The L.S. Starrett Company (Starrett) has announced operating results for the financial quarter ending September 30, 2021.
Sales and order intake trends, which had begun to rapidly improve in fiscal 2021, continued an upward trend through the first quarter of fiscal 2022. A full recovery to pre-pandemic order intake levels has now been achieved in all sectors of the Company’s business, including the North American precision hand tool and high-end metrology businesses, while the Company’s international industrial businesses continue to exceed pre-pandemic order intake and sales levels. Consolidated sales for the quarter of $61.5 million represent an increase of 25% over the first quarter of fiscal 2021. On a currency-neutral basis, sales for the quarter were $60.4 million, representing an increase of 22% over the same time period comparison.
Restructuring Projects Drive Improved Margins
The Company improved gross margin by 120 basis points in the first quarter of 2022 compared to the first quarter of 2021, despite pandemic related headwinds related to global supply chain issues, raw material price increases, and wage pressure related to labor shortages in its North American operations. This improvement was primarily driven by the positive impact of the restructuring strategy the Company implemented throughout fiscal 2021.
Operating income improved to $4.1 million in the quarter ending September 30, 2021, up from $1.8 million in the quarter ending one year prior, representing a 125% increase in relation to sales. Adjusted operating income, which adds back restructuring charges incurred in the first quarter of fiscal 2021 for comparative purposes, increased from $2.2 million in the quarter ending September 30, 2020 to $4.1 million in the quarter ending September 30, 2021, representing a 90% increase in relation to sales.
Strategic Efforts Implemented to Mitigate Global Supply Chain Issues
During the quarter ended September 30, 2021, the Company has implemented temporary protective measures in the face of increasing global supply chain challenges by increasing its inventory levels. These measures, implemented to insulate customer service requirements, have led to net cash used in operating activities of $5.8 million for the quarter ended September 30, 2021, half of which is a result of increased inventory levels. The Company implemented these measures because it still maintains a strong liquidity position in relation to available cash and credit facilities.
For more information: www.starrett.com