Eastern Company (EML, Financial) filed Quarterly Report for the period ended 2010-10-02.
Eastern Company has a market cap of $105.3 million; its shares were traded at around $17.05 with a P/E ratio of 28.6 and P/S ratio of 0.9. The dividend yield of Eastern Company stocks is 2.1%.EML is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates, Mario Gabelli of GAMCO Investors.
Income taxes - the effective tax rate in the third quarter of 2010 was 31.5% compared to 19.3% in the third quarter of 2009. The lower effective tax rate in the third quarter of 2009 was the result of the Company s recognition of tax benefits resulting from the expiration of the statute of limitations. In the third quarter of 2010, similar benefits were recognized; however, these benefits were offset by the tax recorded on the repatriation of foreign earnings of $1.45 million with no corresponding foreign tax credit to offset the U.S. tax impact. The effective tax rate for the first nine months of 2010 was 34.1% compared to 49.5% in the first nine months of 2009. The nine month 2009 effective tax rate was higher primarily due to a 10% impact on the rate as a result of the repatriation of foreign earnings of $2 million with no corresponding foreign tax credit to offset the U.S. tax impact. While both periods had the repatriation of foreign earnings without any corresponding foreign tax credit, the higher amount repatriated in 2009, when included with the lower taxable earnings in 2009, resulted in a higher effective rate.
The Company generated $6.9 million from operations during the first nine months of 2010 compared to $13.8 million during the same period in 2009. The decrease in cash flows was primarily the result of the associated timing differences for collections of accounts receivable, payments of liabilities, and changes in inventories. Cash flow from operations coupled with cash on hand at the beginning of the year was sufficient to fund capital expenditures, debt service, and dividend payments. The Company did not utilize its revolving line of credit during the first nine months of 2010 or 2009.
Additions to property, plant and equipment were $3.6 million for the first nine months of 2010 compared to $1.8 million for the same period in 2009. Total capital expenditures for 2010 are expected to be in the range of $4 million to $5 million. As of October 2, 2010, there is approximately $200,000 of outstanding commitments for these capital expenditures.
Total inventories as of October 2, 2010 were $26.3 million, compared to $24.5 million at year-end 2009. The inventory turnover ratio of 3.9 turns at the end of the third quarter was comparable to both the year-end 2009 ratio of 3.8 turns and the 3.9 turns in the third quarter of 2009. Accounts receivable increased to $18.1 million from $15.3 million at year end 2009 and $15.0 million at the end of the third quarter of fiscal 2009. The increases are related to higher revenues in the first nine months of the current year. The average days sales in accounts receivable for the third quarter of 2010 of 49 days was comparable to both the 50 days at the end of fiscal 2009 and the 49 days at the end of the third quarter of fiscal 2009.
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Eastern Company has a market cap of $105.3 million; its shares were traded at around $17.05 with a P/E ratio of 28.6 and P/S ratio of 0.9. The dividend yield of Eastern Company stocks is 2.1%.EML is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates, Mario Gabelli of GAMCO Investors.
Highlight of Business Operations:
Cash flow from operations in the first nine months of 2010 decreased compared to the same period in 2009. During the first quarter of 2010, the Company paid off its $11.4 million debt with Bank of America, N.A. and established a new banking relationship with People s United Bank consisting of a $5 million term loan and a $10 million revolving credit facility. The Company has not used any of the new revolving credit facility to date. Cash flow from operations, along with the result of controlling discretionary expenditures, should be sufficient to enable the Company to meet all its existing obligations and continue its quarterly dividend payments.Income taxes - the effective tax rate in the third quarter of 2010 was 31.5% compared to 19.3% in the third quarter of 2009. The lower effective tax rate in the third quarter of 2009 was the result of the Company s recognition of tax benefits resulting from the expiration of the statute of limitations. In the third quarter of 2010, similar benefits were recognized; however, these benefits were offset by the tax recorded on the repatriation of foreign earnings of $1.45 million with no corresponding foreign tax credit to offset the U.S. tax impact. The effective tax rate for the first nine months of 2010 was 34.1% compared to 49.5% in the first nine months of 2009. The nine month 2009 effective tax rate was higher primarily due to a 10% impact on the rate as a result of the repatriation of foreign earnings of $2 million with no corresponding foreign tax credit to offset the U.S. tax impact. While both periods had the repatriation of foreign earnings without any corresponding foreign tax credit, the higher amount repatriated in 2009, when included with the lower taxable earnings in 2009, resulted in a higher effective rate.
The Company generated $6.9 million from operations during the first nine months of 2010 compared to $13.8 million during the same period in 2009. The decrease in cash flows was primarily the result of the associated timing differences for collections of accounts receivable, payments of liabilities, and changes in inventories. Cash flow from operations coupled with cash on hand at the beginning of the year was sufficient to fund capital expenditures, debt service, and dividend payments. The Company did not utilize its revolving line of credit during the first nine months of 2010 or 2009.
Additions to property, plant and equipment were $3.6 million for the first nine months of 2010 compared to $1.8 million for the same period in 2009. Total capital expenditures for 2010 are expected to be in the range of $4 million to $5 million. As of October 2, 2010, there is approximately $200,000 of outstanding commitments for these capital expenditures.
Total inventories as of October 2, 2010 were $26.3 million, compared to $24.5 million at year-end 2009. The inventory turnover ratio of 3.9 turns at the end of the third quarter was comparable to both the year-end 2009 ratio of 3.8 turns and the 3.9 turns in the third quarter of 2009. Accounts receivable increased to $18.1 million from $15.3 million at year end 2009 and $15.0 million at the end of the third quarter of fiscal 2009. The increases are related to higher revenues in the first nine months of the current year. The average days sales in accounts receivable for the third quarter of 2010 of 49 days was comparable to both the 50 days at the end of fiscal 2009 and the 49 days at the end of the third quarter of fiscal 2009.
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