EML - Earnings call transcript Q4 2019

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Operator

Good day, ladies and gentlemen. And welcome to The Eastern Company's Fourth Quarter Fiscal Year 2019 Earnings Conference Call. [Operator Instructions] At this time, it my pleasure to turn the floor over to your host for today, Mr. Chris Moulton. Sir, the floor is yours.

Chris Moulton

you. Thank thank us and for everyone morning, today. joining Good

President Gus After Vlak; today we'll will our CEO, Eastern’s be questions. for Sullivan. Speaking and and CFO, the call open that, John

other will and information that note hear discussion margin, statements performance future some gross the the and business including expenses, consist Please statements you business regarding forward-looking of revenue, income prospects, of during taxes will our company's outlook. and financial expense, about today without operating limitation

uncertainties and those risks could to forward-looking subject are statements to from forward-looking results actual significantly statements. trends projected that or These cause these differ in

For our more these Form uncertainties, and in yesterday. to filed please refer information regarding XX-K discussed risk factors risks

useful measures will as performance. call, during In isolation as certain should addition, measures are we results. discuss These for in substitute of from not be Eastern's and financial GAAP addition to measures considered non-GAAP non-GAAP an today's or supplemental a that believe we

for the With that, turn will I to call opening remarks. Gus over

Gus Vlak

and Chris, on via of good have those web. the who Thanks phone those and the joined participating us morning to you

full Eastern's numbers released and full year yesterday quarter fourth the last Friday, Form XX-K We and afternoon.

reviews the take few progress with fast so to you, detailed I'd a are, our of like and events reflect to on where stock moving are results minutes take we John as Before especially these days.

by increase value strong that we and strong. and shareholder close are execution our our to want a businesses balance right brought that sheet emphasize track the to I keeping portfolio strengthening to XXXX we on of optimizing

XXXX. with out pleased a call few. am accomplishment in To I Eastern's just

a with customers. our step was August with in significant long-term presence Precision important key X Big of company acquisition goal building of stronger our towards larger First, an

businesses. team some seamless seeing Precision Big months. And realize X and in already a of business. we're Precision other to of a management the some working are into completed between early few Eastern with potential full this our X the integration of We And we just Big synergies

The And XXXX also fourth last made quarter results. before accretive acquisition to a for transaction contribution as that's forecasted our I was as whole, a substantial quarter, costs.

sales been Second, strong generating we've new from products.

mirror, concerns a for new leading functionality mirror. the Including, a we market raised some truck mount launched mirror a by that OEM which with a addresses replacing hood with fixed pivoting example, truck

We OEM through latching modular toolbox. introduced and also a toolbox that system be new as branded will an available is dealerships

In of sales compared of XX% of sales total, industrial XXXX products represented growth accounted products for in XXXX. in new hardware in fourth growth. quarter sales sales X% new our And the of the to segment,

of flow fourth compared strong full we operations XXXX cash exceptionally demand year, generated the working that's in a sort as non-cash both adjusted fiscal from XX% million to Eastern's prior increase charges. for for year. operations, of well the this a cash reduction was capital to Third, the at improvement inventory in year. quarter in our growth $XX from as full matching and from And came most better income In net

very strong different our which of a of both also across flows businesses. ever leading But Not importance the overall X robust our Fourth, order backlog, the all with varies sales growth. $XX.X we a it some we reflects Precision, our year manufacturing. the backlog indicator flow is totaling that believe of heard acquisition Big through million and but ended relevant

it obviously of could uncertainty result a macroeconomic as in me significant environment respond measures have. to [ph] to a the amount financial stand the as of today. where impact coronavirus to the and brings That we is There

few have supply have of very is the conditions in weeks. experiencing situation of extension, result been Year a the while opening our obviously some in chain locations of delayed fluid, the some our last the our New and As and China China. Chinese own local disruptions holiday businesses And suppliers, improved

operating In be to end Eastern at next XX%. Southern by XX% an week. China we're the at XX% of week at we're expect and China At this

is China to a attention really even structural mid-January, our in XX% with that on reduce deal Eastern base an help of good supply [ph] and supply towards in supply anywhere been XX%. shorten coronavirus from our Our making we've But focusing us issues before surfaced working capital chain, chains. can the eye changes

quality the monitoring taken the taking philosophy common to situation business and sense enhance on closely. the goals today's have the And Obviously, to added of been free At up our suppliers employees. Our urgency has health these moment, and reliability we're of flow. cash with we're actions protect our situation.

U.S. by what the guidance in the we our that the make impacted today. the based delay term our a adversely shipments from know we by are of And XXXX We're to believe We CDC keep short healthy. substantially in can up on to offered locations that China. implementing remainder during gap sales the extent the

this. Cut [ph] the innovative looking beyond we're and working a immediate customers on new from time, headwinds developing same focused will very on At but and the for our XXXX. the in hard from coronavirus concerted require we're products situation effort,

or us across in of challenges our that of customers of markets, industries. certain our in while our of the range launches a customers' end markets broad offset important to Eastern remember serves some components that support we're truck. diversity facing product packaging also Class wide main whether solutions Innovative It's like new solutions the pressure will A help

Finally, sheet. we're on very maintaining our focused balance strong

value Our grew in book XXXX. X% by

have flexibility compared is XXXX. And ample X.X current Our agreement. credit our that's X.X capacity in to under and ratio we

discuss into a will terms. we entered John momentarily agreement with August credit new last favorable As very

a committed strategy. acquisitions completed, will in key Eastern's we with to strengthen we take well presence of Big of is X positioned further that business markets relationships any to opportunities than given that our arise. build our advantage basic balance are customers. and ever This of With bolt-on identifying our the successfully of our more sheet, strength are acquisition part Precision And

call. at our of we'll results over back I'll details now John and this to over financial the come turn the of end call go to the

John Sullivan

this the primarily results focus Gus. Eastern’s for will on you, quarter My morning fourth XXXX. of Thank remarks

Our in release. are last and full Friday's yesterday's available press are year XX-K also results in filing summarized

$XX.X net the increased sales August in segment million $XX.X X XX% earlier. Sales year to from hardware to a year quarter, of fourth quarter growth $XX.X the XX, the million on industrial Big acquired the XX% XXXX. by a For we $XX.X XXXX million acquisition, increased reflects fourth which Sales in from million earlier.

A in by and Big military Excluding lower impact offset stronger due sales Class decreased partly launches X to and vehicles Precision, specialty to new X% of product the sales sales customers. trucks

lower systems launch point payment didn't fourth compared as for Sales loss the security of Lock in products, segment products, for the to quarter as N year of completely as XXXX demand sale Load the commercial and mechatronic offset security in XX% late [ph]. decreased of contracts product padlock product well supply launches

industrial middle XX% Sales mining segment of while of sale XXXX. XX% XX% products to Sales products the in of as compared decreased to product XXXX. quarter compared the decreased in decreased quarter sales fourth casting the fourth

our a as Mining by customer between were one foundry the coal and protection impacted affected fire sales customers Industrial and temporarily a suffered bankruptcy the were loss from filing combination two a negatively XXXX from of by facility. castings U.S. the for business of these largest mines products was sourced in in the

XXXX in a XXXX X to increase acquisition. products sales quarter. The million, the the margin was as of percent $X.X by Big of last remain XX%. fourth fourth quarter Gross XX% sold comparable attributable at Cost of increased year's from to

closure quarter Product the of relates quarter period. vision Bellingham, of the Velvac decrease in expenses by compared fourth This sales adopted new to in to second of percent as development year's XX% the to legal a as the development XXXX as in Road-iQ we operation a approach XXXX, decreased products. developing last Washington

to period, X XX% XXXX Precision primarily due the fourth Selling compared expenses and acquisition. XXXX Big to as administrative in quarter increased the

I'll for balance summary you quick Now highlights flow year. cash of the and give full a sheet our

in for XXXX strengthened million cash was million in XXXX. $XX.X activities Net to XXXX, investing in XXXX. $XX.X XXXX, Our and used activities respectively. in financial million $XX provided and million operating by $X.X compared We position

fixed amount, approximately for approximately in X Included Lock. in the The XXXX there's year to the $X the and of the $X.X to in be XXXX $X.X XXXX, purchase range balance for N of million. million expenditures for respectively, $X acquisition expected Capital amount is acquisition. Included million the million Load are in million assets. Big and of XXXX was XXXX $XX.X used

$XX for financing We In from for we activities. approximately approximately received used million and million an existing $X.X loan addition, $XX.X for debt $XX.X in dividend payments. XXXX, refinanced million. We repayments, million

for entered term a People million into August XX agreement as credit Bank portion million TD credit new along we portion. -- for for received $XX with lead In $XXX with revolving which $XXX Bank million of ranger, United Santander XXXX, and of a and we in

facility its X repay the to and term of the loan to and portion $XX Big acquire terminate outstanding Proceeds used credit million to approximately we the remaining term existing Precision.

to Chris questions. I'll now turn for call the over

Chris Moulton

any Operator, John. for do who questions. dialed-in you, Thank have we have participants

Operator

Instructions] [Operator

Chris Moulton

And while come have we the that questions we webcast. a in wait, via couple do

to get let's those. So

First onetime question, continue will you have charges? to

John Sullivan

restructuring they Well, make transactions costs. costs. Right small transaction we now be to restructuring some usually and we are smaller. to plans would would If no that the onetime be costs. charges related bolt-on have But on do acquisitions,

Chris Moulton

second what trucks A impact Class question, the downturn in Our to the is business? a of

Gus Vlak

our believe end despite trucks trucks business other to end A is to growth we we markets. And advantage when opportunity Class A take other in with market Class And markets. into do downturn many for us. we an continue the market the important that Well, have grow down, fell in obviously customers because market, we can of turns the

A at time. programs programs very that And growing of share in trucks. time Class long are the same These we lead our have are

revenue So the we rank into ample visibility there. up have

Chris Moulton

a at does when have third what XX%? mean your factory we then it is question, And

Gus Vlak

two. the meet to close as as relationship are There's percent That ability the both demand. at employees work, well between factory's to refers of those that a percent back very

quarantine week, that from China will employees So at the passed of period our allowed we to next end up which XX%. the of approximately be factory day of current the they factory East XX% work percentage XX have will XX% the brings and anticipate to

have customers' to our meet note to that important do That's orders. we ways other

Just XX%. And some is factory or ship in inventory got our we've we out cases, at can production operating because other options. of

Chris Moulton

Okay. we questions? callers, Operator, any do have

Operator

not phone line. So any have the far, from do questions I

Chris Moulton

we that further appears webcast It Okay. no questions. have

like to Thanks. for I'd turn So remarks. Gus call to back closing the

Gus Vlak

morning. for everyone this thanks, us joining Well,

and the carefully of the very on we're impact monitoring heard, you've coronavirus responding our As business. to

same steadfastly our our by execution strong. enhancing shareholder While roadmap time to are balance sheet our keeping optimizing companies, we and of adhering to value increase at portfolio the

and we Eastern's in for XXth XXXrd joining XXXX. in again And forward consecutive another look Company. Thanks interest marks paying of us XXXX to dividends. quarterly year The year and your good our year Eastern

Chris Moulton

to the that, back With turn the call we'll you. operator. Thank

Operator

gentlemen, you Ladies for thank call. participation. that you. We today's Thank and does your conclude

day. great a You have may this disconnect at time and

The Eastern Company (EML) 6 Mar 202019 Q4 Earnings call transcript