The Eastern Company Reports Third Quarter 2024 Results

About this update from Eastern Company (the)

Net sales from continuing operations increase to $71.3 million in Q3 2024 compared to $62.0 million in Q3 2023 Gross margin from continuing operations increases to 25.5% in Q3 2024 compared to 24.9% in Q3 2023 Earnings per diluted share from continuing operations increase 36% to $0.75 in Q3 2024 compared to $0.55 in Q3 2023 Eastern advances its business transformation by reporting Big 3 Mold business as discontinued operations Eastern announces transition to new CEO – Ryan Schroeder SHELTON, CT / ACCESSWIRE / November 5, 2024 / The Eastern Company ("Eastern" or the "Company") (NASDAQ:EML), an industrial manufacturer of unique engineered solutions serving commercial transportation, logistics, and other industrial markets, today announced the results of operations for the third fiscal quarter ended September 28, 2024 and that its Board of Directors has named Ryan Schroeder the Company's next Chief Executive Officer, effective November 6, 2024 . Mr. Schroeder , a seasoned executive with a proven history of leading manufacturing companies to sustained long-term growth, will succeed Mark Hernandez as CEO. James Mitarotonda , Chair of the Board of Directors, said "We are pleased that Ryan will be joining Eastern as CEO. He is a seasoned executive with a history of leading manufacturing companies to peer-beating, sustained long-term growth, and he will succeed Mark Hernandez , who has separated from service as CEO, a position he has held since 2023, and has resigned from the Company's Board of Directors after having served in such capacity since 2022. Ryan brings a track record for growing businesses both organically and through acquisition, most recently as CEO at Plaskolite LLC . Prior to that, Ryan spent four years at IMI Norgen as president, leading approximately 2,200 employees across 17 facilities, and prior to joining IMI Norgen, he spent 12 years at 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." Board Chairman James Mitarotonda continued, "Eastern turned in an excellent operating performance for the third quarter, with notable year-over-year improvements in the Company's net sales, gross margin, operating profit, and earnings per share from continuing operations. These results, in tandem with a 13% year-over-year increase in backlog, demonstrate the success of the many steps we have taken under our value-creation program. "During the quarter, we continued to evaluate Eastern's business portfolio for long-term performance. As a result of this exercise, we determined that the Big 3 Mold business no longer fits with our long-term strategy, and we recently began taking steps to sell that business. Making this structural change to our portfolio will enable us to focus all of our resources on our best-in-class manufacturing and assembly capabilities in commercial vehicle, automotive, and other industrial end markets." Mr. Mitarotonda concluded, "With these steps, we have advanced the most important elements of the business transformation program. We expect to continue benefiting from our "One Eastern" strategy in the fourth quarter of 2024 and beyond, as well as from the trend toward dual-sourcing currently underway as industry players take further actions to protect their supply chain even as demand is currently softening in the commercial vehicle market. In summary, Eastern is now moving forward as a stronger organization that is well positioned to reach our key goal of consistently delivering solid performance and creating shareholder value." Discontinued Operations In accordance with the Company's decision to sell the Big 3 Mold business, the income statement results of the Big 3 Mold business have been reclassified as discontinued operations. Included in discontinued operations for the third quarter of 2024 are a $0.8 million operating loss and a $23.1 million write-down of the Big 3 Mold business to fair value. Third Quarter and Nine Months 2024 Financial Results The following analysis excludes discontinued operations. Net sales for the third quarter of 2024 increased 15% to $71.3 million from $62.0 million for the corresponding period in 2023. Net sales for the first nine months of 2024 increased 6% to $206.1 million from $195.1 million in the corresponding period last year. Sales increased in the third quarter of 2024 primarily due to increased demand for returnable transport packaging products, truck mirror assemblies, and truck accessories of $7.4 million , $1.2 million , and $0.7 million , respectively. Sales increases in the first nine months of 2024 were driven by increased demand for truck mirror assemblies and returnable transport packaging products of $13.3 million and $4.6 million respectively, offset by lower demand for truck accessories of $6.9 million . Our backlog as of September 28, 2024 increased 13% to $97.2 million from $86.2 million as of September 30, 2023 , primarily driven by increased orders for various truck mirror assemblies of $11.6 million and returnable transport packaging products of $3.2 million . Gross margin as a percentage of sales was 25.5% in the third quarter of 2024 and 25.2% in the first nine months of 2024 compared to 24.9% in the third quarter of 2023 and 22.9% in the first nine months of 2023. Our gross margin in the third quarter of 2024 primarily reflects the impact of price increases to customers to recover increases in raw material costs and cost savings initiatives. Selling, general and administrative expenses increased $1.9 million , or 22.1%, in the third quarter of 2024 when compared to the third quarter of 2023 primarily due to higher payroll-related expenses of $1.2 million , legal and professional expenses of $0.3 million , travel expenses of $0.1 million , and other selling and administrative expenses of $0.3 million . Selling and administrative expenses increased $2.0 million , or 6.8%, in the first nine months of 2024 when compared to the corresponding period in 2023 primarily due to higher payroll-related expenses of $1.7 million and other administrative costs. Other income and expense increased $0.1 million in the third quarter of 2024 and decreased $1.1 million in the first nine months of 2024 when compared to the corresponding periods in 2023. The increase in other income and expense of $0.1 million in the third quarter of 2024 was primarily driven by lower pension expense of $0.1 million when compared to the third quarter of 2023. The decrease in other income and expense of $1.1 million for the first nine months of 2024 when compared to the corresponding period in 2023 was primarily driven by $0.3 million lower pension expense in the second quarter of 2023, and an unfavorable final working capital adjustment of $0.4 million related to the sale of the Greenwald business in the first quarter of 2023, partially offset by a $1.6 million favorable adjustment for the final settlement of our swap agreement with Santander in the second quarter of 2023. Net income for the third quarter of fiscal 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 comparable period in 2023. In the first nine months of 2024, net income was $11.7 million , or $1.87 per diluted share, compared to net income of $7.8 million , or $1.24 per diluted share, for the comparable period in 2023. Adjusted net income from continuing operations (a non-GAAP measure) for the third quarter of fiscal 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 comparable period in 2023. For the nine months ended September 29, 2024 , adjusted net income from continuing operations was $11.7 million , or $1.87 per diluted share, compared to $9.1 million , or $1.44 per diluted share for the comparable 2023 period. Adjusted EBITDA from continuing operations (a non-GAAP measure) for the third quarter of fiscal 2024 was $8.7 million compared to adjusted EBITDA from continuing operations of $6.7 million for the 2023 period. For the nine months ended September 28, 2024 , adjusted EBITDA from continuing operations was $21.3 million compared to $18.5 million in the 2023 period. See "Non-GAAP Financial Measures" below and the reconciliation table accompanying this release. During the third quarter of fiscal 2024, the Company repurchased 50,000 shares of common stock under its share repurchase program authorized in August 2023 . Conference Call and Webcast The Eastern Company will host a conference call to discuss its results for the third quarter of 2024 and other matters on Wednesday, November 6, 2024 at 11:00 AM 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 594322. Participants can also join via the web at https://www.webcaster4.com/Webcast/Page/1757/51396 About The Eastern Company The Eastern Company manages industrial businesses that design, manufacture and sell unique engineered solutions to 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 impact of higher raw material and component costs and cost inflation, supply chain disruptions and shortages, particularly with respect to steel, plastics, scrap iron, zinc, copper, and electronic components; delays in delivery of our products to our customers; the impact of global economic conditions and rising interest rates, and more specifically conditions in the automotive, construction, aerospace, energy, oil and gas, transportation, electronic, and general industrial markets, including the impact, length and degree of economic downturns on the customers and markets we serve and demand for our products, reductions in production levels, the availability, terms and cost of financing, including borrowings under credit arrangements or agreements, the potential impact of bank failures on our ability to access financing or capital markets, and the impact of market conditions on pension plan funded status; restrictions on operating flexibility imposed by the agreement governing our credit facility; risks associated with doing business overseas, including fluctuations in exchange rates and the inability to repatriate foreign cash, the impact on cost structure and on economic conditions as a result of actual and threatened increases in trade tariffs and the impact of political, economic, and social instability; the inability to achieve the savings expected from global sourcing of materials; lower-cost competition; our ability to design, introduce and sell new or updated products and related components; market acceptance of our products; the inability to attain expected benefits from acquisitions or the inability to effectively integrate acquired businesses and achieve expected synergies; costs and liabilities associated with environmental compliance; the impact of climate change, natural disasters, geopolitical events and elections, including a change in administration from the upcoming U.S. presidential election, and public health crises, including pandemics (such as COVID-19) and epidemics, and any related Company or government policies or actions; military conflict (including the Russia / Ukraine conflict, the conflict in the Middle East , the possible expansion of such conflicts and geopolitical consequences) or terrorist threats and the possible responses by the U.S. and foreign governments; failure to protect our intellectual property; cyberattacks; and materially adverse or unanticipated legal judgments, fines, penalties, or settlements. 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 Company's Annual Report on Form 10-K for the fiscal year ended December 30, 2023 , which was filed with the Securities and Exchange Commission on March 12, 2024 , 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 Earnings Per Share from Continuing Operations, Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontinued 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. 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 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. 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. 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 from Discontinued Operations is defined as net income from discontinued 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. Adjusted EBITDA from Discontinued 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. 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 Nicholas Vlahos 203-729-2255 THE EASTERN COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Net sales $ 71,274,757 $ 62,001,347 $ 206,068,490 $ 195,062,061 Cost of products sold (53,085,087 ) (46,556,952 ) (154,161,980 ) (150,371,589 ) Gross margin 18,189,670 15,444,395 51,906,510 44,690,472 Product development expense (1,077,930 ) (1,425,159 ) (3,739,214 ) (4,257,468 ) Selling and administrative expenses (10,316,788 ) (8,452,163 ) (31,014,022 ) (29,051,436 ) Operating profit 6,794,952 5,567,073 17,153,274 11,381,568 Interest expense (709,680 ) (854,223 ) (2,049,655 ) (2,059,912 ) Other (expense) income (82,703 ) (135,839 ) (92,415 ) 1,025,582 Income from continuing operations before income taxes 6,002,569 4,577,011 15,011,204 10,347,238 Income tax expense (1,333,771 ) (1,113,587 ) (3,335,489 ) (2,574,393 ) Net income from continuing operations $ 4,668,798 $ 3,463,424 $ 11,675,715 $ 7,772,845 Discontinued Operations (see note B) Loss from operations of discontinued unit $ (766,990 ) $ (530,764 ) $ (2,750,844 ) $ (3,600,060 ) Loss on classification as held for sale (23,087,775 ) - (23,087,775 ) - Income tax benefit 3,888,522 129,298 4,320,904 895,695 Loss on discontinued operations $ (19,966,243 ) $ (401,466 ) $ (21,517,715 ) $ (2,704,365 ) Net (loss) income $ (15,297,445 ) $ 3,061,958 $ (9,842,000 ) $ 5,068,480 Earnings per share from continuing operations: Basic $ 0.75 $ 0.55 $ 1.88 $ 1.25 Diluted $ 0.75 $ 0.55 $ 1.87 $ 1.24 Loss per share from discontinued operations: Basic $ (3.22 ) $ (0.06 ) $ (3.46 ) $ (0.43 ) Diluted $ (3.21 ) $ (0.06 ) $ (3.45 ) $ (0.43 ) Total (loss) earnings per share: Basic $ (2.47 ) $ 0.49 $ (1.58 ) $ 0.82 Diluted $ (2.46 ) $ 0.49 $ (1.58 ) $ 0.81 Cash dividends per share $ 0.11 $ 0.11 $ 0.33 $ 0.33 THE EASTERN COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS September 28, 2024 December 30, 2023 (unaudited) ASSETS Current Assets Cash and cash equivalents $ 7,670,541 $ 8,048,127 Marketable securities 2,034,602 986,477 Accounts receivable, less allowances: 2024 - $470,870 ; 2023 - $534,476 45,999,803 34,204,581 Inventories 58,125,362 58,396,679 Current portion of notes receivable 239,261 573,269 Prepaid expenses and other assets 2,356,524 5,443,778 Current assets held for sale 9,643,534 4,583,797 Total Current Assets 126,069,627 112,236,708 Property, Plant and Equipment 59,890,704 52,684,476 Accumulated depreciation (31,095,676 ) (29,162,438 ) Property, Plant and Equipment, Net 28,795,028 23,522,038 Goodwill 58,576,197 58,576,198 Trademarks 3,946,651 3,914,409 Patents and other intangibles net of accumulated amortization 9,373,296 11,182,167 Long-term notes receivable, less current portion 238,002 374,932 Deferred Income Taxes 2,536,357 2,283,571 Right of Use Assets 14,645,336 17,064,137 Other Long-Term Assets 42,510 - Long-term assets held for sale - 22,885,041 Total Other Assets 89,358,349 116,280,455 TOTAL ASSETS $ 244,223,004 $ 252,039,201 THE EASTERN COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (continued) September 28, 2024 December 30, 2023 (unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $ 23,988,401 $ 24,554,117 Accrued compensation 5,142,966 5,194,830 Other accrued expenses 8,252,803 3,965,335 Current portion of operating lease liability 3,373,500 4,336,794 Current portion of finance lease liability 721,178 175,231 Current portion of long-term debt 3,228,935 2,871,870 Other current liabilities 578,071 - Current liabilities held for sale 2,541,189 1,635,549 Total Current Liabilities 47,827,043 42,733,726 Other long-term liabilities 640,724 730,970 Operating lease liability, less current portion 11,271,835 12,727,344 Finance lease liability, less current portion 3,050,529 715,669 Long-term debt, less current portion 41,487,366 41,063,865 Accrued postretirement benefits 594,167 554,758 Accrued pension cost 20,111,130 21,025,365 Long-term liabilities held for sale - 6,920 Total Liabilities 124,982,794 119,558,617 Shareholders' Equity Voting Preferred Stock, no par value: Authorized and unissued: 1,000,000 shares Nonvoting Preferred Stock, no par value: Authorized and unissued: 1,000,000 shares Common Stock, no par value, Authorized: 50,000,000 shares 34,864,634 33,950,859 Issued: 9,127,700 shares as of 2024 and 9,091,815 shares as of 2023 Outstanding: 6,183,179 shares as of 2024 and 6,217,370 shares as of 2023 Treasury Stock: 2,894,521 shares as of 2024 and 2,874,445 shares as of 2023 (25,196,598 ) (23,280,467 ) Retained earnings 132,912,235 144,805,168 Accumulated other comprehensive loss: Foreign currency translation (1,394,461 ) (866,599 ) Unrealized loss on foreign currency swap, net of tax (535,561 ) - Unrecognized net pension and postretirement benefit costs, net of tax (21,410,039 ) (22,128,377 ) Accumulated other comprehensive loss (23,340,061 ) (22,994,976 ) Total Shareholders' Equity 119,240,210 132,480,584 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 244,223,004 $ 252,039,201 THE EASTERN COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended September 28, 2024 September 30, 2023 Operating Activities Net (loss) income $ (9,842,000 ) $ 5,068,480 Less: Loss from discontinued operations (21,517,715 ) (2,704,365 ) Income from continuing operations $ 11,675,715 $ 7,772,845 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,266,038 3,914,160 Reduction in carrying amount of ROU assets 2,418,801 3,579,223 Unrecognized pension and postretirement benefits (353,257 ) 635,677 Loss on sale of equipment and other assets 53,311 331,474 Provision for doubtful accounts (24,570 ) (88,353 ) Stock compensation expense 913,775 151,300 Changes in operating assets and liabilities: Accounts receivable (11,739,823 ) 1,069,630 Inventories 300,720 4,501,969 Prepaid expenses and other 2,874,825 1,108,094 Other assets (236,934 ) (262,212 ) Accounts payable 693,653 1,821,223 Accrued compensation (190,904 ) 353,773 Change in operating lease liability (2,418,801 ) (3,579,223 ) Other accrued expenses 115,403 (3,152,809 ) Net cash provided by operating activities 8,347,952 18,156,771 Investing Activities Marketable securities (999,960 ) - Business acquisition - (547,638 ) Payments received from notes receivable 470,937 2,265,730 Proceeds from sale of equipment 18,925 - Purchases of property, plant, and equipment (7,634,265 ) (4,089,705 ) Net cash used in investing activities (8,144,363 ) (2,371,613 ) Financing Activities Proceeds from new long-term debt financing - 60,000,000 Principal payments on long-term debt (2,365,500 ) (74,919,004 ) Proceeds (payments) on short term borrowings (revolver) 3,000,000 (300,029 ) Financing leases, net 2,819,262 674,558 Purchase common stock for treasury (1,916,130 ) (245,546 ) Dividends paid (2,050,933 ) (2,069,043 ) Net cash used in financing activities (513,301 ) (16,859,064 ) Discontinued Operations Cash provided by operating activities 411,778 1,092,876 Cash used in investing activities (217,101 ) (628,968 ) Cash provided by discontinued operations 194,677 463,908 Effect of exchange rate changes on cash (67,874 ) (36,737 ) Net change in cash and cash equivalents (182,909 ) (646,735 ) Cash and cash equivalents at beginning of period 8,299,453 10,187,521 Cash and cash equivalents at end of period ?? $ 8,116,544 $ 9,540,786 Supplemental disclosure of cash flow information Interest $ 2,443,448 $ 2,574,890 Income taxes 3,945,295 1,321,170 Non-cash investing and financing activities Right of use asset 2,418,801 3,579,222 Lease liability (462,004 ) (4,484,838 ) ?? includes cash from assets held for sale of $0.4 million as of September 28, 2024 and $0.7 million as of September 30, 2023 Reconciliation of Non-GAAP Measures Adjusted Net Income from Continuing Operations and Adjusted Earnings per Share from Continuing Operations Calculation For the Three and Nine Months ended September 28, 2024 and September 30, 2023 ( $000 's) Three Months Ended Nine Months Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Net income from continuing operations as reported per generally accepted accounting principles (GAAP) $ 4,669 $ 3,463 $ 11,676 $ 7,773 Earnings per share from continuing operations as reported under generally accepted accounting principles (GAAP): Basic $ 0.75 $ 0.55 $ 1.88 $ 1.25 Diluted $ 0.75 $ 0.55 $ 1.87 $ 1.24 Adjustments: Severance and accrued compensation - - - 1,799 a Greenwald final sale adjustment - - - 390 b Non-GAAP tax impact of adjustments (1) - - - (909 ) Total adjustments (non-GAAP) $ - $ - $ - $ 1,280 Adjusted net income from continuing operations (non-GAAP) $ 4,669 $ 3,463 $ 11,676 $ 9,053 Adjusted earnings per share from continuing operations (non-GAAP): Basic $ 0.75 $ 0.56 $ 1.88 $ 1.45 Diluted $ 0.75 $ 0.55 $ 1.87 $ 1.44 (1) We estimate the tax effect of the items identified to determine a non-GAAP annual effective tax rate applied to the pre-tax amount in order to calculate the non-GAAP provision for income taxes a) Severance expenses associated with accrued compensation and severance related to the elimination of the Chief Operating Officer position and the departure of the Chief Executive Officer b) Final settlement of working capital adjustment associated with Greenwald sale Reconciliation of Non-GAAP Measures Calculations of Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontinued Operations and Adjusted EBITDA For the Three and Nine Months ended September 28, 2024 and September 30, 2023 ( $000 's) Three Months Ended Nine Months Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Net income from continuing operations as reported per generally accepted accounting principles (GAAP) $ 4,669 $ 3,463 $ 11,676 $ 7,773 Interest expense 710 854 2,050 2,060 Provision for income taxes 1,334 1,114 3,335 2,574 Depreciation and amortization 2,033 1,317 4,266 3,914 Severance and accrued compensation - - - 1,799 a Greenwald final sale adjustment - - - 390 b Adjusted EBITDA from continuing operations (non-GAAP) $ 8,745 $ 6,748 $ 21,327 $ 18,510 Net income from discontinued operations as reported per generally accepted accounting principles (GAAP) $ (19,966 ) $ (401 ) $ (21,518 ) $ (2,704 ) Interest expense 177 214 512 515 Provision for income taxes (3,889 ) (129 ) (4,321 ) (896 ) Depreciation and amortization 546 534 1,595 1,558 Loss on classification as held for sale 23,088 c - 23,088 c - Adjusted EBITDA from discontinued operations (non-GAAP) $ (44 ) $ 217 $ (644 ) $ (1,527 ) Net income as reported per generally accepted accounting principles (GAAP) $ (15,297 ) $ 3,062 $ (9,842 ) $ 5,068 Interest expense 887 1,068 2,562 2,575 Provision for income taxes (2,555 ) 984 (985 ) 1,679 Depreciation and amortization 2,579 1,851 5,861 5,472 Severance and accrued compensation - - - 1,799 a Greenwald final sale adjustment - - - 390 b Loss on classification as held for sale 23,088 c - 23,088 c - Adjusted EBITDA (non-GAAP) $ 8,701 $ 6,965 $ 20,683 $ 16,983 a) Severance expenses associated with accrued compensation and severance related to the elimination of the Chief Operating Officer position and the departure of the Chief Executive Officerb) Final settlement of working capital adjustment associated with Greenwald salec) Impact of classifying Big 3 Mold business as held for sale SOURCE: The Eastern Company View the original press release on accesswire.com

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