the same as the prior year quarter. Management anticipates continued growth in both our headcount and SFT’s in fiscal year 2023. The Company believes it continues to gain market share through its local presence business model.

 

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

 

Any statements set forth in this news release that are not entirely historical and factual in nature, including without limitation, statements related to our headcount expansion and future growth are forward-looking statements. 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)

   November 30,   August 31, 
    2022    2022* 
ASSETS          
Current Assets:          
Cash and cash equivalents  $14,021   $17,386 
Restricted cash   10    10 
Trade accounts receivable, net   40,335    44,637 
Inventory, net   53,055    48,808 
Marketable securities, trading   10,655    3,925 
Prepaid expenses and other current assets   5,198    5,008 
Total current assets   123,274    119,774 
Non-current Assets:          
Property, equipment and leasehold improvements, net   8,206    8,479 
Operating lease right-of-use assets   10,645    10,389 
Other assets, net   1,121    1,039 
Total assets  $143,246   $139,681 
LIABILITIES AND SHAREHOLDERS’ EQUITY          
Current Liabilities:          
Trade accounts payable  $21,246   $21,762 
Accrued expenses and other current liabilities   14,252    15,020 
Current portion of operating lease liabilities   3,554    3,375 
Current portion of long-term debt   120    119 
Total current liabilities   39,172    40,276 
Non-current Liabilities:          
Long-term debt   4,435    4,465 
Operating lease liabilities   7,285    7,192 
Total liabilities   50,892    51,933 
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   88    174 
Retained earnings   79,838    75,146 
Total shareholders’ equity   92,354    87,748 
Total liabilities and shareholders’ equity  $143,246   $139,681 

 

* Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2022 filed with the U.S. Securities and Exchange Commission on November 4, 2022.

 

 

 

 

EACO Corporation and Subsidiaries

Condensed Consolidated Statements of Income

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

(unaudited)

 

  

Three Months Ended

November 30,

 
   2022   2021 
Net sales  $76,319   $63,822 
Cost of sales   54,656    45,644 
Gross margin   21,663    18,178 
Operating expenses:          
Selling, general and administrative expenses   15,685    8,895 
Income from operations   5,978    9,283 
           
Other income (expense):          
Net gain (loss) on trading securities   442    (56)
Interest and other expense, net   (48)   (52)
Other income (expense), net   394    (108)
Income before income taxes   6,372    9,175 
Provision for income taxes   1,661    2,389 
Net income   4,711    6,786 
Cumulative preferred stock dividend   (19)   (19)
Net income attributable to common shareholders  $4,692   $6,767 
           
Basic and diluted earnings per common share:  $0.97   $1.39 
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,

 
   2022   2021 
Operating activities:          
Net income  $4,711   $6,786 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:          
Depreciation and amortization   359    382 
Bad debt expense   2    9 
Net unrealized loss on trading securities   (487)   56 
Increase (decrease) in cash from changes in          
Trade accounts receivable   4,300    (248)
Inventory   (4,247)   (2,094)
Prepaid expenses and other assets   (272)   (4,350)
Operating lease right-of-use assets   (256)   (220)
Trade accounts payable   (407)   1,642 
Accrued expenses and other current liabilities   (768)   744 
Operating lease liabilities   272    240 
Net cash provided by operating activities   3,207    2,947 
Investing activities:          
Additions to property, equipment, and leasehold improvements   (86)   (286)
(Purchase) sale of marketable securities, trading   (6,243)   1 
Net cash (used in) investing activities   (6,329)   (285)
Financing activities:          
Payments on long-term debt   (29)   (27)
Preferred stock dividend   (19)   (19)
Bank overdraft   (109)   (1,008)
Net cash used in financing activities   (157)   (1,054)
Effect of foreign currency exchange rate changes on cash and cash equivalents   (86)   (480)
Net (decrease) increase in cash, cash equivalents, and restricted cash   (3,365)   1,128 
Cash, cash equivalents, and restricted cash - beginning of period   17,396    4,465 
Cash, cash equivalents, and restricted cash - end of period  $14,031   $5,593 
Supplemental disclosures of cash flow information:          
Cash paid for interest  $51   $52