The Eastern Company (EML) Q2 2025 earnings summary

Executive summary

• Q2 2025 net sales declined 3% year-over-year to $70.2 million, with adjusted EPS of $0.56–$0.57, nearly flat from Q2 2024, and net income from continuing operations at $2 million ($0.33 per diluted share), down from $4.1 million ($0.65 per share) in Q2 2024.

• Significant cost reductions and restructuring, including facility closures and headcount reductions, led to $4 million in expected annual savings starting 2026, with $1.8 million in Q2 2025 restructuring charges.

• The company completed the sale of Big 3 Mold's ISBM division and Centralia mold assets, with discontinued operations reflected in financials.

• Share repurchase program completed with 400,000 shares authorized through April 2030; 30,962–82,000 shares repurchased in Q2 2025, totaling $2.1 million year-to-date.

• Eberhard ramped up supply for the USPS vehicle program, benefiting from new product introductions.

Financial highlights

• Net sales for Q2 2025 were $70.2 million, down from $72.6 million year-over-year, with six-month sales at $136.1 million, mainly due to lower truck mirror assembly sales.

• Gross margin declined to 23.3% from 25.4% year-over-year, impacted by higher raw material costs and in-house sourcing transitions.

• Adjusted net income for Q2 2025 was $3.5 million ($0.57 per share), compared to $4.1 million ($0.65 per share) last year; adjusted EBITDA was $6.7 million, down from $8.0 million.

• Backlog as of June 28, 2025, was $87.1 million, down 19% year-over-year, mainly due to lower orders for transport packaging and latch/handle assemblies.

• Inventory declined to $54.1 million, and accounts receivable increased to $40.2 million at quarter-end.

Outlook and guidance

• Management expects recovery in coming months, with focus on margin protection, resilient supply chains, and sufficient liquidity for working capital needs.

• Plans to remain active and disciplined in M&A, leveraging a conservative balance sheet and monitoring the impact of the One Big Beautiful Bill Act (OBBBA) on tax provisions.