The Eastern Company, www.easterncompany.com – founded in 1858 and widely known as an established manufacturer of high-quality security and industrial hardware, yesterday issued a financial report on its operations in 2Q and the six-month period for FY10.
Sales and Income data offers a very clear picture of strong demand in each segment:
• 2Q Sales, up 16% to $32.6M (compared to $28.1M in 2Q FY09)
• 2Q Net Income, up 67% to $1.4M or $0.23 per diluted share ($842k/$0.13)
• Six-month Net Sales up 12% to $63.5M ($56.5M)
• Six-month Net Income up 110% to $2.4M or $0.40 per diluted share (loss of $240k/$0.04)
Chairman, President and CEO of EML, Leonard F. Leganza, beamed at the data, which shows an “upward trend which began in the first quarter of this year”, and noted increased sales in every single market EML serves as evidence that (irrespective of future market conditions) the Company has a solid business plan/structure, good product uptake with strong market presence, and clear objectives for FY10.
Projecting continued improvement and increases in sales, as well as growth across all segments and earnings for the year, Leganza inferred that “cost and expense reductions” implemented in 2009 were driving strong organic growth and efficiency across the board.
The Eastern Company has operations in the U.S., Canada, China, Mexico, and Taiwan, with a diverse manufacturing base structured on a modular fashion that allows for adaptation and market responsiveness:
• Security Products – the Greenwald Industries Division manufactures coin acceptors, metering systems (laundromats, etc.) and new “Smart Card” payment systems; The Illinois Lock Company/CCL Security Products Division makes keyless locks for sale under established brand names like Huski, Presto and Sesamee; World Lock and World Security gives EML a solid footprint in Asian markets and a swifter hand in distribution to a global economy
• Industrial Hardware – headed by the Eberhard Division, which has been an industry leader for over 100 years, the Industrial Hardware Group manufactures a wide range of latches, locks and various security hardware for the transportation and industrial sectors
• Metal Products – the Frazer & Jones Division is a recognized leader in manufacturing anchoring devices used to support roofs (ceilings) in underground mining
Mr. Leganza detailed some of the fundamentals for each segment:
• Security Products Group – strong demand in a majority of served markets despite relative softening of commercial laundry markets, combined with the roll-out of advanced coin recognition and card systems in 2Q FY10, bolstering new market opportunities
• Industrial Hardware Group – strong demand for lightweight composite panels, increase in demand for Class 8 sleeper cab and delivery truck applications, in addition to the introduction of new products
• Metal Products Group – rising demand for coal driving mining industry growth in conjunction with a $2.5M production improvement initiative (major installations in early August) that will not disrupt service
Mr. Leganza cited the sufficiency of current liquidity plans to service debt, replace/upgrade capital equipment, and support dividend policies, and pledged to redouble efforts to maintain liquidity throughout 2010, improve operating results, and enable the pursuit of EML’s strategic vision.
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