Greetings. Welcome to The Eastern Company's Second Quarter Fiscal Year 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Ernie Hawkins. You may begin. Good morning, and thank you, everyone, for joining us this morning for a review of Eastern's results for the second quarter of 2023. With me on the call are Eastern's President and CEO, Mark Hernandez, and Eastern's CFO, Nicholas Vlahos. We 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 Form 10-K, filed with the SEC on March 14, 2023, for the fiscal year 2022, and Form 10-Q, filed with the SEC on August 8, 2023. 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 Mark. Thank you, Ernie. Good morning to those who have joined us by phone, as well as those participating via the web. I'm going to begin today's call with some high-level observations of our performance and actions during the second quarter. I'll then turn the call over to Nick, who will provide a more detailed review of our financial results. After that, I'll come back and update you on the progress of our plans to transform Eastern's operations and enhance our portfolio of businesses. I'll also provide some thoughts on what we are focused on for the rest of 2023. As you recall, when I became Eastern's CEO seven months ago, the company was facing severe supply chain disruptions and increases in freight and material costs that hurt the performance of all three of our divisions. Our new management team immediately undertook a ground-up review of our businesses, their products, the markets in which they operate, and the conditions in those markets. Based on that review, we initiated a wide array of changes to our operations, several of which I described in the last earnings call. In the second quarter, we continued implementing those actions and realized some initial benefits from our many improvement initiatives to show that our strategy is beginning to take root. Let's take a quick look at some of the high points of the quarter. First, cash flow from operations for the first six months ended ending July 1st, 2023, increased by $16 million as compared to the same period in 2022. As Nick will discuss in more detail, our balance sheet continued to strengthen due to our operational actions during the quarter, which allowed us to pay down another $5 million in debt during the quarter, second quarter. On a year-over-year basis, our backlog was down 9% to $75.3 million as we continue to improve our supply chain, transition from old to new programs with our vehicle and automotive customers, and increase shipments to our customers. Our backlog is now in line with the level of with our current level of business, and we are focused on every order, every day, to make sure the backlog remains consistent to enable optimum performance. We took steps to enhance our portfolio of businesses, including closing Associated Toolm akers, our European mold tooling service facility, and acquiring assets of Sureflex, a manufacturer of tractor-trailer electrical connection cable assemblies, which will vertically integrate our trailer hose business and enhance the Velvac production facility. We made a... we also made asset allocations to install a tube laser, plate laser, and a five-axis CNC machine in our facilities. These projects have met the new NPV payback and internal rate of return thresholds that are embedded within our new Eastern strategy. On a sequential basis, our gross margins rose to 22% in this year's second quarter from 21% in the first quarter of 2023, as a result of focusing on margins within the commercial segments. We are very optimistic that our team's hard work will become more evident in the second half of 2023. We established a new $90 million, five-year senior credit facility with expanded lender group. The new credit facility provides us with increased flexibility and will allow us to continue to drive improvements across the company, execute our growth strategy, and increase shareholder value. Finally, demand as a whole remains consistent and in line with previous quarters. Although we do expect headwinds from macroeconomic factors, we are now better positioned to deal with these headwinds and to take advantage of tailwinds that may arise. With that overview, I'll turn the call over to Nick. Thank you, Mark. Good morning, everybody. I'll provide a quick review of the quarter's financial highlights. Net sales from continuing operations declined 2% to $68.3 million, from $69.5 million in the second quarter of 2022, primarily due to lower demand for returnable transport packaging products. Price increases and sales of new products contributed 2%. New products included various truck mirror assemblies, rotary latches, D-rings, and mirror cams. Price increases primarily reflect our efforts to recover increases in raw material and freight costs. Gross margin as a percentage of sales, was 22% in the second quarter, compared to 23% in the last year's period, but up from 21% in the first quarter of 2023. The quarter-over-quarter increase reflected improved price cost alignment and easing of some raw material and freight costs. Product development expenses were up $0.5 million in the second quarter of 2023 when compared to the corresponding period in 2022, reflecting increased investment in new products at Eberhard and Velvac. As a percentage of net sales, product development expenses were 2.1% compared to 1.4% in the second quarter of 2022. Selling and administrative expenses were $11.3 million, compared to $10.1 million for the second quarter of 2022, an increase of $1.1 million or 11%, primarily due to legal, professional, and selling costs, and payroll-related expenses. The increase in selling expenses reflects our investment in sales capabilities. Other income decreased $300,000- $200,000 in the second quarter of 2023, compared to the corresponding period in 2022. This decrease primarily reflected unfavorable pension costs of $300,000 in this year's second quarter, while in the prior year period, the company had a favorable pension cost adjustment of $400,000, and a $1.4 million expense associated with the closure of Associated Toolm akers, partially offset by a $1.6 million favorable adjustment for the final settlement of our swap agreement with Santander Bank. Net income from continuing operations for the second quarter of 2023 was $1.4 million, or $0.22 per diluted share, compared to $3.4 million, or $0.59 per diluted share for the comparable period of 2022. Adjusting for related closing expenses with Associated Toolm akers, net of tax, which totaled $1.1 million, or $0.18 a share, adjusted net income from continuing operations was $0.40 per share. Adjusted EBITDA from continuing operations, a non-GAAP measure, for the second quarter of 2023, was $5.9 million, compared to $7.2 million in the second quarter of 2022. During the first six months of 2023, we increased our cash flow from operations by $16 million when compared to the same period in 2022. The improvement reflects a reduction in cash used to support working capital, primarily a $7.7 million decrease in inventory. By comparison, last year, cash was used to ensure the availability of in-inventory to meet customer demand in light of the supply chain constraints. With this cash flow, we paid down $5 million of debt during the second quarter and nearly $10 million year- to- date. At the end of second quarter, our senior net leverage ratio was 1.95 to 1, down from 2.05 at the end of the first quarter. In addition, we have invested $2 million in capital expenditures and paid dividends of $1.4 million in this first six months of 2023. For the second quarter, cash flow from operating activities was $6.7 million, compared to $1.1 million for the second quarter of last year. As a result, inventory turnover improved from 3.8 compared to 3.2 for last year's period. That completes my financial review. I'll now turn the call back to Mark. Thank you, Nick. Because our team strategy is so key to everything we do, I want to briefly reiterate it for you today. As you recall, it's made up of four categories. First, disciplined operations that deliver consistent results. We continue to scrub the cost side of the business, making sure that the cost of goods sold and operating expenses meet internal profitability targets, and shifting Eastern's focus to high volume, high margin products. These efforts are evidenced by the reduced working capital and increased cash flows, enabling us to pay down debt. Second, a strong commercial business focus. In this area, we are focusing on improving return on invested capital through pricing actions and margin discipline. During the second quarter, we continue our evaluation of the margin of each product as part of our overall portfolio optimization exercise, and have been pinpointing areas where we're missing opportunities to enhance margins through pricing or where we need to change our approach. We have been renegotiating pre-pandemic contracts, rationalizing SKUs, and making sure every segment has positive margins. We've begun to see some of these fruits of these efforts, as evidenced by the start of the sequential improvement in gross margin. Third, effective capital allocation and utilization. Our divestiture of Associated Toolm akers announced in the beginning of May, shows that we won't go on doing business whose ROIC is not favorable to Eastern. Fourth, value-added acquisitions. The Sureflex assets we added in June are a small acquisition but smartly done. The addition will have a very positive impact on Velvac. Our Eastern M&A committee is currently reviewing additional opportunities. Our goal for this year remains to ensure that all aspects of Eastern operations, our cost structure, and capital management, and pricing strategy, meet profitability, return on invested capital thresholds so that each business contributes to building overall shareholder value. Of course, there can be some puts and takes to this process, such as offsetting offsetting increases in healthcare expense, pension portfolio performance, and ERC tax credits. We are not yet at a stage where we can share the target financial metrics with you. As I mentioned last quarter, successful OEM suppliers, which is what we intend Eastern to be, proactively respond to changes in cyclical demand while returning 10%-12% return on sales and working capital sales ratios of less than 22%. We are optimistic about our performance in the second half of 2023, as our strategy has time to show its impact. A final note before we open the floor to questions. In the coming months, we plan to extend our Investor Relations activities. In July, we developed a new investor presentation and posted it to our Investor Relations website. We are updating the presentation now that we've announced second quarter results. I invite you to take a look when you have a chance. We've also had an early round of conversations with members of the investment community who follow micro-cap stocks, and plan to continue those conversations in the future. We'll also participate in investor conferences in the fall. Thanks, Mark. Operator, I'd like to open the line for questions. I see that we have questions from the webcast. We will address those questions first and then turn to questions on the line. First question: How much of today's backlog reflects the old pricing versus current renegotiated pricing? Approximately 80% of our current backlog reflects our new pricing strategy. Thanks. Second question: There were a lot of moving parts in the income statement in the second quarter. Should we expect more of the same in Q3? As we move forward in Q3, the bulk of the adjustments that we had to make to operations have been undertaken and been reflected in our results. However, there will be no other future impacts of the order of magnitude of what we've seen on our balance sheet so far. The third question from the web: EV impact on commercial trucking. Overall, is it good or bad? The impact of electric vehicles in commercial, in the commercial vehicle space continues to move forward. We don't see signs of softening as the total cost of ownership of certain segments within the commercial vehicle space, particularly, Class 5 through 7, begin to take hold. You know, starting with school bus, school buses, getting into, you know, small delivery trucks, distribution, deliveries, and regional hauls. The biggest drain, drain on the implementation of EVs across the commercial vehicle segment is the infrastructure to charge the vehicles. It's really, you know, picking and choosing those, those segments that can take advantage from a total cost of ownership perspective. It's, it's my opinion that we have not slowed down or nor have we sped up. It's just going the course that it's been going for the last 2 or 3 years. I'm not seeing any other questions via the webcast, so Operator, I'll turn it over to you. Okay. At this time, we will take phone questions. If you would like to ask a question or participate, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for our questions. Remember, again, please press star one on your phone. Okay. Our first question comes from Ross Davisson with Banneton Capital. Sir? Ross Davisson, your line is open for questions. Sorry about that. Hi, Mark. Hi, Nick. Thanks for taking the question. A couple of questions on growth. What is driving... You know, what are you seeing in the returnable packaging segment that you think is driving the lower demand? Is it more about just a strong year last year that you're comping or, you know, or what are you seeing in terms of end market demand? On returnable packaging, it, it has a lot to do with the new program launches as new automotive assemblies, vehicles come out, electric vehicles, ICE vehicles, going forward. We haven't seen signs of the, of the automotive OEMs or the commercial vehicles OEMs delaying the, the launch of these, of these products. We're seeing consistent demand through, through the transition of, of the programs. When you, when you launch a new vehicle, they require unique, unique racks that are, that are made specifically for those programs. We're, we're looking at a, a, a strong demand going as, as these programs get launched at the OEMs. Right, and that makes sense, but then it sounds like in this most recent quarter, you, the business was down, I think. It sounds like, from what you said. Yes. Is that right? What, what's changing, if anything? There was, you know, some fears out there of a recession in 2024. Some of the larger OEMs delayed some of their releases of their purchase orders. That is behind us now as the fears of a strong recession are put aside. Now it looks to be just a softening, not a full-on recession. Got it. They're more. That's helpful. Sorry about that. They're more positive about what's going into 2024. Sorry. Great. Then the other segments of beyond just Big 3, beyond the returnable packaging business, are those growing or are those, you know, facing challenges of their own in terms of growth? On the other businesses, we're, we're closely tied with the commercial vehicle space, and the demand, the replacement demand is still there, and it's very strong. We're getting indications from all the commercial vehicle manufacturers that they want to increase capacity. Whether other suppliers, like frame rails, which is a commodity across the commercial vehicles, can keep up, we're gonna be paced along with them. The demand is there to replace the vehicles that have been in the field for three years going forward. We, we see, you know, a modest 5%-10% increase in segments of the commercial vehicle space going into next year. Okay, great. Thank you. In terms of pricing and just cost recovery actions, it sounds like you've had some, some real success there. As you think about the sort of inflection or the improvement you're saying we'll see in the second half of 2023 in terms of these efforts coming to fruition, are these actions that are done, like, they, they've been agreed to? It sounds like the backlog is, you know, largely priced already. Just wanted to check, like, is there a risk that, you know, some of the actions you're still pursuing won't come through, or do you feel like, you know, a lot of this is baked because you've had success in going back to customers and recovering some of those costs? Yeah. From a customer perspective, we're probably 95% done, and they've, the customers have agreed. There's still some, some stragglers out there that we're working on. Those, those customers are priced into our backlog currently. So, you know, it's really, really difficult to take existing business and, and increase pricing. It's easier to do it when you're launching a new program or a new product for a new model. We undertook this effort, and, you know, it's a, it's an emotional drain, doing these negotiations and talking about macroeconomic factors and how they affect the business. The customers are professional, and, and we treat them professional, and we just wanna be a good, strong supplier for the customers, and they appreciate that. Yeah, no doubt. I, I'm sure it's been really tough for the team, and so congratulations on, on realizing that. You know, given it's 95% done with the customers, I don't know if it doesn't seem like the dynamic with these raw materials and the trade are anywhere close to the swings you've seen in the past. Do you feel like, you know, you're gonna see some recovery in the second half year, as you've said, based on these conversations, based on these new programs you're rolling out with new pricing? After that, you know, you expect more stability in gross margin, or do you see opportunities beyond just these near-term actions you've taken to sort of keep, improving gross margin as, as you go forward, you know, into 2024 and 2025? Yeah. We factored into the price increases, the current situations in logistics and raw materials. The raw materials are going to continue to fluctuate, and we'll work with the OEMs on how to deal with that going forward. This doesn't preclude us from kind of making that a neutral to our gross margins. We do see opportunities on the onshoring side to reduce our transportation costs and be less exposed to long-distance shipments of parts as we onshore materials. We think there's opportunities on the transportation side that will add to or reduce our cost of goods sold, as well as add to our gross margins. Okay, great. Last question, thanks for, thanks for taking these. You talked about the sales capability investments that you've made as part of the increase in SG&A. I'm just curious if you could elaborate a little bit on what those are and kind of what you're seeing or how, how you expect those to help, I guess, sales, you know, going forward. We, we, you know, we take a look at the SG&A and also the R&D side of it, and we're investing in, in new models that are, that are coming out. You see our, our engineering costs are, are slightly higher than they have been historically, but we have quite a few programs that are gonna launch in 2024 going forward. Once, once they get off the ground and, we'll start seeing the revenue, and you'll see the percentages of SG&A and R&D actually go down. As we, this will, you know, be reflected in incremental revenue growth, and the percentage of SG&A and R&D will, will actually fall as a percentage of revenue. Just to add to that, a little bit about the SG&A percentage as well. We did incur costs during the quarter for our contract renegotiations. We view those more as a one-time cost that we will not have consistently going forward. Thanks, Nick. So that's like costs that you might. Are those customer, like, customer costs, like, you know, some sort of concession to, in order to realize the renegotiation? No. That kind of cost? Yeah. Or legal costs, incurring legal costs- Oh, right. to renegotiate. Correct. Yes. Got it. Okay. Well, thank you, guys. I appreciate you taking these questions. It's very helpful. There are no questions remaining in the queue. At this moment, I will turn the call back over to Ernie Hawkins. Okay. With that, I'll turn the call over to Mark for closing remarks. Thanks, Ernie. Thanks again for joining us today. To sum up, I'm confident that our strategy and focus will bring positive changes and improve results in 2023, putting Eastern on a strong path for the future. We look forward to sharing more signs of progress with you after the third quarter. If you need more information in the meantime, please reach out to us. Thank you for joining the call. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.