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The Eastern Company (EML - Free Report) reported net income of 56 cents per share in the second fiscal quarter of 2024. This marks a substantial improvement from 22 cents per share recorded in the same period of the previous year.
Net sales for the quarter were $73.2 million, up 7% from $68.3 million in the corresponding period last year.
The quarterly performance showcases significant improvements in net income and sales, driven by robust demand in specific product lines and strategic business adjustments. However, challenges remain, especially in the commercial vehicle and electric vehicle markets, impacting the demand for custom returnable packaging solutions.
The Eastern Company Price, Consensus and EPS Surprise
The increase in revenues this quarter can primarily be attributed to the higher demand for truck mirror assemblies, which saw an $8 million increase, and returnable transport packaging products, which contributed an additional $0.4 million. This was slightly offset by a decrease in demand for truck accessories amounting to $3.6 million. The increase in truck mirror assemblies was notably driven by a $5 million surge in orders from two key customers, leveraging Eastern’s operational flexibility and competitive advantages.
Gross Margin
The company's gross margin improved to 25% in the second quarter of 2024 from 22% in the second quarter of 2023, reflecting effective price increases and cost management strategies to offset rising raw material costs.
Costs
Despite the revenue increase, Eastern also faced higher payroll-related expenses of $0.4 million and travel expenses of $0.1 million, partially balanced by a reduction in legal and professional expenses of $0.1 million and lower selling costs of $0.2 million. These changes reflect a slight increase in selling, general, and administrative expenses by $0.2 million or 2% compared to the second quarter of 2023.
Net Income
The adjusted net income for the second quarter of 2024 remained stable at $3.5 million, matching the GAAP net income, indicating minimal adjustments and a straightforward financial period. The adjusted EBITDA also showed improvement, totaling $7.2 million, up from $5.9 million in the second quarter of 2023.
Balance Sheet Position (as of Jun 29, 2024)
Eastern reported cash and cash equivalents totaling $11.7 million, showing an increase from $8.3 million at the end of 2023.
Total assets rose to $255.9 million from $252 million.
Long-term debt, less current portion, amounted to $39.6 million. This marks a decrease from $41.1 million as of Dec 30, 2023. The current portion of long-term debt totaled $2.9 million.
Total shareholders’ equity stood at $136.5 million, up from $132.5 million at 2023-end.
Cash Flows
EML generated $10.3 million of net cash from operations for the six months ended Jul 29, 2024.
Other Developments
During the second quarter of 2024, Eastern repurchased 10,000 shares of common stock under its share repurchase program authorized in August 2023. It declared a cash dividend of 11 cents per share for the quarter.
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Eastern (EML) Q2 Earnings Rise Y/Y on Strong Truck Mirror Sales
The Eastern Company (EML - Free Report) reported net income of 56 cents per share in the second fiscal quarter of 2024. This marks a substantial improvement from 22 cents per share recorded in the same period of the previous year.
Net sales for the quarter were $73.2 million, up 7% from $68.3 million in the corresponding period last year.
The quarterly performance showcases significant improvements in net income and sales, driven by robust demand in specific product lines and strategic business adjustments. However, challenges remain, especially in the commercial vehicle and electric vehicle markets, impacting the demand for custom returnable packaging solutions.
The Eastern Company Price, Consensus and EPS Surprise
The Eastern Company price-consensus-eps-surprise-chart | The Eastern Company Quote
Quarterly Performance Analysis
Revenue Streams
The increase in revenues this quarter can primarily be attributed to the higher demand for truck mirror assemblies, which saw an $8 million increase, and returnable transport packaging products, which contributed an additional $0.4 million. This was slightly offset by a decrease in demand for truck accessories amounting to $3.6 million. The increase in truck mirror assemblies was notably driven by a $5 million surge in orders from two key customers, leveraging Eastern’s operational flexibility and competitive advantages.
Gross Margin
The company's gross margin improved to 25% in the second quarter of 2024 from 22% in the second quarter of 2023, reflecting effective price increases and cost management strategies to offset rising raw material costs.
Costs
Despite the revenue increase, Eastern also faced higher payroll-related expenses of $0.4 million and travel expenses of $0.1 million, partially balanced by a reduction in legal and professional expenses of $0.1 million and lower selling costs of $0.2 million. These changes reflect a slight increase in selling, general, and administrative expenses by $0.2 million or 2% compared to the second quarter of 2023.
Net Income
The adjusted net income for the second quarter of 2024 remained stable at $3.5 million, matching the GAAP net income, indicating minimal adjustments and a straightforward financial period. The adjusted EBITDA also showed improvement, totaling $7.2 million, up from $5.9 million in the second quarter of 2023.
Balance Sheet Position (as of Jun 29, 2024)
Eastern reported cash and cash equivalents totaling $11.7 million, showing an increase from $8.3 million at the end of 2023.
Total assets rose to $255.9 million from $252 million.
Long-term debt, less current portion, amounted to $39.6 million. This marks a decrease from $41.1 million as of Dec 30, 2023. The current portion of long-term debt totaled $2.9 million.
Total shareholders’ equity stood at $136.5 million, up from $132.5 million at 2023-end.
Cash Flows
EML generated $10.3 million of net cash from operations for the six months ended Jul 29, 2024.
Other Developments
During the second quarter of 2024, Eastern repurchased 10,000 shares of common stock under its share repurchase program authorized in August 2023. It declared a cash dividend of 11 cents per share for the quarter.