The L.S. Starrett Company Announces Fiscal 2023 Second Quarter Results

Rhea-AI Summary

The L.S. Starrett Company (NYSE: SCX) reported financial results for the second quarter of fiscal 2023, ending December 31, 2022.

Net sales reached $66.8 million, a 9% increase year-over-year, with North America performing strongly at 21% growth, contrasting a 5% decline in international sales, particularly in Europe, due to economic challenges and the Ukraine conflict.

Gross margin improved to 32.3%, up 140 basis points from the prior year, attributed to price increases despite ongoing inflationary pressures. Operating income rose to 8.9%, net income was $3.1 million, or $0.42 per diluted share, reflecting a 23.9% increase from last year.

Positive

• Net sales increased by 9% year-over-year to $66.8 million.
• North American sales surged by 21%, driven by high demand for precision granite products.
• Gross margin improved to 32.3%, up 140 basis points from the prior year.
• Operating income increased to 8.9%, a 200 basis point improvement.
• Net income rose by 23.9% to $3.1 million, translating to $0.42 per diluted share.

Negative

• International net sales declined by 5%, particularly affected by economic conditions and the Ukraine conflict.

ATHOL, Mass.--(BUSINESS WIRE)-- The L.S. Starrett Company (NYSE: SCX) (“Starrett” or “the Company”) a global innovator, manufacturer and marketer of precision measuring tools, cutting tools and equipment, and high-end metrology solutions for industrial, professional, and consumer markets, today announced operating results for the quarter ended December 31, 2022.

Fiscal 2023 Second Quarter Financial Highlights

• Net sales of $66.8 million increased 9% compared to the second quarter of the prior year. North American businesses continued to outperform the prior year with an increase in net sales of 21%, while net sales at the Company’s international operations declined by 5%. International net sales were negatively impacted in Europe as a result of economic conditions and the on-going war in Ukraine. North American net sales were supported by continued high demand for precision granite products and stable demand for the Company’s portfolio of precision measuring tools and saw blades sold through industrial distribution.
• Gross margin for the quarter was 32.3%, an improvement of 140 basis points from 30.9% in the second quarter of the prior year. The Company improved gross margin through a series of price increases, despite continuing to experience macro-economic and inflationary pressures on most production inputs.
• Operating income for the quarter was 8.9%, an improvement of 200 basis points compared to 6.9% in the second quarter of the prior year. Primary drivers were improved gross margin and reduced Selling General and Administrative costs as a percentage of net sales by 80 basis points, from 24.1% in the second quarter last year to 23.3% in the second quarter this fiscal year.
• Net income for the quarter was $3.1 million, or $0.42 per diluted share, an improvement of $0.6 million, or 23.9%, compared to net income of $2.5 million, or $0.34 per diluted share, for the second quarter in the prior year.

“Our improved performance in the second quarter is the result of solid execution throughout our global business. While the macro-economic landscape remains volatile, our personnel throughout the globe continue to navigate the challenges and are focused on continuing our positive trajectory in the second half of our fiscal year,” said Douglas A. Starrett, President and Chief Executive Officer

About The L.S. Starrett Company:

Founded in 1880 by Laroy S. Starrett and incorporated in 1929, The L.S. Starrett Company is a leading manufacturer of high-end precision tools, cutting equipment, and metrology systems for industrial, professional and consumer markets and is engaged in the business of manufacturing over 5,000 different products for industrial, professional and consumer markets. The Company has a long history of global manufacturing experience and currently operates three major global manufacturing plants. All subsidiaries principally serve the global manufacturing industrial base with concentration in the metalworking, construction, machinery, equipment, aerospace and automotive markets. The Company offers its broad array of measuring and cutting products to the market through multiple channels of distribution throughout the world. Starrett is a brand recognized around the world for precision, quality and innovation. For more information, please visit: https://www.starrett.com.

Forward-Looking Statements:

This press release may contain forward-looking statements concerning the Company’s expectations, anticipations, intentions, beliefs or strategies regarding the future. These forward-looking statements are based on its current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those that it has anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond its control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements, and other risks and uncertainties described in its Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on August 25, 2022 in the section entitled "Risk Factors," and in its other filings from time to time with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should any of its assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements.

L.S. Starrett Company Summary of Operations Quarter Ended December 31, 2022 TABLE 1
	Quarter Ended 12/31/2022			Comparison to Quarter Ended 12/31/2021								Fiscal 2023 YTD 12/31/2022			Comparison Fiscal 2022 YTD 12/31/2021
(Amounts in Thousands, except income per share)				12/31/2021			$ Change			% Change					12/31/2021			$ Change			% Change
Net Sales	$	66,775		$	61,318		+5,457			8.9	%	$	127,236		$	122,832		+4,404			3.6	%
Gross Margin		21,576			18,950			2,626		13.9	%		41,776			39,095			2,681		6.9	%
as % of Net Sales		32.3	%		30.9	%							32.8	%		31.8	%
Selling, general, and administrative expenses		15,561			14,749		+812			5.5	%		31,855			30,762		+1,093			3.6	%
as % of Net Sales		23.3	%		24.1	%							25.0	%		25.0	%
Restructuring Charges		54			-			54		0.0	%		244			-			244		0.0	%
Operating income		5,961			4,201		+1,760			41.9	%		9,677			8,333		+1,344			16.1	%
as % of Net Sales		8.9	%		6.9	%							7.6	%		6.8	%
Other expense, net		(1,121	)		(662	)		(459	)	69.3	%		(1,797	)		(436	)		(1,361	)	312.2	%
Income before income taxes		4,840			3,539		+1,301			36.8	%		7,880			7,897			(17	)	-0.2	%
Income tax expense		1,709			1,011		+698			69.0	%		2,693			2,137		+556			26.0	%
Net Income	$	3,131		$	2,528		+603			23.9	%	$	5,187		$	5,760			(573	)	9.9	%
Basic income per share	$	0.42		$	0.35		$	0.07		20.0	%	$	0.71		$	0.80		$	(0.09	)	-11.3	%
Diluted income per share	$	0.42		$	0.34		$	0.08		23.5	%	$	0.69		$	0.77		$	(0.08	)	-10.4	%

L.S. Starrett Company Consolidated, Condensed Balance Sheet December 31, 2022 TABLE 2
ASSETS	12/31/2022		6/30/2022
Cash	$	8,957	$	14,523
Accounts receivable		38,151		42,961
Inventories, net		70,088		66,900
Prepaid expenses and other current assets		9,727		8,669
Total current assets		126,923		133,053
Property, plant and equipment, net		38,121		37,116
Other Long-Term Assets		28,067		29,385
Total assets	$	193,111	$	199,554
LIABILITIES AND STOCKHOLDERS’ EQUITY	12/31/2022		6/30/2022
Notes payable and current maturities of long-term debt	$	5,259	$	6,548
Accounts payable		13,017		14,624
Other Current Liabilities		17,057		20,008
Total current liabilities		35,333		41,180
Other Long Term Liabilities		6,503		7,102
Long-term debt, net of current portion		20,313		24,905
Postretirement benefit and pension obligations		23,052		23,938
Total Liabilities		85,201		97,125
Stockholders' Equity		107,910		102,429
Total Liabilities and Stockholders' Equity	$	193,111	$	199,554

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230206005068/en/

John C. Tripp

Chief Financial Officer

(978) 249-3551

jtripp@starrett.com

Source: The L.S. Starrett Company

FAQ

What were the Q2 2023 earnings results for SCX?

L.S. Starrett Company reported Q2 2023 net income of $3.1 million, or $0.42 per diluted share.

How much did SCX's net sales increase in Q2 2023?

Net sales increased by 9% in Q2 2023 compared to the same quarter last year.

What factors contributed to SCX's growth in North America?

The growth in North America was driven by a 21% increase in demand for precision granite products and stable demand for precision measuring tools.

How did the international sales perform for SCX in Q2 2023?

International sales for SCX declined by 5%, negatively impacted by economic conditions and the war in Ukraine.

What was the gross margin for SCX in Q2 2023?

The gross margin for SCX in Q2 2023 improved to 32.3%, an increase of 140 basis points from the prior year.