The L.S. Starrett Company Announces Fiscal 2022 Results

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 fiscal year ending June 30, 2022.

Financial results include non-GAAP financial measures. These non-GAAP measures are more fully described and are reconciled from the respective measures determined under GAAP in the section titled "Use of Non-GAAP Financial Measures" and the attached tables.

Fiscal 2022 Financial Highlights

• Net sales for fiscal 2022 of $253.7 million increased 15.5% compared to fiscal 2021. Most areas of the business continued to exceed pre-pandemic order intake levels throughout the fiscal year, and as of June 30, 2022, backlog remained at historical high levels. Currency neutral net sales were $251.7 million for fiscal 2022, representing an increase of 14.6% compared to the prior year.
• Gross margin for fiscal 2022 was 33.2%, compared to 33.4% in fiscal 2021. Benefits from the Company's fiscal 2021 restructuring program had been offset in the first half of fiscal 2022 by macro and inflationary pressures, including increased supply chain costs related to the pandemic. In addition, labor shortages in North America drove significant wage increases and reduced plant utilization. In an effort to mitigate the impact of these challenges, the Company implemented price increases in the first quarter of fiscal 2022 in Brazil and the U.S. Additional price increases and surcharges on shipped orders were implemented during the third quarter. As a result of these initiatives, gross margin improved 270 basis points, from 31.8% in the first six months of fiscal 2022 to 34.5% in the last six months of the fiscal year.
• Fiscal 2022 operating income was $21.6 million, or 8.5% of net sales, an improvement of $5.0 million or 30% from $16.6 million, or 7.5% of net sales, in fiscal 2021. Fiscal 2022 adjusted operating income was $22.0 million, or 8.7% of net sales, an improvement of $5.0 million, or 29%, from $17.0 million, or 7.8% of net sales, in fiscal 2021.
• Fiscal 2022 diluted Earnings per Share (EPS) was $2.00 for fiscal 2022 compared to $2.11 for fiscal 2021. Adjusted EPS for fiscal 2022 was $2.06, which excludes a restructuring charge of $0.4 million. Adjusted diluted EPS for fiscal 2021 was $1.81, which excludes a restructuring charge of $3.7 million, a gain on the sale of a facility of $3.2 million, and a one-time tax credit of $2.6 million. (See Table 4)

"I am pleased the Company delivered another strong financial performance for fiscal 2022," said Douglas A. Starrett, Chairman and Chief Executive Officer. "Today, we are better positioned than ever to leverage our strengths. We are in the business of providing application-based solutions to industry across our metrology and saw product portfolios. Starrett's products are critical to the global supply chain. Our products help keep America and the world moving."

Use of Non-GAAP Financial Measures:

The Company uses the following non-GAAP financial measures: "currency neutral net sales," which are net sales calculated using actual exchange rates during the comparative prior year period, which the Company believes enhances the visibility of the underlying business trends excluding the impact of translation arising from foreign currency exchange rate fluctuations; "adjusted operating income," which adjusts for restructuring costs and one-time gains on the sale of a building that are reflected in one period but not the other; and "adjusted diluted earnings per share," which adjusts net income for any one-time tax credits or charges in addition to the same adjustments to operating income in order to show comparative operational performance between the two periods.

The Company discusses these non-GAAP financial measures because management believes they assist investors in comparing the Company's performance across reporting periods on a consistent basis by eliminating items that the Company does not believe are indicative of its core operating performance. Such non-GAAP financial measures assist investors in understanding the ongoing operating performance of the Company by presenting financial results between periods on a more comparable basis. Such measures should be considered in addition to, and not in lieu of, the financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

References to currency neutral net sales, adjusted operating income, and adjusted earnings per share should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP, and may not be comparable to similarly titled non-GAAP financial measures used by other companies. In evaluating these non-GAAP financial measures, investors should be aware that in the future the Company may incur expenses or be involved in transactions that are the same as or similar to some of the adjustments in this press release. The Company's discussion of non-GAAP financial measures should not be construed to imply that its future results will be unaffected by any such adjustments. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.

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 contains forward-looking statements concerning the Company's expectations, anticipations, intentions, beliefs or strategies regarding the future. These forward-looking statements are based on the Company's 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 September 2, 2021 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 any forward-looking statements.

	L.S. Starrett Company Summary of Operations Fiscal Year ending June 30, 2022 TABLE 1
		Fiscal Year Ended 6/30/2022			Comparison to Fiscal Year Ended 6/30/2021
	(Amounts in Thousands, except income per share)				FYE 6/30/2021			$ Change			% Change
	Net Sales	$	253,701		$	219,644		+34,057			15.5	%
	Gross Margin		84,246			73,342			10,904		14.9	%
	as % of Net Sales		33.2	%		33.4	%
	Selling, general, and administrative expenses		62,260			56,316		+5,944			10.6	%
	as % of Net Sales		24.5	%		25.6	%
	Restructuring Charges		432			3,664			(3,232	)	-88.2	%
	Gain on sale of building		-			(3,204	)		3,204		-100.0	%
	Operating income		21,554			16,566		+4,988			30.1	%
	as % of Net Sales		8.5	%		7.5	%
	Other (loss) income, net		(35	)		860			(895	)	-104.1	%
	Income before income taxes		21,519			17,426		+4,093			23.5	%
	Income tax expense		6,641			1,893		+4,748			250.8	%
	Net Income	$	14,878		$	15,533			(655	)	-4.2	%
	Basic net income per share	$	2.06		$	2.20		$	(0.14	)	-6.4	%
	Diluted net income per share	$	2.00		$	2.11		$	(0.11	)	-5.2	%

L.S. Starrett Company Consolidated, Condensed Balance Sheet June 30, 2022 TABLE 2
ASSETS	6/30/2022		6/30/2021
Cash	$	14,523	$	9,105
Accounts receivable		42,961		35,076
Inventories, net		66,900		60,572
Prepaid expenses and other current assets		8,669		14,467
Total current assets		133,053		119,220
Property, plant and equipment, net		37,116		35,992
Other Long-Term Assets		29,385		29,274
Total assets	$	199,554	$	184,486
LIABILITIES AND STOCKHOLDERS' EQUITY	6/30/2022		6/30/2021
Notes payable and current maturities of long-term debt	$	6,548	$	15,959
Accounts payable		14,624		17,229
Other Current Liabilities		20,008		18,501
Total current liabilities		41,180		51,689
Other Long Term Liabilities		7,102		5,600
Long-term debt, net of current portion		24,905		6,010
Postretirement benefit and pension obligations		23,938		37,652
Total Liabilities		97,125		100,951
Stockholders' Equity		102,429		83,535
Total Liabilities and Stockholders' Equity	$	199,554	$	184,486

	L.S. Starrett Company Adjusted Operating Income Reconciliation Fiscal Year ending June 30, 2022 TABLE 3
		Fiscal Year Ended 6/30/2022			Comparison to Fiscal Year Ended 6/30/2021
	(Amounts in Thousands)				FYE 6/30/2021			$ Change		% Change
	Operating income, as reported	$	21,554		$	16,566		+4,988		30.1	%
	Restructuring charges		432			3,664		(3,232	)	-88.2	%
	Gain on sale of building		-			(3,204	)	3,204		-
	Adjusted operating income	$	21,986		$	17,026		+4,960		29.1	%
	as % of Net Sales		8.7	%		7.8	%			+90 bps

L.S. Starrett Company Adjusted Net Income and EPS Reconciliations Fiscal Year ending June 30, 2022 TABLE 4
	Fiscal Year Ended 6/30/2022		Comparison to Fiscal Year Ended 6/30/2021
(Amounts in Thousands)			FYE 6/30/2021			$ Change			% Change
Net Income, as reported	$	14,878	$	15,533			(655	)	-4.2	%
Diluted earnings per share	$	2.00	$	2.11		$	(0.11	)	-5.1	%
Restructuring charges		432		3,664			(3,232	)	-88.2	%
Gain on sale of building		-		(3,204	)		3,204		0.0	%
GILTI Tax Credit		-		(2,622	)		2,622		-
Adjusted net income	$	15,310	$	13,371			+1,939		14.5	%
Adjusted diluted earnings per share	$	2.06	$	1.81		$	0.24		13.4	%
Diluted Shares outstanding		7,437		7,367

L.S. Starrett Company Currency Neutral Net Sales Reconciliation Fiscal Year ending June 30, 2022 TABLE 5
	Fiscal Year Ended 6/30/2022			Comparison to Fiscal Year Ended 6/30/2021
(Amounts in Thousands)				FYE 6/30/2021		$ Change		% Change
Net Sales, as reported		253,701			219,644	+34,057		15.51	%
Currency Impact		(2,014	)		-	(2,014	)	-0.92	%
FY22 Currency Neutral Net Sales	$	251,687		$	219,644	+32,043		14.59	%

 

Contacts

John C. Tripp
Chief Financial Officer
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