The Eastern Company (EML) on Q1 2021 Results - Earnings Call Transcript
Operator: Good morning, ladies and gentlemen, and welcome to The Eastern Company First Quarter Fiscal Year 2021 Earnings Event. At this time, all participants have been placed on a listen-only mode. And we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Chris Moulton. Sir, the floor is yours. Chris Moulton: Good morning, and thank you, everyone, for joining us today. Speaking today will be Eastern's President and CEO, Gus Vlak; as well as our CFO, John Sullivan. After that, we'll open the call for questions. Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements about the company's future financial performance and business prospects, including without limitation statements regarding revenue, gross margin, operating expenses, other income and expense, taxes and business outlook. August Vlak: Thanks, Chris. And good morning to those of you who have joined us on the phone and those participating via the web. We released Eastern's first quarter numbers on our Form 10-Q yesterday afternoon. Before John Sullivan reviews the detailed results with you, I'd like to take a few moments to reflect on the quarter. I'm pleased to report that we had a strong start to the year with sales of $73 million. That's a high in Eastern's 163-year history. Obviously, we benefited from the economic recovery and improvement in demand across the majority of the markets we serve. We positioned our portfolio in these markets, because we believe in the underlying demand for growth for the products we make. That certainly proved correct in the first quarter. Demand was strong across a broad range of commercial vehicle markets, including Class 8 trucks, service bodies, light trucks, recreational vehicles, electric vehicle manufacturers and our industrial distribution. According to ACT Research, Class 8 truck orders in March were 40,000 units. That's up 4-fold from March of 2020. And this March marked the 6th straight month that orders top 40,000 units, well above the replacement demand which is roughly around 19,000 per month. ACT Research expects North America Class 8 production to be about 302,000 units this year, and that's an increase of 40% over last year. Also, sales of lightweight and midsized trucks rebounded in the first quarter. For example, Ford's F-Series sales were up 9% year-over-year. And new mid-sized truck-owners drive demand for many of our components for truck accessories and tonneau covers and truck apps. We also deliver margin expansion across many of our businesses. Our unadjusted net income grew to 8% in the first quarter of 2021. That's compared to 4% in the prior year. And adjusted EBITDA was 12% compared to 10% last year. This increase partly reflects the changes in our portfolio businesses, including the contribution of packaged blow mold tooling business and the addition of Hallink which we acquired in August of 2020. John Sullivan: Thank you, Gus. This morning, I'll focus on Eastern's results for the first quarter of 2021. For the first quarter of 2021, net sales increased 12% to $73.1 million from $65.3 million a year earlier. On a segment level basis, net sales increased in the Engineered Solutions segment in the first quarter by 19% to $61.8 million from $51.8 million in the first quarter of 2020 due to increased demand for truck accessory, automotive returnable packaging, blow mold tooling and distribution products. Sales in the Diversified Products segment decreased 16% to $11.3 million in the first quarter compared to $13.5 million in the first quarter of 2020 due to the sale of Canadian Commercial Vehicles and Sesamee Mexicana in June and November 2020 respectively, and lower demand for commercial laundry products, partially offset by increased demand for mining and industrial casting products. Sales of existing products increased 5% in the first quarter compared to the first quarter of 2020. Price increases and new products increased net sales by 7%. New products included various truck mirror assemblies, truck compression latches, cable lock and mirror cams. Gross margin as a percent of sales was 24% in the first quarter compared to 22% in the first quarter of 2020. The increase in gross margin was due in part to higher sales and our success in passing on most of the raw material price increases in many of our businesses. Product development expenses of $0.8 million, increased $0.1 million or 8% in the first quarter, compared to the first quarter of 2020. As a percentage of net sales, product development expenses were 1.1% and 1.2% for the first quarter of 2021 and 2020, respectively. Chris Moulton: Thanks, John. Operator, I'd like to open the line for questions. Operator: Certainly, ladies and gentlemen, the floor is now open for questions. There are no questions in the queue at this time. : : Chris Moulton: Okay, thank you. I'm also not seeing any questions via the webcast. So with that, I'll turn the call over to Gus for closing remarks. August Vlak: Thanks, Chris. And thanks, everyone, for joining us this morning. We're encouraged by the continued acceleration in demand for our products and services across the majority of our businesses. The strength in our backlog at the end of fiscal 2020 has continued into 2021. The value of our backlog of orders at the end of the first quarter was $98 million. That's an increase of 15% or $13 million over $85 million at the end of fiscal 2020. I want to highlight that this is the company's highest-ever level of backlog. This growth in backlog reflects the continuation in the rebound in demand for truck accessories at Eberhard, the launch of large new mirror programs for Class 8 trucks, and strong demand for our products and services in our blow mold tooling business. Chris Moulton: Thanks, Gus. With that, I'll turn the call back to the operator. Operator: Certainly. Thank you, ladies and gentlemen, this does conclude today's event. You may disconnect your lines at this time and have a wonderful day. Thank you for your participation.
The Eastern Company (EML) Reports First-Quarter 2025 Earnings
- Earnings per Share (EPS) of $0.32, missing the estimated $0.41.
- Revenue reported at approximately $63.3 million, below the estimated $71.3 million.
- Strategic Developments include the sale of Big 3 Mold's ISBM business unit and a new 400,000-share buyback program.
The Eastern Company, trading on NASDAQ:EML, is a prominent player in the industrial sector, known for its unique engineered solutions. Operating across the U.S., Canada, Mexico, Taiwan, and China, EML taps into markets with promising growth opportunities. The company recently reported its first-quarter 2025 earnings, revealing some key financial metrics and strategic developments.
On May 6, 2025, EML reported an earnings per share (EPS) of $0.32, falling short of the estimated $0.41. The company's actual revenue was approximately $63.3 million, compared to the estimated $71.3 million. Despite this shortfall, EML achieved net sales of $63.3 million from continuing operations, with an adjusted EBITDA of $4.6 million, as highlighted by Access Newswire.
A significant development for EML was the completion of the sale of Big 3 Mold's ISBM business unit on April 30, 2025. This move, along with the revamping of Big 3 Precision's geographic footprint, aims to enhance focus, production, and cost-efficiency. CEO Ryan Schroeder emphasized that the first quarter marked a period of substantial change, with new leadership executing plans to boost sales and improve operational efficiency.
In a strategic move, EML completed a 200,000-share repurchase program and received board authorization for a new 400,000-share buyback program. This reflects the company's commitment to enhancing shareholder value. Additionally, EML announced its 339th consecutive quarterly cash dividend of $0.11 per share, scheduled for payment on June 16, 2025, underscoring its dedication to rewarding investors.
EML's financial health is further supported by a price-to-sales ratio of approximately 0.50 and an enterprise value to sales ratio of about 0.66. The company's debt-to-equity ratio stands at 0.47, indicating a moderate level of debt compared to its equity. With a current ratio of 2.58, EML demonstrates strong liquidity, having more than twice the current assets needed to cover its current liabilities.
