eml_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	for the quarterly period ended September 27, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	for the transition period from ________________ to _______________

Commission File Number 001-35383

THE EASTERN COMPANY

(Exact name of registrant as specified in its charter)

Connecticut		06-0330020
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

3 Enterprise Drive, Suite 408, Shelton, Connecticut		06484
(Address of principal executive offices)		(Zip Code)

(203) 729-2255

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, No Par Value	EML	NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of September 27, 2025, 6,068,650 shares of the registrant’s common stock, no par value per share, were issued and outstanding.

The Eastern Company

Form 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 27, 2025

TABLE OF CONTENTS

		Page

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3.	Defaults Upon Senior Securities	30

Item 4.	Mine Safety Disclosures	30

Item 5.	Other Information	30

Item 6.	Exhibits	31

SIGNATURES		32

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Table of Contents

PART 1 – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

THE EASTERN COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended						Nine Months Ended
	September 27, 2025			September 28, 2024			September 27, 2025			September 28, 2024
Net sales	$	55,336,452		$	71,274,757		$	191,437,750		$	206,068,490
Cost of products sold		(42,971,012	)		(53,085,087	)		(147,613,222	)		(154,161,980	)
Gross margin		12,365,440			18,189,670			43,824,528			51,906,510

Product development expense		(995,771	)		(1,077,930	)		(3,136,673	)		(3,739,214	)
Selling and administrative expenses		(9,646,956	)		(10,316,788	)		(32,181,886	)		(31,014,022	)
Operating profit		1,722,713			6,794,952			8,505,969			17,153,274

Interest expense		(688,425	)		(709,680	)		(2,019,365	)		(2,049,655	)
Other expenses, net		(157,640	)		(82,703	)		(282,136	)		(92,415	)
Income from continuing operations before income taxes		876,648			6,002,569			6,204,468			15,011,204

Income tax expense		(297,712	)		(1,333,771	)		(1,422,414	)		(3,335,489	)
Net income from continuing operations	$	578,936		$	4,668,798		$	4,782,054		$	11,675,715

Discontinued Operations (see Note B)
Loss from operations of discontinued unit	$	-		$	(766,990	)	$	(520,006	)	$	(2,750,844	)
(Loss) gain on classification as held for sale		-			(23,087,775	)		2,016,696			(23,087,775	)
Income tax benefit (expense)		-			3,888,522			(315,951	)		4,320,904
Net (Loss) income on discontinued operations	$	-		$	(19,966,243	)	$	1,180,739		$	(21,517,715	)

Net income (loss)	$	578,936		$	(15,297,445	)	$	5,962,793		$	(9,842,000	)

Earnings per share from continuing operations:
Basic	$	0.10		$	0.75		$	0.78		$	1.88

Diluted	$	0.10		$	0.75		$	0.78		$	1.87

(Loss) earnings per share from discontinued operations:
Basic	$	-		$	(3.22	)	$	0.19		$	(3.46	)

Diluted	$	-		$	(3.21	)	$	0.19		$	(3.45	)

Total earnings (loss) per share:
Basic	$	0.10		$	(2.47	)	$	0.97		$	(1.58	)

Diluted	$	0.10		$	(2.46	)	$	0.97		$	(1.58	)

Cash dividends per share:	$	0.11		$	0.11		$	0.33		$	0.33

See accompanying notes.

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THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended					Nine Months Ended
	September 27, 2025		September 28, 2024			September 27, 2025		September 28, 2024
Net income (loss)	$	578,936	$	(15,297,445	)	$	5,962,793	$	(9,842,000	)
Other comprehensive income (loss):

Change in foreign currency translation		19,779		(120,191	)		417,372		(527,862	)

Change in fair value of foreign currency swap		238,515		(355,123	)		985,718		(412,382	)

Change in pension and postretirement benefit costs, net of taxes of:
2025 - $60,963 and $182,888 respectively; 2024 - $71,355 and $214,065 respectively		205,727		237,501			617,181		718,338
Total other comprehensive income (loss)		464,021		(237,813	)		2,020,271		(221,906	)
Comprehensive income (loss)	$	1,042,957	$	(15,535,258	)	$	7,983,064	$	(10,063,906	)

See accompanying notes.

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THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 27, 2025			December 28, 2024
	(unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	9,227,940		$	14,010,388
Marketable securities		-			2,051,301
Accounts receivable, less allowances: 2025 - $584,372; 2024 - $530,560		30,008,422			35,515,632
Inventories		56,766,191			55,209,598
Current portion of notes receivable		100,643			286,287
Prepaid expenses and other assets		4,468,683			3,477,717
Current assets held for sale		-			5,071,828
Total Current Assets		100,571,879			115,622,751

Property, Plant and Equipment		59,040,146			56,320,688
Accumulated depreciation		(32,510,699	)		(28,810,628	)
Property, Plant and Equipment, Net		26,529,447			27,510,060

Goodwill		58,596,177			58,509,384
Trademarks		3,816,720			3,946,455
Patents and other intangibles net of accumulated amortization		7,165,804			8,765,612
Long term notes receivable, less current portion		33,201			162,102
Deferred Income Taxes		6,611,518			6,611,518
Right of Use Assets		16,649,014			14,180,865
Other Long Term Assets		75,980			-
Total Other Assets		92,948,414			92,175,936

TOTAL ASSETS	$	220,049,740		$	235,308,747

See accompanying notes.

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THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

	September 27, 2025			December 28, 2024
	(unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	17,359,215		$	19,650,970
Accrued compensation		4,597,276			5,478,581
Other accrued expenses		2,856,321			9,577,019
Current portion of operating lease liability		3,782,516			3,072,668
Current portion of finance lease liability		737,032			761,669
Current portion of long-term debt		4,297,585			3,603,935
Other current liabilities		-			505,376
Current liabilities held for sale		-			2,144,573
Total Current Liabilities		33,629,945			44,794,791

Operating lease liability, less current portion		12,869,598			11,108,197
Finance lease liability, less current portion		2,691,010			3,052,073
Long-term debt, less current portion		31,044,907			38,640,576
Accrued postretirement benefits		420,157			410,476
Accrued pension cost		14,565,285			16,064,840
Other long-term liabilities		546,395			546,395

Total Liabilities		95,767,297			114,617,348

Shareholders’ Equity
Voting Preferred Stock, no par value:
Authorized and unissued: 1,000,000 shares
Nonvoting Preferred Stock, no par value:
Authorized and unissued: 1,000,000 shares
Common Stock, no par value, Authorized: 50,000,000 shares		36,042,381			35,443,009
Issued: 9,170,470 shares as of 2025 and 9,146,996 shares as of 2024
Outstanding: 6,068,650 shares as of 2025 and 6,163,138 shares as of 2024
Treasury Stock: 3,101,820 shares as of 2025 and 2,983,858 shares as of 2024		(29,313,460	)		(26,338,309	)
Retained earnings		137,492,223			133,545,670
Accumulated other comprehensive loss:
Foreign currency translation		(1,859,218	)		(2,276,590	)
Unrealized gain (loss) on foreign currency swap, net of tax		480,342			(505,376	)
Unrecognized net pension and postretirement benefit costs, net of tax		(18,559,825	)		(19,177,005	)
Accumulated other comprehensive loss		(19,938,701	)		(21,958,971	)
Total Shareholders’ Equity		124,282,443			120,691,399
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	220,049,740		$	235,308,747

See accompanying notes.

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THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Months Ended
	September 27, 2025			September 28, 2024
Operating Activities
Net income (loss)	$	5,962,793		$	(9,842,000	)
Less: Gain (Loss) from discontinued operations		1,180,739			(21,517,715	)
Income from continuing operations	$	4,782,054		$	11,675,715
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		4,846,679			4,266,038
Reduction in carrying amount of ROU assets		2,200,274			2,418,801
Unrecognized pension and postretirement benefits		(689,806	)		(353,257	)
Loss on sale of equipment and other assets		176,254			53,311
Provision for doubtful accounts		17,000			(24,570	)
Stock compensation expense		599,372			913,775
Changes in operating assets and liabilities:
Accounts receivable		8,050,261			(11,739,823	)
Inventories		(722,705	)		300,720
Prepaid expenses and other		(387,479	)		2,874,825
Other assets		214,725			(236,934	)
Accounts payable		(3,274,997	)		693,653
Accrued compensation		(906,067	)		(190,904	)
Change in operating lease liability		(2,200,274	)		(2,418,801	)
Other accrued expenses		(7,683,977	)		115,403
Net cash provided by operating activities		5,021,314			8,347,952

Investing Activities
Marketable securities		2,222,059			(999,960	)
Business Acquisition		(421,039	)		-
Payments received from notes receivable		14,545			470,937
Proceeds from sale of discontinued operations		1,593,646			-
Proceeds from sale of equipment		800			18,925
Purchases of property, plant, and equipment		(1,643,885	)		(7,634,265	)
Net cash provided by (used in) investing activities		1,766,126			(8,144,363	)

Financing Activities
Principal payments on long-term debt		(7,044,065	)		(2,365,500	)
Proceeds(payments) on short term borrowings (revolver)		-			3,000,000
Financing leases, net		(592,699	)		2,819,262
Purchase common stock for treasury		(2,975,152	)		(1,916,130	)
Dividends paid		(2,016,239	)		(2,050,933	)
Net cash used in financing activities		(12,628,155	)		(513,301	)

Discontinued Operations
Cash provided by operating activities		-			411,778
Cash used in investing activities		-			(217,101	)
Cash provided by discontinued operations		-			194,677

Effect of exchange rate changes on cash		225,126			(67,874	)
Net change in cash and cash equivalents		(5,615,589	)		(182,909	)

Cash and cash equivalents at beginning of period		14,843,529			8,299,453
Cash and cash equivalents at end of period	$	9,227,940		$	8,116,544

Supplemental disclosure of cash flow information:
Interest	$	2,110,688		$	2,443,448
Income taxes		2,078,175			3,945,295

Non-cash investing and financing activities
Right of use asset		4,552,886			2,418,801
Lease liability		(4,016,861	)		(462,004	)

See accompanying notes

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THE EASTERN COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 27, 2025

Note A – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X and do not include all the information and footnotes required by generally accepted accounting principles in the United States (“GAAP”) for complete financial statements. Refer to the consolidated financial statements of The Eastern Company (together with its consolidated subsidiaries, the “Company,” “we,” “us” or “our”) and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 28, 2024, filed with the Securities and Exchange Commission on March 11, 2025 (the “2024 Form 10-K”), for additional information.

The accompanying condensed consolidated financial statements are unaudited. However, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for interim periods have been reflected therein. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. All intercompany accounts and transactions are eliminated.

The condensed consolidated balance sheet as of December 28, 2024 has been derived from the audited consolidated balance sheet at that date.

The Company’s fiscal year is a 52-53-week fiscal year ending on the Saturday nearest to December 31. References in this Quarterly Report on Form 10-Q for the quarterly period ended September 27, 2025 (this “Form 10-Q”) to 2024, the fiscal year 2024 or fiscal 2024 mean the 52-week period ended on December 28, 2024, and references to 2025, fiscal year 2025 or fiscal 2025 mean the 53-week period ending on January 3, 2026. In a 52-week fiscal year, each quarter has 13 weeks. In a 53-week fiscal year, the first three quarters each have 13 weeks, and the fourth quarter has 14 weeks. References to the third quarter of 2024, the third fiscal quarter of 2024 or the three months ended September 28, 2024 mean the 13-week period from June 30, 2024 to September 28, 2024. References to the third quarter of 2025, the third fiscal quarter of 2025 or the three months ended September 27, 2025, mean the 13-week period from June 29, 2025 to September 27. 2025. References to the first nine months of 2024 or the nine months ended September 28, 2024 mean the period from December 31, 2023 to September 28, 2024. References to the first nine months of 2025 or the nine months ended September 27, 2025 mean the period from December 29, 2024 to September 27, 2025.

Certain amounts in the 2024 financial statements have been reclassified to conform with the 2025 presentation with no impact or change to previously reported net income or shareholders’ equity. See Note B, Discontinued Operations, for additional information.

Note B – Discontinued Operations

In the third quarter of 2024, we determined that the business of Big 3 Precision Mold Services, Inc. (“Big 3 Mold”) met the criteria to be held for sale and that the assets held for sale qualified for discontinued operations. As such, the financial results of the Big 3 Mold business are reflected in our unaudited condensed consolidated statements of operations as discontinued operations for all periods presented. Additionally, current and non-current assets and liabilities of discontinued operations are reflected in the unaudited condensed consolidated balance sheets for both periods presented.

On April 30, 2025, the Company sold the equipment, workforce and customer list of the ISBM division of Big 3 Mold. ISBM, which is located in Centralia, Illinois, is an injection stretch blow mold toolmaker.

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Summarized Financial Information of Discontinued Operations

The following table represents (loss) income from discontinued operations, net of tax, for the periods presented:

	Three Months Ended					Nine Months Ended
	September 27, 2025		September 28, 2024			September 27, 2025			September 28, 2024
	(unaudited)		(unaudited)			(unaudited)			(unaudited)
Net sales	$	-	$	3,360,405		$	1,670,208		$	9,647,649
Cost of products sold		-		(2,804,743	)		(1,653,484	)		(8,402,175	)
Gross margin		-		555,662			16,724			1,245,474

Selling and administrative expenses		-		(1,145,232	)		(388,848	)		(3,483,904	)
(Loss) income from disposal of discontinued operations		-		(23,087,775	)		2,016,696			(23,087,775	)
Operating (loss) income		-		(23,677,345	)		1,644,572			(25,326,205	)

Interest expense		-		(177,420	)		(147,882	)		(512,414	)
(Loss) income from discontinued operations before income taxes		-		(23,854,765	)		1,496,690			(25,838,619	)

Income tax benefit (expense)		-		3,888,522			(315,951	)		4,320,904
(Loss) income from discontinued operations, net of tax	$	-	$	(19,966,243	)	$	1,180,739		$	(21,517,715	)

The following table represents the assets and liabilities of discontinued operations as of the dates presented:

	September 27, 2025		December 28, 2024
	(unaudited)
Cash	$	-	$	833,141
Accounts receivable		-		2,533,357
Inventory		-		784,485
Prepaid expenses		-		789,438
Right of use assets		-		131,407
Total assets of discontinued operations	$	-	$	5,071,828

Current assets of discontinued operations¹	$	-	$	5,071,828
Total assets of discontinued operations	$	-	$	5,071,828

Accounts payable	$	-	$	756,842
Accrued compensation and other accrued expenses		-		1,242,812
Current portion of lease liability		-		128,670
Other long-term liabilities		-		16,249
Total liabilities of discontinued operations	$	-	$	2,144,573

Current liabilities of discontinued operations¹	$	-	$	2,144,573
Total liabilities of discontinued operations	$	-	$	2,144,573

¹ The total assets and liabilities of discontinued operations are presented as current in the December 28, 2024 balance sheet as we sold the discontinued operations and collect proceeds within one year.

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Note C – Earnings Per Share

The denominators used to calculate earnings per share are as follows:

Three Months Ended

Nine Months Ended

September 27,

SEC Form 10-Q filed by Eastern Company