scx-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


			For the quarterly period ended			March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


			For the transition period from						to

			Commission file number						1-367


THE L. S. STARRETT COMPANY
(Exact name of registrant as specified in its charter)


Massachusetts						04-1866480
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


121 Crescent Street, Athol, Massachusetts			01331-1915
(Address of principal executive offices)			(Zip Code)


Registrant's telephone number, including area code			978-249-3551

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common - $1.00 Per Share Par Value	SCX	New York Stock Exchange
Class B Common - $1.00 Per Share Par Value	Not applicable	Not applicable

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):

Large Accelerated Filer ☐ Accelerated Filer ☐ Non-Accelerated Filer ☐ Smaller Reporting Company ☒

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒


Common Shares outstanding as of						April 24, 2023
Class A Common Shares						6,835,043
Class B Common Shares						590,592

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, our clinical results and other future conditions. The words “anticipate”, “believe”, “contemplate”, “continue”, “could”, “estimate”, “expect”, “forecast”, “goal”, “intend”, “may”, “plan”, “potential”, “predict”, “project”, “should”, “target”, “will”, “would”, or the negative of these terms or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed in our Annual Report on Form 10-K and other filings with the Securities Exchange Commission (the “SEC”). You should carefully review and consider the information regarding certain factors which could materially affect our business, financial condition or future results set forth under Item 1A. “Risk Factors” in our Form 10-K for the year ended June 30, 2022.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make or collaborations or strategic partnerships we may enter into. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

THE L. S. STARRETT COMPANY

CONTENTS


			Page No.

Part I.	Financial Information:

	Item 1.	Financial Statements	3

		Condensed Consolidated Balance Sheets – March 31, 2023 (unaudited) and June 30, 2022	3

		Condensed Consolidated Statements of Operations (unaudited)– three and nine months ended March 31, 2023 and March 31, 2022	4

		Condensed Consolidated Statements of Comprehensive Income (unaudited) – three and nine months ended March 31, 2023 and March 31, 2022	5

		Condensed Consolidated Statements of Stockholders' Equity (unaudited) – three and nine months ended March 31, 2023 and March 31, 2022	6-8

		Condensed Consolidated Statements of Cash Flows (unaudited) - nine months ended March 31, 2023 and March 31, 2022	8

		Notes to Unaudited Condens ed Co nsolidated Financial Statements	10-21

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

	Item 4.	Controls and Procedures	26

Part II.	Other Information:

	Item 1A.	Risk Factors	27

	Item 6.	Exhibits	28

SIGNATURES			29

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THE L. S. STARRETT COMPANY

Condensed Consolidated Balance Sheets

(in thousands except share data)

(unaudited)


	03/31/2023		06/30/2022
ASSETS
Current assets:
Cash	$	8,595	$	14,523
Accounts receivable (less allowance for credit losses of $846 and $796, respectively)	36,267		42,961
Inventories	67,685		66,900
Prepaid expenses and other current assets	10,073		8,669
Total current assets	122,620		133,053

Property, plant and equipment, net	38,160		37,116
Right of use assets	5,338		5,540

Deferred tax assets, net	18,793		14,924
Intangible assets, net	4,571		4,640
Goodwill	1,015		1,015
Other assets	3,368		3,266
Total assets	$	193,865	$	199,554

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of debt	$	5,264	$	6,547
Current lease liability	2,057		1,530
Accounts payable	15,006		14,624
Accrued expenses	9,767		11,776
Accrued compensation	5,553		6,703
Total current liabilities	37,647		41,180

Other tax obligations	2,850		2,936
Long-term lease liability	3,465		4,166
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:
Class A Common stock $1 par (20,000,000 shares authorized; 6,818,178 outstanding at March 31, 2023 and 6,682,521 outstanding at June 30, 2022)	$	6,818	$	6,683
Class B Common stock $1 par (10,000,000 shares authorized; 607,899 outstanding at March 31, 2023 and 610,087 outstanding at June 30, 2022)	608		610
Additional paid-in capital	57,627		57,143
Retained earnings	101,719		89,059
Accumulated other comprehensive loss	(49,716)		(51,066)
Total stockholders' equity	117,056		102,429
Total liabilities and stockholders’ equity	$	193,865	$	199,554

See Notes to Unaudited Condensed Consolidated Financial Statements

THE L. S. STARRETT COMPANY

Condensed Consolidated Statements of Operations

(in thousands except per share data)

(unaudited)


	3 Months Ended						9 Months Ended
	03/31/2023			03/31/2022			03/31/2023			03/31/2022

Net sales	$	61,678		$	60,479		$	188,914		$	183,311
Cost of goods sold	42,455			39,459			127,916			123,197
Gross profit	19,223			21,020			60,998			60,114
% of Net sales	31.2		%	34.8		%	32.3		%	32.8		%

Restructuring charges	—			658			244			658
Selling, general and administrative expenses	15,109			14,988			46,962			45,750

Operating income	4,114			5,374			13,792			13,706

Other (expense) income, net	(602)			684			(2,399)			249

Income before income taxes	3,512			6,058			11,393			13,955

Income tax (benefit) expense	(3,961)			1,774			(1,267)			3,911

Net income	$	7,473		$

SEC Form 10-Q filed by L.S. Starrett Company