Fri, 30 Sep 2022

Second Quarter 2022 Net Sales from Continuing Operations Grew 14% Over Prior-Year Period

Earnings Per Share from Continuing Operations Grew 34% Over Prior-Year Period

  • Net sales from continuing operations grew to a new record of $69.5 million in the second quarter of 2022, an increase of 14% compared to net sales from continuing operations in the second quarter of 2021. Orders remained strong and the backlog at the end of the quarter was $82.8 million.
  • Earnings per diluted share from continuing operations for the second quarter of 2022 were $0.59, compared to $0.44 for the second quarter of 2021. The change in earnings was primarily the result of an increase in sales volumes.
  • Liquidity continues to improve with an increase in the Company's current ratio to 3.0x for the second quarter of 2022, compared to 2.7x for the first quarter of 2022 and 2.8x for the second quarter of 2021.

NAUGATUCK, CT / ACCESSWIRE / August 8, 2022 / The Eastern Company ('Eastern' or the 'Company') (NASDAQ:EML), an industrial manufacturer of unique engineered solutions serving commercial transportation, logistics, and other industrial markets, today announced the results of operations for the second fiscal quarter ended July 2, 2022.

President and CEO August Vlak commented, 'Net sales from continuing operations for the second quarter of 2022 increased 14% compared to the second quarter of 2021. This is the second time this year that we set a new record quarterly sales level for Eastern. We believe this sustained growth demonstrates that our businesses are effectively executing on the very favorable long-term demand trends across our core markets. Strong orders and deliveries of returnable transport packaging at Big 3 Precision account for most of the growth in the quarter, compared to the same period last year. Growth in our transport packaging business is the result of our recent investments in this business and the increase in new vehicle launches by OEMs. According to Bank of America, OEMs expect to launch 245 new models during 2023-26, or an average of 61 per year. This rate of vehicle launches is more than 50% above the average number of models launched per year between model years 2003 and 2022.

'Our backlog at the end of the second quarter of 2022 was $82.8 million, remaining solid and in line with the backlog of $83.2 million at the end of the second quarter of 2021. We remain encouraged that order volumes remain strong due to increased orders for transport packaging and demand from our commercial vehicle and truck accessories customers. '

Mr. Vlak continued, 'Earnings per diluted share from continuing operations for the second quarter of 2022 were $0.59, compared to $0.44 for the second quarter of 2021. This 34% improvement reflects both sales growth and our team's relentless focus on execution in the face of headwinds resulting from global raw material inflationary pressures, labor shortages, pandemic-related shipping delays, and supply chain constraints, most of which are anticipated to persist in some form throughout the remainder of the year. We remain highly proactive in our efforts to mitigate the effects of these macro-economic challenges, including engaging in close conversations with our suppliers, as well as implementing appropriate pricing actions as needed.'

Mr. Vlak expanded, 'Overall, our balance sheet remains solid. Our liquidity continues to improve, demonstrated by a very strong current ratio of 3.0x for the second quarter of 2022. We repurchased 29,762 shares of our common stock in the second quarter of 2022, which reflects our strong liquidity. Moreover, we believe that we are prepared for a rising interest rate environment, with over 50% of our term debt locked in at a fixed interest rate through an interest rate swap agreement.'

Mr. Vlak concluded, 'We are optimistic about the remainder of this year and our longer-term future. Our team is committed, resilient, and prepared for both the challenges and opportunities that lie ahead.'

Summary of Second Quarter and First Half 2022 Results

Net sales in the second quarter of 2022 increased 14% to $69.5 million from $61.2 million for the corresponding period in 2021. Net sales in the first six months of 2022 increased 13% to $138.6 million from $123.0 million for the same period in 2021. Net sales of existing products increased 9% in the second quarter of 2022 compared to the corresponding period in 2021. Price increases and new products increased net sales by 5% in the second quarter of 2022 compared to the corresponding period in 2021.

Our gross margin in the second quarter and the first half of 2022 reflects the increase in raw material prices, partly offset by the impact of price increases. Cost of products sold increased by $6.3 million, or 13%, in the second quarter of 2022 compared to the corresponding period in 2021. Cost of goods sold increased by $14.5 million, or 16%, in the first six months of 2022 compared to the first six months of 2021. These increases are primarily due to higher sales volume, as well as increases in the cost of materials and freight rates.

Selling and administrative expenses increased by $0.8 million, or 8%, in the second quarter of 2022 when compared to the corresponding period in 2021, primarily due to investments in sales and marketing, higher commissions, and other selling costs. Selling and administrative costs increased by $1.7 million, or 9%, in the first six months of 2022 compared to the same period in 2021.

Net income from continuing operations for the second quarter of 2022 was $3.7 million, or $0.59 per diluted share, compared to net income of $2.8 million, or $0.44 per diluted share, for the comparable period in 2021. Net income from continuing operations for the first six months of 2022 was $6.4 million, compared to net income from continuing operations of $8.4 million in the first six months of 2021. Adjusted net income (a non-GAAP measure) for the first six months of 2022 was $6.6 million, compared to $7.1 million for the first six months of 2021.

Conference Call and Webcast

The Eastern Company will host a conference call to discuss its results for the second quarter and other matters on August 9, 2022, at 11:00 AM Eastern Time. Participants can access the conference call by phone at 877-545-0523 (toll-free in US & Canada) or 973-528-0016 (international), using access code 495479.Participants can also join via the web at https://www.webcaster4.com/Webcast/Page/1757/46209

About The Eastern Company

The Eastern Company manages industrial businesses that design, manufacture and sell unique engineered solutions to markets. Eastern's businesses operate in industries that offer long-term macroeconomic growth opportunities. The Company operates from locations in the U.S., Canada, Mexico, U.K., Taiwan, and China. More information on the Company can be found at www.easterncompany.com.

Safe Harbor for Forward-Looking Statements

Statements in this document that are not based on historical facts are 'forward-looking statements' within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of. Forward-looking statements may be identified by the use of forward-looking terminology such as 'would,' 'should,' 'could,' 'may,' 'will,' 'expect,' 'believe,' 'estimate,' 'anticipate,' 'intend,' 'continue,' 'plan,' 'potential,' 'opportunities,' or similar terms or variations of those terms or the negative of those terms. There are many factors that affect the Company's business and the results of its operations and that may cause the actual results of operations in future periods to differ materially from those currently expected or anticipated. These factors include the scope and duration of the COVID-19 pandemic, including timing of the distribution of COVID-19 vaccines and rates of vaccination, the extent of resurgences, the emergence of additional virus variants (and how quickly and to what extent normal economic activity can resume), and economic effects of the COVID-19 pandemic, including supply chain disruptions, cost inflation, delays in delivery of our products to our customers, impact on demand for our products, reductions in production levels, increased costs, including costs of raw materials, the impact on global economic conditions, the availability, terms, and cost of financing, including borrowings under credit arrangements or agreements, and risks associated with employees working remotely or operating with a reduced workforce. Other factors include, but are not limited to: risks associated with doing business overseas, including fluctuations in exchange rates and the inability to repatriate foreign cash, the impact on cost structure and on economic conditions as a result of actual and threatened increases in trade tariffs and the impact of political, economic and social instability; restrictions on operating flexibility imposed by the agreement governing our credit facility; the inability to achieve the savings expected from global sourcing of materials; the impact of higher raw material and component costs (including the impact of supply chain shortages and inflation), particularly steel, plastics, scrap iron, zinc, copper and electronic components; lower-cost competition; our ability to design, introduce and sell new products and related components; market acceptance of our products; the inability to attain expected benefits from acquisitions or the inability to effectively integrate such acquisitions and achieve expected synergies; domestic and international economic conditions, including the impact, length and degree of economic downturns on the customers and markets we serve and more specifically conditions in the automotive, construction, aerospace, energy, oil and gas, transportation, electronic, and general industrial markets; costs and liabilities associated with environmental compliance; the impact of climate change or terrorist threats and the possible responses by the U.S. and foreign governments; failure to protect our intellectual property; cyberattacks; materially adverse or unanticipated legal judgments, fines, penalties or settlements, and other risks identified and discussed in Item 1A, Risk Factors, and Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended January 1, 2022, filed with the Securities and Exchange Commission (the 'SEC') on March 17, 2022, and that may be identified from time to time in our quarterly reports on Form 10-Q, current reports on Form 8-K and other filings we make with the SEC. The Company undertakes no obligation to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise, except as required by law.

Non-GAAP Financial Measures

The non-GAAP financial measures we provide in this release should be viewed in addition to, and not as an alternative for, results prepared in accordance with U.S. GAAP. A reconciliation of non-GAAP financial measures referenced in this release to the nearest GAAP results is provided with this release.

To supplement the consolidated financial statements prepared in accordance with U.S. GAAP, we have presented Adjusted Net Income from Continuing Operations, and Adjusted Earnings Per Diluted Share from Continuing Operations, which are considered non-GAAP financial measures. The non-GAAP financial measures presented may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures in the same way. These measures are not substitutes for their comparable U.S. GAAP financial measures, such as net sales, net income, diluted earnings per common share, or other measures prescribed by U.S. GAAP, and there are limitations to using non-GAAP financial measures.

Adjusted Net Income from Continuing Operations is defined as net income from continuing operations excluding, when incurred, certain one-time costs arising from the impacts of impairment losses, gains/losses on the sale of subsidiaries and facilities, transaction expenses primarily relating to acquisitions and divestitures, factory start-up costs, factory relocation expenses and restructuring costs. Adjusted Net Income from Continuing Operations is a tool that can assist management and investors in comparing our performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our underlying operating performance.

Adjusted Earnings Per Diluted Share from Continuing Operations is defined as earnings per diluted share from continuing operations excluding, when incurred, certain per share one-time costs arising from, for example, the impacts of impairment losses, gains/losses on the sale of subsidiaries, property and facilities, transaction expenses primarily relating to acquisitions and divestitures, factory start-up costs, factory relocation expenses and restructuring costs. We believe that Adjusted Earnings Per Diluted Share from Continuing Operations provides important comparability of underlying operational results, allowing investors and management to access operating performance on a consistent basis.

Adjusted EBITDA from Continuing Operations is defined as net income from continuing operations before interest expense, provision for income taxes, and depreciation and amortization and excluding, when incurred, the impacts of certain one-time costs arising from impairment losses, gains/losses on sale of subsidiaries and facilities, transaction expenses primarily relating to acquisitions and divestitures, factory start-up costs, factory relocation expenses and restructuring expenses. Adjusted EBITDA from Continuing Operations is a tool that can assist management and investors in comparing our performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our underlying operations.

Management uses such measures to evaluate performance period over period, to analyze the underlying trends in our business, to assess our performance relative to our competitors, and to establish operational goals and forecasts that are used in allocating resources. These financial measures should not be considered in isolation from, or as a replacement for, U.S. GAAP financial measures.

We believe that presenting non-GAAP financial measures in addition to U.S. GAAP financial measures provides investors greater transparency to the information used by our management for its financial and operational decision-making. We further believe that providing this information better enables our investors to understand our operating performance and to evaluate the methodology used by management to evaluate and measure such performance.

Investor Relations Contacts

The Eastern Company
August Vlak or Peter O'Hara
203-729-2255

THE EASTERN COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

THE EASTERN COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

THE EASTERN COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying notes.

THE EASTERN COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

includes cash from assets held for sale of $0.1 million as of July 2, 2022 and $1.6 million as of July 3, 2021

Reconciliation of Non-GAAP Measures
Adjusted Net Income and EPS from Continuing Operations Calculation
For the Three and Six Months ended July 2, 2022 and July 3, 2021
($000's)

A) Gain on sale of Eberhard Hardware Ltd building

B) Loss on sale of ILC building in Wheeling, IL

Reconciliation of Non-GAAP Measures
Adjusted EBITDA from Continuing Operations Calculation
For the Three and Six Months ended July 2, 2022 and July 3, 2021
($000's)

A) Gain on sale of Eberhard Hardware Ltd building

B) Loss on sale of ILC building in Wheeling, IL

SOURCE: The Eastern Company



View source version on accesswire.com:
https://www.accesswire.com/710755/The-Eastern-Company-Reports-Another-Record-Setting-Quarter

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