10-year

Don't Miss This Only Promotion (20% off)

Join GuruFocus Premium Membership Now for Only $279/Year

Save up to $500 on Global Membership.

Don't Miss It !

Free 7-day Trial
All Articles and Columns »

Eastern Company Reports Operating Results (10-Q)

November 06, 2012 | About:
10qk

10qk

18 followers
Eastern Company (EML) filed Quarterly Report for the period ended 2012-09-29.

Eastern Co has a market cap of $99.7 million; its shares were traded at around $15.76 with a P/E ratio of 11.9 and P/S ratio of 0.7. The dividend yield of Eastern Co stocks is 2.5%.

Highlight of Business Operations:

Selling and administrative expenses increased $404,000 or 20% in the third quarter and $1.2 million or 19% in the first nine months of 2012 compared to the prior year periods. The increase in the third quarter was primarily due to increased payroll and payroll related charges of $246,000 or 22.5% and an increase in the allocation of corporate expenses based on the sales volume in 2012 of $98,000 or 31.4% as compared to the same period in 2011. The increase in the first nine months was primarily due to increased payroll and payroll related charges of $700,000 or 21.1%, an increase in the allocation of corporate expenses based on the sales volume in 2012 of $322,000 or 32.8%, increased commission payments resulting from the higher sales volume in 2012 of $38,000 or 104.1% and increased bad debt expense of $40,000 or 230.4% as compared to the same period in 2011.

Cost of products sold for the Security Products segment increased $117,000 or 1% in the third quarter and $988,000 or 4% in the first nine months of 2012 compared to the same periods in 2011. The increase in the third quarter was primarily due to increased costs for raw materials of $107,000 or 1.6%, supplies and tools of $45,000 or 23.3% and engineering expenses of $62,000 or 27.4% as compared to the same period in 2011. The cost increases in the third quarter were reduced by a decrease in the allocation of corporate expenses of $68,000 or 26.3% and lower miscellaneous income of $33,000 or 86.8% as compared to the same period in 2011. The increase in the first nine months was primarily due to increased costs raw materials of $973,000 or 4.8%, supplies and tools of $25,000 or 3.9%, engineering expenses of $29,000 or 4.1%, an increase in the allocation of corporate expenses of $25,000 or 3.4% and foreign exchange of $57,000 or 941.2% as compared to the same period in 2011. The cost increases in the first nine months were reduced by decreases in cost maintenance and repair of $28,000 or 58.3%, freight on sales of $63,000 or 47.7% and utilities of $37,000 or 18.6% as compared to the same period in 2011.

Selling and administrative expenses decreased $64,000 or 3% in the third quarter and $137,000 or 2% in the first nine months of 2012 as compared to the 2011 periods. The decrease in the third quarter was primarily due to decreased payroll and payroll related charges of $14,000 or 1.5%, a decrease in commission payments of $26,000 or 14.0% and a reduction in amortization expense in 2012 resulting from acquisition costs related to Royal Lock which were fully amortized in 2011 of $102,000 or 86.7% as compared to the same period in 2011. The decreases in the third quarter were reduced by increased costs for advertising of $33,000 or 87.2% and other administrative charges of $37,000 or 27.3%. The decrease in the first nine months was primarily due to a decrease in travel expenses of $52,000 or 15.8%, commission payments of $63,000 or 11.4% and a reduction in amortization expense in 2012 resulting from acquisition costs related to Royal Lock which were fully amortized in 2011 of $307,000 or 86.7% as compared to the same period in 2011. The decreases in the first nine months were reduced by increased costs for advertising of $74,000 or 37.6%, other administrative charges of $72,000 or 14.7%, payroll and payroll related charges of $63,000 or 2.3%, and an increase in the allocation of corporate expenses based on the sales volume in 2012 of $77,000 or 7.4%,

Net sales in the Metal Products segment were up 29% in the third quarter and up 30% in the first nine months of 2012 as compared to the prior year periods. Sales of mining products were up 8% in the third quarter and up 16% in the first nine months 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 continued strong demand for its mining products in the third quarter of 2012, 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 197% in the third quarter and 150% in the first nine months 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.

Selling and administrative expenses were up $80,000 or 17% in the third quarter and $245,000 or 17% in the first nine months of 2012 compared to the same periods in 2011. The increase in the third quarter primarily related to an increase in the allocation of corporate expenses based on the sales volume in 2012 of $101,000 or 77.1% as compared to the 2011 period. The increase in the third quarter was reduced by a reduction in payroll and payroll related charges of $17,000 or 10.3% as compared to the 2011 period. The increase in the first nine months primarily related to an increase in the allocation of corporate expenses based on the sales volume in 2012 of $223,000 or 38.5%, travel expenses of $12,000 or 48.6% and other administrative expenses of $21,000 or 7.2% as compared to the 2011 period. The increase in the third quarter was reduced by a reduction in payroll and payroll related charges of $7,000 or 1.4% as compared to the 2011 period.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK