EASTERN CO (EML)

CIK: 0000031107. SIC: 3420 Cutlery, Handtools & General Hardware. Latest 10-K as of: 2026-03-03.

SIC breadcrumb: Manufacturing > SIC Major Group 34 > SIC 3420 Cutlery, Handtools & General Hardware

SEC company page: https://www.sec.gov/edgar/browse/?CIK=31107. Latest filing source: 0001654954-26-001850.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-19. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000031107.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-12. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000031107.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001654954-26-004741.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-12. Report date: 2026-04-04.

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is intended to highlight significant changes in the financial position and results of operations of The Eastern Company (together with its consolidated subsidiaries, the “Company,” “we,” “us” or “our”) for the three months ended April 4, 2026. This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the fiscal year ended January 3, 2026 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2026, as amended on March 19, 2026 (the “2025 Form 10-K”).

The Company’s fiscal year is a 52- or 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 April 4, 2026 (this “Form 10-Q”) to 2025, fiscal year 2025 or fiscal 2025 mean the 53-week period ended on January 3, 2026, and references to 2026, fiscal year 2026 or fiscal 2026 mean the 52-week period ending on January 2, 2027. In a 53-week fiscal year, the first three quarters each have 13 weeks, and the fourth quarter has 14 weeks. In a 52-week fiscal year, each quarter has 13 weeks.  References to the first quarter of 2025, the first fiscal quarter of 2025 or the three months ended March 29, 2025 mean the 13-week period from December 29, 2024 to March 29, 2025. References to the first quarter of 2026, the first fiscal quarter of 2026 or the three months ended April 4, 2026, mean the 13-week period from January 4, 2026 to April 4, 2026.

Safe Harbor for Forward-Looking Statements

Statements contained in this Form 10-Q that are not based on historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terminology such as “would,” “should,” “could,” “may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue,” “plan,” “potential,” “opportunities,” or similar terms or variations of those terms or the negative of those terms. There are many factors that affect the Company’s business and the results of its operations and that may cause the actual results of operations in future periods to differ materially from those currently expected or anticipated.  These factors include:

·

risks associated with doing business overseas, including fluctuations in exchange rates and the inability to repatriate foreign cash, the impact on cost structure and on economic conditions as a result of actual and threatened increases in trade tariffs and the impact of political, economic, and social instability;

·

the impact of tariffs, trade sanctions or political instability on the availability or cost of raw materials;

·

the impact of higher raw material and component costs and cost inflation, supply chain disruptions and shortages, particularly with respect to steel, plastics, scrap iron, zinc, copper, and electronic components;

·

delays in delivery of our products to our customers;

·

the impact of global economic conditions and interest rates, and more specifically conditions in the automotive, construction, aerospace, energy, oil and gas, transportation, electronic, and general industrial markets, including the impact, length and degree of economic downturns on the customers and markets we serve and demand for our products, reductions in production levels, the availability, terms and cost of financing, including borrowings under credit arrangements or agreements, and the impact of market conditions on pension plan funded status;

·

restrictions on operating flexibility imposed by the agreement governing our credit facility;

·

the inability to achieve the savings expected from global sourcing of materials;

·

lower cost competition;

·

our ability to design, introduce and sell new or updated products and related components;

·

market acceptance of our products;

·

the inability to attain expected benefits from acquisitions or dispositions or the inability to effectively integrate acquired businesses and achieve expected synergies;

·

costs and liabilities associated with environmental compliance;

·

the impact of climate change, natural disasters, geopolitical events, and public health crises, including pandemics and epidemics, and any related Company or government policies or actions, including any potential adverse economic impacts resulting from the U.S. federal government shutdown;

·

military conflict (including the Russia/Ukraine conflict, the conflict in the Middle East, the possible expansion of such conflicts and geopolitical consequences) or terrorist threats and the possible responses by the U.S. and foreign governments;

·

failure to protect our intellectual property;

·

cyberattacks, data breaches or interruptions or failures of our information technology systems; and

·

materially adverse or unanticipated legal judgments, fines, penalties, or settlements.

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The Company is also subject to other risks identified and discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, in Part I, Item 1A, Risk Factors, and in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the 2025 Form 10-K, and that may be identified from time to time in our quarterly reports on Form 10-Q, current reports on Form 8-K and other filings we make with the SEC.

Although the Company believes it has an appropriate business strategy and the resources necessary for its operations, future revenue and margin trends cannot be reliably predicted, and the Company may alter its business strategies to address changing conditions. Also, the Company makes estimates and assumptions that may materially affect reported amounts and disclosures. These relate to valuation allowances for accounts receivable and excess and obsolete inventories, accruals for pensions and other postretirement benefits (including forecasted future cost increases and returns on plan assets), provisions for depreciation (estimating useful lives), uncertain tax positions, and, on occasion, accruals for contingent losses. The Company undertakes no obligation to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise, except as required by law.

Recent Developments

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) became law. Among other provisions, the OBBBA extends permanently, with modifications, tax provisions enacted as part of the 2017 Tax Cuts and Jobs Act and restores and makes permanent many business provisions, such as full expensing for research and development and capital investments. In addition, the OBBBA contains other new tax relief measures and various revenue raising measures. We are currently assessing the potential impact of the OBBBA on our business and financial results.

For the three months ended April 4, 2026, we incurred approximately $3.1 million in tariff and tariff-related expenses, $2.9 million of which have been mitigated through price increases. On February 20, 2026, the U.S. Supreme Court ruled in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (“IEEPA”) does not authorize the executive branch to impose certain tariffs. The U.S. Customs and Border Protection (“CBP”) is developing an administrative process for seeking refunds of tariffs paid pursuant to the IEEPA, and on April 20, 2026, launched the first phase of that administrative process. The Company is in the process of submitting refund claims to the CBP.  The amount and timing of any potential refund remain uncertain, and, as of April 4, 2026, we have not recorded a benefit for potential refunds of IEEPA tariffs paid.  In response to the U.S. Supreme Court’s decision, the presidential administration implemented a tariff surcharge pursuant to Section 122 of the Trade Act of 1974, establishing a minimum 10% duty on imports, subject to certain exemptions. The tariff environment remains dynamic, and it is likely that additional developments will occur over the next several months, particularly as the U.S. continues to negotiate with trade partners and the CBP further develops and executes on the administrative process for refunds.  While the long-term effects remain uncertain, we continue to closely monitor the evolving tariff environment which presents a mix of impacts, such as higher pricing, including higher product and operating costs, and the potential for refunds. See Part I, Item 1A, Risk Factors in the 2025 Form 10-K for a discussion regarding tariff-related risks.

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.

In the third quarter of 2024, we determined that the Big 3 Mold business met the criteria to be held for sale and that the assets held for sale qualified 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 Mold. 

The following analysis excludes discontinued operations.

Net sales for the first quarter of 2026 decreased 6% to $59.7 million from $63.3 million in the corresponding period in 2025. Sales decreased in the first quarter of 2026 primarily due to decreased shipments resulting from lower order volume of returnable transport packaging products of $4.9 million offset by increased sales of truck mirror assemblies of $1.1 million. Our backlog as of April 4, 2026 decreased $3.7 million, or 8%, to $82.2 million from $85.9 million as of March 29, 2025.

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Net sales of existing products decreased 10.7% for the first quarter of 2026 compared to the corresponding period in 2025. Price increases and new products increased net sales by 5.0% in the first quarter of 2026 compared to the corresponding period in 2025. New products included various truck mirror and latch assemblies.

Cost of products sold decreased $1.4 million, or 3%, for the first quarter of 2026 due to lower sales volume. Additionally, the Company paid tariff costs on China-sourced products of approximately $3.1 million in the first quarter of 2026, compared to $0.6 million in the first quarter of 2025. A majority of tariffs on China-sourced products have been recovered through price increases.

Gross margin as a percentage of sales was 20.0% for the first quarter of 2026 compared to 22.4% for the first quarter of 2025.  This decrease was due to lower sales volume, pricing pressures on that volume and labor inefficiencies.

Product development expenses decreased $0.1 million for the first quarter of 2026 compared to the corresponding period in 2025. As a percentage of net sales, product development costs were 1.7% and 1.8% for the first quarter of 2026 and 2025, respectively, as we continue to invest in new products at our businesses.

Selling

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2026-03-03. Report date: 2026-01-03.

ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company’s fiscal year ends on the Saturday nearest to December 31. Fiscal year 2025 was 53 weeks in length and fiscal year 2024 was 52 weeks in length. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to results for “2025” or “fiscal year 2025” mean the fiscal year ended January 3, 2026, and references to results for “2024” or “fiscal year 2024” mean the fiscal year ended December 28, 2024. References to the “fourth quarter of 2025” or the “fourth fiscal quarter of 2025” mean the fourteen-week period from September 28, 2025 to January 3, 2026, and references to the “fourth quarter of 2024” or the “fourth fiscal quarter of 2024” mean the thirteen-week period from September 29, 2024 to December 28, 2024.

The following analysis excludes discontinued operations.

Summary

Net sales for 2025 were $249.0 million compared to $272.8 million for 2024. Net income for 2025 was $6.0 million, or $0.98 per diluted share, compared to $13.2 million, or $2.13 per diluted share, for 2024. Sales for the fourth quarter of 2025 were $57.5 million compared to $66.7 million for the same period in 2024. Net income for the fourth quarter of 2025 was $1.2 million, or $0.19 per diluted share compared to $1.6 million, or $0.26 per diluted share, for the comparable 2024 period.

The Company’s backlog was $81.1 million on January 3, 2026, compared to $89.2 million on December 28, 2024, primarily due to decreased orders for returnable transport packaging products

Critical Accounting Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make judgments, estimates and assumptions regarding uncertainties that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Areas of uncertainty that require judgments, estimates and assumptions include items such as the allowance for doubtful accounts; inventory accounting; the testing of goodwill and other intangible assets for impairment; pensions and other postretirement benefits; and gain or loss on held for sale.  Management uses historical experience and all available information to make its estimates and assumptions, but actual results will inevitably differ from the estimates and assumptions that are used to prepare the Company’s financial statements at any given time. Despite these inherent limitations, management believes that Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and related footnotes provide a meaningful and fair presentation of the Company’s financial position and results of operations.

Management believes that the application of these estimates and assumptions on a consistent basis enables the Company to provide the users of the financial statements with useful and reliable information about the Company’s operating results and financial condition.

Allowance for Doubtful Accounts

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company reviews the collectability of its receivables on an ongoing basis, considering a combination of factors that require judgment and estimates, including among others, our customers’ access to capital, customers’ willingness, or ability to pay, customer payment patterns, general economic conditions and geopolitical trends, and our ongoing relationship with our customers. The Company reviews potential problems, such as past due accounts, a bankruptcy filing or deterioration in the customer’s financial condition, to ensure that the Company has adequately accrued for potential loss. Accounts are considered past due based on when payment was originally due. If a customer’s situation changes, such as a bankruptcy or a change in its creditworthiness, or there is a change in the current economic climate, the Company may modify its estimate of the allowance for doubtful accounts. The Company will write off accounts receivable after reasonable collection efforts have been made and the accounts are deemed uncollectible. If our estimates and assumptions as to collectability were materially incorrect, or if any of our significant customers were to develop unexpected and immediate financial problems that would prevent payment of amounts due to us, and our allowance for doubtful accounts were inadequate, this could result in an unexpected loss in profitability.

As of January 3, 2026 and December 28, 2024, the Company’s allowance for doubtful accounts total was $0.6 million and $0.5 million, respectively. As of January 3, 2026, and December 28, 2024, the Company’s bad debt expense was $0.1 million and $0.1 million, respectively.

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Inventory

Inventories are valued at the lower of cost or net realizable value. Cost is determined by the last-in, first-out (“LIFO”) method at Eberhard while Big 3 Precision and Velvac and inventories outside the United States are valued using a first-in, first-out (“FIFO”) method. Accordingly, a LIFO valuation reserve is calculated using the dollar value link chain method.

We review the net realizable value of inventory in detail on an ongoing basis, considering deterioration, obsolescence, estimated future demand, current market conditions, and other factors. Based on these assessments, we provide for an inventory reserve in the period in which an impairment is identified. The reserve fluctuates with market conditions, design cycles, and other economic factors and could vary significantly, whether favorably or unfavorably, from actual results due to, among other things, unanticipated changes in economic conditions, customer demand, or the competitive landscape.

The inventory reserve for excess or obsolete inventory reduced the Company’s inventory valuation by $1.8 million and $1.9 million as of January 3, 2026 and December 28, 2024, respectively.

Goodwill and Other Intangible Assets

Intangible assets with finite useful lives are generally amortized on a straight-line basis over the periods benefited. Goodwill and other intangible assets with indefinite useful lives are not amortized. The Company performs annual qualitative assessments on goodwill and other intangible assets as of the end of each fiscal year by comparing the estimated fair value of each reporting unit with its carrying amount. Additionally, the Company performs an interim analysis if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Such events or circumstances could include, among other things, increased competition or unexpected loss of market share, significant adverse changes in the markets in which the Company operates, or unexpected business disruptions. If the carrying amount of a reporting unit exceeds its estimated fair value, the Company records an impairment loss based on the difference between fair value and carrying amount not to exceed the associated carrying amount of goodwill. Determining the fair value of a reporting unit involves the use of significant estimates and assumptions, including (i) macroeconomic conditions, (ii) market and industry conditions, (iii) cost factors, (iv) overall financial performance, (v) other relevant entity-specific events, and (vi) events affecting a reporting unit. The values assigned to the key assumptions represent management’s assessment of future trends in the relevant industry and have been based on historical data from both external and internal sources.

In the third quarter of 2024, a goodwill impairment of approximately $12.1 million was recognized in discontinued operations when classifying Big 3 Mold as held for sale.

The Company performed its annual qualitative assessment as of the end of each of fiscal 2025 and 2024 on the carrying value of goodwill and determined that it is more likely than not that no impairment of goodwill existed as of such dates. See Note 3 – Accounting Policies – Goodwill, in Item 8, Financial Statements and Supplementary Data, of this Form 10-K for more detail.

Pension and Other Postretirement Benefits

The amounts recognized in the consolidated financial statements related to pension and other postretirement benefits are determined from actuarial valuations. Inherent in these valuations are assumptions about such factors as expected return on plan assets, discount rates at which liabilities could be settled, rate of increase in future compensation levels, mortality rates, and trends in health insurance costs. These assumptions are reviewed annually and updated as required. In accordance with U.S. GAAP, actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, affect the expense recognized and obligations recorded in future periods.

The discount rate used is based on a single equivalent discount rate derived with the assistance of our actuaries by matching expected future benefit payments in each year to the corresponding spot rates from the FTSE Pension Liability Yield Curve, comprised of high quality (rated AA or better) corporate bonds. The Company calculates its service and interest costs in future years by applying the specific spot rates along the selected yield curve to the relevant projected cash flows.

The expected long-term rate of return on assets is also developed with input from the Company’s actuarial firms. We consider the Company’s historical experience with pension fund asset performance, the current and expected allocation of our plan assets and expected long-term rates of return. The long-term rate-of-return assumption used for determining net periodic pension expense was 7.5% for both 2025 and 2024, respectively. The Company reviews the long-term rate of return each year.

Future actual pension income and expenses will depend on future investment performance, changes in future discount rates and various other factors related to the population of participants in the Company’s pension plans.

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The Company expects to make cash contributions of approximately $2,800,000 and $40,000 to our pension and other postretirement plans, respectively, in 2026.

In connection with our pension and other postretirement benefits, the Company reported income of $0.4 million and $3.0 million (net of tax) on its Consolidated Statement of Comprehensive Income for fiscal years 2025 and 2024, respectively. The main factor driving this income was the change in the discount rate during the applicable period.

Assumptions used to determine net periodic pension benefit cost for the fiscal years indicated were as follows:

  2025

  2024

Discount rate

5.56% - 5.59

%

   4.99% - 5.00

%

Expected return on plan assets

7.5

%

7.5

%

Rate of compensation increase

0.0

%

0.0

%

Assumptions used to determine net periodic other postretirement benefit cost for the fiscal years indicated were as follows:

  2025

  2024

Discount rate

5.65

%

5.04

%

Expected return on plan assets

4.0

%

4.0

%

Rate of compensation increase

4.3

%

4.3

%

The changes in assumptions had the following effect on the net periodic pension and other postretirement costs recorded in Other Comprehensive Income as follows:

Year ended

January 3,

December 28,

2026

2024

Discount rate

$

(1,471,794

)

$

4,531,239

Additional recognition due to significant event

--

--

Asset gain or (loss)

314,191

(2,149,183

)

Amortization of:

Unrecognized gain or (loss)

1,090,663

1,231,188

Unrecognized prior service cost

(3,391

)

4,241

Other

670,484

316,301

Comprehensive income, before tax

600,153

3,933,786

Income tax

(177,258

)

(982,414

)

Comprehensive income, net of tax

$

422,895

$

2,951,372

The Plan has been investing a portion of the assets in long-term bonds to better match the impact of changes in interest rates on its assets and liabilities and thus reduce volatility in Other Comprehensive Income. Please refer to Note 10 – Retirement Benefit Plans in Item 8, Financial Statements and Supplementary Data of this Form 10-K for additional disclosures concerning the Company’s pension and other postretirement benefit plans.

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RESULTS OF OPERATIONS

Fourth Quarter 2025 Compared to Fourth Quarter 2024

The following table shows, for the fourth quarter of 2025 and 2024, selected line items from the consolidated statements of income from continuing operations as a percentage of net sales for the Company’s continuing operations. The Company’s continuing operations include (1) Big 3 Products; (2) Eberhard; and (3) Velvac.

Three Months Ended

January 3,

2026

December 28,

2024

Net Sales

100.0

%

100.0

%

Cost of Products Sold

77.2

%

77.0

%

Gross Margin

22.8

%

23.0

%

Product Development Expense

1.6

%

1.7

%

Selling and Administrative Expense

17.4

%

16.8

%

Restructuring Costs

1.6

%

1.7

%

Operating Profit

3.8

%

4.5

%

Net sales in the fourth quarter of 2025 decreased 13.7% to $57.5 million from $66.7 million in the fourth quarter of 2024. Sales decreases were due to lower shipments of returnable transport packaging products and truck mirror assemblies. Net sales of existing products decreased 19.9% while price increases and new products increased net sales by 6.2% in the fourth quarter of 2025 when compared to sales in the fourth quarter of 2024. New products included various truck mirror assemblies, rotary latches, and handles.

Cost of products sold in the fourth quarter of 2025 decreased $6.9 million or 13.5% from the corresponding period in 2024. The decrease in cost of products sold is primarily attributable to the lower product shipments.

Gross margin as a percentage of net sales for the fourth quarter of 2025 was 22.8% compared to 23.0% in the prior year fourth quarter. The decrease is primarily due to higher material costs in the fourth quarter of 2025.

Product development expenses decreased $0.2 million, or 19.3%, in the fourth quarter of 2025 compared to the corresponding period in 2024 as we continue to invest in new products at Eberhard, Velvac and Big 3 Products. As a percentage of net sales, product development costs were 1.6% for the fourth quarter of 2025 compared to 1.7% for the corresponding period in 2024.

Selling and administrative expenses in the fourth quarter of 2025 decreased 10.5% compared to the fourth quarter of 2024. As a percentage of net sales, selling and administrative expenses were 17.4% for the fourth quarter of 2025 compared to 16.8% for the corresponding period in 2024. The decrease was primarily the result of decreased commissions, legal fees and personnel-related costs.

Net income from continuing operations for the fourth quarter of 2025 was $1.2 million, or $0.19 per diluted share, from $1.6 million, or $0.26 per diluted share, for the same period in 2024.

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Fiscal Year 2025 Compared to Fiscal Year 2024

The following table shows, for fiscal year 2025 and fiscal year 2024, selected line items from the consolidated statements of income as a percentage of net sales for the Company’s operations. The Company’s continuing operations include (1) Big 3 Products; (2) Eberhard; and (3) Velvac.

Fiscal Year Ended

January 3,

2026

December 28,

2024

Net Sales

100.0

%

100.0

%

Cost of Products Sold

77.1

%

75.3

%

Gross Margin

22.9

%

24.7

%

Product Development Expense

1.6

%

1.8

%

Selling and Administrative Expense

17.0

%

15.5

%

Operating Profit

4.3

%

7.4

%

Summary

Net sales for 2025 decreased 8.7% to $249.0 million from $272.8 million in 2024. The sales decrease was primarily due to lower shipments for truck mirror assemblies and returnable transport packaging products. Net sales of existing products decreased 14.9%  in 2025 compared to 2024 while price increases and new products increased net sales in 2025 by 6.2%. Sales of new products increased 5.9% in 2025 and included various new truck mirror assemblies, rotary latches, D-rings, and mirror cams.

Cost of products sold decreased $13.5 million or 6.6% to $192.0 million in 2025 from $205.5 million in 2024. The decrease in the cost of products sold is primarily attributable to lower sales volumes. Tariffs incurred during 2025 were $10.2 million from China-sourced products as compared to $2.5 million in 2024. Most tariffs were recovered through price increases.

Gross margin as a percentage of sales was 22.9% in 2025 compared to 24.7% in 2024. The decrease primarily reflects the impact of higher material costs on lower sales volumes.

Product development expenses as a percentage of sales were 1.6% and 1.8% in 2025 and 2024, respectively, as the Company continues to invest in new products at Eberhard, Velvac and Big 3 Products to better serve our customers.

Selling and administrative expenses were $42.2 million in 2025 compared to $42.2 million in 2024. As a percentage of net sales, selling and administrative expenses were 17.0% for the fiscal year of 2025 compared to 15.5% for the fiscal year 2024. During 2025, Selling and administrative expenses include a $2.5 million of restructuring charges composed of personnel and facilities related cost.  The charges relate to actions completed within the fiscal year 2025.

Other expense increased $0.1 million to $0.5 million of expense in 2025 from $0.3 million of expense in 2024. The increase in other expense is due to costs associated with credit agreement refinancing partially offset by recovery of employment tax credits.

Net income from continuing operations for 2025 decreased 57% to $6.0 million, or $0.98 per diluted share, from $13.2 million, or $2.13 per diluted share, in 2024.

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Other Items

The following table shows the amount of change from the year ended December 28, 2024 to the year ended January 3, 2026 in other items (dollars in thousands):

Amount

%

Interest Expense

$

(37

)

-1.3

%

Other (Income) Expense

$

146

41.3

%

Income Tax Expense

$

(2,336

)

-60.5

%

Interest expense decreased in 2025 from 2024 is primarily due to paydown of principal.

The effective tax rate for 2025 was 20.6% compared to the 2024 effective tax rate of 22.6%. Total income taxes paid were $1.9 million in 2025 and $5.2 million in 2024.

Liquidity and Sources of Capital                    

The primary source of the Company’s cash is earnings from operating activities adjusted for cash generated from or used for net working capital. The most significant recurring non-cash items included in net income are depreciation and amortization expense. Changes in working capital fluctuate with the changes in operating activities. As sales increase, there generally is an increased need for working capital. The Company closely monitors inventory levels and attempts to match production to expected market demand, keeping tight control over the collection of receivables, and optimizing payment terms on its trade and other payables. The maintenance of appropriate inventory levels considering demand has been and may continue to be challenged by supply chain disruptions, which have led in some cases to a deficiency inventory that has required us to pay expedited freight fees on some of our products to timely fulfill customer orders. Coupled with increased materials costs, this has decreased our margins. If these disruptions persist and we are unable to maintain sufficient inventory on hand, we may need to cancel or decline orders, and we may be unable to offset increased material and freight costs fully by increasing prices on our products, any of which could have a material adverse impact on our liquidity.

The Company is dependent on continued demand for its products and subsequent collection of accounts receivable from its customers. The Company serves a broad base of customers and industries with a variety of products. As a result, any fluctuations

in demand or payment from a particular industry or customer should not have a material impact on the Company’s sales and collection of receivables. Management expects that the Company’s foreseeable cash needs for operations, capital expenditures, debt service and dividend payments will continue to be met in the next 12 months from January 3, 2026 and beyond by the Company’s operating cash flows and available credit facility.

The following table shows key financial ratios at the end of each fiscal year:

2025

2024

Current ratio

3.7

2.6

Average days’ sales in accounts receivable

59

50

Inventory turnover

3.4

3.7

Ratio of working capital to sales

28.8

%

25.1

%

Total debt to shareholders’ equity

27

%

35

%

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The following table shows important liquidity measures as of the fiscal year-end balance sheet date for each of the preceding two years (in millions):

2025

2024

Cash and cash equivalents

-  Held in the United States

$

5.2

$

12.4

-  Held by foreign subsidiaries

2.2

1.6

7.4

14.0

Working capital

71.7

68.4

Net cash provided by operating activities

8.9

19.4

Change in working capital impact on net cash provided by operating activities

(5.4

)

4.9

Net cash used in investing activities

(0.5

)

(7.9

)

Net cash used in financing activities

(16.3

)

(4.8

)

All cash held by foreign subsidiaries is readily convertible into other currencies, including the U.S. dollar.

Net cash provided by operating activities was $8.7 million in 2025 compared to $19.4 million net cash provided by operating activities in 2024. In 2025, the Company contributed $3.1 million to its defined benefit retirement plan.

In 2024, cash used to support increases in working capital requirements was $5.4 million, driven primarily by payments of accounts payable. In 2024, reductions in working capital requirements provided $4.9 million, primarily driven by reductions in inventory and prepaid expenses.

The Company used $0.5 million and $7.9 million for investing activities in 2025 and 2024, respectively.  In 2025, the Company invested $4.0 million in capital expenditures, sold $2.2 million in marketable securities, and received $1.5 million from the sale of business assets.  In 2024, the Company invested $9.7 million in capital expenditures, invested $1.0 million in marketable securities, received $2.3 million on the sale of one of its buildings, and received payments on notes receivable of $0.5 million. Capital expenditures in fiscal year 2026 are expected to be approximately $7.3 million.

In 2025, the Company made total debt payments of $44.8 million, of which $36.0 million were principal payments on the former credit facility and $2.7 million were for payment of dividends. The Company anticipates dividend payments in fiscal 2026 to be approximately $2.8 million. The Company has $66 million available on its revolving line of credit. See Note 6 - Debt in Item 8, Financial Statements and Supplementary Data, of this Form 10-K for further discussion on the Company’s debt facilities.

In 2024, the Company made total debt payments of $4.8 million, of which $1.8 million were principal payments on the revolving commitment portion of the credit facility and $2.7 million were for payment of dividends.

The Company leases certain equipment and buildings under cancelable and non-cancelable operating leases that expire at various dates for up to 8 years. Rent expenses amounted to approximately $4.5 million in 2025 and $4.9 million in 2024.

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On October 28, 2025, the Company entered into a credit agreement with the lenders from time to time party thereto, Citizens Bank, N.A., as the administrative agent, as an LC issuer, and as the swing line lender (the “Citizens Credit Agreement”). The Citizens Credit Agreement replaces the Company’s prior credit facility with TD Bank, N.A. (“TD Bank”), which was repaid using borrowings under the Citizens Credit Agreement and terminated on October 28, 2025. See Note 6 - Debt for additional information regarding the terms of the prior credit facility with TD Bank.  The Citizens Credit Agreement established a new $100 million five-year unsecured revolving credit facility and provides for the extension of credit to the Company in the form of revolving loans, swing line loans and letters of credit, at any time and from time to time during the term of the Citizens Credit Agreement. See Note 6, Debt, for additional information regarding the terms of the Citizens Credit Agreement, including repayment terms, interest rates, and applicable loan covenants. Under the terms of the Citizens Credit Agreement, the Company is subject to restrictive covenants that limit our ability to, among other things, incur additional indebtedness, pay dividends, or make other distributions, and consolidate, merge, sell or otherwise dispose of assets, as well as financial covenants that require us to maintain a maximum senior net leverage ratio and a minimum interest coverage ratio.  These covenants may limit how we conduct our business, and in the event of certain defaults, our repayment obligations may be accelerated.

The Company was in compliance with all its covenants under the Citizens Credit Agreement as of January 3, 2026 and through the date of filing this Form 10-K. The Company has $66 million available on its line of credit under the Citizens Credit Agreement as of the date of filing this Form 10-K.

As of the end of the fourth quarter of 2025, the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Non-GAAP Financial Measures

The non-GAAP financial measures we provide in this Form 10-K should be viewed in addition to, and not as an alternative for, results prepared in accordance with U.S. GAAP.

To supplement the consolidated financial statements prepared in accordance with U.S. GAAP, we have presented Adjusted Net Income from Continuing Operations, Adjusted Earnings Per Share from Continuing Operations and Adjusted EBITDA from Continuing Operations, which are considered non-GAAP financial measures. The non-GAAP financial measures presented may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures in the same way. These measures are not substitutes for their comparable U.S. GAAP financial measures, such as net sales, net income from continuing operations, diluted earnings per share from continuing operations, or other measures prescribed by U.S. GAAP, and there are limitations to using non-GAAP financial measures.

Adjusted Net Income from Continuing Operations is defined as net income from continuing operations excluding, when incurred, gains or losses that we do not believe reflect our ongoing operations, including, for example, the impacts of impairment losses, gains/losses on the sale of subsidiaries, property and facilities, transaction expenses primarily relating to acquisitions and divestitures, factory start-up costs, factory relocation expenses, executive severance, and restructuring costs.  Adjusted Net Income from Continuing Operations is a tool that can assist management and investors in comparing our performance on a consistent basis across periods by removing the impact of certain items that management believes do not directly reflect our underlying operating performance.

Adjusted Earnings Per Share from Continuing Operations is defined as earnings per share from continuing operations excluding, when incurred, certain per share gains or losses that we do not believe reflect our ongoing operations, including, for example, the impacts of impairment losses, gains/losses on the sale of subsidiaries, property and facilities, transaction expenses primarily relating to acquisitions and divestitures, factory start-up costs, factory relocation expenses, executive severance, and restructuring costs.  We believe that Adjusted Earnings Per Share from Continuing Operations provides important comparability of underlying operational results, allowing investors and management to access operating performance on a consistent basis from period to period.

Adjusted EBITDA from Operations is defined as net income from continuing operations before interest expense, provision for income taxes, and depreciation and amortization and excluding, when incurred, the impacts of certain losses or gains that we do not believe reflect our ongoing operations, including, for example, impairment losses, gains/losses on sale of subsidiaries, property and facilities, transaction expenses primarily relating to acquisitions and divestitures, factory start-up costs, factory relocation expenses, executive severance, and restructuring expenses.  Adjusted EBITDA from Operations is a tool that can assist management and investors in comparing our performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our underlying operations.

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Management uses such measures to evaluate performance period over period, to analyze the underlying trends in our business, to assess our performance relative to our competitors, and to establish operational goals and forecasts that are used in allocating resources. These financial measures should not be considered in isolation from, or as a replacement for, U.S. GAAP financial measures.

We believe that presenting non-GAAP financial measures in addition to U.S. GAAP financial measures provides investors greater transparency to the information used by our management for its financial and operational decision-making. We further believe that providing this information better enables our investors to understand our operating performance and to evaluate the methodology used by management to evaluate and measure such performance.

Reconciliation of Non-GAAP Measures

Adjusted Net Income from Continuing Operations and Adjusted Earnings per Share from Continuing Operations Calculation

For the Three and Twelve Months ended January 3, 2026 and December 28, 2024

($000's)

Three Months Ended

Twelve Months Ended

January 3,

2026

December 28,

2024

January 3,

2026

December 28,

2024

Net income from continuing operations as reported per generally accepted accounting principles (GAAP)

$

1,185

$

1,597

$

5,967

$

13,216

Earnings per share from continuing operations as reported under generally accepted accounting principles (GAAP):

Basic

0.19

0.26

0.98

2.13

Diluted

0.19

0.26

0.98

2.13

Adjustments:

Severance and accrued compensation

1,368

a

1,368

a

Personnel and facilities restructuring

350

b

2,522

b

Credit Agreement refinancing

527

c

527

c

Non-GAAP tax impact of adjustments (1)

(181

)

(342

)

(628

)

(342

)

Total adjustments

696

1,026

2,421

1,026

Adjusted net income from continuing operations (non-GAAP)

$

1,881

$

2,623

$

8,388

$

14,242

Adjusted earnings per share from continuing operations (non-GAAP):

Basic

$

0.31

$

0.42

$

1.37

$

2.29

Diluted

$

0.31

$

0.42

$

1.37

$

2.29

(1)

Estimate of the tax effect of the items identified to determine a non-GAAP annual effective tax rate applied to the pretax amount  in order to calculate the non-GAAP provision for income taxes      

a)

Expenses associated with accrued compensation and severance related to the elimination of the former Chief Operating Officer position and the departure of two former Chief Executive Officers

b)

Expenses associated with severance and facilities related costs.

c)

Writeoff of fees associated with former credit agreement.

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Reconciliation of Non-GAAP Measures

Adjusted EBITDA and Adjusted EBITDA from Operations Calculation

For the Three and Twelve Months ended January 3, 2026 and December 28, 2024

($000's)

Three Months Ended

Twelve Months Ended

January 3,

2026

December 28,

2024

January 3,

2026

December 28,

2024

Net income from continuing operations as reported per generally accepted accounting principles (GAAP)

$

1,185

$

1,597

$

5,967

$

13,216

Interest expense

665

672

2,685

2,721

Provision for income taxes

100

466

1,522

3,859

Depreciation and amortization

1,736

1,622

6,586

5,888

Severance and accrued compensation

-

1,368

a

-

1,368

a

Personnel and facilities restructuring

350

c

-

2,522

c

-

Credit Agreement refinancing

527

d

527

d

Adjusted EBITDA from continuing operations

$

4,563

$

5,725

$

19,809

$

27,052

Net income  (loss) from discontinued operations as reported per generally accepted accounting principles (GAAP)

$

(15

) 

$

(284

)

$

1,166

$

(21,745

)

Interest expense

-

168

148

680

Provision (benefit) for income taxes

15

213

331

(4,333

)

Depreciation and amortization

-

-

-

1,552

(Gain) Loss on classification as held for sale

-

-

(2,017

)b

23,088

Adjusted EBITDA from discontinued operations

$

-

$

97

$

(372

)

$

(758

)

Net income (loss) as reported per generally accepted accounting principles (GAAP)

$

1,170

$

1,313

$

7,133

$

(8,529

)

Interest expense

665

840

2,832

3,401

Provision for income taxes

115

679

1,853

(474

)

Depreciation and amortization

1,736

1,622

6,586

7,440

Severance and accrued compensation

1,368

a

1,368

a

Personnel and facilities restructuring

350

c

2,522

c

Credit Agreement refinancing

527

d

527

d

(Gain) Loss on classification as held for sale

-

-

(2,017

)b

23,088

b

Total adjusted EBITDA

$

4,563

$

5,822

$

19,436

$

26,294

a)

Expenses associated with accrued compensation and severance related to the elimination of the former Chief Operating Officer position and the departure of two former Chief Executive Officers

b)

Impact of classifying Big 3 Mold business as held for sale

c)

Expenses associated with severance and facilities related costs

d)

Writeoff of fees associated with former credit agreement.