Good day, ladies and gentlemen. And welcome to The Eastern Company's Third Quarter Fiscal Year 2019 Earnings Conference Call. [Operator Instructions] At this time, it my pleasure to turn the floor over to Chris Moulton, Head of Corporate Development and Investor Relations. Sir, the floor is yours.

Thank you. Good morning, and thank everyone for joining us. Speaking today will be Eastern’s President and CEO, Gus Vlak; and our CFO, John Sullivan. After that, we'll open the call for questions. Please note that some of the information you will hear during our discussion today will consist of forward-looking statements about the Company's future financial performance and business prospects, including without limitation statements regarding revenue, gross margin, operating expenses, other income expense, taxes and business outlook. These forward-looking statements are subject to risks and uncertainties that could cause actual results or trends to differ significantly from those projected in these forward-looking statements. For more information regarding these risks and uncertainties, please refer to risk factors discussed in our Form 10-Q, filed yesterday and also in our most recent 10-K. With that, I will turn the call over to Gus for opening remarks.

Thanks Chris, and good morning to those of you who have joined us on the phone and those participating via the web. I'll start this morning with an overview of our sales and earnings for the third quarter and then update you on our recent acquisition of Big 3 Precision. Adding this leading provider of engineered turnkey packaging to our portfolio of businesses was a significant step forward for us. After that, I'll take a few minutes to talk about some of the new products our businesses have recently launched. Together they provide a good illustration of the approach we're taking to respond to our customers needs, bring new technologies and materials to market and ensure the vitality of our businesses. So looking at the financial results, net sales for the quarter were $60.7 million, that's an increase of almost 6% from the 2018 period. Our growth was led by the Industrial Hardware segment, which includes one month of Big 3 Precision results, partly offset by some of the softness in several end markets. In addition, we realized growth through new product launches with Class 8 truck customers, and experience continued strength in commercial transportation markets. On the bottom line, our results were solid with an increase of more than 11% to 67% per diluted share, reflecting both revenue growth, our continued focus on productivity, and our successful pass through of the record trade tariffs that we paid to the U.S. government in the third quarter. Third quarter earnings also include a one-time nonrecurring transaction costs of approximately $800,000, or roughly $0.13 per diluted share. This double-digit increase demonstrates the power of our business model and our focus on investing in areas that offer long-term growth opportunities. Now turning to Big 3 Precision, as you know during the past several…

Thank you, Gus. On a consolidated basis, net sales in the third quarter of 2019 increased 6% to $60.7 million as compared to $57.4 million in the third quarter of 2018. The increase in net sales was driven by continued strengthen the industrial Hardware and Metal product segments offset by a decline in net sales in the Security Product segment. Total sales volume in the third quarter of 2019 decreased by 2% due to a decline in sales volume in the Security Product segment, a decline in the recreational vehicle market and the decline in our composite panel business, which more than offset the addition of one month sales related to the acquisition of Big 3 Precision. New Products contributed 6% to the quarter sales increase. New product sales included a hood mount truck mirror, a molded tool box latching system for pickup trucks, and electronic switch lock, a key lock for storage inventory, a canopy lock assembly for vehicles and various industrial castings for the agricultural market. On a segment level basis, net sales in the Industrial Hardware segment increased by 15% in the third quarter of 2019, as compared to the net sales in the third quarter 2018 as a result of strong sales growth in Class A truck distribution and specialty vehicle markets, in addition to the acquisition of Big 3 Precision. Net sale decreased in the Security Product segment by 16% in the third quarter of 2019 as compared to the net sales in the third quarter of 2018. Sales from the Load N Lock business we acquired in June of 2018 partially offset the impact of the lower demand for commercial laundry products, a decline in our point-of-sale Security Products, the termination of a supply contract to manufacture mechatronic padlock systems for cell phone tower…

Thank you, John. Operator, we'd now like to open the call for questions by chance we have any telephone participants.

[Operator Instructions]

While we wait, we do have a few questions that have come in via the webcast. So let's tackle those first. One, there's been commentary lately about the possibility of an economic slowdown, if not a recession. How do you expect the Eastern's portfolio of businesses to perform under these economic conditions?

Thank you. Well, a lot of our products ultimately supports a very wide scope of economic activity including commercial transportation, oil and gas, construction, and of course, at the end of the line consumer ultimately drives a lot of fundamental demand. Given how our products are used, and the broad range of markets that we support, we're less exposed to any one shock and more impacted by overall economic activity and that would affect our demand. Having said that, we fight hard to grow share, launch more competitive products, and vigorously control costs in these economic conditions. We're trying to continue to work hard to deliver earnings growth, no matter what conditions we operate in.

All right, operator by chance, do we have any telephone participants or questions?

It doesn't look like we have any questions coming in.

Okay, we do have a couple more questions in the webcast. Second question, in your September call, you said you expected Big 3 Precision to be accretive to your ETFs by at least $0.40 for fiscal 2020. Is that still the case? Or do you now expect it to be even higher?

We do expect the acquisition to be accretive to 2020 EPS by at least $0.40. And we are confident in that number and we're working hard to try to beat that number.

Right, we have another webcast question, having completed the acquisition of Big 3 Precision, are you planning to target a similarly sized transaction over the next 12 months or you think it'd be better to digest Big 3 before looking for next acquisition candidate?

So we believe that Big 3 Precision offers an especially attractive opportunity for us to create value both through organic growth and through bolt-on acquisitions, and that's really where we are currently focusing.

Operator by chance, do we have any other questions on the telephone

[Operator Instructions]

Yes, we do have another webcast question. Can we expect that the non-recurring expenses, which were $3.8 million will not extend into the fourth quarter. Have all the write-offs been taken or can we expect zero non-recurring expenses to be over. And then the second part, what was the reduction in debt in the fourth quarter - third quarter I believe that's?

Well, as far as the non-recurring from the write-offs that we incurred in the second quarter and third quarter. Those are over with, we don't anticipate any further write-offs. There are probably a few more acquisition related expenses trickling in that, that we expect to come into the fourth quarter, but minimal.

Then reduction debt reduction in the - that was third quarter?

Not quite sure what that means. I mean, we did pay off debt of approximately $9 million last year or during the year, $8 million was on an accelerated basis. And then in the third quarter it was the acquisition of Big 3 Precision. We refinanced our entire debt and paid for the acquisition of $81 million and to refinance about $19 million that was still standing on our previous debt.

All right. And then we have another question, will Big 3 Precision be accretive in the fourth quarter after expenses?

Yes, it will be. We haven't quite determined, yet how much, but we believe that it's on track to be accretive in the fourth quarter.

And then we have one other question, which of your companies are you particularly excited about in terms of future new prospects and new customers?

So we believe each of our companies has opportunities. And as part of our portfolio I believe there are a couple of companies that are very well positioned and which have a quickest line of sight into opportunities. Our Class 8 truck mirror business has been growing very rapidly in the last year and it's well positioned to continue to expand its business over the next couple of years. Even while that market overall demand in that market is declining, we think that business is well positioned to grow pretty significantly in the foreseeable future. We also think that some of the businesses that we've been trying to reposition, like Illinois Lock is entering higher growth markets, which we think positions it well for accelerated growth in the future.

All right, operator, do we have any callers via telephone?

There are no live questions.

Okay, and it looks as though we have no further questions via webcast. So I will turn the call over to Gus for closing remarks.

Thanks. Thanks, Chris and thanks, everyone, for joining us this morning. As you've heard, we're carefully following our roadmap to increase shareholder value by optimizing our portfolio of businesses, strengthening our execution and keeping our balance sheet strong. Before wrapping up, I want to mention we’ll be participating in the ROTH Capital's Technology and New Industrial Conference in New York next Wednesday. We'll issue an advisory announcement with details later today. And I look forward to seeing some of you guys there. Thank you. And we hope you will join us again next quarter to review the results of the fourth quarter and fiscal year 2019.

With that operator we’ll now turn the call back to you. Thank you.

Thank you. This concludes today's conference call. We thank you for your participation. You may disconnect your life at this time. And have a great day.