The Eastern Company

Good morning, ladies and gentlemen, and welcome to the Eastern Company first quarter fiscal year 2021 earnings event. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Chris Moulton. Sir, the floor is yours.

Good morning, and thank you, everyone, for joining us today. Speaking today will be Eastern's president and CEO, Gus Flack, as well as our CFO, John Sullivan. After that, we'll open the call for questions. Please note that some of the information we'll hear during our discussion today will consist of forward-looking statements about the company's future financial performance and business prospects, including, without limitation, statements regarding revenue, gross margin, operating expenses, other income and expense, taxes, and business outlook. These forward-looking statements are subject to risks and uncertainties that could cause actual results or trends to differ significantly from those projected in these forward-looking statements. For more information regarding these risks and uncertainties, please refer to risk factors discussed in our Form 10-Q filed yesterday. In addition, during today's call, we will discuss non-GAAP financial measures that we believe are useful as supplemental measures of Eastern's performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. With that, I'll turn the call over to Gus for opening remarks.

Thanks, Chris. and good morning to those of you who have joined us on the phone and those participating via the web. We released Eastern's first quarter numbers on our Forum 10Q yesterday afternoon. Before John Sullivan reviews the detailed results with you, I'd like to take a few moments to reflect on the quarter. I'm pleased to report that we had a strong start to the year with sales of $73 million. That's a high in Eastern's 163-year history. Obviously, We benefited from the economic recovery and improvement in demand across the majority of the markets we serve. We position our portfolio in these markets because we believe in the underlying demand for growth for the products we make. That certainly proved correct in the first quarter. Demand was strong across a broad range of commercial vehicle markets, including Class A trucks, service bodies, light trucks, recreational vehicles, electric vehicle manufacturers, and our industrial distribution. According to ACT research, Class A truck orders in March were 40,000 units. That's up fourfold from March of 2020. And this March marked the sixth straight month that orders topped 40,000 units, well above the replacement demand, which is roughly around 19,000 per month. ACT research expects North America Class A production to be about 302,000 units this year, and that's an increase of 40% over last year. Also, sales of lightweight and midsize trucks rebounded in the first quarter. For example, Ford's F-Series sales were up 9% year over year. A new midsize truck owners drive demand for many of our components for truck accessories and tonneau covers and truck caps. We also delivered margin expansion across many of our businesses. Our unadjusted net income grew to 8% in the first quarter of 2021. That's compared to 4% in the prior year. And adjusted EBITDA was 12% compared to 10% last year. This increase partly reflects the changes in our portfolio of businesses, including the contribution of packaged billable tooling business and the addition of Haylink, which we acquired in August of 2020. Our margins also benefited from strong organic growth in our core businesses and the impact of the consolidation of Eberhardt and Eleanor Lock. In the first quarter, our businesses demonstrated exceptional resilience in the face of significant disruptions in our supply chain and increases in raw material prices. All our businesses were impacted to varying degrees by the interruption in transportation. causing delays in shipments of finished products and critical components. Moreover, freight costs and prices of certain raw material, including steel and resins, rose throughout the quarter, and certain locations struggled to find sufficient manpower. We believe that these trends, including the sustained increases in raw material prices and freight costs, may pressure margins this year, but fortunately many of our businesses have been able to pass some of these cost increases to our customers or have mitigated the impact through advanced buying of primarily steel. And with that, I'll turn the call over to John to go over the details of our financial results.