Eastern Company (EML, Financial) filed Quarterly Report for the period ended 2012-06-30.
The Eastern Company has a market cap of $118.7 million; its shares were traded at around $18.19 with a P/E ratio of 18.2 and P/S ratio of 0.8. The dividend yield of The Eastern Company stocks is 2.1%.
Sales in the first six months of 2012 increased 19% compared to the prior year period as a result of an increase in sales of existing products in many of the markets we serve, selective price increases to customers and the introduction of new products. Sales increased in the first six months of 2012 by 25% in the Industrial Hardware segment, by 6% in the Security Products segment, and by 30% in the Metal Products segment compared to the prior year period.
Net sales in the Metal Products segment were up 28% in the second quarter and up 30% in the first half of 2012 as compared to the prior year periods. Sales of mining products were up 13% in the second quarter and up 20% in the first half of 2012 compared to the prior year periods. The increase in sales of mining products was driven by continued strong demand in 2012 in both the U.S. and Canadian mining markets compared to the prior year periods and the introduction of new mining products. New mining products included hexnuts, square cableheads, truss shoes, splice tubes, bearing blocks and steel mine anchor shells. While the Company experienced a strong first half in sales of products for the coal mining industry, the coal mining industry is forecasting a softening in coal usage beginning during the second half of 2012 resulting from new clean air rules enacted by the U.S. Environmental Protection Agency (“EPA”), which may negatively impact the Company. Sales of contract castings increased 183% in the second quarter and 123% in the first half of 2012 from the prior year levels. The increase in sales of contract casting was primarily the result of new products: a tie plate for the railroad industry and kicker clips and rail clamps for a solar panel application. The Company is actively trying to develop additional new products to replace any softening in sales volume of mining products that may result from the new EPA clean air regulations.
Gross margin as a percentage of net sales increased from 9% to 11% in the second quarter of 2012 as compared to the 2011 period and increased from 10% to 11% for the first half of 2012 compared to the 2011 period. The increases in both the second quarter and first half of 2012 as compared to the prior year periods are due to the mix of products produced, elimination of products with unacceptable profit margins, price increases to customers, and cost reductions related to improved production efficiency.
Total inventories as of June 30, 2012 were $29.6 million, compared to $29.8 million at year end 2011 and $28.7 million at the end of the second quarter of 2011. Accounts receivable increased to $20.4 million from $18.6 million at year end 2011 and $19.7 million at the end of the second quarter of fiscal 2011. The increases are related to higher revenues in the first six months of the current year.
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The Eastern Company has a market cap of $118.7 million; its shares were traded at around $18.19 with a P/E ratio of 18.2 and P/S ratio of 0.8. The dividend yield of The Eastern Company stocks is 2.1%.
Highlight of Business Operations:
Sales in the second quarter of 2012 increased 17% compared to the second quarter of 2011, as a result of an increase in sales of existing products in many of the markets we serve, selective price increases to customers and the introduction of new products. In the second quarter of 2012 Industrial Hardware sales increased 19%, Security Products sales increased 8% and Metal Products sales increased 28% compared to the prior year period.Sales in the first six months of 2012 increased 19% compared to the prior year period as a result of an increase in sales of existing products in many of the markets we serve, selective price increases to customers and the introduction of new products. Sales increased in the first six months of 2012 by 25% in the Industrial Hardware segment, by 6% in the Security Products segment, and by 30% in the Metal Products segment compared to the prior year period.
Net sales in the Metal Products segment were up 28% in the second quarter and up 30% in the first half of 2012 as compared to the prior year periods. Sales of mining products were up 13% in the second quarter and up 20% in the first half of 2012 compared to the prior year periods. The increase in sales of mining products was driven by continued strong demand in 2012 in both the U.S. and Canadian mining markets compared to the prior year periods and the introduction of new mining products. New mining products included hexnuts, square cableheads, truss shoes, splice tubes, bearing blocks and steel mine anchor shells. While the Company experienced a strong first half in sales of products for the coal mining industry, the coal mining industry is forecasting a softening in coal usage beginning during the second half of 2012 resulting from new clean air rules enacted by the U.S. Environmental Protection Agency (“EPA”), which may negatively impact the Company. Sales of contract castings increased 183% in the second quarter and 123% in the first half of 2012 from the prior year levels. The increase in sales of contract casting was primarily the result of new products: a tie plate for the railroad industry and kicker clips and rail clamps for a solar panel application. The Company is actively trying to develop additional new products to replace any softening in sales volume of mining products that may result from the new EPA clean air regulations.
Gross margin as a percentage of net sales increased from 9% to 11% in the second quarter of 2012 as compared to the 2011 period and increased from 10% to 11% for the first half of 2012 compared to the 2011 period. The increases in both the second quarter and first half of 2012 as compared to the prior year periods are due to the mix of products produced, elimination of products with unacceptable profit margins, price increases to customers, and cost reductions related to improved production efficiency.
Total inventories as of June 30, 2012 were $29.6 million, compared to $29.8 million at year end 2011 and $28.7 million at the end of the second quarter of 2011. Accounts receivable increased to $20.4 million from $18.6 million at year end 2011 and $19.7 million at the end of the second quarter of fiscal 2011. The increases are related to higher revenues in the first six months of the current year.
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