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 in aerospace and defense and strong demand in core product lines.

• Net income for Q2 2026 increased to $5.6 million ($0.94 per diluted share), primarily due to a $6.5 million non-cash bargain purchase gain from the acquisitions of Sungear and Crown Precision.

• Adjusted net income for Q2 2026 was $0.9 million ($0.15 per share), reflecting normalization for non-recurring items.

• Entering the second half of 2026 with strong order momentum and improved profitability outlook, supported by backlog and new business.

Financial highlights

• Gross margin for Q2 2026 was $20.6 million or 20.6% of sales, down from 23.3% in Q2 2025.

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

• 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 a year ago.

• Inventory increased 17.1% since year-end to $66 million; accounts receivable rose to $36.8 million.

Outlook and guidance

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

• Integration of acquisitions and rising production volumes anticipated to enhance product mix and margins.

• Heavy truck build rates and automotive model launches are set to drive growth through 2026 and into 2027.

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