Executive Summary

Q2 FY2025 delivered record net sales and record second-quarter net income: Revenue $100.13M (+20.2% YoY) and net income $6.76M (+23.0% YoY); diluted EPS $1.38 .
Sequentially, revenue grew +6.6% vs Q1 ($93.92M → $100.13M) while diluted EPS ticked down ($1.41 → $1.38) as SG&A increased with continued headcount expansion .
Gross margin dollars expanded YoY to $29.51M, with gross margin rate ~29.5% (Q2) vs ~29.6% (Q1) on higher sales; Q3 later showed further margin improvement to ~30.6% (context for trajectory) .
No formal guidance or Street consensus was provided; the company emphasized ongoing market share gains via its local presence model and continued sales force growth .

What Went Well and What Went Wrong

What Went Well

Strong top-line growth: Net sales rose to $100.13M (+20.2% YoY) on continued share gains, marking a record quarter .
Operating leverage vs prior year: Income from operations increased to $9.09M from $7.43M YoY, with gross margin up to $29.51M .
Strategic execution: “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.” (press release) .

What Went Wrong

Sequential EPS softened: Diluted EPS declined to $1.38 from $1.41 in Q1 despite revenue growth, reflecting higher SG&A ($20.41M vs $18.94M in Q1) .
Working capital intensity: Inventory increased to $79.38M vs $75.68M in Q1 and $69.60M at FY24 year-end, tying up cash .
Operating cash flow was negative in 1H FY2025: Net cash used in operating activities $(1.06)M for the six months ended Feb 28, 2025 .

Financial Results

Metric	Q1 FY2025 (Nov 30, 2024)	Q2 FY2025 (Feb 28, 2025)	Q3 FY2025 (May 31, 2025)
Revenue ($USD Millions)	$93.92	$100.13	$111.41
Net Income ($USD Millions)	$6.89	$6.76	$9.52
Diluted EPS ($USD)	$1.41	$1.38	$1.94
Gross Margin ($USD Millions)	$27.78	$29.51	$34.07
Gross Margin (%)	~29.6% (27.78/93.92)	~29.5% (29.51/100.13)	~30.6% (34.07/111.41)
SG&A ($USD Millions)	$18.94	$20.41	$21.63
Operating Income ($USD Millions)	$8.84	$9.09	$12.45

KPI	Q1 FY2025	Q2 FY2025	Q3 FY2025
Sales Employees (count)	426	445	435
Sales Focus Teams (SFTs) (count)	112	114	114

Segment breakdown: Not disclosed in Q2 materials .

Vs estimates: S&P Global consensus EPS and revenue were not available for EACO for Q2 FY2025 (OTC Pink coverage is limited) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Company guidance	FY2025/Q2	None provided	None provided	Maintained (no formal guidance)

Earnings Call Themes & Trends

No earnings call transcript was available for Q2 FY2025 or surrounding quarters; themes are derived from press releases.

Topic	Previous Mentions (Q1 FY2025)	Previous Mentions (Q3 FY2025)	Current Period (Q2 FY2025)	Trend
Market share/local presence	Emphasis on market share gains via local presence	Reiterated local presence model	Continued share gains highlighted	Consistent, positive
Sales force expansion	426 sales employees; 112 SFTs	435 sales employees; 114 SFTs	445 sales employees; 114 SFTs	Up vs Q1; stable SFTs vs Q3
Tariffs/macro risk	Tariffs and competitive factors cited in Safe Harbor	Tariffs risk reiterated	Tariffs and competitor actions reiterated	Persistent risk disclosure
Operating cash flow	Q1: positive $2.01M OCF	9M OCF turned positive $7.38M	1H OCF negative $(1.06)M	Volatile; improved by Q3
Inventory/work capital	Inventory $75.68M	Inventory $82.78M	Inventory $79.38M	Elevated; rising into Q3

Management Commentary

“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.” (Q2 press release) .
“The Company had 445 sales employees at February 28, 2025… The Company had 114 SFT’s… Management anticipates continued growth…” (Q2 press release) .
Safe Harbor highlights risks from tariffs, pricing/availability, competitive offerings, and hiring/opening additional offices (Q2 press release) .

Q&A Highlights

No Q2 FY2025 earnings call transcript was available; therefore, analyst Q&A highlights and tone/read-through cannot be assessed from a call transcript [ListDocuments earnings-call-transcript returned 0 for 2025].

Estimates Context

Wall Street consensus via S&P Global for Q2 FY2025 EPS and revenue was unavailable, limiting direct beat/miss analysis. EACO trades OTC Pink and may have limited sell-side coverage .
Internal comparison shows strong YoY revenue and net income growth; sequential EPS compression suggests near-term OpEx scaling as the sales force expands .

Key Takeaways for Investors

Demand and share gains: Q2 revenue $100.13M (+20.2% YoY) with record net income, demonstrating resilient demand and effective local market execution .
Operating leverage vs prior year: Operating income rose to $9.09M; gross margin dollars expanded YoY alongside sales, supporting profitability improvement vs prior year .
Sequential EPS headwind: Diluted EPS fell to $1.38 from $1.41 in Q1 as SG&A increased amid sales-force expansion; watch cost discipline vs growth .
Working capital and OCF: 1H FY2025 operating cash flow was negative $(1.06)M with inventory build; however, OCF turned positive by Q3 (9M OCF $7.38M), implying improved cash conversion later in the fiscal year .
Execution KPIs: Headcount rose vs Q1 (445 vs 426) and SFTs reached 114; these are leading indicators of growth but will carry near-term OpEx .
Risk monitoring: Safe Harbor underscores tariff and competitive risks; any tariff increases or supply constraints could pressure margins and working capital .
Actionable: Near-term, monitor margins and SG&A trajectory as the sales force scales; medium-term, the local presence strategy and market share gains remain the core thesis drivers absent formal guidance .

EACO CORP (EACO)·Q2 2025 Earnings Summary