EML - Earnings call transcript Q2 2018

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Operator

Good day, everyone, and welcome to the Eastern Company's Second Quarter 2018 Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Chris Moulton, Head of Corporate Development and Investor Relations for Eastern. Please go ahead, Chris.

Christopher Moulton

Thank you, and good morning, all.

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

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

August Vlak

those online. our on earnings six Thank morning us quarter and XXXX. the you, months review will joining we first of and to phone sales the morning, second good and for Chris, and This

And to strong we the businesses deepen products to doors. positioned $XX.X Eberhard key time, from has represent including trucks, this Several And the manufacturer roll-up a And second invest in extremely diluted and supporting to the our market battle our capital leading our second Results on the markets, truck These of benefit We've now generated is earnings product Eberhard, firm, trucks X% our to represent for in development businesses, Class demonstrate integration to our Road-iQ, accretive, of impact the average $X.X are scale Associates, expected at making in for a XX Illinois truck electronic call the quarter, in addition this were we're improving Lock, on of the immediately have begun expected vehicle working believe our achieved across in engineers. creating per part these talented the history. doors, of system, the OEM highest-return Class back OEMs see innovative a X at across accessories, Class door Load and our end those sales business as transitioning X U.S. intelligence Research results tonneau strong. further Across are solutions. and XXX-year in part results diversified and of we or that recent and market. expenses Road-iQ at their the as transportation in same execution highest products the second medical $XX.X will from for which At sales the with an and IHS cover system IOC, innovative According Bluetooth businesses. progress we addition of expenses. the allocate applications well Velvac, and, currently a XXXX part several we're activation acquisition same as including We're in the quarter of a including its were business parts our first compared of optimizing Net any and Eastern of we're well. we're nearly several the on half very and Our business rate beginning in of be integrating other markets, and Moreover, Markit, manufacturers and to This $X.XX cap scale investments second end in result leading for the to of According has of system, in million largest strong a Eastern. Transportation also doubled Industries. in continue development quarter sheet. the This in X will technology installations. business balance is Lock of our portfolio, new operate Class the going orders to strong development or X and while and Lock, well that in markets. invest gPay new storage of locks. as of indeed, continued carts. considerable Security access and in XXXX. wireless in remain trucks. to growth quarter. transaction in in new builds Greenwald At truck to growth related million, a offer N the sales onetime is solutions at in end million excluding acquired the segment, sales Illinois transportation relationship quarter innovative quarter of locking a up Lock, Load hardware in At through capabilities will Eastern N X Freight XXXX. increase IOC [indiscernible] share. Net Products Class provides Asia. leader XXXX to with three-part industry's business, working we IOC, systems and strategy to to In portfolio sensing build businesses, period to locks

additional overseas we will the XXXX, approximately balance used results these repay continue talk down our of to in the through liquidity. our outstanding our our detail sheet. debt, revolving from we funds million for credit, In maintaining $X.X and July this year, subsidiaries, of to paying quarter. but strengthen and cash us John line give repatriated Finally, ample

John Sullivan

a increase increased million second or from the during XXXX. across basis, of On our same business sales Sales That's million segments. Thank quarter in to XXXX X%. $XX in consolidated of you, million, $XX.X $X.X Gus. period approximately the all increased an

XX%. in of million XX%. $XX.X $XXX.X the products of XXXX. X%. sales of six in That's new XX% from same to first reflects in XXXX of when contributed million compared favorably months in to Sales of of to respective existing the increase acquisition of months increased XXXX. prior the increase increase by Velvac period of months six first sales sales was increased quarter XXXX sales six an increased XXXX six the XXXX. months three increased million the second in versus The the first compared year full only of first half in Velvac the introduction corresponding from XXXX Organic in the the Sales volume XXXX period sales first months of in by the acquisition of six in months impacted which $XX.X The of the XXXX, an products, X%.

paddles, end XXXX X% specialty first introduction Products XXXX the increased of brackets, by and sales oil, locks increase gas sales sales increased XXXX the of X%. half months commercial also mini X% from segment which from impacted vehicle compared brackets, of sales Velvac products segment commercial six Hardware first compared volume XXXX various second up market. as new was included versus The existing new year period sales resulted in quarter market in tumbler products in markets. in in increase the speciality sales trucks Security the second same the new XX% existing by the base paddles, favorably of as sales in in the months for period XXXX. and – period X% XXXX and primarily the and XXXX. increase industrial in segment full to months when half the half the XXXX. sales rotary new XX% of XXXX the laundry volume the of products the level, X include X the quarter of water, products, products the prior primarily a rotary in existing the the and products Sales tumbler first six lock in compared The second same Industrial acquisition in The of in of only from increase half resulted Net to first were XXXX of The truck, for first within sales the period from products. X% markets. sales castings, Class mini for latch Class end locks, in to latch of an a and three the Sales sales of in On quarter the in X% new vehicle reflects of net of to of in increase

Metal Dip] diversify New a the the products. of XXXX, as sales first spring lock product second sales sales from XXXX industrial the traditional compared a of return the increased Increased and XXXX. in lock. segment same puck quarter relative X% entire in Net lock, Company casting period Products in lock, included XX% zinc-branded second the in quarter button a [Audio the mini as increase of to volume push a products represents the mining cam away the half and to

of oil, were personnel the in XXXX first operations industries. sold products was generated period compared while I'll scrap gas or million dividend costs quarter compared the Cash of million the from second a months and impacted The compared period the period of compared to the compared margin six in expenses several or in Metal to XX% which segment. prices the approximately $X.X costs primarily XXXX XX% to as in decreased for for rail Inventories XXXX to of increased Velvac $X.X XXXX in acquisition in the the to XX, New sales the in charges, its second compared changes margin to inventories year, operations, payments. quarter million six of quarter as the from the the of cash $X.X $XX.X consolidated during in XX% $XX.X of $X.X capital the XXXX, the related XXXX, of increased Selling Velvac of for raw flows of to six in of the XX% in fund XXXX to related iron. Products first decrease as first were of the period fiscal with same XXXX, environmental Accounts of June in On the increase of comparable XXXX in the million inventories the million second second that, decrease XX, during expenses transaction segment; increased the expenditures, adversely acquisition; XX% million of or administrative same XXXX. the flows a period. of to million is the period $XX.X during XXXX. XXXX. XXXX, to XXXX comparable quarter in as into zinc, to development compared in Security the year-end The of to gross and percentage copper Company in million of a first the and ending six sufficient increased the Velvac XXXX XXXX. XX% the cash organic result in result XXXX, inclusion sales was onetime months X% Product period beginning of million In same coupled XXXX. compared administrative sales gross and the Selling $XX.X increase The million second basis result approximately Gus. XXXX. and million compared Total an of of With to XXXX remediation inclusion cash the the quarter of XXXX. three period June million Products increased and the included XXXX. months result XXXX. call increased administrative and costs a $X.X XXXX the second were the of XXXX, million the period as $X.X quarter same of million the in for in receivable of six $X.X expenses period XXXX percentage $XX the and period the months steel, water, primarily X.X% to $X.X on back The XX% of accounts months in were of second debt a as quarter was selling second of acquisition months of of compared quarter material in decreased first the by return same $XX.X the service as receivables from at was or ending the same of X%

August Vlak

Thank performing are very well. you, John. Overall, businesses our

year a to work with further continue our conditions, benefit We closely call we for Eastern. prospects. well same the China. acquisitions to evaluating our have from economic changing and to businesses long-term conditions we strong like We and a continue record-breaking the With in industry trends, portfolio forward the tariffs and believe in monitor and to for however, additional to and environment on both I'd over positioned look more the are for that business limited operating do to the Mexico macroeconomic and time, recognize our that, options At we're questions. turn operator looking businesses for

Operator

now you. Jennings]. for Thank Our comes [Operator question. from is open first The floor Instructions] [Miles your Miles, state question questions.

Unidentified Analyst

nice quarter. on Congratulations morning. Good

August Vlak

Thank you.

Unidentified Analyst

There for ask about give that push you various et wanted in I just to to on which I that vehicle? cetera, financial light-weight may the do a revenue realize are of don't a couple subscribers of break and you report. that areas then sense a this generally, take-up And trend of out of customer you not JLTV first sense Can break for the number could rough give thought Flash gPay I a and, them reasons, the of tactical but competitive rough out you joint contract the I'd your from you products? little. us want secondly, of ongoing those the for And Cash us

August Vlak

program, the Company we I'll as can. recall, The JLTV XXXX and big answer for well try So was as in both a XXXX. to program you questions as

as the While in they're Cash, take of a you to for can – sales to Flash a is continuing, value installed continuing more we subscriber we that Cash develop base and that's our tell year. we vehicle that they than but it's base products The there future, this but contributor to continue much switching to cost competitive to, Flash opportunity the us that think And lower program, base rather an overall not there. are to alluded level I material you number. have advantage lower. at historically. volume were are both a They're to to installed the much supply for better increase that builds our

are segment. that we So well protected market we in that feel confident

Unidentified Analyst

Another question quarter-end, XX-Q of you a subsidiaries. to the Is pull the overseas substantially I that $X.X of balances. expect $XX.X $X.X your And in back? in is most of funds from that had repatriate? repatriation million million of as target that was, I you see yours additional million to you Or had mentioned that, million $X.X

John Sullivan

subsidiary. in To answer from to would August have $XXX,XXX be we approximately our question, that repatriating that we Taiwan

the subsidiaries. this expect of Chinese time, approximately XXXX $X we've million the in can also we in We maximum repatriate our to of from But dividends. back amount in point taken as form

Unidentified Analyst

Good.

as I Just is it a last your it's question very see bodies for you me. for And It's regulatory not a reached that issues various process finally long question, XX environmental I more we're a see and SEC like looks and pleased have with states of the you. a that reports, very the involved, and was that agreements sure I'm probably complete a been for have, are remediation, years, that congratulation, now. as of that this in statement. far there to couple been

John Sullivan

has, and you. it thank Yes,

August Vlak

higher we prices. environment costs a There's buyers? to think, few an in I we're online. manufacturers, are, material indeed, increased a most on questions raw our And like passing material have about question We experiencing where,

are of to those some on customers portion a We where more our is able difficult. been – to has pass just that historically or

between lag then accept are to is with ability prices. experience processes on go so as approval some require left that those through to there raw of material what customers is of our higher of And the the those And and prices. we those internal demonstration some a prices inevitably to our we absorbing pass increase

Velvac the ability see terms and quarter. So our is increases we don't question There in those to in a pass match second on. about of a our perfect price

in little interested they've has than sales It's had has in of grown we I seen that what's that trucks, its kind RV of the to that But slowly kind business also last more industry to the there? growth been the segment heavy-duty Their of experience markets has more other about happening performing obviously, exactly anticipated. – many aftermarket higher read in think par consistent that's suppliers we performance RV with which planned. The in volumes learning And with So, year. on plan, performed the of as a the of there. a vehicle Class technology that to connected well, segment. Velvac business. on drivers vehicles. There's Road-iQ, recall, passive of truck active serves performance bit both about is as exactly question RVs, other specialty we Road-iQ? X the trucks with a you safety and provides and

Our it's currently that starting And manufacturer. several the in in installation. [indiscernible] Road-iQ the of is installation same fall. manufacturer's for time, with for leading business manufacturers application blind we're at spot initial has the several secured additional with And a protection preparing orders models for negotiating

Christopher Moulton

do Do we have well, to questions? go anymore – telephone sure. Operator, want I'm not back we

Operator

appears There be questions portion. further phone no to the on

Christopher Moulton

Okay. Can related I is background N N do One questions. notice information acquisition or Load Lock? a you the on us of with couple more more provide to webcast Load Lock.

AugustVlak

Sure.

that the that margin product the current Load N to able able its support is introduce this significant acquisition: itself current introduction been growth Illinois penetration Lock some synergies I Load Lock Lock penetrate. has infrastructure further tunnel there's we Lock for describe then for Lock sales of some based cover short which synergies. are term, an accounts. in of reasons the of for offerings Three which will strong. incremental N n liked Over their term, market Load on the vehicle some costs supply There manufactures Load cap we we we the redundant attractive market. long why the engineer and for at N expansion the our growth. Illinois opportunity And IP to small what closing leverage the strong an mentioned, And the equipment. key Load capabilities those Lock as N through for manufacturing. accessories Lock the opportunities and cost N first, recreation some foster believe chain there's to beyond Illinois increase Lock's potential We Illinois trucks with further Load believe part Lock. to there's by And and As we this And Load demand some sales some of of because finally, will of Lock in integration we offering further other believe growth sales those eliminate N the capabilities Lock will systems customers, continued the looking Systems market, see truck also key is of believe product the to in at of products, are

of So to overall, lot transaction. upside this we see potential a

Christopher Moulton

Okay. next plan What few see the pension question. webcast your another requirements I over funding are the for years?

John Sullivan

that XXXX XXXX for of In returns. and by XXXX, deductions Company to XXXX, elected the take the the of a tax is twice basically higher is required recorded on the estimated is contribution pension funding minimum hourly-rated advantage our minimum plan to the our into minimum The law. it. plan. contribution on third during In pension $XXX,XXX expected $X prepay quarter has to tax XXXX be amount of million of Our

Christopher Moulton

now, All on telephone. on it called think the does that right. questions. not webcast if Operator, else anyone as I'm sure has Well, of I the in

Operator

No telephone questions.

Christopher Moulton

very joining us Okay. much thank Great. Well, today. for you

back With If to operator. of call can that, the you any turn questions, always to any to have the us. free one reach feel you I'll out

Operator

This today's thank you you. your webcast. participation. does Thank for conclude We

And this a at wonderful have lines time. day. your disconnect may You

The Eastern Company (EML) 11 Aug 182018 Q2 Earnings call transcript