Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from ________________ to _______________

Commission File Number 001-35383

THE EASTERN COMPANY

(Exact name of registrant as specified in its charter)

Connecticut

06-0330020

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

3 Enterprise Drive, Suite 408, Shelton, Connecticut		06484
(Address of principal executive offices)		(Zip Code)

(203)-729-2255

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, No Par Value	EML	NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of September 30, 2023, 6,238,413 shares of the registrant’s common stock, no par value per share, were issued and outstanding.

The Eastern Company

Form 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS

		Page



PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 3.	Defaults Upon Senior Securities	26

Item 4.	Mine Safety Disclosures	26

Item 5.	Other Information	26

Item 6	Exhibits	27

Signatures		28

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PART 1 – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

THE EASTERN COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended						Nine Months Ended
	September 30, 2023			October 1, 2022			September 30, 2023			October 1, 2022
Net sales	$	65,635,680		$	71,636,746		$	206,468,838		$	210,191,448
Cost of products sold		(49,260,313	)		(55,056,160	)		(159,447,930	)		(163,047,360	)
Gross margin		16,375,367			16,580,586			47,020,908			47,144,088

Product development expense		(1,425,159	)		(1,011,961	)		(4,257,468	)		(3,168,333	)
Selling general and administrative expenses		(9,700,342	)		(10,121,683	)		(32,927,015	)		(30,129,112	)
Operating profit		5,249,866			5,446,942			9,836,425			13,846,643

Interest expense		(1,067,779	)		(645,773	)		(2,574,890	)		(1,583,894	)
Other (expense) income		(135,839	)		1,118,453			(514,357	)		2,118,783
Income from continuing operations before income taxes		4,046,248			5,919,622			6,747,178			14,381,532

Income tax expense		(984,289	)		(1,423,363	)		(1,678,698	)		(3,498,365	)
Net income from continuing operations		3,061,959			4,496,259			5,068,480			10,883,167

Discontinued Operations (see Note B)
Gain from operations of discontinued operations		-			495,820			-			1,426,569
Income tax expense		-			(133,500	)		-			(384,104	)
Gain from discontinued operations		-			362,320			-			1,042,465

Net income	$	3,061,959		$	4,858,579		$	5,068,480		$	11,925,632

Earnings per share from continuing operations:
Basic	$	0.49		$	0.72		$	0.81		$	1.75

Diluted	$	0.49		$	0.72		$	0.81		$	1.74

Earnings per share from discontinued operations:
Basic	$	-		$	0.06		$	-		$	0.17

Diluted	$	-		$	0.06		$	-		$	0.17

Total earnings per share:
Basic	$	0.49		$	0.78		$	0.81		$	1.92

Diluted	$	0.49		$	0.78		$	0.81		$	1.91

Cash dividends per share:	$	0.11		$	0.11		$	0.33		$	0.33

See accompanying notes.

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THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended						Nine Months Ended
	September 30, 2023			October 1, 2022			September 30, 2023			October 1, 2022
Net income	$	3,061,959		$	4,858,579		$	5,068,480		$	11,925,632
Other comprehensive (loss) income:

Change in foreign currency translation		(87,572	)		(1,387,274	)		(182,029	)		(2,358,170	)

Change in fair value of interest rate swap, net of tax cost of:
2023 - $0 and $(274,957) respectively; 2022 - $163,533 and $590,827 respectively		-			517,855			(1,449,754	)		1,870,954

Change in pension and postretirement benefit costs, net of taxes of:
2023 - $74,360 and $223,079 respectively; 2022 - $92,235 and $276,705 respectively		252,668			313,408			758,006			940,225
Total other comprehensive income (loss)		165,096			(556,011	)		(873,777	)		453,009
Comprehensive income	$	3,227,055		$	4,302,568		$	4,194,703		$	12,378,641

See accompanying notes.

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THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2023			December 31, 2022
	(unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	9,540,786		$	10,187,522
Accounts receivable, less allowances: 2023 - $718,568; 2022 - $677,000		42,838,864			42,886,250
Inventories		60,648,599			64,636,591
Current portion of notes receivable		570,696			1,006,421
Prepaid expenses and other assets		5,876,920			6,598,774
Total Current Assets		119,475,865			125,315,558

Property, Plant and Equipment		60,077,603			56,112,889
Accumulated depreciation		(32,088,351	)		(30,000,797	)
Property, Plant and Equipment, Net		27,989,252			26,112,092

Goodwill		70,764,166			70,777,459
Trademarks		5,514,890			5,514,886
Patents and other intangibles net of accumulated amortization		16,080,034			18,819,897
Long term notes receivable, less current portion		446,627			2,276,631
Deferred Income Taxes		657,607			488,989
Right of Use Assets		15,796,743			12,217,521
Total Other Assets		109,260,067			110,095,383

TOTAL ASSETS	$	256,725,184		$	261,523,033

See accompanying notes.

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THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2023			December 31, 2022
	(unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	30,257,077		$	27,638,317
Accrued compensation		4,205,484			3,327,832
Other accrued expenses		4,830,717			3,944,964
Current portion of operating lease liability		3,540,157			3,059,547
Current portion of finance lease liability		150,362			-
Current portion of long-term debt		3,000,000			9,010,793
Total Current Liabilities		45,983,797			46,981,453

Other long-term liabilities		754,763			754,762
Operating lease liability, less current portion		12,256,587			9,195,205
Finance lease liability, less current portion		792,484			-
Long-term debt, less current portion		45,661,186			55,136,231
Accrued postretirement benefits		672,064			666,222
Accrued pension cost		21,958,215			22,174,465
Total Liabilities		128,079,096			134,908,338

Shareholders’ Equity
Voting Preferred Stock, no par value:
Authorized and unissued: 1,000,000 shares
Nonvoting Preferred Stock, no par value:
Authorized and unissued: 1,000,000 shares
Common Stock, no par value, Authorized: 50,000,000 shares		33,737,465			33,586,165
Issued: 9,086,096 shares in 2023 and 9,056,421 shares in 2022
Outstanding: 6,238,413 shares in 2023 and 6,221,976 shares in 2022
Treasury Stock: 2,847,683 shares in 2023 and 2,834,445 shares in 2022		(22,790,230	)		(22,544,684	)
Retained earnings		141,985,268			138,985,852
Accumulated other comprehensive loss:
Foreign currency translation		(1,323,007	)		(1,140,978	)
Unrealized gain on interest rate swap, net of tax		-			1,449,754
Unrecognized net pension and postretirement benefit costs, net of tax		(22,963,408	)		(23,721,414	)
Accumulated other comprehensive loss		(24,286,415	)		(23,412,638	)
Total Shareholders’ Equity		128,646,088			126,614,695
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	256,725,184		$	261,523,033

See accompanying notes.

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THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Months Ended
	September 30, 2023			October 1, 2022
Operating Activities
Net income	$	5,068,480		$	11,925,632
Less: gain from discontinued operations		-			1,042,465
Income from continuing operations	$	5,068,480		$	10,883,167
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization		5,471,633			5,389,394
Unrecognized pension and postretirement benefits		635,677			(477,560	)
Loss (Gain) on sale of equipment and other assets		331,474			(345,718	)
Provision for doubtful accounts		(88,353	)		35,000
Stock compensation expense		151,300			699,454
Changes in operating assets and liabilities:
Accounts receivable		116,025			(8,008,687	)
Inventories		4,628,294			(5,217,395	)
Prepaid expenses and other		888,342			(1,082,483	)
Other assets		190,216			340,925
Accounts payable		1,499,401			(537,072	)
Accrued compensation		476,714			(957,022	)
Other accrued expenses		(119,557	)		(1,046,094	)
Net cash provided by (used in) operating activities		19,249,646			(324,091	)

Investing Activities
Business Acquisition		(547,638	)		—
Issuance of Notes Receivable		—			(400,000	)
Payments received from notes receivable		2,265,730			748,148
Proceeds from sale of equipment		—			2,171,073
Purchases of property, plant, and equipment		(4,718,673	)		(1,734,553	)
Net cash (used in) provided by investing activities		(3,000,581	)		784,668

Financing Activities
Principal payments on long-term debt		(74,919,004	)		(5,688,866	)
Principal payments on short-term borrowings (revolver)		(300,029	)		(1,000,000	)
Proceeds from short term borrowings (revolver)		—			10,000,000
Proceeds from new long-term debt financing		60,000,000			—
Financing leases, net		674,558			(161,906	)
Purchase common stock for treasury		(245,546	)		(1,637,072	)
Dividends paid		(2,069,043	)		(2,054,875	)
Net cash used in financing activities		(16,859,064	)		(542,719	)

Discontinued Operations
Cash used in operating activities		-			(610,887	)
Cash used in discontinued operations		-			(610,887	)

Effect of exchange rate changes on cash		(36,737	)		(257,093	)
Net change in cash and cash equivalents		(646,737	)		(950,122	)

Cash and cash equivalents at beginning of period		10,187,522			6,602,429
Cash and cash equivalents at end of period ¹	$	9,540,786		$	5,652,307

Supplemental disclosure of cash flow information:
Interest	$	2,482,362		$	1,753,699
Income taxes		1,321,170			3,197,375

Non-cash investing and financing activities
Right of use asset	$	3,579,222		$	1,743,518
Lease liability		(4,484,838	)		(1,608,530	)



¹ includes cash from assets held for sale of $0.4 million as of October 1, 2022

See accompanying notes

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THE EASTERN COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2023

Note A – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X and do not include all the information and footnotes required by generally accepted accounting principles in the United States (“GAAP”) for complete financial statements. Refer to the consolidated financial statements of The Eastern Company (together with its consolidated subsidiaries, the “Company,” “we,” “us” or “our”) and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on March 14, 2023 (the “2022 Form 10-K”), for additional information.

The accompanying condensed consolidated financial statements are unaudited. However, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for interim periods have been reflected therein. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. All intercompany accounts and transactions are eliminated.

The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited consolidated balance sheet at that date.

The Company’s fiscal year is a 52-53-week fiscal year ending on the Saturday nearest to December 31. References to 2022, the 2022 fiscal year or fiscal 2022 mean the 52-week period ended on December 31, 2022, and references to 2023, the 2023 fiscal year or fiscal 2023 mean the 52-week period ending on December 30, 2023. In a 52-week fiscal year, each quarter has 13 weeks. References to the third quarter of 2022, the third fiscal quarter of 2022, the third quarter of fiscal 2022 or the three months ended October 1, 2022, mean the period from July 3, 2022 to October 1, 2022. References to the third quarter of 2023, the third fiscal quarter of 2023, the third fiscal quarter of 2023 or the three months ended September 30, 2023, mean the 13-week period from July 2, 2023 to September 30, 2023. References to the first nine months of 2022, the first nine months of fiscal 2022 or the nine months ended October 1, 2022 mean the period from January 2, 2022 to October 1, 2022. References to the first nine months of 2023, the first nine months of fiscal 2023 or the nine months ended September 30, 2023 mean the period from January 1, 2023 to September 30, 2023.

Certain amounts in the 2022 financial statements have been reclassified to conform with the 2023 presentation with no impact or change to previously reported net income or shareholders’ equity.

Note B – Discontinued Operations

In the second quarter of 2021, the Company determined that the companies included in our former Diversified Products segment no longer fit with our long-term strategy and the Company initiated the process of selling the companies within the Diversified Products segment, which process was completed with the sale of the Company’s Argo EMS business (“Argo”) on October 19, 2022. Argo supplied printed circuit boards and other electronic assemblies to original equipment manufacturers in various industries, including measurement systems, semiconductor equipment manufacturing, and industrial control, medical, and military products. We believe that the sale of the Diversified Products segment has allowed management to focus on our core capabilities and offerings.

The former Diversified Products segment met the criteria to be held for sale and furthermore, we determined that the assets held for sale qualified for discontinued operations. As such, the financial results of the Diversified Products segment are reflected in our unaudited condensed consolidated statements of income as discontinued operations for the prior periods presented. The results of the former Diversified Products segment are not reflected in the unaudited condensed consolidated statements of income for the three and nine months ended September 30, 2023 because dispositions of the businesses that comprised that segment were completed prior to the start of the period.

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Summarized Financial Information of Discontinued Operations

The following table represents income from discontinued operations, net of tax:

	Three Months Ended					Nine Months Ended
	September 30, 2023		October 1, 2022			September 30, 2023		October 1, 2022
	(unaudited)		(unaudited)			(unaudited)		(unaudited)
Net sales	$	-	$	2,516,064		$	-	$	7,356,491
Cost of products sold		-		(1,656,694	)		-		(4,943,751	)
Gross margin		-		859,370			-		2,412,740

Selling, general and administrative expenses		-		(311,190	)		-		(857,747	)
Operating income		-		548,180			-		1,554,993

Interest expense		-		(52,360	)		-		(128,424	)
Gain from discontinued operations before income taxes		-		495,820			-		1,426,569

Income tax expense		-		(133,500	)		-		(384,104	)
Income from discontinued operations, net of tax	$	-	$	362,320		$	-	$	1,042,465

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Note C – Earnings Per Share

The denominators used to calculate earnings per share are as follows:

Three Months Ended

Nine Months Ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

Basic:

Weighted average shares outstanding

6,241,796

6,209,014

6,233,493

6,226,493

Diluted:

Weighted average shares outstanding

6,241,796

6,209,014

6,233,493

6,226,493

Dilutive stock appreciation rights

32,462

14,102

32,462

14,102

Denominator for diluted earnings per share

6,274,258

6,223,116

6,265,955

6,240,595

Note D – Inventories

Inventories from continuing operations consist of the following components:

	September 30, 2023		December 31, 2022

Raw material and component parts	$	24,325,177	$	25,924,696
Work in process		8,747,860		9,323,082
Finished goods		27,575,562		29,388,813
Total inventories	$	60,648,599	$	64,636,591

Note E - Goodwill

The aggregate carrying amount of goodwill from continuing operations is approximately $70.8 million as of September 30, 2023 and includes the write-off of approximately $0.5 million of goodwill associated with the closure of Associated Toolmakers, Ltd. in the second quarter of 2023. Additionally, the Company recorded approximately $0.5 million of goodwill associated with the acquisition of Sureflex, Inc. in the second quarter of 2023. See Note O – Business Acquisition for further details. No impairment was recognized in the third quarter of 2023.

The Company evaluates its reporting units for impairment annually in December, or more frequently 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 and 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. The Company tests reporting units for impairment by comparing the estimated fair value of each reporting unit with its carrying amount. 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. 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.

Note F – Leases

The Company presents right-of-use (ROU) assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-02, Leases. The Company accounts for non-lease components as part of the lease component to which they relate. Lease accounting involves significant judgements, including making estimates related to the lease term, lease payments, and discount rate.

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The Company has operating leases for buildings, warehouses, and office equipment. The Company determines whether an arrangement is, or contains, a lease at contract inception. An arrangement contains a lease if the Company has the right to direct the use of and obtain substantially all the economic benefits of an identified asset. ROU assets and lease liabilities are recognized at lease commencement based on the present value of lease payments over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Most leases include one or more options to renew. The exercise of lease renewal options is at our sole discretion. All options to extend, when it is reasonably certain the option will be exercised, have been included in the calculation of the ROU asset and lease liability.

Currently, the Company has twenty-one operating leases with a lease liability of $15.8 million and four finance leases with a lease liability of $0.9 million as of September 30, 2023. The terms and conditions of the leases are determined by the individual agreements. The leases do not contain residual value guarantees, restrictions, or covenants that could cause the Company to incur additional financial obligations. There are no related party lease transactions. There are no leases that have not yet commenced that could create significant rights and obligations for the Company.

Approximate total minimum lease payments for each of the next five fiscal years is estimated to be as follows: remainder of 2023 - $1.0 million; 2024 - $3.6 million; 2025 - $2.4 million; 2026 - $1.8 million; 2027 - $1.5 million; and $6.5 million thereafter. The weighted average remaining lease term is 7.3 years. The implicit interest rate used was 5.0% to 8.25%.

Note G - Debt

On June 16, 2023, the Company entered into a credit agreement with TD Bank, N.A., Wells Fargo Bank, Bank of America, and M&T Bank as lenders (the “Credit Agreement”), that included a $60 million term portion and a $30 million revolving commitment portion. The proceeds of the term loan were used to repay the Company’s remaining outstanding term loan and to terminate its existing credit facility with Santander Bank, N.A. (approximately $59 million). The term loan portion of the credit facility requires quarterly principal payments of (i) $750,000 beginning on September 30, 2023 through June 30, 2025, (ii) $1,125,000 beginning on September 30, 2025 through June 30, 2027, and (iii) $1,500,000 beginning on September 30, 2027 through March 31, 2028, with the balance of the term loan payable on the maturity date of June 16, 2028. Amounts outstanding under the revolving portion of the credit facility are generally due and payable on the expiration date of the Credit Agreement (June 16, 2028). The Company can elect to prepay some or all the outstanding balance from time to time without penalty. A commitment fee is payable on the unused portion of the revolving credit facility based on the Company’s consolidated ratio of net debt to adjusted EBITDA from time to time. Currently, the commitment fee is 0.30%. As of September 30, 2023, the Company has not borrowed any funds on the revolving commitment portion of the credit facility.

The term loan bears interest at a variable rate based on the term secured overnight financing rate (“SOFR”), plus an adjustment of ten basis points, plus an applicable margin of 1.875% to 2.625%, depending on the Company’s senior net leverage ratio. Borrowings under the revolving portion bear interest at a variable rate based on, at the Company’s election, a base rate plus an applicable margin of 0.875% to 1.625% or term SOFR, plus an adjustment of ten basis points, plus an applicable margin of 1.875% to 2.625%, with such margins determined based on the Company’s senior net leverage ratio. The Company’s obligations under the Credit Agreement are secured by a lien on certain of the Company’s and its subsidiaries’ assets pursuant to a Pledge and Security Agreement, dated as of June 16, 2023, with TD Bank N.A., as administrative agent.

The Company’s loan covenants under the Credit Agreement require the Company to maintain a senior net leverage ratio not to exceed 3.5 to 1. In addition, the Company is required to maintain a fixed charge coverage ratio to be not less than 1.25 to 1. The Company was in compliance with all its covenants under the Credit Agreement on September 30, 2023, and through the date of filing this Form 10-Q.

Note H - Stock Options and Awards

On February 19, 2020, the Board of Directors of the Company (the “Board”) adopted the Eastern Company 2020 Stock Incentive Plan (the “2020 Plan”), which replaced The Eastern Company 2010 Executive Stock Incentive Plan after its expiration in February 2020. On April 29, 2020, at the Company’s 2020 Annual Meeting of Shareholders, the shareholders of the Company approved and adopted the 2020 Plan. The Company has no other existing plan pursuant to which equity awards may be granted.

Incentive stock options granted under the 2020 Plan must have exercise prices that are not less than 100% of the fair market value of the Company’s common stock on the dates the stock options are granted. Restricted stock awards may also be granted to participants under the 2020 Plan with restrictions determined by the Compensation Committee of the Board. Under the 2020 Plan, non-qualified stock options granted to participants will have exercise prices determined by the Compensation Committee of the Board. During the first nine months of fiscal 2023 and 2022, the Company granted stock awards with respect to 79,500 and 43,300 shares of Company common stock respectively, that were subject to the meeting of performance measurements or time based. For the first nine months of fiscal years 2023 and 2022, the Company used fair market value to determine the associated expense with stock awards.

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The 2020 Plan also permits the issuance of Stock Appreciation Rights (“SARs”). The SARs are in the form of an option with a cashless exercise price equal to the difference between the fair value of the Company’s common stock at the date of grant and the fair value as of the exercise date resulting in the issuance of the Company’s common stock. During the first nine months of fiscal 2023 and 2022 the Company did not issue any SARs.

Stock-based compensation (income) expense, including forfeitures, in connection with SARs and stock awards previously granted to employees was approximately $5,000 and $131,000 in the third quarter of 2023 and the third quarter of 2022, respectively, and was approximately $(158,000) and $381,000 in the first nine months of fiscal years 2023 and 2022, respectively.

As of September 30, 2023, there were 889,992 shares of Company common stock reserved and available for future grant under the 2020 Plan.

The following tables set forth the outstanding SARs for the period specified:

	Nine Months Ended					Year Ended
	September 30, 2023					December 31, 2022
	Units			Weighted Average Exercise Price		Units			Weighted Average Exercise Price
Outstanding at beginning of period		146,166		$	23.22		180,833		$	22.88
Expired		(50,833	)		24.24		-			-
Exercised		(33,333	)		21.10		(16,667	)		21.20
Forfeited		(49,000	)		22.80		(18,000	)		21.74
Outstanding at end of period		13,000			24.19		146,166			23.22

SARs Outstanding and Exercisable
Range of Exercise Prices	Outstanding as of September 30, 2023		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Exercisable as of September 30, 2023		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price

$19.44 - $26.30		13,000		0.7	$	24.19		13,000		0.7	$	24.19

The following tables set forth the outstanding stock awards for the period specified:

	Nine Months Ended			Year Ended
	September 30, 2023			December 31, 2022
	Shares			Shares
Outstanding at beginning of period		64,500			27,300
Issued		79,500			43,300
Exercised		(10,600	)		-
Forfeited		(47,300	)		(6,100	)
Outstanding at end of period		86,100			64,500

As of September 30, 2023, outstanding SARs and stock awards had an intrinsic value of $1,562,715.

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Note I – Share Repurchase Program

On August 21, 2023, the Company announced that the Board of Directors of the Company had approved a new share repurchase program authorizing the Company to repurchase up to 200,000 shares of the Company’s common stock through August 20, 2028. The Company’s share repurchase program does not obligate it to acquire the Company’s common stock at any specific cost per share. Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

Below is a summary of the Company’s shares repurchased during the third quarter of 2023 under the prior share repurchase program.

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that may yet be Purchased Under the Plans or Programs
Balance as of July 1, 2023		139,716	$	24.61		139,716		60,284

July 2, 2023 – September 30, 2023		-		-		-		(60,284	)

Balance as of September 30, 2023		139,716	$	24.61		139,716		-

Below is a summary of the Company’s shares repurchased during the third quarter of 2023 under the new share repurchase program.

Period

Total Number of Shares Purchased

Average Price Paid Per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Number of Shares that may yet be Purchased Under the Plans or Programs

Balance as of July 1, 2023

July 2, 2023 – September 30, 2023

13,238

18.55

13,238

186,762

Balance as of September 30, 2023

13,238

18.55

13,238

186,762

Note J – Revenue Recognition

The Company’s revenues result from the sale of goods and services and reflect the consideration to which the Company expects to be entitled. The Company records revenues in accordance with FASB Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers.” The Company has defined purchase orders as contracts in accordance with ASC Topic 606. For its customer contracts, the Company identifies its performance obligations, which are delivering goods or services, determines the transaction price, allocates the contract transaction price to the performance obligations (when applicable), and recognizes the revenue when (or as) the performance obligation is transferred to the customer. A good or service is transferred when the customer obtains control of that good or service. The Company’s revenues are recorded at a point in time from the sale of tangible products. Revenues are recognized when products are shipped.

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Customer volume rebates, product returns, discount and allowance are variable considerations and are recorded as a reduction of revenue in the same period that the related sales are recorded. The Company has reviewed the overall sales transactions for variable consideration and has determined that these costs are not material.

The Company has no future performance obligations and does not capitalize costs to obtain or fulfill contracts.

Note K - Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction, and in various states and foreign jurisdictions. With limited exceptions, the Company is no longer subject to U.S. federal, state, and local income tax examinations by tax authorities for years before 2018 and is no longer subject to non-U.S. income tax examinations by foreign tax authorities for years prior to 2016.

The total amount of unrecognized tax benefits could increase or decrease within the next 12 months for several reasons, including the closure of federal, state, and foreign tax years by expiration of the statute of limitations and the recognition and measurement considerations under FASB ASC Topic 740, “Income Taxes.” There have been no significant changes to the value of unrecognized tax benefits during the nine months ended September 30, 2023. The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits will not increase or decrease significantly over the next twelve months.

Note L - Retirement Benefit Plans

The Company has four non-contributory defined benefit pension plans covering most U.S. employees. Three of these pension plans are frozen and participants in these three plans have not accrued benefits since the date on which these plans were frozen. A fourth pension plan does not permit new participants but existing participants in this fourth pension plan continue to accrue benefits. Plan benefits are generally based upon age at retirement, years of service and, for the plan covering salaried employees, the level of compensation. The Company also sponsors unfunded non-qualified supplemental retirement plans that provide certain former officers with benefits in excess of limits imposed by federal tax law.

The Company also provides health care and life insurance for retired salaried employees in the United States who meet specific eligibility requirements.

Significant disclosures relating to these benefit plans for the first three months and first nine months 2023 and 2022 are as follows:

	Pension Benefits
	Three Months Ended						Nine Months Ended
	September 30, 2023			October 1, 2022			September 30, 2023			October 1, 2022
Service cost	$	216,153		$	269,744		$	648,459		$	809,231
Interest cost		990,053			608,188			2,970,160			1,824,568
Expected return on plan assets		(1,049,016	)		(1,460,658	)		(3,147,046	)		(4,381,980	)
Amortization of prior service cost		-			16,563			-			49,689
Amortization of the net loss		342,866			390,075			1,028,596			1,170,225
Net periodic benefit cost (benefit)	$	500,056		$	(176,088	)	$	1,500,169		$	(528,267	)

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	Other Postretirement Benefits
	Three Months Ended						Nine Months Ended
	September 30, 2023			October 1, 2022			September 30, 2023			October 1, 2022
Service cost	$	6,486		$	13,323		$	19,458		$	39,969
Interest cost		14,533			10,988			43,599			32,964
Expected return on plan assets		(4,849	)		(4,400	)		(14,547	)		(13,200	)
Amortization of prior service cost		1,060			1,060			3,180			3,180
Amortization of the net loss		(16,895	)		(2,054	)		(50,685	)		(6,162	)
Net periodic benefit cost	$	335		$	18,917		$	1,005		$	56,751

The Company’s funding policy with respect to its qualified plans is to contribute at least the minimum amount required by applicable laws and regulations. In fiscal year 2023, the Company expects to contribute approximately $1,300,000 into its pension plans and approximately $50,000 into its postretirement plan. As of September 30, 2023, the Company has contributed $800,000 to its pension plans, has contributed $32,000 to its postretirement plan, and expects to make the remaining contributions as required during the remainder of the fiscal year.

The Company has a contributory savings plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”) covering substantially all U.S. non-union employees. The 401(k) Plan allows participants to make voluntary contributions from their annual compensation on a pre-tax basis, subject to limitations under the Internal Revenue Code. The 401(k) Plan provides for contributions by the Company at its discretion.

The Company made contributions to the plan as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Regular matching contribution	$	241,487	$	149,673	$	747,913	$	522,327
Transitional credit contribution		23,271		28,144		83,935		107,886
Non-discretionary contribution		83,302		16,715		654,552		376,861
Total contributions for the period	$	348,060	$	194,532	$	1,486,400	$	1,007,074

The non-discretionary contribution of $328,953 made in the nine months ended September 30, 2023, was accrued for, and expensed in the prior fiscal year.

Effective January 1, 2023, the non-discretionary contributions are being contributed on a weekly basis.

Note M - Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that could impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued, but are not yet effective, that might have a material impact on the consolidated financial statements of the Company.

Note N - Concentration of Risk

Credit Risk

Credit risk is the potential financial loss resulting from the failure of a customer or counterparty to settle its financial and contractual obligations to the Company, as and when they become due. The primary credit risk for the Company is its accounts receivable due from customers. The Company has established credit limits for customers and monitors their balances to mitigate the risk of loss. As of September 30, 2023, there was one significant concentration of credit risk with a customer, who had receivables representing 12% of our net accounts receivable. One single customer represented 14% of the Company’s net accounts receivable as of December 31, 2022. The maximum exposure to credit risk is primarily represented by the carrying amount of the Company’s accounts receivable.

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The Company has deposits that exceed amounts up to $250,000 that are insured by the Federal Deposit Insurance Corporation (FDIC), but the Company does not consider this a significant concentration of credit risk based on the strength of the financial institution.

Interest Rate Risk

The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt, which bears interest at variable rates based on term SOFR, plus an adjustment of ten basis points, plus an applicable margin of 1.875% to 2.625%, depending on the Company’s senior net leverage ratio.

Currency Exchange Rate Risk

The Company’s currency exposure is concentrated in the Canadian dollar, Mexican peso, New Taiwan dollar, Chinese RMB, Hong Kong dollar and United Kingdom pound sterling. Because of the Company’s limited exposure to any single foreign market, any exchange gains or losses have not been material and are not expected to be material in the future. As a result, the Company does not attempt to mitigate its foreign currency exposure through the acquisition of any speculative or leveraged financial instruments.

Note O – Business Acquisition

On June 29, 2023, the Company acquired certain assets, including accounts receivable, inventories, furniture, fixtures and equipment, intellectual property rights, and rights existing under all sales and purchase agreements, and assumed certain liabilities of Sureflex, Inc. (“Sureflex”). These assets are held in our Velvac, Inc. (“Velvac”) subsidiary. We expect that Sureflex, which manufactures tractor-trailer electrical connection cable assemblies, will enable the Company to manufacture electrical products and become more competitive with respect to cost and quality.

The acquisition of Sureflex was accounted for under Business Combinations (ASC Topic 805). The acquired business is included in the consolidated operating results of the Company from the effective date of the acquisition. The excess of the cost of Sureflex over the fair market value of the net assets acquired of $0.5 million has been recorded as goodwill.

Neither the actual results nor the pro forma effects of the Sureflex acquisition are material to the Company’s financial statements.

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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 and nine months ended September 30, 2023. 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 December 31, 2022 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 December 31, 2022, which was filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2023 (the “2022 Form 10-K”).

The Company’s fiscal year is a 52-53-week fiscal year ending on the Saturday nearest to December 31. References to 2022, the 2022 fiscal year or fiscal 2022 mean the 52-week period ended on December 31, 2022, and references to 2023, the 2023 fiscal year or fiscal 2023 mean the 52-week period ending on December 30, 2023. In a 52-week fiscal year, each quarter has 13 weeks. References to the third quarter of 2022, the third fiscal quarter of 2022, the third quarter of fiscal 2022 or the three months ended October 1, 2022, mean the period from July 3, 2022 to October 1, 2022. References to the third quarter of 2023, the third fiscal quarter of 2023, the third quarter of fiscal 2023 or the three months ended September 30, 2023, mean the 13-week period from July 2, 2023 to September 30, 2023. References to the first nine months of 2022, the first nine months of fiscal 2022 or the nine months ended October 1, 2022 mean the period from January 2, 2022 to October 1, 2022. References to the first nine months of 2023, the first nine months of fiscal 2023 or the nine months ended September 30, 2023 mean the period from January 1, 2023 to September 30, 2023.

Safe Harbor for Forward-Looking Statements

Statements contained in this Quarterly Report on Form 10-Q of the Company 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 the impact of the COVID-19 pandemic and resulting economic effects, 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, rising interest rates, delays in delivery of our products to our customers, the impact of global economic conditions on demand for our products, including the impact, length and degree of economic downturns on the customers and markets we serve, reductions in production levels, the availability, terms and cost of financing, including borrowings under credit arrangements or agreements, the potential impact of bank failures on our ability to access financing or capital markets, and the impact of market conditions on pension plan funded status. Other factors include, but are not limited to: restrictions on operating flexibility imposed by the agreement governing our credit facility; 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 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 the inability to effectively integrate such acquisitions and achieve expected synergies; domestic and international economic conditions, and more specifically conditions in the automotive, construction, aerospace, energy, oil and gas, transportation, electronic, and general industrial markets; costs and liabilities associated with environmental compliance; the impact of climate change; military conflict (including the Russia/Ukraine conflict, the conflict in Israel and surrounding areas, 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; materially adverse or unanticipated legal judgments, fines, penalties or settlements; and other risks identified and discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 1A, Risk Factors, and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the 2022 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.

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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.

General Overview

The following analysis excludes discontinued operations.

Net sales in the third quarter of 2023 decreased 8% to $65.6 million from $71.6 million in the corresponding period in 2022. Net sales for the first nine months of 2023 decreased 2% to $206.5 million from $210.2 million in the same period last year. Sales declined in both the third quarter of 2023 and first nine months of 2023 primarily due to lower demand for truck accessories and returnable transport packaging products. Our backlog as of September 30, 2023 increased 4% to $89.4 million from $85.7 million as of October 1, 2022.

Net sales of existing products declined 14% in the third quarter of 2023 and 5% for the first nine months of 2023 compared to the corresponding periods in 2022. Price increases and new products increased net sales by 6% in the third quarter of 2023 and 3% in the first nine months of 2023, compared to the corresponding periods in 2022. 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.

Cost of products sold decreased $5.8 million, or 11%, in the third quarter of 2023 and decreased $3.6 million, or 2% in the first nine months of 2023 compared to the corresponding periods in 2022. The decreases in the third quarter and first nine months of 2023 are primarily due to lower sales volumes. Additionally, the Company paid tariff costs on China-sourced products of approximately $0.6 million and $1.7 million in the third quarter and first nine months of 2023, respectively, compared to $0.8 million and $2.5 million in the third quarter and first nine months of fiscal 2022, respectively. Most tariffs on China-sourced products have been recovered through price increases.

Gross margin as a percentage of sales was 25% in the third quarter and 23% in the first nine months of 2023 compared to 23% in the third quarter and 22% in the first nine months of fiscal 2022. Our gross margins in the third quarter and first nine months of 2023 reflect the impact of price increases to customers to recover increases in raw material costs.

Product development expense increased $0.4 million, or 41%, in the third quarter of 2023 and increased $1.1 million, or 34%, in the first nine months of 2023 compared to the corresponding periods in 2022 as we continue to invest in new products at Eberhard, Velvac and Big 3. As a percentage of net sales, product development costs were 2.2% and 2.1% for the third quarter and first nine months of 2023, respectively, compared to 1.4% and 1.5% for the corresponding periods in 2022.

Selling general and administrative expenses decreased $0.4 million, or 4%, in the third quarter of 2023 when compared to the third quarter of 2022 primarily due to lower legal, professional, and selling costs and payroll-related expenses. Selling general and administrative expenses increased $2.8 million, or 9%, in the first nine months of 2023 when compared to the corresponding period in 2022 primarily due to severance and other accrued compensation expenses of $1.8 million related to the elimination of the chief operating officer position and the departure of our previous chief executive officer during the first quarter of 2023 and legal, professional, and selling costs and payroll-related expenses during the first six months of 2023. The increase in selling expenses reflects our investments in sales capabilities and change in management personnel.

Interest expense increased $0.4 million in the third quarter and $1.0 million in the first nine months of 2023 compared to the corresponding periods in 2022 due to higher borrowing rates.

Other income decreased $1.3 million in the third quarter of 2023 and decreased $2.6 million in the first nine months of 2023 compared to the corresponding periods in 2022. The decrease in other income of $1.3 million in the third quarter of 2023 was primarily driven by unfavorable pension costs of $0.3 million in the third quarter of 2023, while in the third quarter of 2022 the Company had a favorable pension cost adjustment of $0.4 million, and a $0.6 million gain on the sale of the Company’s corporate office building in the third quarter of 2022. The decrease in other income of $2.6 million for the first nine months of 2023 when compared to the corresponding period in 2022 was primarily driven by unfavorable pension costs of $0.9 million for the first nine months of 2023, while in the first nine months of 2022 the Company had favorable pension cost adjustments of $1.3 million, $1.4 million expense associated with the closure of Associated Toolmakers, Ltd. in the second quarter of 2023, an unfavorable working capital adjustment of $0.4 million in the first quarter of 2023 related to the sale of the Greenwald business, partially offset by a $1.6 million favorable adjustment for the final settlement of our swap agreement with Santander in the second quarter of 2023, while in the first quarter of 2022 the Company had a loss on the sale of the Wheeling, IL building of $0.3 million and a gain of $0.6 million on the sale of the Company’s corporate office building in the third quarter of 2022.

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Net income from continuing operations for the third quarter of fiscal 2023 was $3.1 million, or $0.49 per diluted share compared to net income from continuing operations of $4.5 million, or $0.72 per diluted share, for the comparable period in 2022. In the first nine months of 2023 net income from continuing operations was $5.1 million, or $0.81 per diluted share, compared to net income from continuing operations of $10.9 million, or $1.74 per diluted share, for the comparable period in 2022.

A more detailed analysis of the Company’s results of operations and financial condition follows.

Results of Operations

The following table shows, for the periods indicated, selected line items from the condensed consolidated statements of income as a percentage of net sales:

	Three Months Ended						Nine Months Ended
	September 30, 2023			October 1, 2022			September 30, 2023			October 1, 2022

Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of products sold		75.1	%		76.9	%		77.2	%		77.6	%
Gross margin		24.9	%		23.1	%		22.8	%		22.4	%
Product development expense		2.1	%		1.4	%		2.0	%		1.5	%
Selling and administrative expense		14.8	%		14.1	%		16.0	%		14.3	%
Operating Profit		8.0	%		7.6	%		4.8	%		6.6	%

The following table shows the change in sales and operating profit for the third quarter and first nine months of 2023 compared to the third quarter and first nine months of 2022 (dollars in thousands):

	Three Months			Nine Months
	Ended			Ended
	September 30, 2023			September 30, 2023

Net Sales	$	(6,001	)	$	(3,723	)

Volume		-14.0	%		-4.9	%
Price		4.6	%		2.1	%
New products		1.0	%		1.0	%
		-8.4	%		-1.8	%

Operating Profit	$	(197	)	$	(4,010	)

Liquidity and Sources of Capital

The Company generated approximately $19.2 million of cash from continuing operations during the first nine months of fiscal 2022 compared to consuming approximately $0.3 million during the first nine months of fiscal 2022. Cash flow from operations in the first nine months of 2023 was higher when compared to the corresponding period in 2022 primarily due to reductions in inventory and accounts receivable. See Note G - Debt for further discussion on the Company’s debt facilities.

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Additions to property, plant and equipment for continuing operations were approximately $4.7 million and $1.7 million for the first nine months of 2023 and 2022, respectively. As of September 30, 2023, there were approximately $1.5 million of outstanding commitments for capital expenditures.

The following table shows key financial ratios at the end of each specified period:

	Third Quarter 2023			Third Quarter 2022			Fiscal Year 2022
Current ratio		2.6			2.9			2.7
Average days’ sales in accounts receivable		58			67			56
Inventory turnover		3.5			3.2			3.4
Total debt to shareholders’ equity		37.8	%		60.3	%		50.7	%

The following table shows important liquidity measures as of the balance sheet date for each specified period or for the period, as applicable (in millions):

	Third Quarter 2023			Third Quarter 2022			Fiscal Year 2022
- Held in the United States	$	7.3		$	3.2			7.4
- Held by a foreign subsidiary		2.2			2.5			2.8
		9.5			5.7			10.2

Working capital		73.5			90.6			78.3
Net cash provided by (used in) operating activities		19.2			(0.3	)		7.4
Change in working capital impact on net cash used in operating activities		7.7			(16.5	))		(5.2	)
Net cash (used in) provided by investing activities		(3.0	)		0.8			5.1
Net cash used in financing activities		(16.9	)		(0.5	))		(11.8	)

Inventories of $60.6 million as of September 30, 2023, represent a decrease of 6.2% as compared to $64.6 million at the end of fiscal year 2022 and a decrease of 10.2% as compared to $67.5 million at the end of the third quarter of fiscal 2022. Accounts receivable, less allowances, were $42.8 million as of September 30, 2023, as compared to $42.9 million at 2022 fiscal year end and $50.9 million at the end of the third quarter of fiscal 2022.

On June 16, 2023, the Company entered into a credit agreement with TD Bank, N.A., Wells Fargo Bank, Bank of America, and M&T Bank as lenders (the “Credit Agreement”), and incurred indebtedness under the Credit Agreement in the aggregate principal amount of $60 million in the form of a term loan, the proceeds of which were used to repay the Company’s remaining outstanding term loan and to terminate its existing credit facility with Santander Bank. See Note G for additional information regarding the terms of the Credit Agreement, including repayment terms, interest rates and applicable loan covenants. Under the terms of the 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 fixed charge coverage ratio and a maximum senior net leverage ratio. These covenants may limit how we conduct our business, and in the event of certain defaults, our repayment obligations may be accelerated. We were in compliance with all our covenants as of September 30, 2023.

Cash, cash flow from operating activities and funds available under the revolving credit portion of the Credit Agreement are expected to be sufficient to cover future foreseeable working capital requirements in the short-term (i.e., the next 12 months from September 30, 2023) and separately in the long-term (i.e., beyond the next 12 months). However, the Company cannot provide any assurances of the availability of future financing or the terms on which it might be available. In addition, the interest rate on borrowings under the Credit Agreement varies based on our senior net leverage ratio, and the Credit Agreement requires us to maintain a senior net leverage ratio not to exceed 3.50 to 1 and a fixed charge coverage ratio to be not less than 1.25 to 1. A decrease in earnings due to the impact of current economic conditions and inflationary pressures or the resulting harm to the financial condition of our customers, or an increase in indebtedness incurred to offset such a decrease in earnings, would have a negative impact on our senior net leverage ratio and our fixed charge coverage ratio, which in turn would increase the cost of borrowing under the Credit Agreement and could cause us to fail to comply with the covenants under our Credit Agreement.

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In addition to funding capital requirements, we may use available cash to pay down our indebtedness, to make investments, which may include investments in publicly traded securities, or to make acquisitions that we believe will complement or expand our existing businesses.

As of the end of the third quarter of 2023, 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.

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. For a full description of our critical accounting estimates, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of the 2022 Form 10-K. While there have been no material changes to our critical accounting estimates, we continue to monitor the methodologies and assumptions underlying such critical accounting estimates.

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Non-GAAP Financial Measures

The non-GAAP financial measures we provide in this report 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 Diluted 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 Continuing 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 Continuing 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.

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.

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Reconciliation of Non-GAAP Measures
Adjusted Net Income and EPS from Continuing Operations Calculation
For the Three and Nine Months ended September 30, 2023 and October 1, 2022
($000's)

	Three Months Ended					Nine Months Ended
	September 30, 2023		October 1, 2022			September 30, 2023			October1,2022
Net income from continuing operations as reported per generally accepted accounting principles (GAAP)	$	3,062	$	4,496		$	5,068		$	10,883

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

Basic	$	0.49	$	0.72		$	0.81		$	1.75
Diluted	$	0.49	$	0.72		$	0.81		$	1.74

Adjustments:
Loss on sale of Wheeling, IL building, net of tax		-		-			-			202	A
Gain on sale of Eastern corporate office building, net of tax		-		(474)	B		-			(474)	B
Severance and accrued compensation, net of tax		-		-			1,349	C		-
Greenwald final sale adjustment				-			293	D		-
Associated Toolmakers, Ltd. closure, net of tax				-			1,086	E		-
Total adjustments (non-GAAP)	$	-	$	(474	)	$	2,728		$	(272	)

Adjusted net income from continuing operations	$	3,062	$	4,022		$	7,796		$	10,611

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

Basic	$	0.49	$	0.65		$	1.25		$	1.70
Diluted	$	0.49	$	0.65		$	1.24		$	1.70

A) Loss on sale of building in Wheeling, IL

B) Gain on sale of Eastern corporate office building

C) Severance expenses associated with accrued compensation and severance related to the elimination of the

Chief Operating Officer position and the departure of the former Chief Executive Officer

D) Final settlement of working capital adjustment associated with Greenwald sale

E) Associated Toolmakers, Ltd. closure costs

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Reconciliation of Non-GAAP Measures
Adjusted EBITDA from Continuing Operations Calculation
For the Three and Nine Months ended September 30, 2023 and October 1, 2022
($000's)

	Three Months Ended					Nine Months Ended
	September 30, 2023		October 1, 2022			September 30, 2023			October1,2022

Net income from continuing operations as reported per generally accepted accounting principles (GAAP)	$	3,062	$	4,496		$	5,068		$	10,883

Interest expense		1,068		646			2,575			1,584
Provision for income taxes		984		1,423			1,679			3,498
Depreciation and amortization		1,851		1,756			5,472			5,389
Loss on sale of Wheeling, IL building		-		-			-			269	A
Gain on sale of Eastern corporate office building		-		(624	)B		-			(624	)B
Severance and accrued compensation		-		-			1,799	C		-
Greenwald final sale adjustment		-		-			390	D		-
Associated Toolmakers, Ltd. closure, net of tax		-		-			1,448	E		-
Adjusted EBITDA from continuing operations	$	6,965	$	7,697		$	18,431		$	20,999

A) Loss on sale of building in Wheeling, IL

B) Gain on sale of Eastern corporate office building

C) Severance expenses associated with accrued compensation and severance related to the elimination of the

Chief Operating Officer position and the departure of the former Chief Executive Officer

D) Final settlement of working capital adjustment associated with Greenwald sale

E) Associated Toolmakers, Ltd. closure costs

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ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a result of the Company’s status as a smaller reporting company pursuant to Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company is not required to provide information under this Item 3.

ITEM 4 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures:

As of September 30, 2023, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (the “CEO”) and the Chief Financial Officer (the “CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) pursuant to Exchange Act Rule 13a-15. As defined in Exchange Act Rules 13a-15(e) and 15d-15(e), “the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.”

The Company believes that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, and the CEO and CFO have concluded that these controls and procedures are effective at the “reasonable assurance” level as of September 30, 2023.

Changes in Internal Control Over Financial Reporting:

During the period covered by this Quarterly Report on Form 10-Q, there were no changes in the Company's internal control over financial reporting that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

The Company is a party to various legal proceedings from time to time related to its normal business operations. As of the end of the quarter ended September 30, 2023, the Company does not have any material pending legal proceedings, other than as set forth in Part I, Item 3, Legal Proceedings, of the 2022 Form 10-K, or any material legal proceedings known to be contemplated by governmental authorities.

ITEM 1A – RISK FACTORS

The Company’s business is subject to several risks, some of which are beyond its control. In addition to the other information set forth in this Quarterly Report on Form 10-Q, the Company’s shareholders should carefully consider the risk factors discussed in Part I, Item 1A, Risk Factors of the 2022 Form 10-K. These risk factors could have a material adverse effect on the Company’s business, results of operations, financial condition and/or liquidity and could cause our operating results to vary significantly from period to period. As of September 30, 2023, there have been no material changes to the risk factors disclosed in the 2022 Form 10-K. The Company may disclose changes to such risk factors or disclose additional risk factors from time to time in its future filings with the SEC. Additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial also may materially adversely affect its business, financial condition, or operating results.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On May 2, 2023, the Company’s existing share purchase program expired, under which the Company repurchased a total of 139,716 shares of Company common stock. On August 21, 2023, the Company announced that the Board of Directors of the Company had approved a new share repurchase program authorizing the Company to repurchase up to 200,000 shares of the Company’s common stock through August 20, 2028. The Company’s new share repurchase program does not obligate it to acquire the Company’s common stock at any specific cost per share. Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. Below is a summary of the Company’s share repurchases during the third quarter of 2023 under the new share repurchase program.

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that may yet be Purchased Under the Plans or Programs
July 2, 2023 – July 29, 2023		-	$	-		-		-

July 30, 2023 – August 26, 2023		-		-		-		200,000

August 27, 2023 – September 30, 2023		13,238		18.55		13,238		186,762

Total		13,238	$	18.55		13,238		186,762

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4 – MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 – OTHER INFORMATION

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ITEM 6 – EXHIBITS

3.1)		Restated Certificate of Incorporation of the Company, as amended (conformed copy) (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed on May 6, 2020).

3.2)		Amended and Restated By-Laws of the Company, as amended through March 11, 2022 (incorporated by reference to Exhibit 3(ii) to the Company’s Current Report on Form 8-K filed on March 11, 2022).

31)		Certifications required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32)		Certifications pursuant to Rule 13a-14(b) and 18 USC 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

101)		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended July 1, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Income (Unaudited) for the three months ended July 1, 2023 and July 2, 2022; (ii) Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the six months ended July 1, 2023, and July 2, 2022; (iii) Condensed Consolidated Balance Sheets (Unaudited) as of July 1, 2023 and December 31, 2022; (iv) Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended July 1, 2023 and July 2, 2022; and (iv) Notes to the Condensed Consolidated Financial Statements (Unaudited).**

104)		Cover Page Interactive Data File (formatted as Inline XBRL and included in Exhibit 101). **

* Filed herewith.

** Furnished herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	THE EASTERN COMPANY
	(Registrant)

DATE: November 7, 2023	/s/ Mark Hernandez
	Mark Hernandez President and Chief Executive Officer

DATE: November 7, 2023	/s/ Nicholas Vlahos
	Nicholas Vlahos Vice President and Chief Financial Officer

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nullnull

Cover	9 Months Ended
Cover	Sep. 30, 2023 shares
Cover [Abstract]
Entity Registrant Name	THE EASTERN COMPANY
Entity Central Index Key	0000031107
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Sep. 30, 2023
Entity Filer Category	Accelerated Filer
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Entity Common Stock Shares Outstanding	6,238,413
Entity File Number	001-35383
Entity Incorporation State Country Code	CT
Entity Tax Identification Number	06-0330020
Entity Address Address Line 1	3 Enterprise Drive
Entity Address Address Line 2	Suite 408
Entity Address City Or Town	Shelton
Entity Address State Or Province	CT
Entity Address Postal Zip Code	06484
City Area Code	203
Local Phone Number	729-2255
Security 12b Title	Common Stock, No Par Value
Trading Symbol	EML
Security Exchange Name	NASDAQ
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Oct. 01, 2022	Sep. 30, 2023	Oct. 01, 2022
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Net sales	$ 65,635,680	$ 71,636,746	$ 206,468,838	$ 210,191,448
Cost of products sold	(49,260,313)	(55,056,160)	(159,447,930)	(163,047,360)
Gross margin	16,375,367	16,580,586	47,020,908	47,144,088
Product development expense	(1,425,159)	(1,011,961)	(4,257,468)	(3,168,333)
Selling general and administrative expenses	(9,700,342)	(10,121,683)	(32,927,015)	(30,129,112)
Operating profit	5,249,866	5,446,942	9,836,425	13,846,643
Interest expense	(1,067,779)	(645,773)	(2,574,890)	(1,583,894)
Other (expense) income	(135,839)	1,118,453	(514,357)	2,118,783
Income from continuing operations before income taxes	4,046,248	5,919,622	6,747,178	14,381,532
Income tax expense	(984,289)	(1,423,363)	(1,678,698)	(3,498,365)
Net income from continuing operations	3,061,959	4,496,259	5,068,480	10,883,167
Discontinued Operations (see Note B)
Gain from operations of discontinued operations	0	495,820	0	1,426,569
Income tax expense	0	(133,500)	0	(384,104)
Gain from discontinued operations	0	362,320	0	1,042,465
Net income	$ 3,061,959	$ 4,858,579	$ 5,068,480	$ 11,925,632
Earnings per share from continuing operations:
Basic	$ 0.49	$ 0.72	$ 0.81	$ 1.75
Diluted	0.49	0.72	0.81	1.74
Earnings per share from discontinued operations:
Basic	0	0.06	0	0.17
Diluted	0	0.06	0	0.17
Total earnings per share:
Basic	0.49	0.78	0.81	1.92
Diluted	0.49	0.78	0.81	1.91
Cash dividends per share:	$ 0.11	$ 0.11	$ 0.33	$ 0.33

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Oct. 01, 2022	Sep. 30, 2023	Oct. 01, 2022
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
Net income	$ 3,061,959	$ 4,858,579	$ 5,068,480	$ 11,925,632
Other comprehensive (loss) income:
Change in foreign currency translation	(87,572)	(1,387,274)	(182,029)	(2,358,170)
Change in fair value of interest rate swap, net of tax cost of: 2023 - $0 and $(274,957) respectively; 2022 - $163,533 and $590,827 respectively	0	517,855	(1,449,754)	1,870,954
Change in pension and postretirement benefit costs, net of taxes of: 2023 - $74,360 and $223,079 respectively; 2022 - $92,235 and $276,705 respectively	252,668	313,408	758,006	940,225
Total other comprehensive income (loss)	165,096	(556,011)	(873,777)	453,009
Comprehensive income	$ 3,227,055	$ 4,302,568	$ 4,194,703	$ 12,378,641

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Current Assets
Cash and cash equivalents	$ 9,540,786	$ 10,187,522
Accounts receivable, less allowances: 2023 - $718,568; 2022 - $677,000	42,838,864	42,886,250
Inventories	60,648,599	64,636,591
Current portion of notes receivable	570,696	1,006,421
Prepaid expenses and other assets	5,876,920	6,598,774
Total Current Assets	119,475,865	125,315,558
Property, Plant and Equipment	60,077,603	56,112,889
Accumulated depreciation	(32,088,351)	(30,000,797)
Property, Plant and Equipment, Net	27,989,252	26,112,092
Goodwill	70,764,166	70,777,459
Trademarks	5,514,890	5,514,886
Patents and other intangibles net of accumulated amortization	16,080,034	18,819,897
Long term notes receivable, less current portion	446,627	2,276,631
Deferred Income Taxes	657,607	488,989
Right of Use Assets	15,796,743	12,217,521
Total Other Assets	109,260,067	110,095,383
TOTAL ASSETS	256,725,184	261,523,033
Current Liabilities
Accounts payable	30,257,077	27,638,317
Accrued compensation	4,205,484	3,327,832
Other accrued expenses	4,830,717	3,944,964
Current portion of operating lease liability	3,540,157	3,059,547
Current portion of finance lease liability	150,362	0
Current portion of long-term debt	3,000,000	9,010,793
Total Current Liabilities	45,983,797	46,981,453
Other long-term liabilities	754,763	754,762
Operating lease liability, less current portion	12,256,587	9,195,205
Finance lease liability, less current portion	792,484	0
Long-term debt, less current portion	45,661,186	55,136,231
Accrued postretirement benefits	672,064	666,222
Accrued pension cost	21,958,215	22,174,465
Total Liabilities	128,079,096	134,908,338
Nonvoting Preferred Stock, no par value: Authorized and unissued: 1,000,000 shares
Common Stock, no par value, Authorized: 50,000,000 shares Issued: 9,086,096 shares in 2023 and 9,056,421 shares in 2022 Outstanding: 6,238,413 shares in 2023 and 6,221,976 shares in 2022	33,737,465	33,586,165
Treasury Stock: 2,847,683 shares in 2023 and 2,834,445 shares in 2022	(22,790,230)	(22,544,684)
Retained earnings	141,985,268	138,985,852
Accumulated other comprehensive loss:
Foreign currency translation	(1,323,007)	(1,140,978)
Unrealized gain on interest rate swap, net of tax	0	1,449,754
Unrecognized net pension and postretirement benefit costs, net of tax	(22,963,408)	(23,721,414)
Accumulated other comprehensive loss	(24,286,415)	(23,412,638)
Total Shareholders' Equity	128,646,088	126,614,695
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 256,725,184	$ 261,523,033

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts	$ 718,568	$ 677,000
Shareholders' Equity
Voting Preferred Stock, par value (in dollars per share)	$ 0	$ 0
Voting Preferred Stock, shares authorized (in shares)	1,000,000	1,000,000
Nonvoting Preferred Stock, par value (in dollars per share)	$ 0	$ 0
Nonvoting Preferred Stock, shares authorized (in shares)	1,000,000	1,000,000
Common Stock, par value (in dollars per share)	$ 0	$ 0
Common Stock, shares authorized (in shares)	50,000,000	50,000,000
Common Stock, shares issued (in shares)	9,086,096	9,056,421
Common Stock, shares outstanding (in shares)	6,238,413	6,221,976
Treasury Stock, shares (in shares)	2,847,683	2,834,445

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2023	Oct. 01, 2022
Operating Activities
Net income	$ 5,068,480	$ 11,925,632
Less: gain from discontinued operations	0	1,042,465
Net income from continuing operations	5,068,480	10,883,167
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	5,471,633	5,389,394
Unrecognized pension and postretirement benefits	635,677	(477,560)
Loss (Gain) on sale of equipment and other assets	331,474	(345,718)
Provision for doubtful accounts	(88,353)	35,000
Stock compensation expense	151,300	699,454
Changes in operating assets and liabilities:
Accounts receivable	116,025	(8,008,687)
Inventories	4,628,294	(5,217,395)
Prepaid expenses and other	888,342	(1,082,483)
Other assets	190,216	340,925
Accounts payable	1,499,401	(537,072)
Accrued compensation	476,714	(957,022)
Other accrued expenses	(119,557)	(1,046,094)
Net cash provided by (used in) operating activities	19,249,646	(324,091)
Investing Activities
Business Acquisition	(547,638)	0
Issuance of Notes Receivable	0	(400,000)
Payments received from notes receivable	2,265,730	748,148
Proceeds from sale of equipment	0	2,171,073
Purchases of property, plant, and equipment	(4,718,673)	(1,734,553)
Net cash (used in) provided by investing activities	(3,000,581)	784,668
Financing Activities
Principal payments on long-term debt	(74,919,004)	(5,688,866)
Principal payments on short-term borrowings (revolver)	(300,029)	(1,000,000)
Proceeds from short term borrowings (revolver)	0	10,000,000
Proceeds from new long-term debt financing	60,000,000	0
Financing leases, net	674,558	(161,906)
Purchase common stock for treasury	(245,546)	(1,637,072)
Dividends paid	(2,069,043)	(2,054,875)
Net cash used in financing activities	(16,859,064)	(542,719)
Discontinued Operations
Cash used in operating activities	0	(610,887)
Cash used in discontinued operations	0	(610,887)
Effect of exchange rate changes on cash	(36,737)	(257,093)
Net change in cash and cash equivalents	(646,737)	(950,122)
Cash and cash equivalents at beginning of period	10,187,522	6,602,429
Cash and cash equivalents at end of period ?	9,540,786	5,652,307
Supplemental disclosure of cash flow information:
Interest	2,482,362	1,753,699
Income taxes	1,321,170	3,197,375
Non-cash investing and financing activities
Right of use asset	3,579,222	1,743,518
Lease liability	$ (4,484,838)	$ (1,608,530)

Basis of Presentation

9 Months Ended

Sep. 30, 2023

Basis of Presentation

Basis of Presentation

Note A – Basis of Presentation

The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited consolidated balance sheet at that date.

Certain amounts in the 2022 financial statements have been reclassified to conform with the 2023 presentation with no impact or change to previously reported net income or shareholders’ equity.

Discontinued Operations

9 Months Ended

Sep. 30, 2023

Discontinued Operations

Discontinued Operations

Note B – Discontinued Operations

Summarized Financial Information of Discontinued Operations

The following table represents income from discontinued operations, net of tax:

	Three Months Ended					Nine Months Ended
	September 30, 2023		October 1, 2022			September 30, 2023		October 1, 2022
	(unaudited)		(unaudited)			(unaudited)		(unaudited)
Net sales	$	-	$	2,516,064		$	-	$	7,356,491
Cost of products sold		-		(1,656,694	)		-		(4,943,751	)
Gross margin		-		859,370			-		2,412,740

Selling, general and administrative expenses		-		(311,190	)		-		(857,747	)
Operating income		-		548,180			-		1,554,993

Interest expense		-		(52,360	)		-		(128,424	)
Gain from discontinued operations before income taxes		-		495,820			-		1,426,569

Income tax expense		-		(133,500	)		-		(384,104	)
Income from discontinued operations, net of tax	$	-	$	362,320		$	-	$	1,042,465

Earnings per Share

9 Months Ended

Sep. 30, 2023

Total earnings per share:

Earnings per Share

Note C – Earnings Per Share

The denominators used to calculate earnings per share are as follows:

Three Months Ended

Nine Months Ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

Basic:

Weighted average shares outstanding

6,241,796

6,209,014

6,233,493

6,226,493

Diluted:

Weighted average shares outstanding

6,241,796

6,209,014

6,233,493

6,226,493

Dilutive stock appreciation rights

32,462

14,102

32,462

14,102

Denominator for diluted earnings per share

6,274,258

6,223,116

6,265,955

6,240,595

Inventories

9 Months Ended

Sep. 30, 2023

Inventories

Inventories

Note D – Inventories

Inventories from continuing operations consist of the following components:

	September 30, 2023		December 31, 2022

Raw material and component parts	$	24,325,177	$	25,924,696
Work in process		8,747,860		9,323,082
Finished goods		27,575,562		29,388,813
Total inventories	$	60,648,599	$	64,636,591

Goodwill

9 Months Ended

Sep. 30, 2023

Goodwill

Goodwill

Note E - Goodwill

Leases

9 Months Ended

Sep. 30, 2023

Leases

Leases

Note F – Leases

Debt

9 Months Ended

Sep. 30, 2023

Debt

Debt

Note G - Debt

Stock Options and awards

9 Months Ended

Sep. 30, 2023

Stock Options and awards

Stock Options and awards

Note H - Stock Options and Awards

As of September 30, 2023, there were 889,992 shares of Company common stock reserved and available for future grant under the 2020 Plan.

The following tables set forth the outstanding SARs for the period specified:

	Nine Months Ended					Year Ended
	September 30, 2023					December 31, 2022
	Units			Weighted Average Exercise Price		Units			Weighted Average Exercise Price
Outstanding at beginning of period		146,166		$	23.22		180,833		$	22.88
Expired		(50,833	)		24.24		-			-
Exercised		(33,333	)		21.10		(16,667	)		21.20
Forfeited		(49,000	)		22.80		(18,000	)		21.74
Outstanding at end of period		13,000			24.19		146,166			23.22

SARs Outstanding and Exercisable
Range of Exercise Prices	Outstanding as of September 30, 2023		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Exercisable as of September 30, 2023		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price

$19.44 - $26.30		13,000		0.7	$	24.19		13,000		0.7	$	24.19

The following tables set forth the outstanding stock awards for the period specified:

	Nine Months Ended			Year Ended
	September 30, 2023			December 31, 2022
	Shares			Shares
Outstanding at beginning of period		64,500			27,300
Issued		79,500			43,300
Exercised		(10,600	)		-
Forfeited		(47,300	)		(6,100	)
Outstanding at end of period		86,100			64,500

As of September 30, 2023, outstanding SARs and stock awards had an intrinsic value of $1,562,715.

Share Repurchase Program

9 Months Ended

Sep. 30, 2023

Share Repurchase Program

Share Repurchase Program

Note I – Share Repurchase Program

Below is a summary of the Company’s shares repurchased during the third quarter of 2023 under the prior share repurchase program.

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that may yet be Purchased Under the Plans or Programs
Balance as of July 1, 2023		139,716	$	24.61		139,716		60,284

July 2, 2023 – September 30, 2023		-		-		-		(60,284	)

Balance as of September 30, 2023		139,716	$	24.61		139,716		-

Below is a summary of the Company’s shares repurchased during the third quarter of 2023 under the new share repurchase program.

Period

Total Number of Shares Purchased

Average Price Paid Per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Number of Shares that may yet be Purchased Under the Plans or Programs

Balance as of July 1, 2023

July 2, 2023 – September 30, 2023

13,238

18.55

13,238

186,762

Balance as of September 30, 2023

13,238

18.55

13,238

186,762

Revenue Recognition

9 Months Ended

Sep. 30, 2023

Revenue Recognition

Revenue Recognition

Note J – Revenue Recognition

The Company has no future performance obligations and does not capitalize costs to obtain or fulfill contracts.

Income Taxes

9 Months Ended

Sep. 30, 2023

Income Taxes

Income Taxes

Note K - Income Taxes

Retirement Benefit Plans

9 Months Ended

Sep. 30, 2023

Retirement Benefit Plans

Retirement Benefit Plans

Note L - Retirement Benefit Plans

The Company also provides health care and life insurance for retired salaried employees in the United States who meet specific eligibility requirements.

Significant disclosures relating to these benefit plans for the first three months and first nine months 2023 and 2022 are as follows:

	Pension Benefits
	Three Months Ended						Nine Months Ended
	September 30, 2023			October 1, 2022			September 30, 2023			October 1, 2022
Service cost	$	216,153		$	269,744		$	648,459		$	809,231
Interest cost		990,053			608,188			2,970,160			1,824,568
Expected return on plan assets		(1,049,016	)		(1,460,658	)		(3,147,046	)		(4,381,980	)
Amortization of prior service cost		-			16,563			-			49,689
Amortization of the net loss		342,866			390,075			1,028,596			1,170,225
Net periodic benefit cost (benefit)	$	500,056		$	(176,088	)	$	1,500,169		$	(528,267	)

	Other Postretirement Benefits
	Three Months Ended						Nine Months Ended
	September 30, 2023			October 1, 2022			September 30, 2023			October 1, 2022
Service cost	$	6,486		$	13,323		$	19,458		$	39,969
Interest cost		14,533			10,988			43,599			32,964
Expected return on plan assets		(4,849	)		(4,400	)		(14,547	)		(13,200	)
Amortization of prior service cost		1,060			1,060			3,180			3,180
Amortization of the net loss		(16,895	)		(2,054	)		(50,685	)		(6,162	)
Net periodic benefit cost	$	335		$	18,917		$	1,005		$	56,751

The Company made contributions to the plan as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Regular matching contribution	$	241,487	$	149,673	$	747,913	$	522,327
Transitional credit contribution		23,271		28,144		83,935		107,886
Non-discretionary contribution		83,302		16,715		654,552		376,861
Total contributions for the period	$	348,060	$	194,532	$	1,486,400	$	1,007,074

The non-discretionary contribution of $328,953 made in the nine months ended September 30, 2023, was accrued for, and expensed in the prior fiscal year.

Effective January 1, 2023, the non-discretionary contributions are being contributed on a weekly basis.

Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2023

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Note M - Recent Accounting Pronouncements

Concentration of risk

9 Months Ended

Sep. 30, 2023

Concentration of risk

Concentration of risk

Note N - Concentration of Risk

Credit Risk

Interest Rate Risk

Currency Exchange Rate Risk

Business Acquisition

9 Months Ended

Sep. 30, 2023

Business Acquisition

Business Acquisition

Note O – Business Acquisition

Neither the actual results nor the pro forma effects of the Sureflex acquisition are material to the Company’s financial statements.

Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2023

Discontinued Operations

Schedule of income from discontinued operations

	Three Months Ended					Nine Months Ended
	September 30, 2023		October 1, 2022			September 30, 2023		October 1, 2022
	(unaudited)		(unaudited)			(unaudited)		(unaudited)
Net sales	$	-	$	2,516,064		$	-	$	7,356,491
Cost of products sold		-		(1,656,694	)		-		(4,943,751	)
Gross margin		-		859,370			-		2,412,740

Selling, general and administrative expenses		-		(311,190	)		-		(857,747	)
Operating income		-		548,180			-		1,554,993

Interest expense		-		(52,360	)		-		(128,424	)
Gain from discontinued operations before income taxes		-		495,820			-		1,426,569

Income tax expense		-		(133,500	)		-		(384,104	)
Income from discontinued operations, net of tax	$	-	$	362,320		$	-	$	1,042,465

Earnings per Share (Tables)

9 Months Ended

Sep. 30, 2023

Total earnings per share:

Schedule of Denominators Used in Earnings Per Share Computations

Three Months Ended

Nine Months Ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

Basic:

Weighted average shares outstanding

6,241,796

6,209,014

6,233,493

6,226,493

Diluted:

Weighted average shares outstanding

6,241,796

6,209,014

6,233,493

6,226,493

Dilutive stock appreciation rights

32,462

14,102

32,462

14,102

Denominator for diluted earnings per share

6,274,258

6,223,116

6,265,955

6,240,595

Inventories (Tables)

9 Months Ended

Sep. 30, 2023

Inventories

Schedule of Inventories from continuing operations

	September 30, 2023		December 31, 2022

Raw material and component parts	$	24,325,177	$	25,924,696
Work in process		8,747,860		9,323,082
Finished goods		27,575,562		29,388,813
Total inventories	$	60,648,599	$	64,636,591

Stock Options and awards (Tables)

9 Months Ended

Sep. 30, 2023

Stock Options and awards

Schedule of SARs Outstanding and Exercisable

	Nine Months Ended					Year Ended
	September 30, 2023					December 31, 2022
	Units			Weighted Average Exercise Price		Units			Weighted Average Exercise Price
Outstanding at beginning of period		146,166		$	23.22		180,833		$	22.88
Expired		(50,833	)		24.24		-			-
Exercised		(33,333	)		21.10		(16,667	)		21.20
Forfeited		(49,000	)		22.80		(18,000	)		21.74
Outstanding at end of period		13,000			24.19		146,166			23.22

SARs Outstanding and Exercisable
Range of Exercise Prices	Outstanding as of September 30, 2023		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Exercisable as of September 30, 2023		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price

$19.44 - $26.30		13,000		0.7	$	24.19		13,000		0.7	$	24.19

Schedule of Outstanding Stock Grants

	Nine Months Ended			Year Ended
	September 30, 2023			December 31, 2022
	Shares			Shares
Outstanding at beginning of period		64,500			27,300
Issued		79,500			43,300
Exercised		(10,600	)		-
Forfeited		(47,300	)		(6,100	)
Outstanding at end of period		86,100			64,500

Share Repurchase Program (Tables)

9 Months Ended

Sep. 30, 2023

Share Repurchase Program

Schedule of Company's shares repurchased

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that may yet be Purchased Under the Plans or Programs
Balance as of July 1, 2023		139,716	$	24.61		139,716		60,284

July 2, 2023 – September 30, 2023		-		-		-		(60,284	)

Balance as of September 30, 2023		139,716	$	24.61		139,716		-

Period

Total Number of Shares Purchased

Average Price Paid Per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Number of Shares that may yet be Purchased Under the Plans or Programs

Balance as of July 1, 2023

July 2, 2023 – September 30, 2023

13,238

18.55

13,238

186,762

Balance as of September 30, 2023

13,238

18.55

13,238

186,762

Retirement Benefit Plans (Tables)

9 Months Ended

Sep. 30, 2023

Retirement Benefit Plans

Schedule of Significant Disclosures Relating to Benefit Plans

	Pension Benefits
	Three Months Ended						Nine Months Ended
	September 30, 2023			October 1, 2022			September 30, 2023			October 1, 2022
Service cost	$	216,153		$	269,744		$	648,459		$	809,231
Interest cost		990,053			608,188			2,970,160			1,824,568
Expected return on plan assets		(1,049,016	)		(1,460,658	)		(3,147,046	)		(4,381,980	)
Amortization of prior service cost		-			16,563			-			49,689
Amortization of the net loss		342,866			390,075			1,028,596			1,170,225
Net periodic benefit cost (benefit)	$	500,056		$	(176,088	)	$	1,500,169		$	(528,267	)

	Other Postretirement Benefits
	Three Months Ended						Nine Months Ended
	September 30, 2023			October 1, 2022			September 30, 2023			October 1, 2022
Service cost	$	6,486		$	13,323		$	19,458		$	39,969
Interest cost		14,533			10,988			43,599			32,964
Expected return on plan assets		(4,849	)		(4,400	)		(14,547	)		(13,200	)
Amortization of prior service cost		1,060			1,060			3,180			3,180
Amortization of the net loss		(16,895	)		(2,054	)		(50,685	)		(6,162	)
Net periodic benefit cost	$	335		$	18,917		$	1,005		$	56,751

Schedule of Company made contributions towards benefit plans

	Three Months Ended				Nine Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Regular matching contribution	$	241,487	$	149,673	$	747,913	$	522,327
Transitional credit contribution		23,271		28,144		83,935		107,886
Non-discretionary contribution		83,302		16,715		654,552		376,861
Total contributions for the period	$	348,060	$	194,532	$	1,486,400	$	1,007,074

Discontinued Operations (Details) - USD ($)	3 Months Ended				9 Months Ended
Discontinued Operations (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2023	Oct. 01, 2022	Oct. 01, 2022	Sep. 30, 2023	Oct. 01, 2022	Oct. 01, 2022
Net Sales	$ 65,635,680		$ 71,636,746		$ 206,468,838	$ 210,191,448
Cost of products sold	(49,260,313)		(55,056,160)		(159,447,930)	(163,047,360)
Gross margin	16,375,367		16,580,586		47,020,908	47,144,088
Selling general and administrative expenses	(9,700,342)		(10,121,683)		(32,927,015)	(30,129,112)
Operating income	5,249,866		5,446,942		9,836,425	13,846,643
Interest expense	(1,067,779)		(645,773)		(2,574,890)	(1,583,894)
Income tax (expense) benefit	(984,289)		(1,423,363)		(1,678,698)	(3,498,365)
Income (loss) from discontinued operations, net of tax	$ 0		$ 362,320		0	$ 1,042,465
Discontinued Operation [Member]
Net Sales		$ 0		$ 2,516,064	0		$ 7,356,491
Cost of products sold		0		(1,656,694)	0		(4,943,751)
Gross margin		0		859,370	0		2,412,740
Selling general and administrative expenses		0		(311,190)	0		(857,747)
Operating income		0		548,180	0		1,554,993
Interest expense		0		(52,360)	0		(128,424)
Gain from discontinued operations before income taxes		0		495,820	0		1,426,569
Income tax (expense) benefit		0		(133,500)	0		(384,104)
Income (loss) from discontinued operations, net of tax		$ 0		$ 362,320	$ 0		$ 1,042,465

Earnings Per Share (Details) - shares	3 Months Ended		9 Months Ended
Earnings Per Share (Details) - shares	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Basic [abstract]
Weighted Average Shares Outstanding	6,241,796	6,209,014	6,233,493	6,226,493
Diluted [abstract]
Weighted Average Shares Outstanding	6,241,796	6,209,014	6,233,493	6,226,493
Dilutive Stock Appreciation Rights	32,462	14,102	32,462	14,102
Denominator For Diluted Earnings Per Share (in Shares)	6,274,258	6,223,116	6,265,955	6,240,595

Inventories (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Inventories
Raw Material And Component Parts	$ 24,325,177	$ 25,924,696
Work In Process	8,747,860	9,323,082
Finished Goods	27,575,562	29,388,813
Total Inventories	$ 60,648,599	$ 64,636,591

Goodwill (Details Narrative) $ in Millions	9 Months Ended
Goodwill (Details Narrative) $ in Millions	Sep. 30, 2023 USD ($)
Goodwill
Goodwill writeoff	$ 0.5
Goodwill, Net	70.8
Goodwill acquisition	$ 0.5

Leases (Details Narrative) $ in Millions	9 Months Ended
Leases (Details Narrative) $ in Millions	Sep. 30, 2023 USD ($)
Lease Liability	$ 15.8
Operating Lease Term	12 months
Lease weighted average remaining lease terms	7 years 3 months 18 days
2023	$ 1.0
2024	3.6
2025	2.4
2026	1.8
2027	1.5
Thereafter	$ 6.5
Minimum [Member]
Interest Rate	5.00%
Maximum [Member]
Interest Rate	8.25%
Stock Options [Member]
Lease Liability	$ 0.9

Debt (Details Narrative) - USD ($)	1 Months Ended	9 Months Ended
Debt (Details Narrative) - USD ($)	Jun. 16, 2023	Sep. 30, 2023
Credit Agreement [Member]
Ratio Description		applicable margin of 1.875% to 2.625%, with such margins determined based on the Company’s senior net leverage ratio. The Company’s obligations under the Credit Agreement are secured by a lien on certain of the Company’s and its subsidiaries’ assets pursuant to a Pledge and Security Agreement
Revolving Credit Loan [Member]
Annual Commitment Fee Percentage	0.30%
Revolving Credit Loan [Member] \| Minimum [Member] \| LIBOR [Member]
Basis Spread On Variable Rate		0.875
Revolving Credit Loan [Member] \| Maximum [Member] \| LIBOR [Member]
Basis Spread On Variable Rate		1.625
Term Loan [Member] \| September 30, 2023 through June 30, 2024 [Member]
Quarterly Principal Payment		$ 750,000
Term Loan [Member] \| September 30, 2025 through June 30, 2027 [Member]
Quarterly Principal Payment		1,125,000
Term Loan [Member] \| September 30, 2027 through March 31, 2028 [Member]
Quarterly Principal Payment		$ 1,500,000
Term Loan [Member] \| Minimum [Member]
Variable Interest Rate Based On Senior Net Leverage Ratio		1.875
Term Loan [Member] \| Maximum [Member]
Variable Interest Rate Based On Senior Net Leverage Ratio		2.625
Interest Rate Swap [Member] \| Term Loan [Member]
Term portion loan	$ 60,000,000
Revolving Commitment Portion	$ 30,000,000

Stock Options and Awards (Details) - $ / shares	9 Months Ended	12 Months Ended
Stock Options and Awards (Details) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Number Of Units, Forfeited	(47,300)	(6,100)
Stock Options [Member]
Number Of Units Outstanding At Beginning Of Period	146,166	180,833
Number Of Units, Expired	(50,833)
Number Of Units, Exercised	(33,333)	(16,667)
Number Of Units, Forfeited	(49,000)	(18,000)
Number Of Units Outstanding At End Of Period	13,000	146,166
Weighted Average Exercise Price, Beginning Balance	$ 23.22	$ 22.88
Weighted Average Exercise Price,Expired	24.24	0
Weighted Average Exercise Price, Exercised	21.10	21.20
Weighted Average Exercise Price, Forfeited	22.80	21.74
Weighted Average Exercise Price, Ending Balance	$ 24.19	$ 23.22

Stock Options and Awards (Details 1) - SAR [Member]	9 Months Ended
Stock Options and Awards (Details 1) - SAR [Member]	Sep. 30, 2023 $ / shares shares
Outstanding \| shares	13,000
Weighted- Average Remaining Contractual Life, Oustanding	8 months 12 days
Weighted Average Exercise Price, Oustanding	$ 24.19
Exercisable \| shares	13,000
Weighted- Average Remaining Contractual Life, Exercisable	8 months 12 days
Weighted Average Exercise Price, Exercisable	$ 24.19
Minimum [Member]
Range Of Exercise Prices	19.44
Maximum [Member]
Range Of Exercise Prices	$ 26.30

Stock Options and Awards (Details 2) - shares	9 Months Ended	12 Months Ended
Stock Options and Awards (Details 2) - shares	Sep. 30, 2023	Dec. 31, 2022
Stock Options and awards
Number Of Units Outstanding At Beginning Of Period	64,500	27,300
Number Of Units, Issued	79,500	43,300
Number Of Units, Exercised	(10,600)
Number Of Units, Forfeited	(47,300)	(6,100)
Number Of Units Outstanding At End Of Period	86,100	64,500

Stock Options and Awards (Details Narrative) - USD ($)	9 Months Ended				12 Months Ended
Stock Options and Awards (Details Narrative) - USD ($)	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2022	Dec. 31, 2022
Intrinsic value	$ 1,562,715	$ 1,562,715
Number Of Units, Issued		79,500			43,300
Stock Compensation Expense	$ 5,000	$ (158,000)	$ 381,000	$ 131,000
2020 Plan [Member]
Number Of Units, Issued		79,500		43,300
Common Stock Shares Reserved For Future Issuance	889,992	889,992

Share Repurchase Program (Details)	3 Months Ended
Share Repurchase Program (Details)	Sep. 30, 2023 $ / shares shares
Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs [Member]
Maximum Number Of Shares That May Yet Be Purchased Under The Plans Or Programs, Beginning Balance	60,284
Maximum Number Of Shares That May Yet Be Purchased Under The Plans Or Programs, during period	(60,284)
Average Price Paid Per Share [Member]
Average Price Paid Per Share, Beginning Balance \| $ / shares	$ 24.61
Average Price Paid Per Share During The Period \| $ / shares	0
Average Price Paid Per Share, Ending Balance \| $ / shares	$ 24.61
Total Number of Shares Purchased [Member]
Total Number Of Shares Purchased, Beginning Balance	139,716
Total Number Of Shares Purchased,ending Balance	139,716
Total Number of Shares Purchased As Part of Publicly Announced Plansor Programs [Member]
Total Number Of Shares Purchased As Part Of Publicly Announced Plansor Programs, Beginning Balance	139,716
Total Number Of Shares Purchased As Part Of Publicly Announced Plansor Programs, Ending Balance	139,716

Share Repurchase Program (Details 1)	3 Months Ended
Share Repurchase Program (Details 1)	Sep. 30, 2023 $ / shares shares
Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs [Member]
Maximum Number Of Shares That May Yet Be Purchased Under The Plans Or Programs, Beginning Balance	60,284
Maximum Number Of Shares That May Yet Be Purchased Under The Plans Or Programs, during period	(60,284)
Total Number of Shares Purchased [Member]
Total Number Of Shares Purchased, Beginning Balance	139,716
Total Number Of Shares Purchased,ending Balance	139,716
September 30, 2023 [Member] \| Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs [Member]
Maximum Number Of Shares That May Yet Be Purchased Under The Plans Or Programs, during period	186,762
Maximum Number Of Shares That May Yet Be Purchased Under The Plans Or Programs, Ending Balance	186,762
September 30, 2023 [Member] \| Average Price Paid Per Share [Member]
Average Price Paid Per Share During The Period \| $ / shares	$ 18.55
Average Price Paid Per Share, Ending Balance \| $ / shares	$ 18.55
September 30, 2023 [Member] \| Total Number of Shares Purchased [Member]
Total Number Of Shares Purchased, during period	13,238
Total Number Of Shares Purchased,ending Balance	13,238
Total Number of Shares Purchased As Part of Publicly Announced Plansor Programs [Member]
Total Number Of Shares Purchased As Part Of Publicly Announced Plansor Programs, Beginning Balance	139,716
Total Number Of Shares Purchased As Part Of Publicly Announced Plansor Programs, Ending Balance	139,716
Total Number of Shares Purchased As Part of Publicly Announced Plansor Programs [Member] \| September 30, 2023 [Member]
Total Number Of Shares Purchased As Part Of Publicly Announced Plansor Programs, Ending Balance	13,238
Total Number Of Shares Purchased As Part Of Publicly Announced Plansor Programs, During period	13,238

Share Repurchase Program (Details Narrative)	Aug. 21, 2023 shares
Share Repurchase Program
Number Of Shares Authorized To Be Repurchased	200,000

Retirement Benefit Plans (Details) - USD ($)	3 Months Ended		9 Months Ended
Retirement Benefit Plans (Details) - USD ($)	Sep. 30, 2023	Oct. 01, 2022	Sep. 30, 2023	Oct. 01, 2022
Pension Benefit [Member]
Service Cost	$ 216,153	$ 269,744	$ 648,459	$ 809,231
Interest Cost	990,053	608,188	2,970,160	1,824,568
Expected Return On Plan Assets	(1,049,016)	(1,460,658)	(3,147,046)	(4,381,980)
Amortization Of Prior Service Cost	0	16,563	0	49,689
Amortization Of The Net Loss	342,866	390,075	1,028,596	1,170,225
Net Periodic Benefit Cost	(500,056)	176,088	(1,500,169)	528,267
Other Postretirement Benefit [Member]
Service Cost	6,486	13,323	19,458	39,969
Interest Cost	14,533	10,988	43,599	32,964
Expected Return On Plan Assets	(4,849)	(4,400)	(14,547)	(13,200)
Amortization Of The Net Loss	1,060	1,060	3,180	3,180
Net Periodic Benefit Cost	16,895	2,054	50,685	6,162
Gain On Significant Event	$ 335	$ 18,917	$ 1,005	$ 56,751

Retirement Benefit Plans (Details 1) - USD ($)	3 Months Ended		9 Months Ended
Retirement Benefit Plans (Details 1) - USD ($)	Sep. 30, 2023	Oct. 01, 2022	Sep. 30, 2023	Oct. 01, 2022
Total Contributions For The Period	$ 348,060	$ 194,532	$ 1,486,400	$ 1,007,074
Regular Matching Contributions [Member]
Total Contributions For The Period	241,487	149,673	747,913	522,327
Transitional Credit Contributions [Member]
Total Contributions For The Period	23,271	28,144	83,935	107,886
Non-Discretionary Contributions [Member]
Total Contributions For The Period	$ 83,302	$ 16,715	$ 654,552	$ 376,861

Retirement Benefit Plans (Details Narrative) - USD ($)	9 Months Ended	12 Months Ended
Retirement Benefit Plans (Details Narrative) - USD ($)	Sep. 30, 2023	Jan. 03, 2023
Non-discretionary contribution	$ 328,953
Pension Benefit [Member]
Cash Contributions	800,000	$ 1,300,000
Other Postretirement Benefit [Member]
Cash Contributions	$ 32,000	$ 50,000

Concentration of Risk (Details Narrative) - USD ($)	9 Months Ended	12 Months Ended
Concentration of Risk (Details Narrative) - USD ($)	Sep. 30, 2023	Dec. 31, 2021
Federal Deposit Insurance Corporation	$ 250,000
Minimum [Member] \| Revolving Credit Loan [Member]
Debt bear interest on variable rate	1.87%
Maximum [Member] \| Revolving Credit Loan [Member]
Debt bear interest on variable rate	2.62%
One Customers [Member] \| Accounts Receivable [Member] \| Customer Concentration Risk [Member]
Threshold Percentage Of Concentration Risk	12.00%	14.00%

Business Acquisition (Details Narrative) - USD ($)	1 Months Ended	9 Months Ended
Business Acquisition (Details Narrative) - USD ($)	Jun. 29, 2023	Sep. 30, 2023	Oct. 01, 2022
Business Acquisition
Business acquisition net assets acquired	$ 500,000	$ 547,638	$ 0