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EML Nasdaq· The Eastern Company
Earnings report Q3 2023

EML Reports Decrease in Net Sales for the Latest Quarter

Segments of revenue

EML's net sales for the latest quarter, ending September 30, 2023, amounted to $65.64 million, representing a decrease of 8.4% compared to the same period in the previous year. The decline in net sales can be attributed to a decrease in volume, which dropped by 14.0%, and a decrease in price, which decreased by 4.6%. However, there was a slight increase of 1.0% in revenue from new products.

Strengths

Despite the decrease in net sales, EML's operating profit for the latest quarter was $5.25 million, indicating a relatively stable performance. The company's management highlighted that the decrease in selling general and administrative expenses contributed to maintaining a positive operating profit. Additionally, EML's product development costs increased by 41% in the third quarter of 2023, suggesting a focus on innovation and investment in new products.

Challenges

EML faced challenges in generating revenue during the latest quarter, as evidenced by the decline in net sales. The decrease in volume and price impacted the company's overall revenue performance. Furthermore, selling general and administrative expenses increased by 9% in the first nine months of 2023, primarily due to severance and other accrued compensation expenses related to the elimination of the chief operating officer position.

Noteworthy

It is worth noting that EML experienced a significant improvement in cash flow from continuing operations during the first nine months of fiscal 2023. The company generated approximately $19.2 million in cash, compared to consuming approximately $0.3 million in the same period of the previous year. This improvement was primarily driven by reductions in inventory and accounts receivable.

Summary

EML faced a decline in net sales for the latest quarter, primarily due to decreases in volume and price. However, the company managed to maintain a positive operating profit, supported by a decrease in selling general and administrative expenses. EML's focus on product development and investment in new products is evident from the increase in product development costs. The improvement in cash flow from continuing operations is a positive sign for the company's financial stability. Overall, EML's latest quarter performance reflects both challenges and strengths in their revenue generation.

Source documents

Form 10-Q  filed on Nov 07, 2023
88 pages scanned

Reference data

Company financials Q3 revenue 67M
Analyst estimates Q3 EPS missed by NaN%
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