The Eastern Company (EML) 18 Mar 222021 Q4 Earnings call transcript

Good day, ladies and gentlemen, and welcome to The Eastern Company. Fourth Quarter Fiscal Year 2021 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. [Operator Instructions] sound quality. pleasure Moulton the Head my your over now Christopher host, of is to floor turn to It Corporate Development. is floor the yours. Sir,

Good everyone morning. you, us. And for joining thank

business financial Vlak, Eastern's After without our income III. we'll in discussion hear gross expense, of These some including and open could margin, results questions. trends operating to taxes consist CEO, Speaking. outlook. cause revenue, of performance L. for that, Statements President forward-looking call today regarding that or the note subject will to prospects, CFO, limitations. business John and will forward-looking are be August Today expenses, and forward-looking company's projected differ these statements during statements. M. uncertainties Please actual and those the the our Sullivan risks significantly will other statements future and about and from that information

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

addition, performance. for In useful GAAP of as to substitute we measures not financial isolation non-GAAP in I'll should supplemental as believe to discuss Eastern's that and will we for results. over opening non-GAAP considered measures With Gus in are measures a be the addition today's from that, turn or These during call, call remarks.

fourth the Thanks XX-K Chris, Eastern's and full-year on and and those phone who over afternoon. by good of participating web. yesterday joined those our morning released quarter to XXXX have the We you Form numbers

the year. a results Before John on minutes I'd few reviews to with like you, reflect take detailed the Sullivan to

teams the XXXX. business as reported divest our a to debt approximately improve We XXXX, also reduce integration completed us to We're our a outstanding at and and how bill executed into repurchased our capture chains truly growing We value up team profitable Investor and in These We shares for We supply moving, businesses. year. Let a long-term businesses on XXXX demand dynamic three the synergies. Eberhard sale on portfolio ramping we our a in plan safe me very in two start more the for time, allowed and same combined was that our their continued in to strong products, and executed divestitures could create franchise. everything Eastern. day discontinued divested to we transform doing $XX.X strategic innovation, afford At saying in I to to for every shareholder forward. focused and them organizations Commercial faster announced both recover. our of going Industries the to once follows environment. remain keep of moves communities unwavering. to production in Last our our subsequently and of we to Which these address Economy our our our Vehicles the for the second want non-core XXXX. Eastern. quarter $XX,XXX million, of transformative truly Form-XX-Q for for years. Fraser&Jones operations total of innovation high-performing successfully proud by performance and Canadian Sesamee and year XXXX, their lock divestitures focus helping two our In build several success grateful by operating last scale, efforts and year, around we intention our world November on to am thank our strengthen I ensure commitment Greenwald again

expansion we Strongsville, further We including Reynosa, warehousing Mexico. production our to facilities our closed As plan supply Canada some Mexico, by shorter In extraordinarily into Reynosa, Ohio current consolidate manufacturing supply in trends, our Asia. to Illinois and demand distribution the Further, integration, in robust we Wheeling, XXXX, build demand, from chains, and and our which rebound Tilsonburg, operations in in and moving we of demand including activities in part moved believe location manufacturing fueled on that capitalized will products. in chains, the customer and logistics truck fuel macro Mexico for outdoor turn, improved accessories XXXX, more transportation, commercial robust the we to. into in and recreational and surge

in We XXXX also and equally model remember XXXX customers transport in as dynamic. meaningful the experienced new pickup unprecedented I our accelerated. a demand turmoil. automotive year, describing as launches vehicle packaging Last Yet from commercial environment proved

some in X,XXX more steel our for gross right from in price mentioned were increased I of raw growth before the XXXX, of costs, unparalleled these increases increases see were material many hot-rolled at in the our in per example, of XXXX time lagged sales. we But and margin on And in of To to we than $X,XXX steel we August of tons of peak of some material hot-rolled not a can buying of calls, as able to ton price raw instances, as you sales we in shipping August As an growth XXXX, And and all ton our saw were the costs. to in most material able pricing were we buy year. some $XXX the XX% costs, produce the of those steel per raise of you to prices. pass give per year. we

result, on earnings was material. the our a As impact

for are year even is environment increasing to stable where suppliers. new which steel costs by meeting it a demand per customers stocks we is strong and to important now was $X,XXX our from today, safety the Ukraine, and evolving material operating in approximately adding prioritized our add that rapidly with the raw It's ago. navigated than they were close and ton Our a example, year, war hot-rolled more last

end of impacted inventory of the we at required supply As the flow and backlog, customers a chains current is up support to over cash navigate to XXXX result and end stretch the free of those decisions, was temporarily serve build strategically which the XX% our as global XXXX.

thoughts go over transformative some the the of truly share over we I call. at end details to can John of will call had on for the you financial As the results. the turn to But XXXX now, see, year. I'll a

August. you, Thank

fourth-quarter, million the XX% of million pricing. contributed distribution demand XX% sales quarter and X% primarily accessories, and volume increased Sales XXXX. new returnable XXXX, packaging, the Sales to For for to increased from truck automotive $XX.X in well of improved products higher quarter. the fourth due $XX.X and in price products net existing as products as increased

various truck latches included accessories. and products New mirrors,

XX% the was net compared the to For prior fourth of year the compared up higher XXXX in net $XXX.X was freight increased in compared fourth development million of a to in of as sales margin $X and percent of the costs. XXXX when XX% quarter. $XXX.X and XX% fourth a of quarter in decrease the XX% expenses reflects to Gross a XXX% for material million XX% XXXX. of XXXX, million the from percentage margin of XXXX. Gross year Product The as XXXX sales full-year combination to fourth XXXX. was for in sales quarter the quarter

of travel the quarter business the XXXX. our to in increased X.X% other As percentage fourth charge factory at fourth million of was goodwill quarter Selling share the a tax more diluted increase normal million was from returned of fourth and relocation, The products primarily negatively increase non-recurring of costs expenses The expenses, of expenses XX% of and in quarter net or fourth of XXXX, of increased expenses by impairment the per related compared XXXX payroll, administrative X% development $X.X and operations million $X.XX and primarily product $X.X XXXX. as $X.XX is transaction XXXX. increased increased XXXX. were per quarter result income of of share income Eberhard in Velvac. in $X.X to the the non-cash new investment compared million to Net $X.X payroll-related net and in net of quarter XXXX In for fourth or tax. sales, X.X% impacted net restructuring, to diluted

approximately full the EBITDA net or increased $X.X in X% $XX.X the fourth Adjusted million compared quarter diluted XXXX. diluted from continuing $XX.X XXXX. to million increased $X.XX the $XX.X $XX Adjusted the share operations in from XX% to fourth year for a million or approximately approximately XXXX. For was from million EBITDA per continuing from XXXX, quarter to share income per full XXXX, operations for of million $X.X $X.XX for of million by year

For a on In activities highlights, cash in sheet net the benefit contributed the for operating flow we XXXX, balance $XX.X quick in full-year used XXXX. million summary plans. by $X.X provided defined was XXXX, to our $X.X compared operating retirement a million basis, in cash on cash activities net million to

constraints. to usage primarily cash which support XXXX what additional due expect capital was During for accelerated to Fiscal capital, million, support $XX.X in working inventory, on XXXX, $X.X XXXX, was capital current meet Total payment. expenditures we supply the But cash $XX capital, comparison chain ensuring a demands working million to total million. requirements In approximately million, availability during which was additional was of made management's way debt XXXX to of the in customer focus on an Year payments billion. be $X.X $X.X used XXXX to $XX.X of company of expenditures principal was million, of

and Xst had As we $X.X equivalents cash January cash XXXX, of of million.

With over X.XX Chris our both Our X.X, of to that, the turn our X,X/X fixed bank for which within and leverage at are covenants coverage call ratio respectively. at well X,X/X net stood questions. of ratio and I'll

like you line to for questions. would open John. the Thanks Operator

Certainly, we or via moment if Please have while type the you ask ladies questions. into and hold question once may them the any questions [Operator Instructions]. box you comments, gentlemen, again for or poll the webcast

in we begin questions have come that with Okay. them. via We so some do the have webcast can

to one it I'm going out, question, with bear have it me We says. read

OEMS expect three will introduction give obviously in that 'XX that Or the through the these -order the OEMS big XXXX do the been big products and you new model to pre the a returnable place vehicle of recent as essentially year are models. such for business, result rather chain take of year. as growth a this new growth segment would supply growth introduced. Regarding Do models introduction segment packaging -- big their expect is placed one ready one such 'XX that that continue as already XXXX, to during three

I answer think we question. can that

Yes.

the the XX OEMS packaging. to to the in product working of they launch months returnable start order, when So prior on XX is transport with us design somewhere

bit little a probably later. that's Xs, Tier For

driven all that's by new Bank product the through the XXXX. data for of that aggregated we've latest have, on we strong launches based And vehicle which remains forecast launches. by America, So new

approximately and at XXXX. three compares an over launches estimates through to XXXX America last new years. average the XX of in above Bank product to XX So of XX or That launches XX that remains

future. to strong merger the expecting we're So remain the for foreseeable

your you working see in and level on current quarters. Maybe can comment headed of we capital it another coming question, where

Sure.

And level. our factors is historical So our driving investments this. safety really in three are there I main obviously capital mentioned our working is above that stocks.

mentioned I not think orders product we complete reason that where I the it certain of would is able we in working be due level we're on are all past a sits to transit. do finish long a expect that components have we to capitalism waiting those And higher to while time above as our third products.

of which about take driving any got. to got inventory quarters but capital. the our can based this. concern this And we've do working All quality see have hard on away, we won't don't doesn't happen to it's a -- is right it few It spoilage but we declining,

course, will further our down we which cash of happens, as leverage will net that drive generate ratio. Now

at around question you have that experienced about we highest sure. John, currently do gross get have our Not we're XXXX? Then XX% any? back previous another to in can Do think back the margins, we that in we we quarter. and

Well, actually yes.

forward the increase So I think will we normalized can prices with go as costs. get improve that and and our we see material

to many Gus and we of lot with that keep had pricing of up a lagged. couldn't is customers, our said so the time, had material with rising took negotiate As earlier, which we the fast price so recoveries the we

the improvement As holding, gross in down, coming marked should margin. price of we see the are a and our prices material starts

the in going another forward? have says, it feel run quarters rate below we on we And " appropriate "Notably this Do year. is an SG&A, question other

expenses think running is, I for. controls to know sales starts administrative bringing I put should will really we it's selling on should increase know, sales. It where a also and business we on do that relative a appropriate. bit. we lot as we actually them. do I be us and additional some monitor might But improving, people But be additional staff which it be as of

like Okay. to the no It that appears Operator, would have further have questions. ask as do question? we webcast that a anyone line we on

Yes.

is today Investor. line from question Jennings first Our the coming from Miles our Priored

Your line live. is

You may begin.

those employees having though see considered and maybe from shares and them the and of I pension the various just handle plan? stock. for owning XXX,XXX the at as of assets, That's Eastern is that by plan and pension double for shares sort a shares you'll common has one funds jeopardy Good the have seems I questions wondered, of X.X% have to buying expenses your available back about outstanding. and few everything. cash well sure you about least. suspect thanks plan than as as I morning your of good volatility answer report. shares. of I And It of had that stock I'm easier shares your firm just X.X%

the investments, board pension market actually do going to meeting however -- we expect feel low where do we and we have every that have review a fairly been actually we've price we we at the do when know look quarter a our that and overall our benefit at Well, was acquiring funding. to it relative to shares go, the into we be we

though cannot into the are XX% any more we than We pension cost. include plan capped

the be time, at factor. try to see this we that would don't But out of limiting to divest in reason a that point So there.

to that and that along the you This you. as at far of as is service million your and reduce you Wheeling, I the $XX which But the of XXX,XXX space on That's real to based which like just for year-end. just do company. square per wondered, owned that consolidation square I you looked a saw carrying. facilities? planning Thank resorts excess share. the do is $X about seems feet works it said heavy was footage foot. businesses, data year-end, to and out year $XX on about that million Illinois -- for. think large value Illinois, building facilities just is in estate, set price of you're tied facilities of lines I plans XX-K they see at value further your versus I at sold commend I Wheeling lock you you're industrial about average $XXX luck carrying a which what industrial have the very square evaluating I just to a that this globestreet.com,

do we with the your of footprint. got to question, one square to has than Just we we've two more our to to discount manufacturing parts the optimization do And believe that footage with support our release the to And of own current is, to I it production understand second part correctly, need question is levels. the should we your do think if I that we whether we say capacity manufacturing we looking evaluating that to that fact look are we space year today continuously some we're our goals in margin we ways with the when so I at add, would have, some levels. can plans we the on production we support own. sites, together, I say know our put each currently both, would need. what manufacturing at I and more

footage. for the expecting the when change acquisition an think what of ability we quite in our a benefit any look closely footprint time, not potentially to wholesale because square same we're our bit overall there's to terms look that. with to At at from I begin optimize a acquisitions, But very is

Yes.

think That rates change. on in say, don't we has could and for And We have it far come to pretty where we out been continue that level certainly once general second cap compare a commercial debt have at The your dynamic. sale for if a until to to the don't impact come And based looked shareholders. look, would gotten is month, cap changes, offers on the those question, least that we at estate a rates real And us. I so rates conclusion. certainly offers it that the if benefit would we've market we there. benefits the now, evaluate think us, we with and different to and leasebacks,

Excellent.

further disclosed equipment think. just sale of you sale total you And & the one business two Greenwald of give for proceeds these $X on I the Just million, net on the -- sales. I that thing. gain can us you you some the businesses? that wondered, noted I on Frazer sold saw Jones, of

million. $XX

million. XX

million. XX

XX retaining I And Greenwald building Thank million. for Investment Good. you. that's just research. of the assume.

correct. is That

out And have think do working you're nicely and very Thanks, like Thanks much. you been spot very acquisitions on it your sounds the the right academy. in again.

do Thank we you. Operator, line? the questions other any on have

queue the in questions further no time. have We this at

call the I'll August you. With that, for Okay. closing Thank remarks. turn to

Thank you and questions. those thank you for

are and optimistic year. markets, of As in be core chains, strong that volatility recovering demand price believe I to I the higher confidence reasons XXXX, reflect our about will there level that material With raw on many a subside. supply

mentioned, the we're the accelerated in of Illinois once launches, war should In the as new well increase saw see raw six also in against cost impact the we in increases of the mirror that Ukraine, While materials, from synergies driving XXXX. some of seeing our from the the we as not programs is to the in begin I up as growth in new Eberhard of Lock XXXX. truck launch of vehicle consolidation XXXX,

OEMs electro include in SUV time, Mustang, continue to of the strengthen working we're SUV. expect big truck GM on among noted our Cherokee, and heavy-duty the with headway building and launches. a with demand Lightning year-end many also packaging X others, a These our significant excited passenger EQS three Tier in seen XXXX, made At of of transport FXXX Jeep a Were Mercedes has that models truck are excited lot business about Super-duty in precision, FXXX same report the of due the EQS for and and model leading throughout upcoming Ford one its Ford truck XXX that working which reflected And numerous to the We're customers launches heavy-duty material was demand OEMS. near-term services to we're including Ford supplier well. pickup customers. packaging XXXX, now the and to return we're earlier, we've and are as primary launch, to industry the trucks. backlog. returnable in business, the And Grand -vehicle products we As new passenger on with others

various success with our Our commercial based on Velvac strong OEMS. this to is in leverage part these vehicle Eberhard's in and market ability relationships

XXXX, believe we deliver and digitization X growth, digitization will that markets, we And our on and across transportation automation. XXXX led on sales that including our on for acquisitions including full XXXX, of significant recently pursuit businesses. Velvac, earnings at for And Precision, the and anticipate and and synergies electrification, our flow Beyond We're core cash our in businesses industry expands that and beyond access of bolt-on into will each electrification build and offer innovation beyond. organic and Big capitalizing markets, our active launched businesses, three retail. XXXX capabilities, line translate our core core innovative Eberhard, example, focus our Eberhard, of several in solutions, a our of many looking capitalizing we're that. electro-mechanical very growth products for to commercial trends,

goal Chris. and turn Navistar. company our during year. As Finance O'Hara John With incredible release, of career Peter a year our will press remain excited President call I'll organic we're that as in place his Peter as an we're for deeply confident this Vice result, on combination CFO. XXth leadership at seen in through but at back of Sullivan, of acquisitions. we the has was million and least, May not had senior you Last leadership $XXX retiring to growth and team XX Peter built grateful on a the might have Eastern, EBITDA that, John will, who's commitment. become our recently, to Most

back Thank Operator. you, call August. I'll with that, to And the turn the

Thank you. this does and Ladies today's gentlemen, conclude event.

for this time wonderful participation. day. a We disconnect thank may at You and have your you