EML - Earnings call transcript Q2 2022

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Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter Fiscal Year 2022 Earnings Call. At this time, all participants have been placed on a listen-only mode. And the floor will be opened for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Nicholas Vlahos, Vice President of Finance, Treasurer and Secretary. Sir, the floor is yours.

Nicholas Vlahos

you joining thank and morning, everyone us. for Good

that and income President Gus After statements in other differ and the or events revenue, expenses, without will Vlak; forward-looking taxes risks today Please we'll will and of our hear uncertainties performance CEO, no statements forward-looking Eastern's be operating occur note margin, those questions. that today for cause these circumstances to statements O'Hara. These limitation, outlook. expense, We any gross undertake Speaking during and statements our information or obligation will are and to financial and CFO, including about the projected regarding the call business statements. significantly call. after business of from trends future discussion to to reflect subject prospects, some forward-looking the open consist you that, update actual revise forward-looking that Peter could results company's or

For year SEC. risk fiscal factors filings and the more our other please refer SEC the in for risks to these any Form XX-K with March information X, discussed the with on XXXX uncertainties, filed and regarding

over under for reconciliation in Information useful financial These substitute Gus comparable remarks. on earnings In With or measures of available the the measure of measures and call, press each during a discussed as be found www.easterncompany.com the opening I'll isolation call to discuss turn of not measures tab. we website believe most considered non-GAAP are measures in addition, the Investor GAAP should at during call performance. that, will our GAAP as the to today's can be to directly non-GAAP that release today's non-GAAP A results. supplemental we Eastern's in from addition

Gus Vlak

on And yesterday those on and via Eastern’s Form you, phone like with XX-Q quarter morning joined detailed the web. numbers second on Peter who our to reviews We reflect before the from quarter. the solid strong operations have quarter results an revenue for those Thanks, take afternoon. quarter quarter and I'd Eastern sales the grew over us participating Net Nick, the to good released in to of the another increase was This that's XXXX, XX% continuing of a to second few with it's $XX.X as backlog million year trends second minutes from demand to of second of as year of the quarter each of for were underscores A the across markets. second history. XXX sales effective growth strong at XXXX. year by importantly, core our our backlog beginning of Eastern And the XXXX. well execution strong stood million $XX.X our another this benefit where Customer end was the from the over orders quarterly end businesses and well quarters. stable the at last positions it coming us record Sales of growth. quarter favorable

to Class up. the same for the XXXX. remain truck transport compared launched Big our of the FTR According momentum, gain accelerates. new returnable as our packaging these as the to prior nearly example, the trucks into well programs continue Intelligence, A products X in of mirror is Precision beyond remainder truck year. positioned new For time, robust Transportation sales programs this At and the team Sales of from packaging in over for demand anticipated to for pace launches recently builds XX% ramp year returnable to vehicle grew growth quarter our remains expected

structure years. began certain a to moderate increases in prior than higher second we Now for material key while quarter, commodities much the at continue cost to cost raw operate material in

and shortages still ongoing chain experience constraints. labor also We supply

second effect towards quarter we across and of of of the all remain adjustments our third XXXX. beginning which latter on businesses, price most the for quarter such, focused in of took the As half need of the the

more impact third ongoing take see start we'll expect to actions the benefits the We these quarter. in of and full to

may and That We warning contraction. markets. not end finish results well pressures sustained natural across sales, have by signs These ignoring teams, said, in central solid reflect XXXX clearly a the global and that there, the cyclical the execution we're reaction our momentum territory. pipeline a be are year we're prepared. will we and and with macroeconomic out last inflationary banks growing the positioned of from a world strong trigger to record healthy

we're plants businesses inventory of due including a our reductions are And we efforts see For to and businesses during example, scenario. general these safety should focused hand. for inflationary in and remains of to the consumers production this when overall specific Velvac remain review such that and cost aftershocks and looking supply said, opportunities. capitalized for we're inventory but of to increases our our you operation, largest supply reduce to operating same order pandemic in of also opportunity All desire to across each very Eberhard that market. on time, At a plans do intake for inventory the their two a every establishing deploy teams vigilant basis, change our not time, product for chains each a At opportunities, cost at reasons, the business chains stocks. structure protracted from and need we're focused at most our suggest China on the our the have sales and as ready with couple certain to for companywide on of backlog on going of factors the increased part the greater our inventory know, protect we're

stress important balance that to Finally, it's sheet I remains our think solid.

results. X.X We by to we believe rate interest times demonstrated our in debt second the of over swap to very to strong With fixed current it through order in second commentary of over environment improve quarter for Peter able to agreement. detailed of with the in hand XX,XXX to XX% ratio continues a that, locked I'll of interest a capital rising liquidity term at for take deploy on we're repurchase common also Our you prepared shares an through quarter. interest XXXX. over rate the quarter the stock that were Moreover, rates

Peter O'Hara

and Eastern's to focus morning Gus, this morning for on will the second everyone results on remarks call good of is My who you, the today. Thank quarter XXXX.

transport For truck the from for net to $XX.X XX% $XX.X and increased a as packaging distributors. Sales increased earlier. increased automotive million products quarter, the sales primarily well to year as demand due from accessories returnable million

products continued by Gross increases price margin year. X.X% to automotive reflected sales recover contributed a launches. on vehicle the new raw increases transfer returnable products net freight the year-over-year increases have in new to Our efforts line initial benefit including primarily sales The increased XX% several in X.X%. with sales was an while launches, electric of in volume existing upcoming packages the and increase of from in quarter prior percent materials as our of second broadly Price in XXXX costs. effect

worked As many beginning of Gus agree effect outlined, to the that with have customers our quarter XXXX. upon third the half second took of pricing, our major -- quarter towards new of of latter and we the the

beyond. XXXX -- the to compared XXXX. fuller or quarter Product increases in quarter second those the quarter We $XXX,XXX second XX% development the of more increased decreased in quarter have a in XXX,XXX XX% effect will and expect to third of or the continue costs second

in selling As were other the reflects share increased quarter for $X.X investments to sales general XXXX. Net selling of expenses diluted or X.X% $X.X quarter a a of year-over-year, second made expenses costs, sales XXXX of result was related increase for impact and The or increased X% million of increased development compared percent travel net we X.X% the in and and costs $X.XX commissions quarter both income product expenses the year. as Selling, per sales, per second well as administrative continuing compared net capabilities. from prior as million from $XXX,XXX operations in primarily or payroll share to the the $X.XX income in strategic of diluted have our costs.

from supplemental ongoing the either million operations compared for quarter adjustments $X.X information outside the in XX% financial second press during quarter any quarter events a did the that continuing we in quarter XXXX, that of of of year-over-year. operations was represents prior increase for $X.X second of EBITDA million year. Adjusted reflected the our for EBITDA our the not to As second in the have matter release, or second

quarter In and operating related the million and the was during XXXX. adversely working during increased principally the with approximately of continue of $X.X second quarter supply prior COVID-XX well. generated second second impact resulting to quarter remained and build XXXX, In the of a generating settlement quarter terms the flow, recent flow for inventories quarter largely year. China pandemic of inventory compared payables associated an of The continuing levels result, cash as the second capital, from increase in million shutdowns from our by of first company cash the impacted in chain those the first to in operations as at effect XXXX quarter in approximately in the $X the of of cash

As cash to now call with approximately that, And the $X.X we turn XXXX, cash I'll million. of held Nick. over July X, and of equivalents

Nicholas Vlahos

the the turn Thanks, over we'll then, Peter. phone. first. some the I'd ask I operator see address on and ones like questions do the Operator, those the we'll questions. to line on webcast for we for questions open questions that to And the

Nicholas Vlahos

your on likelihood economic the view downturn? is What an of impact and

Gus Vlak

we're remains by just their backlog end customers, demand our but right very it So also demand of strong markets solid. closely in now demand the the or backlog and and and very while by our monitoring in not is customers many our demand

softening we mentioned our plans see markets. any As to respond that if we any of prepare very begun earlier, we in can I end quickly, have so

Nicholas Vlahos

The what on is the Eastern increasing Gus. rates the you, direct impact Thank of interest question next Company? is,

Peter O'Hara

that our floating is rates half fixed debt the was fortunate interest we origination. And means increase financial We're currently monthly balance payments an on from that interest have that million muted. now swapped over in from the $XX the to at impact in the that of sheet of

Nicholas Vlahos

Thank you, Peter.

expect next For to the question, Argo? do when you sell

Gus Vlak

Argo to while recall, its maximize evaluate value. discontinued operations, options as you'll As we to continue we report

With circuit first sales dynamics assembly, reported half the orders of the and board in XXXX. current good the printed business market earnings strong for the in really asset and are

Argo make for the explore shareholders. of maximize we these our are sure we to as value options, that committed So we

Nicholas Vlahos

you, Thank are question next activity? what is, your plans for near-term The Gus. M&A

Peter O'Hara

to multiple committed remain accretive complete bolt-on acquisitions. We

great risk an economic However, we that current with and environment specifically the of be opportunities. in believe we more the acquisition may through future downturn,

we look at so near term And transactions. continue potential to actively

at near term to balance excess those primarily as While sheet using strengthen we're to our transactions such funds continue debt. on our we also focused reducing look say, by

Nicholas Vlahos

to plans we restore increase prices next which price below have is have The Does question company Peter. well year-over-year increases X.X%, is you, have to inflation. further Thank margins? the been

Gus Vlak

Thank you.

So of price all reflects price increases increase the the the over entirety sales. of X.X% our entirety all

take Now now increases sales. recurring on a the -- lot we price price -- only increases are

year any new are price on products programs and this them or are big our these they are part that because we won't year. we sold that time you will see or in last and year. are repriced volume -- the we selling the A So is products those each priced sell of since new of prior came increases that again launch

over X.X% sales that the of entirety the volume. price a So much but increase, larger is

Peter O'Hara

back as well, the may happened principally of quarter. price in If the that second the to I increases add half

half occurring the only of is X.X% of latter the the half that. that, a in so of of but really just kind And entire is second increase measurement the quarter, the

Nicholas Vlahos

Thank Gus and you, Peter.

next to the given speak expected question, margin actions? cadence can QX QX for you and and the For price

Gus Vlak

expand that. is business we we that why to will to we see that there. continue continue we margins QX our about the margins QX, generally, that going expect held be will we we back no could into do into prevent to gross -- And margins by XXXX. to would nothing reason us but QX. in not I we and forecast bring structural where get There not to believe So our do I'm

Nicholas Vlahos

Thank you, Gus.

questions do have we more have We no questions? online. any Operator,

Operator

now are Please Cohen. your David Your for for question. coming lines questions. from first [Operator and Instructions] today is open then pose Ladies phone gentlemen, the question your affiliation, announce

David Cohen

million able for obvious Hi. Advisors. accounts Good grew million or capital they $XX morning, My of working Minerva to to capital. question trend the and first incremental meaningfully might release like you'd during about in working some capital? to second $XX the I'm provide of sort when guys. about Thanks. relates I reasons, think wondering be to expectations half, the the from half working the we what start funds

Nicholas Vlahos

David. Thank you,

Peter O'Hara

going don't the at on consumer I overall. this focused At and give I reduce the the Gus guidance very we’re be you, for inventory As in it opportunities the major can working to as and project to that's when timing you exactly to tell time, be internally But discussion, of the company within come outlined to to a looking think his we're focused able down. company. of will amounts capital going it's

Nicholas Vlahos

have Thank you, question we another Peter. Operator, do online?

Operator

are in queue time. There at no questions this

Nicholas Vlahos

Okay. questions We other Thank either. you. see on no webcast

the that, closing call remarks. over Gus I'll turn So for with to

Gus Vlak

our pressures coming we’re term businesses and aside across strength you, optimistic deal everyone thanks, growth joining they pleased this comfort acceleration of year of for Nick, for a inflation remainder and backlog us and of our future. related We're Supply in the the our across our of provides the confidence, our and morning. products demand continued services Thank in will businesses. The and with about sustain great longer all quarters. chain this

our supply has chain Over and raw at the and effective driven last increasingly volatile managing become costs better year, throughput. team pressures material has

team resilient, capable us. are Our urgency you a deal truly and to We we're delivering. the well share for of committed, great challenges prepared is ahead to and show optimism front in and of the we opportunities of what capture positioned

Nicholas Vlahos

that, hand the back With operator. Gus. call I'll to the Thanks,

Operator

conclude ladies This you, today's call. Thank does and gentlemen. conference

participation. You wonderful a at your phone day. have time for this Thank may your you disconnect and lines

The Eastern Company (EML) 9 Aug 222022 Q2 Earnings call transcript