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Shares of The Eastern Company (EML - Free Report) have gained 9.4% since the company reported its earnings for the quarter ended March 29, 2025. This compares with the S&P 500 index’s 0.2% decline over the same time frame. Over the past month, the stock has gained 2.6% compared with the S&P 500’s 4.4% growth.
Eastern posted first-quarter 2025 earnings per share from continuing operations of 31 cents, down from 34 cents a year earlier. Adjusted earnings per share slipped to 32 cents from 34 cents a year ago. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
The company’s net sales from continuing operations of $63.3 million denoted a 2% decrease compared to $64.6 million in the year-ago period. Adjusted EBITDA also declined modestly to $4.6 million from $4.8 million a year ago, reflecting ongoing market headwinds, particularly in the heavy-duty truck segment.
The Eastern Company Price, Consensus and EPS Surprise
Eastern’s gross margin in the quarter was 22.4%, down from 23.9% in the same quarter last year. The company attributed this decline to higher raw material costs, partially offset by pricing actions. Meanwhile, selling, general and administrative (SG&A) expenses dropped by $0.8 million, or 8%, to $9.8 million. This decrease was driven by lower payroll-related expenses, partially offset by increased sales commissions. As a percentage of net sales, SG&A costs improved to 15.6% from 16.5% in the prior-year period.
Operating income was $3.2 million, slightly lower than $3.4 million in the prior year. Net income from continuing operations stood at $1.9 million compared to $2.1 million in the year-ago period. On the cash flow front, the company used $1.8 million in operating activities, down from a positive $2.8 million in the prior year, reflecting significant changes in working capital and lease-related adjustments.
Management Commentary
CEO Ryan Schroeder described the first quarter as a period of “significant change,” with the new leadership team focusing on sales growth, cost reduction, and operational efficiency. He acknowledged the challenging macroeconomic environment, particularly the slowdown in the heavy-duty truck market, which pressured the company’s performance and backlog. Nevertheless, Schroeder emphasized Eastern’s strategy to remain agile, defend margins, and leverage its entrepreneurial culture to build product roadmaps and explore acquisition opportunities.
Chairman James Mitarotonda echoed this sentiment, commending management for accelerating execution and positioning the company for long-term success. The board's confidence was underscored by a new share repurchase program, authorizing the buyback of up to 400,000 shares over the next five years, doubling the size of the recently completed program.
Factors Influencing the Headline Numbers
The revenue decline was primarily due to lower sales in truck mirror assemblies and accessories, although these were partially offset by stronger demand in returnable transport packaging products. The gross margin compression was largely a result of elevated raw material costs. Despite these pressures, Eastern implemented pricing actions to help protect margins.
Lower SG&A expenses also contributed to earnings stability. Payroll-related savings were partly redirected into higher commission expenses, aligning with the company’s focus on incentivizing sales performance. Additionally, the company absorbed modest restructuring charges related to facility and personnel changes.
Other Developments
A notable strategic move during the quarter was the April 30 completion of the divestiture of Big 3 Mold’s injection stretch blow molding (ISBM) unit, one of three divisions within the Big 3 Mold business. This sale, along with the geographic repositioning of Big 3 Precision’s engineering and manufacturing operations, is expected to enhance efficiency and lower operating costs. The company transitioned prototyping from Dearborn, MI, to Sterling Heights, and consolidated production into its Centralia, Illinois facility, a process slated for completion in the second quarter.
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EML Q1 Earnings Dip Y/Y Amid Truck Market Headwinds, Stock Up 9%
Shares of The Eastern Company (EML - Free Report) have gained 9.4% since the company reported its earnings for the quarter ended March 29, 2025. This compares with the S&P 500 index’s 0.2% decline over the same time frame. Over the past month, the stock has gained 2.6% compared with the S&P 500’s 4.4% growth.
Eastern posted first-quarter 2025 earnings per share from continuing operations of 31 cents, down from 34 cents a year earlier. Adjusted earnings per share slipped to 32 cents from 34 cents a year ago. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
The company’s net sales from continuing operations of $63.3 million denoted a 2% decrease compared to $64.6 million in the year-ago period. Adjusted EBITDA also declined modestly to $4.6 million from $4.8 million a year ago, reflecting ongoing market headwinds, particularly in the heavy-duty truck segment.
The Eastern Company Price, Consensus and EPS Surprise
The Eastern Company price-consensus-eps-surprise-chart | The Eastern Company Quote
Other Key Business Metrics
Eastern’s gross margin in the quarter was 22.4%, down from 23.9% in the same quarter last year. The company attributed this decline to higher raw material costs, partially offset by pricing actions. Meanwhile, selling, general and administrative (SG&A) expenses dropped by $0.8 million, or 8%, to $9.8 million. This decrease was driven by lower payroll-related expenses, partially offset by increased sales commissions. As a percentage of net sales, SG&A costs improved to 15.6% from 16.5% in the prior-year period.
Operating income was $3.2 million, slightly lower than $3.4 million in the prior year. Net income from continuing operations stood at $1.9 million compared to $2.1 million in the year-ago period. On the cash flow front, the company used $1.8 million in operating activities, down from a positive $2.8 million in the prior year, reflecting significant changes in working capital and lease-related adjustments.
Management Commentary
CEO Ryan Schroeder described the first quarter as a period of “significant change,” with the new leadership team focusing on sales growth, cost reduction, and operational efficiency. He acknowledged the challenging macroeconomic environment, particularly the slowdown in the heavy-duty truck market, which pressured the company’s performance and backlog. Nevertheless, Schroeder emphasized Eastern’s strategy to remain agile, defend margins, and leverage its entrepreneurial culture to build product roadmaps and explore acquisition opportunities.
Chairman James Mitarotonda echoed this sentiment, commending management for accelerating execution and positioning the company for long-term success. The board's confidence was underscored by a new share repurchase program, authorizing the buyback of up to 400,000 shares over the next five years, doubling the size of the recently completed program.
Factors Influencing the Headline Numbers
The revenue decline was primarily due to lower sales in truck mirror assemblies and accessories, although these were partially offset by stronger demand in returnable transport packaging products. The gross margin compression was largely a result of elevated raw material costs. Despite these pressures, Eastern implemented pricing actions to help protect margins.
Lower SG&A expenses also contributed to earnings stability. Payroll-related savings were partly redirected into higher commission expenses, aligning with the company’s focus on incentivizing sales performance. Additionally, the company absorbed modest restructuring charges related to facility and personnel changes.
Other Developments
A notable strategic move during the quarter was the April 30 completion of the divestiture of Big 3 Mold’s injection stretch blow molding (ISBM) unit, one of three divisions within the Big 3 Mold business. This sale, along with the geographic repositioning of Big 3 Precision’s engineering and manufacturing operations, is expected to enhance efficiency and lower operating costs. The company transitioned prototyping from Dearborn, MI, to Sterling Heights, and consolidated production into its Centralia, Illinois facility, a process slated for completion in the second quarter.