Cover page
Cover page - shares | 9 Months Ended | |
Mar. 31, 2021 | Apr. 29, 2021 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 1-367 | |
Entity Registrant Name | STARRETT L S CO | |
Entity Incorporation, State or Country Code | MA | |
Entity Address, Address Line One | 121 Crescent Street | |
Entity Address, City or Town | Athol | |
Entity Tax Identification Number | 04-1866480 | |
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 - $1.00 Per Share Par Value | |
Trading Symbol | SCX | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000093676 | |
Amendment Flag | false | |
Class A | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 6,453,544 | |
Class B | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 650,010 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Current assets: | ||
Cash | $ 11,247 | $ 13,458 |
Accounts receivable (less allowance for doubtful accounts of $583 and $736, respectively) | 34,467 | 29,012 |
Inventories | 52,536 | 52,987 |
Prepaid expenses and other current assets | 10,355 | 8,641 |
Total current assets | 108,605 | 104,098 |
Property, plant and equipment, net | 35,001 | 37,090 |
Right of use assets | 4,186 | 4,465 |
Deferred tax assets, net | 23,513 | 21,018 |
Intangible assets, net | 4,935 | 4,997 |
Goodwill | 1,015 | 1,015 |
Total assets | 177,255 | 172,683 |
Current liabilities: | ||
Current maturities of debt | 6,895 | 4,532 |
Current lease liability | 1,247 | 1,905 |
Accounts payable | 12,089 | 7,579 |
Accrued expenses | 7,745 | 8,838 |
Accrued compensation | 5,663 | 4,980 |
Total current liabilities | 33,639 | 27,834 |
Other tax obligations | 2,761 | 2,532 |
Long-term lease liability | 3,027 | 2,655 |
Long-term debt, net of current portion | 18,530 | 26,341 |
Postretirement benefit and pension obligations | 61,948 | 67,338 |
Total liabilities | 119,905 | 126,700 |
Stockholders' equity: | ||
Additional paid-in capital | 56,329 | 55,762 |
Retained earnings | 69,638 | 58,648 |
Accumulated other comprehensive loss | (75,721) | (75,415) |
Total stockholders' equity | 57,350 | 45,983 |
Total liabilities and stockholders’ equity | 177,255 | 172,683 |
Class A | ||
Stockholders' equity: | ||
Common stock | 6,452 | $ 6,308 |
Common stock, par value (in dollars per share) | $ 1 | |
Class B | ||
Stockholders' equity: | ||
Common stock | $ 652 | $ 680 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Allowance for doubtful accounts | $ 583 | $ 736 |
Class A | ||
Common stock, par value (in dollars per share) | $ 1 | |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares, outstanding (in shares) | 6,451,960 | 6,308,025 |
Class B | ||
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) | 651,968 | 679,680 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||||
Net sales | $ 54,944 | $ 49,998 | $ 158,408 | $ 158,976 |
Cost of goods sold | 36,795 | 35,154 | 107,082 | 107,793 |
Gross margin | $ 18,149 | $ 14,844 | $ 51,326 | $ 51,183 |
% of net sales | 0.00% | 0.00% | 0.00% | 0.00% |
Selling, general and administrative expenses | $ 13,511 | $ 14,780 | $ 41,126 | $ 46,912 |
Restructuring charges | 788 | 0 | 1,518 | 0 |
Gain on sale of building | 0 | 0 | (3,204) | 0 |
Operating income | 3,850 | 64 | 11,886 | 4,271 |
Other income (expense), net | 663 | 223 | 236 | (833) |
Income before income taxes | 4,513 | 287 | 12,122 | 3,438 |
Income tax expense (benefit) | 1,496 | (326) | 1,132 | 787 |
Net income | $ 3,017 | $ 613 | $ 10,990 | $ 2,651 |
Basic income per share (in dollars per share) | $ 420 | $ 90 | $ 1,560 | $ 380 |
Diluted income per share (in dollars per share) | $ 410 | $ 90 | $ 1,500 | $ 380 |
Weighted average outstanding shares used in per share calculations: | ||||
Basic (in shares) | 7,104 | 6,962 | 7,058 | 6,941 |
Diluted (in shares) | 7,390 | 7,022 | 7,335 | 7,017 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 3,017 | $ 613 | $ 10,990 | $ 2,651 |
Other comprehensive income (loss): | ||||
Currency translation (loss), net of tax | (3,835) | (9,813) | (225) | (10,878) |
Pension and postretirement plans, net of tax | (60) | (21) | (81) | (64) |
Other comprehensive (loss) | (3,895) | (9,834) | (306) | (10,942) |
Total comprehensive income (loss) | $ (878) | $ (9,221) | $ 10,684 | $ (8,291) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock OutstandingClass A | Common Stock OutstandingClass B | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss |
Beginning balance at Jun. 30, 2019 | $ 83,379 | $ 6,207 | $ 690 | $ 55,276 | $ 80,487 | $ (59,281) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Total comprehensive income (loss) | (2,981) | 778 | (3,759) | |||
Repurchase of shares | (10) | (2) | (8) | |||
Stock-based compensation | 214 | 57 | 157 | |||
Conversion | 6 | (6) | ||||
Ending balance at Sep. 30, 2019 | 80,602 | 6,270 | 682 | 55,425 | 81,265 | (63,040) |
Beginning balance at Jun. 30, 2019 | 83,379 | 6,207 | 690 | 55,276 | 80,487 | (59,281) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Total comprehensive income (loss) | (8,291) | |||||
Ending balance at Mar. 31, 2020 | 75,518 | 6,297 | 673 | 55,633 | 83,138 | (70,223) |
Beginning balance at Sep. 30, 2019 | 80,602 | 6,270 | 682 | 55,425 | 81,265 | (63,040) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Total comprehensive income (loss) | 3,911 | 1,260 | 2,651 | |||
Repurchase of shares | (921) | (3) | ||||
Issuance of stock | 37 | 7 | 30 | |||
Stock-based compensation | 72 | 2 | 70 | |||
Conversion | 8 | (8) | ||||
Ending balance at Dec. 31, 2019 | 84,619 | 6,280 | 681 | 55,522 | 82,525 | (60,389) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Total comprehensive income (loss) | (9,221) | 613 | (9,834) | |||
Repurchase of shares | (4) | (1) | (3) | |||
Stock-based compensation | 124 | 10 | 114 | |||
Conversion | 0 | 7 | (7) | |||
Ending balance at Mar. 31, 2020 | 75,518 | 6,297 | 673 | 55,633 | 83,138 | (70,223) |
Accumulated balance consists of: | ||||||
Translation loss | (60,437) | |||||
Pension and postretirement plans, net of taxes | (9,786) | |||||
Accumulated other comprehensive loss | (70,223) | |||||
Accumulated other comprehensive loss | (75,415) | |||||
Beginning balance at Jun. 30, 2020 | 45,983 | 6,308 | 680 | 55,762 | 58,648 | (75,415) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Total comprehensive income (loss) | 3,858 | 4,116 | (258) | |||
Repurchase of shares | (6) | (2) | (4) | |||
Stock-based compensation | 367 | 8 | 359 | |||
Conversion | 0 | 26 | (26) | |||
Ending balance at Sep. 30, 2020 | 50,202 | 6,342 | 652 | 56,117 | 62,764 | (75,673) |
Beginning balance at Jun. 30, 2020 | 45,983 | 6,308 | 680 | 55,762 | 58,648 | (75,415) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Total comprehensive income (loss) | 10,684 | |||||
Ending balance at Mar. 31, 2021 | 57,350 | 6,452 | 652 | 56,329 | 69,638 | (75,721) |
Beginning balance at Sep. 30, 2020 | 50,202 | 6,342 | 652 | 56,117 | 62,764 | (75,673) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Total comprehensive income (loss) | 7,704 | 3,857 | 3,847 | |||
Repurchase of shares | (1) | (1) | ||||
Issuance of stock | 25 | 8 | 17 | |||
Stock-based compensation | 154 | 103 | 51 | |||
Conversion | 0 | 3 | (3) | |||
Ending balance at Dec. 31, 2020 | 58,084 | 6,448 | 657 | 56,184 | 66,621 | (71,826) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Total comprehensive income (loss) | (878) | 3,017 | (3,895) | |||
Repurchase of shares | (4) | (1) | (3) | |||
Stock-based compensation | 148 | 148 | ||||
Conversion | 0 | 4 | (4) | |||
Ending balance at Mar. 31, 2021 | 57,350 | $ 6,452 | $ 652 | $ 56,329 | $ 69,638 | (75,721) |
Accumulated balance consists of: | ||||||
Translation loss | (62,099) | |||||
Pension and postretirement plans, net of taxes | (13,622) | |||||
Accumulated other comprehensive loss | $ (75,721) | $ (75,721) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities: | ||
Net income | $ 10,990 | $ 2,651 |
Non-cash operating activities: | ||
Gain from sale of real estate | (3,204) | 0 |
Depreciation | 3,912 | 3,735 |
Amortization | 911 | 1,540 |
Stock-based compensation | 669 | 410 |
Net long-term tax obligations | 117 | 163 |
Deferred taxes | (2,279) | 264 |
Postretirement benefit and pension obligations | (11) | 92 |
Working capital changes: | ||
Accounts receivable | (4,580) | 2,876 |
Inventories | 1,391 | (3,097) |
Other current assets | (1,813) | (831) |
Other current liabilities | 2,803 | (5,463) |
Prepaid pension expense | (6,374) | (6,360) |
Other | 189 | 159 |
Net cash provided by (used in) operating activities | 2,721 | (3,861) |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (4,048) | (7,595) |
Software development | (849) | (1,023) |
Proceeds from sale of real estate | 5,214 | 0 |
Net cash provided by (used in) investing activities | 317 | (8,618) |
Cash flows from financing activities: | ||
Proceeds from borrowing | 12,581 | 11,556 |
Debt repayments | (17,924) | (4,666) |
Proceeds from common stock issued | 25 | 37 |
Shares repurchased | (11) | (17) |
Net cash (used in) provided by financing activities | (5,329) | 6,910 |
Effect of exchange rate changes on cash | 80 | 202 |
Net decrease in cash | (2,211) | (5,367) |
Cash, beginning of period | 13,458 | 15,582 |
Cash, end of period | 11,247 | 10,215 |
Supplemental cash flow information: | ||
Interest paid | 673 | 737 |
Income taxes paid, net | $ 3,535 | $ 1,304 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Account Policies | 9 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Account Policies | Basis of Presentation and Summary of Significant Account Policies The unaudited interim consolidated financial statements as of and for the nine months ended March 31, 2021 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 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, 2020. The balance sheet as of June 30, 2020 has been derived from the audited consolidated financial statements as of and for the year ended June 30, 2020. 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 . 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 consolidated financial statements and accompanying notes. Note 2 to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended June 30, 2020 describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. Throughout the COVID-19 pandemic crisis, the Company's main focus has been on protecting the health and well-being of its employees, and the long-term financial health of the Company. The COVID-19 pandemic continues to have a negative impact on certain sectors of the Company's Sales, particularly in Industrial and Capital Equipment markets. Products sold through Consumer channels, principally in Brazil, have returned to or even exceed pre-pandemic levels. Some uncertainty still exists when trying to predict a full recovery across the whole company. |
Segment Information
Segment Information | 9 Months Ended |
Mar. 31, 2021 | |
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 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, 2020. The Company’s business is aggregated into two reportable segments based on geography of operations: North American Operations and International Operations. 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 significant changes in the segment operations or in the segment assets from the Annual Report on Form 10-K. Financial results for each reportable segment are as follows (in thousands): North International Unallocated Total Three months ended March 31, 2021 Sales 1 $ 32,519 $ 22,425 $ — $ 54,944 Operating Income (Loss) 2,931 2,692 (1,773) $ 3,850 Three Months ended March 31, 2020 Sales 2 $ 33,369 $ 16,629 $ — $ 49,998 Operating Income (Loss) $ 1,337 $ 448 $ (1,721) $ 64 1. Excludes $1,338 of North American segment intercompany sales to the International segment, and $3,197 of International segment intercompany sales to the North American segment. 2. Excludes $1,063 of North American segment intercompany sales to the International segment, and $2,722 of International segment intercompany sales to the North American segment. North International Unallocated Total Nine Months ended March 31, 2021 Sales 1 $ 85,609 0 $ 72,799 $ — $ 158,408 Operating Income (Loss) 8,611 8,804 $ (5,529) $ 11,886 Nine months ended March 31, 2020 Sales 2 $ 97,475 $ 61,501 $ — $ 158,976 Operating Income (Loss) $ 6,217 $ 3,069 $ (5,015) $ 4,271 1 1. Excludes $3,075 of North American segment intercompany sales to the International segment, and $8,593 of International segment intercompany sales to the North American segment. 2. Excludes $3,079 of North American segment intercompany sales to the International segment, and $10,820 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, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers The core principle of ASC Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The application of the FASB’s guidance on revenue recognition requires the Company to recognize the amount of revenue and consideration that the Company expects to receive in exchange for goods and services transferred to our customers. To do this, the Company applies the five-step model prescribed by the FASB, which requires us to: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the Company satisfies a performance obligation. The Company accounts for a contract or purchase order when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability is probable. Revenue is recognized when control of the product passes to the customer, which is upon shipment, unless otherwise specified within the customer contract or on the purchase order as delivery, and is recognized at the amount that reflects the consideration the Company expects to receive for the products sold, including various forms of discounts. When revenue is recorded, estimates of returns are made and recorded as a reduction of revenue. Contracts with customers are evaluated to determine if there are separate performance obligations related to timing of product shipment that will be satisfied in different accounting periods. When that is the case, revenue is deferred until each performance obligation is met. No revenue was deferred as of March 31, 2021 and June 30, 2020. Purchase orders are of durations less than one year. As such, the Company applies the practical expedient in ASC paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less, for which work has not yet been performed. Certain taxes assessed by governmental authorities on revenue producing transactions, such as value added taxes, are excluded from revenue and recorded on a net basis. Performance Obligations The Company’s primary source of revenue is derived from the manufacture and distribution of metrology tools and equipment, saw blades and related products sold to distributors. The Company recognizes revenue for sales to our customers when transfer of control of the related good or service has occurred. All of the Company’s revenue was recognized under the point in time approach for the three and nine months ended March 31, 2021 and 2020. Contract terms with certain metrology equipment customers could result in products and services being transferred over time as a result of the customized nature of some of the Company’s products, together with contractual provisions in the customer contracts that provide the Company with an enforceable right to payment for performance completed to date; however, under typical terms, the Company does not have the right to consideration until the time of shipment from its manufacturing facilities or distribution centers, or until the time of delivery to its customers. If certain contracts in the future provide the Company with this enforceable right of payment, the timing of revenue recognition from products transferred to customers over time may be slightly accelerated compared to the Company’s right to consideration at the time of shipment or delivery. The Company’s typical payment terms vary based on the customer, geographic region, and the type of goods and services in the contract or purchase order. The period of time between invoicing and when payment is due is typically not significant. Amounts billed and due from the Company’s customers are classified as accounts receivable on the Consolidated Balance Sheets. As the Company’s standard payment terms are usually less than one year, the Company has elected the practical expedient under ASC paragraph 606-10-32-18 to not assess whether a contract has a significant financing component. The Company’s customers take delivery of goods, and they are recognized as revenue at the time of transfer of control to the customer, which is usually at the time of shipment, unless otherwise specified in the customer contract or purchase order. This determination is based on applicable shipping terms, as well as the consideration of other indicators, including timing of when the Company has a present right to payment, when physical possession of products is transferred to customers, when the customer has the asset, and provisions in contracts regarding customer acceptance. While unit prices are generally fixed, the Company provides variable consideration for certain customers, typically in the form of promotional incentives at the time of sale. The Company utilizes the most likely amount to estimate the effect of uncertainty on the amount of variable consideration to which the Company would be entitled. The most likely amount method considers the single most likely amount from a range of possible consideration amounts. The most likely amounts are based upon the contractual terms of the incentives and historical experience with each customer. The Company records estimates for cash discounts, promotional rebates, and other promotional allowances in the period the related revenue is recognized (“Customer Credits”). The provision for Customer Credits is recorded as a reduction from gross sales and reserves for Customer Credits are presented within accrued expenses on the Consolidated Balance Sheets. Actual Customer Credits have not differed materially from estimated amounts for each period presented. Amounts billed to customers for shipping and handling are included in net sales and costs associated with shipping and handling are included in cost of sales. The Company has concluded that its estimates of variable consideration are not constrained according to the definition within the new standard. Additionally, the Company applies the practical expedient in ASC paragraph 606-10-25-18B and accounts for shipping and handling activities that occur after the customer has obtained control of a good as a fulfillment activity, rather than a separate performance obligation. Under ASC Topic 606, the Company is required to present a refund liability and a return asset within the Unaudited Consolidated Balance Sheet. As of March 31, 2021, and June 30, 2020, the balance of the return asset is $0.2 million and $0.1 million and the balance of the refund liability is $0.2 million and $0.2 million respectively. They are presented within prepaid expenses and other current assets and accrued expenses, respectively, on the 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 1 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 $0.6 million and $0.4 million at March 31, 2021 and June 30, 2020 located in Accounts Payable in the 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, 2021 and 2020 (in thousands): Three Months Ended Nine Months Ended 3/31/2021 3/31/2020 3/31/2021 3/31/2020 North America United States $ 30,307 $ 31,288 $ 79,989 $ 90,996 Canada & Mexico 2,212 2,081 5,620 6,479 32,519 33,369 85,609 97,475 International Brazil 14,901 8,729 47,302 36,551 United Kingdom 4,269 5,333 14,818 15,936 China 1,655 1,338 5,240 4,505 Australia & New Zealand 1,600 1,229 5,439 4,509 22,425 16,629 72,799 61,501 Total Sales $ 54,944 $ 49,998 $ 158,408 $ 158,976 |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Mar. 31, 2021 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Issued Accounting Standards not yet adopted: In August 2018, the FASB issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." ASU 2018-14 removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and added additional disclosures. This ASU is effective for public companies for annual reporting periods and interim periods within those annual periods beginning after December 15, 2020, effective for the Company July 1, 2021.. The amendments in ASU 2018-14 must be applied on a retrospective basis. The Company is currently assessing the effect, if any, that ASU 2018-14 will have on its consolidated financial statements. In November 2019, FASB issued ASU 2019-10, which (1) provides a framework to stagger effective dates for future major accounting standards and (2) amends the effective dates of certain major new accounting standards. Of those standards affected the following is the only one not yet implemented by the Company. Financial Instruments Credit Losses ASU 2016-13 (ASC 326) and subsequent amendment to the guidance, ASU 2018-19 in November 2018. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. The amendment will affect 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 ASU is effective for annual periods beginning after December 15, 2019, and interim periods therein. Early adoption was permitted for annual periods beginning after December 15, 2018, and interim periods therein. This pronouncement was extended for Small Reporting Companies and for the Company beginning July 1, 2022. The Company does not expect the adoption of this standard to have a material impact on the financial position and results of operations. In December 2019, FASB issued ASU 2019-12, Income Taxes (Topic 740). The amendments in this Update simplify the accounting for income taxes by removing the following exceptions: a) Exception to the incremental approach for intra-period tax allocation when there is a loss from continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income) b) Exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment c) Exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary d) Exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The amendments in this Update also simplify the accounting for income taxes by doing the following: a) Requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax. Requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction. b) Specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements. However, an entity may elect to do so (on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority. c) Requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. d) Making minor Codification improvements for income taxes related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method.. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 or July 1, 2021 for the Company. The Company is currently assessing the effect, if any, on its consolidated financial statements. In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). The amendments in this Update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) |
Leases
Leases | 9 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Leases | Leases Operating lease cost amounted to $0.6 million and $1.8 million for three and nine months period ended March 31, 2021. As of March 31, 2021, the Company’s right-of-use assets, lease obligations and remaining cash commitment on these leases (in thousands): Right-of-Use Operating Lease Remaining Cash Operating leases $ 4,186 $ 4,274 $ 5,081 The Company has other operating lease agreements with commitments of less than one year or that are not significant. 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 4.1 years. As of March 31, 2021, the Company’s financing leases are de minimis. The foreign exchange impact affecting the operating leases are de minimis. The Company entered into $0.9 million in operating lease commitments and incurred de minimis exchange impact during the nine months ended March 31, 2021. In December 2020, the Company completed a sale and leaseback of its Mount Airy NC Facility (see note 13) and recognized a Right-Of-Use ("ROU") asset based on leasing 66,000 square feet in the amount of $0.8 million for a three year lease with an option for 2 more years. At March 31, 2021, the Company had the following fiscal year minimum operating lease commitments (in thousands): Nine months ended March 31, 2021 Operating Lease 2021 (Remainder of year) $ 574 2022 1,318 2023 1,122 2024 917 2025 639 Thereafter 511 Subtotal $ 5,081 Imputed interest (806) Total 4,274 |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-based Compensation On September 5, 2012, the Board of Directors adopted The L.S. Starrett Company 2012 Long Term Incentive Plan (the “2012 Stock Plan”). The 2012 Stock Plan was approved by shareholders on October 17, 2012, and the material terms of its performance goals were re-approved by shareholders at the Company’s Annual Meeting held on October 18, 2017. The 2012 Stock Plan permits the granting of the following types of awards to officers, other employees and non-employee directors: stock options; restricted stock awards; unrestricted stock awards; stock appreciation rights; stock units including restricted stock units; performance awards; cash-based awards; and awards other than previously described that are convertible or otherwise based on stock. The 2012 Stock Plan provides for the issuance of up to 500,000 shares of common stock. Options granted vest in periods ranging from one year to three years and expire ten years after the grant date. Restricted stock units (“RSU”) granted generally vest from one year to three years. Vested restricted stock units will be settled in shares of common stock. As of March 31, 2021, there were 8,250 stock options and 260,977 restricted stock units outstanding. There were 10,477 shares available for grant under the 2012 Stock Plan as of March 31, 2021. For stock option grants, the fair value of each grant is estimated at the date of grant using the Binomial Options pricing model. The Binomial Options pricing model utilizes assumptions related to stock volatility, the risk-free interest rate, the dividend yield, and employee exercise behavior. Expected volatilities utilized in the model are based on the historic volatility of the Company’s stock price. The risk-free interest rate is derived from the U.S. Treasury Yield curve in effect at the time of the grant. The expected life is determined using the average of the vesting period and contractual term of the options (Simplified Method). No stock options were granted during the nine months ended March 31, 2021 and 2020. The weighted average contractual term for stock options outstanding as of March 31, 2021 was 1.8 years. The aggregate intrinsic value of stock options outstanding as of March 31, 2021 was less than $0.1 million. Stock options exercisable as of March 31, 2021 were 8,250 shares. In recognizing stock compensation expense for the 2012 Stock Incentive Plan, management has estimated that there will be no forfeitures of options. The Company accounts for stock options and RSU awards by recognizing the expense of the grant date fair value ratably over vesting periods generally ranging from one year to three years. The related expense is included in selling, general and administrative expenses. There were 297,140 RSU awards with a fair value of $3.36 per RSU granted during the nine months ended March 31, 2021. There were 102,670 RSUs settled, and 3,834 RSUs forfeited during the nine months ended March 31, 2021. The aggregate intrinsic value of RSU awards outstanding as of March 31, 2021 was $1.7 million. As of March 31, 2021, all vested awards have been issued and settled. On February 5, 2013, the Board of Directors adopted The L.S. Starrett Company 2013 Employee Stock Ownership Plan (the “2013 ESOP”). The purpose of the plan is to supplement existing Company programs through an employer funded individual account plan dedicated to investment in common stock of the Company, thereby encouraging increased ownership of the Company while providing an additional source of retirement income. The plan is intended as an employee stock ownership plan within the meaning of Section 4975 (e) (7) of the Internal Revenue Code of 1986, as amended. U.S. employees who have completed a year of service are eligible to participate. Compensation expense related to all stock-based plans for the three and nine-month periods ended March 31, 2021 were $0.1 million, and $0.6 million as compared to the prior year three and nine months of $0.1 million and $0.3 million, respectively. As of March 31, 2021, there was $2.4 million of total unrecognized compensation costs related to outstanding stock-based compensation arrangements. Of this cost, $1.7 million relates to performance based RSU grants that are not expected to be awarded. The remaining $0.7 million is expected to be recognized over a weighted average period of 1.8 years. |
Inventories
Inventories | 9 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following (in thousands): 3/31/2021 6/30/2020 Raw material and supplies $ 29,149 $ 26,255 Goods in process and finished parts 13,673 13,694 Finished goods 34,087 37,579 76,909 77,528 LIFO Reserve (24,373) (24,541) $ 52,536 $ 52,987 Of the Company’s $52.5 million and $53.0 million total inventory at March 31, 2021 and June 30, 2020, respectively, the $24.4 million and $24.5 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 $27.9 million on a FIFO basis and $3.5 million on a LIFO basis at March 31, 2021. The Core U.S. business had total Inventory, on a FIFO basis, of $33.1 million and $8.6 million on a LIFO basis as of June 30, 2020. The use of LIFO, as compared to FIFO, resulted in a $0.5 million decrease in cost of sales for the goods sold in the nine months ending March 31, 2021 compared to $0.3 million increase in the nine months ending March 31, 2020. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company’s acquisition of Bytewise in 2011 and a private software company in 2017 resulted in the recognition of goodwill of $4.7 million. During the fourth quarter of fiscal 2020 the Company, considering the COVID-19 pandemic a triggering event for the private software company and Bytewise due to a drop in sales, tested impairment of intangible assets according to ASC 360 "Property, Plant and Equipment" and determined the carrying value was deemed to be recoverable at Bytewise but not at the private software company where the impairment of intangibles was calculated. The Company concluded that intangible assets of the private software company were impaired by $2.9 million. The Company then, according to ASC 350 Intangibles -Goodwill and Other, conducted a step one analysis performed based on the update carrying value for each reporting unit. Goodwill was determined to be impaired $0.6 million at the private software company and goodwill of $3.0 million was impaired at the Bytewise reporting unit as of June 30, 2020. As a result, the balance of goodwill at Bytewise is zero and $1.0 million at the private software company as of March 31, 2021. The Company will continue to perform an annual assessment of goodwill associated with its purchase of a private software company. If future results significantly vary from current estimates, related projections, or business assumptions due to changes in industry or market conditions, the Company may be required to perform an impairment analysis prior to our annual test date if a triggering event is identified. As of March 31, 2021, we did not identify a triggering event. Amortizable intangible assets consist of the following (in thousands): 3/31/2021 6/30/2020 Trademarks and trade names 2,070 2,070 Completed technology 2,010 2,010 Customer relationships 630 630 Software development 10,293 9,445 Total 15,003 14,155 Accumulated amortization and impairment (10,068) (9,158) Total net balance $ 4,935 $ 4,997 Amortizable intangible assets are being amortized on a straight-line basis over the period of expected economic benefit. 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 estimated aggregate amortization expense for the remainder of fiscal 2021 and for each of the next five years and thereafter, is as follows (in thousands): 2021 (Remainder of year) $ 387 2022 1,331 2023 1,096 2024 825 2025 666 2026 401 Thereafter 229 Total net balance $ 4,935 |
Pension and Post-retirement Ben
Pension and Post-retirement Benefits | 9 Months Ended |
Mar. 31, 2021 | |
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 and another for U.K. employees. The Company has a postretirement medical benefit plan for U.S. employees. As of January 1, 2021, the Company no longer provided Life Insurance benefits for retirees. The Company also has defined contribution plans. The U.K. defined benefit plan was closed to new entrants in fiscal 2009. On December 21, 2016, the Company amended the U.S. defined benefit pension plan to freeze benefit accruals effective December 31, 2016. Consequently, the Plan is closed to new participants and current participants will no longer earn additional benefits after December 31, 2016. Net periodic benefit costs for the Company's defined benefit pension plans are located in Other (expense), net in 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. Net periodic benefit costs consist of the following (in thousands): Three Months Ended Nine Months Ended 3/31/2021 3/31/2020 3/31/2021 3/31/2020 Service cost $ — $ — $ — $ — Interest cost 1,120 1,362 3,351 4,077 Expected return on plan assets (1,115) (1,305) (3,336) (3,908) Amortization of net loss 13 9 40 28 $ 18 $ 66 $ 55 $ 197 Net periodic benefit costs for the Company's Postretirement Medical Plan consists of the following (in thousands): Three Months Ended Nine Months Ended 3/31/2021 3/31/2020 3/31/2021 3/31/2020 Service cost $ 21 $ 18 $ 64 $ 55 Interest cost 51 60 154 180 Amortization of prior service credit (134) (134) (403) (403) Amortization of net loss 41 20 124 62 $ (21) $ (36) $ (61) $ (106) For the three and nine month period ended March 31, 2021, the Company contributed $2.6 million and $5.4 million, respectively in the U.S. and $0.3 million and $0.7 million in the UK pension plans. The Company estimates that it will contribute an additional $1.8 million for the remainder of fiscal 2021. 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, 2021 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt is comprised of the following (in thousands): 3/31/2021 6/30/2020 Short-term and current maturities Loan and Security Agreement (Term Loan) 1,732 597 Brazil Loans 5,163 3,935 6,895 4,532 Long-term debt (net of current portion) Loan and Security Agreement (Term Loan) 6,147 5,941 Loan and Security Agreement (Line of Credit) 12,384 20,400 18,530 26,341 $ 25,425 $ 30,873 On December 31, 2019, the Company entered into the Tenth Amendment of its Loan and Security Agreement (“Tenth Amendment”). Under the revised agreement, the limit for the Line of credit was increased from $23.0 million to $25.0 million. In addition, the Company entered into a new $10.0 million 5-year Term Loan with a fixed interest rate of 4.0%. The new Term Loan will require interest only payments for 12 months and will convert to a term loan requiring both interest and principal payments commencing January 1, 2021. Also, under the Tenth Amendment, the credit limit for external borrowing was increased from $2.5 million to $5.0 million. On June 25, 2020, the Borrowers and TD Bank entered into an amendment and restatement (the “Amendment and Restatement”) of the Loan Agreement. The Amendment and Restatement waived the fixed charge coverage ratio for the quarter ended June 30, 2020. In addition, the Amendment and Restatement clarifies that certain non-cash adjustments to the definition of EBITDA are permitted under the Loan Agreement, as amended. In addition, the Amendment and Restatement increases the permitted borrowings from a foreign bank from $5.0 million to $15.0 million and permits the Company to draw the remainder of the outstanding balance under the Loan Agreement. Pursuant to the terms of the Company’s Amended and Restated Loan and Security Agreement of June 25, 2020, the “First Amendment” to this loan agreement was executed on September 17, 2020, which include, among other things, (i) pause testing of the Fixed Charge Coverage Ratio until September 30, 2021 and (ii) establishment of a new minimum cumulative EBITDA and minimum liquidity covenants in lieu thereof. TD Bank updated its security interests in the Company’s U.S. based assets, increased the maximum interest charged on the Line Of Credit from and annual interest rate of 2.25% plus LIBOR to 3.50% plus LIBOR, and amended the borrowing base for the line of credit from 80% of Qualified AR and 50% of the lower of Cost or Market of US inventory values to 80% of qualified AR plus 85% of the Net Orderly Liquidation Value ("NOLV") of US Inventory plus 62.5% of total appraised US real estate values. As a result of this change, the Company is projected to maintain its current borrowing capacity of $25,000,000 under the Line of Credit. The Company underwent a series of appraisals and field exams in all US locations as part of restructuring this agreement and will provide additional reporting supporting the borrowing base and covenants certifications. This minimum adjusted EBITDA covenant is based on the Company’s plan for a slow pandemic recovery throughout fiscal 2021 and the impact of the Company’s restructuring plan initiatives. Under this amendment, the Company also agreed to apply all proceeds from the sale of US real estate assets, except the Mt. Airy, North Carolina facility, against the principle balance of the term loan and line of credit. The Company agreed to apply the lesser of 50% or $2 million of the net proceeds from the sale of that facility against the principal balance of the Term Loan. Upon closing of the transaction during the quarter ending December 31, 2020, $2 million was applied against the principal balance of the Term Loan. The Agreement will revert to the existing covenant package for the quarter ending September 30, 2021 and every quarter thereafter. The Company was compliant with the minimum liquidity requirement and the minimum adjusted cumulative EBITDA required bank covenants as of March 31, 2021 and is expected to comply with the covenants over the next twelve months. 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 $25.0 million. A 0.25% commitment fee is charged on the unused portion of the Line of Credit. 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, 2021 (in thousands): Lending Institution Interest Rate Beginning Date Ending Date Outstanding Balance Bradesco 5.18 % May 2020 May 2021 $ 288 Santander 10.18 % November 2020 May 2021 $ 263 Brazil Bank 4.30 % September 2020 August 2021 $ 991 Brazil Bank 3.38 % November. 2020 November 2021 $ 900 Bradesco 2.37 % December 2020 December 2021 $ 1,000 Bradesco 4.74 % December 2020 December 2021 $ 527 Santander 5.98 % February 2021 February 2022 $ 1,194 $ 5,163 |
Income Taxes
Income Taxes | 9 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company is subject to U.S. federal income tax and various state, local, and foreign income taxes in numerous jurisdictions. The Company’s domestic and foreign tax liabilities are subject to the allocation of revenues and expenses in different jurisdictions and the timing of recognizing revenues and expenses. Additionally, the amount of income taxes paid is subject to the Company’s interpretation of applicable tax laws in the jurisdictions in which it files. The Company provides for income taxes on an interim basis based on an estimate of the effective tax rate for the year. This estimate is reassessed on a quarterly basis. Discrete tax items are accounted for in the quarterly period in which they occur. On December 22, 2017, the Tax Cuts and Jobs Act was enacted in the United States. The Act reduces the U.S. federal corporate tax rate from a graduated rate of 35% to a flat rate of 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. Beginning in fiscal 2019, the Company incorporated certain provisions of the Act in the calculation of the tax provision and effective tax rate, including the provisions related to the Global Intangible Low Taxed Income (“GILTI”), Foreign Derived Intangible Income (“FDII”), Base Erosion Anti Abuse Tax (“BEAT”), as well as other provisions, which limit the ability to deduct expenses. The GILTI provisions are expected to have the most significant impact to the Company. Under the new law, U.S. taxes are imposed on foreign income in excess of a deemed return on tangible assets of its foreign subsidiaries. In general, this foreign income will effectively be taxed at an additional 10.5% tax rate reduced by any available current year foreign tax credits. The ability to benefit foreign tax credits may be limited under the GILTI rules as a result of the utilization of net operating losses, foreign sourced income and other potential limitations within the foreign tax credit calculation. In July 2020, the IRS issued final regulations and additional proposed regulations that address the application of the high-taxed exclusion from GILTI. Under these regulations, the Company can make an annual election to exclude from its GILTI inclusion, income from its foreign subsidiaries that’s effective income tax rate exceeds 18.9% for that year. The regulations must be applied for tax years beginning after July 23, 2020 but companies have the option to apply retroactively for tax years beginning after December 31, 2017 and before July 23, 2020. In the first quarter of fiscal 2021 the Company recognized a discrete tax benefit of ($2.7) million related to the impact of electing to apply the high-tax exclusion retroactively for fiscal 2019 and fiscal 2020. For the three month period ended March 31, 2021, the Company recognized tax expense of $1.5 million on a profit before tax of $4.5 million or an effective tax rate of 33%. The tax rate for fiscal 2021 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%. For the three month period ended March 31, 2020, the Company recognized tax benefit of $(0.3) million on a profit before tax of $0.3 million or an effective tax rate of (100)%. The tax rate for fiscal 2020 was lower than the U.S. statutory tax rate of 21% primarily due to the GILTI provisions, the jurisdictional mix of earnings, particularly Brazil with a statutory rate of 34%, and the impact of permanent deductible and nondeductible items and research credits. The impact of these items on the tax rate is substantial based on the Company’s profit being $0.3 million in the third quarter of 2020. For the nine month period ended March 31, 2021, the Company recognized a tax provision of $1.1 million on a profit before tax of $12.1 million or an effective tax rate of 9%. Before the discrete benefits relating to legislation enacted during the first quarter of fiscal 2021 in the amount of ($2.7) million related to the impact of the GILTI high-tax exclusion and ($0.2) million related to the impact of the increase in UK corporate tax rate on the net deferred tax asset, tax expense was $4.1 million or 34% of pre-tax income. This 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. For the nine month period ended March 31, 2020. the Company recognized tax expense of $0.8 million on a profit before tax of $3.4 million or an effective tax rate of 24%. The tax rate for fiscal 2020 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%. U.S. Federal tax returns for years prior to fiscal 2017 are generally no longer subject to review by tax authorities; however, tax loss carryforwards from earlier years are still subject to adjustment. As of March 31, 2021, the Company has substantially resolved all open income tax audits and there were no other local or federal income tax audits in progress. In international jurisdictions including Australia, Brazil, Canada, China, Germany, Mexico, New Zealand, Singapore and the UK, which comprise a significant portion of th e Company’s operations, the years that may be examined vary by country. The Company’s most significant foreign subsidiary in Brazil is subject to audit for the calendar years 2015 – present. During the next twelve months, it is possible there will be a reduction of $0.1 million in long-term tax obligations due to the expiration of the statute of limitations on prior year tax returns. Accounting for income taxes requires estimates of future benefits and tax liabilities. Due to the temporary differences in the timing of recognition of items included in income for accounting and tax purposes, deferred tax assets or liabilities are recorded to reflect the impact arising from these differences on future tax payments. With respect to recorded tax assets, the Company assesses the likelihood that the asset will be realized by addressing the positive and negative evidence to determine whether realization is more likely than not to occur. If realization is in doubt because of uncertainty regarding future profitability, the Company provides a valuation allowance related to the asset to the extent that it is more likely than not that the deferred tax asset will not be realized. Should any significant changes in the tax law or the estimate of the necessary valuation allowance occur, the Company would record the impact of the change, which could have a material effect on the Company’s financial position. No valuation allowance has been recorded for the Company’s U.S. federal and foreign deferred tax assets related to temporary differences included in taxable income. While the Company continues to believe that forecasted future taxable income provide sufficient evidence to, more likely than not, support the realization of the tax benefits provided by those differences; the impact of COVID-19 may significantly impact its ability to forecast future pre-tax earnings in certain jurisdictions. If its forecasts are significantly impacted, the Company may need to record a valuation allowance on some or all its deferred tax assets as soon as the current fiscal year end. In the U.S., a partial valuation allowance has been provided for foreign tax credit carryforwards due to the uncertainty of generating sufficient foreign source income to utilize those credits in the future and certain state net operating loss carryforwards that will expire in the near future unutilized. |
Contingencies
Contingencies | 9 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | ContingenciesThe Company is involved in certain legal matters, which arise, in the normal course of business. Management believes it is not reasonably possible that these matters will have a material negative impact on the Company's financial condition, results of operations or cash flows. |
Facility Sale and Leaseback
Facility Sale and Leaseback | 9 Months Ended |
Mar. 31, 2021 | |
Sale Leaseback Transaction, Net Book Value [Abstract] | |
Facility Sale and Leaseback | Facility Sale and Leaseback The Company completed a sale and leaseback of the Mount Airy, North Carolina facility in December 2020. The Company sold three buildings amounting to 313,000 square feet with proceeds of $5.2 million. The carrying value of the property was $2.0 million resulting in a gain in the amount of $3.2 million. The Company entered into an operating lease for 66,000 square feet for on-going operations and recorded a right-of-use asset of $0.8 million. The lease term is for three years with an option for two |
Restructuring
Restructuring | 9 Months Ended |
Mar. 31, 2021 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring The COVID-19 pandemic created a negative impact on global sales. The impact was felt as early as January 2020 in the Company’s operation in Suzhou, China and most significantly in March 2020 in North America and in the UK. The Company took austerity measures, reducing payroll and managing variable operational spending to help mitigate the shortfall. In addition, the Company is investing in a strategic realignment focused on a lower cost structure, long term, designed to maximize our global factory utilization. In June 2020, the Company recorded a $1.6 million restructuring charge of which $1.0 million remained in accrued expenses on the Consolidated Balance Sheets at fiscal 2020 year end. That accrued expense balance was zero as of March 31, 2021. Total restructuring cost of $4.3 million, with $1.2 million in the U.S. and $3.1 million internationally, is expected to drive annual savings of $10-14 million beginning in fiscal 2021 as planned implementation throughout the year, with full annual savings realized in fiscal 2022. These savings will be reflected in the Consolidated Statements of Operations in a reduction to cost of goods sold and selling, general and administrative expenses. The Company adopted this plan in order to consolidate certain saw manufacturing operations for greater efficiency. This restructuring is strategic to improving manufacturing utilization globally and will be completed in fiscal 2021. Since the project was announced in the quarter ended June 2020, $3.0 million has been charged as restructuring expense including $1.5 million that was incurred in the nine months ended March 31, 2021. The Company expects to charge an additional $1.3 million in the remaining three months of fiscal 2021. The Company has recorded a gain on the sale of property, plant and equipment internationally of $0.2 million, related to restructuring. The Company does not expect a material amount of disposal costs. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Account Policies (Policies) | 9 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Accounting | The unaudited interim consolidated financial statements as of and for the nine months ended March 31, 2021 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 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, 2020. The balance sheet as of June 30, 2020 has been derived from the audited consolidated financial statements as of and for the year ended June 30, 2020. 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 . 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 consolidated financial statements and accompanying notes. Note 2 to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended June 30, 2020 describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. |
Potential Impairment Due to COVID-19 | Throughout the COVID-19 pandemic crisis, the Company's main focus has been on protecting the health and well-being of its employees, and the long-term financial health of the Company. The COVID-19 pandemic continues to have a negative impact on certain sectors of the Company's Sales, particularly in Industrial and Capital Equipment markets. Products sold through Consumer channels, principally in Brazil, have returned to or even exceed pre-pandemic levels. Some uncertainty still exists when trying to predict a full recovery across the whole company. |
Revenue from Contracts with Customers | The Company accounts for a contract or purchase order when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability is probable. Revenue is recognized when control of the product passes to the customer, which is upon shipment, unless otherwise specified within the customer contract or on the purchase order as delivery, and is recognized at the amount that reflects the consideration the Company expects to receive for the products sold, including various forms of discounts. When revenue is recorded, estimates of returns are made and recorded as a reduction of revenue. Contracts with customers are evaluated to determine if there are separate performance obligations related to timing of product shipment that will be satisfied in different accounting periods. When that is the case, revenue is deferred until each performance obligation is met. No revenue was deferred as of March 31, 2021 and June 30, 2020. Purchase orders are of durations less than one year. As such, the Company applies the practical expedient in ASC paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less, for which work has not yet been performed. Certain taxes assessed by governmental authorities on revenue producing transactions, such as value added taxes, are excluded from revenue and recorded on a net basis. Performance Obligations The Company’s primary source of revenue is derived from the manufacture and distribution of metrology tools and equipment, saw blades and related products sold to distributors. The Company recognizes revenue for sales to our customers when transfer of control of the related good or service has occurred. All of the Company’s revenue was recognized under the point in time approach for the three and nine months ended March 31, 2021 and 2020. Contract terms with certain metrology equipment customers could result in products and services being transferred over time as a result of the customized nature of some of the Company’s products, together with contractual provisions in the customer contracts that provide the Company with an enforceable right to payment for performance completed to date; however, under typical terms, the Company does not have the right to consideration until the time of shipment from its manufacturing facilities or distribution centers, or until the time of delivery to its customers. If certain contracts in the future provide the Company with this enforceable right of payment, the timing of revenue recognition from products transferred to customers over time may be slightly accelerated compared to the Company’s right to consideration at the time of shipment or delivery. The Company’s typical payment terms vary based on the customer, geographic region, and the type of goods and services in the contract or purchase order. The period of time between invoicing and when payment is due is typically not significant. Amounts billed and due from the Company’s customers are classified as accounts receivable on the Consolidated Balance Sheets. As the Company’s standard payment terms are usually less than one year, the Company has elected the practical expedient under ASC paragraph 606-10-32-18 to not assess whether a contract has a significant financing component. The Company’s customers take delivery of goods, and they are recognized as revenue at the time of transfer of control to the customer, which is usually at the time of shipment, unless otherwise specified in the customer contract or purchase order. This determination is based on applicable shipping terms, as well as the consideration of other indicators, including timing of when the Company has a present right to payment, when physical possession of products is transferred to customers, when the customer has the asset, and provisions in contracts regarding customer acceptance. While unit prices are generally fixed, the Company provides variable consideration for certain customers, typically in the form of promotional incentives at the time of sale. The Company utilizes the most likely amount to estimate the effect of uncertainty on the amount of variable consideration to which the Company would be entitled. The most likely amount method considers the single most likely amount from a range of possible consideration amounts. The most likely amounts are based upon the contractual terms of the incentives and historical experience with each customer. The Company records estimates for cash discounts, promotional rebates, and other promotional allowances in the period the related revenue is recognized (“Customer Credits”). The provision for Customer Credits is recorded as a reduction from gross sales and reserves for Customer Credits are presented within accrued expenses on the Consolidated Balance Sheets. Actual Customer Credits have not differed materially from estimated amounts for each period presented. Amounts billed to customers for shipping and handling are included in net sales and costs associated with shipping and handling are included in cost of sales. The Company has concluded that its estimates of variable consideration are not constrained according to the definition within the new standard. Additionally, the Company applies the practical expedient in ASC paragraph 606-10-25-18B and accounts for shipping and handling activities that occur after the customer has obtained control of a good as a fulfillment activity, rather than a separate performance obligation. |
Recently Issued Accounting Standards not yet adopted | Recently Issued Accounting Standards not yet adopted: In August 2018, the FASB issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." ASU 2018-14 removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and added additional disclosures. This ASU is effective for public companies for annual reporting periods and interim periods within those annual periods beginning after December 15, 2020, effective for the Company July 1, 2021.. The amendments in ASU 2018-14 must be applied on a retrospective basis. The Company is currently assessing the effect, if any, that ASU 2018-14 will have on its consolidated financial statements. In November 2019, FASB issued ASU 2019-10, which (1) provides a framework to stagger effective dates for future major accounting standards and (2) amends the effective dates of certain major new accounting standards. Of those standards affected the following is the only one not yet implemented by the Company. Financial Instruments Credit Losses ASU 2016-13 (ASC 326) and subsequent amendment to the guidance, ASU 2018-19 in November 2018. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. The amendment will affect 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 ASU is effective for annual periods beginning after December 15, 2019, and interim periods therein. Early adoption was permitted for annual periods beginning after December 15, 2018, and interim periods therein. This pronouncement was extended for Small Reporting Companies and for the Company beginning July 1, 2022. The Company does not expect the adoption of this standard to have a material impact on the financial position and results of operations. In December 2019, FASB issued ASU 2019-12, Income Taxes (Topic 740). The amendments in this Update simplify the accounting for income taxes by removing the following exceptions: a) Exception to the incremental approach for intra-period tax allocation when there is a loss from continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income) b) Exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment c) Exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary d) Exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The amendments in this Update also simplify the accounting for income taxes by doing the following: a) Requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax. Requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction. b) Specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements. However, an entity may elect to do so (on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority. c) Requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. d) Making minor Codification improvements for income taxes related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method.. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 or July 1, 2021 for the Company. The Company is currently assessing the effect, if any, on its consolidated financial statements. In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). The amendments in this Update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Summary 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, 2021 Sales 1 $ 32,519 $ 22,425 $ — $ 54,944 Operating Income (Loss) 2,931 2,692 (1,773) $ 3,850 Three Months ended March 31, 2020 Sales 2 $ 33,369 $ 16,629 $ — $ 49,998 Operating Income (Loss) $ 1,337 $ 448 $ (1,721) $ 64 1. Excludes $1,338 of North American segment intercompany sales to the International segment, and $3,197 of International segment intercompany sales to the North American segment. 2. Excludes $1,063 of North American segment intercompany sales to the International segment, and $2,722 of International segment intercompany sales to the North American segment. North International Unallocated Total Nine Months ended March 31, 2021 Sales 1 $ 85,609 0 $ 72,799 $ — $ 158,408 Operating Income (Loss) 8,611 8,804 $ (5,529) $ 11,886 Nine months ended March 31, 2020 Sales 2 $ 97,475 $ 61,501 $ — $ 158,976 Operating Income (Loss) $ 6,217 $ 3,069 $ (5,015) $ 4,271 1 1. Excludes $3,075 of North American segment intercompany sales to the International segment, and $8,593 of International segment intercompany sales to the North American segment. 2. Excludes $3,079 of North American segment intercompany sales to the International segment, and $10,820 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, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of 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, 2021 and 2020 (in thousands): Three Months Ended Nine Months Ended 3/31/2021 3/31/2020 3/31/2021 3/31/2020 North America United States $ 30,307 $ 31,288 $ 79,989 $ 90,996 Canada & Mexico 2,212 2,081 5,620 6,479 32,519 33,369 85,609 97,475 International Brazil 14,901 8,729 47,302 36,551 United Kingdom 4,269 5,333 14,818 15,936 China 1,655 1,338 5,240 4,505 Australia & New Zealand 1,600 1,229 5,439 4,509 22,425 16,629 72,799 61,501 Total Sales $ 54,944 $ 49,998 $ 158,408 $ 158,976 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of lease assets and liabilities | As of March 31, 2021, the Company’s right-of-use assets, lease obligations and remaining cash commitment on these leases (in thousands): Right-of-Use Operating Lease Remaining Cash Operating leases $ 4,186 $ 4,274 $ 5,081 |
Fiscal year minimum operating lease commitments | At March 31, 2021, the Company had the following fiscal year minimum operating lease commitments (in thousands): Nine months ended March 31, 2021 Operating Lease 2021 (Remainder of year) $ 574 2022 1,318 2023 1,122 2024 917 2025 639 Thereafter 511 Subtotal $ 5,081 Imputed interest (806) Total 4,274 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories consist of the following (in thousands): 3/31/2021 6/30/2020 Raw material and supplies $ 29,149 $ 26,255 Goods in process and finished parts 13,673 13,694 Finished goods 34,087 37,579 76,909 77,528 LIFO Reserve (24,373) (24,541) $ 52,536 $ 52,987 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Amortizable intangible assets | Amortizable intangible assets consist of the following (in thousands): 3/31/2021 6/30/2020 Trademarks and trade names 2,070 2,070 Completed technology 2,010 2,010 Customer relationships 630 630 Software development 10,293 9,445 Total 15,003 14,155 Accumulated amortization and impairment (10,068) (9,158) Total net balance $ 4,935 $ 4,997 |
Estimated aggregate amortization expense | The estimated aggregate amortization expense for the remainder of fiscal 2021 and for each of the next five years and thereafter, is as follows (in thousands): 2021 (Remainder of year) $ 387 2022 1,331 2023 1,096 2024 825 2025 666 2026 401 Thereafter 229 Total net balance $ 4,935 |
Pension and Post-retirement B_2
Pension and Post-retirement Benefits (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Retirement Benefits [Abstract] | |
Schedule of Net Benefit Costs | Net periodic benefit costs consist of the following (in thousands): Three Months Ended Nine Months Ended 3/31/2021 3/31/2020 3/31/2021 3/31/2020 Service cost $ — $ — $ — $ — Interest cost 1,120 1,362 3,351 4,077 Expected return on plan assets (1,115) (1,305) (3,336) (3,908) Amortization of net loss 13 9 40 28 $ 18 $ 66 $ 55 $ 197 Net periodic benefit costs for the Company's Postretirement Medical Plan consists of the following (in thousands): Three Months Ended Nine Months Ended 3/31/2021 3/31/2020 3/31/2021 3/31/2020 Service cost $ 21 $ 18 $ 64 $ 55 Interest cost 51 60 154 180 Amortization of prior service credit (134) (134) (403) (403) Amortization of net loss 41 20 124 62 $ (21) $ (36) $ (61) $ (106) |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt schedule | Debt is comprised of the following (in thousands): 3/31/2021 6/30/2020 Short-term and current maturities Loan and Security Agreement (Term Loan) 1,732 597 Brazil Loans 5,163 3,935 6,895 4,532 Long-term debt (net of current portion) Loan and Security Agreement (Term Loan) 6,147 5,941 Loan and Security Agreement (Line of Credit) 12,384 20,400 18,530 26,341 $ 25,425 $ 30,873 |
Schedule of short-term debt, Brazilian subsidiary | The Company’s Brazilian subsidiary has the following loans of March 31, 2021 (in thousands): Lending Institution Interest Rate Beginning Date Ending Date Outstanding Balance Bradesco 5.18 % May 2020 May 2021 $ 288 Santander 10.18 % November 2020 May 2021 $ 263 Brazil Bank 4.30 % September 2020 August 2021 $ 991 Brazil Bank 3.38 % November. 2020 November 2021 $ 900 Bradesco 2.37 % December 2020 December 2021 $ 1,000 Bradesco 4.74 % December 2020 December 2021 $ 527 Santander 5.98 % February 2021 February 2022 $ 1,194 $ 5,163 |
Segment Information - Narrative
Segment Information - Narrative (Details) | 9 Months Ended |
Mar. 31, 2021segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Segment Information - Summary o
Segment Information - Summary of financial results for reportable segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Sales | $ 54,944 | $ 49,998 | $ 158,408 | $ 158,976 |
Operating Income (Loss) | 3,850 | 64 | 11,886 | 4,271 |
Unallocated | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
Operating Income (Loss) | (1,773) | (1,721) | (5,529) | (5,015) |
North American Operations | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Sales | 32,519 | 33,369 | 85,609 | 97,475 |
North American Operations | Operating Segments | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Sales | 32,519 | 33,369 | 85,609 | 97,475 |
Operating Income (Loss) | 2,931 | 1,337 | 8,611 | 6,217 |
North American Operations | Intercompany sales | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Intercompany sales | 1,338 | 1,063 | 3,075 | 3,079 |
International Operations | Operating Segments | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Sales | 22,425 | 16,629 | 72,799 | 61,501 |
Operating Income (Loss) | 2,692 | 448 | 8,804 | 3,069 |
International Operations | Intercompany sales | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Intercompany sales | $ 3,197 | $ 2,722 | $ 8,593 | $ 10,820 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Narrative (Details) | 9 Months Ended | |
Mar. 31, 2021USD ($)segment | Jun. 30, 2020USD ($) | |
Revenue from Contract with Customer [Abstract] | ||
Customer return asset | $ 200,000 | $ 100,000 |
Customer refund liability | 200,000 | 200,000 |
Contract asset | 0 | 0 |
Contract liability | $ 600,000 | $ 400,000 |
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, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 54,944 | $ 49,998 | $ 158,408 | $ 158,976 |
North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 32,519 | 33,369 | 85,609 | 97,475 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 22,425 | 16,629 | 72,799 | 61,501 |
United States | North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 30,307 | 31,288 | 79,989 | 90,996 |
Canada & Mexico | North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 2,212 | 2,081 | 5,620 | 6,479 |
Brazil | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 14,901 | 8,729 | 47,302 | 36,551 |
United Kingdom | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 4,269 | 5,333 | 14,818 | 15,936 |
China | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,655 | 1,338 | 5,240 | 4,505 |
Australia & New Zealand | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 1,600 | $ 1,229 | $ 5,439 | $ 4,509 |
Leases - Narrative (Details)
Leases - Narrative (Details) ft² in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021USD ($)ft² | Mar. 31, 2021USD ($)ft² | Dec. 31, 2020USD ($) | Jun. 30, 2020USD ($) | |
Lessee, Lease, Description [Line Items] | ||||
Operating lease cost | $ 600 | $ 1,800 | ||
Weighted average discount rate | 9.00% | 9.00% | ||
Weighted average remaining lease term (in years) | 4 years 1 month 6 days | 4 years 1 month 6 days | ||
Operating lease commitments | $ 900 | |||
Right of use assets | 4,186 | $ 4,186 | $ 4,465 | |
Operating lease obligation | $ 4,274 | $ 4,274 | ||
Mount Airy NC Facility | ||||
Lessee, Lease, Description [Line Items] | ||||
Area of property leased (in square feet) | ft² | 66 | 66 | ||
Right of use assets | $ 800 | $ 800 | $ 800 | |
Operating lease obligation | $ 800 | $ 800 | ||
Operating lease term (in years) | 3 years | 3 years | 3 years | |
Operating lease, renewal term (in years) | 2 years | 2 years | 2 years |
Leases - Summary of lease asset
Leases - Summary of lease assets and liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
Right-of-Use Assets | $ 4,186 | $ 4,465 |
Operating Lease Obligations | 4,274 | |
Remaining Cash Commitment | $ 5,081 |
Leases - Fiscal year minimum op
Leases - Fiscal year minimum operating lease commitments (Details) $ in Thousands | Mar. 31, 2021USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2021 (Remainder of year) | $ 574 |
2022 | 1,318 |
2023 | 1,122 |
2024 | 917 |
2025 | 639 |
Thereafter | 511 |
Subtotal | 5,081 |
Imputed interest | (806) |
Total | $ 4,274 |
Stock-based Compensation (Detai
Stock-based Compensation (Details) - The 2012 Stock Incentive Plan - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Sep. 05, 2012 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Shares of common stock authorized by 2012 plan (in shares) | 500,000 | ||||
Shares available for grant under 2012 plan (in shares) | 10,477 | 10,477 | |||
Weighted average contractual term for stock options outstanding (in years) | 1 year 9 months 18 days | ||||
Compensation expense for all stock-based plans | $ 0.1 | $ 0.1 | $ 0.6 | $ 0.3 | |
Unrecognized stock-based compensation costs | $ 0.7 | $ 0.7 | |||
Expected weighted average vesting period (in years) | 1 year 9 months 18 days | ||||
Share-based Payment Arrangement, Option | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Expiration date of options granted (in years) | 10 years | ||||
Shares outstanding (in shares) | 8,250 | 8,250 | |||
Stock options granted (in shares) | 0 | 0 | |||
Aggregate intrinsic value of shares outstanding (less than) | $ 0.1 | $ 0.1 | |||
Stock options exercisable (in shares) | 8,250 | 8,250 | |||
Forfeiture of options (in shares) | 0 | ||||
Restricted Stock Units (RSUs) | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Shares outstanding (in shares) | 260,977 | 260,977 | |||
Aggregate intrinsic value of shares outstanding (less than) | $ 1.7 | $ 1.7 | |||
Restricted stock awards (in shares) | 297,140 | ||||
Fair value of restricted stock award grants (in dollars per share) | $ 3.36 | ||||
Restricted stock awards vested (in shares) | 102,670 | ||||
Restricted stock awards forfeited (in shares) | 3,834 | ||||
Unrecognized stock-based compensation costs | 2.4 | $ 2.4 | |||
Portion Relating to RSU Grants Not Expected to be Awarded | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Unrecognized stock-based compensation costs | $ 1.7 | $ 1.7 | |||
Minimum | Share-based Payment Arrangement, Option | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Vesting period of shares granted (in years) | 1 year | ||||
Minimum | Restricted Stock Units (RSUs) | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Vesting period of shares granted (in years) | 1 year | ||||
Maximum | Share-based Payment Arrangement, Option | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Vesting period of shares granted (in years) | 3 years | ||||
Maximum | Restricted Stock Units (RSUs) | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Vesting period of shares granted (in years) | 3 years |
Inventories - Components of Inv
Inventories - Components of Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Inventory Disclosure [Abstract] | ||
Raw material and supplies | $ 29,149 | $ 26,255 |
Goods in process and finished parts | 13,673 | 13,694 |
Finished goods | 34,087 | 37,579 |
Total before LIFO reserve | 76,909 | 77,528 |
LIFO Reserve | (24,373) | (24,541) |
Total | $ 52,536 | $ 52,987 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |||
Inventories | $ 52,536 | $ 52,987 | |
Inventory, LIFO Reserve | 24,373 | 24,541 | |
Inventory difference using FIFO basis | 27,900 | 33,100 | |
LIFO inventory amount | 3,500 | $ 8,600 | |
Effect of LIFO Reserve on income | $ (500) | $ 300 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2020 | Mar. 31, 2021 | Jun. 30, 2020 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Goodwill | $ 1,015 | $ 1,015 | $ 1,015 | |
Bytewise and Private Software Company | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Goodwill | $ 4,700 | |||
Private Software Company | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Goodwill | 1,000 | |||
Intangibles impairment | $ 2,900 | |||
Goodwill impairment loss | 600 | |||
Bytewise | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Goodwill | $ 0 | |||
Goodwill impairment loss | $ 3,000 | |||
Computer software | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Intangible asset useful life (in years) | 5 years | |||
Trademarks and trade names | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Intangible asset useful life (in years) | 20 years |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Finite-lived Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | $ 15,003 | $ 14,155 |
Accumulated amortization and impairment | (10,068) | (9,158) |
Total net balance | 4,935 | 4,997 |
Trademarks and trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 2,070 | 2,070 |
Completed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 2,010 | 2,010 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 630 | 630 |
Software development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | $ 10,293 | $ 9,445 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Estimated Aggregate Amortization Expense (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2021 (Remainder of year) | $ 387 | |
2022 | 1,331 | |
2023 | 1,096 | |
2024 | 825 | |
2025 | 666 | |
2026 | 401 | |
Thereafter | 229 | |
Total net balance | $ 4,935 | $ 4,997 |
Pension and Post-retirement B_3
Pension and Post-retirement Benefits (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Mar. 31, 2021USD ($)plan | Mar. 31, 2021USD ($)plan | |
Defined Benefit Plan Disclosure [Line Items] | ||
Number of defined benefit pension plans | plan | 2 | 2 |
Expected employer contributions for remainder of the fiscal year | $ 1.8 | $ 1.8 |
Pension Plan | United States | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Employer contributions | 2.6 | 5.4 |
Pension Plan | Foreign Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Employer contributions | $ 0.3 | $ 0.7 |
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, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Pension Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 0 | $ 0 | $ 0 | $ 0 |
Interest cost | 1,120 | 1,362 | 3,351 | 4,077 |
Expected return on plan assets | (1,115) | (1,305) | (3,336) | (3,908) |
Amortization of net loss | 13 | 9 | 40 | 28 |
Total | 18 | 66 | 55 | 197 |
Post Retirement Medical Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 21 | 18 | 64 | 55 |
Interest cost | 51 | 60 | 154 | 180 |
Amortization of prior service credit | (134) | (134) | (403) | (403) |
Amortization of net loss | 41 | 20 | 124 | 62 |
Total | $ (21) | $ (36) | $ (61) | $ (106) |
Debt - Debt schedule (Details)
Debt - Debt schedule (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Debt Instrument [Line Items] | ||
Loan and Security Agreement (Term Loan) | $ 6,895 | $ 4,532 |
Short-term and current maturities | 6,895 | 4,532 |
Long-term debt (net of current portion) | 18,530 | 26,341 |
Long-term debt | 25,425 | 30,873 |
Loan and Security Agreement (Term Loan) | ||
Debt Instrument [Line Items] | ||
Long-term debt (net of current portion) | 6,147 | 5,941 |
Loan and Security Agreement (Line of Credit) | ||
Debt Instrument [Line Items] | ||
Long-term debt (net of current portion) | 12,384 | 20,400 |
Loan and Security Agreement (Term Loan) | ||
Debt Instrument [Line Items] | ||
Loan and Security Agreement (Term Loan) | 1,732 | 597 |
Brazil Loans | ||
Debt Instrument [Line Items] | ||
Brazil Loans | $ 5,163 | $ 3,935 |
Debt (Details)
Debt (Details) - USD ($) | Jun. 25, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | Jun. 24, 2020 | Dec. 30, 2019 |
Debt Instrument [Line Items] | ||||||||
Credit limit on revolving loan facility | $ 25,000,000 | $ 25,000,000 | $ 23,000,000 | |||||
Commitment fee percentage on line of credit | 0.25% | |||||||
Term loan repayment | $ 17,924,000 | $ 4,666,000 | ||||||
Loan and Security Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Face value of term loan | $ 5,000,000 | |||||||
Amended and Restated Loan And Security Agreement, Foreign Bank Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Face value of term loan | $ 15,000,000 | |||||||
Amended and Restated Loan And Security Agreement, Term Loan | London Interbank Offered Rate (LIBOR) | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable interest rate | 2.25% | |||||||
Amended and Restated Loan And Security Agreement, Term Loan | London Interbank Offered Rate (LIBOR) | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable interest rate | 3.50% | |||||||
Line of Credit | Loan and Security Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Percent of qualified AR | 80.00% | |||||||
Percent of the lower of cost or market of US inventory values | 50.00% | |||||||
Line of Credit | Amended and Restated Loan And Security Agreement, Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Credit limit on revolving loan facility | $ 25,000,000 | |||||||
Percent of qualified AR | 80.00% | |||||||
Percent of Net Orderly Liquidation Value (NOLV) | 85.00% | |||||||
Percent of US real estate values | 62.50% | |||||||
Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Face value of term loan | $ 10,000,000 | |||||||
Term of loan (in years) | 5 years | |||||||
Fixed interest rate | 4.00% | |||||||
Term of interest only payments | 12 months | |||||||
Credit limit for external borrowing | $ 5,000,000 | $ 2,500,000 | ||||||
Term Loan | Amended and Restated Loan And Security Agreement, Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Percentage of sales proceeds to be paid on term loan if proceeds are less than 2 million dollars | 50.00% | |||||||
Amount of sales proceeds to be paid on term loan if proceeds are more than 2 million dollars | $ 2,000,000 | |||||||
Term loan repayment | $ 2,000,000 |
Debt - Short-term Debt (Details
Debt - Short-term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Brazil Loans | ||
Statement [Line Items] | ||
Brazil Loans | $ 5,163 | $ 3,935 |
Brazil Bank | 4.30% Short-term loan | ||
Statement [Line Items] | ||
Interest rate | 4.30% | |
Brazil Bank | 4.30% Short-term loan | Brazil Loans | ||
Statement [Line Items] | ||
Brazil Loans | $ 991 | |
Brazil Bank | 3.38% Short-term loan | ||
Statement [Line Items] | ||
Interest rate | 3.38% | |
Brazil Bank | 3.38% Short-term loan | Brazil Loans | ||
Statement [Line Items] | ||
Brazil Loans | $ 900 | |
Bradesco Bank | 5.18% Short-term loan | ||
Statement [Line Items] | ||
Interest rate | 5.18% | |
Bradesco Bank | 5.18% Short-term loan | Brazil Loans | ||
Statement [Line Items] | ||
Brazil Loans | $ 288 | |
Bradesco Bank | 2.37% Short-term loan | ||
Statement [Line Items] | ||
Interest rate | 2.37% | |
Bradesco Bank | 2.37% Short-term loan | Brazil Loans | ||
Statement [Line Items] | ||
Brazil Loans | $ 1,000 | |
Bradesco Bank | 4.74% Short-term loan | ||
Statement [Line Items] | ||
Interest rate | 4.74% | |
Bradesco Bank | 4.74% Short-term loan | Brazil Loans | ||
Statement [Line Items] | ||
Brazil Loans | $ 527 | |
Santander Bank | 10.18% Short-term loan | ||
Statement [Line Items] | ||
Interest rate | 10.18% | |
Santander Bank | 10.18% Short-term loan | Brazil Loans | ||
Statement [Line Items] | ||
Brazil Loans | $ 263 | |
Santander Bank | 5.98% Short-term loan | ||
Statement [Line Items] | ||
Interest rate | 5.98% | |
Santander Bank | 5.98% Short-term loan | Brazil Loans | ||
Statement [Line Items] | ||
Brazil Loans | $ 1,194 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2021 | Sep. 30, 2020 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | |
Operating Loss Carryforwards [Line Items] | ||||||
Effective income tax rate percentage | 33.00% | (100.00%) | 9.00% | 24.00% | 18.90% | |
Income tax expense (benefit) | $ 1,496 | $ (326) | $ 1,132 | $ 787 | ||
Profit before tax | 4,500 | $ 300 | 12,100 | $ 3,400 | ||
UK tax expense on pre-tax income | $ 4,100 | |||||
Effective UK tax rate on pre-tax income | 34.00% | |||||
Possible reduction in long-term tax obligations | $ 100 | $ 100 | ||||
Tax Years 2019 and 2020 | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Income tax expense (benefit) | $ (2,700) | (2,700) | ||||
Foreign Tax Authority | Her Majesty's Revenue and Customs (HMRC) | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Effect of increase in UK corporate tax rate | $ (200) |
Facility Sale and Leaseback (De
Facility Sale and Leaseback (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2020USD ($)ft²building | Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) | Jun. 30, 2020USD ($) | |
Property, Plant and Equipment [Line Items] | ||||||
Proceeds from sale of facility | $ 5,214 | $ 0 | ||||
Income from sale | $ 0 | $ 0 | 3,204 | $ 0 | ||
Right of use assets | 4,186 | 4,186 | $ 4,465 | |||
Mount Airy NC Facility | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Number of buildings sold | building | 3 | |||||
Square footage of building | ft² | 313,000 | |||||
Proceeds from sale of facility | $ 5,200 | |||||
Carrying value of property | 2,000 | |||||
Income from sale | 3,200 | |||||
Right of use assets | $ 800 | $ 800 | $ 800 | |||
Operating lease term (in years) | 3 years | 3 years | 3 years | |||
Operating lease, renewal term (in years) | 2 years | 2 years | 2 years | |||
Mount Airy NC Facility | Building | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Square footage of building | ft² | 66,000 |
Restructuring (Details)
Restructuring (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2021 | |
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring charges | $ 1,600 | $ 788 | $ 0 | $ 1,518 | $ 0 | |
Restructuring reserve | $ 1,000 | 0 | 0 | |||
Remaining expected restructuring costs | 4,300 | 4,300 | ||||
Restructuring charges incurred since project announced | 3,000 | 3,000 | ||||
Restructuring costs charged as period expense | 1,500 | |||||
Expected remaining charges for restructuring | 1,300 | 1,300 | ||||
Gain on sale of fixed assets | 200 | |||||
Minimum | Forecast | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Expected annual savings resulting from restructuring | $ 10,000 | |||||
Maximum | Forecast | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Expected annual savings resulting from restructuring | $ 14,000 | |||||
United States | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Remaining expected restructuring costs | 1,200 | 1,200 | ||||
Non-US | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Remaining expected restructuring costs | $ 3,100 | $ 3,100 |