On August 6, 2024, The Eastern Co (EML, Financial) released its 8-K filing detailing the financial results for the second fiscal quarter ended June 29, 2024. The Eastern Co manages industrial businesses that design, manufacture, and sell engineered solutions to industrial markets, primarily operating in the United States.
Performance Overview
The Eastern Co (EML, Financial) reported a notable increase in net income for Q2 2024, reaching $3.5 million, or $0.56 per diluted share, compared to $1.4 million, or $0.22 per diluted share, in Q2 2023. This significant improvement underscores the company's efforts in enhancing business operations and addressing customer needs amidst supply chain disruptions.
Financial Achievements
Net sales for Q2 2024 increased by 7% to $73.2 million from $68.3 million in Q2 2023. For the first six months of 2024, net sales slightly rose to $141.1 million from $140.8 million in the same period last year. The increase in sales was primarily driven by higher demand for truck mirror assemblies and returnable transport packaging products.
Gross margin improved to 25% in Q2 2024 from 22% in Q2 2023, reflecting the impact of price increases to customers and cost-saving initiatives. The backlog as of June 29, 2024, surged by 43% to $107.3 million from $75.3 million as of July 1, 2023, indicating strong future demand.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Income | $3.5 million | $1.4 million |
| Net Sales | $73.2 million | $68.3 million |
| Gross Margin | 25% | 22% |
Operational Insights
President and CEO Mark Hernandez commented,
Our second quarter results reflect some of the progress we have made in enhancing portions of our business operations over the past 18 months, although much remains to be done. Many of our initiatives have improved gross margins, increased our agility, and enhanced customer relationships."
Despite these achievements, the company faces challenges, particularly in the commercial vehicle market and certain electric vehicle programs, which have impacted the demand for custom returnable packaging solutions. The Eastern Co (EML, Financial) continues to focus on operational excellence and strengthening customer relationships to navigate these challenges.
Balance Sheet and Cash Flow
Selling, general, and administrative expenses increased by $0.2 million, or 2%, in Q2 2024 compared to Q2 2023, primarily due to higher payroll-related and travel expenses. However, for the first six months of 2024, these expenses decreased by $0.2 million, or 1%, compared to the same period in 2023, reflecting lower payroll-related, legal, and professional expenses.
Other income and expense saw a decrease of $0.3 million in Q2 2024 but increased by $0.4 million for the first six months of 2024 compared to the corresponding periods in 2023. These fluctuations were influenced by various factors, including the final settlement of a swap agreement and the closure of Associated Toolmakers, Ltd.
Adjusted Financial Metrics
Adjusted net income for Q2 2024 was $3.5 million, or $0.56 per diluted share, compared to $2.5 million, or $0.40 per diluted share, in Q2 2023. Adjusted EBITDA for Q2 2024 was $7.2 million, up from $5.9 million in Q2 2023. These non-GAAP measures provide a clearer view of the company's operational performance by excluding certain non-recurring items.
In summary, The Eastern Co (EML, Financial) demonstrated strong financial performance in Q2 2024, with significant improvements in net income, gross margin, and backlog. However, the company remains vigilant in addressing market challenges and continues to focus on operational excellence and customer relationships to sustain its growth trajectory.
Explore the complete 8-K earnings release (here) from The Eastern Co for further details.
