Greetings, and welcome to The Eastern Company’s Fourth Quarter Fiscal Year 2023 Earnings Conference Call. At this time, all participants are on a listen-only mode, and 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, Mr. Ernie Hawkins. Sir, you may begin. Thank you. Good morning, and thank you everyone for joining us this morning for a review of Eastern's results for the fourth quarter and full year 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 12th, 2024, for the fiscal year 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 both those who are joining us by the phone and those participating via the web. It's an absolute pleasure to be speaking with you today after a year of realignment and continuous improvement, during which we focused on our core operations for long-term growth and shareholder value creation. As you know, since I became CEO in January of 2023, we've been following four fundamental strategies: disciplined operations, effective capital utilization, focused commercial business, and value-adding acquisitions. To those four pillars, we recently added a key overlying component we call One Eastern, to help us capture the many synergies that exist between our three business operations. During 2023, our determined application of Eastern strategies produced increasingly strong results as 2023 progressed. For the full year, we boosted our gross margins by 280 basis points, from 21% in 2022 to 23.8% in 2023, through onshoring, pricing increases, and cost recovery actions. Earnings from operations improved continuously each quarter, culminating in earnings per share of $0.57 in the fourth quarter of 2023, compared to $0.03 in last year's period. We achieved these results while dealing with the lingering impacts of troubled supply chains, with customers reducing their inventory levels as global supply chain finally returned to its pre-pandemic state, and with the high inflation that hadn't been experienced for several decades. In addition to improving quality and consistency of our earnings, we brought down past due deliveries and past due order backlog, and we ended the year with working capital as a percentage of sales of 25.6%, compared to 26.1% in 2022. By reducing working capital requirements and generating cash flow from continued operations, we brought down debt by more than $20 million. Cash flow from operations improved to $26.5 million in 2023, compared to $7.4 million last year, and our balance sheet strengthened commensurately. While achieving these results, we continued investing in our company and returning capital to the shareholders. During 2023, we streamlined Eastern operations, consolidating our focus on North America, and in an example of vertical integration, we bought certain assets of, Inc., to expand Velvac production capabilities. We also maintained Eastern's long-standing dividend program and repurchased 40,000 shares, or approximately 0.6% of the company's stock. In 2023, our transformation strategy delivered strong early results, and we expect to drive further improvements in 2024. We now have a solid operational foundation. We need to consider revenue-enhancing acquisitions that will help Eastern grow and vertical integration initiatives that will support gross margin improvements. Before I outline our approach for this year, I'll turn the call over to Nick for a quick review of the fourth quarter of 2023 financial results. Nick? ... Thank you, Mark, and good morning, everyone. As Mark said, I'll run through our financial results for the fourth quarter of 2023. For the period, net sales decreased 3% to $67 million from $69.1 million in the 2022 period, primarily due to lower demand for truck accessories and returnable transport packaging products amidst the normalization of the global supply chain. In the fourth quarter, we strengthened our backlog as a whole, while at the same time reducing our past due backlog. Our backlog as of December 30th, 2023, increased 10.5% to $80 million, from $72.5 million on December 31st, 2022, reflecting an increase at Big 3 for mold services and returnable packaging, and an increase related to the launch of a new mirror program for Class 8 trucks at Velvac. Gross margin as a percentage of sales in the fourth quarter was 26.8%, compared to 16.6% in the 2022 period. The increase in margin primarily reflects lower material and freight costs, improved pricing, and a favorable adjustment to the LIFO reserve in the fourth quarter of 2023, combined with other inventory write-offs in the 2022 period. As a percentage of net sales, product development expenses were 2% compared to 1.5% for last year's fourth quarter. Selling and administrative expenses increased $1.9 million, or 19.9%, for the fourth quarter of 2023. The increase was primarily due to higher payroll and payroll-related expenses, legal and professional, and selling costs. Other income and expense in the fourth quarter of 2023 decreased $3.2 million compared to the 2022 period. The decrease primarily reflected an unfavorable $1.1 million pension adjustment and various other items. Net income for the fourth quarter of 2023 increased to $3.5 million, or $0.56 per diluted share, from $0.2 million, or $0.03 per diluted share in the 2022 period. In the fourth quarter of 2022, net income was negatively impacted by restructuring costs of $0.5 million, net of tax, related to a warehouse consolidation into Eberhard. Adjusted EBITDA for continuing operations, a non-GAAP measure, for the fourth quarter of 2023 was $7.2 million, compared to $3.3 million for the fourth quarter of 2022. In 2023, we increased our cash flow from operations by $19 million when compared to 2022. The improvement reflects a reduction in cash used to support working capital, primarily a $5.3 million decrease in inventory. In 2023, we reduced our accounts receivable days to 48 days from 56 days in 2022. By comparison, last year, cash was primarily used to ensure the availability of 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 fourth quarter and $20 million for the full year. This is a record level of debt paydown for Eastern. At the end of the fourth quarter, our senior net leverage ratio was 1.41 to 1, down from 2.27 at the end of 2022. In addition, we invested $6.4 million in capital expenditures and paid dividends of $2.8 million in 2023. That completes my financial review. I'll now turn the call back to Mark. Thanks, Nick. At this point, I'll turn our plans for 2024 and turn to our plans for 2024 and beyond. First and foremost, we are going to continue to focus on delivering consistent performance through our proven strategy of disciplined operations, effective capital utilization, focused commercial business, and value-added acquisitions, all under the umbrella of One Eastern. The difference between today and our fourth quarter call last year, and it's an important one, is that we now have a solid foundation of reliable earnings from operating activities to build on. The foundation positions us to continue driving earnings and cash flow, paying down debt, and as I mentioned earlier, to seriously considering and pursuing M&A opportunities that accelerate our objectives, while continuing to focus on vertical integration to drive margin increases. In 2024, we expect our goals to be aligned, aided by continued strong sales demand in the automotive and commercial vehicle markets, organic growth activities through new products and market and market share improvement, as well as acquisitions. Our confidence is supported by our $7.6 million increase in backlog as of year-end 2023 to $80.1 million. This increase took place even as the global supply chain normalized. Customers cut back on excess inventory, and we reduced our past due backlog. It is strong indication of the new orders we're generating, including Velvac's launch of a new mirror program for Class A trucks and for Big 3's mold services and returnable packaging. We have many initiatives underway to enhance our gross margins even further through reductions in product cost, concentrating on total landed cost through our vertical integration make versus buy strategies and spending rationalization efforts. In addition, we've taken steps to ensure we have the right culture and opportunities in place to enable our teammates, who are Eastern's greatest resource, to drive the company forward every day. We've created achievable plans for each of the three businesses, changed our our structure to realize synergies across our disparate companies, and strengthen our incentive system so it properly rewards cross-functional collaboration. Through these efforts, we're working to achieve more, more than what any one division is capable. We are also repositioning our all three of our businesses and reviewing our global footprint, analyzing how to improve our assets, and optimize Eastern's efficiency. At Eberhard, for example, we are enhancing our portfolio of electromechanical products, focusing on new geographies and sectors, including government, where we can expand our business. At Velvac, we're expanding our solutions for aftermarket in ways that will augment existing relationships. At Big 3, we're taking steps to leverage our metal fabrication and machining capabilities to increase performance. To sum up, we are committed to achieving operational excellence by focusing on Eastern's operating costs, quality, on-time delivery, and especially employee safety. We expect our company to continue to play a unique role in the industry, embraces the move to electrification, the rejuvenation of internal combustion engine market, digitization, and automation. We believe our capabilities are closely aligned with sustainable mobility, whether it be internal combustion engine or electric, and through sustainable returnable packaging and commercial vehicle accessories that increase improvement in miles per gallon, but will result in increased miles per gallon by reducing wind resistance. With that overview, let's open the floor to questions. Okay, so I think we'll go ahead, operator. Sorry, sir, I interrupted you. Please continue. We'll take questions from the web first. We do have a few questions. First question: You grew gross margin by 280 basis points in 2023. How should we think about margin expansion in 2024? Is another 280 basis point expansion possible? As I mentioned in our previous calls, you know, we have aspirational goals to always increase gross margins as far as we can extend them, and this is supplemented by our cost improvement efforts through One Eastern. Utilizing One Eastern to lower our, strengthen our position for purchasing, as well as vertical integration activities, where we're bringing stuff in-house that we would normally pay outside services to other companies. So yes, I believe that we can continue this effort to grow gross margins. Okay, next question: As you get more active in M&A, what are your criteria in terms of size and profitability? Which business offers the most attractive opportunities? Well, like we started with, with Sure,, you know, we wanna take the crawl, walk, run, strategy going forward. We're looking for things, first, on the vertical acquisition space that are smaller in nature, but can help our operations currently, that currently exist today and improve our gross margins. As well as we're always looking for, acquisitions that can, add to our revenue-enhancing capabilities and leverage the One Eastern strategy as we fold them into the Eastern Company. Okay, next question: Mark, you've been CEO of Eastern for nearly a year. Can you share any learnings from the past year that you'd like to implement in the coming year? Well, you know, it's been a year of learning for me, personally, but putting strategies on paper are just what—just half the story. It's, it's actually the easier half, to put a strategy on paper. What's the challenge that I've seen and learning I have, is getting everybody on the same page to pull towards One Eastern, and we continue that effort. We've made significant progress, and that's what led to the launch of the One Eastern strategy. Now, all of our companies are not only looking to win for themselves, but looking to win for Eastern. Revenue is down when compared to the prior year quarter and prior year, while earnings have strengthened. How do you see this going forward? Well, I look at this in two levels, break it up into two pieces. One is, as supply chains normalize, there was a reduction in just-in-case inventory, where our customers were buying extra inventory to protect themselves against the unreliable supply chains. So we see that resulted in our revenue as they cut back on their orders. I also see it as some headwinds that we know happen in the commercial vehicle industry as suppliers struggle to enhance the supply chain so that the OEMs can increase their production levels to normal. And then, that was coupled with some of the packaging solutions projects that are happening at the consumer packaging side, not to be as robust as in previous years. Okay. And our final question from the web: Were there any one-time items in Q4 selling and administrative expenses? ... so I'll take that question, Ernie. Thank you. And so, yes, there were one-time expenses in selling and administrative expenses for recruiting and consulting fees, and then comparing on a prior year basis as well, there was a positive adjustment in the prior year due to the removal of bonus accrual. Okay. With that, operator, we'll turn it back to you for any other questions from the audience. Thank you, sir. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. And 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 questions. Thank you. We have a question from Ross Davisson with Banneton Capital. Your line is live. Hi, Mark Hernandez. Thanks for taking the question. Just picking up on the gross margin question earlier and the information you provided, it sounds like, as always, there are some puts and takes on gross margin in the quarter with, you know, some things that are clearly ongoing, like improved pricing that you've worked hard to change and the material and freight costs getting more favorable or less negative. But there's also things like the LIFO adjustment. As you think through those puts and takes, and you know, what should our expectation be for gross margin? I know, I know, and you just reiterated, like, a long-term goal always to step that up. But in the short term, you know, is the 26.8% from this quarter unusually high because some of those, you know, more temporary things like the LIFO, or is that, you know, a target you think you can keep attaining as we look ahead to 2024? You know, I stated in earlier earnings calls that our aspirational target is to get to 30% gross margins, and that is a stake in the ground of what we hold ourselves to. The LIFO adjustments, you know, are things that are, I kind of call them outside of operational control, so we'll continue to take those adjustments as they come. However, from the operations side, we do believe that there's significant opportunity to grow our margins. We're not giving up on pricing, but as we have new products come to market, obviously, we're gonna position them with focused commercial business strategy that yields us a gross margin that is acceptable to us and that we deserve. Then on the second piece, that's pulls our whole point towards vertical acquisitions or CapEx investment that improves our ability, instead of paying, you know, outside services companies or direct material companies to produce products that we are able and capable of producing ourselves through capital through capital allocation or through mergers and acquisitions on the vertical acquisition side. We're very active in that space right now, and, you know, we see that there's a significant opportunity to get to that 30%, which is the first hurdle that we're trying to achieve. Great, that makes sense. And I guess just a quick follow-up on that, I mean, just to put a finer point on it, is the LIFO adjustment in this quarter like a pretty meaningful piece of what allows you to hit that 26.8, or is it not? Like, I'm just trying to get a sense of magnitude, like, you know, should we not be surprised if it, if when we don't have that in Q1, presumably, you know, there's a big step down? It won't be as a meaningful impact in the future. Okay. Thank you for that. And then on the backlog, Oh, sorry, go ahead. Go ahead, Mark. Yeah, I was just gonna add, as a percentage of gross margin, it's, it's not as significant as these other opportunities that we're pursuing. Got it. Okay. On the backlog, I understand it was up year over year, but it was down sequentially, and I don't remember sort of the seasonality pattern you usually see. Is the decline quarter, you know, from Q3, is that just seasonal? Is that the past due backlog that you talked about or, you know, the, yeah, the past due backlog going down? Is it something else? Like, you know, I just wanna double-check if there's anything else that I should take away from the backlog ticking down like that from Q3. You know, I have a lot of experience in commercial vehicles, and Q3 tends to be the strong, the strong quarter for most of our commercial vehicle customers, and they focus on, on production to get units, off of the assembly line, and then they focus the fourth quarter on getting those units out of the factories to recognize revenue. So it would make sense, and there's less working days in the fourth quarter, so there's not a need, for to order parts, to start up in 2023 as, as companies try to, rationalize their, their expenses to improve their, their earnings. So it's, it, it has a little bit of a cycle to it, but I didn't see it as, as, as significant as it has been in the past in my, in my career. Okay. Okay. So yeah, it sounds like, I mean, you know, it all, all sounds very normal and, and nothing necessarily to read into. And then just on the revenue, just to close it out here, I was you know, if you think about sort of some of the things you've worked through in 2023 with, you know, the normalization in orders as your customers stopped sort of stocking, you know, having a buffer inventory, if you will, and also, you know, what you said about the truck OEMs not able to grow, do you are we, are we at the point now where you know, those headwinds, like on a quarterly basis, are gone? Or are you still kind of anniversarying some of that as you go into 2024, if that makes sense. I'm just trying to get a sense of, like, you obviously have a headwind as you kind of normalize in 2023. I'm curious, is that headwind persisting in 2024 just because of timing or, or are we sort of through that? I would answer it this way, Ross, is that the headwinds aren't increasing. They're actually kind of stable, and that's primarily driven by interest rates. With the falling of interest rates, we see that that headwinds will drop significantly, because commercial vehicle—the smaller commercial vehicle consumers will be able to be better positioned to replace their trucks. Yeah. So I think, I think it's what I would say right now, it's not increasing. The headwinds are steady, and we see positive signs through macroeconomic factors that it'll continue through 2024 to 2025. Okay, great. Appreciate the added color and congrats on the year. Thank you. Thank you. Once again, if you have any final questions or comments, please press star one on your phone at this time. Okay, as we currently have no further questions, I will hand it back to Mr. Hernandez for any closing comments. Okay. I'd like to say thank you for joining us today. We are confident in our strategy, which brought consistently improved results in 2023, provides an excellent foundation for the future. We are looking forward to giving you an update on our progress after Q1. In the meantime, if you need additional information, please reach out to us. Thanks again for joining us today. Thank you. This concludes today's conference call, and you may disconnect your lines at this time. We thank you for your participation.