NAUGATUCK — After reporting positive first-quarter results earlier this year, The Eastern Co. last week posted significantly different results for the second quarter and first half of 2014.
The Naugatuck-based industrial conglomerate reported net income of $1.7 million, or 27 cents per diluted share, for the second quarter, a 22 percent decrease from $2.2 million, or 35 cents per diluted share, in the same period last year. The reduced earnings came on sales of $34.8 million in the quarter, an 11 percent decrease from $39.2 million for the same period last year.
The second-quarter performance followed a strong first quarter in which net income increased 50 percent as sales increased 3 percent from a year earlier.
The weaker second quarter resulted in net income for the first six months of 2014, ended June 28, of $3.2 million, or 51 cents per diluted share. Both figures are identical to those from the first half of last year, the company said.
Net sales for the first six months of 2014, however, were $70.6 million, compared to $73.9 million for the first half of last year.
“For the first six months of 2014, our sales levels decreased 5 percent” compared to 2013,” Leonard F. Leganza, Eastern’s chairman, president and CEO, stated in a news release. “The Industrial Hardware segment was negatively impacted because of lower sales of lightweight composite panels used in an electronic white board product and composite panels used in the fracking industry.”
Leganza said the decrease in panel sales used to construct a fracking tank was “the unexpected result of the customer exiting the fracking business.”
Eastern’s Metal Products segment also saw reduced sales of mining products in both the U.S. and Canada, he said.
“We currently view that as a temporary situation, where customers are adjusting inventories,” Leganza said.
The company’s Security Products segment did see higher sales in the first half of 2014, he said, primarily due to increased sales to the commercial laundry industry.
Leganza attributed the first half’s reduced sales to the unexpected “general softness in the economy and its effect on the many original equipment manufacturers” the company supplies.
“We will as always continue to emphasize the development of new products to offset some of the current softness in our markets, and we will continue to vigorously pursue acquisitions that fit into our strategic growth plans,” he said in the release.
Eastern is a 156-year-old manufacturer of industrial hardware, security products and metal castings that operates in 11 locations in the U.S., Canada, Mexico, Taiwan and China. It employs 600 workers in North America and another 300 in China.
Despite the earnings decline, Eastern’s board of directors voted to pay shareholders a one-time extra dividend of 4 cents along with the regular quarterly dividend of 11 cents, payable on Sept. 15, 2014. The dividend will be the company’s 296th consecutive quarterly dividend, “a 74-year track record we are very proud of,” Leganza said.