Greetings. Welcome to The Eastern Company Third Quarter Fiscal Year 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Marianne Barr, Treasurer at The Eastern Company. You may begin.

Good morning, and thank you, everyone, for joining us this morning for a review of -- The Eastern Company's results for the third quarter of 2025. With me on the call are Ryan Schroeder, Chief Executive Officer; and Nicholas Vlahos, Chief Financial Officer. The company issued an earnings press release yesterday after the market closed. If anyone has not yet seen the release, please visit the Investors section of the company's website, www.easterncompany.com, where you will find the release under Financial News. Please note that some of the information you will hear during today's call will consist of forward-looking statements about the company's future financial performance and business prospects, including, without limitation, statements regarding revenue, gross margin, operating expenses, other income and expenses, taxes and business outlook. These forward-looking statements are subject to risks and uncertainties that could cause actual results or trends to differ significantly from those projected in these forward-looking statements. We undertake no obligation to review or update any forward-looking statements to reflect events or circumstances that occur after the call. For more information regarding these risks and uncertainties, please refer to risk factors discussed in our SEC filings, including our Form 10-K for the fiscal year 2024 filed with the SEC on March 11, 2025, and our Form 10-Q filed with the SEC on November 4, 2025. In addition, during today's call, we will discuss non-GAAP financial measures that we believe are useful as supplemental measures of Eastern's performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. A reconciliation of each of the non-GAAP measures discussed during today's call to the most directly comparable GAAP measure can be found in the earnings press release. With that introduction, I'll turn the call over to Ryan.

Thanks, Marianne. Good morning to everyone on the call, and thank you for your interest in The Eastern Company. Overall, it was a disappointing quarter from a results standpoint. Revenue from continuing operations for Q3 was $55.3 million, down 22% from Q3 of the prior year, and EBITDA was $3.5 million for the quarter that made earnings per share of $0.10. Our disappointing performance is primarily attributed to the pullback in 2 key end markets, specifically Class 8 truck and automotive. We saw OE truck production in the quarter down 36%. This included summer shutdowns at the beginning of the quarter and a number of days removed from customer schedules towards the end of the quarter. The returnable packaging portion of our business is very heavily influenced by the North American automotive market. More specifically, the number of vehicle model changes impact our sales. And with the pullback of many new EV models, we saw a reduction of new projects in the quarter, specifically with 13 less platform launches in 2025 that led to a reduction of 34% the prior year. We have had success diversifying still within automotive, but outside of our historically large customer as well as within military and heavy equipment producers. We did see the slowing in both of these markets coming and made significant proactive changes to our structure over the preceding 2 quarters to optimize our workforce and align resources with current market conditions. Among other things, we reduced the size of our SG&A, reorganized our Big 3 operational footprint and sold an underperforming business unit. All in, these actions led to a savings of $1.8 million within the quarter. Furthermore, we have taken steps to enhance product innovation, expand into new end markets and both deepen and diversify our customer relationships to position us to capture emerging opportunities, reduce volatility and support sustainable long-term performance. Turning to our balance sheet. We have repurchased approximately 118,000 shares through the end of the third quarter. This represents almost 2% of our outstanding shares and demonstrates our ongoing commitment to allocating capital to benefit our shareholders. We also reduced debt by $7 million and entered into a new $100 million revolving credit facility with Citizens Bank that provides us with additional flexibility to enhance our priorities, including continued investments into long-term growth initiatives and potential M&A opportunities. Given the proactive steps we have taken and our historically strong balance sheet, we are confident that Eastern Company is well equipped to weather the cyclical market downturn and to capitalize on opportunities when our markets return to healthier positions. With that, I'll hand it over to Nick to dig a little deeper into the quarter. Nick?

Thanks, Ryan. I'll focus my review today on the company's financial results from continuing operations for the third quarter of 2025. Net sales in the third quarter of 2025 decreased 22% to $55.3 million from $71.3 million in last year's third quarter. The decline was primarily due to decreased sales of returnable transport packaging products and truck mirror assemblies of $9.9 million and $6.4 million, respectively. Our backlog as of September 27, 2025, decreased $23.6 million or 24% to $74.3 million from $97.2 million as of September 28, 2024, driven by decreased orders for returnable transport packaging products of $15.2 million, latch and handle assemblies of $4.7 million and truck and mirror assemblies of $3.6 million. Gross margin as a percentage of net sales was 22.3% for the third quarter of 2025 compared to 25.5% for the prior year period. The decrease was primarily due to an increase in raw material costs incurred as we transition from customer-provided material to in-house sourcing on a mirror project as well as the impact of reduced volumes. As a percentage of net sales, product development costs were $1.6 million or 1.6% for the first 9 months of 2025 compared to 1.8% for the 2024 period. Selling, general and administrative expenses decreased $0.7 million or 6.5% in the third quarter of 2025 compared to the last year's period. The decrease was primarily due to $1.1 million of lower compensation charges, offset by restructuring charges of $0.3 million. Other expenses increased $0.1 million in the third quarter of 2025 compared to the same period in 2024. The increase was the result of lower lease income. Net income from continuing operations for the third quarter of 2025 was $0.6 million or $0.10 per diluted share compared to net income of $4.7 million or $0.75 per diluted share for the 2024 period. Now turning to a non-GAAP measure. Adjusted net income from continuing operations for the third quarter of 2025 was $0.8 million or $0.13 per diluted share compared to net income of $4.7 million or $0.75 per diluted share for the prior year period. At the end of Q3 2025, our senior net leverage ratio was 1.64 compared to 1.23: 1 at the end of 2024. In addition, we paid dividends of $0.7 million in this year's third quarter. Subsequent to the quarter close, we entered into a new $100 million revolving credit facility with Citizens Bank. As of September 27, 2025, inventories totaled $56.8 million or $1.6 million, up from the end of 2024. During the third quarter of 2025, we repurchased 36,413 shares of common stock under the share repurchase program Eastern's Board authorized in April 2025. To date, we have repurchased 118,000 shares or approximately 2% of our outstanding stock. This completes my financial review. I'll now turn the call back over to Ryan.

Thanks, Nick. Clearly, it's been a challenging macroeconomic environment in the heavy-duty truck and automotive segments, as you've certainly heard from other industry participants during this earnings season. Trucks are getting older, and we are well into a freight recession. It really is only a matter of time until trucks -- market begins to bounce back. We are seeing some marginal improvements in Q4 already, but we'll have to see where it goes from there. On the positive side, Eastern's new leadership team is fully in place and operating full speed ahead. Together, we have successfully implemented a much needed restructuring and plant closure program. Through cost containment and operational improvements and even with the reduced volume, we're making our operations more efficient and profitable. We're also staying nimble and close to our customers to mitigate the effect of changing dynamics on our businesses. Given this, I believe we are very well positioned for success going forward. Lastly, we are looking for acquisition opportunities that fit our size and strategic criteria, taking a very disciplined and opportunistic approach as we evaluate companies. With that, operator, I'll open it up for questions.

[Operator Instructions] And the first question today is coming from [ Garvit Bhandari from Singular Research. ]

So a few questions from my side. This is Garvit from Singular Research. Firstly, on the gross margins, you have seen contractions during this quarter. So is it temporary? Or should we expect structurally lower margins going forward as well?

Yes. There certainly was a mix element associated to the gross margin reduction within the quarter, especially comparing to the third quarter of prior year. So I'd say, in general, it's -- I won't call it a one-off, but I think the trend definitely leans towards improved gross margins in the future back towards maybe the norm that we've seen in the past. But Nick, maybe you want to expand upon that...

Yes. So the gross margins were impacted by reduced volumes. So as we expect the volumes to come back to a normal state in the future, we will see the gross margins impacting as well.

Okay. Okay. Understood. And then on the overall demand side, you have indicated that you're seeing some recovery, but if you can just throw some more light on -- is it -- are you seeing early signs of recovery in the heavy-duty truck market? Or do you expect volumes to bounce back in the coming quarter and going into FY '26? Is that something that we should sort of take forward from your comments?

Yes. So I'll take this one, Nick. I think we certainly have seen some bounce back in the fourth quarter. That being said, we haven't seen volumes begin to return to the more historical norms. We certainly watch this very closely, as I'm sure you do as well. Right now, the truck industry, the heavy truck industry is forecasting some recovery next year. We're seeing some in the fourth quarter here. We're not sure if that's transitory associated with some of the changes in tariffs or not, but we are seeing some limited additional volume in the fourth quarter. Right now, forecast that we've received show a soft first half of 2026. That's what we're planning for and then some incremental improvements towards the end of 2026. That being said, we frankly don't know. We are well positioned to react as our customers need us to. We're ready to ramp up. And if things are going to remain difficultly slow for the next few months, we are positioned -- we have positioned our factories to operate in that mean as well. That being said, yes, we've seen some limited volume improvements here in October, and we're expecting that through November, and we'll kind of see what happens in December and then in the beginning part of the year.

Okay. Got it. And then on the -- I think last quarter, you had mentioned about the USPS vehicle program, before contract that you had won from the government. Is there any update on that? How are you seeing the revenues ramping up there?

Yes. That program certainly has been a bright spot. I know we've spoken about that many quarters in the past. I left that out of this note just because it has ramped up nicely. It's been an important part of our overall business. And for Eberhard, it's this last quarter actually that Oshkosh became our largest customer for the quarter, recognizing -- it's not going to stay that way, but it's become an important part of our overall business, and it's been a nice project for us that has taken a while for it to come to fruition, but we're in full production. It's going to run full through next year, and we'll see as the contract continues, how long that one will run, but it's been a nice one for us for sure.

Okay. So is it possible for you to quantify the revenue contribution from the program and any -- and would we see a material impact on revenues in FY '26 as well from this program?

In terms of specific revenue on that, I would probably pause to be overly specific on that, just not to reveal too much in a public setting. I'm certainly happy to answer some questions for you offline as it pertains to that. If you take Eberhard though, as an important business within Eastern, Eberhard has enjoyed some good volumes with the -- on that U.S. Postal Service program, but at the same time, have another important market segment for them is the Class 8 truck market. And when you think of truck market, specifically the sleeper cab portion of the truck market, the levers and latches and locks and things of that nature, are an important part of Eberhard's business. That has obviously been a slow segment for us, as we've spoken about in these prepared remarks, but also in the past, we've seen that slow down. We expect that to bounce back in the future just as the truck market will bounce back. But for Eberhard's specifically, the Postal Service program has been a nice offset to the softness of the truck market.

Okay. Okay. Understood. And then lastly, on the Big 3, has there been any increase in the pace of model refresh cycles? Have you seen pace increasing? Or has it slowed down further? And if so, are you seeing any impact on the order flow there?

Yes. It slowed -- it has been a very slow quarter. Really, we've had 2 material impacts to our business within the quarter from a negative standpoint. One was the truck market and then the other was the automotive model changes. So that part of our market in the third quarter of our business has been significantly negatively impacted. If you look back, really the number of models launched this year is at a historical low for a very long time going back. And for that reason, we are forecasting and already seeing an increase in model launches for next year and beginning right now. We're a number of months ahead of the actual launch is where we tend to be impacted favorably. And we're already starting to see specific to Big 3, our backlog improve there. So more to come, certainly more to come with that, and we'll have to see where it goes. But the sort of change in direction from EVs in this year certainly impacted the total launches, and we've had to make some adjustments accordingly for that. But yes, we are expecting that to improve some next year, and we'll be prepared for that as it comes.

[Operator Instructions] And there were no other questions at this time. I would now like to hand the call back to Ryan Schroeder for closing remarks.

I'd just like to say thanks again for joining this morning. It clearly has been a very challenging quarter, but the company is in great shape looking forward. I look forward to giving you an update after the fourth quarter. And if you need any additional information in the meantime, please reach out to us. And with that, I will end the call. Thank you very much.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.