Market Overview

The Eastern Company Reports Net Sales of $60.9 Million and Earnings of $0.52 Per Diluted Share for the Second Quarter of 2018


The Eastern Company (NASDAQ:EML) today announced the results of
operations for the second quarter of 2018. Sales for the second quarter
were $60.9 million, compared to $58.0 million for the same period in
2017. Net income for the second quarter of 2018 was $3.3 million, or
$0.52 per diluted share, compared to $1.5 million, or $0.23 per diluted
share, for the same period last year.

Mr. August Vlak, President and CEO, stated that "the 5% increase in
sales for the second quarter of 2018 compared to the same period in 2017
reflects sustained organic growth across all three of our business
segments. Our Industrial Hardware segment grew by 2% in the second
quarter of 2018 compared with the second quarter of 2017 as a result of
sales growth in the heavy duty truck, sports utility vehicles, and
military markets. Security Product segment sales grew by 10% in the
second quarter of 2018 compared to the same period in 2017, in part as a
result of strong growth of our Illinois Lock business and Greenwald
Industries winning significant new business over our competition in the
commercial laundry market. In our Metal Products segment, second quarter
2018 sales were up 6% compared to the second quarter of 2017. This
segment continues to benefit from diversification into new industrial

Net income increased 122% to $3.3 million for the second quarter of 2018
from $1.5 million for the comparable period of 2017. The growth in net
income was primarily attributable to the absence of one-time costs
related to the acquisition of Velvac Holdings, Inc. ("Velvac") in the
second quarter of 2017. Gross margins were 25% of net sales in the
second quarter of 2018 compared to 27% of net sales in the second
quarter of 2017. Mr. Vlak commented that "the favorable impact from cost
reduction and cost absorption were more than offset by higher material
costs, primarily due to increases in prices for steel, zinc, copper and
scrap iron. While we were able to recover some of the increases in raw
material prices, price increases often lag cost increases. In addition,
we started to scale back our investments in the development of new
technology products, as we began to take initial orders at Road-iQ, a
division of Velvac, and for gPay at Greenwald Industries. Road-iQ is a
connected vehicle vision technology that provides both active and
passive safety features to drivers of RVs, trucks and other specialty
vehicles, and gPay is a new payment system that enables consumers to use
their mobile phones to pay for their laundry."

Mr. Vlak added that "in the second quarter of 2018, the Company also
acquired substantially all of the assets of Load N Lock Systems, Inc.,
("Load N Lock"), including products and intellectual property. Load N
Lock is a leader in innovative truck cap and tonneau cover locks that
keep truck contents safe and secure and has developed and patented the
first integrated power lock for the industry. The addition of Load N
Lock adds new talent to our business and helps us build scale in
attractive end-markets.

Mr. Vlak continued that "in July 2018, we repatriated approximately $5.5
million in cash from our overseas subsidiaries and used these funds to
repay our outstanding revolving line of credit. The acquisition of Load
N Lock and the repatriation of overseas cash are important steps in the
execution of our three-part strategy of optimizing our portfolio
businesses, improving execution and building our balance sheet. Despite
continued macroeconomic uncertainty, we believe our businesses are well
positioned to benefit from underlying growth in several of our core
markets in 2018."

The Eastern Company will host a conference call to discuss its results
for the second quarter and first half of 2018 and other matters on
Tuesday, August 7, 2018 at 9:00 a.m. Eastern Time. Participants can
access the conference call by phone at (888) 669-0684. Participants can
also join via the web at

About The Eastern Company
The Eastern Company is 160-year
old manufacturer of industrial hardware, security products and metal
castings. It operates 16 locations in the United States, Canada, Mexico,
Taiwan and China.

Safe Harbor for Forward-Looking Statements
Statements in
this document about our future expectations, beliefs, goals, plans or
prospects constitute forward-looking statements within the meaning of
the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995 and the rules, regulations and releases of the Securities
and Exchange Commission. Any statements that are not statements of
historical fact, including statements containing the words "believes,"
"intends", "continues," "reflects," "plans," "anticipates," "expects,"
and similar expressions, should also be considered to be forward-looking
statements. Readers should not place undue reliance on these
forward-looking statements, which are based upon management's current
beliefs and expectations. These forward-looking statements are subject
to risks and uncertainties, and actual results might differ materially
from those discussed in, or implied by, the forward-looking statements.
Among the risks and uncertainties that could cause actual results or
events to differ materially from those indicated by such forward-looking
statements include, but are not limited to changing customer
preferences, lack of success of new products, loss of customers and
increased prices for raw materials. There are important, additional
factors that could cause actual results or events to differ materially
from those indicated by such forward looking statements, including those
set forth in our reports and filings with the Securities and Exchange
Commission. We undertake 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.

Statement of Consolidated Income (unaudited)
THREE Months Ended SIX Months Ended
13 wks 13 wks 26 wks 26 wks

June 30, 2018

July 1, 2017 June 30, 2018 July 1, 2017
Net Sales $ 60,860,852 $ 58,044,743 $120,305,849 $94,088,038
Net Income $ 3,258,477 $ 1,466,402 $ 6,358,672 $ 2,983,543
Net Income Per Share:
Basic $ 0.52 $ 0.23 $ 1.02 $ 0.48
Diluted $ 0.52 $ 0.23 $ 1.01 $ 0.47
Weighted average
shares outstandings:
Basic 6,265,315 6,258,467 6,264,435 6,257,482
Diluted 6,292,317 6,285,339 6,291,437 6,270,918

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