EACO Corporation Reports Record Quarterly and Annual Sales

ANAHEIM, Calif.--(BUSINESS WIRE)--EACO Corporation (OTCQB:EACO) today reported the results for the quarter and year ended August 31, 2012.

Net sales, net income and earnings per share were as follows for the three months ended August 31, 2012 (dollars in thousands, except per share information):

	Three Months Ended
	August 31, 2012	August 31, 2011	Change
	(unaudited)
Net sales/revenue	$30,414	$27,212	12%
Net income	$435	$385	13%
Basic and diluted earnings per common share	$0.09	$0.08	13%

As of August 31, 2012, the Company’s sales team numbered 302 employees an increase of 13% from the 268 employees on August 31, 2011. The Company’s sales force is divided into Sales Focus Teams (SFT). The Company had 85 SFT’s as of August 31, 2012, an increase of 9% from 78 SFT’s on August 31, 2011.

The current annual estimated North American market for the Company’s current line of products we distribute 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 and per share information)
	August 31, 2012		August 31, 2011
ASSETS	(unaudited)
Current Assets:
Cash and cash equivalents	$	2,568	$	1,368
Trade accounts receivable, net		13,972		12,348
Inventory, net		12,189		11,389
Marketable securities, trading		197		892
Prepaid expenses and other current assets		464		320
Assets held for sale		1,521		--
Deferred tax asset, current		290		1,062
Total current assets		31,201		27,379
Non-current Assets:
Restricted cash, non-current		548		632
Real estate properties held for leasing, net		8,253		10,085
Equipment and leasehold improvements, net		1,106		972
Deferred tax asset		2,111		2,623
Other assets, principally deferred charges, net of accumulated amortization		1,110		1,187
Total assets	$	44,329	$	42,878
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable	$	9,519	$	8,541
Accrued expenses and other current liabilities		2,482		2,325
Liabilities of discontinued operations – short-term		146		147
Liabilities of assets held for sale		1,113		--
Current portion of long-term debt		555		778
Total current liabilities		13,815		11,791
Non-current Liabilities:
Liabilities of discontinued operations – long-term		2,567		2,708
Deposit liability		147		147
Long-term debt		12,907		15,626
Total liabilities		29,436		30,272
Shareholders’ Equity:
Convertible preferred stock, $0.01 par value per share; authorized 10,000,000 shares; 36,000 shares outstanding at August 31, 2012 and 2011 (liquidation value $900)		1		1
Common stock, $0.01 par value per share; authorized 8,000,000 shares; 4,861,590 shares outstanding at August 31, 2012 and 2011		49		49
Additional paid-in capital		12,378		12,378
Accumulated other comprehensive income		478		554
Retained earnings (accumulated deficit)		1,987		(376	)
Total shareholders’ equity		14,893		12,606
Total liabilities and shareholders’ equity	$	44,329	$	42,878

EACO Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except for share and per share information)
(unaudited)
	Three Months Ended						Year Ended
	August 31, 2012			August 31, 2011			August 31, 2012			August 31, 2011
Gross sales	$	30,414		$	27,212		$	114,634		$	104,505
Cost of goods sold		21,986			19,155			82,664			75,448
Gross profit		8,428			8,057			31,970			29,057
Operating expenses:
Selling, general and administrative expenses		7,498			6,812			27,648			24,827
Total operating expenses		7,498			6,812			27,648			24,827
Income from operations		930			1,245			4,322			4,230
Non-operating expense:
Gain (loss) on sale of trading securities		242			(9	)		287			313
Unrealized (loss) gain on trading securities		(146	)		(192	)		207			(172	)
Interest expense, net		(173	)		(192	)		(717	)		(767	)
Total non-operating expense		(77	)		(393	)		(223	)		(626	)
Income before provision for income taxes		853			852			4,099			3,604
Provision for income taxes		418			467			1,679			1,465
Net income		435			385			2,420			2,139
Undeclared cumulative preferred stock dividend		(19	)		(19	)		(76	)		(76	)
Net income attributable to common shareholders	$	416		$	366		$	2,344		$	2,063
Basic and diluted earnings per share	$	0.09		$	0.08		$	0.48		$	0.42
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)
	Year Ended
	August 31, 2012			August 31, 2011
Operating activities:
Net income	$	2,420		$	2,139
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		807			752
Bad debt expense		200			165
Change in inventory reserve		204			--
Net gain on trading securities		(494	)		(342	)
(Increase) decrease in:
Trade accounts receivable		(1,824	)		(1,399	)
Inventory		(1,004	)		(1,380	)
Prepaid expenses and other assets		(124	)		(127	)
Deferred tax asset		1,284			772
Increase (decrease) in:
Trade accounts payable		1,405			(1,574	)
Accrued expenses and other current liabilities		157			502
Liabilities of discontinued operations		(142	)		(220	)
Net cash provided by (used in) operating activities		2,889			(712	)
Investing activities:
Purchase of property and equipment		(573	)		(387	)
Sale of trading securities		1,189			267
Change in restricted cash		84			234
Net cash provided by investing activities		700			114
Financing activities:
Net (payments) borrowings on revolving credit facility		(1,050	)		600
Bank overdraft		(427	)		889
Payment of preferred dividend		(57	)		(228	)
Payments on long-term debt		(779	)		(470	)
Net cash (used in) provided by financing activities		(2,313	)		791
Effect of foreign currency exchange rate changes on cash and cash equivalents		(76	)		(85	)
Net increase in cash and cash equivalents		1,200			108
Cash and cash equivalents - beginning of period		1,368			1,260
Cash and cash equivalents - end of period	$	2,568		$	1,368
Supplemental disclosures of cash flow information:
Cash paid for interest	$	742		$	771
Cash paid for taxes	$	451		$	258
Non cash transfer of equipment and leasehold improvements, net to assets held for sale	$	1,521		$	--
Non cash transfer of long-term debt to liabilities of assets held for sale	$	1,113		$	--