The Eastern Company

Greetings. Welcome to the Eastern Company's second quarter fiscal year 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Marianne Barr, Treasurer at the Eastern Company. You may begin.

Good morning, and thank you, everyone, for joining us this morning for a review of the Eastern Company's results for the second quarter of 2024. With me on the call are Eastern's President and CEO, Mark Hernandez, and Eastern's CFO, Nicholas Vallejos. The company issued an earnings press release yesterday after the market closed. If anyone has not yet seen the release, please visit the Investors section of the company's website www.easterncompany.com, where you will find the release under financial news. Please note that some of the information you will hear during today's call 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 expenses, 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. We undertake no obligation to review or update any forward-looking statements to reflect events or circumstances that occur after the call. For more information regarding these risks and uncertainties, please refer to risk factors discussed in our SEC filings, including Form 10-K filed with the SEC on March 12, 2024, for the fiscal year 2023, and Form 10-Q filed with the SEC on August 6, 2024. 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. A reconciliation of each of the non-GAAP measures discussed during today's call to the most directly comparable GAAP measure can be found in the earnings press release. With that introduction, I'll turn the call over to Mark.

Thank you, Marianne. And good morning to those who are joining us by phone and also via the web. Over the last several months, we continue to push forward with our transformation program for Eastern, methodically taking additional steps to enhance the company's day-to-day business operations and strengthen customer relationships. Our second quarter results, which include higher sales, increased gross margins, improved net income, demonstrate some of the progress we've made. However, much remains to be done. We are especially pleased that that when two of our commercial vehicle customers suddenly experienced severe supply disruptions this spring, the actions we've taken to enhance Eastern's business agility enabled us to jump on the opportunity and respond quickly to their needs, improving our own financial results in the process. Some of you who haven't dealt with supply and logistics issues for as many years as I have might ask, What exactly do you mean by agility in this case? So I'd like to take a few minutes to explain the steps that we've taken to make Eastern more agile and set us apart from our competitors. An agile solutions provider is one that consistently emphasize efficient processes, empowered employees, and fast access to information so that it is nimble enough to respond smoothly to sudden changes in supply and demand. An agile approach allows the company to quickly and decisively seize new business opportunities and achieve positive outcomes. At Eastern, the actions we've taken in the recent months to establish ourselves as an Agile Solutions Provider include implementing cellular manufacturing systems to better organize our machines, parts, tools, and workstations, fabricating our own assembly lines, and error-proofing the applications so assembly cannot be done incorrectly. To be clear, we're not pursuing high-priced solutions, but pragmatic ones that will enable the company to work faster and be more profitable. These steps help position us to respond to our customers' unexpected needs this spring, in the process contributing to our solid quarter two results. These actions are also contributing to our goal of changing the way Eastern is viewed from simply a product manufacturer into a true partner to our customers. As I described during our first quarter call, our goal is for Eastern to be the company our customers want to do business with so that they actually look for opportunities to work with us and are invested in our success. The higher backlog we have now, up 43% from a year ago, demonstrates our approach is having a positive impact. Going forward, we expect our proven ability to react swiftly to our customers' supply chain issues to help us tap previously untapped business opportunities. Although the situation hasn't yet normalized, as our customers look to reinforce their supply bases and avoid being tied to any one source, we believe there's an excellent opportunity for us to gain additional business. And of course, agility isn't tied exclusively to new business opportunities. It also means being nimble and changing course within the organization to establish stronger business foundation, adjust to market as it changes, and recalibrate our business to service our customers' changing needs. I've talked in the past earnings calls about four pillars we're using in our value creation strategy. Discipline operations, effective capital utilization, focused commercial business, and value-added acquisitions. All of these contribute to the company's business agility, and although we've made a lot of progress since I joined Eastern last year, there is still work to be done and still many opportunities to use the pillars to improve companies' business performance. Before we turn to that part of today's agenda, I'll turn the call over to Nick for a quick review of our quarter two financial results. Nick? Thank you, Mark.