NAUGATUCK — The Eastern Co. said last week it will continue investing in infrastructure improvements and developing new products despite reporting a 50 percent reduction in first-quarter profits.
The Naugatuck-based industrial conglomerate said net income for the first quarter was $1.01 million, or 16 cents per diluted share, compared with $2.05 million, or 33 cents per diluted share, for the first quarter of 2012. First-quarter sales were $34.7 million, a 14 percent drop from $40.5 million in the year-ago quarter.
Leonard Leganza, Eastern’s chairman, president and CEO, said the company’s current business plans “anticipated first-quarter softness in the economy,” which the company began to notice in the fourth quarter of 2012.
While sales fell in the first quarter compared to the same period last year, he said it is “too soon to conclude that this decrease reflects a broader slowdown in the domestic economy.”
Leganza said the company is still “well positioned to meet the demand and future growth we expect in the many diversified markets that we serve.”
Eastern is a 155-year-old company that makes vehicular and industrial hardware; locks; latches; metal castings; coin-vending and smart card products; and a proprietary line of mine roof expansion anchors used to secure the roofs of underground coal and metallurgical mines. The products are made in 10 manufacturing plants in the United States, Canada, Mexico, Taiwan and China.
The company employs about 730 people in the United States and Canada, and another 500 in China.
As an example of the company’s commitment to infrastructure improvements and new product development, Leganza said Eastern recently began building a 19,680-square-foot addition to the Eberhard Manufacturing Co. of Cleveland, the anchor of its industrial hardware division.
The new facility will be used primarily to support the growth in demand for hardware in the Class 8 truck market, for which Eastern has introduced a number of new products, including a new line of venting products that debuted in 2012.
At its Canadian Commercial Vehicles subsidiary in Tillsonburg, Ontario, Eastern has developed a new use for its lightweight honeycomb composite paneling systems, which are now used to make modular water tanks used in fracking for the oil and gas industries, he said.
Fracking is the process of drilling and injecting fluid into the ground at a high pressure in order to fracture shale rocks and release petroleum, natural gas, shale gas or other substances for extraction.
Eastern is also evaluating a longer-term capital initiative at the Frazer & Jones Co. in Solvay, N.Y., the headquarters of its metal products division. The company is weighing plans to upgrade the facility to enable it to expand production as demand increases, Leganza said.
“The focus and emphasis we have placed on cash flow during the recent years of economic uncertainties have maintained the company in solid financial position,” he said, adding that the company is confident its financial strength will support dividend and debt payments and its infrastructure investments.