The L.S. Starrett Company Announces Fiscal 2023 Third Quarter Results
Financial results include non-
Fiscal 2023 Third Quarter Financial Highlights
-
Net sales of
increased$61.7 million 2% compared to the third quarter of the prior year, while currency-neutral net sales of increased$62.4 million 3% . Both International and North American net sales increased2% compared to the third quarter of the prior year. 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
31.2% , 360 basis points lower than the34.8% in the third quarter of the prior year. Gross margin has been impacted by lower factory utilization as a result of lower production as the company has shifted its focus to working capital reduction and cash generation considering overall improved supply chain conditions compared to the prior year. -
Operating income for the quarter was
6.7% , 220 basis points lower compared to8.9% in the second quarter of the prior year, driven by overall lower gross margin. Selling General and Administrative costs decreased as a percentage of net sales by 30 basis points, from24.8% in the third quarter last year to24.5% in the third quarter this fiscal year. -
Operating cash flow in the quarter was
, an improvement of$11.4 million compared to$9.6 million for the third quarter in the prior year. The Company retired$1.8 million in debt during the quarter as the result of its initiatives to reduce working capital and improve treasury operations. On March 31, 2023, the Company’s debt totaled$10 million , its lowest level in more than ten years.$16 million
-
Net income for the quarter was
, or$7.5 million per diluted share, compared to net income of$0.99 , or$4.3 million per diluted share for the third quarter in the prior year. Net income for the quarter was increased by a tax credit of$0.57 . This credit was a result of a reduction of the Company’s valuation allowance against its deferred tax assets due to improved performance achieved and forecasted for its North American operating units and an increase in foreign-sourced royalty income resulting from amendments to the Company’s transfer pricing policies.$5 million
“I am pleased with the overall strengthening of our balance sheet made in this quarter. Our teams have delivered significant improvements in cash flow and a reduction of debt despite headwinds in our international markets and broader global economic uncertainty. As post pandemic supply chains have begun to normalize, we have pivoted away from protective inventory strategies which will apply pressure on gross margins over the next several months., Our sales continue to be buoyed by a healthy backlog, and we believe that end user orders based on point of sales data indicates demand for our products in our two largest markets,
Use of Non-
The Company uses the following non-
The Company discusses these non-
References to currency-neutral sales, adjusted operating income, and adjusted net income and earnings per share should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with
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 March 31, 2023 TABLE 1
|
||||||||||||||||||||||
Quarter
|
Comparison to Quarter Ended 03/31/2022 |
Fiscal 2023 YTD 3/31/2023 |
Comparison Fiscal 2022 YTD 3/31/2022 |
|||||||||||||||||||
(Amounts in Thousands, except income per share) | 3/31/2022 | $ Change | % Change | 3/31/2022 | $ Change | % Change | ||||||||||||||||
Net Sales | $ |
61,678 |
|
$ |
60,479 |
|
+1,199 | 2.0 |
% |
$ |
188,914 |
|
$ |
183,311 |
|
+5,603 | 3.1 |
% |
||||
Gross Profit |
|
19,223 |
|
|
21,020 |
|
|
(1,797 |
) |
0 |
|
|
60,998 |
|
|
60,114 |
|
+884 | 0 |
|
||
as % of Net Sales |
|
31.2 |
% |
|
34.8 |
% |
|
32.3 |
% |
|
32.8 |
% |
||||||||||
Selling, general, and administrative expenses |
|
15,109 |
|
|
14,988 |
|
+121 | 0.8 |
% |
|
46,962 |
|
|
45,750 |
|
+1,212 | 2.6 |
% |
||||
as % of Net Sales |
|
24.5 |
% |
|
24.8 |
% |
|
24.9 |
% |
|
25.0 |
% |
||||||||||
Restructuring Charges |
|
- |
|
|
658 |
|
|
(658 |
) |
-100.0 |
% |
|
244 |
|
|
658 |
|
|
(414 |
) |
-62.9 |
% |
Operating income |
|
4,114 |
|
|
5,374 |
|
|
(1,260 |
) |
-23.4 |
% |
|
13,792 |
|
|
13,706 |
|
+86 | 0.6 |
% |
||
as % of Net Sales |
|
6.7 |
% |
|
8.9 |
% |
|
7.3 |
% |
|
7.5 |
% |
||||||||||
Other income, net |
|
(602 |
) |
|
684 |
|
|
(1,286 |
) |
-188.0 |
% |
|
(2,399 |
) |
|
249 |
|
|
(2,648 |
) |
-1063.5 |
% |
Income before income taxes |
|
3,512 |
|
|
6,058 |
|
|
(2,546 |
) |
-42.0 |
% |
|
11,393 |
|
|
13,955 |
|
|
(2,562 |
) |
-18.4 |
% |
Income tax expense |
|
(3,961 |
) |
|
1,774 |
|
|
(5,735 |
) |
-323.3 |
% |
|
(1,267 |
) |
|
3,911 |
|
|
(5,178 |
) |
-132.4 |
% |
Net Income | $ |
7,473 |
|
$ |
4,284 |
|
+3,189 | 74.4 |
% |
$ |
12,660 |
|
$ |
10,044 |
|
+2,616 | 26.0 |
% |
||||
Basic income per share | $ |
1.01 |
|
$ |
0.59 |
|
$ |
0.42 |
|
71.2 |
% |
$ |
1.72 |
|
$ |
1.39 |
|
$ |
0.33 |
|
23.7 |
% |
Diluted income per share | $ |
0.99 |
|
$ |
0.57 |
|
$ |
0.42 |
|
73.7 |
% |
$ |
1.68 |
|
$ |
1.34 |
|
$ |
0.34 |
|
25.4 |
% |
L.S. Starrett Company Consolidated, Condensed Balance Sheet March 31, 2023 TABLE 2
|
||||
ASSETS | 3/31/2023 | 6/30/2022 | ||
Cash | $ |
8,595 |
$ |
14,523 |
Accounts receivable |
|
32,267 |
|
42,961 |
Inventories, net |
|
67,685 |
|
66,900 |
Prepaid expenses and other current assets |
|
10,073 |
|
8,669 |
Total current assets |
|
118,620 |
|
133,053 |
Property, plant and equipment, net |
|
38,160 |
|
37,116 |
Other Long-Term Assets |
|
37,085 |
|
29,385 |
Total assets | $ |
193,865 |
$ |
199,554 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | 3/31/2023 | 6/30/2022 | ||
Notes payable and current maturities of long-term debt | $ |
5,264 |
$ |
6,548 |
Accounts payable |
|
15,006 |
|
14,624 |
Other Current Liabilities |
|
17,377 |
|
20,008 |
Total current liabilities |
|
37,647 |
|
41,180 |
Other Long Term Liabilities |
|
6,315 |
|
7,102 |
Long-term debt, net of current portion |
|
9,991 |
|
24,905 |
Postretirement benefit and pension obligations |
|
22,856 |
|
23,938 |
Total Liabilities |
|
76,809 |
|
97,125 |
Stockholders' Equity |
|
117,056 |
|
102,429 |
Total Liabilities and Stockholders' Equity | $ |
193,865 |
$ |
199,554 |
L.S. Starrett Company Currency Neutral Net Sales March 31, 2023 TABLE 3
|
||||||||||||||
Quarter Ended 3/31/2023 |
Comparison to Quarter Ended 03/31/2022 |
Fiscal 2023 YTD 3/31/2023 |
Comparison Fiscal 2022 YTD 3/31/2022 |
|||||||||||
(Amounts in Thousands) | 3/31/2022 | $ Change | % Change | 3/31/2022 | $ Change | % Change | ||||||||
Net Sales, as reported |
|
61,678 |
|
60,479 |
+1,199 | 1.98 |
% |
|
188,914 |
|
183,311 |
+5,603 | 3.1 |
% |
*Currency Impact | +698 |
|
- |
+698 | 1.15 |
% |
+1,447 |
|
- |
+1,447 | 0.79 |
% |
||
FY23 Currency Neutral Net Sales | $ |
62,376 |
$ |
60,479 |
+1,897 | 3.14 |
% |
$ |
190,361 |
$ |
183,311 |
+7,050 | 3.8 |
% |
*Change when converting FY23 sales in non USD functional currencies at the same exchange rates used in the comparison period |
L.S. Starrett Company Adjusted Net Income and Earnings Per Share March 31, 2023 TABLE 4
|
||||||||||||||||
Quarter Ended 3/31/2023 |
Comparison to Quarter Ended 03/31/2022 |
Fiscal 2023 YTD 3/31/2023 | Comparison Fiscal 2022 YTD 3/31/2022 | |||||||||||||
(Amounts in Thousands) | 3/31/2022 | $ Change | % Change | 3/31/2022 | $ Change | % Change | ||||||||||
Net Income, as reported |
|
7,473 |
|
4,284 |
|
+3,189 | 74.44 |
% |
|
12,660 |
|
10,044 |
|
+2,616 | 26.0 |
% |
reduce impact of changes to tax provisions |
|
(5,000) |
|
- |
|
(5,000) |
|
(5,000) |
|
- |
|
(5,000) |
||||
impact of increase pension and post retirement benefit cost | +156 |
|
(361 |
) |
+517 | +459 |
|
(1,085 |
) |
+1,544 | ||||||
Net Income, Adjusted for Comparison | $ |
2,629 |
$ |
3,923 |
|
(1,294) |
-32.98 |
% |
$ |
8,119 |
$ |
8,959 |
|
(840) |
-9.4 |
% |
Diluted Shares Outstanding |
|
7,577 |
|
7,492 |
|
|
7,538 |
|
7,480 |
|
||||||
Diluted EPS - adjusted for changes to tax provisions | $ |
0.35 |
$ |
0.52 |
|
(0.18) |
-33.74 |
% |
$ |
1.08 |
$ |
1.20 |
|
(0.12) |
-10.1 |
% |
Diluted EPS - as reported | $ |
0.99 |
$ |
0.57 |
|
+0.42 | 73.68 |
% |
$ |
1.68 |
$ |
1.34 |
|
+0.34 | 25.4 |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230508005445/en/
John C. Tripp
Chief Financial Officer
(978) 249-3551
jtripp@starrett.com
Source: The L.S. Starrett Company