The Eastern Company (EML) Q2 2026 earnings summary

Executive summary

• Net sales for Q2 2026 decreased 12% year-over-year to $61.8 million, but backlog rose 45% to $126.2 million, driven by acquisitions and strong demand in core and new aerospace/defense markets.

• Net income for Q2 2026 was $5.6 million ($0.94 per diluted share), up from $2.0 million ($0.33) in Q2 2025, primarily due to a $6.5 million non-cash bargain purchase gain from acquisitions.

• Adjusted net income from continuing operations for Q2 2026 was $0.9 million ($0.15 per diluted share), down from $3.5 million ($0.57) a year ago.

• Entering the second half of 2026 with strong momentum and improved profitability outlook, supported by order book strength and improved demand.

Financial highlights

• Gross margin for Q2 2026 was 20.6% ($7.9 million), down from 23.3% ($16.4 million) in Q2 2025.

• Adjusted EBITDA for Q2 2026 was $3.4 million, down 49% from $6.7 million in Q2 2025.

• Cash from operations for the first six months of 2026 was $12 million, up from $1.9 million in the prior year.

• Inventory increased 17.1% since year-end to $66.0 million; accounts receivable rose to $36.8 million.

• Operating profit was $1.7 million (2.7% of net sales), down from $3.1 million (4.5%) a year ago.

Outlook and guidance

• Expectation of continued improvement in revenue and margins as backlog converts to shipments in the second half of 2026.

• Heavy truck build rates and automotive model launches are anticipated to drive further growth into 2027.

• Aerospace and defense acquisitions expected to be accretive in 2026, with margin improvement targeted through operational and pricing actions.

• Management expects sufficient liquidity for both short- and long-term needs, with $59 million available under the credit facility.