10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from	to
Commission file number	1-367

THE L. S. STARRETT COMPANY

(Exact name of registrant as specified in its charter)

Massachusetts	04-1866480
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

121 Crescent Street, Athol, Massachusetts	01331-1915
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code 978-249-3551

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common - $1.00 Per Share Par Value	SCX	New York Stock Exchange
Class B Common - $1.00 Per Share Par Value	Not applicable	Not applicable

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒     No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.  (Check One):

Large Accelerated Filer ☐ Accelerated Filer ☐ Non-Accelerated Filer ☐ Smaller Reporting Company ☒

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐    No ☒

Common Shares outstanding as of	January 27, 2021
Class A Common Shares	6,449,298
Class B Common Shares	655,281

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THE L. S. STARRETT COMPANY

CONTENTS

			Page No.
Part I.	Financial Information:
	Item 1.	Financial Statements	3
		Consolidated Balance Sheets – December 31, 2020 (unaudited) and June 30, 2020	3
		Consolidated Statements of Operations (unaudited)– three and six months ended December 31, 2020 and December 31, 2019	4
		Consolidated Statements of Comprehensive Income (Loss) (unaudited) – three and six  months ended December 31, 2020 and December 31, 2019	5
		Consolidated Statements of Stockholders' Equity (unaudited) – three and six months ended December 31, 2020 and December 31, 2019	6
		Consolidated Statements of Cash Flows (unaudited) - six months ended December 31, 2020 and December 31, 2019	7
		Notes to Unaudited Consolidated Financial Statements	8-18
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
	Item 4.	Controls and Procedures	23
Part II.	Other Information:
	Item 1A.	Risk Factors	25
	Item 6.	Exhibits	27
SIGNATURES			28

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PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

THE L. S. STARRETT COMPANY

Consolidated Balance Sheets

(in thousands except share data)

	(unaudited)12/31/2020		(audited) 06/30/2020
ASSETS
Current assets:
Cash	$	14,559	$	13,458
Accounts receivable (less allowance for doubtful accounts of $623 and $736, respectively)	34,378		29,012
Inventories	51,022		52,987
Prepaid expenses and other current assets	9,392		8,641
Total current assets	109,351		104,098
Property, plant and equipment, net	36,112		37,090
Right of use assets	4,782		4,465
Deferred tax assets, net	23,846		21,018
Intangible assets, net	4,930		4,997
Goodwill	1,015		1,015
Total assets	$	180,036	$	172,683
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of debt	$	7,130	$	4,532
Current lease liability	1,591		1,905
Accounts payable	10,356		7,579
Accrued expenses	7,492		8,838
Accrued compensation	4,179		4,980
Total current liabilities	30,748		27,834
Other tax obligations	2,809		2,532
Long-term lease liability	3,283		2,655
Long-term debt, net of current portion	20,329		26,341
Postretirement benefit and pension obligations	64,783		67,338
Total liabilities	121,952		126,700
Stockholders' equity:
Class A Common stock $1 par 20,000,000 shares authorized; 6,447,739 outstanding at December 31, 2020 and 6,308,025 outstanding at June 30, 2020)	6,448		6,308
Class B Common stock $1 par (10,000,000 shares authorized; 656,908 outstanding at December 31, 2020 and 679,680 outstanding at June 30, 2020	657		680
Additional paid-in capital	56,184		55,762
Retained earnings	66,621		58,648
Accumulated other comprehensive loss	(71,826)		(75,415)
Total stockholders' equity	58,084		45,983
Total liabilities and stockholders’ equity	$	180,036	$	172,683

See Notes to Unaudited Consolidated Financial Statements

3

THE L. S. STARRETT COMPANY

Consolidated Statements of Operations

(in thousands except per share data) (unaudited)

	3 Months Ended						6 Months Ended
	12/31/2020			12/31/2019			12/31/2020			12/31/2019
Net sales	$	54,054		$	56,864		$	103,464		$	108,978
Cost of goods sold	36,449			38,228			70,287			72,639
Gross margin	17,605			18,636			33,177			36,339
% of Net sales	32.6		%	32.8		%	32.1		%	33.3		%
Restructuring charges	384			—			730			—
Gain on sale of building	(3,204)			—			(3,204)			—
Selling, general and administrative expenses	14,224			15,874			27,615			32,132
Operating income	6,201			2,762			8,036			4,207
Other (expense), net	(426)			(887)			(427)			(1,056)
Income before income taxes	5,775			1,875			7,609			3,151
Income tax expense (benefit)	1,918			615			(364)			1,113
Net income	$	3,857		$	1,260		$	7,973		$	2,038
Basic income per share	$	0.54		$	0.18		$	1.13		$	0.29
Diluted income per share	$	0.53		$	0.18		$	1.10		$	0.29
Weighted average outstanding shares used in per share calculations:
Basic	7,081			6,955			7,035			6,930
Diluted	7,294			7,015			7,260			7,011

See Notes to Unaudited Consolidated Financial Statements

4

THE L. S. STARRETT COMPANY

Consolidated Statements of Comprehensive Income (Loss)

(in thousands) (unaudited)

	3 Months Ended				6 Months Ended
	12/31/2020		12/31/2019		12/31/2020		12/31/2019
Net income	$	3,857	$	1,260	$	7,973	$	2,038
Other comprehensive income (loss):
Currency translation gain (loss), net of tax	3,846		2,674		3,610		(1,065)
Pension and postretirement plans, net of tax	1		(23)		(21)		(43)
Other comprehensive income (loss)	3,847		2,651		3,589		(1,108)
Total comprehensive income	$	7,704	$	3,911	$	11,562	$	930

See Notes to Unaudited Consolidated Financial Statements

5

THE L. S. STARRETT COMPANY

Consolidated Statements of Stockholders' Equity

(in thousands) (unaudited)

For the Three and Six-Month Period Ended December 31, 2020:

	Common Stock Outstanding				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Class A		Class B
Balance June 30, 2020	$	6,308	$	680	$	55,762	$	58,648	$	(75,415)	$	45,983
Total comprehensive income (loss)	—		—		—		4,116		(258)		3,858
Repurchase of shares	—		(2)		(4)		—		—		(6)
Stock-based compensation	8		—		359		—		—		367
Conversion	26		(26)		—		—		—		—
Balance September 30, 2020	$	6,342	$	652	$	56,117	$	62,764	$	(75,673)	$	50,202
Total comprehensive income	—		—		—		3,857		3,847		7,704
Repurchase of shares	—		—		(1)		—		—		(1)
Issuance of stock	—		8		17		—		—		25
Stock-based compensation	103		—		51		—		—		154
Conversion	3		(3)		—		—		—		—
Balance December 31, 2020	$	6,448	$	657	$	56,184	$	66,621	$	(71,826)	$	58,084
Accumulated balance consists of:
Translation loss									$	(58,264)
Pension and postretirement plans, net of taxes									(13,562)
									$	(71,826)

For the Three and Six-Month Period Ended December 31, 2019:

	Common Stock Outstanding				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Class A		Class B
Balance June 30, 2019	$	6,207	$	690	$	55,276	$	80,487	$	(59,281)	$	83,379
Total comprehensive income (loss)	—		—		—		778		(3,759)		(2,981)
Repurchase of shares	—		(2)		(8)		—		—		(10)
Stock-based compensation	57		—		157		—		—		214
Conversion	6		(6)		—		—		—		—
Balance September 30, 2019	$	6,270	$	682	$	55,425	$	81,265	$	(63,040)	$	80,602
Total comprehensive income	—		—		—		1,260		2,651		3,911
Repurchase of shares	—		—		(3)		—		—		(921)
Issuance of stock	—		7		30		—		—		37
Stock-based compensation	2		—		70		—		—		72
Conversion	8		(8)		—		—		—		—
Balance December 31, 2019	$	6,280	$	681	$	55,522	$	82,525	$	(60,389)	$	84,619
Accumulated balance consists of:
Translation loss									$	(50,624)
Pension and postretirement plans, net of taxes									(9,765)
									$	(60,389)

See Notes to Unaudited Consolidated Financial Statements

6

THE L. S. STARRETT COMPANY

Consolidated Statements of Cash Flows

(in thousands) (unaudited)

	6 Months Ended
	12/31/2020		12/31/2019
Cash flows from operating activities:
Net income	$	7,973	$	2,038
Non-cash operating activities:
Gain from sale of real estate	(3,204)		—
Depreciation	2,681		2,430
Amortization	605		1,109
Stock-based compensation	521		286
Net long-term tax obligations	114		192
Deferred taxes	(2,564)		484
Postretirement benefit and pension obligations	32		58
Working capital changes:
Accounts receivable	(2,911)		1,825
Inventories	4,615		(4,088)
Other current assets	(349)		41
Other current liabilities	(1,813)		(3,784)
Prepaid pension expense	(3,469)		(2,933)
Other	170		85
Net cash provided by (used in) operating activities	2,401		(2,257)
Cash flows from investing activities:
Purchases of property, plant and equipment	(3,050)		(4,663)
Software development	(537)		(718)
Proceeds from sale of real estate	5,214		—
Net cash provided by (used in) investing activities	1,627		(5,381)
Cash flows from financing activities:
Proceeds from borrowing	9,142		3,989
Debt repayments	(12,608)		(2,813)
Proceeds from common stock issued	25		37
Shares repurchased	(7)		(13)
Net cash (used in) provided by financing activities	(3,448)		1,200
Effect of exchange rate changes on cash	521		238
Net increase (decrease) in cash	1,101		(6,200)
Cash, beginning of period	13,458		15,582
Cash, end of period	$	14,559	$	9,382
Supplemental cash flow information:
Interest paid	$	423	$	502
Income taxes paid, net	2,941		1,180

See Notes to Unaudited Consolidated Financial Statements

7

THE L. S. STARRETT COMPANY

Notes to Unaudited Consolidated Financial Statements

December 31, 2020

Note 1:    Basis of Presentation and Summary of Significant Account Policies

The unaudited interim consolidated financial statements as of and for the six months ended December 31, 2020 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 1st and ends June 30th.

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 it's 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.

Note 2:    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. Financial results for each reportable segment are as follows (in thousands):

	North American Operations		International Operations		Unallocated		Total
Three Months ended December 31, 2020
Sales1	$	27,106	$	26,948	$	—	$	54,054
Operating Income (Loss)	$	3,688	$	4,436	$	(1,923)	$	6,201
Three Months ended December 31, 2019
Sales2	$	33,098	$	23,766	$	—	$	56,864
Operating Income (Loss)	$	2,547	$	1,725	$	(1,510)	$	2,762

1.Excludes $992 of North American segment intercompany sales to the International segment, and $2,610 of International segment intercompany sales to the North American segment.

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2.Excludes $1,049 of North American segment intercompany sales to the International segment, and $3,855 of International segment intercompany sales to the North American segment.

	North American Operations			International Operations		Unallocated		Total
Six months ended December 31, 2020
Sales1	$	53,089	0	$	50,375	$	—	$	103,464
Operating Income (Loss)	$	4,516		$	7,277	$	(3,757)	$	8,036
Six months ended December 31, 2019
Sales2	$	64,106		$	44,872	$	—	$	108,978
Operating Income (Loss)	$	4,751		$	2,889	$	(3,433)	$	4,207

1.Excludes $1,737 of North American segment intercompany sales to the International segment, and $5,396 of International segment intercompany sales to the North American segment.

2.Excludes $2,016 of North American segment intercompany sales to the International segment, and $8,097 of International segment intercompany sales to the North American segment.

Note 3:    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 of consideration 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 December 31, 2020 and 2019. 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 six months ended December 31, 2020 and 2019. 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

9

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 receivables 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 December 31, 2020, and June 30, 2020, the balance of the return asset is $0.1 million and was $0.1 million and the balance of the refund liability is $0.2 million and was $0.2 million. 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 $0.7 million and $0.4 million at December 31, 2020 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 six months ended December 31, 2020 and 2019 (in thousands):

10

	Three Months Ended				Six Months Ended
	12/31/2020		12/31/2019		12/31/2020		12/31/2019
North America
United States	$	25,345	$	31,085	$	49,682	$	59,708
Canada & Mexico	1,761		2,013		3,408		4,398
	27,106		33,098		53,090		64,106
International
Brazil	17,493		15,000		32,401		27,822
United Kingdom	5,554		5,372		10,548		10,603
China	2,005		1,653		3,586		3,167
Australia & New Zealand	1,896		1,741		3,839		3,280
	26,948		23,766		50,374		44,872
Total Sales	$	54,054	$	56,864	$	103,464	$	108,978

Note 4:    Recent Accounting Pronouncements

Recently Issued Accounting Standards not yet adopted:

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” and subsequent amendment to the guidance, ASU 2018-19 in November 2018. The standard significantly changes how entities 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 until 2023. The Company does not expect the adoption of this standard to have a material impact on the financial position and results of operations.

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. 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.

Note 5:    Leases

Operating lease cost amounted to $0.6 million and $1.2 million for six months period ended December 31, 2020 and 2019. As of December 31, 2020, the Company’s right-of-use assets, lease obligations and remaining cash commitment on these leases (in thousands):

	Right-of-Use Assets		Operating Lease Obligations		Remaining Cash Commitment
Operating leases	$	4,782	$	4,873	$	5,774

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 December 31,

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2020, 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 $0.1 of exchange expense during the six months ended December 31, 2020. The Company completed a sale and leaseback of their Mount Airy NC Facility (see note 13) and recognized an ROU asset of 66,000 square feet in the amount of $0.8 million for a three year lease with an option for 2 more years.

At December 31, 2020, the Company had the following fiscal year minimum operating lease commitments (in thousands)

Six months ended December 31, 2020	Operating Lease Commitments
2021 (Remainder of year)	$	1,256
2022	1,342
2023	1,110
2024	913
2025	640
Thereafter	512
Subtotal	$	5,774
Imputed interest	(901)
Total	4,873

Note 6:    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 December 31, 2020, 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 December 31, 2020.

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 six months ended December 31, 2020 and 2019.

The weighted average contractual term for stock options outstanding as of December 31, 2020 was 2.0 years.  The aggregate intrinsic value of stock options outstanding as of December 31, 2020 was less than $0.1 million. Stock options exercisable as of December 31, 2020 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.

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There were 297,140 RSU awards with a fair value of $3.36 per RSU granted during the six months ended December 31, 2020. There were 102,670 RSUs settled, and 3,834 RSUs forfeited during the six months ended December 31, 2020.  The aggregate intrinsic value of RSU awards outstanding as of December 31, 2020 was $1.1 million. As of December 31, 2020, 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 six-month periods ended December 31, 2020 were $0.2 million, and $0.5 million as compared to the prior year three and six months of $0.1 million and $0.2 million, respectively.  As of December 31, 2020, there was $2.5 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 $0.8 million is expected to be recognized over a weighted average period of 2.0 years.

Note 7:    Inventories

Inventories consist of the following (in thousands):

	12/31/2020		06/30/2020
Raw material and supplies	$	30,738	$	26,255
Goods in process and finished parts	13,035		13,694
Finished goods	32,208		37,579
	75,981		77,528
LIFO Reserve	(24,959)		(24,541)
	$	51,022	$	52,987

Of the Company’s $51.0 million and $53.0 million total inventory at December 31, 2020 and June 30, 2020, respectively, the $25.0 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 $29.8 million on a FIFO basis and $4.8 million on a LIFO basis at December 31, 2020. 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 $0.1 million increase in cost of sales for the goods sold in the period ending December 31, 2020 compared to $0.4 million in the six months ending December 31, 2019.

Note 8:    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 totaling $4.7 million. During the fourth quarter of fiscal year 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 December 31, 2020.

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 December 31, 2020, we did not identify a triggering event.

Amortizable intangible assets consist of the following (in thousands):

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	12/31/2020		6/30/2020
Trademarks and trade names	2,070		2,070
Completed technology	2,010		2,010
Customer relationships	630		630
Software development	9,982		9,445
Total	14,692		14,155
Accumulated amortization	(9,763)		(6,316)
Intangibles impairment	$	—	$	(2,842)
Total net balance	$	4,930	$	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)	$	743
2022	1,269
2023	1,034
2024	764
2025	604
2026	287
Thereafter	229
Total net balance	$	4,930

Note 9:    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 and life insurance benefit plan for U.S. employees. 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				Six Months Ended
	12/31/2020		12/31/2019		12/31/2020		12/31/2019
Service cost	$	—	$	—	$	—	$	—
Interest cost	1,118		1,366		2,231		2,715
Expected return on plan assets	(1,113)		(1,309)		(2,221)		(2,603)
Amortization of net loss	14		9		27		19
	$	19	$	66	$	37	$	131

Net periodic benefit costs for the Company's Postretirement Medical Plan consists of the following (in thousands):

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	Three Months Ended				Six Months Ended
	12/31/2020		12/31/2019		12/31/2020		12/31/2019
Service cost	$	22	$	19	$	43	$	37
Interest cost	52		60		103		120
Amortization of prior service credit	(135)		(135)		(269)		(269)
Amortization of net loss	41		21		83		42
	$	(20)	$	(35)	$	(40)	$	(70)

For the three month and six month period ended December 31, 2020, the Company contributed $1.5 million and $2.8 million, respectively in the U.S. and $0.3 million and $0.5 million in the UK pension plans. The Company estimates that it will contribute an additional $4.6 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.

Note 10:     Debt

Debt is comprised of the following (in thousands):

	12/31/2020		06/30/2020
Short-term and current maturities
Loan and Security Agreement (Term Loan)	1,475		597
Brazil Loans	5,655		3,935
	7,130		4,532
Long-term debt (net of current portion)
Loan and Security Agreement (Term Loan)	6,525		5,941
Loan and Security Agreement (Line of Credit)	13,804		20,400
	20,329		26,341
	$	27,459	$	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 credit limit for the Revolving Loan 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.

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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 FY21 and the impact of the Company’s restructuring plan initiatives. The Company will apply certain proceeds from the sale of US real estate assets against the principle balance of the term loans under the TD Bank loan agreement. 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 December 31, 2020.

Total debt decreased $3.4 million during the six months ended December 31, 2020.  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 December 31, 2020 (in thousands):

Lending Institution	Interest Rate		Beginning Date	Ending Date	Outstanding Balance
Brazil Bank	6.05	%	March 2020	March 2021	$	377
Santander	8.12	%	April 2020	April 2021	$	1,010
Bradesco	5.18	%	May 2020	May 2021	$	791
Brazil Bank	4.30	%	September 2020	August 2021	$	1,000
Brazil Bank	3.38	%	November 2020	November 2021	$	900
Brazil Bank	4.74	%	December 2020	December 2021	$	577
Bradesco	2.37	%	December 2020	December 2021	$	1,000
					$	5,655

Note 11:     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 tax deductibility of 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,

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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 year 2019 and fiscal year 2020.

For the three month period ended December 31, 2020, the Company recognized tax expense of $1.9 million on a profit before tax of $5.8 million or an effective tax rate of 33%.For the three month period ended December 31, 2019, the Company recognized tax expense of $0.6 million on a profit before tax of $1.9 million or an effective tax rate of 33%. The tax rate for both fiscal 2021 and fiscal 2020 was higher than the U.S. statutory tax rate of 21% primarily due to the GILTI provisions, which became effective in fiscal 2019, and the jurisdictional mix of earnings, particularly Brazil with a statutory rate of 34%.

For the six month period ended December 31, 2020, the Company recognized a tax benefit of ($0.4) million on a profit before tax of $7.6 million or an effective tax rate of (5)%. 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 $2.5 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 six month period ended December 31, 2019. the Company recognized tax expense of $1.1 million on a profit before tax of $3.2 million or an effective tax rate of 35%. 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 December 31, 2020, 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 the 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.

Note 12: Contingencies

The Company is involved in certain legal matters, which arise, in the normal course of business. These matters are not expected to have a material impact on the Company’s financial condition, results of operations or cash flows.

Note 13: Facility Sale and Leaseback

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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 more years.

Note 14:     Restructuring

In June 2020, the Company recorded a $1.6 million restructuring charge of which $1.0 million remained in the accrual at fiscal 2020 year end. The total planned expenditure is $4.0 million, $1.2 million in the U.S. and $2.8 million internationally, expensed during the five quarters from Q42020 to Q42021. $2.3 million has been charged as restructuring in the nine months ending December 31, 2020. The Company adopted this plan in order to consolidate certain saw manufacturing operations for greater efficiency. This restructuring is strategically targeting improving manufacturing utilization globally and will be completed in fiscal 2021.

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. Total restructuring cost of $4.0 million is expected to drive annual savings of $10-14 million annually beginning in fiscal year 2021 as planned implementation throughout the year, with full annual savings realized in fiscal year 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.

In the six months ended December 31, 2020, $0.7 million of restructuring cost were charged as a period expense in the Consolidated Statements of Operations, on a separate line, and $1.0 million was charged against accrued expenses on the Consolidate Balance Sheets. The remaining balance of the accrual at December 31, 2020 is zero. The Company expects to charge an addition $1.7 million in the period those cost are incurred in the remaining six months of fiscal year 2021. There currently have been no material losses related to disposal of assets. The Company recorded a gain on the sale of fixed assets internationally of $0.2 million. The Company does not expect a material amount of disposal costs.

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ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Three months ended December 31, 2020 and December 31, 2019

Overview

Net sales in the quarter ended December 31, 2020 were $54.1 million, down $2.8 million or 4.9% compared to $56.8 million in the quarter ended December 31, 2019. Foreign currency translation negatively impacted reported sales by $5.2 million for the three months ended December 31, 2020. On a foreign currency neutral basis, sales in the quarter ending December 31, 2020 increased 4.2% from the quarter ending December 31, 2019. International sales in the quarter represent 50% of our global sales mix led by a resurgent Brazil.

Operating Income increased $3.4 milllion to $6.2 million compared to $2.8 million in quarter ended December 31, 2019 due in large part to the gain of $ 3.2 million on the sale of the Mount Airy, North Carolina facility in December 2020 (see Note 13). In addition, $0.4 million in restructuring cost were in the quarter ended December 31, 2020 and not in the prior year quarter and operating income increased as a result of operations in the amount of $0.6 million or 21%. Given the pandemic affecting the corresponding decline in sales we are seeing benefits from our restructuring.

This improvement is the result of aligning our cost structure to current pandemic demand and on-going restructuring. The Company continues to benefit from its restructuring activities that have resulted in a reduction of selling, general and administrative expenses of $1.7 million in the quarter ending December 31, 2020 compared to quarter ending December 31, 2019.

Net income improved by $2.6 million in the quarter ended December 31, 2020 to $3.9 million. The improvements compared to the quarter ended December 31, 2019 resulted from the gain on the sale of the facility of $3.2 million, $1.6 million of lower selling, general and administrative expenses and improved other income of $0.5 million. Those benefits were partially offset by lower gross margin of $1.0 million as a result of lower sales, higher taxes of $1.3 million and restructuring cost of $0.4 million.

Use of Non-GAAP Financial Measures

In "Management's discussion and analysis on financial condition and results of operations" in this quarterly report on form 10-Q, we discuss non-GAAP financial measures related to currency-neutral sales revenues, which should be considered in addition to, and not in lieu of, the financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Currency-neutral sales are calculated using actual exchange rates in use during the comparative prior year period to enhance the visibility of the underlying business trends excluding the impact of translation arising from foreign currency exchange rate fluctuations.

Management uses these non-GAAP financial measures when evaluating the Company's performance, including when making financial and operating decisions. Additionally, management believes these non-GAAP financial measures provide investors with additional financial information that should be considered when assessing our underlying business performance and trends. However, references to currency-neutral revenues should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP and may not be comparable to similarly titled non-GAAP measures used by other companies.

Net Sales

The breakdown of the Company’s net sales of $54.1 million was North America with sales of $27.1 million, a decline of $6.0 million, offset by an increase of $3.2 million in International sales to $26.9 million in the quarter ended December 31, 2020.

International sales were adversely impacted by the aforementioned currency fluctuation primarily in Brazil. On a currency neutral basis our Brazilian subsidiary's sales increased 53% for the quarter ending December 31, 2020 compared to the quarter ending December 31, 2019. This was due to strong performance across most all of its product portfolio led by its consumer markets.

North American sales declined 18% in the quarter ended December 31, 2020. All of our U.S. subsidiaries collectively recorded lower sales in the quarter ended December 31, 2020 as compared to the prior year quarter. This was driven by significantly

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lower demand in our industrial and capital equipment markets as the result of channel inventories declining and capital projects on hold due to the COVID-19 pandemic, the exception being the semi-conductor market which has exhibited resilience.

Gross Margin

Gross margin decreased $1.0 million or 5.5%, commensurate with the drop in sales volume. Total gross margin as a percentage of sales was essentially flat in the quarter ended December 31, 2020 at 32.6% of sales, and in the quarter ended December 31, 2019 at 32.8% of sales. North American gross margin percentage declined 5.5% of sales due in large part to sales mix and lower volume and plant utilization.

International gross margins increased by 4.3% of sales to 40.2 % in the quarter ended December 31, 2020 as compared to the prior year quarter. International gross margins increased $2.3 million to $10.8 million in the quarter ended December 31, 2020 based upon an increase in sales volume and improved manufacturing utilization.

Selling, General and Administrative Expenses

Selling, general and administrative expense decreased $1.7 million or 10.4% in the quarter ended December 31, 2020 vs the prior year quarter. North America selling, general and administrative expense was $1.6 million lower, International selling, general and administrative expense was $0.5 million lower, and Corporate expenses were up $0.4 million in the quarter ended December 31, 2020 vs the prior quarter. The decline in expenses reflects the Company’s efforts to align our cost structure to demand. Corporate expenses were higher by $0.4 million in the quarter ended December 31, 2020 as compared to prior quarter due to RSU stock expense, increased insurance premiums, and investment in Treasury, FP&A and SEC reporting tools.

As presented on separate lines on the Consolidated Statements of Operations are a gain on the sale of the North Carolina facility of $3.2 million and $0.4 million in restructuring charges of which $0.3 million in the U.S. and $0.1 million in the U.K. associated with the fiscal year 2021 plan as disclosed in the June 30, 2020 Form 10-K as well as Note 14.

Other Income (Expense)

Other Income (expense) improved $0.5 million from the prior year quarter to an expense of $(0.4) million in the quarter ended December 31, 2020. Other Income (expense) was $(0.9) million in the quarter ended December 31, 2019. Other Income (expense) improved as compared to the prior year quarter namely as a result offsetting $0.3 million income from a consolidated gain of fixed asset sales, increased other miscellaneous income as well as a favorable tax settlement of $0.2 million in Brazil.

Income Taxes

The tax expense for the second quarter of fiscal 2021 was $1.9 million on a profit before tax of $5.8 million or an effective tax rate of 33%. The tax expense for the second quarter of fiscal 2020 was $0.6 million on a profit before tax of $1.9 million or an effective tax rate of 33%. The tax rate for the second quarter of both fiscal 2021 and fiscal 2020 was higher than the U.S. statutory tax rate of 21% primarily due to the GILTI provisions, which became effective in fiscal 2019, and the jurisdictional mix of earnings, particularly Brazil with a statutory rate of 34%.

Net Income

The Company recorded net income of $3.9 million or $0.54 per basic share in the quarter ended December 31, 2020 compared to net income of $1.3 million or $0.18 per basic share in the quarter ended December 31, 2019. Pretax income was $5.8 million, an increase of $3.9 million. Tax expense rose $1.3 million to $1.9 million. higher as a result of a $2.6 million increase in net income in the quarter ended December 31, 2020 as compared to the quarter ended December 31, 2019.

Six months ended December 31, 2020 and December 31, 2019

Overview

The company finished the six months ended December 31, 2020 with sales of $103.5 million and net income of $8.0 million or $5.5 million lower sales yet $6.0 million of more net income as compared to the six months ended December 31, 2019. In the six months ended December 31, 2020, sales declined $11.0 million in North America, which was offset by an increase in our international markets of $5.5 million as compared to the six months ended December 31, 2019. The weakening of the Brazilian currency relative to the U.S. Dollar between the two comparative periods negatively impacted reported sales by $10.7 million. Eliminating the impact of foreign exchange translation, sales have increased 4.2% year on year for the first six months of this

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fiscal year. As a result operating income, which includes the gain on the Sale of our Mt. Airy North Carolina facility improved by $3.8 million in six months ended December 31, 2020 as compared to the prior year six months.

Gross Margin as a percentage of sales was down to 32.1% of sales or $33.2 million in the six months ended December 31, 2020, a decrease of $3.2 million as compared to the $36.4 million gross margin or 33.3% of sales in the six months ended December 31, 2019. Selling, general and administrative expense was at $27.6 million in the six months ended December 31, 2020 or $4.5 million lower compared to the prior year six months.

Net income improved by $5.9 million in the six months ended December 31, 2020 . The improvement was due to the following: A $ 3.2 million gain on the sale of the Mount Airy, North Carolina facility in December 2020, a $0.6 million improvement in other expense for small gains on sales of fixed assets globally, taxes were $1.5 million lower due to chanes in GILTI legislation requiring adjustments in the September 2020 quarter as well as the on-going operational improvement of $0.6 million.

Net Sales

Net sales in the six months ended December 31, 2020 were $103.5 million or $5.5 million lower as compared to the six months ended December 31, 2019. International sales were $5.5 million higher in the quarter ended December 31, 2020 or $50.4 million as compared to $44.9 million in the prior year six months. Brazil was up 16.5% to $32.4 million in reported sales as compared to $27.8 million in the prior year six months. On a currency neutral basis, Brazil's sales to third party customers have increased by 55% from the comparative period in the prior year, showing strong gains in all product categories.

North American sales in the six months ended December 31, 2020 were $11.0 million lower, or $53.1 million as compared to $64.1 million in the prior year six months. In the U.S. sales in our industrial and capital equipment markets declined by $10 million. Our industrial products sold primarily through distribution channel partners continue to be negatively affected by the lack of inventory replenishment relative to the pandemic. With capital projects shelved as most industries preserve cash, sales of high end metrology products have significantly declined from pre COVID -19 levels. The semi-conductor market has remained stable to the benefit of our custom engineered products.

Gross Margin

Gross margin decreased $3.2 million or 8.7% principally due to the drop in sales volume. Total gross margin as a percentage of sales declined 1.3% points due in large part to lower utilization in manufacturing in the U.S. for the six months ended December 31, 2020 as compared to 2019. For the six months ended December 31, 2020 the gross margin percentage of sales was 32.1% of sales and in the six months ended December 31, 2019 gross margin was 33.4% of sales.

North American gross margin percentage declined 4.9% of sales due in large part to sales mix and lower volume as well as lower plant utilization. International gross margins increased by 1.5% of sales to 38.9 % in the quarter ended December 31, 2020 as compared to 37.4% during the prior year six months. International gross margins increased $2.8 million to $19.6 million in the six months that ended December 31, 2020 based upon an increase in sales volume and manufacturing utilization.

Selling, General and Administrative Expenses

Selling, general and administrative expenses of $27.6 million were lower by $4.5 million or 14.1% in the six months ended December 31, 2020 as compared to the prior year. North American expenses were $3.2 million lower in the six months ended December 31, 2020 as compared to the prior year six months primarily due to $1.2 million lower selling costs as a result of less travel and entertainment, no trade show participation, and lower headcount. Distribution expenses also attributed to $0.4 million in lower expenses due to lower sales, and general and administrative expenses were lower $1.1 million due to lower cost structure.

Selling, general and administrative expenses internationally were $12.2 million for the six months ended December 31, 2020 or

$1.7 million or 12.1% lower than the six months ended December 31, 2019. Internationally, selling expenses were $1.1 million lower and marketing expenses were $0.6 million lower in the six months ended December 31, 2020 as compared to prior year as a result of no trade show participation, lower head count and minimal travel and entertainment costs.

Corporate expenses were $3.8 million in the six months ended December 31, 2020 or $0.3 million higher than the prior year six months as a result of higher RSU expense, increased insurance premiums and professional services. In addition, the Company has made some investments in financial planning, analysis, reporting, treasury, and external reporting tools.

21

As presented as separate lines on the Consolidated Statements of Operations is the gain of $3.2 million on the sale of our Mount Airy, North Carolina facility (See Note 13) and $0.7 million in restructuring charges with $0.6 million in the U.S. and $0.1 million in the U.K. associated with the fiscal year 2021 plan as disclosed in the June 30, 2020 Form 10-K as well as Note 14.

Other Income (expense)

Other Income (expense) improved $0.7 million from the prior year six months to $(0.4) million in the six months ended December 31, 2020. Other Income (expense) was $(1.1) million in the six months ended December 31, 2019. Other Income (expense) declined in the six months compared to the prior year period namely as a result of $0.3 million income from a consolidated gain of fixed asset sales, a favorable tax settlement of $0.2 million in Brazil and $0.2 million in interest income and scrap sales combined.

Income Tax Expense

The tax expense for the first half of fiscal 2021 was a benefit of ($0.4) million on a profit before tax of $7.6 million or an effective tax rate of (5%). Before the discrete benefits relating to legislation enacted during the first half 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 $2.5 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.The tax expense for the first half of fiscal 2020 was $1.1 million on a profit before tax of $3.2 million or an effective tax rate of 35%. 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%.

Net Income

The Company recorded net income of $8.0 million or $1.13 per basic share in the quarter ended December 31, 2020 compared to net income of $2.0 million or $0.29 per basic share in the quarter ended December 31, 2019. Pretax income was $7.6 million, an improvement of $4.5 million compared to the six months ended December 31, 2019. Tax expense in the six months ended December 31, 2020 was $1.5 million lower than in the comparative period, resulting in an increase of net income of $6.0 million to $8.0 million as compared to $2.0 million for the six months ended December 31, 2019.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows (in thousands)	Six Months Ended
	12/31/2020		12/31/2019
Cash provided by (used in) operating activities	$	2,401	(2,257)
Cash provided by (used in) investing activities	1,627		(5,381)
Cash (used in) provided by financing activities	(3,448)		1,200
Effect of exchange rate changes on cash	521		238
Net increase (decrease) in cash	$	1,101	$	(6,200)

Net cash flows for the six months ended December 31, 2020 provided an increase in cash of $1.1 million compared to a decrease in cash of $6.2m for the six month period ending December 31, 2019. Cash provided by operations increased to $2.4 million due to improved performance and working capital management. Cash provided by investing activities increased to $1.6 million as a result of $5.2 million proceeds from the sale of the Mount Airy, North Carolina facility in December 2020. This was partially offset by $3.0 million in capital investments during the period which were largely part of the 2021 planned restructuring. With the building sale and improved operating cash flows, the Company was able to reduce its overall debt during the six-month period between June 30, 2020 and December 31, 2020 by $3.4m.

Liquidity and Credit Arrangements

The Company believes it maintains sufficient liquidity and has the resources to fund its operations.  During 2020 the Company implemented a restructuring plan to address changes in its business as a result of the COVID-19 pandemic. This plan included reducing payroll, consolidation of certain operations and managing variable costs.

22

The Company worked with TD Bank to amend the current loan agreement which resulted in a number of changes such as amendments to the financial covenants through June 2021. The Company believes that existing cash and cash expected to be provided by future operating activities, augmented by the plans highlighted above, are adequate to satisfy its working capital, capital expenditure requirements and other contractual obligations for at least the next 12 months. If the Company's expectations are incorrect or the impact from the COVID-19 pandemic worsens then it may need to take advantage of unanticipated strategic opportunities to strengthen our financial position, which could result in material impacts to the Company’s consolidated financial statements in future reporting periods.

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.

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 perfected its security interests in the Company’s U.S. based assets, increased the maximum interest charged on the Line Of Credit from an 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. In addition, the Company will provide additional reporting to TD Bank, including monthly profit and loss statements, balance sheets, cash flow statements and forecasting. This minimum adjusted EBITDA covenant is based on the Company’s plan for a slow pandemic recovery throughout FY21 and the impact of the Company’s restructuring plan initiatives. The Company will apply certain proceeds from the sale of US real estate assets against the principle balance of the term loans under the TD Bank loan agreement. The Agreement will revert to the existing covenant package for the quarter ending September 30, 2021 and every quarter thereafter.

The effective interest rate on the borrowings under the Loan and Security Agreement during the six months ending December 31, 2020 and 2019 was 1.9% and 3.7% respectively. The effective rate for the six months ending December 31, 2020 was lower than that specified in the First Amendment to the loan agreement which was executed on September 17, 2020 (See Note 10). Upon investigation, the bank had discovered that it had not re-set its system and had been undercharging the company interest since the inception of the September 17, 2020 amendment. The Bank has since corrected the issue and will bill the company retroactively for the interest not charged during the six month period ending December 31, 2020.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any material off-balance sheet arrangements as defined under the Securities and Exchange Commission rules.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

One should carefully review and consider the information regarding certain factors which could materially affect our business, financial condition or future results set forth under Item 1A. “Risk Factors” in our Form 10-K for the year ended June 30, 2020.

ITEM 4.    CONTROLS AND PROCEDURES

The Company's management, under the supervision and with the participation of the Company's President and Chief Executive Officer and Chief Financial Officer, has evaluated the Company's disclosure controls and procedures as of December 31, 2020, and they have concluded that our disclosure controls and procedures were effective as of such date. All information required to be filed in this report was recorded, processed, summarized and reported within the time period required by the rules and regulations of the Securities and Exchange Commission, and such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2020, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.

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No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II.    OTHER INFORMATION

ITEM 1A.    RISK FACTORS

SAFE HARBOR STATEMENT

UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Quarterly Report on Form 10-Q contains forward-looking statements about the Company’s business, competition, sales, expenditures, foreign operations, plans for reorganization, interest rate sensitivity, debt service, liquidity and capital resources, and other operating and capital requirements. In addition, forward-looking statements may be included in future Company documents and in oral statements by Company representatives to securities analysts and investors. The Company is subject to risks that could cause actual events to vary materially from such forward-looking statements. You should carefully review and consider the information regarding certain factors which could materially affect our business, financial condition or future results set forth under Item 1A. “Risk Factors” in our Form 10-K for the year ended June 30, 2020. There have been no material changes from the factors disclosed in our Form 10-K for the year ended June 30, 2020 other than what is set forth below;

On October 1, 2020, The L. S. Starrett Company (the “Company”) was notified (the “Notice”) by the New York Stock Exchange (the “NYSE”) that it was not in compliance with the continued listing standard set forth in Section 802.01B of the NYSE Listed Company Manual because the Company’s average market capitalization was less than $50 million over a consecutive 30 trading-day period and the stockholders’ equity of the Company was less than $50 million.

The Company notified the NYSE that it intends to submit a plan to cure this deficiency and return to compliance with the NYSE continued listing requirements. In order to avoid delisting under Section 802.01B, the Company had 45 days from the receipt of the Notice to submit a business plan advising the NYSE of definitive actions the Company has taken, or proposes to take, that would bring it into compliance with the market capitalization listing standards on or before April 1, 2022 (the “Cure Period”). The Company has prepared and submitted a plan on November 10, 2020, at which time stockholder's equity had already exceeded the $50m minimum threshold with the quarter ending September 30, 2020. The plan was officially accepted by the NYSE as confirmed in a letter addressed to the Company dated December 23, 2020. Subsequent to the plan submission and acceptance by the NYSE, the company has posted a second consecutive quarter with Owners' Equity in excess of $50 million with the filing of this report for the quarter ending December 31, 2020. In accordance with NYSE listing standards, the company has regained full compliance. The NYSE has indicated that it will review the current quarterly report, and once it has deemed the company to be fully compliant, it will issue the Company a cure letter, remove the company from the list of non-compliant issuers, and remove the ".BC" appendage from the stock ticker.

Increased information technology security threats and more sophisticated computer crime pose a risk to our systems, networks, products and services. Any inadequacy, interruption, integration failure or security failure with respect to our information technology could harm our ability to effectively operate our business.

The efficient operation of the Company's business is dependent on its information systems, including its ability to operate them effectively and to successfully implement new technologies, systems, controls and adequate disaster recovery systems. In addition, the Company must protect the confidentiality of data of its business, employees, customers and other third parties. Information technology security threats -- from user error to cybersecurity attacks designed to gain unauthorized access to our systems, networks and data – are increasing in frequency and sophistication. Cybersecurity attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer crime and advanced persistent threats. For example, on October 7, 2020, our information technology (“IT”) systems were exposed to a ransomware attack, which partially impaired certain IT systems for a short period of time. We are continuing to investigate the incident, together with legal counsel and other incident response professionals. Although minimal data may have been compromised, current data mining exercises will determine if any sensitive data had been accessed in that breach We do not believe that we have experienced any material losses related to the ransomware attack and were able to recover all material data. Most systems have been restored to pre-attack capabilities, and our major ERP system and associated financial and transactional data were never impacted by this breach.

These threats pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. Cybersecurity attacks could also include attacks targeting customer data or the security, integrity and/or reliability of the hardware and software installed in our products. It is possible that our information technology systems and networks, or those managed by third parties, could have vulnerabilities, which could go unnoticed for a period of time. The failure of the Company's information systems to perform as designed or its failure to implement and operate them effectively could disrupt the Company's business or subject it to liability and thereby harm its profitability. While the Company continues to enhance the

25

applications contained in the Enterprise Resource Planning (ERP) system as well as improvements to other operating systems, there can be no guarantee that the actions and controls we have implemented and are implementing, or which we cause or have caused third party service providers to implement, will be sufficient to protect our systems, information or other property.

26

ITEM 6.    EXHIBITS

31a	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31b	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32	Certifications of the Principal Executive Officer and the Principal Financial Officer pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from The L. S. Starrett Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language): (I) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statement of Stockholders' Equity, (v) the Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text.

27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		THE L. S. STARRETT COMPANY (Registrant)
Date	February 5, 2021	/S/R. Douglas A. Starrett
		Douglas A. Starrett - President and CEO (Principal Executive Officer)
Date	February 5, 2021	/S/R. John C. Tripp
		John C. Tripp - Treasurer and CFO (Principal Accounting Officer)

28

EX-31.A

EXHIBIT 31.a

CERTIFICATIONS

I, Douglas A. Starrett, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of The L.S. Starrett Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial report; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 5, 2021	/S/	Douglas A. Starrett
		Douglas A. Starrett
		Chief Executive Officer

EX-31.B

EXHIBIT 31.b

CERTIFICATIONS

I, John C. Tripp, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of The L.S. Starrett Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial report; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 5, 2021	/S/	John C. Tripp
		John C. Tripp
		Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATIONS

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of The L.S. Starrett Company, a Massachusetts corporation (the "Company"), does hereby certify, to such officer's knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (the "Form 10-Q") of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date	February 5, 2021	/S/ Douglas A. Starrett
		Douglas A. Starrett
		Chief Executive Officer
Date	February 5, 2021	/S/ John C. Tripp
		John C. Tripp
		Chief Financial Officer

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

A signed original of this written statement required by Section 906 has been provided to The L.S. Starrett Company and will be retained by The L.S. Starrett Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover page - shares	6 Months Ended
	Dec. 31, 2020	Jan. 20, 2021
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Dec. 31, 2020
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	Q2
Entity Central Index Key	0000093676
Amendment Flag	false
Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		6,449,298
Class B
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		655,281

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2020	Jun. 30, 2020
Current assets:
Cash	$ 14,559	$ 13,458
Accounts receivable (less allowance for doubtful accounts of $623 and $736, respectively)	34,378	29,012
Inventories	51,022	52,987
Prepaid expenses and other current assets	9,392	8,641
Total current assets	109,351	104,098
Property, plant and equipment, net	36,112	37,090
Right of use assets	4,782	4,465
Deferred tax assets, net	23,846	21,018
Intangible assets, net	4,930	4,997
Goodwill	1,015	1,015
Total assets	180,036	172,683
Current liabilities:
Current maturities of debt	7,130	4,532
Current lease liability	1,591	1,905
Accounts payable	10,356	7,579
Accrued expenses	7,492	8,838
Accrued compensation	4,179	4,980
Total current liabilities	30,748	27,834
Other tax obligations	2,809	2,532
Long-term lease liability	3,283	2,655
Long-term debt, net of current portion	20,329	26,341
Postretirement benefit and pension obligations	64,783	67,338
Total liabilities	121,952	126,700
Stockholders' equity:
Additional paid-in capital	56,184	55,762
Retained earnings	66,621	58,648
Accumulated other comprehensive loss	(71,826)	(75,415)
Total stockholders' equity	58,084	45,983
Total liabilities and stockholders’ equity	180,036	172,683
Class A
Stockholders' equity:
Common stock	6,448	6,308
Class B
Stockholders' equity:
Common stock	$ 657	$ 680

XML

Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Dec. 31, 2020	Jun. 30, 2020
Allowance for doubtful accounts	$ 623	$ 736
Common stock, par value (in dollars per share)	$ 1	$ 1
Class A
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares, outstanding (in shares)	6,447,739	6,308,025
Class B
Common stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, shares, outstanding (in shares)	656,908	679,680

XML

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Income Statement [Abstract]
Net sales	$ 54,054	$ 56,864	$ 103,464	$ 108,978
Cost of goods sold	36,449	38,228	70,287	72,639
Gross margin	$ 17,605	$ 18,636	$ 33,177	$ 36,339
% of Net sales	32.60%	32.80%	32.10%	33.30%
Restructuring charges	$ 384	$ 0	$ 730	$ 0
Selling, general and administrative expenses	14,224	15,874	27,615	32,132
Operating income	6,201	2,762	8,036	4,207
Other (expense), net	(426)	(887)	(427)	(1,056)
Gain on sale of building	(3,204)	0	(3,204)	0
Income before income taxes	5,775	1,875	7,609	3,151
Income tax expense (benefit)	1,918	615	(364)	1,113
Net income	$ 3,857	$ 1,260	$ 7,973	$ 2,038
Basic income per share (in dollars per share)	$ 0.54	$ 0.18	$ 1.13	$ 0.29
Diluted income per share (in dollars per share)	$ 0.53	$ 0.18	$ 1.10	$ 0.29
Weighted average outstanding shares used in per share calculations:
Basic (in shares)	7,081	6,955	7,035	6,930
Diluted (in shares)	7,294	7,015	7,260	7,011

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Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Statement of Comprehensive Income [Abstract]
Net income	$ 3,857	$ 1,260	$ 7,973	$ 2,038
Other comprehensive income (loss):
Currency translation gain (loss), net of tax	3,846	2,674	3,610	(1,065)
Pension and postretirement plans, net of tax	1	(23)	(21)	(43)
Other comprehensive income (loss)	3,847	2,651	3,589	(1,108)
Total comprehensive income	$ 7,704	$ 3,911	$ 11,562	$ 930

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Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock Outstanding Class A	Common Stock Outstanding Class B	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss
Beginning balance at Jun. 30, 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)	930
Ending balance at Dec. 31, 2019	84,619	6,280	681	55,522	82,525	(60,389)
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)
Accumulated balance consists of:
Translation loss						(50,624)
Pension and postretirement plans, net of taxes						(9,765)
Accumulated other comprehensive loss						(60,389)
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		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)	11,562
Ending balance at Dec. 31, 2020	58,084	6,448	657	56,184	66,621	(71,826)
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		3	(3)
Ending balance at Dec. 31, 2020	58,084	$ 6,448	$ 657	$ 56,184	$ 66,621	(71,826)
Accumulated balance consists of:
Translation loss						(58,264)
Pension and postretirement plans, net of taxes						(13,562)
Accumulated other comprehensive loss	$ (71,826)					$ (71,826)

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Cash flows from operating activities:
Net income	$ 7,973	$ 2,038
Non-cash operating activities:
Gain from sale of real estate	(3,204)	0
Depreciation	2,681	2,430
Amortization	605	1,109
Stock-based compensation	521	286
Net long-term tax obligations	114	192
Deferred taxes	(2,564)	484
Postretirement benefit and pension obligations	32	58
Working capital changes:
Accounts receivable	(2,911)	1,825
Inventories	4,615	(4,088)
Other current assets	(349)	41
Other current liabilities	(1,813)	(3,784)
Prepaid pension expense	(3,469)	(2,933)
Other	170	85
Net cash provided by (used in) operating activities	2,401	(2,257)
Cash flows from investing activities:
Purchases of property, plant and equipment	(3,050)	(4,663)
Software development	(537)	(718)
Proceeds from sale of real estate	5,214	0
Net cash provided by (used in) investing activities	1,627	(5,381)
Cash flows from financing activities:
Proceeds from borrowing	9,142	3,989
Debt repayments	(12,608)	(2,813)
Proceeds from common stock issued	25	37
Shares repurchased	(7)	(13)
Net cash (used in) provided by financing activities	(3,448)	1,200
Effect of exchange rate changes on cash	521	238
Net increase (decrease) in cash	1,101	(6,200)
Cash, beginning of period	13,458	15,582
Cash, end of period	14,559	9,382
Supplemental cash flow information:
Interest paid	423	502
Income taxes paid, net	$ 2,941	$ 1,180

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Basis of Presentation and Summary of Significant Account Policies

6 Months Ended

Dec. 31, 2020

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 six months ended December 31, 2020 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 1st and ends June 30th.

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 it's 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.

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Segment Information

6 Months Ended

Dec. 31, 2020

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. Financial results for each reportable segment are as follows (in thousands):

	North American Operations		International Operations		Unallocated		Total
Three Months ended December 31, 2020
Sales1	$	27,106	$	26,948	$	—	$	54,054
Operating Income (Loss)	$	3,688	$	4,436	$	(1,923)	$	6,201
Three Months ended December 31, 2019
Sales2	$	33,098	$	23,766	$	—	$	56,864
Operating Income (Loss)	$	2,547	$	1,725	$	(1,510)	$	2,762

1.Excludes $992 of North American segment intercompany sales to the International segment, and $2,610 of International segment intercompany sales to the North American segment.

2.Excludes $1,049 of North American segment intercompany sales to the International segment, and $3,855 of International segment intercompany sales to the North American segment.

	North American Operations			International Operations		Unallocated		Total
Six months ended December 31, 2020
Sales1	$	53,089	0	$	50,375	$	—	$	103,464
Operating Income (Loss)	$	4,516		$	7,277	$	(3,757)	$	8,036
Six months ended December 31, 2019
Sales2	$	64,106		$	44,872	$	—	$	108,978
Operating Income (Loss)	$	4,751		$	2,889	$	(3,433)	$	4,207

1.Excludes $1,737 of North American segment intercompany sales to the International segment, and $5,396 of International segment intercompany sales to the North American segment.

2.Excludes $2,016 of North American segment intercompany sales to the International segment, and $8,097 of International segment intercompany sales to the North American segment.

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Revenue from Contracts with Customers

6 Months Ended

Dec. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customer

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 of consideration 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 December 31, 2020 and 2019. 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 six months ended December 31, 2020 and 2019. 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 receivables 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 December 31, 2020, and June 30, 2020, the balance of the return asset is $0.1 million and was $0.1 million and the balance of the refund liability is $0.2 million and was $0.2 million. 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 $0.7 million and $0.4 million at December 31, 2020 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 six months ended December 31, 2020 and 2019 (in thousands):

	Three Months Ended				Six Months Ended
	12/31/2020		12/31/2019		12/31/2020		12/31/2019
North America
United States	$	25,345	$	31,085	$	49,682	$	59,708
Canada & Mexico	1,761		2,013		3,408		4,398
	27,106		33,098		53,090		64,106
International
Brazil	17,493		15,000		32,401		27,822
United Kingdom	5,554		5,372		10,548		10,603
China	2,005		1,653		3,586		3,167
Australia & New Zealand	1,896		1,741		3,839		3,280
	26,948		23,766		50,374		44,872
Total Sales	$	54,054	$	56,864	$	103,464	$	108,978

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Recent Accounting Pronouncements

6 Months Ended

Dec. 31, 2020

Accounting Standards Update and Change in Accounting Principle [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Recently Issued Accounting Standards not yet adopted:

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” and subsequent amendment to the guidance, ASU 2018-19 in November 2018. The standard significantly changes how entities 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 until 2023. The Company does not expect the adoption of this standard to have a material impact on the financial position and results of operations.

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. 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.

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Leases

6 Months Ended

Dec. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Leases

Leases

Operating lease cost amounted to $0.6 million and $1.2 million for six months period ended December 31, 2020 and 2019. As of December 31, 2020, the Company’s right-of-use assets, lease obligations and remaining cash commitment on these leases (in thousands):

	Right-of-Use Assets		Operating Lease Obligations		Remaining Cash Commitment
Operating leases	$	4,782	$	4,873	$	5,774

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 December 31,

2020, 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 $0.1 of exchange expense during the six months ended December 31, 2020. The Company completed a sale and leaseback of their Mount Airy NC Facility (see note 13) and recognized an ROU asset of 66,000 square feet in the amount of $0.8 million for a three year lease with an option for 2 more years.

At December 31, 2020, the Company had the following fiscal year minimum operating lease commitments (in thousands)

Six months ended December 31, 2020	Operating Lease Commitments
2021 (Remainder of year)	$	1,256
2022	1,342
2023	1,110
2024	913
2025	640
Thereafter	512
Subtotal	$	5,774
Imputed interest	(901)
Total	4,873

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Stock-based Compensation

6 Months Ended

Dec. 31, 2020

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 December 31, 2020, 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 December 31, 2020.

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 six months ended December 31, 2020 and 2019.

The weighted average contractual term for stock options outstanding as of December 31, 2020 was 2.0 years.  The aggregate intrinsic value of stock options outstanding as of December 31, 2020 was less than $0.1 million. Stock options exercisable as of December 31, 2020 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 six months ended December 31, 2020. There were 102,670 RSUs settled, and 3,834 RSUs forfeited during the six months ended December 31, 2020.  The aggregate intrinsic value of RSU awards outstanding as of December 31, 2020 was $1.1 million. As of December 31, 2020, 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 six-month periods ended December 31, 2020 were $0.2 million, and $0.5 million as compared to the prior year three and six months of $0.1 million and $0.2 million, respectively.  As of December 31, 2020, there was $2.5 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 $0.8 million is expected to be recognized over a weighted average period of 2.0 years.

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Inventories

6 Months Ended

Dec. 31, 2020

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consist of the following (in thousands):

	12/31/2020		06/30/2020
Raw material and supplies	$	30,738	$	26,255
Goods in process and finished parts	13,035		13,694
Finished goods	32,208		37,579
	75,981		77,528
LIFO Reserve	(24,959)		(24,541)
	$	51,022	$	52,987

Of the Company’s $51.0 million and $53.0 million total inventory at December 31, 2020 and June 30, 2020, respectively, the $25.0 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 $29.8 million on a FIFO basis and $4.8 million on a LIFO basis at December 31, 2020. 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 $0.1 million increase in cost of sales for the goods sold in the period ending December 31, 2020 compared to $0.4 million in the six months ending December 31, 2019.

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Goodwill and Intangible Assets

6 Months Ended

Dec. 31, 2020

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 totaling $4.7 million. During the fourth quarter of fiscal year 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 December 31, 2020.

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 December 31, 2020, we did not identify a triggering event.

Amortizable intangible assets consist of the following (in thousands):

	12/31/2020		6/30/2020
Trademarks and trade names	2,070		2,070
Completed technology	2,010		2,010
Customer relationships	630		630
Software development	9,982		9,445
Total	14,692		14,155
Accumulated amortization	(9,763)		(6,316)
Intangibles impairment	$	—	$	(2,842)
Total net balance	$	4,930	$	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)	$	743
2022	1,269
2023	1,034
2024	764
2025	604
2026	287
Thereafter	229
Total net balance	$	4,930

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Pension and Post-retirement Benefits

6 Months Ended

Dec. 31, 2020

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 and life insurance benefit plan for U.S. employees. 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				Six Months Ended
	12/31/2020		12/31/2019		12/31/2020		12/31/2019
Service cost	$	—	$	—	$	—	$	—
Interest cost	1,118		1,366		2,231		2,715
Expected return on plan assets	(1,113)		(1,309)		(2,221)		(2,603)
Amortization of net loss	14		9		27		19
	$	19	$	66	$	37	$	131

Net periodic benefit costs for the Company's Postretirement Medical Plan consists of the following (in thousands):

	Three Months Ended				Six Months Ended
	12/31/2020		12/31/2019		12/31/2020		12/31/2019
Service cost	$	22	$	19	$	43	$	37
Interest cost	52		60		103		120
Amortization of prior service credit	(135)		(135)		(269)		(269)
Amortization of net loss	41		21		83		42
	$	(20)	$	(35)	$	(40)	$	(70)

For the three month and six month period ended December 31, 2020, the Company contributed $1.5 million and $2.8 million, respectively in the U.S. and $0.3 million and $0.5 million in the UK pension plans. The Company estimates that it will contribute an additional $4.6 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.

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Debt

6 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Debt

Debt

Debt is comprised of the following (in thousands):

	12/31/2020		06/30/2020
Short-term and current maturities
Loan and Security Agreement (Term Loan)	1,475		597
Brazil Loans	5,655		3,935
	7,130		4,532
Long-term debt (net of current portion)
Loan and Security Agreement (Term Loan)	6,525		5,941
Loan and Security Agreement (Line of Credit)	13,804		20,400
	20,329		26,341
	$	27,459	$	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 credit limit for the Revolving Loan 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 FY21 and the impact of the Company’s restructuring plan initiatives. The Company will apply certain proceeds from the sale of US real estate assets against the principle balance of the term loans under the TD Bank loan agreement. 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 December 31, 2020.

Total debt decreased $3.4 million during the six months ended December 31, 2020.  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 December 31, 2020 (in thousands):

Lending Institution	Interest Rate		Beginning Date	Ending Date	Outstanding Balance
Brazil Bank	6.05	%	March 2020	March 2021	$	377
Santander	8.12	%	April 2020	April 2021	$	1,010
Bradesco	5.18	%	May 2020	May 2021	$	791
Brazil Bank	4.30	%	September 2020	August 2021	$	1,000
Brazil Bank	3.38	%	November 2020	November 2021	$	900
Brazil Bank	4.74	%	December 2020	December 2021	$	577
Bradesco	2.37	%	December 2020	December 2021	$	1,000
					$	5,655

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Income Taxes

6 Months Ended

Dec. 31, 2020

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 tax deductibility of 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 year 2019 and fiscal year 2020.

For the three month period ended December 31, 2020, the Company recognized tax expense of $1.9 million on a profit before tax of $5.8 million or an effective tax rate of 33%.For the three month period ended December 31, 2019, the Company recognized tax expense of $0.6 million on a profit before tax of $1.9 million or an effective tax rate of 33%. The tax rate for both fiscal 2021 and fiscal 2020 was higher than the U.S. statutory tax rate of 21% primarily due to the GILTI provisions, which became effective in fiscal 2019, and the jurisdictional mix of earnings, particularly Brazil with a statutory rate of 34%.

For the six month period ended December 31, 2020, the Company recognized a tax benefit of ($0.4) million on a profit before tax of $7.6 million or an effective tax rate of (5)%. 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 $2.5 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 six month period ended December 31, 2019. the Company recognized tax expense of $1.1 million on a profit before tax of $3.2 million or an effective tax rate of 35%. 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 December 31, 2020, 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 the 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.

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Contingencies	6 Months Ended
	Dec. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Contingencies	ContingenciesThe Company is involved in certain legal matters, which arise, in the normal course of business. These matters are not expected to have a material impact on the Company’s financial condition, results of operations or cash flows.

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Facility Sale and Leaseback	6 Months Ended
	Dec. 31, 2020
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 more years.

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Restructuring

6 Months Ended

Dec. 31, 2020

Restructuring and Related Activities [Abstract]

Restructuring

Restructuring

In June 2020, the Company recorded a $1.6 million restructuring charge of which $1.0 million remained in the accrual at fiscal 2020 year end. The total planned expenditure is $4.0 million, $1.2 million in the U.S. and $2.8 million internationally, expensed during the five quarters from Q42020 to Q42021. $2.3 million has been charged as restructuring in the nine months ending December 31, 2020. The Company adopted this plan in order to consolidate certain saw manufacturing operations for greater efficiency. This restructuring is strategically targeting improving manufacturing utilization globally and will be completed in fiscal 2021.

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. Total restructuring cost of $4.0 million is expected to drive annual savings of $10-14 million annually beginning in fiscal year 2021 as planned implementation throughout the year, with full annual savings realized in fiscal year 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.

In the six months ended December 31, 2020, $0.7 million of restructuring cost were charged as a period expense in the Consolidated Statements of Operations, on a separate line, and $1.0 million was charged against accrued expenses on the Consolidate Balance Sheets. The remaining balance of the accrual at December 31, 2020 is zero. The Company expects to charge an addition $1.7 million in the period those cost are incurred in the remaining six months of fiscal year 2021. There currently have been no material losses related to disposal of assets. The Company recorded a gain on the sale of fixed assets internationally of $0.2 million

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Basis of Presentation and Summary of Significant Account Policies (Policies)

6 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Basis of Accounting

The unaudited interim consolidated financial statements as of and for the six months ended December 31, 2020 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 1st and ends June 30th.

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 it's 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.

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Segment Information (Tables)

6 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Summary of financial results for reportable segments

Financial results for each reportable segment are as follows (in thousands):

	North American Operations		International Operations		Unallocated		Total
Three Months ended December 31, 2020
Sales1	$	27,106	$	26,948	$	—	$	54,054
Operating Income (Loss)	$	3,688	$	4,436	$	(1,923)	$	6,201
Three Months ended December 31, 2019
Sales2	$	33,098	$	23,766	$	—	$	56,864
Operating Income (Loss)	$	2,547	$	1,725	$	(1,510)	$	2,762

1.Excludes $992 of North American segment intercompany sales to the International segment, and $2,610 of International segment intercompany sales to the North American segment.

2.Excludes $1,049 of North American segment intercompany sales to the International segment, and $3,855 of International segment intercompany sales to the North American segment.

	North American Operations			International Operations		Unallocated		Total
Six months ended December 31, 2020
Sales1	$	53,089	0	$	50,375	$	—	$	103,464
Operating Income (Loss)	$	4,516		$	7,277	$	(3,757)	$	8,036
Six months ended December 31, 2019
Sales2	$	64,106		$	44,872	$	—	$	108,978
Operating Income (Loss)	$	4,751		$	2,889	$	(3,433)	$	4,207

1.Excludes $1,737 of North American segment intercompany sales to the International segment, and $5,396 of International segment intercompany sales to the North American segment.

2.Excludes $2,016 of North American segment intercompany sales to the International segment, and $8,097 of International segment intercompany sales to the North American segment.

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Revenue from Contracts with Customers (Tables)

6 Months Ended

Dec. 31, 2020

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 six months ended December 31, 2020 and 2019 (in thousands):

	Three Months Ended				Six Months Ended
	12/31/2020		12/31/2019		12/31/2020		12/31/2019
North America
United States	$	25,345	$	31,085	$	49,682	$	59,708
Canada & Mexico	1,761		2,013		3,408		4,398
	27,106		33,098		53,090		64,106
International
Brazil	17,493		15,000		32,401		27,822
United Kingdom	5,554		5,372		10,548		10,603
China	2,005		1,653		3,586		3,167
Australia & New Zealand	1,896		1,741		3,839		3,280
	26,948		23,766		50,374		44,872
Total Sales	$	54,054	$	56,864	$	103,464	$	108,978

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Leases (Tables)

6 Months Ended

Dec. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Summary of lease assets and liabilities

As of December 31, 2020, the Company’s right-of-use assets, lease obligations and remaining cash commitment on these leases (in thousands):

	Right-of-Use Assets		Operating Lease Obligations		Remaining Cash Commitment
Operating leases	$	4,782	$	4,873	$	5,774

Fiscal year minimum operating lease commitments

At December 31, 2020, the Company had the following fiscal year minimum operating lease commitments (in thousands)

Six months ended December 31, 2020	Operating Lease Commitments
2021 (Remainder of year)	$	1,256
2022	1,342
2023	1,110
2024	913
2025	640
Thereafter	512
Subtotal	$	5,774
Imputed interest	(901)
Total	4,873

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Inventories (Tables)

6 Months Ended

Dec. 31, 2020

Inventory Disclosure [Abstract]

Schedule of inventories

Inventories consist of the following (in thousands):

	12/31/2020		06/30/2020
Raw material and supplies	$	30,738	$	26,255
Goods in process and finished parts	13,035		13,694
Finished goods	32,208		37,579
	75,981		77,528
LIFO Reserve	(24,959)		(24,541)
	$	51,022	$	52,987

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Amortizable intangible assets

Amortizable intangible assets consist of the following (in thousands):

	12/31/2020		6/30/2020
Trademarks and trade names	2,070		2,070
Completed technology	2,010		2,010
Customer relationships	630		630
Software development	9,982		9,445
Total	14,692		14,155
Accumulated amortization	(9,763)		(6,316)
Intangibles impairment	$	—	$	(2,842)
Total net balance	$	4,930	$	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)	$	743
2022	1,269
2023	1,034
2024	764
2025	604
2026	287
Thereafter	229
Total net balance	$	4,930

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Pension and Post-retirement Benefits (Tables)

6 Months Ended

Dec. 31, 2020

Retirement Benefits [Abstract]

Schedule of Net Benefit Costs

Net periodic benefit costs consist of the following (in thousands):

	Three Months Ended				Six Months Ended
	12/31/2020		12/31/2019		12/31/2020		12/31/2019
Service cost	$	—	$	—	$	—	$	—
Interest cost	1,118		1,366		2,231		2,715
Expected return on plan assets	(1,113)		(1,309)		(2,221)		(2,603)
Amortization of net loss	14		9		27		19
	$	19	$	66	$	37	$	131

Net periodic benefit costs for the Company's Postretirement Medical Plan consists of the following (in thousands):

	Three Months Ended				Six Months Ended
	12/31/2020		12/31/2019		12/31/2020		12/31/2019
Service cost	$	22	$	19	$	43	$	37
Interest cost	52		60		103		120
Amortization of prior service credit	(135)		(135)		(269)		(269)
Amortization of net loss	41		21		83		42
	$	(20)	$	(35)	$	(40)	$	(70)

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Debt (Tables)

6 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Debt schedule

Debt is comprised of the following (in thousands):

	12/31/2020		06/30/2020
Short-term and current maturities
Loan and Security Agreement (Term Loan)	1,475		597
Brazil Loans	5,655		3,935
	7,130		4,532
Long-term debt (net of current portion)
Loan and Security Agreement (Term Loan)	6,525		5,941
Loan and Security Agreement (Line of Credit)	13,804		20,400
	20,329		26,341
	$	27,459	$	30,873

Schedule of short-term debt, Brazilian subsidiary

The Company’s Brazilian subsidiary has the following loans of December 31, 2020 (in thousands):

Lending Institution	Interest Rate		Beginning Date	Ending Date	Outstanding Balance
Brazil Bank	6.05	%	March 2020	March 2021	$	377
Santander	8.12	%	April 2020	April 2021	$	1,010
Bradesco	5.18	%	May 2020	May 2021	$	791
Brazil Bank	4.30	%	September 2020	August 2021	$	1,000
Brazil Bank	3.38	%	November 2020	November 2021	$	900
Brazil Bank	4.74	%	December 2020	December 2021	$	577
Bradesco	2.37	%	December 2020	December 2021	$	1,000
					$	5,655

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Segment Information - Narrative (Details)	6 Months Ended
	Dec. 31, 2020 segment
Segment Reporting [Abstract]
Number of reportable segments	2

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Segment Information - Summary of financial results for reportable segments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Sales	$ 54,054	$ 56,864	$ 103,464	$ 108,978
Operating Income (Loss)	6,201	2,762	8,036	4,207
Unallocated
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Sales	0	0	0	0
Operating Income (Loss)	(1,923)	(1,510)	(3,757)	(3,433)
North American Operations
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Sales	27,106	33,098	53,090	64,106
North American Operations | Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Sales	27,106	33,098	53,089	64,106
Operating Income (Loss)	3,688	2,547	4,516	4,751
North American Operations | Intercompany sales
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Intercompany sales	992	1,049	1,737	2,016
International Operations | Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Sales	26,948	23,766	50,375	44,872
Operating Income (Loss)	4,436	1,725	7,277	2,889
International Operations | Intercompany sales
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Intercompany sales	$ 2,610	$ 3,855	$ 5,396	$ 8,097

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Revenue from Contracts with Customers - Narrative (Details) $ in Thousands	6 Months Ended
	Dec. 31, 2020 USD ($) segment	Jun. 30, 2020 USD ($)
Revenue from Contract with Customer [Abstract]
Customer return asset	$ 100	$ 100
Customer refund liability	200	200
Contract asset	0
Contract liability	$ 700	$ 400
Number of reportable segments | segment	2

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Revenue from Contracts with Customers - Disaggregation of revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Disaggregation of Revenue [Line Items]
Net sales	$ 54,054	$ 56,864	$ 103,464	$ 108,978
North America
Disaggregation of Revenue [Line Items]
Net sales	27,106	33,098	53,090	64,106
International
Disaggregation of Revenue [Line Items]
Net sales	26,948	23,766	50,374	44,872
United States | North America
Disaggregation of Revenue [Line Items]
Net sales	25,345	31,085	49,682	59,708
Canada & Mexico | North America
Disaggregation of Revenue [Line Items]
Net sales	1,761	2,013	3,408	4,398
Brazil | International
Disaggregation of Revenue [Line Items]
Net sales	17,493	15,000	32,401	27,822
United Kingdom | International
Disaggregation of Revenue [Line Items]
Net sales	5,554	5,372	10,548	10,603
China | International
Disaggregation of Revenue [Line Items]
Net sales	2,005	1,653	3,586	3,167
Australia & New Zealand | International
Disaggregation of Revenue [Line Items]
Net sales	$ 1,896	$ 1,741	$ 3,839	$ 3,280

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Leases - Narrative (Details) $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended
	Dec. 31, 2020 USD ($) ft² facility	Dec. 31, 2020 USD ($) ft² facility	Dec. 31, 2020 USD ($) ft² facility	Dec. 31, 2019 USD ($)	Jun. 30, 2020 USD ($)
Lessee, Lease, Description [Line Items]
Operating lease cost		$ 600	$ 1,200
Weighted average discount rate	9.00%	9.00%	9.00%
Weighted average remaining lease term	4 years 1 month 6 days	4 years 1 month 6 days	4 years 1 month 6 days
Operating lease commitments		$ 900
Exchange expense on operating lease commitments			$ 100
Proceeds from sale of facility			5,214	$ 0
Right of use assets	$ 4,782	4,782	4,782		$ 4,465
Operating Lease Obligations	$ 4,873	$ 4,873	$ 4,873
Mount Airy NC Facility
Lessee, Lease, Description [Line Items]
Number of buildings sold | facility	3	3	3
Proceeds from sale of facility	$ 5,200
Area of property leased | ft²	66,000	66,000	66,000
Right of use assets	$ 800	$ 800	$ 800
Operating Lease Obligations	$ 800	$ 800	$ 800
Operating lease term	3 years	3 years	3 years
Operating lease, renewal term	2 years	2 years	2 years

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Leases - Summary of lease assets and liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
Right of use assets	$ 4,782	$ 4,465
Operating Lease Obligations	4,873
Remaining Cash Commitment	$ 5,774

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Leases - Fiscal year minimum operating lease commitments (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2021 (Remainder of year)	$ 1,256
2022	1,342
2023	1,110
2024	913
2025	640
Thereafter	512
Subtotal	5,774
Imputed interest	(901)
Total	$ 4,873

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Stock-based Compensation (Details) - The 2012 Stock Incentive Plan - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	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)			2 years
Share-based Payment Arrangement, Expense	$ 0.2	$ 0.1	$ 0.5	$ 0.2
Unrecognized stock-based compensation costs	$ 0.8		$ 0.8
Expected weighted average vesting period (in years)			2 years
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)	$ 1.1		$ 1.1
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	2.5		$ 2.5
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

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Inventories - Components of Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Jun. 30, 2020
Inventory Disclosure [Abstract]
Raw material and supplies	$ 30,738	$ 26,255
Goods in process and finished parts	13,035	13,694
Finished goods	32,208	37,579
Total before LIFO reserve	75,981	77,528
LIFO Reserve	(24,959)	(24,541)
Total	$ 51,022	$ 52,987

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Inventories (Details) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Jun. 30, 2020
Inventory Disclosure [Abstract]
Inventories	$ 51,022		$ 52,987
Inventory, LIFO Reserve	24,959		24,541
Inventory difference using FIFO basis	29,800		33,100
LIFO inventory amount	4,800		$ 8,600
Effect of LIFO Reserve on income	$ 100	$ 400

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Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2020	Jun. 30, 2020	Sep. 30, 2020
Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 1,015	$ 1,015	$ 1,015
Intangibles impairment		0	(2,842)
Private Software Company
Finite-Lived Intangible Assets [Line Items]
Goodwill				$ 1,000
Goodwill impairment loss			600
Intangibles impairment	$ 2,900
Bytewise
Finite-Lived Intangible Assets [Line Items]
Goodwill				$ 0
Goodwill impairment loss			$ 3,000
Bytewise and Private Software Company
Finite-Lived Intangible Assets [Line Items]
Goodwill		$ 4,700
Computer software
Finite-Lived Intangible Assets [Line Items]
Intangible asset useful life		5 years
Trademarks and trade names
Finite-Lived Intangible Assets [Line Items]
Intangible asset useful life		20 years

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Goodwill and Intangible Assets - Finite-lived Intangible Assets (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Dec. 31, 2020	Jun. 30, 2020
Finite-Lived Intangible Assets [Line Items]
Total intangible assets	$ 14,692	$ 14,155
Accumulated amortization	(9,763)	(6,316)
Intangibles impairment	0	(2,842)
Intangible assets, net	4,930	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	$ 9,982	$ 9,445

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Goodwill and Intangible Assets - Estimated Aggregate Amortization Expense (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
2021 (Remainder of year)	$ 743
2022	1,269
2023	1,034
2024	764
2025	604
2026	287
Thereafter	229
Total net balance	$ 4,930	$ 4,997

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Pension and Post-retirement Benefits - Net Periodic Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 0	$ 0	$ 0	$ 0
Interest cost	1,118	1,366	2,231	2,715
Expected return on plan assets	(1,113)	(1,309)	(2,221)	(2,603)
Amortization of net loss	14	9	27	19
Total	19	66	37	131
Post Retirement Medical Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	22	19	43	37
Interest cost	52	60	103	120
Amortization of prior service credit	(135)	(135)	(269)	(269)
Amortization of net loss	41	21	83	42
Total	$ (20)	$ (35)	$ (40)	$ (70)

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Pension and Post-retirement Benefits (Details) $ in Millions	3 Months Ended	6 Months Ended
	Dec. 31, 2020 USD ($)	Dec. 31, 2020 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Number of defined benefit pension plans	2	2
Expected employer contributions for remainder of the fiscal year	$ 4.6	$ 4.6
Pension Plan | United States
Defined Benefit Plan Disclosure [Line Items]
Employer contributions	1.5	2.8
Pension Plan | Foreign Plan
Defined Benefit Plan Disclosure [Line Items]
Employer contributions	$ 0.3	$ 0.5

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Debt - Debt schedule (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Jun. 30, 2020
Debt Instrument [Line Items]
Loan and Security Agreement (Term Loan)	$ 7,130	$ 4,532
Brazil Loans	5,655
Short-term and current maturities	7,130	4,532
Long-term debt (net of current portion)	20,329	26,341
Long-term debt	27,459	30,873
Loan and Security Agreement (Term Loan)
Debt Instrument [Line Items]
Long-term debt (net of current portion)	6,525	5,941
Loan and Security Agreement (Line of Credit)
Debt Instrument [Line Items]
Long-term debt (net of current portion)	13,804	20,400
Loan and Security Agreement (Term Loan)
Debt Instrument [Line Items]
Loan and Security Agreement (Term Loan)	1,475	597
Brazil Loans
Debt Instrument [Line Items]
Brazil Loans	$ 5,655	$ 3,935

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Debt (Details) - USD ($)			3 Months Ended	6 Months Ended
	Jun. 25, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2020	Jun. 24, 2020	Mar. 31, 2020	Dec. 30, 2019
Debt Instrument [Line Items]
Credit limit on revolving loan facility		$ 25,000,000.0	$ 25,000,000.0	$ 25,000,000.0			$ 23,000,000.0
Commitment fee percentage on line of credit				0.25%
Loan and Security Agreement
Debt Instrument [Line Items]
Face value of term loan					$ 5,000,000.0
Amended and Restated Loan And Security Agreement, Foreign Bank Term Loan
Debt Instrument [Line Items]
Face value of term loan	$ 15,000,000.0
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%
All Debt
Debt Instrument [Line Items]
Increase in debt			$ (3,400,000)
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]
Percent of qualified AR	80.00%
Percent of Net Orderly Liquidation Value (NOLV)	85.00%
Percent of US real estate values	62.50%
Credit limit on revolving loan facility		25,000,000
Term Loan
Debt Instrument [Line Items]
Face value of term loan		$ 10,000,000.0
Term of loan		5 years
Fixed interest rate		4.00%
Credit limit for external borrowing		$ 5,000,000.0					$ 2,500,000

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Debt - Short-term Debt (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Statement [Line Items]
Brazil Loans	$ 5,655
Brazil Bank | 6.05% Short-term loan
Statement [Line Items]
Interest rate	6.05%
Brazil Loans	$ 377
Brazil Bank | 4.30% Short-term loan
Statement [Line Items]
Interest rate	4.30%
Brazil Loans	$ 1,000
Brazil Bank | 3.38% Short-term loan
Statement [Line Items]
Interest rate	3.38%
Brazil Loans	$ 900
Brazil Bank | 4.74% Short-term loan
Statement [Line Items]
Interest rate	4.74%
Brazil Loans	$ 577
Bradesco Bank | 5.18% Short-term loan
Statement [Line Items]
Interest rate	5.18%
Brazil Loans	$ 791
Bradesco Bank | 2.37% Short-term loan
Statement [Line Items]
Interest rate	2.37%
Brazil Loans	$ 1,000
Santander Bank | 8.12% Short-term loan
Statement [Line Items]
Interest rate	8.12%
Brazil Loans	$ 1,010

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Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Operating Loss Carryforwards [Line Items]
Income tax expense (benefit)	$ 1,918		$ 615	$ (364)	$ 1,113
Profit before tax	$ 5,800		$ 1,900	$ 7,600	$ 3,200
Effective income tax rate percentage	33.00%	18.90%	33.00%	(5.00%)	35.00%
UK tax expense on pre-tax income		$ 2,500
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)

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Facility Sale and Leaseback (Details) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Dec. 31, 2020 USD ($) ft² facility	Dec. 31, 2020 USD ($) ft² facility	Dec. 31, 2019 USD ($)	Dec. 31, 2020 USD ($) ft² facility	Dec. 31, 2019 USD ($)	Jun. 30, 2020 USD ($)
Property, Plant and Equipment [Line Items]
Income from sale		$ 3,204	$ 0	$ 3,204	$ 0
Right of use assets	$ 4,782	$ 4,782		$ 4,782		$ 4,465
Mount Airy NC Facility
Property, Plant and Equipment [Line Items]
Number of buildings sold | facility	3	3		3
Square footage of building | ft²	313,000	313,000		313,000
Carrying value of property	$ 2,000	$ 2,000		$ 2,000
Income from sale	3,200
Right of use assets	$ 800	$ 800		$ 800
Operating lease term	3 years	3 years		3 years
Operating lease, renewal term	2 years	2 years		2 years
Mount Airy NC Facility | Building
Property, Plant and Equipment [Line Items]
Square footage of building | ft²	66,000	66,000		66,000

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Restructuring (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 1,600	$ 384	$ 0	$ 730	$ 0
Restructuring Reserve	$ 1,000	0		0
Restructuring costs charged as period expense				1,000
Remaining expected restructuring costs		4,000		4,000
Restructuring and Related Cost, Cost Incurred to Date		2,300		2,300
Restructuring and Related Cost, Expected Cost Remaining		1,700		1,700
Restructuring Charges				700
Gain (Loss) on Disposition of Assets				200
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		$ 2,800		$ 2,800