Exhibit 99
FOR IMMEDIATE RELEASE
July 26, 2007
THE EASTERN COMPANY REPORTS RESULTS
FOR THE SECOND QUARTER AND SIX MONTHS OF 2007
Naugatuck, CT-The Eastern Company (AMEX-EML) today announced the results of its
operations for the second quarter and six months of 2007. Sales for the quarter
were $34.2 million, compared to $29.7 million for the same period in 2006, a 15%
increase, while net income was $728,000, or $0.12 per diluted share, compared to
the $1.2 million, or $0.21 per diluted share, reported in the second quarter of
2006, a 40% decrease.
Net sales for the six months of 2007 were $86.5 million compared to $57.5
million for the first six months of the previous year, a 50% increase. Year to
date earnings for the six month period ended June 30, 2007 were $7.5 million or
$1.25 per diluted share, compared to $2.4 million or $0.41 per diluted share for
the same period in 2006, a 218% increase.
Leonard F. Leganza, Chairman, President and CEO stated, "Sales and profits in
the six month period were impacted favorably by the sales of door latching
system components used in a military project which up-armored existing Humvees.
That project was completed during the first quarter of 2007. In addition, the
acquisitions of Royal Lock and Summit Manufacturing, which were completed in the
latter part of 2006, contributed approximately 11% of the sales increase in the
second quarter of 2007 and 10% of the increase in the six month period compared
to the prior year periods. Excluding the impact of the military project and
acquisitions, sales increases were experienced in each of our "core" business
segments in both the second quarter and six month periods compared to the 2006
periods. We continue to anticipate further increases in sales and earnings as
the year progresses."
Mr. Leganza continued, "Notwithstanding the sales increase in the second
quarter, which was our nineteenth consecutive quarter of improved year to year
sales, profit margins were negatively impacted by several factors. We continued
to face the challenge of offsetting the increased costs of raw materials, energy
and health care by price increases, improvements in efficiency or by global
outsourcing. The quarter also reflects the amortization of intangible expenses
related to the Royal Lock and Summit acquisitions. In our Security Products
segment, certain higher margin products were phased out by customers in favor of
other products with lower margins, and in our Metal Products segment, we
experienced some challenging problems in casting two new products related to
military orders which resulted in higher manufacturing costs and lower margins.
The Company believes the problems associated with these two products are now
behind us."
Mr. Leganza added, "As we noted in our first quarter 10-Q, the Industrial
Hardware segment was affected by the slowdown in sales of "sleeper cabs" for the
Class 8 truck market that was caused by the tighter emissions regulations which
were enacted in the first quarter. We expect the "sleeper cab" business to pick
up over the remainder of 2007."
Mr. Leganza concluded, "Despite the increased costs and other factors affecting
the second quarter, we continue to be optimistic about our current and future
opportunities and results. The Company is continuing to seek additional military
business including the retrofitting of additional Humvees, the Mine Resistant
Ambush Protected (MRAP) program and various other projects being developed. In
addition, the Company continues to pursue complementary businesses and product
lines."
The Eastern Company is a 149-year-old manufacturer of industrial hardware,
security products and metal castings. It operates from nine locations in the
U.S., Canada, Mexico, Taiwan and China. The diversity of the Company's products
helps it to respond to the changing requirements of a broad array of markets.
Forward-Looking Statements: Information in this news release contains statements
which reflect the Company's current expectations regarding its future operating
performance and achievements. Actual results may differ due to the many economic
uncertainties that affect the Company's business environment. Further
information about the potential factors which could affect the Company's
financial results are included in the Company's reports and filings with the
Securities and Exchange Commission. The Company is not obligated to update or
revise the aforementioned statements for those new developments.
Contact: Leonard F. Leganza or John L. Sullivan III
(203) 729-2255
Statement of Consolidated Income (unaudited)
THE EASTERN COMPANY (AMEX - EML)
THREE Months Ended SIX Months Ended
13 wks 13 wks 26 wks 26 wks
June 30, 2007 July 1, 2006 June 30, 2007 July 1, 2006
------------- ------------ ------------- ------------
Net Sales $ 34,175,471 $ 29,669,159 $ 86,492,645 $ 57,529,342
Net Income $ 728,356 $ 1,212,557 $ 7,486,594 $ 2,356,322
Net Income Per Share:
Basic $ 0.13 $ 0.22 $ 1.35 $ 0.43
Diluted $ 0.12 $ 0.21 $ 1.25 $ 0.41
Weighted average shares outstandings:
Basic 5,593,073 5,476,055 5,550,219 5,470,373
Diluted 6,048,133 5,740,326 5,990,085 5,721,276