10-Q · May 12, 2026
The Eastern Company reported a decrease in revenue and EPS for Q1 2026, totaling $59.7 million and $0.11, respectively, both lower than the prior year. Management noted a particularly poor performance in the racks…
Earnings analysis · 10-Q
EML earnings analysis
Filed August 11, 2026 · Our reading of the company's report
The latest report
Second-quarter revenue fell 11.9% year over year to $61.8 million, with gross margin declining 270 basis points to 20.6% and operating profit declining to $1.7 million from $3.1 million. GAAP diluted EPS increased to…
Read full summary
Second-quarter revenue fell 11.9% year over year to $61.8 million, with gross margin declining 270 basis points to 20.6% and operating profit declining to $1.7 million from $3.1 million. GAAP diluted EPS increased to $0.94 from $0.33, but this was driven by a $6.5 million bargain-purchase gain; adjusted diluted EPS was $0.15 versus $0.57. Backlog and operating cash flow improved materially, but tariff costs, weaker core-product shipments, higher inventories, and increased debt remain important headwinds.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.94
- Segment
- Engineered Solutions: net sales $61,821,757, gross margin $12,752,139, and operating profit $1,657,792 for the three months ended July 4, 2026. The company has one reportable segment.
What stood out
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Backlog rose 45% to $126.2M
Backlog increased $39.0 million, or 45%, to $126.2 million as of July 4, 2026 from $87.1 million a year earlier, led by $19.0 million of acquired aerospace and defense orders.
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Operating cash flow improved
Operating cash flow for the first six months increased to $12.0 million from $1.9 million in the prior-year period, primarily due to vendor-payment timing and working-capital movements.
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Aerospace platform added $1.7M sales
The acquisition of Sinecera and Sungear added $1.7 million of aerospace and defense sales from June 1 through July 4, 2026 and established a fourth operating platform.
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SG&A fell 17.5%
Selling and administrative expense declined $2.1 million, or 17.5%, in the quarter to $10.1 million, including $1.9 million of lower restructuring charges.
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Liquidity position strengthened
Cash and cash equivalents increased to $15.1 million at July 4, 2026 from $7.4 million at January 3, 2026, while the company reported $59 million of available revolving-credit capacity at filing.
What to watch
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Revenue remained below prior year
Quarterly net sales declined $8.342 million, or 11.9%, to $61.822 million from $70.164 million in the prior-year quarter. Lower shipments of truck mirror assemblies, returnable transport packaging, and latch and handle assemblies reduced sales by $5.7 million, $3.4 million, and $0.9 million, respectively.
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Margins pressured by lower volume and tariffs
Gross margin contracted to 20.6% from 23.3%, while operating profit fell to $1.658 million from $3.142 million. The company incurred approximately $1.9 million of tariff and tariff-related expenses in the quarter, with $1.8 million mitigated through price increases.
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Acquisition integration and valuation risk
The newly added acquisition-specific risk relates to the $7.850 million Sinecera and Sungear transaction and the $6.529 million bargain-purchase gain, including uncertainty over fair-value judgments and integration benefits. The acquired businesses generated $1.725 million of sales but a $123,647 operating loss before the gain.
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Working capital and leverage increased
Inventories increased 17.1% to $66.0 million from $56.3 million at January 3, 2026, while long-term debt rose to $41.7 million from $33.9 million. The credit agreement requires a senior net leverage ratio no higher than 3.50 to 1.00 and interest coverage of at least 3.00 to 1.00.
Management's outlook
No quantitative revenue or EPS guidance was provided in the 10-Q. Management said cash, operating cash flow, and revolving-credit availability are expected to cover foreseeable working-capital requirements over the next 12 months and beyond; $59 million was available under the credit line at filing.
Earlier filings 4
10-K · March 3, 2026
The Eastern Company's 2026 10-K reveals a challenging year marked by decreased revenues and net income due to reduced sales in key product categories like truck mirror assemblies. Despite a decrease in gross and…
10-Q · November 4, 2025
The Eastern Company reported a significant decline in revenue and net income for Q3 2025, reflecting challenging market conditions and lower sales volume. Revenue decreased by 22% to $55.3 million compared to $71.3…
10-Q · August 5, 2025
The Eastern Company's Q2 2025 10-Q reflects a decrease in revenue to $70.2 million from $72.6 million YoY, alongside a decrease in gross margin to 23.3%. Net income dropped to $2.0 million from $4.1 million YoY,…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.