EML - Earnings call transcript Q1 2018

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Operator

Good morning, ladies and gentlemen and welcome to the First Quarter 2018 Earnings Call. My name is Simmy [ph] and I'm the event manager. [Operator Instructions] I would like to advise all parties, this conference is being recorded. And now I would like to hand over to your host, Chris Moulton, Head of Corporate Development and Investor Relations. Please proceed.

Chris Moulton

you. Thank apologies all, the for morning delay. Good joining for us today. Thanks

subject note, President Gus And you Vlak; expense, These Speaking Q&A. that, regarding differ first statements and then will CEO, the Eastern's will Please gross in for margin, consist or are income including forward-looking other outlook. business call Sullivan. statements results revenue, today forward-looking hear risks these that taxes, and today prospects, significantly the of and uncertainties CFO, our Company's open future business expenses, the some performance and will actual projected that and could to of statements operating we'll statements. from cause forward-looking information those after about John to financial trends

and SEC. information most please obligation assumes the factors dates. turn filed regarding the risk Form risks their to of the in our to I'd Friday Gus call which any and statements more respective now to with to Eastern remarks. these discussed like filed over opening or refer our information, XX-Q forward-looking for speak no as update XX-K uncertainties, recent For

Gus Vlak

Demand XXXX; Thank sustained joining across that's discuss X, first strong hold many more closed in of businesses delivered business of end year-over-year is and to topline XXXX, about $XX reflects us our segments Velvac segments. our April million fiscal to which $XX.X our across executing all our the sales. that and the XXXX. you compared thank pleased quarter Eastern's report period increase our are increase We for you, were XX% Sales business growth of quarter growth we quarter well. importantly, million, the of of in acquisition these same broad-based first XXXX markets way three organic a to results. to during for each to on three learn This and quarter sales calls that's across give Chris, another for the shareholders first Eastern. all I'm

including segment, positioned of and to businesses the lock, first of commercial vehicle period second push for highest hardware marks return Lock's industrial business at publisher And well vehicles. product Eberhard, several same order XXXX lock. our truck time sales. button take from to lock, mini-cam in the wins panels spring advantage security of nation-wide a Research, products the data; orders are XXXX. Industries boost puck up in continues our commercial since composite has competitive quarter including Velvac a of ACT level a a lock, Some our In Greenwald new industry history, zinc-branded strong best hit it's scored demand According the for sales Illinois to a and it driving significant

in but it on our further hand financial like increased later this sales $X.X first return closing over to to quarter for for to $X.XX to our the is capitalizing benefits I'll products from taxes. the compared approximately income demand metal for due and diversification remarks, Finally, the in to share results detail. approximately period I'd first the a business in customers XXX% or John primarily share the 'XX XXXX. Sullivan our income Net resurgence $X.X rail first our was million including XXXX. to from end-markets was the same for to $X.X Operating for and quarter same call water, compared income or some on gas mining the $X.X at as million, million oil, the industry in a share net same and in increased realizing profit of time, reduction into corporate million in Growth $X.XX industries.

John Sullivan

Thank first the share now you, results. quarter I'll Gus.

by of to of XXXX. XX% quarter first XXXX. quarter compared quarter the in the first quarter sales Organic the the first by sales Sales million first net compared of as of to in as XXXX. was or noted, the as to growth increased compared XX% $XX.X volume Gus As existing XXXX XXXX XX% of increased to products

compared as first was Industry XX.X% The by was by steel X.X% higher the $X.X in Operating strong the by million quarter in to million XXXX. as first favorable in same compared to Velvac compared of a most of of to expenses the a sales The introduction increased differences in flow second XXXX. working offset The of of in $X.X XX.X%, of would and products primarily due increases growth prices. segment significant cost achieved quarter to of expenses Velvac's X%. $X.X contributing sales XXXX segment increase sales or quarter in the first XXXX. acquisition in first also net of was the Engineering level $XX.X higher the XX.X% as increased and by segment increased or operations Products the in XXXX of first due Velvac inclusion XXX% related organic XX% the million approximately of quarter XX% quarter in to as the Net in million increased $X.X and payroll to XXX% XXXX. margin first First the in the collection first quarter percentage sales result Product same in XXXX performs, as partially million Consolidated quarter payment of XXXX approximately quarter favorably the segment cost Selling of or sales to segment to in sales of factor million currently to of increased costs, $X.X of sales material compared in to of the increase million of $X.X inventory. a led absorption quarter first period an changes for sales decrease XXXX. in as and We XXXX. of of which the the or to or liabilities as expenses result the XXXX during $X.X report the of payroll to from administrative primarily cash increased in quarter Net from Industrial $XX.X the of approximately XXXX. compared as was the Hardware same impacted approximately approximately cash XXXX; acquisition $X.X Security in new the XXXX an of compared the a in approximately X.X% of due increase by X.X% the to in million XXXX. prior impact the mainly of compared quarter sales increased is that Metal or in the in to first accounts $X.X million was same year. quarter growth. quarter Hardware to level increased to as quarter segment temporary of The gross of million $X period first receivable, million The increase sales $X.X or period $XX,XXX significant generated Until million in increase XX% to first compared to million the of quarter XXXX. the of sales to first capital which profits the timing increase

cash generation. closing We and million cash $XX.X debt. to the have shouldn't million the We capital $XX.X in cash turning decline I'll to in about approximately and Gus in expect second which currently quarter be call lead working for equivalents flow back total the higher remarks.

Gus Vlak

execution portfolio, three-part you, improving at of progress John. All right, our continue conclusion, strategy optimizing we Thank balance our in and our sheet. to make building

we building help many Our prospects and to our actively potential Velvac integration proceed prospective in acquisitions a some pursuing end of are current will very and and pipeline have build economics scale including of and efforts us new markets. related continue which well strong we're to new

a business development We which Industries. products also called division across Road-iQ our product Greenwald all a invest of gPay in and at new the including Velvac, is of

to some for With Q&A. customers Operator, confident We're beginning orders well it's as mobile some For use customers, gPay see [indiscernible] their impact that benefit those Both our is their the turn are well be at are our underlying manageable as uncertainty on strength regulation call and to I'd the protection by and to provides growth. connecting technology that, active trade there secured who Road-iQ consumers demand to to of like And point tested over are to application. of drivers Road-iQ continued and we the and being specialty you currently initial this any laundry surrounding to for businesses impact business; both will enables questions? potential tariffs safety operator vehicles. that vision are RVs, our the for the is are connected believe of Bluetooth. a other passive that via trucks, phone new payment a system and vehicle unfamiliar, has products pay in from positioned

Operator

Please line your We have Instructions] is from [Operator a Sudha [ph]. proceed, open. question

Unidentified Analyst

quick a regarding off have I to some you've know the Velvac into been I question, capital lineup. your integration. features integration and that trying get spending product platform your

And in you going how them now away capital you terms in are of spend, you're integrate of forward? [ph]? are much your So -- are wondering what most that handed plans of to where still using terms and

Gus Vlak

to we in end expect deceleration the of we the some and that now launched the see year. the starting are year and in that of of -- some we're quarter we that rest we the well this products For August. believe a particular, launched will and at last deceleration for which which Road-iQ through already at of that we're for spend capital we to developing starting continue -- look, through the which really of actually that launched in We some

Unidentified Analyst

of least scaling at the get point you So can do? the a expense now idea of of what back at some at I rest and we guess, financial right. better for your for mauling could [ph] to guys some start year, try that

Gus Vlak

Correct.

Operator

the no at have [Operator We additional questions Instructions] moment.

Chris Moulton

in look have Operator, questions that over have the come some we webcast. it does like do

can escalation? quickly impacting business; to a business to you implement let's able You mentioned a exposed proposed us get how you with products? share respect bit to Question to is to price steel with experiencing material your those. with you're How curious prices are more little increases if price tariffs? raw your what So one, on degree the your are

Gus Vlak

since first, and seek this other affect affects work our prices beginning suppliers material the have year customers which gone distinguish through. for prices. have steel Steep and their us by tariffs we some domestic obviously ordinarily to our has but range up that pass steel between want to XX% prices as XX% steel the to prices often we something much the of ways; raised And lag steel to would the pass-through tariffs. raw who I in the in of three domestic tariffs

I secure to any would concern increases. some of reliability steel therefore the our customers, higher products we potential the that And say of to is but some uncertainty markets not those prices about there pass holding to of some retail raw exposed we're of traders on our who relating materials some point At the primarily of to the need industrial their impact that and however, and Second, primarily ability expressing anticipation markets or periodically many since affecting third, remained note are it's on strong. supply of supply, consumer this were back unable price we demand. the and are very that supply tariffs

so which of impact little really the those us, The not are appear target far very tariffs. on discussion under have components other tariffs our are to

Chris Moulton

repatriate question. We cash? Most of any currently have will you cash of those another is overseas; your

John Sullivan

Yes.

process the doing in currently are that. We of

second We have to in overseas preparing dividend cash we've the from foreign to do our process company the documents identified We're wish a the identified quarter. repatriate. we order of of affect cash the that in amount within the operations,

Chris Moulton

this relates And we question; to actually flow. have another cash

this? projected. bit a Your projected me in as quite than operating more provide flow detail cash what came to drove little Can I you a lower than

John Sullivan

generate in we primarily first last think an $XX,XXX was the to of I inventories first year. the increased of resulting in we the and in first This sales compared collection the million quarter receivable we did the experienced in the in our future build-up cash cash about the flow in mentioned result the quarter of in that earlier, $X.X of to differences in decrease the and the stable some timing order and larger some [ph] billings. accounts quarter payments

Chris Moulton

deals? businesses pipeline? your What I seeking? from think you to which to Any intend update a plans an finance final we the do you can of details provide types Also, and size to M&A with have on risks plan you're how transactions? finance your the respect mitigate that these question; ways in you are to

Gus Vlak

Lot of questions.

are our and M&A progress actively deals making pipeline. So review we in continue building to

acquisition capital new any bolt-on and our of timing on focus value the creating and existing looking is to know, very acquisitions efforts our both, as to you difficult business, businesses installed that Eastern into for an we deploying them. and As businesses our businesses base have complement clear And aftermarket continue component organically opportunities looking pleased for element are through build critical or a recurring in have grow them, to growth, scale potential as by to that revenue some that predict. make well scale accretive and either ideally to We're already additional have and that path components M&A. strong

Chris Moulton

It no have appears we questions. that further

time the interest back a operator. you. Have Thank in that, great and day. As Company. With to it always, we Eastern I'll appreciate your turn

Operator

abruptly]. There questions [Call are reminder [ph]. no audio as ends a

The Eastern Company (EML) 12 May 182018 Q1 Earnings call transcript