Eastern's Q3 Earnings Surge 36% Y/Y on Packaging Demand

For the third quarter of 2024, The Eastern Company EML reported earnings per share from continuing operations of 75 cents, a notable 36% increase from 55 cents in the year-ago quarter. Net sales witnessed a strong 15% year-over-year rise in net sales, reaching $71.3 million from $62 million in the prior-year period.Eastern’s third-quarter 2024 results reflect an improved operational landscape, marked by increases in sales, gross margin, and operating profit. The company’s growth was largely driven by heightened demand in key product lines such as returnable transport packaging products and truck mirror assemblies. However, the upside was partly offset by elevated selling, general, and administrative (SG&A) costs.The Eastern Company Price, Consensus and EPS Surprise The Eastern Company price-consensus-eps-surprise-chart | The Eastern Company QuoteKey Business MetricsSales PerformanceEastern’s net sales increased, attributable to increased demand for returnable transport packaging products, contributing an additional $7.4 million, along with gains from truck mirror assemblies and truck accessories.Gross MarginThe gross margin expanded slightly to 25.5% in the third quarter of 2024 compared to 24.9% in the prior-year period. This improvement primarily reflects price increases implemented to offset higher raw material costs. Cost-saving measures also contributed to the margin expansion, indicating effective management of cost pressures and productivity enhancements.Operating Profit and ExpensesEastern’s operating profit rose to $6.8 million in the third quarter of 2024 from $5.6 million in the third quarter of 2023, showcasing improved profitability. However, SG&A expenses saw a 22.1% increase year over year, primarily due to higher payroll expenses, legal fees, and travel costs. SG&A expenses totaled $10.3 million in the third quarter of 2024, up from $8.5 million in the third quarter of 2023, suggesting that while revenues expanded, operating expenses also grew significantly.Adjusted EBITDAAdjusted EBITDA from continuing operations climbed to $8.7 million in the third quarter of 2024, compared to $6.7 million in the third quarter of 2023, indicating robust underlying profitability growth.BacklogEastern also saw an increase in its backlog by 13% year over year, reaching $97.2 million as of Sept. 28, 2024, which could provide a cushion against potential revenue fluctuations in the coming quarters. The backlog growth stems from higher orders for truck mirror assemblies and returnable transport packaging products, reflecting Eastern’s market responsiveness and ability to secure future demand in its core product segments.Net IncomeEastern reported an adjusted net income from continuing operations of $4.7 million, compared to $3.5 million in the same period of 2023.Balance Sheet Update (As of Sept. 28, 2024)Eastern reported cash and cash equivalents of $7.7 million, a slight decrease from $8 million as of Dec. 30, 2023. Total assets amounted to $244.2 million, down from $252 million.Long-term debt, less current portion, stood at $41.5 million compared to $41.1 million in December 2023. The current portion of long-term debt was $3.2 million, up from $2.9 million as of Dec. 30, 2023. Shareholders’ equity decreased, totaling $119.2 million at the end of the third quarter of 2024 compared to $132.5 million.Cash FlowsNet cash provided by operating activities during the first nine months ended Sept. 28, 2024, was $8.3 million, a decline from $18.2 million in the same period in 2023.Other DevelopmentsDuring the third quarter of 2024, Eastern announced its decision to divest the Big 3 Mold business, classifying it as a discontinued operation. This decision resulted in a $23.1 million write-down and a $0.8 million operating loss. The divestiture aligns with Eastern’s long-term strategic focus, as the Big 3 Mold business no longer fits within the company’s redefined portfolio. By exiting this business segment, Eastern aims to concentrate resources on its manufacturing and assembly capabilities in high-potential areas like commercial vehicle and automotive markets. Moreover, Eastern is undergoing a leadership transition, with Ryan Schroeder appointed as the new CEO, effective Nov. 6, 2024. Schroeder brings substantial experience in the manufacturing sector, which is expected to aid Eastern in achieving sustained growth through both organic and acquisitive strategies. His appointment aligns with Eastern’s broader value-creation program, which is centered around building long-term shareholder value.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Eastern Company (The) (EML): Get Free ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks