EASTERN CO Q1 FY2025 earnings call

• Made meaningful structural changes in Big 3 Precision, sold ISBM Blow Mold business, closed Dearborn facility. - Completed 200,000 share buyback, Board authorized additional 400,000 share buyback. - Completed leadership team transition plans. - Chan Galbato joined the Board. - For Eberhard, Zachary Gorny joined as President, reorganized commercial team, focusing on commercial front, new product development, nimble supply chain. - For Velvac, Dan McGrew and team working through end market demand and supply chain uncertainty, focusing on vertical integration, aftermarket business growth, nimble supply chain. - For Big 3, completed sale of ISBM business, improved racking business cost structure, closed Dearborn location, shifting to operational efficiency and commercial growth plans.

Net sales in the first quarter of 2025 decreased 2% to $63.2 million from $64.6 million in Q1 2024. The decline was due to decreased sales of truck mirror assemblies and truck accessories, offset by increased sales of returnable transport packaging products. Backlog as of March 29, 2025, decreased 9% to $85.9 million. Gross margin for Q1 2025 was 22.4% vs 23.9% in prior year, due to higher raw material costs partially offset by price increases. Eberhard designs security hardware; Velvac focuses on vision systems, mirrors for medium and heavy-duty trucks; Big 3 designs packaging and material handling solutions. Big 3 completed sale of ISBM business, closed Dearborn facility, and is working on strategic review of mold business.

• Board authorized additional share buyback program of 400,000 shares extending until May 2030. - 2025 focus on enhancing strategic growth plans, eliminating bureaucracy, optimizing cash flow. - M&A is now a priority again, to be disciplined but excited to look at deals in remainder of 2025 and 2026.

• Market challenges with softness in end markets served by Eberhard and Velvac. - Backlog decrease due to decreased orders for certain products. - Higher raw material costs impacting gross margin. - Supply chain uncertainty affecting operations. - Tariffs posing challenges for Velvac and Eberhard.

Q: On returnable packaging, outlook and potential tailwinds from production moves?

A: Returnable packaging market quiet in Automotive segment, but Big 3 Precision is insulated by being made in America with local supply chain, positioned to benefit if pent-up demand breaks loose.

Q: On gross margin, should we expect current levels and near-term opportunities to raise it?

A: Partly due to sales mix, expect higher margin products to gain velocity, also focused on taking out cost from cost of goods sold