Eastern Company (EML) 2026 Q1 法說會逐字稿

Good morning and welcome to the Eastern Company First Quarter Fiscal Year 2026 Earnings Call. At this time, all participants are in a listen-only mode, and a question-and-answer session will follow the formal presentation. (Operator Instructions). Please note, this conference is being recorded.

各位早安，歡迎參加 Eastern Company 2026 會計年度第一季財報電話會議。此刻所有與會者皆為僅收聽模式，正式簡報結束後將進行問答環節。（接線員指示）請注意，本次會議將被錄音。

I will now turn the conference over to your host, Marianne Barr, Treasurer of the Eastern Company. Marianne, the floor is yours.

現在我將把會議交給本次主持人——Eastern Company 財務長（Treasurer）Marianne Barr。Marianne，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 first quarter of 2026. With me on the call are Ryan Schroeder, Chief Executive Officer, and Nicolas Vallejos, Chief Financial Officer.

各位早安，感謝大家今天早上參與我們對 Eastern Company 2026 年第一季業績的回顧。與我一同出席電話會議的還有執行長 Ryan Schroeder，以及財務長 Nicolas Vallejos。

The company issued its earnings press release yesterday after market close. If anyone has not yet seen the release, please visit the Investors Information section of the company's website, www.easterncompany.com, where you will find the release under Financial News.

公司已於昨日收盤後發布財報新聞稿。若尚未閱讀該新聞稿，請造訪公司網站 www.easterncompany.com 的「投資人資訊」專區，您可在「財務新聞」下找到該新聞稿。

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 margins, operating expenses, other income and expenses, taxes, and business outlook. 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. We undertake no obligation to review or update any forward-looking statements to reflect events or circumstances that occur after the call.

請注意，您在今日電話會議中聽到的部分資訊將包含關於公司未來財務表現與業務前景的前瞻性陳述，包括但不限於有關營收、毛利率、營業費用、其他收入與費用、稅負以及業務展望的陳述。這些前瞻性陳述存在風險與不確定性，可能導致實際結果或趨勢與這些前瞻性陳述所預測者出現重大差異。我們不承擔在本次電話會議後因事件或情況發生而審閱或更新任何前瞻性陳述的義務。

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 3, 2026, for the fiscal year 2025. 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. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. 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. With that introduction, I'll turn the call over to Ryan.

如需進一步了解上述風險與不確定性，請參閱我們向美國證券交易委員會（SEC）提交之文件中所討論的風險因素，包括我們於 2026 年 3 月 3 日向 SEC 提交、針對 2025 會計年度的 Form 10-K。此外，在今日電話會議中，我們將討論我們認為可作為 Eastern 業績補充衡量指標的非 GAAP 財務指標。這些非 GAAP 指標應與 GAAP 結果一併考量，而不應取代 GAAP 結果，亦不應單獨或孤立地解讀。今日電話會議所提及之各項非 GAAP 指標與最直接可比之 GAAP 指標的調節表，可於財報新聞稿中查閱。以上為開場說明，接下來我把電話交給 Ryan。

Thank you, Marianne, and good morning, everyone.

謝謝你，Marianne，各位早安。

Welcome to the Eastern Company's first quarter 2026 earnings conference call. Following my prepared remarks, Nic will walk through the financial results in detail, after which we'll open the line for questions. I want to start this morning with our headline view of our Q1 performance and the lens through which we are managing the business as we move into the second quarter and look ahead to the balance of 2026. This was a quarter with positives and negatives.

歡迎參加 Eastern Company 2026 年第一季財報電話會議。在我完成事先準備的發言後，Nic 將詳細說明財務結果，之後我們將開放提問。我今天早上想先從我們對第一季表現的重點觀點開始，以及在進入第二季並展望 2026 年剩餘期間時，我們管理業務所採用的視角。本季有正面也有負面。

On the positive side, net sales of $ 59.7 million improved sequentially from the fourth quarter by 4%. The sequential improvement reflects improved order execution in an improving demand environment. Notably, the sequential improvement was achieved despite continued softness in our returnable dunnage businesses, which weighed on the year-over-year comparison. We also experienced a one-time destocking action by a customer of Eberhard's. Strengthening order conversion drove sequential backlog growth to $ 82.2 million for the second consecutive quarter, continuing the recovery from the trough we reported in the third quarter of 2025. Order rates strengthened across virtually all of our segments. The underlying demand recovery we identified coming out of Q4 is intact and is showing early signs of broadening. And we delivered a $ 5.4 million year-over-year improvement in cash flow from operations, reversing a use of cash in the first quarter of 2025. On the other side of the ledger, an operating issue within our returnable racks businesses. Which resides within big three precision, pressured consolidated gross margin and net income for the quarter. Consequently, we reported Q1 adjusted EBITDA of $ 3 million, compared with $ 4.6 million in both the first and fourth quarters of 2025. Excluding the big three impact, EBITDA across the rest of the portfolio was broadly in line with prior quarter and prior year periods.

正面來看，淨銷售額 5,970 萬美元，較第四季季增 4%。此一季增反映在需求環境改善之下，訂單執行有所提升。值得注意的是，儘管我們可回收周轉包材（returnable dunnage）業務仍然疲弱、拖累年對年比較，我們仍達成了季增改善。我們也遭遇 Eberhard 某位客戶一次性的去庫存（destocking）行動。訂單轉換率提升帶動在手訂單（backlog）連續第二季季增至 8,220 萬美元，延續自我們在 2025 年第三季所報告低點以來的復甦。幾乎所有事業部門的接單率皆有所增強。我們在第四季結束時所辨識的基礎需求復甦仍然完好，並開始出現擴散的早期跡象。同時，我們營運活動現金流較去年同期改善 540 萬美元，扭轉 2025 年第一季的現金流出。另一方面，我們可回收貨架（returnable racks）業務（隸屬於 Big 3 Precision）出現營運問題，對本季合併毛利率與淨利造成壓力。因此，我們第一季調整後 EBITDA 為 300 萬美元，低於 2025 年第一季與第四季的 460 萬美元。若排除 Big 3 的影響，投資組合其餘業務的 EBITDA 大致與前一季及去年同期持平。

Our Q1 performance reflects three principal dynamics, and I want to walk through each in turn, beginning with the operating issue at Big 3. In Q1, our Big 3 business recorded a below-plan operating performance. I want to be clear about what happened, what we've done about it, and the timeframe over which the financial impact will work through our income statement. Within BIG 3, to fill plant capacity against a prolonged period of soft demand, our RACS team quoted orders in the fourth quarter, which were discovered to be below our margin thresholds. Having identified and addressed the root cause of the below plan performance, we have heightened the quoting processes, adjusted the delegation of authority, and installed a cross-functional review process that improves accountability.

我們第一季的表現反映三項主要動態，我想依序說明，首先是 Big 3 的營運問題。第一季，我們的 Big 3 業務營運表現低於計畫。我想清楚說明發生了什麼、我們已採取哪些措施，以及財務影響將在多長時間內反映於損益表中。在 BIG 3 內部，為了在長期需求疲弱期間填補工廠產能，我們的 RACS 團隊在第四季報價承接了一些訂單，後來發現其毛利低於我們的門檻。在辨識並處理造成低於計畫表現的根本原因後，我們已強化報價流程、調整授權層級，並建立跨部門審查流程，以提升問責性。

We have determined that the financial impact is contained to the first half of 2026, while the effective contracts run off. We are honoring our commitments to customers who receive these contracts, preserving the relationship that matters to the long-term value of this business. In fact, we continue to see backlog in this business grow. And despite this operational snap-through, our operational turnaround is on track.

我們判定財務影響將侷限於 2026 年上半年，並會隨著相關合約到期而逐步消退。我們將履行對取得這些合約之客戶的承諾，以維繫對本業務長期價值至關重要的客戶關係。事實上，我們仍看到該業務的在手訂單持續成長。儘管出現這次營運上的短期波動，我們的營運改善（turnaround）仍按計畫推進。

Turning to the demand environment, we are seeing improvements across virtually all of our business segments. The market signals are encouraging. Backlog grew sequentially for the second consecutive quarter, reflecting strengthening order conversion across the portfolio. We are seeing building order momentum at both Eberhard and Belvac. Notably, at Belvac, that activity is supported by an early-stage recovery in heavy-duty truck build rates at our major OEMs, several of which have been adding capacity in their own plants. We also are seeing customers commit to orders for the second half of 2026, which gives us better visibility than we had at this point a year ago.

就需求環境而言，我們幾乎在所有業務部門都看到改善。市場訊號令人鼓舞。在手訂單連續第二季季增，反映整體投資組合的訂單轉換率走強。我們看到 Eberhard 與 Belvac 的接單動能正在累積。值得注意的是，在 Belvac，這些活動受到主要 OEM 的重型卡車（heavy-duty truck）產量回升之早期復甦所支撐，其中數家 OEM 也正在其自有工廠擴增產能。我們也看到客戶開始承諾下達 2026 年下半年的訂單，使我們相較一年前此時擁有更佳的能見度。

Taken together, the demand environment heading into the remainder of 2026 is more constructive than it was in the second half of 2025. The trajectory of the order book and our customer engagement is moving in the direction that have been described for several quarters. That said, the macro backdrop continues to require active monitoring, and we are managing the business with appropriate caution as recovery solidifies. Our operational and commercial work in Q1 included positioning each business to win more business, fulfill it profitably and capture operating leverage as demand recovers, doing so ahead of new program launches scheduled across the second and third quarters. We believe these are the right investments at the right point in the cycle.

綜合而言，展望 2026 年剩餘期間的需求環境，比 2025 年下半年更具建設性。訂單簿的走勢與我們與客戶互動的情況，正朝著過去數季所描述的方向發展。儘管如此，總體環境仍需持續密切監控；在復甦逐步穩固之際，我們以適度審慎的方式經營業務。我們在第一季的營運與商務工作，包括讓各事業單位具備爭取更多訂單、以獲利方式履約，並在需求復甦時取得營運槓桿的能力，且在第二、第三季預計啟動的新專案（program）上市之前就先行布局。我們相信這些是在景氣循環中正確時點所做的正確投資。

At Eberhard, we are applying lean principles to compress lead times and reduce inventory with no material capital required. The result is a more responsive footprint for both existing products and new program launches. Most significant of those launches is a new door actuation program for our customers' next-generation side-by-side ATV that is ramping up across the second and third quarters of this year. At Big 3, alongside corrective measures taken we have taken, we are making capacity investments designed to deliver operating leverage. This includes automation and robotics that expand welding throughput without adding headcount and enabling lights out and weekend production. At Belvac, we went live on a new ERP system on the first day of the second quarter. The new platform is expected to support more efficient order management, inventory visibility and financial close processes as Belvac continues to capture the recovery underway in the heavy-duty truck market.

在 Eberhard，我們正運用精實（lean）原則縮短交期並降低庫存，且不需要重大資本支出。其結果是，無論既有產品或新專案上市，我們的營運據點（footprint）都更具回應速度。其中最重要的上市專案，是為客戶下一代並排式（side-by-side）ATV 所提供的新車門致動（door actuation）專案，將於今年第二、第三季逐步放量（ramping up）。在 Big 3，除已採取的矯正措施外，我們也正在進行產能投資，以帶來營運槓桿，包括自動化與機器人技術，在不增加人力編制的情況下提升焊接產出，並支援無人化（lights out）與週末生產。在 Belvac，我們已於第二季第一天正式上線新的 ERP 系統。預期該新平台將在 Belvac 持續掌握重型卡車市場復甦之際，支援更有效率的訂單管理、庫存可視性與財務結帳流程。

We are in the week six of this major initiative, and while it is not a finished project just yet, we are taking, making, and shipping orders and have been able to successfully close the month of April, and now moving on to the balance sheet and capital allocation. Deleveraging the balance sheet remained a clear priority. In Q1, we continued to reduce debt, continued our regular quarterly dividend, repurchased shares under the authorized program, and generated meaningful cash from operations.

我們正處於這項重大倡議的第六週，雖然目前尚未完全完成，但我們已在接單、製作並出貨，並且已成功結束四月份，現在將重點轉向資產負債表與資本配置。降低資產負債表槓桿仍是明確的優先事項。於第一季，我們持續降低負債、維持例行的季度股利、依核准的計畫回購股份，並自營運中產生可觀的現金。

Strengthening the balance sheet gives us the capacity to absorb periods of operational pressure, like the one we are reporting today, without compromising the businesses or our strategic plan. It also preserves our optionality on M&A, allowing us to move on opportunities when they meet our criteria. I'll now turn the call over to Nic to review our financial results for the first quarter. Nic, over to you.

強化資產負債表使我們有能力在不損及各項業務或我們的策略計畫的情況下，吸收像我們今天所報告這樣的營運壓力期間。這也保留了我們在併購（M&A）上的選擇權，讓我們在機會符合我們的標準時能夠把握。接下來我將把電話交給 Nic，請他回顧我們第一季的財務結果。Nic，交給你。

Thanks, Ryan. Beginning with net sales for the first quarter of 2026, net sales decreased approximately 6% to $ 59.7 million from $ 63.3 million in the first quarter of 2025, due primarily to decreased shipments resulting from lower order volume of returnable transport packaging products. The decrease was partially offset by increased sales of truck mirror assemblies.

謝謝，Ryan。先從 2026 年第一季的淨銷售額開始，淨銷售額由 2025 年第一季的 6,330 萬美元下降約 6% 至 5,970 萬美元，主要是因可重複使用運輸包裝產品的訂單量降低，導致出貨量減少。此降幅部分被卡車後視鏡總成銷售增加所抵銷。

Our backlog as of April 4, 2026, was $ 82.2 million, down approximately 8% from $ 85.9 million a year ago, primarily reflecting softer order activity in returnable transport packaging. Notably, backlog increased modestly on a sequential basis from $ 81.1 million at fiscal year-end. Gross margin as a percentage of net sales for the first quarter of 2026 was 20%, or $ 11.9 million, compared to 22.4%, or $ 14.2 million, in the first quarter of 2025. This decrease reflects a decline in volumes on existing products, which spread manufacturing costs across a smaller revenue base, and below plan operating performance at Big 3, as Ryan detailed.

截至 2026 年 4 月 4 日，我們的在手訂單（backlog）為 8,220 萬美元，較一年前的 8,590 萬美元下降約 8%，主要反映可重複使用運輸包裝的接單活動轉弱。值得注意的是，在手訂單較會計年度年末的 8,110 萬美元按季小幅增加。2026 年第一季毛利率占淨銷售額為 20%，即 1,190 萬美元；相較之下，2025 年第一季為 22.4%，即 1,420 萬美元。此下降反映既有產品出貨量下滑，使製造成本分攤在較小的營收基礎上，以及如 Ryan 所述 Big 3 的營運表現低於計畫。

These factors were partially offset by new product contributions and price increases on existing products. As a percentage of net sales, product development costs were 1.7% in the first quarter of 2026 compared to 1.8% in the prior period. This reflects continued investment in new products across our business units while maintaining cost discipline relative to our revenue base. Selling and administrative expenses for the first quarter of 2026 decreased $ 0.3 million, or 2.8%, to $9.6 million compared to $ 9.8 million in the first quarter of 2025. The decrease was driven by lower compensation and related charges and lower commission charges that were partially offset by higher legal and professional expenses. Operating profit for the first quarter of 2026 was $ 1.3 million, or 2.2% of net sales, compared to $ 3.2 million, or 5.1% of net sales in the prior-year period. Other income and expense for the first quarter of 2026 was $ 13,000 of income, compared to $ 200,000 of expense in the prior period. Interest expense in the first quarter of 2026 was $ 528,000, a modest decline from interest expense of $ 617,000 in the same period in the prior year. Net income from continuing operations for the first quarter was $ 0.6 million, or $ 0.11 per diluted share, compared to $ 1.9 million, or $ 0.31 per diluted share in the prior-year period.

上述因素部分被新產品貢獻以及既有產品的價格調升所抵銷。以淨銷售額百分比計，2026 年第一季產品開發成本為 1.7%，相較前期為 1.8%。這反映我們在各事業單位持續投資新產品，同時相對於營收基礎維持成本紀律。2026 年第一季銷售與管理費用較 2025 年第一季減少 30 萬美元（或 2.8%），至 960 萬美元，前期為 980 萬美元。此下降主要由較低的薪酬及相關費用、以及較低的佣金費用所帶動，但部分被較高的法律與專業服務費用所抵銷。2026 年第一季營業利益為 130 萬美元，占淨銷售額 2.2%；相較前一年同期為 320 萬美元，占淨銷售額 5.1%。2026 年第一季其他收益與費用為收益 1.3 萬美元，相較前期為費用 20 萬美元。2026 年第一季利息費用為 52.8 萬美元，較前一年同期的 61.7 萬美元小幅下降。第一季持續營業單位淨利為 60 萬美元，或稀釋後每股盈餘 0.11 美元；相較前一年同期為 190 萬美元，或稀釋後每股盈餘 0.31 美元。

Turning to adjusted EBITDA, first quarter 2026, adjusted EBITDA from continuing operations was $ 3 million, or 5% of net sales, compared to $ 4.6 million, or 7.3% of net sales in the prior year period. The 230 basis point margin compression reflects two factors listed in the order of magnitude. The most significant driver was Big Three's below plan operating performance. And lower volume in returnable transport packaging. Turning to the balance sheet, I want to highlight several dynamics that underscore our financial stability and the continued progress we are making on our capital structure priorities. Total assets at the end of the first quarter were $ 217 million, essentially flat compared to $ 216.7 million at fiscal year end. On working capital, we ended the quarter at $ 71.3 million, compared to $ 66.1 million in the prior year period, with a current ratio of 3.5 times. Inventory declined $ 3.3 million to $ 53.1 million, representing approximately a 5.9% reduction from year end. Accounts receivables were $ 32.6 million, up modestly from $ 30.1 million at year-end. On debt and leverage, we continue to reduce our long-term debt, ending the quarter with a balance of $ 33 million at quarter-end. Our total debt-to-equity ratio improved 26.6%, down substantially from 34.3% at the end of first quarter of 2025.

接著談調整後 EBITDA。2026 年第一季，持續營業單位的調整後 EBITDA 為 300 萬美元，占淨銷售額 5%；相較前一年同期為 460 萬美元，占淨銷售額 7.3%。毛利率下滑 230 個基點反映兩項因素，並依影響程度排序：最主要的驅動因素是 Big Three 的營運表現低於計畫，其次是可重複使用運輸包裝的出貨量較低。再看資產負債表，我想強調幾項動態，凸顯我們的財務穩健性，以及我們在資本結構優先事項上持續取得的進展。第一季末總資產為 2.17 億美元，與會計年度年末的 2.167 億美元基本持平。就營運資金而言，本季末為 7,130 萬美元，較前一年同期的 6,610 萬美元增加，流動比率為 3.5 倍。存貨減少 330 萬美元至 5,310 萬美元，較年末約下降 5.9%。應收帳款為 3,260 萬美元，較年末的 3,010 萬美元小幅上升。就負債與槓桿而言，我們持續降低長期負債，季末餘額為 3,300 萬美元。我們的總負債對股東權益比率改善至 26.6%，較 2025 年第一季末的 34.3% 顯著下降。

We remain comfortably within all of our covenants under our Citizens Bank credit agreement, and we have $ 67 million of availability on our $ 100 million revolving facility that provides us with significant financial flexibility as we look ahead. Cash generated from operations in the quarter was $ 3.5 million, a strong reversal from the $ 1.9 million usage in the prior year first quarter. Capital expenditures were $ 0.9 million. Consistent with our capital allocation policy, we repurchased approximately 21,000 shares during the quarter. To summarize, our strengthening balance sheet and borrowing capacity gives us the flexibility to fund organic growth.

我們仍完全符合 Citizens Bank 信貸協議下的所有財務約束條款（covenants），且在 1 億美元的循環授信額度下仍有 6,700 萬美元可用額度，為我們展望未來提供顯著的財務彈性。本季營運活動產生現金為 350 萬美元，較前一年第一季使用現金 190 萬美元大幅反轉。資本支出為 90 萬美元。依我們的資本配置政策，本季我們回購約 21,000 股。總結而言，我們持續強化的資產負債表與借款能力，讓我們具備資金彈性以支持內生成長。

And selectively pursue disciplined M&A pipeline. That completes my financial review. I'll now turn the call back to Ryan. Ryan?

並有選擇性地推進具紀律的併購（M&A）案源。以上完成我的財務回顧。接下來我把電話交回給 Ryan。Ryan？

Thanks, Nic. Before we open the line to questions, I want to leave you a couple of key takeaways. Our corporate strategy is unchanged, and we are staying the course. We continue to deleverage and strengthen the balance sheet. The commercial orientation of our businesses remains focused on an organic growth mindset. We are investing in the people, processes, and programs to support that orientation, and our pipeline of potential acquisition targets is filling, and we are well positioned to move decisively when the right opportunity meets our criteria. With that, I'll open it up for questions.

謝謝，Nic。在我們開放提問之前，我想留下幾個重點結論。我們的公司策略不變，並將持續按既定方向前進。我們將持續去槓桿並強化資產負債表。我們各項業務的商業導向仍聚焦於內生成長的思維。我們正投資於人員、流程與計畫以支持該導向，而我們潛在收購標的的管線也正在充實；當合適的機會符合我們的標準時，我們已具備果斷行動的良好條件。接下來開放提問。

Thank you very much. At this time, we'll be conducting our question-and-answer session. (Oparetor Instructions). Hey, I'm not seeing anyone in the queue at this moment.

非常感謝。現在我們將進行問答環節。（Oparetor Instructions）。嘿，我目前沒有看到佇列中有任何人。

There are no further questions at this time. I would like to turn the floor back over to Ryan Schroeder for closing comments.

目前沒有進一步的問題。我想把時間交回給 Ryan Schroeder 作結語。

Thank you for attending our call today, and I would like to thank you for your continued support in Eastern. Please reach out to me or Nic if you have any additional questions. We look forward to updating you in the next quarter.

感謝各位今天參與我們的電話會議，也感謝各位持續支持 Eastern。如有任何其他問題，請與我或 Nic 聯繫。我們期待在下一季向各位更新。

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

非常感謝。今天的電話會議到此結束。您現在可以掛斷電話線，祝您有美好的一天。感謝您的參與。