The L.S. Starrett Company Announces Fiscal 2024 Second Quarter Results
Financial results include non-
Fiscal 2024 Second Quarter Financial Highlights
-
Net sales for the quarter of
$62.1 million were 7.0% lower compared to the second quarter of the prior year, while currency neutral net sales of$60.7 million declined 9.2% compared to the second quarter of fiscal 2023. The decline in net sales compared to the comparative period was primarily driven by continued challenges with labor availability and resulting lower factory utilization in the Company’s measuring tools plant, and a decline in sales of the Company’s in-line laser measuring systems, which was attributed to customer consolidation and capital expenditure delay in that sector, and the recent automotive workers’ strikes, which also paused sector capital spending. International sales continued to improve compared to the prior year, and sales of the Company’s high precision granite measuring products continued to grow. - Gross margin for the quarter was 30.5%, a decline of 180 basis points from 32.3% in the second quarter of the prior year. This was partially a result of the forementioned labor headwinds in our measuring tool production facility, and partially due to product mix, as net sales of the Company’s higher margin in-line laser measuring systems declined disproportionately relative to other products compared to the prior year quarter.
-
Second quarter operating income was 4.0%, compared to 8.9% in the second quarter of the prior year. In addition, selling general and administrative expenses increased as a percentage of net sales compared to the prior year quarter. Approximately one-third of the increase was due to the translation of foreign currencies, particularly the Brazilian Real, into
U.S. Dollars. In addition, the Company has continued to reinvest in growth initiatives, and incurred additional consulting costs during the quarter. -
The Company continues its efforts to reduce inventory, resulting in improved operating cash flow and the retirement of
$5.7 million of debt during the second quarter. By quarter end, debt was at its lowest level in over 10 years. -
Net loss for the quarter was
$0.4 million , compared to net income of$3.1 million in the comparative quarter. Net income was impacted by an unfavorable tax adjustment of$2.0 million related toIRS Notice 2023-80 released inDecember 2023 . Second quarter diluted earnings per share was a loss of$0.05 , compared to a gain of$0.42 for the second quarter in the prior fiscal year.
“I am pleased to see the continued profitable growth of our high precision granite measuring products and a stabilization of demand of our industrial products internationally. This helped offset challenges in our North American industrial markets, particularly in the automotive sector, impacting both industrial distribution and capital equipment demand over the past couple of quarters. Our team continued to drive inventory reductions, allowing us to reduce debt to its lowest level in more than a decade. We remain committed to strengthening our financial position, giving us increased flexibility to invest in our business to drive long-term growth and shareholder value creation.” remarked
Use of Non-
The Company uses the following non-
The Company discusses these non-
References to currency-neutral net sales should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with
About The
Founded in 1880 by
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, as amended, which was filed with the
Summary of Operations
Quarter and Six Months Ended TABLE 1 |
||||||||||||||||||||
Quarter
|
Comparison to Quarter Ended
|
Fiscal 2024
|
Comparison Fiscal 2023 YTD
|
|||||||||||||||||
(Amounts in Thousands, except income per share) |
|
$ Change |
% Change |
|
$ Change |
% Change |
||||||||||||||
Net sales |
$ |
62,076 |
|
$ |
66,775 |
|
|
(4,699) |
-7.0 |
% |
$ |
122,712 |
|
$ |
127,236 |
|
|
(4,524) |
-3.6 |
% |
Gross Profit |
|
18,964 |
|
|
21,576 |
|
|
-2,612 |
-12.1 |
% |
|
38,500 |
|
|
41,776 |
|
|
-3,276 |
0 |
|
as % of |
|
30.5 |
% |
|
32.3 |
% |
|
31.4 |
% |
|
32.8 |
% |
||||||||
Selling, general, and administrative expenses |
|
16,470 |
|
|
15,561 |
|
+909 |
5.8 |
% |
|
33,548 |
|
|
31,855 |
+1,693 |
5.3 |
% |
|||
as % of |
|
26.5 |
% |
|
23.3 |
% |
|
27.3 |
% |
|
25.0 |
% |
||||||||
Restructuring charges |
|
- |
|
|
54 |
|
|
(54) |
-100.0 |
% |
|
- |
|
|
244 |
|
|
(244) |
-100.0 |
% |
Operating income |
|
2,494 |
|
|
5,961 |
|
|
(3,467) |
-58.2 |
% |
|
4,952 |
|
|
9,677 |
|
|
(4,725) |
-48.8 |
% |
as % of |
|
4.0 |
% |
|
8.9 |
% |
|
4.0 |
% |
|
7.6 |
% |
||||||||
Other expense |
|
(526 |
) |
|
(1,121 |
) |
+595 |
-53.1 |
% |
|
(890 |
) |
|
(1,797 |
) |
+907 |
-50.5 |
% |
||
Income before income taxes |
|
1,968 |
|
|
4,840 |
|
|
(2,872) |
-59.3 |
% |
|
4,062 |
|
|
7,880 |
|
|
(3,818) |
-48.5 |
% |
Income tax expense |
|
2,362 |
|
|
1,709 |
|
+653 |
38.2 |
% |
|
2,537 |
|
|
2,693 |
|
|
(156) |
-5.8 |
% |
|
Net (loss) income |
$ |
(394 |
) |
$ |
3,131 |
|
|
(3,525) |
-112.6 |
% |
$ |
1,525 |
|
$ |
5,187 |
|
|
(3,662) |
70.6 |
% |
Basic net income per share |
$ |
(0.05 |
) |
$ |
0.42 |
|
$ |
(0.47) |
-111.9 |
% |
$ |
0.20 |
|
$ |
0.71 |
|
$ |
(0.51) |
-71.8 |
% |
Diluted net income per share |
$ |
(0.05 |
) |
$ |
0.42 |
|
$ |
(0.47) |
-111.9 |
% |
$ |
0.20 |
|
$ |
0.69 |
|
$ |
(0.49) |
-71.0 |
% |
Consolidated, Condensed Balance Sheet
TABLE 2 |
||||
ASSETS |
|
|
||
Cash |
$ |
5,684 |
$ |
10,454 |
Accounts receivable |
|
34,826 |
|
36,611 |
Inventories, net |
|
61,284 |
|
65,414 |
Prepaid expenses and other current assets |
|
10,950 |
|
9,723 |
Total current assets |
|
112,744 |
|
122,202 |
Property, plant and equipment, net |
|
44,852 |
|
39,375 |
Other long-term assets |
|
29,466 |
|
31,225 |
Deferred tax assets, net |
|
15,667 |
|
19,073 |
Intangible assets, net |
|
4,829 |
|
4,888 |
|
|
1,015 |
|
1,015 |
Total assets |
$ |
187,062 |
$ |
192,802 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
||
Notes payable and current maturities of long-term debt |
$ |
4,403 |
$ |
4,961 |
Current lease liability |
|
1,604 |
|
1,650 |
Accounts payable |
|
13,487 |
|
15,047 |
Other current liabilities |
|
18,379 |
|
19,555 |
Accrued compensation |
|
4,613 |
|
8,040 |
Total current liabilities |
|
36,269 |
|
39,563 |
Other long term liabilities |
|
2,899 |
|
2,884 |
Long-term lease liability |
|
2,966 |
|
3,423 |
Long-term debt, net of current portion |
|
3,103 |
|
5,273 |
Postretirement benefit and pension obligations |
|
10,699 |
|
12,192 |
Total Liabilities |
|
55,936 |
|
63,335 |
Stockholders' Equity |
|
131,126 |
|
129,467 |
Total liabilities and stockholders' equity |
$ |
187,062 |
$ |
192,802 |
Reconciliation of
Quarter and Six Months Ended
TABLE 3 |
||||||||||||||||||
Quarter Ended |
Comparison to Quarter Ended |
Fiscal 2024 YTD |
Comparison Fiscal 2023 YTD |
|||||||||||||||
(Amounts in Thousands) |
|
$ Change |
% Change |
|
$ Change |
% Change |
||||||||||||
Net sales, as reported |
|
62,076 |
|
|
66,775 |
(4,699 |
) |
-7.0 |
% |
|
122,712 |
|
|
127,236 |
(4,524 |
) |
-3.6 |
% |
*Currency Impact |
|
(1,412 |
) |
|
- |
(1,412 |
) |
-2.1 |
% |
|
(2,986 |
) |
|
- |
(2,986 |
) |
-2.35 |
% |
Currency neutral net sales |
$ |
60,664 |
|
$ |
66,775 |
(6,111 |
) |
-9.2 |
% |
$ |
119,726 |
|
$ |
127,236 |
(7,510 |
) |
-5.9 |
% |
*Change when converting FY24 sales in non USD functional currencies at the same exchange rates used in the comparison period |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240216508949/en/
Chief Financial Officer
(978) 249-3551
jtripp@starrett.com
Source: The