The Eastern Company Reports Net Sales of $60.9 Million and Earnings of $0.25 Per Diluted Share for the First Quarter of 2019

The Eastern Company (NASDAQ:EML) today announced the results of operations for the first quarter of 2019. Net sales for the first quarter were $60.9 million, compared to $59.4 for the same period in 2018. Net income for the first quarter of 2019 was $1.6 million or $0.25 per diluted share, compared to $3.1 million, or $0.49 per diluted share, for the first quarter of 2018.

Mr. August Vlak, President and CEO, stated that “the first quarter sales growth is primarily the result of the addition of several new truck programs as well as continued growth in Class 8 Truck sales, offset partially by lower sales to recreational vehicle OEMs. The decline in first quarter earnings, compared to the same period in 2018, reflects $0.8 million of one-time restructuring costs associated with the consolidation of our facility in North Carolina and approximately $0.3 million in non-recurring start-up costs associated with new programs.”

Mr. Vlak said that “total net sales in the first quarter of 2019 grew 2% over the same period in 2018. Sales in the Industrial Hardware Segment increased by 5% for the first quarter of 2019 as compared to the first quarter of 2018 as a result of strong growth in Class 8 Trucks and continued demand growth across many of our end-markets. Sales in the Security Products Segment decreased by 3% in the first quarter of 2019 compared to the first quarter of 2018. Growth in new components for truck accessories was more than offset by lower demand for our commercial laundry products and an overall decline in the semi-conductor market affecting our sales of printed circuit boards. First quarter sales in our Metal Products Segment were flat compared to the same period last year. However, we continued to diversify the business, and sales of mining products decreased by 6% while industrial casting sales increased by 12% when compared to the first quarter of 2018."

Mr. Vlak added that “the decline in net income for the first quarter of 2019 compared to the same period in 2018 is partly attributable to the consolidation of our composite panel company in Salisbury, North Carolina with our Kelowna, British Columbia facility. Costs incurred include a write-off of inventory and fixed assets, moving expenses, severance and lease termination expenses. In addition, our cost of products sold in the first quarter of 2019 increased to 77% of net sales as compared to 75% of net sales for the first quarter of 2018. Higher costs of sales were attributable to start-up costs related to a new Class 8 truck mirror program that was awarded in late 2018, higher freight costs as a result of a slowdown at the Port of Long Beach, California, and certain operating costs not being fully absorbed as the result of lower production levels.”