Eastern Company Q1 Sales Drop 5.7% to $59.7M; Adjusted EBITDA Falls 35%
Eastern Company reported first-quarter net sales of $59.7 million, down 5.7% year-over-year, with net income of $0.6 million, or $0.11 per share. Adjusted EBITDA declined 35% to $3.0 million as gross margin slipped to 20%, while backlog rose to $82.2 million and the company reduced debt by $1.0 million.
1. First-Quarter Performance
The Eastern Company’s net sales in Q1 FY2026 were $59.7 million, down 5.7% from $63.3 million last year, driven by lower returnable transport packaging volumes partly offset by stronger truck mirror sales. Net income slid to $0.6 million, or $0.11 per share, and adjusted EBITDA fell 35% to $3.0 million as gross margin declined to 20.0% from 22.4%.
2. Backlog and Operational Challenges
Backlog increased to $82.2 million from $81.1 million sequentially while order execution improvements supported revenue growth. The racks business incurred below-plan operating performance due to unfavorably priced contracts, which management expects to contain through the first half of 2026 as lead times are reduced and throughput capacity is expanded.
3. Balance Sheet Strength and Outlook
The company reduced total debt by $1.0 million and repurchased $422,355 of shares, leaving approximately $67 million of revolver availability at quarter end. Management highlighted a more favorable demand environment for the remainder of 2026 and plans to sustain organic growth investments and pursue selective M&A opportunities as financial flexibility allows.