Good day, everyone. Welcome to The Eastern Company second quarter fiscal year 2026 earnings call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Vice President and Chief Financial Officer, Nicholas Vlahos. The floor is yours. Good morning, everyone, and thank you for joining us for a review of The Eastern Company's results for the second quarter of 2026. With me on the call is Ryan Schroeder, Chief Executive Officer. The company issued its press release yesterday after market close. If anyone has not yet seen the release, please visit the investor information 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 margins, 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. 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 those risks and uncertainties, please refer to risk factors discussed in our SEC filings, including our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q. 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 non-GAAP measure discussed today to the most directly comparable GAAP measure can be found in the earnings press release. With that introduction, I will turn the call over to Ryan. Thank you, Nick, and good morning, everyone. Welcome to The Eastern Company's second quarter 2026 earnings conference call. Following my prepared remarks, Nick will walk through the financial results in greater detail. We will then open the call for your questions. I want to begin with our view of the quarter and the direction of the business as we move into the second half of 2026. The quarter included several moving pieces, but the sequential improvement in our results and the strength of our order book gives us increasing confidence of the underlying trajectory of the business. Our bottom-line results included a one-time bargain purchase gain of approximately $6.5 million associated with the acquisition of Sungear and Crown Precision. The transactions became effective on June 1st, so the quarter includes one month of contribution from those businesses. Net sales from continuing operations were $61.8 million, below the prior year period by 11.9%. On a sequential basis, however, net sales, gross margin, and adjusted EBITDA from continuing operations all improved. We believe that this sequential improvement, together with the marked increase in our backlog, is a better indication of where our business is headed. More on backlog in a moment. Gross margin increased approximately 60 basis points sequentially, even as we absorbed the final effect of the below-margin rack contract at Big 3. That operating improvement is separate from the bargain purchase gain. The forward indicators strengthened as well. Backlog increased across every business, with the most notable sequential gains at Velvac and Eberhard, where backlog increased by 29% and 19%, respectively, over the quarter. As we discussed last quarter, Big 3 accepted a block of rack orders at margins below our minimum threshold in an effort to fill capacity during a softer demand period. We addressed the root cause by tightening the quoting process and strengthening the review and accountability around how work is priced and accepted. That work has now run off, and the margin challenge is completely behind us. New business is being booked at normal margins, and the disciplines we put in place will remain permanent features of the business. Consequently, we saw meaningful improvement in Big 3's gross margin during the final month of the quarter, with further improvement realized in July. Backlog also increased, positioning the business for a much better performance over the balance of the year. The improvement extends beyond Big 3. The recovery we have been anticipating is now evident in our order book, and the demand environment heading into the second half of 2026 is more constructive than it was a year ago. At quarter end, backlog was $126 million, up 45% year over year. Roughly half of the increase came from our existing businesses, with the balance coming from the orders added through the new aerospace and defense platform. We expect the majority of the current backlog to convert to revenue over the balance of the year, providing better second half visibility than we had at this point in 2025. Within the existing portfolio, the largest driver is the recovery of the heavy truck build rates. That is benefiting Velvac and Eberhard, while demand is also improving across several of our other end markets. At Eberhard, our largest work truck body customer is emerging from a prolonged trough. Our new door and actuation program from a customer's next-generation side-by-side ATV also remains on schedule. At Velvac, the team is managing the increase in demand while stabilizing the new ERP system. Importantly, the business continued to ship product and close the quarter on schedule through that transition. We are also seeing progress in returnable racks, where Big 3 has broadened its customer base. The combination of improving end markets and a more diversified order book gives us greater confidence as we have entered the second half. During the quarter, we expanded into the aerospace and defense markets through the acquisition of two precision manufacturers of high-tolerance components. The acquisitions of Crown Precision and Sungear were made at what we believe is an opportune time. These two California-based businesses manufacture high-tolerance components for commercial aerospace and defense applications. Both are embedded in long-cycle programs and have exposure to multi-year procurement tailwinds at leading customers. Their customers are signaling higher output requirements in the coming years, creating a meaningful opportunity for us to support that growth. This was a disciplined and opportunistic use of our capital. These businesses diversify Eastern by adding exposure to different end markets, longer cycle programs, and mission-critical applications. We moved quickly to acquire these high-quality businesses at an attractive valuation. I want to recognize Nick and his team for executing both transactions quickly and thoughtfully. Our initial priorities are to invest in the people, processes, and equipment needed to increase throughput and shorten lead times while maintaining the quality standards these applications require. Our long-term ownership model and operating discipline are well-suited for these businesses. Over time, we see the potential to build a differentiated precision manufacturing platform through both organic investment and disciplined acquisitions. Our capital allocation strategy remains unchanged: maintain a strong balance sheet, invest in our businesses, pursue acquisitions that strengthen the portfolio, and return capital through our quarterly dividend and opportunistic share repurchases. Our liquidity remains strong, giving us the flexibility to support organic growth while continuing to evaluate strategic opportunities. The two acquisitions completed during the quarter demonstrate the disciplined approach we intend to maintain. Eastern has now paid a quarterly dividend for 344 consecutive quarters. During the second quarter, we also repurchased 19,529 shares, bringing first-half repurchases to just over 40,000 shares. As of July 4th, 256,000 shares remain available under the current authorization. With that, I'll turn the call over to Nick to review our second quarter financial results in greater detail. Nick, over to you. Thank you, Ryan. Net sales for the second quarter of 2026 decreased 12% to $61.8 million from $70.2 million in the second quarter of 2025. The decrease was driven by lower shipments of truck mirror assemblies, returnable transport packaging, and latch and handle assemblies of $5.7 million, $3.4 million, and $0.9 million, respectively. The decrease was partially offset by a $1.7 million increase in aerospace sales from our newly acquired businesses. Our backlog as of July 4th, 2026, was $126.2 million, an increase of $39 million or 45% from $87.1 million a year ago, and up from $82.2 million at the end of the first quarter. The increase in backlog reflects broad-based order strength across our legacy businesses, layered on top of the acquired aerospace book, and it underpins the momentum we are seeing going into the second half. Specifically, backlog was driven by $19 million of acquired aerospace orders, together with higher truck orders for truck mirror assemblies of $11.7 million, returnable transport packaging of $4.7 million, and latch and handle assemblies of $3.6 million. Gross margin as a percentage of net sales was $20.6 million or 12.8% in the second quarter, compared to 23.3% or $16.4 million in the prior year period. The year-over-year decline reflects lower volume across a smaller revenue base, the runoff of below-margin Big 3 Precision contracts Ryan described, and tariffs costs on China-sourced products of approximately $1.9 million in the quarter compared to approximately $2.4 million a year ago, most of which were recovered through price. Those below-margin contracts are now largely behind us. New orders are booking at healthier margins, and we expect gross margin to build as the second half volume comes through. As a percentage of sales, product development costs were consistent with the prior year quarter. We continue to invest in new products across our businesses while maintaining cost discipline relative to our revenue base. Selling and administrative expenses decreased $2.1 million or 17.5% in the second quarter compared to the prior year period. The decrease was primarily driven by $1.9 million of lower restructuring charges, along with lower personnel and amortization costs, partially offset by higher computer expenses. Operating profit for the second quarter was $1.7 million, or 2.7% of net sales, compared to $3.1 million, or 4.5% in the prior year period. The item that stands out this quarter is a bargain purchase gain. In connection with our acquisition of Sungear and Crown Precision, we recorded a one-time non-cash bargain purchase gain of $6.5 million. Under GAAP, we record the assets we acquire and the liabilities we assume at their fair values. When the fair value of the net assets acquired exceeds the consideration we pay, the difference is recognized as a gain. That is what happened here. This gain is not operating and non-cash. We exclude it from our adjusted measures, so it does not obscure the underlying performance of the business. Other income and expense for the second quarter was $0.1 million of expense, compared to $0.1 million of income in the prior year period. Interest expense was $0.6 million in the second quarter, down modestly from the prior year. Income tax expense for the second quarter was $1.9 million, compared to $0.5 million in the prior year period. The increase reflects higher pre-tax income, including the tax effects associated with the acquisition and the bargain purchase gain. Net income from continuing operations for the second quarter was $5.6 million, or $0.94 per diluted share, compared to $2 million or $0.33 per diluted share in the prior year period. The GAAP figure includes the $6.5 million one-time non-cash bargain purchase I described above. Excluding that gain and other items we do not view as reflective of ongoing operations, adjusted net income from continuing operations was $0.9 million or $0.15 per diluted share, compared to adjusted net income of $3.5 million or $0.57 per diluted share a year ago. The adjusted figure is a cleaner read on the quarter. It reflects the volume and margin pressure we have discussed, and we expect that pressure to ease as the recovery in our order book reaches the income statement. Adjusted EBITDA from continuing operations for the second quarter was $3.4 million, compared to $6.7 million a year ago, a decrease of approximately 49%. The compression reflects lower volume and margin factors I described, and we expect it to recover as the second half volume and mix improves. Turning to the balance sheet and cash flow, we generated $12 million of cash from operations in the first six months, a substantial improvement from $1.9 million a year ago. Total assets were $245 million. We ended the quarter with $15.1 million of cash, inventories of $66 million, and accounts receivable of $36.8 million. On debt and liquidity, long-term debt was $41.7 million at quarter end, up from $33.9 million at year-end, reflecting borrowings to fund the $7.85 million acquisition of Sungear and Crown Precision. We had $59 million of availability under our $100 million revolving credit facility with Citizens Bank as of our filing date, and we are in compliance with all covenants. That capacity gives us the flexibility to fund organic growth and to continue pursuing disciplined strategic acquisitions. Our capital allocation priorities are unchanged. We continue to deploy capital with discipline. During the quarter, we paid a dividend of $0.11 per share. We repurchased 19,000 shares under our existing authorization, with 256,000 shares remaining available, and we invested $1.5 million in capital expenditures across the first half of the year. That completes my financial review. I will now turn the call back to Ryan. Thank you, Nick. Before we open the call for questions, I want to leave you with one takeaway. Eastern enters the second half of 2026 in a significantly stronger position than it began the year. Our order book provides improved visibility, our margin trajectory is moving in the right direction, and our new aerospace and defense platform expands our long-term growth opportunity. Our job now is to execute, convert the backlog into profitable shipments, make the investments that support organic growth, and remain disciplined as we evaluate additional opportunities. With that, operator, please open the line for questions. Certainly. The floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speakerphone to provide optimum sound quality. Please hold for just a few moments while we poll for any questions. Your first question is coming from Jake Patterson with Talanta Investment Group. Please pose your question. Your line is live. Hey, guys. I've got a couple. I don't know if you can see how many people are in queue or not, but I know last time there was no one on here, so I was hoping to run through a few of these, but Just curious, I know obviously with truck builds being a pretty big driver of the business, and those are set to improve about 26% or so second half run rate versus first. Even second quarter builds are up 24% versus first quarter, and your guys' revenue is kind of down a little or obviously up a little bit sequentially. Just curious, as we think about builds accelerating, how that flows through the P&L, because I know you guys kind of deal with customer inventory and their order rates and whatnot. Can you kind of frame expectations for level of revenue increase we can maybe expect second half given what's going on in the end markets? Yeah. From a truck build rate standpoint, we are feeling that in both of those two businesses, but most notably within Velvac, Eberhard as well. We expect it to continue to trend upwards a bit. As we work through the second quarter, certainly we saw the improvement in the top line for those customers, most notably PACCAR and DTNA, improve fairly significantly, as you had noted. We felt that most notably in June and July, and we expect that to continue for the remainder of the year and well into 2027. Got you. Okay. Then two, I know you guys mentioned on your call last quarter that a lot of your customers are adding capacity. I was kind of curious how we should maybe think about that if you guys are going to have a higher revenue per build. I guess you could look at it like that, but I'm just curious if that was implying any maybe upside to where you guys have historically been within that Class 8 or heavy truck market. Yeah. We're expecting a very strong second half. No doubt about it. Last quarter when we spoke about it, we mainly spoke about the impending increase, and then over the quarter, that transitioned to firm orders. That is a major driver to the significant increase in our order backlog. Our backlog on our legacy business increased something like 26% from the beginning of the quarter to the end of the quarter, and that's primarily resulting from or coming from that heavy truck build increase, as well as some of the other major end markets that had been quite soft in the first half of this year and really the second half of last year. Got you. Okay. Then two, I know you guys mentioned in the Q&A on the call about the tariff cost paid, $5 million year to date versus $3 million in first half last year. I was curious, I know you said you recovered that with pricing, but has that pricing flowed through the P&L yet, or is that to be recovered in future quarters? It's mostly flowed through the P&L. We were able to capture those pricing increases needed pretty live and accurate. Then when tariffs changed here a couple of months ago, our prices with our customers reduced some. As much as we'd love to hold onto all of that, we really have, for our major customers, that tariffs are impacting them significantly. We manage those prices as tariffs have changed in a live manner throughout. So there's certainly going to be some that's coming in future quarters, but it's mostly been close to within 30 days of the change in tariffs. Got you. Okay. The reason I ask that, I guess because you're looking at gross margins here, compared to your FY 2024 period, where you're kind of running at mid-20%s or down to 20.8%, and now you have this acquisition that looks like it's going to be a drag on gross margins just based on that one month if you quarterize it, I suppose. There's like a 5% gross margin. I know obviously volume is a huge driver of margin expansion, but just kind of trying to get an idea of the magnitude of the increase we should see off these kind of trough levels. But obviously, you got some other moving parts in there, so I'm just curious. Maybe if you could touch on if you can frame any expectations around the magnitude of the margin increase or kind of maybe some expectations on this acquisition margin and maybe what the plan is there to get them up to profitability. Yeah. There is a bit of a mixed impact to our gross margins. Setting aside the acquisition, I will come back to that here in a second. Okay. There is a bit of a mixed impact where some of the tighter margin business is what is up more. That being said, we feel strongly that the volume benefit that we are going to get from those products being up is going to outweigh the negative gross margin impact. We feel confident that that is going to be a favorable, it is going to be a win in the whole scheme of things once when that all comes out in the wash. As it pertains to the acquisition, yeah. There is some pricing work that is going to need to happen there, and then there is some cost improvement, really operational improvements that we feel are going to bring that business along nicely. That being said, maybe in the short term, it weighs a little bit on our overall gross margin, but by nature of the size of that business, it is not overly material from my standpoint. Nick, I do not know if you have more to add beyond that, but my take would be it is not overly material. I agree with you, Ryan. Yeah. So it looks like, it's like 120 basis points, give or take. So not a huge deal, but I am looking at your April 26th investor presentation. What we look for in M&A, 15% + EBITDA margin, accretive to earnings, demonstrated history of profitability. Obviously, it is not a huge portion of the business, but I was kind of surprised to see a profitless aerospace company being acquired. So maybe strategically, I know they have some future business that they are supposed to ramp. I saw in the Form 10-Q their backlog is like $19 million, so obviously it is not in there yet, but I was kind of surprised to see that. So maybe I do not know if you can maybe touch on how you view growth opportunities there, cross-selling synergies or just anything to kind of frame what the strategy is. Yeah. Our overall thesis is that there is a massive need in the Tier 2 aerospace market in terms of suppliers that currently exist within that market. There is a multitude of suppliers that maybe, not all of them, so I am not trying to broad too or paint too broad of a picture here, but supply chain shortages and challenges are the bottleneck, the sole bottleneck for aerospace and defense markets. The demand significantly outweighs the ability to supply, and it mainly falls upon these Tier 2 segment, Tier 2 or Tier 3 segment, and their inability to supply. We think we bring an operating scheme and long-term view that uniquely positions us to acquire and improve businesses very similar to Crown Precision and Sungear. So hopefully it is step 1 and 2 of many, but we believe we can significantly grow our business as a whole, diversify Eastern. We love the truck segment, but diversify us away from the truck segment some, while at the same time bringing long-term shareholder value from this acquisition and hopefully others to come that fit within this aerospace and defense segment. Got you. Okay. Is there anything you can share, like customer base or maybe, were they profitable at all in any of the last fiscal years? Or is this going to be kind of longer term runway to profitability? No, they will be profitable. They are going to be profitable this year. They were profitable for the first half of this year, after taking some pricing action last year. And we think there is more to be done there, and we intend for this acquisition to be accretive to our overall efforts this year. So, yeah, there is going to be long-term things to do to improve it further, but we intend for this to be accretive now. Got you. Okay, cool. I do not know if there is anybody else behind me. I can squeeze one more in if I can. Sure. The, I think last time we talked in March, I believe the model launch schedule for 2027 was supposed to be kind of higher than historical levels. I know 2025 was pretty low. Sounds like 2026 is expected to be low. I was just kind of curious, maybe you guys had any insight on kind of how 2026 has looked from a changeover perspective and that impact on your packaging business, and then maybe kind of some outlook for second half, and if 2027 is still expected to be pretty solid on that front. Yeah. 2026 is going to be significantly better than 2027. We are seeing that in our active backlog and I am sorry, 2026, significantly better than 2025, and 2027 is going to be even higher than that. So there is a number of high value automotive model launches that are well underway right now. And for Big 3 Precision, at least as it pertains to our rack business, our backlog is pretty well full through almost the remainder of the year. There might be a little bit of room in the fourth quarter, but we have filled up significantly based on those model launches. So it is pretty much coming to fruition as we had spoken about in past quarters. Okay, cool. Yeah, because I know, I think you guys said you had to kind of win those on a project-by-project basis, so sounds like you've had some success there. Yep. Cool. All right. Well, appreciate it, guys. I'll jump off the queue. Yeah, we have. It's been a nice. It's been good. Cool. All right. Well, thank you. Appreciate it. All right. Thanks. Your next question is coming from [Mike Hughes]. Please pose your question. Your line is live. Good morning. Thanks for taking my questions. Just a couple of follow-ups on the acquisitions. I know it is only one month, so maybe it is not representative, but taking the one month on a quarterly basis, about $5 million a quarter in revenue. Is that a good run rate? I would hope it is going to be a little more than that. It would be maybe $5 million and maybe $6 million a quarter, or even a little bit above that is where we would hope for it to be. The first month out of the hole was a bit soft. We think it has the potential, the two of them combined, to be close to $20 million a year or something of that nature. Okay. The gross margins were effectively break even for that one-month period. Was there an inventory step-up on the acquisitions, meaning it was taken to market level? If so, I would assume that that would carry forward until you burn through the inventory that was acquired. Is that right, or? Yes, that is correct. That is correct, yes. Okay. If you're doing a little more than $5 million a quarter in revenue and it operates at roughly gross margin of around break even, it's going to be a few quarters before we see a more reasonable level of gross margin out of that business. Is that fair? That's correct. It's about two. Yeah, that's correct. You've got it exactly. Okay. What would be a targeted gross margin for that business? Ryan, did you want me to address that one? Nick, maybe you have this more in front of you. Yeah, go ahead. I think our targeted gross margin over time is going to be in a 20%-30% range. There are actions that we have to do to improve some of the throughput process to get us there, and then we will also be taking pricing actions as necessary as well. Okay. What is their total backlog at this point? It is just over $18 million. Will you burn through most of that over the next few quarters, meaning the pricing can start to kick in in 2027? Or is there carryover into 2027 of that backlog that is going to be at a lower margin? We are hopeful probably half of that is going to be suitable for 2026. I do not believe we are going. I can say we are not going, for some of the products that are in the backlog and priced inappropriately, we are going to deal with those now and not wait for the next order to come. It is not going to be massive, but there is a few of these projects that we need to deal with in a sooner period of time. That being said, the vast majority of the backlog is priced at appropriate and healthy levels. These are prices that the previous owners had gotten across the line, and subsequently received orders at the new prices. So, the backlog is priced differently than I would say the business has historically performed. As we go further and deeper into the backlog, we will see those margins, the margin targets Nick referenced, become more of a reality. Not just because of additional pricing and go-gets we need to do right now, but from prices that have been realized in the latter part of last year. Okay. On material cost inflation, what did you see in the quarter on a year-over-year basis? I believe you are on a LIFO basis for the vast majority of your business. Is that correct? Ryan, you want me to take that one? Go ahead, Nick. All right. The material cost increases was minimal, a couple percent. You're on LIFO for most of your business; is that correct? Only one of our businesses is on LIFO. That's our Eberhard business. The newer businesses are not on LIFO. Okay. Just last question. I think on the last call you mentioned an ERP implementation in one of your business lines. Can you just update us on how that's going, and if there are any additional plans for other divisions for ERP rollouts? Yeah, thanks, Mike. Is touched on it quickly, so I know it was a very quick touch in my prepared statements. But we did go live in the ERP changeover at Velvac. And we did that April 1st. There's still some things that we're working through, but I'm happy to report we're taking, making, and shipping orders, the business has been able to close each month and the quarter on time. I'm not going to say it's without any issues to still be resolved, but I'll say that the team's done a nice job getting it to where it's at, and we expect it to be completely normalized and not something we're going to even be talking about within this quarter. We're getting there. I know it's one of the toughest things to go and do, and we've been able to get that across the line. No, we don't have any other ERP upgrades or changes on the docket for any of the businesses, including the two that we just acquired. Okay. I did have one last question for you, actually. Do you have a tariff refund amount? A rough, maybe a ballpark number? No, it's not overly significant at this point in time. Each of the businesses, it's mostly Eberhard and Velvac that are working through that. So right now, it's not anything overly significant and they're still working on that. We might have more to report in that regard at the next quarter presentation. Okay. Thanks for your time. I appreciate it. Yeah. Thanks, Mike. There appear to be no further questions in queue at this time. I would now like to turn the floor back over to Ryan Schroeder for closing remarks. Thank you, and thank you everyone for joining us today. We are encouraged by the direction of the business and focused on translating that momentum into stronger financial performance and long-term shareholder value. Thank you for your continued support of Eastern. Please reach out to Nick or I if you have any additional questions. We look forward to updating you next quarter. Thank you and goodbye. Thank you. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.