The Eastern Company Reports Fourth Quarter and Full Year 2025 Results

About this update from Eastern Company (the)

SHELTON, CT / ACCESS Newswire / March 3, 2026 / The Eastern Company ("Eastern" or the "Company") (NASDAQ:EML), an industrial manufacturer of engineered solutions serving commercial transportation, logistics, and other industrial markets, today announced its results of operations for the fourth fiscal quarter and full year ended January 3, 2026. "2025 was a year defined by market headwinds we could not control and operational actions we could," stated Ryan Schroeder, President and CEO. "Our primary end-markets - heavy-duty truck and automotive - remained under pressure throughout the year, resulting in our financial performance for both the fourth quarter and full year falling far short of expectations. What we could control, however, we did. Among other things, we restructured our cost base, generating $4 million in annualized savings, and mitigated the impact of approximately $10 million in tariffs through increased pricing and cost reductions. The result was a year that remained profitable despite significant volume declines. Fourth quarter gross margin decreased by only 20 basis points despite a decline of over 13% in sales, and we finished the year with net income of $6.0. million and adjusted EBITDA of $19.4 million, which we believe demonstrates the effectiveness of our restructuring actions and the resilience of our operating model. "The decisive actions we took over the course of 2025 - the restructuring initiatives, footprint optimization, cost-alignment measures, and improved accountability - were investments in Eastern's future earnings power. Equally important, we remained disciplined stewards of capital throughout the year by reducing outstanding debt by $8.7 million, returning $2.7 million to shareholders through dividends, and repurchasing $3.7 million of common stock," continued Mr. Schroeder. "Above all, we maintained a strong customer focus as our teams invested in product development and innovation to address evolving customer needs, expanded relationships across a broader customer base, and pursued opportunities in new end markets to capture emerging growth. "We are confident that the restructuring and operational changes implemented in 2025 establish a solid foundation for Eastern's next chapter, which is firmly focused on pursuing disciplined growth. Looking ahead, the Company's strategy is centered on: Mr. Schroeder concluded, "We enter 2026 with a leaner cost structure and a new $100 million credit facility providing increased financial flexibility and additional capital to support growth - both organically and through acquisitions. We are seeing early signs of stabilization in the heavy-duty truck market along with increased activity around new automotive model launches. As truck demand recovers and our customers ramp up new programs to replace our country's aging Class 8 fleet, we believe Eastern is well positioned to translate improving market conditions into meaningfully stronger financial results." Fourth Quarter and Full Year 2025 Financial Results The following analysis excludes discontinued operations. Net sales in the fourth quarter of 2025 decreased 13.7% to $57.5 million from $66.7 million in the fourth quarter of 2024. Net sales for fiscal year 2025 decreased 9% to $249.0 million from $272.8 million in 2024. In both periods, sales decreases were primarily due to lower shipments of returnable transport packaging products and truck mirror assemblies. Our backlog as of January 3, 2026 decreased 10.5% to $81.1 million from $89.1 million on December 28, 2024, primarily due to decreased orders for returnable transport packaging products. Gross margin as a percentage of net sales was 22.8% for the fourth quarter of 2025 and 22.9% for the full year of 2025 compared to 23.0% for the fourth quarter of 2024 and 24.7% for the full year of 2024. The decrease primarily reflects the impact of higher material costs on lower sales volumes. Selling and administrative expenses in the fourth quarter of 2025 decreased 10.5% compared to the fourth quarter of 2024. As a percentage of net sales, selling and administrative expenses were 17.4% for the fourth quarter of 2025 compared to 16.8% for the corresponding period in 2024. The decrease was primarily the result of decreased commissions, legal fees and personnel-related costs. Selling and administrative expenses for the full year of 2025 were essentially flat relative to 2024; however, in 2025, selling and administrative expenses included $2.5 million of restructuring charges. Net income for the fourth quarter of 2025 was $1.2 million, or $0.19 per diluted share, from $1.6 million, or $0.26 per diluted share, for the same period in 2024. Net income for 2025 decreased 57% to $6.0 million, or $0.98 per diluted share, from $13.2 million, or $2.13 per diluted share, in 2024. Adjusted net income from continuing operations (a non-GAAP measure) for the fourth quarter of fiscal 2025 was $1.9 million, or $0.31 per diluted share, compared to adjusted net income from continuing operations of $2.6 million, or $0.42 per diluted share, for the comparable period in 2024. For the twelve months ended January 3. 2026, adjusted net income from continuing operations was $8.4 million, or $1.37 per diluted share, compared to $14.2 million, or $2.29 per diluted share, for the comparable 2024 period. Adjusted EBITDA from continuing operations (a non-GAAP measure) for the fourth quarter of fiscal 2025 was $4.6 million compared to Adjusted EBITDA from continuing operations of $5.8 million for the comparable 2024 period. For the twelve months ended January 3, 2026, adjusted EBITDA from continuing operations was $19.4 million compared to $26.3 million for the comparable period in 2024. See "Non-GAAP Financial Measures" below and the reconciliation table accompanying this release. During the fourth quarter of fiscal 2025, the Company repurchased 35,701 shares of common stock under its share repurchase program authorized in April 2025, and repurchased 153,663 shares in fiscal 2025 (constituting approximately 2.5% of our outstanding shares of common stock). Conference Call and Webcast The Eastern Company will host a conference call to discuss its results for the fourth quarter and full year of 2025 and related matters on Wednesday, March 4, 2026 at 9:00AM Eastern Time. Participants can access the conference call by phone at 888-506-0062 (toll-free in the US and Canada) or 973-528-0011 (international), using access code 183748. Participants can also join via the web at https://www.webcaster5.com/Webcast/Page/1757/53645 . About The Eastern Company The Eastern Company manages businesses that design, manufacture and sell engineered solutions for industrial markets. Eastern's businesses operate in industries that offer long-term macroeconomic growth opportunities. The Company operates from locations in the U.S., Canada, Mexico, Taiwan, and China. More information on the Company can be found at www.easterncompany.com . Safe Harbor for Forward-Looking Statements Statements contained in this press release that are not based on historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terminology such as "would," "should," "could," "may," "will," "expect," "believe," "estimate," "anticipate," "intend," "continue," "plan," "potential," "opportunities," or similar terms or variations of those terms or the negative of those terms. There are many factors that affect the Company's business and the results of its operations and that may cause the actual results of operations in future periods to differ materially from those currently expected or anticipated. These factors include: The Company is also subject to other risks identified and discussed in Part I, Item 1A, Risk Factors , and in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations , of the 2025 Form 10-K which was filed with the Securities and Exchange Commission on March 3, 2026, and that may be identified from time to time in our quarterly reports on Form 10-Q, current reports on Form 8-K and other filings we make with the SEC. Although the Company believes it has an appropriate business strategy and the resources necessary for its operations, future revenue and margin trends cannot be reliably predicted, and the Company may alter its business strategies to address changing conditions. Also, the Company makes estimates and assumptions that may materially affect reported amounts and disclosures. These relate to valuation allowances for accounts receivable and excess and obsolete inventories, accruals for pensions and other postretirement benefits (including forecasted future cost increases and returns on plan assets), provisions for depreciation (estimating useful lives), uncertain tax positions, and, on occasion, accruals for contingent losses. The Company undertakes no obligation to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise, except as required by law. Non-GAAP Financial Measures The non-GAAP financial measures we provide in this press release should be viewed in addition to, and not as an alternative for, results prepared in accordance with U.S. GAAP. To supplement the condensed consolidated financial statements prepared in accordance with U.S. GAAP, we have presented Adjusted Net Income from Continuing Operations, Adjusted Net Income, Adjusted Earnings Per Share from Continuing Operations, Adjusted EBITDA from Continuing Operations, and Adjusted EBITDA, which are considered non-GAAP financial measures. The non-GAAP financial measures presented may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures in the same way. These measures are not substitutes for their comparable U.S. GAAP financial measures, such as net sales, net income, diluted earnings per share, or other measures prescribed by U.S. GAAP, and there are limitations to using non-GAAP financial measures. Adjusted Net Income from Continuing Operations is defined as net income from continuing operations excluding, when incurred, gains or losses that we do not believe reflect our ongoing operations, including, for example, the impacts of impairment losses, gains/losses on the sale of subsidiaries, property and facilities, transaction expenses primarily relating to acquisitions and divestitures, factory start-up costs, factory relocation expenses, executive severance, and restructuring costs. This measure also excludes credit agreement refinancing expenses because we do not believe these expenses are reflective of our ongoing operations. Adjusted Net Income from Continuing Operations is a tool that can assist management and investors in comparing our performance on a consistent basis across periods by removing the impact of certain items that management believes do not directly reflect our underlying operating performance. Adjusted Net Income is defined as net income excluding, when incurred, gains or losses that we do not believe reflect our ongoing operations, including, for example, the impacts of impairment losses, gains/losses on the sale of subsidiaries, property and facilities, transaction expenses primarily relating to acquisitions and divestitures, factory start-up costs, factory relocation expenses, executive severance, and restructuring costs. This measure also excludes credit agreement refinancing expenses because we do not believe these expenses are reflective of our ongoing operations. Adjusted Net Income is a tool that can assist management and investors in comparing our performance on a consistent basis across periods by removing the impact of certain items that management believes do not directly reflect our underlying operating performance. Adjusted Earnings Per Share from Continuing Operations is defined as earnings per share from continuing operations excluding, when incurred, certain per share gains or losses that we do not believe reflect our ongoing operations, including, for example, the impacts of impairment losses, gains/losses on the sale of subsidiaries, property and facilities, transaction expenses primarily relating to acquisitions and divestitures, factory start-up costs, factory relocation expenses, executive severance, and restructuring costs. This measure also excludes credit agreement refinancing expenses because we do not believe these expenses are reflective of our ongoing operations. We believe that Adjusted Earnings Per Share from Continuing Operations provides important comparability of underlying operational results, allowing investors and management to access operating performance on a consistent basis from period to period. Adjusted EBITDA from Continuing Operations is defined as net income from continuing operations before interest expense, provision for income taxes, and depreciation and amortization and excluding, when incurred, the impacts of certain losses or gains that we do not believe reflect our ongoing operations, including, for example, impairment losses, gains/losses on sale of subsidiaries, property and facilities, transaction expenses primarily relating to acquisitions and divestitures, factory start-up costs, factory relocation expenses, executive severance, and restructuring expenses. This measure also excludes credit agreement refinancing expenses because we do not believe these expenses are reflective of our ongoing operations. Adjusted EBITDA from Continuing Operations is a tool that can assist management and investors in comparing our performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our underlying operations. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization and excluding, when incurred, the impacts of certain losses or gains that we do not believe reflect our ongoing operations, including, for example, impairment losses, gains/losses on sale of subsidiaries, property and facilities, transaction expenses primarily relating to acquisitions and divestitures, factory start-up costs, factory relocation expenses, executive severance, and restructuring expenses. This measure also excludes credit agreement refinancing expenses because we do not believe these expenses are reflective of our ongoing operations. Adjusted EBITDA is a tool that can assist management and investors in comparing our performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our underlying operations. Management uses such measures to evaluate performance period over period, to analyze the underlying trends in our business, to assess our performance relative to our competitors, and to establish operational goals and forecasts that are used in allocating resources. These financial measures should not be considered in isolation from, or as a replacement for, U.S. GAAP financial measures. We believe that presenting non-GAAP financial measures in addition to U.S. GAAP financial measures provides investors greater transparency to the information used by our management for its financial and operational decision-making. We further believe that providing this information better enables our investors to understand our operating performance and to evaluate the methodology used by management to evaluate and measure such performance. Investor Relations Contacts The Eastern Company Ryan Schroeder or Nicholas Vlahos 203-729-2255 THE EASTERN COMPANY CONSOLIDATED STATEMENTS OF INCOME THE EASTERN COMPANY CONSOLIDATED BALANCE SHEETS THE EASTERN COMPANY CONSOLIDATED BALANCE SHEETS THE EASTERN COMPANY Consolidated Statements of Cash Flows 1 includes cash from assets held for sale of $0.8 million as of December 28, 2024 Reconciliation of Non-GAAP Measures Adjusted Net Income from Continuing Operations and Adjusted Earnings per Share from Continuing Operations Calculation For the Three and Twelve Months ended January 3, 2026 and December 28, 2024 ($000's) (1) Estimate of the tax effect of the items identified to determine a non-GAAP annual effective tax rate applied to the pretax amount in order to calculate the non-GAAP provision for income taxes a) Expenses associated with accrued compensation and severance related to the elimination of the former Chief Operating Officer position and the departure of two former Chief Executive Officers b) Expenses associated with severance and facilities related costs. c) Writeoff of fees associated with former credit agreement. Reconciliation of Non-GAAP Measures Adjusted EBITDA and Adjusted EBITDA from Continuing Operations Calculation For the Three and Twelve Months ended January 3, 2026 and December 28, 2024 ($000's) a) Expenses associated with accrued compensation and severance related to the elimination of the former Chief Operating Officer position and the departure of two former Chief Executive Officers b) Impact of classifying Big 3 Mold business as held for sale c) Expenses associated with severance and facilities related costs d) Writeoff of fees associated with former credit agreement. SOURCE: The Eastern Company View the original press release on ACCESS Newswire

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