Cover page
Cover page - shares | 9 Months Ended | |
Mar. 31, 2023 | Apr. 24, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 1-367 | |
Entity Incorporation, State or Country Code | MA | |
Entity Tax Identification Number | 04-1866480 | |
Entity Address, Address Line One | 121 Crescent Street | |
Entity Address, City or Town | Athol | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 01331-1915 | |
City Area Code | 978 | |
Local Phone Number | 249-3551 | |
Title of 12(b) Security | Class A Common - $1.00 Per Share Par Value | |
Trading Symbol | SCX | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Registrant Name | STARRETT L S CO | |
Entity Central Index Key | 0000093676 | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Class A Common Shares | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 6,835,043 | |
Class B Common Shares | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 590,592 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2023 | Jun. 30, 2022 |
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 |
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: | ||
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 |
Class A Common Shares | ||
Stockholders' equity: | ||
Common stock | 6,818 | 6,683 |
Class B Common Shares | ||
Stockholders' equity: | ||
Common stock | $ 608 | $ 610 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Mar. 31, 2023 | Jun. 30, 2022 |
Allowance for doubtful accounts | $ 846 | $ 796 |
Class A Common Shares | ||
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares, outstanding (in shares) | 6,818,178 | 6,682,521 |
Class B Common Shares | ||
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Common stock, shares, outstanding (in shares) | 607,899 | 610,087 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||||
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 | 31.20% | 34.80% | 32.30% | 32.80% |
Restructuring charges | $ 0 | $ 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 | $ 4,284 | $ 12,660 | $ 10,044 |
Basic income per share (in dollars per share) | $ 1.01 | $ 0.59 | $ 1.72 | $ 1.39 |
Diluted income per share (in dollars per share) | $ 0.99 | $ 0.57 | $ 1.68 | $ 1.34 |
Weighted average outstanding shares used in per share calculations: | ||||
Basic (in shares) | 7,427 | 7,256 | 7,379 | 7,208 |
Diluted (in shares) | 7,577 | 7,492 | 7,538 | 7,480 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 7,473 | $ 4,284 | $ 12,660 | $ 10,044 |
Other comprehensive income: | ||||
Currency translation gain, net of tax | 1,545 | 6,807 | 1,455 | 2,325 |
Pension and postretirement plans, net of tax | (44) | (89) | (105) | (222) |
Other comprehensive income | 1,501 | 6,718 | 1,350 | 2,103 |
Total comprehensive income | $ 8,974 | $ 11,002 | $ 14,010 | $ 12,147 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock Outstanding Class A | Common Stock Outstanding Class B | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss |
Beginning balance at Jun. 30, 2021 | $ 83,535 | $ 6,475 | $ 634 | $ 56,507 | $ 74,181 | $ (54,262) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Total comprehensive income (loss) | (445) | 3,232 | (3,677) | |||
Repurchase of shares | (16) | (2) | (14) | |||
Stock-based compensation | 174 | 119 | 55 | |||
Conversion | 0 | 25 | (25) | |||
Ending balance at Sep. 30, 2021 | 83,248 | 6,619 | 607 | 56,548 | 77,413 | (57,939) |
Beginning balance at Jun. 30, 2021 | 83,535 | 6,475 | 634 | 56,507 | 74,181 | (54,262) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Total comprehensive income (loss) | 12,147 | |||||
Ending balance at Mar. 31, 2022 | 96,273 | 6,665 | 594 | 56,948 | 84,225 | (52,159) |
Beginning balance at Sep. 30, 2021 | 83,248 | 6,619 | 607 | 56,548 | 77,413 | (57,939) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Total comprehensive income (loss) | 1,590 | 2,528 | (938) | |||
Repurchase of shares | (7) | (7) | ||||
Stock-based compensation | 237 | 11 | 226 | |||
Conversion | 0 | 7 | (7) | |||
Issuance of stock | 117 | 7 | 8 | 102 | ||
Ending balance at Dec. 31, 2021 | 85,185 | 6,644 | 608 | 56,869 | 79,941 | (58,877) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Total comprehensive income (loss) | 11,002 | 4,284 | 6,718 | |||
Repurchase of shares | (17) | (3) | (14) | |||
Stock-based compensation | 103 | 10 | 93 | |||
Conversion | 0 | 11 | (11) | |||
Ending balance at Mar. 31, 2022 | 96,273 | 6,665 | 594 | 56,948 | 84,225 | (52,159) |
Accumulated balance consists of: | ||||||
Translation loss | (53,722) | |||||
Pension and postretirement plans, net of taxes | 1,563 | |||||
Accumulated other comprehensive loss | (52,159) | |||||
Accumulated other comprehensive loss | (51,066) | |||||
Beginning balance at Jun. 30, 2022 | 102,429 | 6,683 | 610 | 57,143 | 89,059 | (51,066) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Total comprehensive income (loss) | (775) | 2,056 | (2,831) | |||
Repurchase of shares | (6) | (1) | (5) | |||
Stock-based compensation | 185 | 76 | 109 | |||
Conversion | 12 | (12) | ||||
Ending balance at Sep. 30, 2022 | 101,833 | 6,771 | 597 | 57,247 | 91,115 | (53,897) |
Beginning balance at Jun. 30, 2022 | 102,429 | 6,683 | 610 | 57,143 | 89,059 | (51,066) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Total comprehensive income (loss) | 14,010 | |||||
Ending balance at Mar. 31, 2023 | 117,056 | 6,818 | 608 | 57,627 | 101,719 | (49,716) |
Beginning balance at Sep. 30, 2022 | 101,833 | 6,771 | 597 | 57,247 | 91,115 | (53,897) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Total comprehensive income (loss) | 5,811 | 3,131 | 2,680 | |||
Repurchase of shares | (3) | (3) | ||||
Stock-based compensation | 185 | 25 | 160 | |||
Conversion | 7 | (7) | ||||
Issuance of stock | 84 | 0 | 34 | 50 | ||
Ending balance at Dec. 31, 2022 | 107,910 | 6,803 | 624 | 57,454 | 94,246 | (51,217) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Total comprehensive income (loss) | 8,974 | 7,473 | 1,501 | |||
Repurchase of shares | (7) | (1) | (6) | |||
Stock-based compensation | 179 | 179 | ||||
Conversion | 15 | (15) | ||||
Ending balance at Mar. 31, 2023 | 117,056 | $ 6,818 | $ 608 | $ 57,627 | $ 101,719 | (49,716) |
Accumulated balance consists of: | ||||||
Translation loss | (58,621) | |||||
Pension and postretirement plans, net of taxes | $ 8,905 | |||||
Accumulated other comprehensive loss | $ (49,716) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 12,660 | $ 10,044 |
Non-cash operating activities: | ||
Depreciation | 3,884 | 3,913 |
Amortization | 998 | 957 |
Stock-based compensation | 549 | 514 |
Net long-term tax obligations | (66) | 126 |
Deferred taxes | (3,753) | 937 |
Postretirement benefit and pension obligations | 475 | (1,058) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 7,148 | (5,900) |
Inventories | (72) | (11,053) |
Other current assets | (1,275) | (5) |
Other current liabilities | (3,255) | 139 |
Prepaid pension expense | (1,574) | (2,342) |
Other | 178 | 937 |
Net cash provided by (used in) operating activities | 15,897 | (2,791) |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (4,790) | (6,883) |
Software development | (795) | (782) |
Intangibles-other | (54) | 0 |
Net cash (used in) investing activities | (5,639) | (7,665) |
Cash flows from financing activities: | ||
Proceeds from term loan borrowings | 575 | 12,433 |
Proceeds from line of credit borrowings | 1,000 | 27,442 |
Term debt repayments | (8,352) | (7,906) |
Repayments of Lines of Credit | (9,500) | (21,582) |
Proceeds from common stock issued | 84 | 117 |
Shares repurchased | (16) | (40) |
Net cash provided by (used in) financing activities | (16,209) | 10,464 |
Effect of exchange rate changes on cash | 23 | (1,093) |
Net decrease in cash | (5,928) | (1,085) |
Cash, beginning of period | 14,523 | 9,105 |
Cash, end of period | 8,595 | 8,020 |
Supplemental cash flow information: | ||
Interest paid | 1,200 | 690 |
Income taxes paid, net | $ 4,395 | $ 2,614 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Account Policies | 9 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Account Policies | Basis of Presentation and Summary of Significant Accounting Policies The unaudited interim Condensed Consolidated Financial Statements as of and for the nine months ended March 31, 2023 have been prepared by The L.S. Starrett Company (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. These unaudited Condensed Consolidated Financial Statements, which, in the opinion of management, reflect all adjustments (including normal recurring adjustments) necessary for a fair presentation, should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2022. The balance sheet as of June 30, 2022 has been derived from the Audited Consolidated Financial Statements as of and for the year ended June 30, 2022. Operating results are not necessarily indicative of the results that may be expected for any future interim period or for the entire fiscal year. The Company’s “fiscal year” begins July 1 st and ends June 30 th . Accounts Receivable and Allowance for Credit Losses Trade accounts receivable are recorded at invoiced amount and do not bear interest. Allowance for doubtful accounts is the Company's estimate of current expected credit losses on its existing accounts receivable and determined based on historical customer assessments, current financial conditions and reasonable and supportable forecasts. Account balances are charged off against the allowance when the Company determines the receivable will not be recovered. Fair Value Measurements Certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other liabilities are carried at cost, which approximates their fair value because of their short-term maturity. See Notes 10 and 11 within the notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for financial assets and liabilities held at carrying amount on the Condensed Consolidated Balance Sheet. The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Note 2 within the notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q to the Company’s Condensed Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended June 30, 2022 describes the significant accounting policies and methods used in the preparation of the Condensed Consolidated Financial Statements. |
Recently Adopted Accounting Pro
Recently Adopted Accounting Pronouncements | 9 Months Ended |
Mar. 31, 2023 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting PronouncementsIn June 2016, the FASB issued ASU 2016-13 "Financial Instruments -Credit Losses" (ASC 326) "Measurement of Credit Losses on Financial Instruments,” and subsequent amendment to the guidance, ASU 2018-19 in November 2018. The standard significantly changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard replaces historic incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. The amendment loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2018-19 clarifies that receivables arising from operating leases are accounted for using lease guidance and not as financial instruments. The amendments should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. This pronouncement was extended for Small Reporting Companies and for the Company beginning July 1, 2022. The adoption of this standard did not have a material impact on the Company's Condensed Consolidated Financial Statements. |
Segment Information
Segment Information | 9 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The segment information and the accounting policies of each segment are the same as those described in the notes to the condensed consolidated financial statements entitled “Financial Information by Segment & Geographic Area” included in our Annual Report on Form 10-K for the year ended June 30, 2022. The Company’s business is aggregated into two reportable segments based on geography of operations: North American Operations "North America" and International Operations "International". Segment income is measured for internal reporting purposes by excluding corporate expenses, which are included in the unallocated column in the table below. Other income and expense, including interest income and expense, and income taxes are excluded entirely from the table below. There were no material changes in the segment operations or in the segment assets from our Annual Report on Form 10-K for the year ended June 30, 2022. Financial results for each reportable segment are as follows (in thousands): North International Unallocated Total Three Months ended March 31, 2023 Sales 1 $ 37,053 $ 24,625 $ — $ 61,678 Operating Income (Loss) $ 3,435 $ 2,502 $ (1,823) 4,114 Three Months ended March 31, 2022 Sales 2 $ 36,288 $ 24,191 $ — $ 60,479 Operating Income (Loss) $ 4,663 $ 2,628 $ (1,917) $ 5,374 1. Excludes $327 of North American segment intercompany sales to the International segment, and $3,556 of International segment intercompany sales to the North American segment. 2. Excludes $1,148 of North American segment intercompany sales to the International segment, and $4,402 of International segment intercompany sales to the North American segment. North International Unallocated Total Nine Months ended March 31, 2023 Sales 1 $ 113,223 $ 75,691 $ — $ 188,914 Operating Income (Loss) $ 10,314 $ 9,231 $ (5,753) $ 13,792 Nine months ended March 31, 2022 Sales 2 $ 102,763 $ 80,548 $ — $ 183,311 Operating Income (Loss) $ 8,713 $ 10,604 $ (5,611) $ 13,706 1. Excludes $1,961 of North American segment intercompany sales to the International segment, and $12,841 of International segment intercompany sales to the North American segment. 2. Excludes $2,827 of North American segment intercompany sales to the International segment, and $14,150 of International segment intercompany sales to the North American segment. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 9 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customer | Revenue from Contracts with Customers Under ASC Topic 606, the Company is required to present a refund liability and a return asset within the Unaudited Condensed Consolidated Balance Sheet. As of March 31, 2023 and June 30, 2022, the balance of the return asset was $0.1 million and $0.2 million, respectively, and the balance of the refund liability as of March 31, 2023 and June 30, 2022 were both $0.2 million. They are presented within prepaid expenses and other current assets and accrued expenses, respectively, on the Condensed Consolidated Balance Sheets. The Company, in general, warrants its products against certain defects in material and workmanship when used as designed, for a period of up to one year. The Company does not sell extended warranties. Contract Balances Contract assets primarily relate to the Company’s rights to consideration for work completed but not billed at the reporting date on contracts with customers. Contract assets are transferred to receivables when the rights become unconditional. Contract liabilities primarily relate to contracts where advance payments or deposits have been received, but performance obligations have not yet been met, and therefore, revenue has not been recognized. The Company had no contract asset balances, but had contract liability balances of $0.8 million and $0.9 million at March 31, 2023 and June 30, 2022, respectively, recorded in Accounts Payable in the Condensed Consolidated Balance Sheets. Disaggregation of Revenue The Company operates in two reportable segments: North America and International. ASC Topic 606 requires further disaggregation of an entity’s revenue. In the following table, the Company's net sales by shipping origin are disaggregated accordingly for the three and nine months ended March 31, 2023 and 2022 (in thousands): Three Months Ended Nine Months Ended 03/31/2023 03/31/2022 03/31/2023 03/31/2022 North America United States $ 35,122 $ 34,181 $ 107,014 $ 97,049 Canada & Mexico 1,931 2,107 6,209 5,714 37,053 36,288 113,223 102,763 International Brazil 18,160 15,980 55,465 54,063 United Kingdom 3,563 4,750 10,059 14,254 China 1,497 1,899 5,160 5,761 Australia & New Zealand 1,405 1,562 5,007 6,469 24,625 24,191 75,691 80,548 Total Sales $ 61,678 $ 60,479 $ 188,914 $ 183,311 |
Leases
Leases | 9 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Leases | Leases Operating lease expense amounted to $0.5 million and $1.5 million for the three and nine months period ended for March 31, 2023 and March 31, 2022. For the three and nine months period ended March 31, 2022 operating lease expense was $0.5 million and $2.1 million. As of March 31, 2023, the Company’s right-of-use assets "ROU", lease obligations and remaining cash commitment on these leases (in thousands): Right-of-Use Operating Lease Remaining Cash Total leases $5,338 $5,522 $6,534 The Company has other operating lease agreements with commitments of less than one year or that are not material. The Company elected the practical expedient option and as such, these lease payments are expensed as incurred. The Company’s weighted average discount rate and remaining term on lease liabilities is approximately 9.0% and 3.5 years. As of March 31, 2023, the Company’s financing leases are not material. The foreign exchange impact affecting the operating leases are, also, not material. In the three months and nine months ended March 31, 2023 the Company entered into new leases in the amount of $0.4 million and $1.2 million. During December 2022 the Company renewed its leases in both Australia (ends September 2026) and New Zealand (ends April 2025) and recorded $0.6 million in new leases as ROU assets. At March 31, 2023, the Company had the following fiscal year minimum operating lease commitments (in thousands): Operating Lease 2023 (Remainder of year) $573 2024 2,128 2025 1,689 2026 1,335 2027 715 Thereafter 94 Subtotal $6,534 Imputed interest (1,012) Total 5,522 |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-based Compensation Compensation expense related to all stock-based plans for the three and nine months ended March 31, 2023 were $0.2 million and $0.5 million as compared to the prior year three and nine months of $0.1 million and $0.4 million, respectively. |
Inventories
Inventories | 9 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following (in thousands): 03/31/2023 06/30/2022 Raw material and supplies $ 36,757 $ 35,752 Goods in process and finished parts 22,218 22,268 Finished goods 35,036 35,589 94,011 93,609 LIFO Reserve (26,326) (26,709) $ 67,685 $ 66,900 Of the Company’s $67.7 million and $66.9 million total inventory at March 31, 2023 and June 30, 2022, respectively, the $26.3 million and $26.7 million LIFO reserves belong to the U.S. Precision Tools and Saws Manufacturing “Core U.S.” business. The Core U.S. business total inventory was $40.1 million on a FIFO basis and $13.8 million on a LIFO basis at March 31, 2023. The Core U.S. business had total Inventory, on a FIFO basis, of $39.3 million and $12.6 million on a LIFO basis as of June 30, |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Amortizable intangible assets consist of the following (in thousands): 03/31/2023 6/30/2022 Trademarks and trade names 2,070 2,070 Customer relationships 630 630 Software development 12,063 11,269 Other intangible assets 55 — Gross intangible assets 14,818 13,969 Accumulated amortization and impairment (10,247) (9,329) Total net balance $ 4,571 $ 4,640 The estimated useful lives of the intangible assets subject to amortization range between 5 years for software development and 20 years for some trademark and trade name assets. The goodwill balance at March 31, 2023, was gross $4.7 million and accumulated impairment of $3.7 million. There is no change in the three and nine months ended March 31, 2023. |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Mar. 31, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses The following table represents accrued expenses from the Condensed Consolidated Balance Sheets (in thousands): 03/31/2023 06/30/2022 Sales related programs (commissions, rebates, distributor programs, warranty and related) $ 2,779 $ 2,733 Income taxes 299 2,420 Professional fees 1,799 1,758 Other 1,496 1,463 Current portion pension cost 1,299 1,289 Taxes other than income tax 1,366 1,243 Workers compensation and employee deposits 493 518 Freight 236 352 Total $ 9,767 $ 11,776 |
Pension and Post-retirement Ben
Pension and Post-retirement Benefits | 9 Months Ended |
Mar. 31, 2023 | |
Retirement Benefits [Abstract] | |
Pension and Post-retirement Benefits | Pension and Post-retirement Benefits The Company has two defined benefit pension plans, one for U.S. employees which was frozen for new participants in 2016 and another for U.K. employees frozen for new participants in 2009. The Company has a postretirement medical insurance benefit plan for U.S. employees which remains open. The Company also has defined contribution plans. Net periodic benefit costs for the Company's defined benefit pension plans are located in Other (expense), net in Condensed Consolidated Statements of Operations except (in the table below) for service cost. Service cost are in cost of sales and selling, general and administrative expenses, allocated on headcount. Net periodic benefit costs consist of the following (in thousands): Three Months Ended Nine Months Ended 03/31/2023 03/31/2022 03/31/2023 03/31/2022 Interest cost 1,464 1,026 4,354 3,090 Expected return on plan assets (1,015) (1,092) (3,007) (3,290) Amortization of net loss 10 14 30 42 Expected net cost (benefit) total $ 459 $ (52) $ 1,377 $ (158) Net periodic benefit costs for the Company's Postretirement Medical Plan consists of the following (in thousands): Three Months Ended Nine Months Ended 03/31/2023 03/31/2022 03/31/2023 03/31/2022 Service cost $ 6 $ 9 $ 17 $ 27 Interest cost 18 12 53 37 Amortization of prior service credit (369) (369) (1,106) (1,106) Amortization of net loss 44 48 133 142 Total net (benefit) $ (301) $ (300) $ (903) $ (900) For the three months ended March 31, 2023, the Company contributed $0.2 million in both the U.S. and the UK to the pension plan. For the nine month periods ended March 31, 2023, the Company contributed $0.9 million, in the U.S. and $0.7 million in the UK pension plans. Based upon the actuarial valuations performed on the Company’s defined benefit plans as of June 30, 2022, the contribution for fiscal 2023 for the U.S. plans would require a contribution of $1.4 million and the U.K. plan would require one of $0.8 million. However, as a result of the American Rescue Plan Act of 2021, the minimum required company contribution for the U.S. Plan in fiscal 2023 was reduced. The Company believes that government regulation is only a small part of deciding the pension funding, and as a result, has contributed more than the federal requirement. The Company will evaluate the U.S. future contribution on a quarterly basis. The Company’s pension plans use fair value as the market-related value of plan assets and recognize net actuarial gains or losses in excess of ten percent (10)% of the greater of the market-related value of plan assets or of the plans’ projected benefit obligation in net periodic (benefit) cost as of the plan measurement date. Net actuarial gains or losses that are less than 10% of the thresholds noted above are accounted for as part of accumulated other comprehensive loss. |
Debt
Debt | 9 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt is comprised of the following (in thousands): 03/31/2023 06/30/2022 Short-term and current maturities Loan and Security Agreement (Term Loan) 1,495 1,495 Brazil Loans 3,769 5,052 Subtotal short-term and current maturities 5,264 6,547 Long-term debt (net of current portion) Loan and Security Agreement (Term Loan) 6,131 10,252 Loan and Security Agreement (Line of Credit) 2,897 11,397 Brazil Loans 1,398 3,771 Debt reacquisition cost (435) (515) Subtotal long-term debt 9,991 24,905 Total debt $ 15,255 $ 31,452 On April 29, 2022, the Company and certain of the Company’s domestic subsidiaries entered into a Loan and Security agreement (the "Loan and Security Agreement") with HSBC Bank USA ("the Lender"). The Company incurred debt re-acquisition cost of $0.5 million which are recorded net of debt and amortized over five years. These new credit facilities replaced the Company’s previous TD Bank credit facilities and are comprised of a $30 million revolving Loan and Security Agreement Line of Credit ("Line of Credit") with a $10 million uncommitted accordion provision, a Loan and Security Agreement Term Loan ("the Term Loan") with original principal of $12.1 million and a $7 million Capital Expenditure draw down credit facility (collectively, the "Facilities"). The Facilities are secured by a valid first-priority security interest on substantially all existing and future assets of the Company and its domestic subsidiaries. The interest rate on the Facilities is based on a grid which uses the percentage of the remaining availability of the revolving credit line to determine the floating margin to be added to the one month or three months Secured Overnight Financing Rate, (SOFR). The Facilities mature on April 29, 2027. Availability under the revolving line of credit is secured by and subject to a borrowing base comprised of eligible inventory and accounts receivable. The percentage of receivables included in the borrowing base is 90% for domestic investment grade and foreign insured accounts, 85% for domestic accounts that are neither investment grade nor insured, and 75% of foreign uninsured accounts. The percentage of inventory included in the borrowing base is the lower of 65% of the value of eligible inventory at cost or 85% of the net orderly liquidation value of eligible inventory at cost. Receivables and inventory are reported monthly to HSBC and subject to an annual field exam and inventory appraisal by an independent auditor commissioned by the Bank. The Company believes that the agreement provides an initial borrowing base sufficient for current domestic working capital needs and flexibility to accommodate potential growth-related working capital needs. Availability under the Line of Credit remains subject to a borrowing base comprised of accounts receivable, inventory, and real estate. The Company believes that the borrowing base will consistently produce availability under the Line of Credit of $30.0 million. A 0.25% commitment fee is charged on the unused portion of the Line of Credit. Availability under the Term Loan was comprised of 70% of the fair market value of the Borrower's eligible real estate, which included facilities located in Westlake, Ohio, and Waite Park, Minnesota and totaled $4.6 million; and 85% of the net orderly liquidation value of the Borrowers’ machinery and equipment, capped at $7.5 million. The real estate portion of the Term facility is subject to a 12.5 year straight line amortization paid quarterly, and the machinery and equipment portion of the facility is subject to a 6.67 year straight line amortization, also paid quarterly. The Term Loan is subject to equal quarterly installments of $373,650, payable on the last day of each fiscal quarter. The capital expenditure loan facility is available for the purchase of new machinery and equipment at 80% of the net invoice value of new machinery and equipment purchases, with a draw period of eighteen months past the closing date, with any amount outstanding under the facility subject to a 3.75% amortization rate per quarter. The Facilities contain financial covenants with respect to a minimum fixed charge coverage ratio of 1.00, measured on a trailing twelve-month basis, for both the U.S. borrowing companies tested quarterly and the Condensed Consolidated L.S. Starrett Company tested semi-annually. The Loan and Security agreement also contains the customary affirmative and negative covenants, including limitations on indebtedness, liens, acquisitions, asset dispositions, fundamental corporate changes, excess pension contributions, and certain customary events of default. Upon the occurrence or continuation of an event of default, the Lender may terminate all commitments and facilities, and require the immediate payment of the entire unpaid principal balances, accrued interest, and all other obligations. The TD Bank loan was retired in the quarter ended June 2022. In Brazil, the Company is actively mitigating this consequence of the build-up of ICMS (translate to "Tax on Commerce and Services") credits by filing applications with the relevant tax authorities to change the methodology of charging and re-claiming ICMS on imports and domestic sales so that this credit is subsequently relieved and does not increase at this rate again. The Brazilian federal tax authority has approved the Company's application and now it is awaiting state tax approval. This new methodology is common for similar sized, export focused companies in Brazil. The ICMS is an asset and its build-up was one of the reasons that the Brazilian operation initially incurred more debt. The ICMS balance as of March 31, 2023 was $5.2 million and as of June 30, 2022 was $5.4 million. The balance is located on the Condensed Consolidated Balance Sheets in prepaid expenses and other current assets. The Company’s Brazilian subsidiary incurs short-term loans with local banks in order to support the Company’s strategic initiatives. The loans are backed by the entity’s US dollar denominated export receivables. The Company’s Brazilian subsidiary has the following loans of March 31, 2023 (in thousands): Lending Institution Interest Rate Beginning Date Ending Date Outstanding Balance Itau 4.52% October 2021 September 2024 $ 3,429 Itau 4.98% February 2022 February 2024 1,219 Brasil 4.95% August 2022 July 2025 372 Brasil 3.80% September 2022 August 2024 95 Brasil 4.18% September 2022 September 2023 53 $ 5,168 |
Income Taxes
Income Taxes | 9 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Tax expense for the three months ended March 31, 2023 was a benefit of $4.0 million on profit before tax of $3.5 million (an effective tax rate of 113%). During the three months ended March 31, 2023 the Company recorded a discrete tax benefit of $5.0 million related to the Company’s partial release of its valuation allowance against its U.S. foreign tax credits and state net operating losses carryforwards, which are expected to be utilized based on demonstrated profitability and current and future forecast income. Excluding the tax benefit related to the partial release of valuation allowance of 144%, the effective tax rate for the three months ended March 31, 2023 was higher than the U.S. statutory tax rate of 21% primarily due to the GILTI provisions and the jurisdictional mix of earnings, particularly Brazil with a statutory rate of 34%, and non-creditable foreign withholding tax. Tax expense for the three months ended March 31, 2022, was $1.8 million on profit before tax of $6.1 million (an effective tax rate of 29%). The effective tax rate for the three months ended March 31, 2022 was higher than the U.S. statutory tax rate of 21% primarily due to the GILTI provisions and the jurisdictional mix of earnings, particularly Brazil with a statutory rate of 34%, offset by tax credits and permanent deductions generated from research expenses. Tax expense for the nine months ended March 31, 2023 was a benefit of $1.3 million on profit before tax of $11.4 million (an effective tax rate of 11%). During the nine months ended March 31, 2023, the Company recorded a discrete tax benefit of $5.0 million related to the Company’s partial release of its valuation allowance against its U.S. foreign tax credits and state net operating losses carryforwards, which are expected to be utilized based on demonstrated profitability and current and future forecast income. In addition the Company used current forecasts of future taxable income. Excluding the tax benefit related to the partial release of valuation allowance of 44%, the effective tax rate for the nine months ended March 31, 2023 was higher than the U.S. statutory tax rate of 21% primarily due to the GILTI provisions and the jurisdictional mix of earnings, particularly Brazil with a statutory rate of 34%, and non-creditable foreign withholding tax. Tax expense for the nine month period ended March 31, 2022 was $3.9 million on profit before tax of $14.0 million (an effective tax rate of 28%). The effective tax rate for the nine month period ended March 31, 2022 was higher than the U.S. statutory tax rate of 21% primarily due to the GILTI provisions, and the jurisdictional mix of earnings, particularly Brazil with a statutory rate of 34%, offset by discrete tax benefits recognized from excess stock compensation deductions, tax credits, and permanent deductions generated from research expenses. Tax expense for the three and nine month period ended March 31, 2023 reflects the impact of final U.S. foreign tax credit regulations effective in fiscal 2023 that result in an increase in tax expense from the GILTI inclusion. In the nine months ended March 31, 2023 the GILTI impact resulted in a 5.4% rate as compared to the nine months ended March 31, 2022 resulting in a rate of 1.1%. At the end of each reporting period management considers all evidence, both positive and negative, that could affect the view of the future realization of deferred tax assets. Based upon cumulative profitability in the US and increases in future taxable income projections, management has determined during the three months ended March 31, 2023, there is sufficient positive evidence to release a portion of valuation allowance previously provided against its foreign tax credits and certain state net operating losses. The Company continues to maintain a valuation allowance against certain foreign tax credit carryforwards and state net operating losses carryforward that are anticipated to expire unutilized and net operating losses in Australia as of March 31, 2023 and June 30, 2022. The Company had long term tax obligations related primarily to transfer pricing adjustments at March 31, 2023 and June 30, 2022. |
Contingencies
Contingencies | 9 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | ContingenciesThe Company is involved in certain legal matters, which arise, in the normal course of business. Although the outcomes of these legal matters are inherently difficult to predict, management does not expect the resolution of these legal matters to have a material adverse effect on the Company’s financial condition, results of operations or cash flows. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Account Policies (Policies) | 9 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Accounting | The unaudited interim Condensed Consolidated Financial Statements as of and for the nine months ended March 31, 2023 have been prepared by The L.S. Starrett Company (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. These unaudited Condensed Consolidated Financial Statements, which, in the opinion of management, reflect all adjustments (including normal recurring adjustments) necessary for a fair presentation, should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2022. The balance sheet as of June 30, 2022 has been derived from the Audited Consolidated Financial Statements as of and for the year ended June 30, 2022. Operating results are not necessarily indicative of the results that may be expected for any future interim period or for the entire fiscal year. The Company’s “fiscal year” begins July 1 st and ends June 30 th . Accounts Receivable and Allowance for Credit Losses Trade accounts receivable are recorded at invoiced amount and do not bear interest. Allowance for doubtful accounts is the Company's estimate of current expected credit losses on its existing accounts receivable and determined based on historical customer assessments, current financial conditions and reasonable and supportable forecasts. Account balances are charged off against the allowance when the Company determines the receivable will not be recovered. Fair Value Measurements Certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other liabilities are carried at cost, which approximates their fair value because of their short-term maturity. See Notes 10 and 11 within the notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for financial assets and liabilities held at carrying amount on the Condensed Consolidated Balance Sheet. The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Note 2 within the notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q to the Company’s Condensed Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended June 30, 2022 describes the significant accounting policies and methods used in the preparation of the Condensed Consolidated Financial Statements. |
Recently Adopted Accounting Pronouncements | In June 2016, the FASB issued ASU 2016-13 "Financial Instruments -Credit Losses" (ASC 326) "Measurement of Credit Losses on Financial Instruments,” and subsequent amendment to the guidance, ASU 2018-19 in November 2018. The standard significantly changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard replaces historic incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. The amendment loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2018-19 clarifies that receivables arising from operating leases are accounted for using lease guidance and not as financial instruments. The amendments should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. This pronouncement was extended for Small Reporting Companies and for the Company beginning July 1, 2022. The adoption of this standard did not have a material impact on the Company's Condensed Consolidated Financial Statements. |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Financial Results for Reportable Segments | Financial results for each reportable segment are as follows (in thousands): North International Unallocated Total Three Months ended March 31, 2023 Sales 1 $ 37,053 $ 24,625 $ — $ 61,678 Operating Income (Loss) $ 3,435 $ 2,502 $ (1,823) 4,114 Three Months ended March 31, 2022 Sales 2 $ 36,288 $ 24,191 $ — $ 60,479 Operating Income (Loss) $ 4,663 $ 2,628 $ (1,917) $ 5,374 1. Excludes $327 of North American segment intercompany sales to the International segment, and $3,556 of International segment intercompany sales to the North American segment. 2. Excludes $1,148 of North American segment intercompany sales to the International segment, and $4,402 of International segment intercompany sales to the North American segment. North International Unallocated Total Nine Months ended March 31, 2023 Sales 1 $ 113,223 $ 75,691 $ — $ 188,914 Operating Income (Loss) $ 10,314 $ 9,231 $ (5,753) $ 13,792 Nine months ended March 31, 2022 Sales 2 $ 102,763 $ 80,548 $ — $ 183,311 Operating Income (Loss) $ 8,713 $ 10,604 $ (5,611) $ 13,706 1. Excludes $1,961 of North American segment intercompany sales to the International segment, and $12,841 of International segment intercompany sales to the North American segment. 2. Excludes $2,827 of North American segment intercompany sales to the International segment, and $14,150 of International segment intercompany sales to the North American segment. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | Three Months Ended Nine Months Ended 03/31/2023 03/31/2022 03/31/2023 03/31/2022 North America United States $ 35,122 $ 34,181 $ 107,014 $ 97,049 Canada & Mexico 1,931 2,107 6,209 5,714 37,053 36,288 113,223 102,763 International Brazil 18,160 15,980 55,465 54,063 United Kingdom 3,563 4,750 10,059 14,254 China 1,497 1,899 5,160 5,761 Australia & New Zealand 1,405 1,562 5,007 6,469 24,625 24,191 75,691 80,548 Total Sales $ 61,678 $ 60,479 $ 188,914 $ 183,311 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Lease Assets And Liabilities | As of March 31, 2023, the Company’s right-of-use assets "ROU", lease obligations and remaining cash commitment on these leases (in thousands): Right-of-Use Operating Lease Remaining Cash Total leases $5,338 $5,522 $6,534 |
Schedule of Fiscal Year Minimum Operating Lease Commitments | At March 31, 2023, the Company had the following fiscal year minimum operating lease commitments (in thousands): Operating Lease 2023 (Remainder of year) $573 2024 2,128 2025 1,689 2026 1,335 2027 715 Thereafter 94 Subtotal $6,534 Imputed interest (1,012) Total 5,522 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consist of the following (in thousands): 03/31/2023 06/30/2022 Raw material and supplies $ 36,757 $ 35,752 Goods in process and finished parts 22,218 22,268 Finished goods 35,036 35,589 94,011 93,609 LIFO Reserve (26,326) (26,709) $ 67,685 $ 66,900 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Amortizable Intangible Assets | Amortizable intangible assets consist of the following (in thousands): 03/31/2023 6/30/2022 Trademarks and trade names 2,070 2,070 Customer relationships 630 630 Software development 12,063 11,269 Other intangible assets 55 — Gross intangible assets 14,818 13,969 Accumulated amortization and impairment (10,247) (9,329) Total net balance $ 4,571 $ 4,640 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | The following table represents accrued expenses from the Condensed Consolidated Balance Sheets (in thousands): 03/31/2023 06/30/2022 Sales related programs (commissions, rebates, distributor programs, warranty and related) $ 2,779 $ 2,733 Income taxes 299 2,420 Professional fees 1,799 1,758 Other 1,496 1,463 Current portion pension cost 1,299 1,289 Taxes other than income tax 1,366 1,243 Workers compensation and employee deposits 493 518 Freight 236 352 Total $ 9,767 $ 11,776 |
Pension and Post-retirement B_2
Pension and Post-retirement Benefits (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Retirement Benefits [Abstract] | |
Schedule of net benefit costs | Net periodic benefit costs consist of the following (in thousands): Three Months Ended Nine Months Ended 03/31/2023 03/31/2022 03/31/2023 03/31/2022 Interest cost 1,464 1,026 4,354 3,090 Expected return on plan assets (1,015) (1,092) (3,007) (3,290) Amortization of net loss 10 14 30 42 Expected net cost (benefit) total $ 459 $ (52) $ 1,377 $ (158) Net periodic benefit costs for the Company's Postretirement Medical Plan consists of the following (in thousands): Three Months Ended Nine Months Ended 03/31/2023 03/31/2022 03/31/2023 03/31/2022 Service cost $ 6 $ 9 $ 17 $ 27 Interest cost 18 12 53 37 Amortization of prior service credit (369) (369) (1,106) (1,106) Amortization of net loss 44 48 133 142 Total net (benefit) $ (301) $ (300) $ (903) $ (900) |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Debt is comprised of the following (in thousands): 03/31/2023 06/30/2022 Short-term and current maturities Loan and Security Agreement (Term Loan) 1,495 1,495 Brazil Loans 3,769 5,052 Subtotal short-term and current maturities 5,264 6,547 Long-term debt (net of current portion) Loan and Security Agreement (Term Loan) 6,131 10,252 Loan and Security Agreement (Line of Credit) 2,897 11,397 Brazil Loans 1,398 3,771 Debt reacquisition cost (435) (515) Subtotal long-term debt 9,991 24,905 Total debt $ 15,255 $ 31,452 |
Schedule of Short-Term Debt, Brazilian Subsidiary | The Company’s Brazilian subsidiary has the following loans of March 31, 2023 (in thousands): Lending Institution Interest Rate Beginning Date Ending Date Outstanding Balance Itau 4.52% October 2021 September 2024 $ 3,429 Itau 4.98% February 2022 February 2024 1,219 Brasil 4.95% August 2022 July 2025 372 Brasil 3.80% September 2022 August 2024 95 Brasil 4.18% September 2022 September 2023 53 $ 5,168 |
Segment Information - Narrative
Segment Information - Narrative (Details) | 9 Months Ended |
Mar. 31, 2023 segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Segment Information - Schedule
Segment Information - Schedule of Financial Results for Reportable Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Sales | $ 61,678 | $ 60,479 | $ 188,914 | $ 183,311 |
Operating Income (Loss) | 4,114 | 5,374 | 13,792 | 13,706 |
Unallocated | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
Operating Income (Loss) | (1,823) | (1,917) | (5,753) | (5,611) |
North American Operations | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Sales | 37,053 | 36,288 | 113,223 | 102,763 |
North American Operations | Operating Segments | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Sales | 37,053 | 36,288 | 113,223 | 102,763 |
Operating Income (Loss) | 3,435 | 4,663 | 10,314 | 8,713 |
North American Operations | Intercompany Sales | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Intercompany sales | 327 | 1,148 | 1,961 | 2,827 |
International Operations | Operating Segments | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Sales | 24,625 | 24,191 | 75,691 | 80,548 |
Operating Income (Loss) | 2,502 | 2,628 | 9,231 | 10,604 |
International Operations | Intercompany Sales | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Intercompany sales | $ 3,556 | $ 4,402 | $ 12,841 | $ 14,150 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Narrative (Details) | 9 Months Ended | |
Mar. 31, 2023 USD ($) segment | Jun. 30, 2022 USD ($) | |
Revenue from Contract with Customer [Abstract] | ||
Customer return asset | $ 100,000 | $ 200,000 |
Customer refund liability | 200,000 | 200,000 |
Contract asset | 0 | 0 |
Contract liability | $ 800,000 | $ 900,000 |
Number of reportable segments | segment | 2 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 61,678 | $ 60,479 | $ 188,914 | $ 183,311 |
North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 37,053 | 36,288 | 113,223 | 102,763 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 24,625 | 24,191 | 75,691 | 80,548 |
United States | North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 35,122 | 34,181 | 107,014 | 97,049 |
Canada & Mexico | North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,931 | 2,107 | 6,209 | 5,714 |
Brazil | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 18,160 | 15,980 | 55,465 | 54,063 |
United Kingdom | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 3,563 | 4,750 | 10,059 | 14,254 |
China | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,497 | 1,899 | 5,160 | 5,761 |
Australia & New Zealand | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 1,405 | $ 1,562 | $ 5,007 | $ 6,469 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Jun. 30, 2022 | |
Lessee, Lease, Description [Line Items] | ||||||
Operating lease cost | $ 500 | $ 500 | $ 1,500 | $ 2,100 | ||
Weighted average discount rate | 9% | 9% | ||||
Weighted average remaining lease term | 3 years 6 months | 3 years 6 months | ||||
Operating lease commitments | $ 400 | $ 1,200 | ||||
Right of use assets | $ 5,338 | $ 5,338 | $ 5,540 | |||
Australia & New Zealand | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Right of use assets | $ 600 |
Leases - Schedule of lease asse
Leases - Schedule of lease assets and liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Jun. 30, 2022 |
Commitments and Contingencies Disclosure [Abstract] | ||
Right-of-Use Assets | $ 5,338 | $ 5,540 |
Operating Lease Obligations | 5,522 | |
Remaining Cash Commitment | $ 6,534 |
Leases - Schedule of Fiscal yea
Leases - Schedule of Fiscal year minimum operating lease commitments (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2023 (Remainder of year) | $ 573 |
2024 | 2,128 |
2025 | 1,689 |
2026 | 1,335 |
2027 | 715 |
Thereafter | 94 |
Subtotal | 6,534 |
Imputed interest | (1,012) |
Operating lease obligations | $ 5,522 |
Stock-based Compensation (Detai
Stock-based Compensation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
The 2012 Stock Incentive Plan | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Compensation expense related to stock-based plans | $ 0.2 | $ 0.1 | $ 0.5 | $ 0.4 |
Inventories - Components of Inv
Inventories - Components of Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Jun. 30, 2022 |
Inventory Disclosure [Abstract] | ||
Raw material and supplies | $ 36,757 | $ 35,752 |
Goods in process and finished parts | 22,218 | 22,268 |
Finished goods | 35,036 | 35,589 |
Total before LIFO reserve | 94,011 | 93,609 |
LIFO Reserve | (26,326) | (26,709) |
Total | $ 67,685 | $ 66,900 |
Inventories - Narrative (Detail
Inventories - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Jun. 30, 2022 | |
Inventory Disclosure [Abstract] | |||
Inventories | $ 67,685 | $ 66,900 | |
LIFO reserves | 26,326 | 26,709 | |
Inventory difference using FIFO basis | 40,100 | 39,300 | |
LIFO inventory amount | 13,800 | $ 12,600 | |
Effect of LIFO Reserve on income | $ 400 | $ (4,300) |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Finite-lived Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Jun. 30, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross intangible assets | $ 14,818 | $ 13,969 |
Accumulated amortization and impairment | (10,247) | (9,329) |
Total net balance | 4,571 | 4,640 |
Trademarks and trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross intangible assets | 2,070 | 2,070 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross intangible assets | 630 | 630 |
Software development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross intangible assets | 12,063 | 11,269 |
Other intangible assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross intangible assets | $ 55 | $ 0 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Narrative (Details) $ in Millions | 9 Months Ended |
Mar. 31, 2023 USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Goodwill, gross | $ 4.7 |
Goodwill impairment loss | $ 3.7 |
Computer Software | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible asset useful life | 5 years |
Trademarks and Trade Names | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible asset useful life | 20 years |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Jun. 30, 2022 |
Payables and Accruals [Abstract] | ||
Sales related programs (commissions, rebates, distributor programs, warranty and related) | $ 2,779 | $ 2,733 |
Income taxes | 299 | 2,420 |
Professional fees | 1,799 | 1,758 |
Other | 1,496 | 1,463 |
Current portion pension cost | 1,299 | 1,289 |
Taxes other than income tax | 1,366 | 1,243 |
Workers compensation and employee deposits | 493 | 518 |
Freight | 236 | 352 |
Total | $ 9,767 | $ 11,776 |
Pension and Post-retirement B_3
Pension and Post-retirement Benefits - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2023 USD ($) plan | Mar. 31, 2023 USD ($) plan | Jun. 30, 2022 USD ($) | |
Defined Benefit Plan Disclosure [Line Items] | |||
Number of defined benefit pension plans | plan | 2 | 2 | |
Pension Plan | United States | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Employer contributions | $ 0.2 | $ 0.9 | |
Expected employer contributions for next fiscal year | $ 1.4 | ||
Pension Plan | Foreign Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Employer contributions | $ 0.2 | $ 0.7 | |
Expected employer contributions for next fiscal year | $ 0.8 |
Pension and Post-retirement B_4
Pension and Post-retirement Benefits - Net Periodic Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Pension Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Interest cost | $ 1,464 | $ 1,026 | $ 4,354 | $ 3,090 |
Expected return on plan assets | (1,015) | (1,092) | (3,007) | (3,290) |
Amortization of net loss | 10 | 14 | 30 | 42 |
Total | 459 | (52) | 1,377 | (158) |
Post Retirement Medical Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 6 | 9 | 17 | 27 |
Interest cost | 18 | 12 | 53 | 37 |
Amortization of prior service credit | (369) | (369) | (1,106) | (1,106) |
Amortization of net loss | 44 | 48 | 133 | 142 |
Total | $ (301) | $ (300) | $ (903) | $ (900) |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Jun. 30, 2022 |
Short-term Debt [Abstract] | ||
Loan and Security Agreement (Term Loan) | $ 5,264 | $ 6,547 |
Brazil Loans | 5,168 | |
Subtotal short-term and current maturities | 5,264 | 6,547 |
Long-term Debt, Excluding Current Maturities [Abstract] | ||
Loan and security agreement | 9,991 | 24,905 |
Total debt | 15,255 | 31,452 |
Loan and Security Agreement (Term Loan) | ||
Long-term Debt, Excluding Current Maturities [Abstract] | ||
Loan and security agreement | 6,131 | 10,252 |
Loan and Security Agreement (Line of Credit) | ||
Long-term Debt, Excluding Current Maturities [Abstract] | ||
Loan and security agreement | 2,897 | 11,397 |
Brazil Loans | ||
Long-term Debt, Excluding Current Maturities [Abstract] | ||
Loan and security agreement | 1,398 | 3,771 |
Debt reacquisition cost | (435) | (515) |
Loan and Security Agreement (Term Loan) | ||
Short-term Debt [Abstract] | ||
Loan and Security Agreement (Term Loan) | 1,495 | 1,495 |
Brazil Loans | ||
Short-term Debt [Abstract] | ||
Brazil Loans | $ 3,769 | $ 5,052 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 9 Months Ended | ||
Apr. 29, 2022 | Mar. 31, 2023 | Jun. 30, 2022 | |
Debt Instrument [Line Items] | |||
Re-acquisition costs, amortization period (in years) | 5 years | ||
Credit limit on revolving loan facility | $ 30,000,000 | ||
Commitment fee percentage on line of credit | 0.25% | ||
ICMS balance | $ 5,200,000 | $ 5,400,000 | |
Loan and Security Agreement (Term Loan) | Loan and Security Agreement (Line of Credit) | |||
Debt Instrument [Line Items] | |||
Minimum fixed charge coverage ratio | 100% | ||
Revolving Credit Facility | The Credit Facility | |||
Debt Instrument [Line Items] | |||
Credit limit on revolving loan facility | $ 30,000,000 | ||
Uncommitted accordion provision | 10,000,000 | ||
Face value of term loan | 12,100,000 | ||
Revolving Credit Facility | Capital Expenditure Draw Down Credit Facility | |||
Debt Instrument [Line Items] | |||
Credit limit on revolving loan facility | $ 7,000,000 | ||
Revolving Credit Facility | Loan and Security Agreement (Term Loan) | Loan and Security Agreement (Line of Credit) | |||
Debt Instrument [Line Items] | |||
Percentage of receivables included in borrowing base, investment grade | 90% | ||
Percentage of receivables included in borrowing base, domestic investment grade and foreign insured | 85% | ||
Percentage of receivables included in borrowing base, foreign uninsured | 75% | ||
Percentage of eligible inventory included in borrowing base at cost | 65% | ||
Percentage of eligible inventory included in borrowing base at net orderly liquidation value | 85% | ||
Term Loan | Loan and Security Agreement (Term Loan) | Loan and Security Agreement (Line of Credit) | |||
Debt Instrument [Line Items] | |||
Percentage of the fair market value of eligible real estate | 70% | ||
Collateral amount | $ 4,600,000 | ||
Percentage of net orderly liquidation value of machinery and equipment | 85% | ||
Capped value of eligible machinery and equipment | $ 7,500,000 | ||
Amortization period for real estate portion | 12 years 6 months | ||
Amortization period for machinery and equipment portion | 6 years 8 months 1 day | ||
Quarterly term loan payments | $ 373,650 | ||
Capital Expenditure Draw Down Credit Facility | Loan and Security Agreement (Term Loan) | Loan and Security Agreement (Line of Credit) | |||
Debt Instrument [Line Items] | |||
Percentage of eligible new machinery and equipment | 80% | ||
Draw down period | 18 months | ||
Amortization rate for capital expenditure draw amounts outstanding | 3.75% | ||
HSBC Bank USA | |||
Debt Instrument [Line Items] | |||
Increase in debt | $ 500,000 |
Debt - Short-term Debt (Details
Debt - Short-term Debt (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Statement [Line Items] | |
Outstanding Balance | $ 5,168 |
Itau Bank | 4.52% Short-term loan | |
Statement [Line Items] | |
Interest Rate | 4.52% |
Outstanding Balance | $ 3,429 |
Itau Bank | 4.98% Short-term loan | |
Statement [Line Items] | |
Interest Rate | 4.98% |
Outstanding Balance | $ 1,219 |
Brasil Bank | 4.95% Short-Term Loan | |
Statement [Line Items] | |
Interest Rate | 4.95% |
Outstanding Balance | $ 372 |
Brasil Bank | 3.80% Short-Term Loan | |
Statement [Line Items] | |
Interest Rate | 3.80% |
Outstanding Balance | $ 95 |
Brasil Bank | 4.18% Short-Term Loan | |
Statement [Line Items] | |
Interest Rate | 4.18% |
Outstanding Balance | $ 53 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Operating Loss Carryforwards [Line Items] | ||||
Income tax (benefit) expense | $ 3,961 | $ (1,774) | $ 1,267 | $ (3,911) |
Profit before tax | $ 3,512 | $ 6,058 | $ 11,393 | $ 13,955 |
Effective income tax rate percentage | 113% | 29% | 11% | 28% |
Operating loss carryforwards, valuation allowance | $ 5,000 | $ 5,000 | ||
Valuation allowance | $ 5,000 | $ 5,000 | ||
Valuation allowance of the effective tax rate | 144% | 44% | ||
Effective income tax rate reconciliation, GILTI, percent | 5.40% | 1.10% | ||
Foreign Tax Authority | Secretariat of the Federal Revenue Bureau of Brazil | ||||
Operating Loss Carryforwards [Line Items] | ||||
Effective income tax rate percentage | 34% | 34% | 34% | 34% |