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The L.S. Starrett Company Reports Operating Results (10-Q)

February 03, 2011 | About:
10qk

10qk

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The L.S. Starrett Company (SCX) filed Quarterly Report for the period ended 2010-12-25.

Starrett (ls) A has a market cap of $89.2 million; its shares were traded at around $13.34 with and P/S ratio of 0.4. The dividend yield of Starrett (ls) A stocks is 2.5%.Hedge Fund Gurus that owns SCX: Jim Simons of Renaissance Technologies LLC. Mutual Fund and Other Gurus that owns SCX: Arnold Van Den Berg of Century Management, Mario Gabelli of GAMCO Investors, Chuck Royce of Royce& Associates, Mario Gabelli of GAMCO Investors.

Highlight of Business Operations:

Net sales increased $6.8 million or 13.4% from $50.5 million to $57.3 million. A weaker U. S. dollar translated into a $0.5 million of the revenue increase. Operating income improved $0.8 million as a $2.8 million improvement in gross margin more than offset a $2.0 million increase in selling and general expenses. Net income increased $1.6 million from a loss of $0.3 million ($0.05 per share) in the fiscal 2010 quarter compared to a profit of $1.3 million ($0.20 per share) in the fiscal 2011 quarter, principally due to aforementioned reasons and a lower effective tax rate.

Net sales in North America increased $4.4 million or 19% from $23.4 million to $27.8 million as strong gains in the industrial sector more than offset declines in the construction markets. International net sales increased $2.4 million or 9% from $27.1 million to $29.5 million, led by Southeast Asia and South America.

Gross margin improved $2.8 million from $15.9 million (31.5% of revenue) to $18.7 million (32.6% of revenue) with North America and International posting gains of $0.9 million and $1.9 million, respectively. North American gross margins as a percentage of revenue declined 1.5% from 29.9% to 28.4% as a $1.3 million volume increase was offset by a $0.4 million margin erosion. This decrease in margin was the result of an unfavorable product mix and increased labor costs. International gross margins improved 3.8% from 32.8% to 36.6% principally as a result of improved efficiencies driven by increased sales revenue.

Earnings before taxes increased $1.4 million from $1.3 million in fiscal 2010 to $2.7 million in fiscal 2011. In the second quarter of fiscal 2011, the Company prevailed on an outstanding non-income tax lawsuit with the Brazilian government resulting in a $0.9 million gain. This gain has been recorded in the second quarter as a $0.4 million reduction in selling and general expenses and $0.5 million increase in interest income, which is included in other income (expense). The improvement was the result of a $0.8 million gain in operating income and a $0.6 million favorable swing in other income. The primary factors influencing the improved other income were lower interest expense and lower foreign exchange losses offsetting a $0.4 million equity loss in a private software development company.

Earning before taxes increased $7.6 million from a loss of $3.4 million in fiscal 2010 to a profit of $4.1 million in fiscal 2011. The improvement was the result of a $6.4 million gain in operating income and a $1.2 million favorable swing in other income. The improved other income was due to lower interest expense coupled with lower foreign exchange losses offsetting $0.4 million equity loss in a private software development company.

Cash increased $1.1 million as increased borrowings and favorable foreign exchange more than offset higher working capital requirements. The $11.4 million swing in cash provided by operations from $11.6 million in fiscal 2010 to $0.3 million in fiscal 2011 was due to the economic recovery resulting in an increase in accounts receivables of $4.4 million related to higher sales and increased inventories of $14.4 million to support revenue growth partially offset by higher net income of $5.6 million.

Read the The complete Report

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