Eastern Company (EML) 2024 Q3 法說會逐字稿

Good morning and welcome to the Eastern Company's third quarter, fiscal year 2024 earnings call.

早安，歡迎參加東方公司 2024 財年第三季財報電話會議。

(Operator Instructions)

（操作員說明）

I will now turn the conference over to your host, Marianne Barr, treasurer of the Eastern Company, Mary Anne over to you.

我現在將會議交給東道主瑪麗安·巴爾（Marianne Barr），東方公司的財務主管瑪麗·安妮（Mary Anne）交給您。

Good morning and thank you everyone for joining us this morning for a review of the Eastern Company's results for the third quarter of 2024.

早安，感謝大家今天早上和我們一起回顧東方公司2024年第三季的業績。

With me on the call are James Mitarotonda, Chair of Eastern's Board of Directors and the company's CFO Nicholas Vlahos.

與我一起參加電話會議的有東方航空董事會主席 James Mitarotonda 和公司財務長 Nicholas Vlahos。

The company issued earnings press release yesterday after the market closed. If anyone has not yet seen the release, please visit the investors section of the company's website, www.easterncompany.com where you will find the release under financial news.

該公司昨天收盤後發布了收益新聞稿。如果有人還沒有看到新聞稿，請造訪該公司網站 www.easterncompany.com 的投資者部分，您可以在財務新聞下找到新聞稿。

Please note that some of the information you will hear during today's call will consist of forward-looking statements about the company's future financial performance and business prospects, including without limitation statements regarding revenue, gross margin, operating expenses, other income and expenses, taxes and business outlook.

請注意，您在今天的電話會議中將聽到的一些資訊將包括有關公司未來財務業績和業務前景的前瞻性陳述，包括但不限於有關收入、毛利率、營運費用、其他收入和費用、稅收和業務前景。

These forward-looking statements are subject to risks and uncertainties that could cause actual results or trends to differ significantly from those projected in these forward-looking statements.

這些前瞻性陳述存在風險和不確定性，可能導致實際結果或趨勢與這些前瞻性陳述中預測的結果或趨勢有顯著差異。

We undertake no obligation to review or update any forward-looking statements to reflect events or circumstances that occur after the call. For more information regarding these risks and uncertainties, please refer to risk factors discussed in our SEC filings including form 10-K filed with the SEC on March 12, 2024, for the fiscal year 2023 and form 10-Q filed with the SEC on November 5, 2024.

我們沒有義務審查或更新任何前瞻性陳述以反映通話後發生的事件或情況。有關這些風險和不確定性的更多信息，請參閱我們在SEC 文件中討論的風險因素，包括2024 年3 月12 日向SEC 提交的2023 財年10-K 表格以及11 月向SEC 提交的10- Q 表格2024 年 5 月。

In addition, during today's call, we will discuss non-GAAP financial measures that we believe are useful as supplemental measures of Eastern's performance.

此外，在今天的電話會議中，我們將討論非公認會計準則財務指標，我們認為這些指標可作為東方航空績效的補充指標。

These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results.

這些非公認會計原則措施應作為公認會計原則結果的補充，而不是替代或孤立於公認會計原則結果。

A reconciliation of each of the non-GAAP measures discussed during today's call to the most directly comparable GAAP measure can be found in the earnings press release.

在今天的電話會議中討論的每項非公認會計準則衡量標準與最直接可比較的公認會計準則衡量標準的調節可以在收益新聞稿中找到。

With that introduction. I'll turn the call over to Jim.

有了這樣的介紹。我會把電話轉給吉姆。

Thank you, Mary Anne and good morning to those who are joining us by phone as well as those participating via the web.

謝謝瑪麗安妮，對透過電話和網路參與我們的人們早安。

Operationally, the third quarter was a strong period for the Eastern Company with substantial year over year improvement in top and bottom-line results, actions were taken to improve pricing and strengthen gross margins.

在營運方面，第三季是東方公司的強勁時期，營收和利潤同比大幅改善，並採取了改善定價和提高毛利率的行動。

At the same time, Eastern's Board of directors believes that there are more actions to be taken and significant progress to be made. And we have appointed a new leader to take Eastern to the next level.

同時，東方董事會認為還有更多行動需要採取，並且需要取得重大進展。我們任命了一位新的領導者，帶領東方航空更上一層樓。

Before I go into details of our new CEO appointment, I will talk about another significant step recently taken at Eastern. As discussed during our Q2 earnings call in August, we have been continuing the process of evaluating all of the company's businesses for long term performance and growth potential. During that process, we determined that the Big 3 Mold business, one of the two businesses within the big three precision products no longer fits our long-term business and financial strategy. Accordingly, we recently began taking steps to sell Big 3 Mold and reclassified it as discontinued operations.

在詳細介紹新任執行長任命之前，我將談談東方航空最近採取的另一項重要舉措。正如我們在 8 月第二季財報電話會議上所討論的那樣，我們一直在繼續評估公司所有業務的長期業績和成長潛力。在此過程中，我們確定三大精密產品中的兩項業務之一的三大模具業務不再符合我們的長期業務和財務策略。因此，我們最近開始採取措施出售 Big 3 Mold，並將其重新歸類為已停產業務。

Unlike Big 3's returnable packaging business, which holds excellent potential for Eastern, Mold is a complex niche business that especially given today's market dynamics offers many fewer opportunities for synergy and require significant capital investment to remain competitive.

與三大巨頭的可回收包裝業務（對東方來說具有巨大潛力）不同，模具是一項複雜的利基業務，特別是考慮到當今的市場動態提供的協同機會少得多，並且需要大量資本投資才能保持競爭力。

The sale of Mold will put Eastern in a better position to play to the company's strengths.

模具的出售將使東方能夠更好地發揮公司的優勢。

In addition, we will now be able to focus all of our resources on Eastern's best in class manufacturing and assembling capabilities in the commercial vehicle, automotive and other industrial end markets.

此外，我們現在將能夠將所有資源集中在東方商用車、汽車和其他工業終端市場上一流的製造和組裝能力上。

With that introduction, I'll turn the call over to Nick for a more detailed review of our Q3 financial results.

介紹完畢後，我將把電話轉給尼克，讓他對我們第三季的財務表現進行更詳細的審查。

Thank you, Jim and good morning everyone. As Jim noted in his opening comments, we recently made the decision to sell Big 3 Mold business and determined that it met the criteria for classification for held for sale accounting and discontinued operations.

謝謝吉姆，大家早安。正如吉姆在開場白中指出的那樣，我們最近決定出售三大模具業務，並確定其符合持有待售會計和終止經營的分類標準。

The loss recognized in the write down of the Big 3 Mold business to fair value in the third quarter was $19.2 million net of tax.

第三季三大模具業務以公允價值減記時確認的虧損為稅後 1,920 萬美元。

I'll focus my review today on Eastern's financial results from continuing operations for the third quarter. For the third quarter, net sales increased 15% to $71.3 million from $62 million in the 2023 period.

今天我將重點回顧東方航空第三季持續營運的財務表現。第三季淨銷售額從 2023 年的 6,200 萬美元成長 15% 至 7,130 萬美元。

Primarily due to increased demand for returnable trans-fat packaging products and truck mirror assemblies and truck accessories.

主要是由於對可回收反式脂肪包裝產品以及卡車後視鏡組件和卡車配件的需求增加。

Our backlog as of September 28, 2024, rose 13% to $97.2 million compared to $86.2 million as of September 30,2023.

截至 2024 年 9 月 28 日，我們的積壓訂單增加了 13%，達到 9,720 萬美元，而截至 2023 年 9 月 30 日，我們的積壓訂單為 8,620 萬美元。

The increase was primarily driven by increased orders for various truck mirror assemblies and returnable transport packaging products. Gross margin as a percentage of sales in the third quarter was 25.5% compared to 24.9% in the 2023 period.

這一增長主要是由於各種卡車後視鏡組件和可回收運輸包裝產品的訂單增加所致。第三季毛利率佔銷售額的百分比為 25.5%，而 2023 年同期為 24.9%。

The increase in margin primarily reflected improved price/cost alignment and other cost savings initiatives.

利潤率的成長主要反映了價格/成本一致性的改善和其他成本節約措施。

As a percentage of net sales product development costs were 1.5% for the third quarter of 2024 compared to 2.3% for 2023 period. Selling and administrative expenses increased $1.9 million or 22% for the third quarter of 2024 compared to last year's period. The increase was primarily due to higher payroll related and legal and professional expenses. Other income and expense for the third quarter of 2024 increased $0.1 million compared to the 2023 period.

2024 年第三季產品開發成本佔淨銷售額的百分比為 1.5%，而 2023 年同期為 2.3%。與去年同期相比，2024 年第三季的銷售和管理費用增加了 190 萬美元，即 22%。這一增長主要是由於工資相關費用以及法律和專業費用增加。與 2023 年同期相比，2024 年第三季的其他收入和支出增加了 10 萬美元。

The increase in other income of $0.1 million was primarily driven by lower pension expense when compared to the prior year period. Net income for the third quarter of 2024 was $4.7 million or $0.75 per diluted share, compared to net income of $3.5 million or $0.55 per diluted share for the 2023 period.

其他收入增加 10 萬美元主要是由於退休金支出較上年同期減少。2024 年第三季的淨利潤為 470 萬美元，即稀釋後每股收益 0.75 美元，而 2023 年第三季淨利為 350 萬美元，即稀釋後每股收益 0.55 美元。

Adjusted net income from continuing operations, a non-GAAP measure for the third quarter of 2024 was $4.7 million or $0.75 per diluted share compared to adjusted net income from continuing operations of $3.5 million or $0.55 per diluted share for the prior year period.

2024 年第三季的調整後持續經營淨利（非GAAP 衡量標準）為470 萬美元，即稀釋每股0.75 美元，而上年同期調整後持續經營淨利為350 萬美元，即稀釋每股0.55美元。

Adjusted EBITA from continuing operations, a non-GAAP measure for the third quarter of 2024 was $8.7 million compared to $6.7 million for the 2023 period.

根據非公認會計準則衡量，2024 年第三季持續經營業務調整後的 EBITA 為 870 萬美元，而 2023 年第三季為 670 萬美元。

At the end of the third quarter, our senior net leverage ratio was 1.4 compared to 1.2 to 1 at the end of the second quarter.

截至第三季末，我們的高級淨槓桿率為 1.4，而第二季末為 1.2 比 1。

In addition, we invested $7.6 million in capital expenditures and paid dividends of $2.1 million for the first nine months of fiscal 2024.

此外，我們在 2024 財年前九個月投資了 760 萬美元的資本支出並支付了 210 萬美元的股息。

We generated $8.3 million from operations during the first nine months of fiscal 2024 compared to $18.2 million during the first nine months of fiscal 2023. Cash flow from operating activities in the 2024 period was lower compared to last year's period, primarily due to increases in accounts receivable of $11.7 million due to increases in revenue in the third quarter of 2024, compared to the corresponding period in 2023. Approximately $3 million in accounts receivable due to prebilling to cover material costs on a specific job.

2024 財年的前 9 個月，我們的營運收入為 830 萬美元，而 2023 財年前 9 個月的營運收入為 1,820 萬美元。2024年期間經營活動產生的現金流量低於去年同期，主要是由於2024年第三季營收較2023年同期增加，應收帳款增加1,170萬美元。由於預先開立發票以支付特定工作的材料成本，應收帳款約為 300 萬美元。

As of September 28, 2024, inventories totalled $58.1 million down $0.3 million from the end of fiscal year 2023 and a decrease of $1.9 million from the end of last year's third quarter.

截至2024年9月28日，庫存總額為5,810萬美元，比2023財年末減少30萬美元，比去年第三季末減少190萬美元。

During the third quarter of 2024, we repurchased 50,000 shares of common stock under the share repurchase program our board authorized in August 2023. Bringing us to a total of approximately 110,000 shares repurchased under the buyback program. That completes my financial review. I'll now turn the call back to Jim.

2024 年第三季度，我們根據董事會 2023 年 8 月批准的股票回購計畫回購了 50,000 股普通股。使我們根據回購計劃總共回購了約 110,000 股股票。我的財務審查就這樣完成了。我現在將電話轉回給吉姆。

Thank you, Nick.

謝謝你，尼克。

At this point, I'd like to provide further details on Eastern's newly appointed Chief Executive Officer.

在此，我想提供更多有關東方航空新任命的執行長的細節。

As we announced yesterday, we are pleased to have Ryan Schroeder join us as CEO effective today.

正如我們昨天宣布的那樣，我們很高興瑞安·施羅德 (Ryan Schroeder) 加入我們，擔任首席執行官，即日生效。

Ryan is a seasoned executive with a strong record of leading manufacturing companies to peer beating, sustained long term growth.

瑞安（Ryan）是一位經驗豐富的高階主管，在帶領製造公司超越同行並實現持續長期成長方面擁有良好的記錄。

Ryan brings a history of growing businesses both organically and through acquisition. Most recently, he served as CEO of Plaskolite LLC, a global leader of acrylic and polycarbonate sheet with more than 120 production lines and 2000 employees worldwide.

Ryan 擁有透過有機發展和收購來發展業務的歷史。最近，他擔任 Plaskolite LLC 的首席執行官，該公司是壓克力和聚碳酸酯板材的全球領導者，在全球擁有 120 多條生產線和 2000 名員工。

Prior to that, Ryan was President of IMI Norgen, a leader in industrial automation with some 2,200 employees across 17 facilities.

在此之前，Ryan 曾擔任 IMI Norgen 總裁，該公司是工業自動化的領導者，在 17 個工廠擁有約 2,200 名員工。

And before that, Ryan spent 12 years at the engineering firm Parker Hannifin in a variety of roles including General manager of Global valves, Plant Manager and Supply Chain Manager of the company's mobile cylinders division.

在此之前，Ryan 在 Parker Hannifin 工程公司工作了 12 年，擔任過多種職務，包括 Global 閥門總經理、該公司行動氣瓶部門的工廠經理和供應鏈經理。

Ryan has extensive background in sales, lean operations, finance and supply chain management. All of which will be valuable to Easter. Ryan will share his vision for achieving long term sustained growth in our next quarterly call. So we hope you will join us for that discussion.

Ryan 在銷售、精實營運、財務和供應鏈管理方面擁有豐富的背景。所有這些對復活節來說都是有價值的。瑞安將在我們下一個季度的電話會議中分享他實現長期持續成長的願景。因此，我們希望您能加入我們的討論。

Operator. I would now like to open the floor to questions. We will take questions from the web first but before we do that, please provide directions to those on the phone about how they can ask questions.

操作員。現在我想請大家提問。我們將首先從網路上回答問題，但在此之前，請向電話中的人員提供如何提問的說明。

No problem. (Operator Instructions)

沒問題。（操作員說明）

All right. So the first question we have via the web is congratulations to the new CEO, where do you want the company to be in six months?

好的。因此，我們透過網路提出的第一個問題是祝賀新任首席執行官，您希望公司在六個月內達到什麼水平？

We have pretty ambitious long-term plans and certainly we have shorter term plans quarterly, yearly. And the short-term plans, we do not comment on them specifically as far as the numbers or our ambitious long term plans but should short term plans include of course actions to achieve the long-term plans. So you can rest assured that we look at all of ways to achieve the long-term plans, which as I stated are pretty ambitious.

我們有相當雄心勃勃的長期計劃，當然我們每季、每年都有短期計劃。至於短期計劃，我們不會具體評論數字或我們雄心勃勃的長期計劃，但短期計劃當然應該包括實現長期計劃的行動。因此，您可以放心，我們會考慮實現長期計劃的所有方法，正如我所說，這些計劃非常雄心勃勃。

Thank you, Jim.

謝謝你，吉姆。

Operator. There are no further questions via the web. Do you have any questions on the conference call?

操作員。沒有透過網路提出更多問題。您對電話會議還有什麼疑問嗎？

I'm not seeing anyone in the queue at the moment, but just a reminder to those on the lines, you can press star one if you would like to ask a question. Not seeing anyone in the queue just yet.

目前我沒有看到任何人在排隊，只是提醒那些排隊的人，如果您想提問，可以按星號一。還沒看到有人在排隊。

No, I am not seeing any questions at the moment.

不，我目前沒有看到任何問題。

Thank you, operator. Jim, there are no further questions. I will turn the call over to you for closing remarks.

謝謝你，接線生。吉姆，沒有其他問題了。我會將電話轉交給您進行結束語。

Thank you all for your time today. As you have heard the third quarter was a productive period for Eastern. We have now advanced the most important elements of the company's business transformation and believe it is much better positioned to grow and prosper. We look forward to introducing you to Ryan Schroeder on our next earnings call. If there is any information you need. In the meantime, please reach out to Nick or me. Thank you.

感謝大家今天抽出時間。正如您所聽說的，第三季度是東方航空的富有成效的時期。我們現在已經推進了公司業務轉型中最重要的要素，並相信它能夠更好地發展和繁榮。我們期待在下一次財報電話會議上向您介紹 Ryan Schroeder。如果有您需要的任何資訊。同時，請聯絡尼克或我。謝謝。

Thank you very much. This does conclude today's conference. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

非常感謝。今天的會議到此結束。此時您可以斷開電話線並度過美好的一天。感謝您的參與。