NAUGATUCK–The Eastern Co. on reported higher sales for the fourth quarter and the fiscal year, but slightly lower profits for the quarter and flat earnings for the year.
The Naugatuck-based industrial conglomerate said its net income for the fourth quarter was $1.5 million, or 24 cents per diluted share, compared with $1.6 million, or 26 cents per diluted share, for the fourth quarter of 2010.
The earnings came on quarterly sales of $38.1 million, a 17 percent increase from $32.6 million for the same quarter last year.
For the fiscal year, the company reported earnings of $5.5 million, or 89 cents per diluted share, compared with $5.5 million, or 90 cents per diluted share, for fiscal 2010. Net sales for the year were $142.9 million, a 10 percent increase from $130.1 million the previous year.
Eastern is a 153-year-old company that makes vehicular and industrial hardware; locks; metal castings, and coin-vending and smart card products in nine manufacturing plants in the United States, Canada, Mexico, Taiwan and China.
Leonard Leganza, Eastern’s chairman, president and CEO, said the company’s earnings were affected by lower than expected military sales due to reduced government spending; higher than expected start-up costs related to the construction of a new manufacturing facility in Tillsonburg, Ontario; sluggish sales of new products to the commercial laundry industry, and ongoing cost increases.
Earnings were also affected by a $5 million contribution to the company’s pension plan made in December, Leganza said.
The discretionary pension plan contribution reduced the company’s taxable income, which lowered the manufacturer’s deduction it was entitled to claim, said John L. Sullivan, the company’s vice president and chief financial officer. That in turn increased the taxes the company paid and reduced its net income.
Though the pension plan contribution had a negative effect on earnings in the fourth quarter and in fiscal 2011, it will have a positive effect on the bottom line in the future by reducing the company’s pension expenses, Sullivan said.
Leganza said he is pleased with the financial results for 2011 and “optimistic” that operations will continue to grow in 2012. The company, he said, is anticipating growth in its industrial hardware segment as the result of the sale of lightweight composite panels for use in the electronic white board industry; a line of vent products for use in the Class 8 truck and other potential markets, and increased sales of hardware products to the military.
Sales in the security products segment are expected to improve because of increased marketing efforts for new products in the commercial laundry market, while the metal products segment anticipates increased sales of malleable and ductile iron products for the mining market, he said.
“Despite the current uncertain state of worldwide economic conditions that continue to impact some of our market segments, we remain very positive about our future,” Leganza said in a statement. “Our strong financial condition provides us the resources we need to invest in our product development initiatives, provide for capital expenditures where needed and to continue our dividend policy.”
As an indication of its confidence in the company’s future performance, Eastern’s board of directors voted last Wednesday to increase its quarterly dividend by 11 percent to 10 cents per share of common stock, effective in the first quarter, Leganza said. The dividend is the company’s 286th consecutive quarterly dividend.