NAUGATUCK — The Eastern Co. posted a significant net gain in profit for this year’s first quarter.
The Naugatuck-based company on Wednesday reported a 50 percent increase in its first-quarter net income for 2014 to $1.5 million, or 24 cents per diluted share, from $1 million, or 16 cents per diluted share, in the same period in 2013.
The firm’s sales for the first quarter came in at $35.8 million, up 3 percent from $34.7 million in the same period last year.
“The company’s sales growth in the first quarter of 2014 was a slight improvement compared to last year and is an encouraging sign for the year ahead,” Leonard Leganza, the company’s president, chairman and CEO, said in a news release.
Leganza said most of the firm’s operating units are product suppliers to original equipment manufacturers whose activity slowed over the past few years. Nonetheless, the company is “well-positioned to meet any future demand and growth in the many markets we serve,” he said.
Eastern is a 156-year-old maker of industrial hardware, security products and metal castings that operates in three segments — Security Products, Industrial Hardware and Metal Products. It has 10 factories — four in the United States, two in Canada, one Mexico, one Taiwan and two China — and employs 600 workers in North America and another 300 in China.
The company’s slight gain in sales drove the marked increase in net income as a result of greater use of the factories, John Sullivan III, the firm’s vice president and chief financial officer, said Wednesday.
“With higher utilization of our factories, we were able to get a higher percentage of earnings from the sales,” he said. “It all comes down to operating more efficiently with what you have.”
Sullivan said first-quarter sales for the Security Products division increased 14 percent from a year ago, while Metal Products’ sales gained 8 percent. Sales for Industrial Hardware declined 7 percent, he said.
Eastern was recently chosen as the supplier of a lightweight honeycomb composite sleeper cab for a new line of large Class 8 trailer trucks to be made in North Carolina, Leganza said. The truck design is based on a vehicle used in the upcoming movie “Transformers: Age of Exploration,” for which Eastern’s subsidiary Canadian Commercial Vehicles Corp., or CCV, supplied the sleeper, Leganza said.
“To whatever degree general economic conditions might not improve, the company will continue to invest in new product development and its infrastructure in anticipation of stronger future business conditions,” he said.
Eastern’s “focus and emphasis” on cash flow during the recent years of economic uncertainty have kept the company in “solid financial position.” Leganza said. The firm is confident its current liquidity will be “sufficient and strong enough” to support its dividend policy, meet its debt service requirements and replace and upgrade equipment as needed, he said.
The company also declared a regular quarterly cash dividend of 11 cents per share, payable June 16 to common stock shareholders of record as of May 21.
Eastern’s shares, which trade on Nasdaq under the symbol EML, gained 50 cents Wednesday to close at $16.41.