What changed in this filing

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Item 1. Financial Statements

2025-05-06 compared with 2024-11-05 · 177 added, 261 removed, 336 unchanged (57% of the section changed)

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 28, 2024

September 30, 2023

September 28, 2024

September 30, 2023

$ 206,068,490

$ 195,062,061

March 29, 2025

March 30, 2024

Cost of products sold

1 unchanged sentence

( 49,170,711 )

( 154,161,980 )

( 150,371,589 )

Product development expense

1 unchanged sentence

( 1,359,797 )

( 3,739,214 )

( 4,257,468 )

Selling and administrative expenses

1 unchanged sentence

( 10,683,652 )

( 31,014,022 )

( 29,051,436 )

Operating profit

Interest expense

( 2,049,655 )

( 2,059,912 )

Other (expense) income

Income from continuing operations before income taxes

Income before income taxes from continuing operations

Income tax expense

( 1,333,771 )

( 1,113,587 )

( 3,335,489 )

( 2,574,393 )

Net income from continuing operations

Discontinued Operations (see note B)

Loss from operations of discontinued unit

$ ( 766,990 )

$ ( 530,764 )

$ ( 2,750,844 )

$ ( 3,600,060 )

Loss on classification as held for sale

( 23,087,775 )

Income tax benefit

Loss on discontinued operations

$ ( 19,966,243 )

$ ( 401,466 )

$ ( 21,517,715 )

$ ( 2,704,365 )

Net (loss) income

Income (Loss) from operations of discontinued unit

$ ( 241,382 )

Income tax benefit (expense)

Income (Loss) on discontinued operations

$ ( 187,845 )

Earnings per share from continuing operations:

Loss per share from discontinued operations:

Total (loss) earnings per share:

Earnings (Loss) per share from discontinued operations:

Total earnings per share:

Cash dividends per share:

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 28, 2024

September 30, 2023

September 28, 2024

September 30, 2023

Net (loss) income

$ ( 15,297,445 )

$ ( 9,842,000 )

Other comprehensive (loss) income:

March 29, 2025

March 30, 2024

Other comprehensive income:

Change in foreign currency translation

Change in fair value of foreign currency swap, net of tax benefit of:

2024 - $(106,076) and $(123,179) respectively

Change in fair value of interest rate swap, net of tax benefit of:

2023 - $0 and $(274,957) respectively

( 1,449,754 )

Change in pension and postretirement benefit costs, net of taxes of:

2024 - $71,355 and $214,065 respectively;

2023 - $74,360 and $223,079 respectively

Total other comprehensive (loss) income

Comprehensive (loss) income

Change in fair value of foreign currency swap

Change in pension and postretirement benefit costs, net of taxes:

2025 - $60,963 ;

2024 - $71,355

Total other comprehensive income

Comprehensive income

See accompanying notes.

THE EASTERN COMPANY

THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 28, 2024

December 30, 2023

Current Assets

17 unchanged sentences

Right of use assets

Other Long-Term Assets

Long-term assets held for sale

Total Other Assets

2 unchanged sentences

See accompanying notes.

THE EASTERN COMPANY

THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 28, 2024

December 30, 2023

LIABILITIES AND SHAREHOLDERS’ EQUITY

15 unchanged sentences

Accrued pension cost

Long-term liabilities held for sale

Total Liabilities

18 unchanged sentences

( 1,561,015 )

Unrealized loss on foreign currency swap, net of tax

( 2,276,590 )

Unrealized gain on foreign currency swap, net of tax

Unrecognized net pension and postretirement benefit costs, net of tax

9 unchanged sentences

See accompanying notes.

THE EASTERN COMPANY

THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine Months Ended

September 28, 2024

September 30, 2023

Three Months Ended

Operating Activities

Net (loss) income

$ ( 9,842,000 )

Loss from discontinued operations

( 21,517,715 )

( 2,704,365 )

Income (Loss) from discontinued operations

Income from continuing operations

Adjustments to reconcile net income to net cash provided

by operating activities:

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation and amortization

Acquisition related expenses

Reduction in carrying amount of ROU assets

Unrecognized pension and postretirement benefits

Unrecognized pension and postretirement (benefit) expense

Loss on sale of equipment and other assets

Provision for doubtful accounts

Stock compensation expense

Stock compensation (benefit) expense

Changes in operating assets and liabilities:

4 unchanged sentences

Accrued compensation

Change in operating lease liability

( 1,256,224 )

Change in operating lease liability

( 3,784,982 )

1 unchanged sentence

( 5,921,413 )

Net cash provided by operating activities

Net cash (used in) provided by operating activities

( 1,848,184 )

Investing Activities

Marketable securities

Business acquisition

Payments received from notes receivable

2 unchanged sentences

( 1,711,560 )

( 4,089,705 )

Net cash used in investing activities

2 unchanged sentences

Financing Activities

Proceeds from new long-term debt financing

Payments on short term borrowings (revolver)

Principal payments on long-term debt

( 2,365,500 )

( 74,919,004 )

Proceeds (payments) on short term borrowings (revolver)

Financing leases, net

2 unchanged sentences

Dividends paid

( 2,050,933 )

( 2,069,043 )

Net cash used in financing activities

( 2,952,847 )

( 1,744,612 )

Discontinued Operations

1 unchanged sentence

Cash used in investing activities

Cash used in financing activities

Cash provided by discontinued operations

1 unchanged sentence

Net change in cash and cash equivalents

( 5,764,086 )

Cash and cash equivalents at beginning of period

4 unchanged sentences

Lease liability

( 4,484,838 )

¹ includes cash from assets held for sale of $0.4 million as of September 28, 2024 and $0.7 million as of September 30, 2023

See accompanying notes

THE EASTERN COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 28, 2024

1 includes cash from assets held for sale of $1.2 million as of March 29, 2025 and $0.4 million as of March 30, 2024

See accompanying notes

Note A – Basis of Presentation

7 unchanged sentences

The Company’s fiscal year is a 52-53-week fiscal year ending on the Saturday nearest to December 31.

References in this Quarterly Report on Form 10-Q for the quarterly period ended September 28, 2024 (this “Form 10-Q”) to 2023, the 2023 fiscal year or fiscal 2023 mean the 52-week period ended on December 30, 2023, and references to 2024, the 2024 fiscal year or fiscal 2024 mean the 52-week period ending on December 28, 2024.

References in this Quarterly Report on Form 10-Q for the quarterly period ended March 29, 2025 (this “Form 10-Q”) to 2024, the 2024 fiscal year or fiscal 2024 mean the 52-week period ended on December 28, 2024, and references to 2025, the 2025 fiscal year or fiscal 2025 mean the 53-week period ending on January 3, 2026.

In a 52-week fiscal year, each quarter has 13 weeks.

References to the third quarter of 2023, the third fiscal quarter of 2023 or the three months ended September 30, 2023 mean the 13-week period from July 2, 2023 to September 30, 2023.

References to the third quarter of 2024, the third fiscal quarter of 2024 or the three months ended September 28, 2024, mean the 13-week period from June 30, 2024 to September 28, 2024.

References to the first nine months of 2023 or the nine months ended September 30, 2023 mean the period from January 1, 2023 to September 30, 2023.

References to the first nine months of 2024 or the nine months ended September 28, 2024 mean the period from December 31, 2023 to September 28, 2024.

References to the first quarter of 2024, the first fiscal quarter of 2024, the first three months of 2024 or the three months ended March 30, 2024 mean the 13-week period from December 31, 2023 to March 30, 2024.

References to the first quarter of 2025, the first fiscal quarter of 2025, the first three months of 2025 or the three months ended March 29, 2025, mean the 13-week period from December 29, 2024 to March 29, 2025.

Certain amounts in the 2024 financial statements have been reclassified to conform with the 2025 presentation with no impact or change to previously reported net income or shareholders’ equity.

1 unchanged sentence

Note B – Discontinued Operations

In the third quarter of 2024 we determined that the Big 3 Mold business no longer fits with our long-term strategy, and we have initiated the process of selling the business.

The Mold business is cyclical in nature, requires significant capital investment to remain competitive, and serves different markets than our core businesses.

Selling the Big 3 Mold business will allow management to focus on our core capabilities, offerings, and markets served.

In the third quarter of 2024, we determined that the Big 3 Mold business meets the criteria to be held for sale and that the assets held for sale qualify for discontinued operations.

In the third quarter of 2024, we determined that the business of Big 3 Mold Services, Inc.

(“Big 3 Mold”) meets the criteria to be held for sale and that the assets held for sale qualify for discontinued operations.

As such, the financial results of the Big 3 Mold business are reflected in our unaudited condensed consolidated statements of operations as discontinued operations for all periods presented.

Additionally, current and non-current assets and liabilities of discontinued operations are reflected in the unaudited condensed consolidated balance sheets for both periods presented.

On April 30, 2025, the Company sold the equipment, workforce and customer list of the ISBM division of Big 3 Precision Mold Service, Inc.

ISBM, which is located in Centralia, Illinois, is an injection stretch blow mold toolmaker.

Summarized Financial Information of Discontinued Operations

The following table represents income from discontinued operations, net of tax:

The following table represents income (loss) from discontinued operations, net of tax:

Three Months Ended

Nine Months Ended

September 28, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

March 30, 2024

Cost of products sold

1 unchanged sentence

( 2,562,277 )

( 8,402,175 )

( 9,076,341 )

Selling and administrative expenses

( 1,145,232 )

( 1,248,179 )

( 3,483,904 )

( 3,875,579 )

Restructuring costs

( 23,087,775 )

Operating loss

( 23,677,345 )

( 25,326,205 )

( 1,545,142 )

Other expense

( 1,539,940 )

Operating Income (Loss)

Interest expense

Loss from discontinued operations before income taxes

( 23,854,765 )

( 25,838,619 )

( 3,600,060 )

Income tax benefit

Loss from discontinued operations, net of tax

$ ( 19,966,243 )

$ ( 401,466 )

$ ( 21,517,715 )

Income (Loss) from discontinued operations before income taxes

Income tax (expense) benefit

Income (Loss) from discontinued operations, net of tax

$ ( 187,845 )

The following table represents the assets and liabilities from discontinued operations:

September 28, 2024

March 29, 2025

December 28, 2024

1 unchanged sentence

Prepaid expenses

Property, plant and equipment, net

Patents and other intangibles net of accumulated amortization

Right of use assets

11 unchanged sentences

Total liabilities of discontinued operations

¹ the total assets and liabilities of discontinued operations are presented as current in the September 28, 2024 consolidated balance sheet as we expect to sell the discontinued operations and collect proceeds within one year.

1 The total assets and liabilities of discontinued operations are presented as current in the March 29, 2025 and December 28, 2024 balance sheet as we expect to sell the discontinued operations and collect proceeds within one year of such dates.

Note C – Earnings Per Share

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 28, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

March 30, 2024

Weighted average shares outstanding

2 unchanged sentences

Denominator for diluted earnings per share

Note D – Fair Value of Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company utilizes a fair value hierarchy, which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

The fair value hierarchy has three levels of inputs that may be used to measure fair value:

Note D – Fair Value of Instruments and Fair Value Measurements

The Company incurs certain manufacturing, marketing, and selling costs in international markets in local currency.

Accordingly, earnings and cash flows are exposed to market risk from changes in foreign currency exchange rates relative to the U.S.

dollar, the Company’s reporting currency.

The Company has a program in place that is designed to mitigate the exposure to changes in foreign currency exchange rates.

The program includes the use of derivative financial instruments to minimize, for a period of time, the impact on its financial results from changes in foreign exchange rates.

The Company utilizes foreign currency forward contracts to hedge the anticipated cash flows from transactions denominated in foreign currencies, namely Mexican pesos.

This does not eliminate the impact of the volatility of foreign exchange rates.

However, because the Company generally enters into forward contracts twelve to eighteen months out, rates are fixed for a twelve-to-eighteen-month period, thereby facilitating financial planning and resource allocation.

Designated Foreign Currency Hedge Contracts

All of the Company’s designated foreign currency hedge contracts as of March 29, 2025 were cash flow hedges under ASC Topic 815, “Derivatives and Hedging” (“ASC 815”).

The Company records the effective portion of any change in the fair value of designated foreign currency hedge contracts in other comprehensive income until the related third-party transaction occurs.

Once the related third-party transaction occurs, the Company reclassifies the effective portion of any related gain or loss on the designated foreign currency hedge contracts to earnings.

In the event the hedged forecasted transaction does not occur, or it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time.

The Company had designated foreign currency hedge contracts outstanding in the contract amount of $ 7.2 million as of March 29, 2025 and $ 9.6 million as of December 28, 2024.

As of March 29, 2025 a loss of $ 0.3 million is expected to be reclassified to earnings within the next nine months.

All currency cash flow hedges outstanding as of March 29, 2025 mature within nine months.

Fair Value of Derivative Instruments

The following table presents the effect of the Company’s derivative instruments designated as cash flow hedges under ASC 815 in its unaudited Condensed Consolidated Statements of Operations for the three months ended March 29, 2025:

Derivative Instruments

Amount of Loss Recognized in Accumulated Other Comprehensive Income

Amount of Loss Reclassified from Accumulated Other Comprehensive

Income into Earnings

Location in Condensed Consolidated Statement of Income

Designated foreign currency hedge contracts

$ ( 308,204 )

$ ( 291,128 )

Cost of products sold

ASC 815 requires all derivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet.

The Company determines the fair value of its derivative instruments using the framework prescribed by ASC 820, “Fair Value Measurements and Disclosures,” by considering the estimated amount it would receive or pay to sell or transfer these instruments at the reporting date.

Generally, the Company uses inputs that include quoted prices for similar assets or liabilities in active markets;

quoted prices for identical or similar assets or liabilities in markets that are not active;

other observable inputs for the asset or liability;

and inputs derived principally from, or corroborated by, observable market data by correlation or other means.

As of March 29, 2025, the Company has classified its derivative assets and liabilities within Level 2 of the fair value hierarchy prescribed by ASC 815, as discussed below, because these observable inputs are available for substantially the full term of its derivative instruments.

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

1 unchanged sentence

or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and

unobservable.

The Company’s financial instruments are primarily investments in marketable securities (Level 1), designated foreign currency hedge contracts – see Note P, Financial Instruments and Fair Value Measurements , and pension assets, see Note M, Retirement Benefit Plans .

The carrying amounts of other financial instruments (cash and cash equivalents, marketable securities, accounts receivable, accounts payable and debt) as of September 28, 2024 and December 30, 2023, approximate fair value because of their short-term nature and market-based interest rates.

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable.

The following tables present the fair value of the Company’s derivative instruments as they appear in its Condensed Consolidated Balance Sheets as of March 29, 2025 and December 28, 2024:

Location in Condensed

Consolidated Balance Sheets

March 29, 2025

December 28, 2024

Derivative Liabilities:

Designated foreign currency hedge contracts

Other current liabilities

Note E – Inventories

Inventories consist of the following components:

September 28, 2024

December 30, 2023

Raw material and component parts

2 unchanged sentences

Total inventories 1

¹ Includes inventory of discontinued operations of $ 1.2 million and $ 0.9 million as of September 28, 2024 and September 30, 2023, respectively.

1 Includes inventory of discontinued operations of $ 0.8 million and $ 0.8 million as of March 29, 2025 and December 28, 2024, respectively.

Note F – Goodwill

The aggregate carrying amount of goodwill from continuing operations is approximately $ 58.6 million as of September 28, 2024.

A goodwill write-off of approximately $ 12.1 million was recognized in discontinued operations when classifying the disposal group as held for sale.

The aggregate carrying amount of goodwill from continuing operations is approximately $ 58.6 million as of March 29, 2025.

In the first quarter of 2025, there was no write-off of goodwill.

See Note B – Discontinued Operations for further discussion.

18 unchanged sentences

All options to extend, when it is reasonably certain the option will be exercised, have been included in the calculation of the ROU asset and lease liability.

Currently, the Company has 17 operating leases with a lease liability of $ 14.8 million and five finance leases with a lease liability of $ 3.8 million as of September 28, 2024.

Currently, the Company has 19 operating leases with a lease liability of $ 18.1 million and 6 finance leases with a lease liability of $ 3.7 million as of March 29, 2025.

The terms and conditions of the leases are determined by the individual agreements.

2 unchanged sentences

There are no leases that have not yet commenced that could create significant rights and obligations for the Company.

The future payments (in millions) due under non-cancelable operating and finance leases as of September 28, 2024 are as follows:

The future payments (in millions) due under non-cancelable operating and finance leases as of March 29, 2025 are as follows:

Less effects of discounting

Lease liabilities recognized 1

As of September 28, 2024, the weighted average lease term for all operating and finance leases was 6.9 and 6.5 years, respectively.

The weighted average discount rate associated with operating and finance leases was 6.3 % and 6.8 %, respectively, as of such date.

1 includes 0.1 million operating lease payments attributable to discontinued operations.

As of March 29, 2025, the weighted average lease term for all operating and finance leases was 5.9 and 6 .0 years, respectively.

As of March 29, 2025, the weighted average discount rate associated with operating and finance leases was 6.8 % and 6.4 %, respectively, as of such date.

Note H – Debt

On June 16, 2023, the Company entered into a credit agreement with TD Bank, N.A., Wells Fargo Bank, Bank of America, and M&T Bank as lenders (the “Credit Agreement”), that included a $ 60 million term portion and a $30 million revolving commitment portion.

The proceeds of the term loan were used to repay the Company’s remaining outstanding term loan and to terminate its existing credit facility with Santander Bank, N.A.

On June 16, 2023, the Company entered into a credit agreement with the lending institutions named therein (the "Lenders"), TD Bank, N.A., as an LC issuer, the swing line lender and as the administrative agent, TD Securities (USA) LLC, as sole arranger and sole bookrunner, and Bank of America, N.A.

and Wells Fargo Bank, National Association, as co-syndication agents (the “Credit Agreement”), that included a $ 60 million term portion and a $ 30 million revolving commitment portion.

In April 2025, the Company entered into an amendment to the Credit Agreement that increased the revolving commitment portion to $ 50 million.

The proceeds of the term loan were used to repay the Company’s remaining outstanding term loan and to terminate its credit facility with Santander Bank, N.A.

(approximately $ 59 million).

4 unchanged sentences

Currently, the commitment fee is 0.25 %.

The Company has $ 3.0 million of outstanding borrowings under the revolving commitment portion of the credit facility as of September 28, 2024.

The Company has $ 1.3 million of outstanding borrowings under the revolving commitment portion of the credit facility as of March 29, 2025.

The term loan bears interest at a variable rate based on the Term Secured Overnight Financing Rate (“SOFR”), plus an adjustment of ten basis points, plus an applicable margin of 1.875 % to 2.625 %, depending on the Company’s senior net leverage ratio.

3 unchanged sentences

In addition, the Company is required to maintain a fixed charge coverage ratio to be not less than 1.25 to 1 .

The Company was in compliance with all its covenants under the Credit Agreement on September 28, 2024, and through the date of filing this Form 10-Q.

The Company was in compliance with all its covenants under the Credit Agreement on March 29, 2025, and through the date of filing this Form 10-Q.

Note I - Stock Options and Awards

2 unchanged sentences

The Company has no other existing plan pursuant to which equity awards may be granted.

Restricted stock unit awards may be granted to participants under the 2020 Plan with restrictions determined by the Compensation Committee of the Board.

During the first three months of 2025 and 2024, the Company granted stock awards with respect to 35,856 and 0 shares of Company common stock, respectively, that were subject to the meeting of performance measurements or time-based.

For the first three months of 2025, the Company used fair market value to determine the associated expense with stock awards.

Incentive stock options granted under the 2020 Plan must have exercise prices that are not less than 100% of the fair market value of the Company’s common stock on the dates the stock options are granted.

Restricted stock awards may also be granted to participants under the 2020 Plan with restrictions determined by the Compensation Committee of the Board.

Under the 2020 Plan, non-qualified stock options granted to participants will have exercise prices determined by the Compensation Committee of the Board.

During the first nine months of fiscal 2024 and 2023, the Company granted stock awards with respect to 92,016 and 79,500 shares of Company common stock, respectively, that were subject to the meeting of performance measurements or time based.

For the first nine months of fiscal years 2024 and 2023, the Company used fair market value to determine the associated expense with stock awards.

The 2020 Plan also permits the issuance of Stock Appreciation Rights (“SARs”).

The SARs are in the form of an option with a cashless exercise price equal to the difference between the fair value of the Company’s common stock at the date of grant and the fair value as of the exercise date resulting in the issuance of the Company’s common stock.

The Company did not issue any SARs during the first nine months of fiscal 2024 and 2023.

Stock-based compensation (income) expense, including forfeitures, in connection with SARs and stock awards previously granted to employees was approximately $ 168,000 and $ 5,000 in the third quarter of 2024 and the third quarter of 2023, respectively, and was approximately $ 582,000 and $( 158,000 ) in the first nine months of fiscal years 2024 and 2023, respectively.

As of September 28, 2024, there were 792,300 shares of Company common stock reserved and available for future grant under the 2020 Plan.

The following tables set forth the outstanding SARs for the period specified:

Nine Months Ended

September 28, 2024

The Company issued 48,240 and 0 options during the first three months of 2025 and 2024, respectively.

For the first three months of 2025, the Company used several assumptions which included an expected term of 3 years, volatility deviation of 40.34 % and a risk-free rate of 4.34 % to determine the expense associated with options.

Stock-based compensation (income) expense, including forfeitures, in connection with options and stock awards previously granted to employees was approximately $( 153,000 ) and $ 434,000 in the first quarter of 2025 and the first quarter of 2024, respectively.

As of March 29, 2025, there were 873,631 shares of Company common stock reserved and available for future grant under the 2020 Plan.

The following tables set forth the outstanding options for the period specified:

Three Months Ended

March 29, 2025

December 28, 2024

Weighted Average Exercise Price

Weighted Average

Exercise Price

Outstanding at beginning of period

Outstanding at end of period

SARs Outstanding and Exercisable

Stock Options Outstanding and Exercisable

Range of Exercise Prices

Outstanding as of September 28, 2024

Outstanding as of March 29, 2025

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Exercisable as of September 28, 2024

Exercisable as of March 29, 2025

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

$ 20.20 - $ 28.69

The following tables set forth the outstanding stock awards for the period specified:

Nine Months Ended

September 28, 2024

December 30, 2023

Three Months Ended

Outstanding at beginning of period

Outstanding at end of period

As of September 28, 2024, outstanding SARs and stock awards had an intrinsic value of $ 3,254,000 .

As of March 29, 2025, outstanding SARs and stock awards had an intrinsic value of $ 1,450,000 .

Note J – Share Repurchase Program

On August 21, 2023, the Company announced that the Board had approved a new share repurchase program authorizing the Company to repurchase up to 200,000 shares of the Company’s common stock through August 20, 2028.

On August 21, 2023, the Company announced that the Board of Directors of the Company had approved a share repurchase program authorizing the Company to repurchase up to 200,000 shares of the Company’s common stock through August 20, 2028.

The Company’s share repurchase program does not obligate it to acquire the Company’s common stock at any specific cost per share.

Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

Below is a summary of the Company’s shares repurchased during the third quarter of 2024 under the new share repurchase program.

Under this program, the Company was authorized to repurchase shares in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

Below is a summary of the Company’s share repurchases during the first quarter of 2025 under the share repurchase program.

As of March 29, 2025, no shares remained available for repurchase under the authorization.

Total Number of Shares Purchased

2 unchanged sentences

Maximum Number of Shares that may yet be Purchased Under the Plans or Programs

Balance as of June 29, 2024

June 30, 2024 – September 28, 2024

Balance as of September 28, 2024

December 29, 2024 – February 1, 2025

February 2, 2025 – March 1, 2025

March 2, 2025 – March 29, 2025

Note K – Revenue Recognition

14 unchanged sentences

income tax examinations by foreign tax authorities for years prior to 2018.

The total amount of unrecognized tax benefits could increase or decrease within the next 12 months for several reasons, including the closure of federal, state, and foreign tax years by expiration of the statute of limitations and the recognition and measurement considerations under FASB ASC Topic 740, “Income Taxes.” There have been no significant changes to the value of unrecognized tax benefits during the nine months ended September 28, 2024.

The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits will not increase or decrease significantly over the next twelve months.

5 unchanged sentences

The Company also provides health care and life insurance for retired salaried employees in the United States who meet specific eligibility requirements.

Significant disclosures relating to these benefit plans for the third quarter and first nine months of fiscal years 2024 and 2023 are as follows:

Significant disclosures relating to these benefit plans for the first quarter of fiscal years 2025 and 2024 are as follows:

Pension Benefits

Three Months Ended

Nine Months Ended

September 28, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

March 30, 2024

Interest cost

2 unchanged sentences

( 1,099,035 )

( 3,297,103 )

( 3,147,046 )

Amortization of prior service cost

Amortization of the net loss

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 28, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

March 30, 2024

Interest cost

2 unchanged sentences

Amortization of the net loss

Net periodic (benefit) cost

Net periodic benefit (gain)

The Company’s funding policy with respect to its qualified plans is to contribute at least the minimum amount required by applicable laws and regulations.

In fiscal year 2025, the Company expects to make cash contributions to its qualified pension plans of approximately $ 2,900,000 and approximately $ 42,000 into its other postretirement plan.

As of September 28, 2024, the Company has contributed $ 1,572,000 to its pension plans and $ 25,000 to its postretirement plan in fiscal year 2024 and expects to make the remaining contributions as required during the remainder of the fiscal year.

As of March 29, 2025, the Company has contributed $ 1,016,000 to its pension plans and $ 7,000 to its postretirement plan in fiscal year 2025 and expects to make the remaining contributions as required during the remainder of the fiscal year.

The Company has a contributory savings plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”) covering substantially all U.S.

4 unchanged sentences

Three Months Ended

Nine Months Ended

September 28, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

March 30, 2024

Regular matching contribution

2 unchanged sentences

Total contributions for the period

The non-discretionary contribution of $ 328,953 made in the nine months ended September 30, 2023 was accrued for and expensed in the prior fiscal year.

Effective January 1, 2023, the non-discretionary contributions are being contributed on a weekly basis.

Note N - Recent Accounting Pronouncements

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which amends the reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

We do not expect this new standard to have a significant impact on our disclosures.

In December 2023, the FASB issued ASU No.

8 unchanged sentences

The Company has established credit limits for customers and monitors their balances to mitigate the risk of loss.

As of September 28, 2024, there were two significant concentrations of credit risk with customers, who had receivables representing 18 % and 11 % respectively, of our net accounts receivable.

As of March 29, 2025, there was one significant concentration of credit risk with a customer, that represented 13 % of our net accounts receivable.

As of December 28, 2024, there was one customer that represented 14 % of the Company’s net accounts receivable.

2 unchanged sentences

Interest Rate Risk

The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt under the Credit Agreement, which bears interest at variable rates based on term SOFR, plus an adjustment of ten basis points, plus an applicable margin of 1.875 % to 2.625 %, depending on the Company’s senior net leverage ratio.

Note P – Financial Instruments and Fair Value Measurements

The Company incurs certain manufacturing, marketing, and selling costs in international markets in local currency.

Accordingly, earnings and cash flows are exposed to market risk from changes in foreign currency exchange rates relative to the U.S.

dollar, the Company’s reporting currency.

The Company has a program in place that is designed to mitigate the exposure to changes in foreign currency exchange rates.

The program includes the use of derivative financial instruments to minimize, for a period of time, the impact on its financial results from changes in foreign exchange rates.

The Company utilizes foreign currency forward contracts to hedge the anticipated cash flows from transactions denominated in foreign currencies, namely Mexican pesos.

This does not eliminate the impact of the volatility of foreign exchange rates.

Designated Foreign Currency Hedge Contracts

All of the Company’s designated foreign currency hedge contracts as of September 28, 2024 were cash flow hedges under ASC 815, “Derivatives and Hedging” (“ASC 815”).

Once the related third-party transaction occurs, the Company reclassifies the effective portion of any related gain or loss on the designated foreign currency hedge contracts to earnings.

The Company had designated foreign currency hedge contracts outstanding in the contract amount of $ 12.6 million as of September 28, 2024 and $ 0.0 million as of December 30, 2023.

As of September 28, 2024 a loss of $ 0.4 million, net of tax, will be reclassified to earnings within the next fifteen months.

All currency cash flow hedges outstanding as of September 28, 2024 mature within fifteen months.

Fair Value of Derivative Instruments

Derivative Instruments

Amount of Loss Recognized in Accumulated Other Comprehensive Income

Amount of Loss Reclassified from Accumulated Other Comprehensive Income into Earnings

Location in Condensed Consolidated Statement of Operations

Designated foreign currency hedge contracts, net of tax

The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt under the Credit Agreement, which bears interest at variable rates based on SOFR, plus an adjustment of ten basis points, plus an applicable margin of 1.875 % to 2.625 %, depending on the Company’s senior net leverage ratio.

Note P - Segment Information

The Company has one reportable segment, and the Chief Executive Officer is the Company’s chief operating decision maker (CODM).

The CODM uses the following reported measures to assess performance and make decisions on resource allocation throughout the Company.

Engineered Solutions

March 30, 2024

Material cost

( 33,418,246 )

( 34,121,028 )

Cost of products sold

ASC 815 requires all derivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet.

Generally, the Company uses inputs that include quoted prices for similar assets or liabilities in active markets;

quoted prices for identical or similar assets or liabilities in markets that are not active;

other observable inputs for the asset or liability;

and inputs derived principally from, or corroborated by, observable market data by correlation or other means.

As of September 28, 2024, the Company has classified its derivative assets and liabilities within Level 2 of the fair value hierarchy prescribed by ASC 815, as discussed below, because these observable inputs are available for substantially the full term of its derivative instruments.

The following tables present the fair value of the Company’s derivative instruments as they appear in its Condensed Consolidated Balance Sheets as of September 28, 2024 and December 30, 2023:

Location in Condensed Consolidated Balance Sheets

As of September 28, 2024

As of December 30, 2023

Derivative Assets:

Designated foreign currency hedge contracts

Other long-term assets

Derivative Liabilities:

Designated foreign currency hedge contracts

Other current liabilities

( 3,125,986 )

( 2,922,443 )

Other variable and fixed overhead¹

( 12,581,070 )

( 12,127,240 )

Product development expense

( 1,109,186 )

( 1,359,797 )

Selling and administrative expenses

( 9,847,121 )

( 10,683,652 )

Operating Profit

1 Other variable and fixed overhead items included in segment operating profit include manufacturing salaries, indirect labor, insurance, lease expense, depreciation, and other overhead expenses

Note Q– Business Acquisition

On February 14, 2025, the Company acquired certain assets under asset and real estate purchase agreements from Centralia Industrial Painting, Inc.

and Ronald R.

Rainwater, respectively.

These assets are held in our Big 3 Precision Products, Inc.

(“Big 3”) subsidiary.

We expect the acquisition will enable the Company to become more competitive with respect to cost and quality of the products sold by Big 3.

The acquisition was accounted as a business combination (ASC Topic 805).

The acquired assets are included in the consolidated financial statements of the Company from the effective date of the acquisition.

The excess of the purchase price paid over the fair market value of the net assets acquired of $ 0.1 million has been recorded as goodwill.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements