EACO Eaco Dashboard

Management Discussion

• Net sales consist primarily of sales of component parts and fasteners, but also include, to a lesser extent, kitting charges and special order fees, as well as freight charged to customers. The Company expanded its product offering during the prior fiscal year to include personal protection equipment (“PPE”) including, among other things, masks, shields and sanitizing stations.
• The decrease in revenues in the three months ended November 30, 2020 (“Q1 2021”) as compared to the three months ended November 30, 2019 (“Q1 2020”) was largely due to lower demand for product resulting from the global industry-wide slowdown due to the impact from the COVID-19 pandemic. While our sales continue to remain strong, we cannot predict how long the pandemic will last or the impact of such pandemic on our financial condition and results of operations.
• The gross margins in Q1 2021 decreased by 1.4% as a percentage of revenues when compared to Q1 2020. This decrease was primarily due to a combination of product and customer mix, and overall declines in gross profit margin due to the global industry-wide slowdown and the impacts from the COVID-19 outbreak. The PPE products distributed by the Company typically carry lower margins, which also contributed to the decline in gross margins in the current periods.