The L.S. Starrett Company Announces Fiscal 2023 Results
The L.S. Starrett Company has announced operating results for the fiscal year ended June 30, 2023.
Fiscal 2023 Financial Highlights
Net sales for fiscal 2023 were $256.2 million, an increase of 1% compared to fiscal 2022, while currency-neutral net sales of $257.9 million increased 1.7%. North American industrial net sales increased 7% compared to fiscal 2022. Global test and measurement net sales, which increased 6% year on year were supported by high demand for precision granite products. International industrial net sales, which declined 7% compared to fiscal 2022, were impacted by macro recessionary pressures in Europe.
Gross margin for fiscal 2023 was 32.2%, 100 basis points lower compared to 33.2% in the prior fiscal year. Gross margin was impacted by lower factory utilization resulting from lower demand and the Company’s focus on working capital reduction and cash generation. In addition, approximately one-third of this decline resulted from geographical sales mix, as higher margin international industrial net sales for fiscal 2023 comprised a smaller portion of consolidated net sales when comparing to fiscal 2022.
Operating income for fiscal 2023 was $18.9 million or 7.4% of net sales, compared to $21.6 million, or 8.5% of net sales in fiscal 2022. This reduction was the result of the lower gross margin, and an increase in Selling, General and Administrative expenses of $1.1 million due to planned spend increase of $1.7 million to support the company’s growth initiatives, partially offset by a $0.6 million reduction in General and Administrative expenses.
Net income for fiscal 2023 was $23.1 million compared to net income of $14.9 million for fiscal 2022. The significant increase in fiscal 2023 was driven by a $10.5 million favorable adjustment to the Company’s net pension liability in the United States, and a $5 million tax credit related to a reduction of the Company’s valuation allowance against its deferred tax assets. The latter resulted from improved performance achieved and forecasted for the North American operating units, and an increase in foreign-sourced royalty income resulting from amendments to the Company’s transfer pricing policies. Without these one-time adjustments and restructuring charges, adjusted net income for fiscal 2023 was $7.7 million compared to $15.3 million for fiscal 2022.
“I am proud of what our global team achieved throughout the year to strengthen our balance sheet, improve cash flow and reduce debt, despite continued broader global economic challenges,” said Douglas A. Starrett, President and Chief Executive Officer. “Our diverse portfolio of North American products more than offset global headwinds and our strategy to reduce working capital and improve cash generation leaves our balance sheet in its best shape for many years, positioning us well to grow the company over the long term,” he continued.
For more information: www.starrett.com
