EACO Corporation reported a solid start to QQ1 2026, underscoring revenue growth and margin expansion against a backdrop of working-capital pressures. Revenue rose to $110.95 million, up 15.4% year-over-year and 10.8% quarter-over-quarter, with gross profit of $34.36 million and a gross margin of 30.96%, supported by favorable product mix and pricing discipline. EBITDA stood at $12.99 million and net income at $9.32 million, translating to EPS of $1.91, driven by a meaningful expansion in operating margin to 11.27%. YoY improvements reflect higher volumes and product mix, while the base effects contribute to the steep year-over-year profitability delta.
However, operating cash flow remained negative at -$0.58 million and free cash flow was -$1.76 million, pressured by a substantial working-capital outflow of -$10.60 million. The company holds cash and equivalents of $0.55 million and substantial short-term investments of $29.72 million, providing liquidity to fund near-term requirements. Net debt stood at approximately $13.02 million, with a net debt to EBITDA ratio near 1.0x, signaling manageable leverage given current profitability. The balance sheet remains solid, with total assets of $229.58 million and stockholders’ equity of $165.14 million, and liquidity metrics (current ratio ~3.36, quick ratio ~1.62) indicating resilience in the near term.
Relative to industry peers, EACO’s gross margin of ~30.96% sits at the higher end of the distribution, suggesting competitive pricing power and favorable mix within the technology distribution landscape. The QQ1 2026 cadence sets a constructive baseline for 2026, but earnings quality will hinge on improving cash conversion and optimizing working-capital efficiency to translate EBITDA into tangible cash flow.