SEC Filing

Form 8-K

filed this form 8-K on 11/10/2021


eml_8k.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report: November 10, 2021

(Date of earliest event reported)

 

The Eastern Company

(Exact name of Registrant as specified in its charter)

 

Connecticut

 

001-35383

 

06-0330020

(State or other jurisdiction

 

(Commission

 

(IRS Employer

of incorporation)

 

File Number)

 

identification No.)

 

112 Bridge Street, Naugatuck, Connecticut

 

06770

(Address of principal executive offices)

 

(Zip Code)

 

(203) 729-2255

(Registrant’s telephone number, including area code)

 

________________________________________________

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2)

 

     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, No Par Value

EML

NASDAQ Global Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging Growth Company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

ITEM 2.02 – Results of Operations and Financial Condition

 

Press Release dated November 10, 2021 announcing the third quarter earnings for 2021 is attached hereto.

 

ITEM 7.01 – Regulation FD Disclosure

 

On November 10, 2021, The Eastern Company released the third quarter earnings of 2021. A copy of the Press Release dated November 10, 2021 announcing the third quarter earnings for 2021 is attached hereto.

 

ITEM 9.01 – Financial Statements and Exhibits

 

(d) Exhibits

   

Exhibit No.

 

Title

 

 

 

99.1

 

Press Release dated November 10, 2021 announcing the third quarter earnings for 2021.

 

 

 

104

 

Cover Page Interactive Data File (cover page XBRL tags are embedded within the Inline XBRL document)

 

 

2

 

  

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

 

 

The Eastern Company

 

 

 

 

Date: November 10, 2021

By:

/s/John L. Sullivan III

 

 

John L. Sullivan III

Vice President and Chief Financial Officer

 

 

3

 

eml_ex991.htm

EXHIBIT 99.1

 

 

FOR IMMEDIATE RELEASE

 

November 10, 2021

 

THE EASTERN COMPANY REPORTS THIRD QUARTER 2021 FINANCIAL RESULTS
NET SALES FROM CONTINUING OPERATIONS INCREASE BY 15%;
NET EARNINGS FROM CONTINUING OPERATIONS GROW BY 21%

 

 

·

Strengthening demand across our core markets drove growth in our net sales from continuing operations to $63.9 million in the third quarter of 2021, an increase of 15% compared to net sales from continuing operations in the third quarter of 2020. Customer orders were strong and backlog grew to $83.1 million at the end of the third quarter compared to $57.7 million at the end of the third quarter of 2020

 

 

 

 

·

Gross margins increased sequentially by 100 basis points to 24% in the third quarter of 2021, compared to 23% in the second quarter of 2021, as price increases began to offset elevated material costs and freight rates.

 

 

 

 

·

Earnings per diluted share from continuing operations for the third quarter of 2021 were $0.61, an increase of 20% over the third quarter of 2020, as a result of higher sales and improved gross margins, partly offset by expenses related to the move of certain operations from Illinois to Mexico. Adjusted for these expenses, earnings per diluted share from continuing operations were $0.64. (See non-GAAP financial measures.)

 

 

 

 

·

Eastern’s balance sheet remains strong with net leverage of 2.5x as of the end of the third quarter of 2021, down from 3.0x at the end of fiscal year 2020.

 

 

 

 

·

As part of our efforts to streamline our portfolio of businesses and build scale in our largest businesses, Eastern announced on November 4th that it had divested the assets of Greenwald Industries. We plan to use the proceeds from the sale to reduce our debt and re-initiate share repurchases under a new 10b5-2 plan.

  

NAUGATUCK, CT – November 10, 2021 - The Eastern Company (“Eastern”) (NASDAQ:EML), an industrial manufacturer of unique engineered solutions serving commercial transportation, logistics, and other industrial markets, today announced the results of operations for the third fiscal quarter ended October 2, 2021.

 

President and CEO August Vlak commented, “Sales from continuing operations for the third quarter of 2021 increased 15% compared to the third quarter of 2020, due to strengthening demand across a broad range of our commercial vehicle and industrial markets. During the third quarter of 2021, sales in our returnable transport packaging business grew by more than 30% compared to the third quarter of 2020, as our customers stepped up preparations for new product launches that are scheduled to take place in 2022. Strong demand for truck accessories, Class-8 trucks, and recreational vehicles, as well as the launch of new products and solutions, including a new Paccar main mirror program, contributed significantly to sales growth in the quarter.

 

Mr. Vlak continued, “Our backlog at the end of the third quarter reached $83.1 million, an increase of $25.4 million, or 44% over the backlog at the end of the third quarter of 2020. The increase in backlog was primarily the result of increased demand from our commercial vehicle and truck accessories customers. As of November 5, 2021, our backlog has continued to grow.

 

Mr. Vlak added, “Our businesses are responding well to the supply chain challenges and volatility in certain raw material prices. Our businesses have been more successful at passing on cost increases by raising prices during the quarter. Gross margin in the third quarter increased to 24% compared to gross margin of 23% in the second quarter of 2021. We believe that recent stabilization in the prices of many of our raw materials and shipping rates will translate into continued improvement in our gross margins in the coming quarters. All of our businesses experienced transportation bottlenecks and sharp increases in freight costs and prices of certain raw materials, including steel and resins. For example, on a year-over-year basis, the price of hot-rolled and cold-rolled steel increased by 245% and 206%, respectively, and freight costs increased 110%.”

  

112 BRIDGE STREET,  P.O. BOX 460,  NAUGATUCK,  CONNECTICUT  06770-0460
PHONE (203) 729 - 2255  *  FAX (203) 723 - 8653  *  WWW.EASTERNCOMPANY.COM

  

 

 

 

Mr. Vlak continued, “Our balance sheet remains strong. As of the end of the third quarter of 2021 our net leverage ratio was 2.5x, and our fixed charge coverage ratio was 2.5x, both of which comfortably comply with our bank covenants of 4.25x and 1.25x, respectively. We believe that our strong balance sheet, proceeds from divestitures, and ample liquidity will fuel an acceleration in growth of our three largest businesses.”

 

Third Quarter of 2021 and First Nine Months of 2021 Financial Results

 

Net sales from continuing operations increased by 15% to $63.9 million for the third quarter compared to $55.7 million for the third quarter of 2020. Net sales from continuing operations increased by 27% for the first nine months of 2021 to $186.9 million, compared to $147.1 million for the first nine months of 2020.

 

Gross margin as a percent of net sales was 24% for the third quarter and first nine months of 2021, compared to 24% for the third quarter of 2020 and 25% for the first nine months of 2020.

 

Net income from continuing operations increased by 21% to $3.8 million for the third quarter, or $0.61 per diluted share, from $3.2 million, or $0.51 per diluted share, for the third quarter of 2020. Net income from continuing operations for the first nine months of 2021 increased by 56% to $12.3 million, or $1.96 per diluted share, from $7.9 million, or $1.26 per diluted share for the first nine months of 2020.

 

Conference Call and Webcast

 

The Eastern Company will host a conference call to discuss its results for the third quarter and first nine months of 2021 and other matters on Thursday, November 11, 2021 at 11:00 AM Eastern Time. Participants can access the conference call by phone at 888-506-0062 (toll free in US & Canada) or 973-528-0011 (international). Participants can also join via the web at https://reporting.webcaster4.com/overview?webcastId=43436&token=c7852c87-b085-49a9-8bd4-9da77080b1c7

.

About The Eastern Company

 

The Eastern Company manages industrial businesses that design, manufacture and sell unique engineered solutions to niche markets, focusing on industries that offer long-term macroeconomic growth opportunities. The Company operates from locations in the U.S., Canada, Mexico, U.K., Taiwan and China. More information on the Company can be found at www.easterncompany.com.

 

Safe Harbor for Forward-Looking Statements

 

Statements in this document about our future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and the rules, regulations and releases of the Securities and Exchange Commission. Any statements that are not statements of historical fact, including statements containing the words “would”, “should”, “may,” “will,” "believes," “estimates,” "intends", "continues," "reflects," "plans," "anticipates," "expects," “potential,” “opportunities” and similar expressions, should also be considered to be forward-looking statements. Readers should not place undue reliance on these forward-looking statements, which are based upon management's current beliefs and expectations. These forward-looking statements are subject to risks and uncertainties, and actual results might differ materially from those discussed in, or implied by, the forward-looking statements. The risks and uncertainties that could cause actual results or events to differ materially from those indicated by such forward-looking statements include, but are not limited to, the effects of the COVID-19 pandemic, vaccination rates, the emergence of variants of COVID-19, and the measures being taken to limit the spread and resurgence of COVID-19, including supply chain disruptions, delays in delivery of our products to our customers, impact on demand for our products, reductions in production levels, increased costs, including costs of raw materials, the impact on global economic conditions, the availability, terms and cost of financing, including borrowings under credit arrangements or agreements, and risks associated with employees working remotely or operating with reduced workforce; the scope and duration of the COVID-19 pandemic, including the extent of any resurgences and the emergence of variants of COVID-19, and how quickly and to what extent normal economic activity can resume; changing customer preferences, lack of success of new products, loss of customers, cybersecurity breaches, changes in competition in our markets, and increased prices for raw materials resulting from tariffs on imported goods or otherwise. There are important, additional factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including those set forth in our reports and filings with the Securities and Exchange Commission. We undertake no obligation to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise, except as required by law.

 

 
2

 

 

Non-GAAP Financial Measures

 

The non-GAAP financial measures we provide in this release should be viewed in addition to, and not as an alternative for, results prepared in accordance U.S. GAAP. A reconciliation of non-GAAP financial measures referenced in this release to the nearest GAAP results is provided with this release.

 

To supplement the consolidated financial statements prepared in accordance with U.S. GAAP, we have presented adjusted earnings per share from continuing operations, adjusted EBITDA from continuing operations and adjusted EBITDA margin, which are considered non-GAAP financial measures. The non-GAAP financial measures presented may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures in the same way. These measures are not substitutes for their comparable GAAP financial measures, such as net sales, net income, diluted earnings per common share, or other measures prescribed by U.S. GAAP, and there are limitations to using non-GAAP financial measures.

 

Adjusted earnings per share from continuing operations is defined as diluted earnings per share from continuing operations excluding, when they occur, the impacts of impairment losses, losses on sale of subsidiaries, transaction expenses, gain on sale of building, factory start-up costs, factory relocation expenses and restructuring costs. We believe that adjusted earnings per share provides important comparability of underlying operational results, allowing investors and management to access operating performance on a consistent basis.

 

Adjusted EBITDA from continuing operations is defined as net income from continuing operations before interest expense, provision for income taxes, and depreciation and amortization and excluding, when they occur, the impacts of impairment losses, losses on sale of subsidiaries, transaction expenses, gain on sale of building, factory start-up costs, factory relocation expenses and restructuring expenses. Adjusted EBITDA is a tool that can assist management and investors in comparing our performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our underlying operations.

 

Management uses non-GAAP financial measures to evaluate performance period over period, to analyze the underlying trends in our business including our business segments, to assess our performance relative to our competitors, and to establish operational goals and forecasts that are used in allocating resources. These financial measures should not be considered in isolation from, or as a replacement for, GAAP financial measures.

 

We believe that presenting non-GAAP financial measures in addition to GAAP financial measures provides investors greater transparency to the information used by our management for its financial and operational decision-making. We further believe that providing this information better enables our investors to understand our operating performance and to assess the methodology used by management to evaluate and measure such performance.

 

Investor Relations Contacts

 

The Eastern Company
August Vlak or John L. Sullivan III

203-729-2255

 

 
3

 

 

THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 2, 2021

 

 

October 3, 2020

 

 

October 2, 2021

 

 

October 3, 2020

 

Net sales

 

$ 63,876,906

 

 

$ 55,705,597

 

 

$ 186,897,930

 

 

$ 147,059,497

 

Cost of products sold

 

 

(48,661,374 )

 

 

(42,315,555 )

 

 

(142,196,527 )

 

 

(110,427,295 )

Gross margin

 

 

15,215,532

 

 

 

13,390,042

 

 

 

44,701,403

 

 

 

36,632,202

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product development expense

 

 

(962,924 )

 

 

(556,469 )

 

 

(3,068,866 )

 

 

(2,395,932 )

Selling and administrative expenses

 

 

(9,440,583 )

 

 

(8,536,752 )

 

 

(27,760,514 )

 

 

(23,289,068 )

Operating profit

 

 

4,812,025

 

 

 

4,296,821

 

 

 

13,872,023

 

 

 

10,947,202

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(427,222 )

 

 

(485,300 )

 

 

(1,388,512 )

 

 

(1,560,962 )

Other income

 

 

407,192

 

 

 

365,701

 

 

 

3,359,065

 

 

 

969,023

 

Income from continuing operations before income taxes

 

 

4,791,995

 

 

 

4,177,222

 

 

 

15,842,576

 

 

 

10,355,263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

(971,884 )

 

 

(1,021,607 )

 

 

(3,573,308 )

 

 

(2,476,640 )

Net income from continuing operations

 

 

3,820,111

 

 

 

3,155,615

 

 

 

12,269,268

 

 

 

7,878,623

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations (see note B )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) from operations of discontinued units

 

 

1,492,063

 

 

 

(222,773 )

 

 

2,831,530

 

 

 

(5,054,259 )

Gain (loss) on classification as held for sale

 

 

1,308,639

 

 

 

-

 

 

 

(9,274,439 )

 

 

-

 

Income tax (expense) benefit

 

 

(659,285 )

 

 

51,833

 

 

 

1,516,661

 

 

 

1,167,345

 

Gain (loss) on discontinued operations

 

 

2,141,417

 

 

 

(170,940 )

 

 

(4,926,248 )

 

 

(3,886,914 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$ 5,961,528

 

 

$ 2,984,675

 

 

$ 7,343,020

 

 

$ 3,991,709

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$ 0.61

 

 

$ 0.51

 

 

$ 1.96

 

 

$ 1.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$ 0.61

 

 

$ 0.51

 

 

$ 1.96

 

 

$ 1.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share from discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$ 0.34

 

 

$ (0.03 )

 

$ (0.79 )

 

$ (0.62 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$ 0.34

 

 

$ (0.03 )

 

$ (0.79 )

 

$ (0.62 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$ 0.95

 

 

$ 0.48

 

 

$ 1.17

 

 

$ 0.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$ 0.95

 

 

$ 0.48

 

 

$ 1.17

 

 

$ 0.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends per share:

 

$ 0.11

 

 

$ 0.11

 

 

$ 0.33

 

 

$ 0.33

 

 

 
4

 

 

THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 2, 2021

 

 

January 2, 2021

 

 

 

(unaudited)

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$ 8,703,386

 

 

$ 15,320,776

 

Accounts receivable, less allowances: 2021 - $583,891; 2020 - $486,707

 

 

41,295,019

 

 

 

31,804,207

 

Inventories

 

 

56,698,552

 

 

 

43,121,737

 

Current portion of notes receivable

 

 

588,926

 

 

 

398,414

 

Prepaid expenses and other assets

 

 

7,314,511

 

 

 

3,152,720

 

Current assets held for sale

 

 

35,044,564

 

 

 

17,937,918

 

Total Current Assets

 

 

149,644,958

 

 

 

111,735,772

 

 

 

 

 

 

 

 

 

 

Property, Plant and Equipment

 

 

50,934,225

 

 

 

52,173,305

 

Accumulated depreciation

 

 

(26,031,846 )

 

 

(25,976,187 )

Property, Plant and Equipment, Net

 

 

24,902,379

 

 

 

26,197,118

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

70,992,398

 

 

 

70,994,178

 

Trademarks

 

 

5,393,868

 

 

 

5,404,284

 

Patents and other intangibles net of accumulated amortization

 

 

23,803,304

 

 

 

27,089,071

 

Long term notes receivable, less current portion

 

 

791,802

 

 

 

1,677,277

 

Right of Use Assets

 

 

11,774,102

 

 

 

12,594,663

 

Long-term assets held for sale

 

 

-

 

 

 

19,894,688

 

Total Other Assets

 

 

112,755,474

 

 

 

137,654,161

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$ 287,302,811

 

 

$ 275,587,051

 

 

 
5

 

 

THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

October 2, 2021

 

 

January 2, 2021

 

 

 

(unaudited)

 

 

 

 

Current Liabilities

 

 

 

 

 

 

Accounts payable

 

$ 31,480,819

 

 

$ 21,311,619

 

Accrued compensation

 

 

4,182,611

 

 

 

3,474,686

 

Other accrued expenses

 

 

1,648,486

 

 

 

3,362,032

 

Current portion of lease liability

 

 

2,785,950

 

 

 

2,798,712

 

Current portion of long-term debt

 

 

7,500,000

 

 

 

6,437,689

 

Current liabilities held for sale

 

 

7,086,138

 

 

 

3,281,225

 

Total Current Liabilities

 

 

54,684,004

 

 

 

40,665,963

 

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

2,957,771

 

 

 

2,957,771

 

Other long-term liabilities

 

 

1,068,580

 

 

 

1,144,126

 

Lease liability

 

 

9,159,274

 

 

 

9,834,853

 

Long-term debt, less current portion

 

 

76,772,649

 

 

 

82,255,803

 

Accrued postretirement benefits

 

 

1,138,148

 

 

 

1,185,139

 

Accrued pension cost

 

 

29,132,453

 

 

 

33,188,623

 

Long-term liabilities held for sale

 

 

-

 

 

 

48,315

 

Total Liabilities

 

 

174,912,879

 

 

 

171,280,593

 

 

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

 

 

Voting Preferred Stock, no par value:

 

 

 

 

 

 

 

 

Authorized and unissued: 1,000,000 shares

 

 

 

 

 

 

 

 

Nonvoting Preferred Stock, no par value:

 

 

 

 

 

 

 

 

Authorized and unissued: 1,000,000 shares

 

 

 

 

 

 

 

 

Common Stock, no par value, Authorized: 50,000,000 shares

 

 

32,591,987

 

 

 

31,501,041

 

Issued: 9,024,909 shares in 2021 and 8,996,625 shares in 2020

 

 

 

 

 

 

 

 

Outstanding: 6,275,180 shares in 2021 and 6,246,896 shares in 2020

 

 

 

 

 

 

 

 

Treasury Stock: 2,749,729 shares in 2021 and 2,749,729 shares in 2020

 

 

(20,537,961 )

 

 

(20,537,962 )

Retained earnings

 

 

128,480,870

 

 

 

122,840,131

 

Accumulated other comprehensive income (loss):

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

715,026

 

 

 

953,863

 

Unrealized loss on interest rate swap, net of tax

 

 

(789,368 )

 

 

(1,391,592 )

Unrecognized net pension and postretirement benefit costs, net of tax

 

 

(28,070,622 )

 

 

(29,059,023 )

Accumulated other comprehensive loss

 

 

(28,144,964 )

 

 

(29,496,752 )

Total Shareholders’ Equity

 

 

112,389,932

 

 

 

104,306,458

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$ 287,302,811

 

 

$ 275,587,051

 

 

 
6

 

 

THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

October 2, 2021

 

 

October 3, 2020

 

Operating Activities

 

 

 

 

 

 

Net income

 

$ 7,343,020

 

 

$ 3,991,709

 

Less: Loss from discontinued operations

 

 

(4,926,248 )

 

 

(3,886,914 )

Income from continuing operations

 

$ 12,269,268

 

 

$ 7,878,623

 

Adjustments to reconcile net income to net cash provided

 

 

 

 

 

 

 

 

by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

5,188,863

 

 

 

4,966,934

 

Unrecognized pension and postretirement benefits

 

 

(3,056,642 )

 

 

(1,066,777 )

Gain on sale of equipment and other assets

 

 

(1,469,218 )

 

 

(418,872 )

Provision for doubtful accounts

 

 

73,097

 

 

 

156,286

 

Stock compensation expense

 

 

1,090,946

 

 

 

652,232

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(9,553,337 )

 

 

3,013,523

 

Inventories

 

 

(13,686,268 )

 

 

3,092,768

 

Prepaid expenses and other

 

 

(3,903,388 )

 

 

132,623

 

Other assets

 

 

47,534

 

 

 

4,755,718

 

Accounts payable

 

 

11,156,105

 

 

 

(949,971 )

Accrued compensation

 

 

697,735

 

 

 

(1,191,856 )

Other accrued expenses

 

 

(2,173,142 )

 

 

(1,587,475 )

Net cash (used in) provided by operating activities

 

 

(3,318,447 )

 

 

19,433,756

 

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

Marketable securities

 

 

28,951

 

 

 

7,741

 

Business disposition

 

 

 

 

 

(5,994,267 )

Issuance of notes receivable

 

 

 

 

 

(1,251,943 )

Payments received from notes receivable

 

 

694,962

 

 

 

54,069

 

Proceeds from sale of equipment

 

 

1,980,729

 

 

 

445,212

 

Purchases of property, plant and equipment

 

 

(2,112,990 )

 

 

(1,531,082 )

Net cash provided by (used in) investing activities

 

 

591,652

 

 

 

(8,270,270 )

 

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

 

Principal payments on long-term debt

 

 

(4,424,757 )

 

 

(3,846,861 )

Financing leases, net

 

 

132,221

 

 

 

 

Purchase common stock for treasury

 

 

 

 

 

(368,864 )

Dividends paid

 

 

(2,062,492 )

 

 

(2,058,943 )

Net cash used in financing activities

 

 

(6,355,028 )

 

 

(6,274,668 )

 

 

 

 

 

 

 

 

 

Discontinued Operations

 

 

 

 

 

 

 

 

Cash provided by (used in) operating activities

 

 

3,546,530

 

 

 

(2,744,115 )

Cash used in investing activities

 

 

(794,519 )

 

 

(245,288 )

Cash provided by (used in) discontinued operations

 

 

2,752,011

 

 

 

(2,989,403 )

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

239,561

 

 

 

(344,534 )

Net change in cash and cash equivalents

 

 

(6,090,251 )

 

 

1,554,881

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

16,101,635

 

 

 

17,996,505

 

Cash and cash equivalents at end of period ¹

 

$ 10,011,384

 

 

$ 19,551,386

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Interest

 

$ 1,839,729

 

 

$ 2,085,953

 

Income taxes

 

 

866,850

 

 

 

1,453,775

 

 

 

 

 

 

 

 

 

 

Non-cash investing and financing activities

 

 

 

 

 

 

 

 

Right of use asset

 

 

(820,561 )

 

 

(428,510 )

Lease liability

 

 

688,341

 

 

 

428,510

 

 

 

 

 

 

 

 

 

 

¹ includes cash from assets held for sale of $1.3 million as of October 2, 2021 and $1.8 million as of October 3, 2020

 

 

 

 

 

 

 

 

 

 
7

 

 

Reconciliation of Non-GAAP Measures

 

 

 

 

 

 

 

 

 

 

 

 

EPS from Continuing Operations Calculation

 

 

 

 

 

 

 

 

 

 

 

 

For the Three and Nine Months ended October 2, 2021 and October 3, 2020

 

 

 

 

 

 

 

($000's)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 2, 2021

 

 

October 3, 2020

 

 

October 2, 2021

 

 

October 3, 2020

 

Net income from continuing operations as reported per generally accepted accounting principles (GAAP)

 

$ 3,820

 

 

$ 3,156

 

 

$ 12,269

 

 

$ 7,879

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations as reported under generally accepted accounting principles (GAAP):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$ 0.61

 

 

$ 0.51

 

 

$ 1.96

 

 

$ 1.26

 

Diluted

 

$ 0.61

 

 

$ 0.51

 

 

$ 1.96

 

 

$ 1.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of Eberhard Hardware Ltd building, net of tax

 

 

-

 

 

 

-

 

 

 

(1,353 )A

 

 

-

 

Factory relocation, net of tax

 

 

45 E

 

 

188 B

 

 

105 E

 

 

188 B

Transaction expenses

 

 

 

 

 

 

184 C

 

 

 

 

 

 

204 C

Factory start-up costs, net of tax

 

 

155 D

 

 

 

 

 

 

187 D

 

 

 

 

Total adjustments (Non-GAAP)

 

$ 200

 

 

$ 372

 

 

$ (1,061 )

 

$ 392

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income from continuing operations

 

$ 4,020

 

 

$ 3,528

 

 

$ 11,208

 

 

$ 8,271

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings per share from continuing operations (Non-GAAP):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$ 0.64

 

 

$ 0.57

 

 

$ 1.79

 

 

$ 1.33

 

Diluted

 

$ 0.64

 

 

$ 0.57

 

 

$ 1.79

 

 

$ 1.33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A) Gain on sale of Eberhard Hardware Ltd building

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B) Cost incurred on relocation of Velvac factory in Reynosa, MX

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C) Costs incurred on the acquisition of Hallink RSB, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

D) Costs incurred on start-up of Eberhard factory in Reynosa, MX

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

E) Costs incurred on relocation of ILC facility in Wheeling, IL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
8

 

 

Reconciliation of Non-GAAP Measures

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA from Continuing Operations Calculation

 

 

 

 

 

 

 

 

 

 

 

 

For the Three and Nine Months ended October 2, 2021 and October 3, 2020

 

 

 

 

 

 

 

($000's)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 2, 2021

 

 

October 3, 2020

 

 

October 2, 2021

 

 

October 3, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations as reported per generally accepted accounting principles (GAAP)

 

$ 3,820

 

 

$ 3,156

 

 

$ 12,269

 

 

$ 7,879

 

Interest expense

 

 

427

 

 

 

485

 

 

 

1,389

 

 

 

1,561

 

Provision for income taxes

 

 

972

 

 

 

1,022

 

 

 

3,573

 

 

 

2,477

 

Depreciation and amortization

 

 

1,658

 

 

 

1,754

 

 

 

5,189

 

 

 

4,967

 

Gain on sale of Eberhard Hardware Ltd building

 

 

-

 

 

 

-

 

 

 

(1,841 )A

 

 

-

 

Factory relocation

 

 

59 E

 

 

251 B

 

 

139 E

 

 

251 B

Transaction expenses

 

 

-

 

 

 

184 C

 

 

-

 

 

 

204 C

Factory start-up costs

 

 

207 D

 

 

 

 

 

 

250 D

 

 

 

 

Adjusted EBITDA from continuing operations

 

$ 7,143

 

 

$ 6,852

 

 

$ 20,968

 

 

$ 17,339

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A) Gain on sale of Eberhard Hardware Ltd building

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B) Cost incurred on relocation of Velvac factory in Reynosa, MX

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C) Costs incurred on the acquisition of Hallink RSB, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

D) Costs incurred on start-up of Eberhard factory in Reynosa, MX

 

 

 

 

 

 

 

 

 

 

 

 

 

E) Costs incurred on relocation of ILC facility in Wheeling, IL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
9