The Eastern Company (EML) Earnings
The Eastern Company is expected to report next earnings on August 11, 2026 (in NaN days), with a consensus EPS estimate of $0.67. EML has beaten EPS estimates in 0 of its last 3 reported quarters (average surprise -58.3% over the last four).
| Report date | EPS est | EPS actual | Surprise | Revenue | Rev. surprise |
|---|---|---|---|---|---|
| May 13, 2026 | $0.50 | $0.11 | -78.0% | $60M | -11.9% |
| Mar 4, 2026 | $0.36 | $0.31 | -13.9% | $60M | -12.4% |
| Nov 4, 2025 | $0.77 | $0.13 | -83.1% | $55M | -24.6% |
| Mar 11, 2025 | — | $0.42 | — | $67M | — |
| Mar 12, 2024 | — | $0.56 | — | $67M | — |
| Mar 14, 2023 | — | $0.11 | — | $69M | — |
| Mar 17, 2022 | — | $0.65 | — | $60M | — |
| Nov 10, 2021 | — | $0.64 | — | $64M | — |
| Aug 12, 2021 | — | $0.44 | — | $61M | — |
| Apr 28, 2021 | — | $0.71 | — | $73M | — |
| Mar 15, 2021 | — | $0.74 | — | $60M | — |
| Apr 29, 2020 | — | $0.46 | — | $65M | — |
Source: company filings + earnings calendar. For informational purposes only — not investment advice.
Earnings call summary
Q1 FY2026 · May 13, 2026
AI summary of management’s prepared remarks and analyst Q&A. For informational purposes only — not investment advice.
Management highlights
### Overall Quarterly Performance - Q1 2026 results included both positives and negatives: net sales rose 4% sequentially from Q4 2025, driven by improved order execution in a gradually improving demand environment, but results were weighed down by softness in returnable dunnage businesses and a one-time customer destocking action at Eberhard. - Backlog grew sequentially to $82.2 million for the second consecutive quarter, continuing a recovery from the Q3 2025 trough, with stronger order rates across nearly all segments. - Operating cash flow was $3.5 million, a $5.4 million year-over-year improvement that reversed a cash outflow in Q1 2025. ### Operational Corrective Actions at Big 3 Precision - To fill unused plant capacity during a prolonged period of soft demand, the RACS team at Big 3 approved below-margin orders in Q4 2025, which reduced Q1 2026 profitability. Management has identified the root cause and implemented fixes: tightened quoting processes, adjusted approval delegation of authority, and added a cross-functional review process to improve accountability. - All existing below-margin customer contracts will be honored to preserve long-term customer relationships, and the financial impact is expected to be limited to the first half of 2026 as these contracts run off. Big 3's backlog continues to grow, and its operational turnaround remains on track. - Capacity investments for future operating leverage are ongoing, including automation and robotics to expand welding throughput without adding headcount, enabling lights-out and weekend production. ### Cross-Segment Strategic Investments - At Eberhard, lean manufacturing principles are being implemented to compress lead times and reduce inventory with no material capital expenditure, creating a more responsive operating footprint for existing products and upcoming new program launches. - At Velvac, a new ERP system went live on the first day of Q2 2026. As of week six of the rollout, the business is still taking, fulfilling, and shipping orders, and has successfully closed the books for April. The new platform is expected to improve order management, inventory visibility, and financial closing processes to support growth as the heavy-duty truck market recovers. ### Balance Sheet and Capital Allocation - Deleveraging the balance sheet remains a top priority. Long-term debt fell to $33 million at quarter-end, and the total debt-to-equity ratio improved to 26.6%, down from 34.3% at the end of Q1 2025. - The company maintained its regular quarterly dividend, repurchased ~21,000 shares under its authorized repurchase program, and generated positive operating cash flow in Q1. - A strong balance sheet provides capacity to absorb operational pressure without disrupting the business or strategic plan, and preserves optionality for disciplined mergers and acquisitions when opportunities meet the company's criteria.
Guidance
Management did not release specific numerical revenue or profitability guidance for fiscal year 2026 on the call. The company confirmed that its underlying demand recovery trajectory identified in Q4 2025 remains intact, with early signs of broadening demand across segments. The demand environment for the remainder of 2026 is more constructive than it was in the second half of 2025, and the company's operational turnaround for Big 3 Precision remains on track, with all financial impact from the below-margin contracts expected to be contained to the first half of 2026. The company's overarching corporate strategy of organic growth, balance sheet deleveraging, and disciplined M&A remains unchanged.
Segment performance
Three core business segments are reported for Eastern Company: 1. Big 3 Precision (includes returnable dunnage/returnable racks businesses): Q1 2026 operating performance came in significantly below plan. Lower order volume for returnable transport packaging products reduced year-over-year net sales, and below-margin contracts won in Q4 2025 pressured consolidated gross margin, accounting for the largest share of the company's 230 basis point adjusted EBITDA margin compression in the quarter. This segment contributed to the overall 6% year-over-year decline in consolidated net sales. 2. Eberhard: The segment saw a one-time customer destocking action that weighed on Q1 results, but order momentum is building, and the segment is implementing lean process improvements to compress lead times and reduce inventory with minimal capital expenditure. A major new door actuation program for next-generation side-by-side ATVs is set to ramp up through Q2 and Q3 2006. 3. Velvac: Revenue increased in Q1 2026 driven by higher sales of truck mirror assemblies. Order activity is strengthening, supported by an early-stage recovery in heavy-duty truck build rates at major OEM customers. This segment went live with a new ERP system at the start of Q2 2026 to support operational scaling. Consolidated net sales for Q1 2026 were $59.7 million, a 6% year-over-year decrease, with gross margin of 20% (=$11.9 million) of net sales, down 240 basis points year-over-year. Adjusted EBITDA was $3 million, equal to 5% of net sales, down 230 basis points year-over-year.
Risks & headwinds
- Forward-looking statements about future performance are subject to inherent risks and uncertainties that could cause actual results to differ materially from projections, with detailed risk factors available in the company's SEC filings, including the FY2025 Form 10-K filed March 3, 2026. - The macroeconomic backdrop remains uncertain and requires ongoing active monitoring, and management is maintaining cautious business operations until the demand recovery solidifies. - The new ERP system implementation at Velvac is still ongoing, and full integration and expected operational benefits have not yet been realized.