FOR RELEASE AT 3:00 PM CDT
Contact: Dennis Bowe
Vice President and
Chief Financial Officer
414-247-3399
www.strattec.com
STRATTEC SECURITY CORPORATION
REPORTS FISCAL 2024 FIRST QUARTER
OPERATING RESULTS
Milwaukee, Wisconsin – October 26, 2023 -- STRATTEC SECURITY CORPORATION (“STRATTEC” or the “Company”) (NASDAQ:STRT) today reported operating results for the fiscal
first quarter ended October 1, 2023.
Net sales for the first quarter ended October 1, 2023 were $135.4 million, compared to net sales of $120.4 million for the first quarter ended October 2, 2022. Net
income was $4.2 million in the current year first quarter, compared to net income of $125,000 in the prior year first quarter. Diluted earnings per share for the current year quarter were $1.05 and for the prior year first quarter were $0.03.
Net sales to each of our customers in the current year quarter and prior year quarter were as follows (in thousands):
| |
|
Three Months Ended
|
|
| |
|
October 1, 2023
|
|
|
October 2, 2022
|
|
| |
|
|
|
|
|
|
|
General Motors Company
|
|
$
|
40,505
|
|
|
$
|
38,150
|
|
|
Stellantis
|
|
|
27,297
|
|
|
|
17,155
|
|
|
Ford Motor Company
|
|
|
26,909
|
|
|
|
24,616
|
|
|
Tier 1 Customers
|
|
|
18,122
|
|
|
|
17,309
|
|
|
Commercial and Other OEM Customers
|
|
|
14,197
|
|
|
|
14,826
|
|
|
Hyundai / Kia
|
|
|
8,376
|
|
|
|
8,304
|
|
|
TOTAL
|
|
$
|
135,406
|
|
|
$
|
120,360
|
|
The higher revenues this quarter reflect $10.8 million of negotiated pricing relief, $8.0 million of which relates to one-time retroactive pricing for parts shipped in
the prior fiscal year, while the remaining $2.8 million is attributable to ongoing increases in current part prices. In addition, the company benefited from increased sales to Ford Motor Company of new power end gate content for their new F-Series
Super Duty Pickup. The same vehicle also drove increased sales of new door hardware sold through Tier 1 Customers. Higher sales to Stellantis reflects increased vehicle production of their
minivan, while sales to Commercial and Other OEM Customers declined year-over-year due to the ending of a door handle program with Honda.
Gross Profit margins improved to 13.8% compared with 10.4% in the prior year driven primarily by the pricing relief achieved, of which 4.7 percentage points was
one-time retroactive pricing related. Major offsetting items to the positive margin effect of pricing in the quarter were an unfavorable U.S. dollar to Mexican Peso exchange rate combined with a mandatory 20% Mexican minimum wage increase in 2023
and higher freight costs.
Included in Other (Expense) Income, Net in the current year quarter compared to the prior year quarter were the following items (in thousands of dollars):
|
|
October 1,
|
|
|
October 2,
|
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
Equity (Loss) Earnings of VAST LLC Joint Venture
|
|
$
|
(265
|
)
|
|
$
|
527
|
|
|
Net Foreign Currency Transaction Gain
|
|
|
226
|
|
|
|
132
|
|
|
Other
|
|
|
(92
|
)
|
|
|
(425
|
)
|
|
|
$
|
(131
|
)
|
|
$
|
234
|
|
Effective June 30, 2023, STRATTEC sold its one-third interest in VAST LLC in an agreement that bolstered our balance sheet with $18.5 million of cash, captured the
remaining 20% ownership of STRATTEC Power Access Group not owned by STRATTEC and created greater flexibility for STRATTEC to enter new segments and markets in the future. The current year quarter equity loss of the joint venture was the result of
additional professional fees incurred during the current period related to the VAST transaction.
Frank Krejci, President and CEO commented: “I am very proud of our entire team for the results in the quarter. The team was able to capture inflationary price
increases in the form of one-time recoveries as well as enhanced margins for the future. Additionally, the higher sales beyond the pricing relief achieved in the quarter reflected our ability to increase the reach of our most successful products
across the product line-ups of our customers. And in support of our effort to protect margins, we implemented a salaried staff reduction in our Mexican operations. Like everyone connected to the auto industry, we are concerned about the UAW
strike. While the strike only modestly affected our sales in September, the situation has changed considerably in October as the strike escalated to include the manufacturing of high-volume pickup trucks and SUVs for our three major customers.
We will continue to adjust our execution to whatever the outcome, however, our earnings will be negatively impacted until the strike ends, at which time we will work in earnest with our customers to try and recover lost sales and profitability.
Fortunately, our exit of a long-standing joint venture arrangement at the end of our prior fiscal year has meaningfully strengthened our balance sheet while providing greater focus on our core business. Now with greater control over our business,
we look forward to the future.”
STRATTEC designs, develops, manufactures and markets automotive Access Control Products, including mechanical locks and keys, electronically enhanced locks and keys,
steering column and instrument panel ignition lock housings, latches, power sliding side door systems, power lift gate systems, power deck lid systems, door handles and related products. These products are provided to customers in North America,
and on a global basis through a unique strategic relationship with WITTE Automotive of Velbert, Germany and ADAC Automotive of Grand Rapids, Michigan. Under this relationship, STRATTEC, WITTE and ADAC market each company’s products to global
customers as cooperating partners of the “VAST Automotive Group” brand name. STRATTEC’s history in the automotive business spans over 110 years.
Certain statements contained in this release contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform
Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “intend,” “may,” “planned,” “potential,” “should,” “will,” and “would.” Such forward-looking
statements in this release are inherently subject to many uncertainties in the Company’s operations and business environment. These uncertainties include general economic conditions, in particular, relating to the automotive industry, consumer
demand for the Company’s and its customers’ products, competitive and technological developments, customer purchasing actions, changes in warranty provisions and customer product recall policies, work stoppages at the Company or at the location of
its key customers as a result of labor disputes, foreign currency fluctuations, uncertainties stemming from U.S. trade policies, tariffs and reactions to same from foreign countries, the volume and scope of product returns, adverse business and
operational issues resulting from the continuing effects of the coronavirus (COVID-19) pandemic, matters adversely impacting the timing and availability of component parts and raw materials needed for the production of our products and the products
of our customers and fluctuations in our costs of operation (including fluctuations in the cost of raw materials). Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking
statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the Company undertakes no obligation to publicly update
such forward-looking statements to reflect subsequent events or circumstances occurring after the date of this release. In addition, such uncertainties and other operational matters are discussed further in the Company’s quarterly and annual
filings with the Securities and Exchange Commission.
STRATTEC SECURITY CORPORATION
Condensed Results of Operations
(In Thousands except per share amounts)
(Unaudited)
| |
|
First Quarter Ended
|
|
| |
|
October 1,
2023
|
|
|
October 2,
2022
|
|
| |
|
|
|
|
|
|
|
Net Sales
|
|
$
|
135,406
|
|
|
$
|
120,360
|
|
| |
|
|
|
|
|
|
|
|
|
Cost of Goods Sold
|
|
|
116,686
|
|
|
|
107,864
|
|
| |
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
18,720
|
|
|
|
12,496
|
|
| |
|
|
|
|
|
|
|
|
|
Engineering, Selling & Administrative Expenses
|
|
|
12,614
|
|
|
|
12,700
|
|
| |
|
|
|
|
|
|
|
|
|
Income (Loss) from Operations
|
|
|
6,106
|
|
|
|
(204
|
)
|
| |
|
|
|
|
|
|
|
|
|
Interest Expense
|
|
|
(220
|
)
|
|
|
(129
|
)
|
| |
|
|
|
|
|
|
|
|
|
Interest Income
|
|
|
87
|
|
|
|
-
|
|
| |
|
|
|
|
|
|
|
|
|
Other (Expense) Income, net
|
|
|
(131
|
)
|
|
|
234
|
|
| |
|
|
|
|
|
|
|
|
|
Income (Loss) Before Provision for Income Taxes and Non- Controlling Interest
|
|
|
5,842
|
|
|
|
(99
|
)
|
| |
|
|
|
|
|
|
|
|
|
Provision (Benefit) for Income Taxes
|
|
|
1,387
|
|
|
|
(36
|
)
|
| |
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
4,455
|
|
|
|
(63
|
)
|
| |
|
|
|
|
|
|
|
|
|
Net Income (Loss) Attributable to Non-Controlling Interest
|
|
|
290
|
|
|
|
(188
|
)
|
| |
|
|
|
|
|
|
|
|
|
Net Income Attributable to STRATTEC SECURITY CORPORATION
|
|
$
|
4,165
|
|
|
$
|
125
|
|
| |
|
|
|
|
|
|
|
|
|
Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.05
|
|
|
$
|
0.03
|
|
|
Diluted
|
|
$
|
1.05
|
|
|
$
|
0.03
|
|
| |
|
|
|
|
|
|
|
|
|
Average Basic Shares Outstanding
|
|
|
3,948
|
|
|
|
3,899
|
|
| |
|
|
|
|
|
|
|
|
|
Average Diluted Shares Outstanding
|
|
|
3,974
|
|
|
|
3,929
|
|
| |
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
|
$
|
2,920
|
|
|
$
|
4,718
|
|
|
Depreciation
|
|
$
|
4,385
|
|
|
$
|
4,497
|
|
STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
(Unaudited)
| |
|
October 1, 2023
|
|
|
July 2, 2023
|
|
| |
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
15,665
|
|
|
$
|
20,571
|
|
|
Receivables, net
|
|
|
87,470
|
|
|
|
89,811
|
|
|
Inventories, net
|
|
|
81,367
|
|
|
|
77,597
|
|
|
Customer Tooling in Progress, net
|
|
|
22,673
|
|
|
|
20,800
|
|
|
Value Added Tax Recoverable
|
|
|
15,054
|
|
|
|
7,912
|
|
|
Other Current Assets
|
|
|
5,622
|
|
|
|
9,091
|
|
|
Total Current Assets
|
|
|
227,851
|
|
|
|
225,782
|
|
|
Other Long-term Assets
|
|
|
20,452
|
|
|
|
20,702
|
|
|
Property, Plant and Equipment, net
|
|
|
92,316
|
|
|
|
94,446
|
|
| |
|
$
|
340,619
|
|
|
$
|
340,930
|
|
| |
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts Payable
|
|
$
|
50,297
|
|
|
$
|
57,927
|
|
|
Value Added Tax Payable
|
|
|
8,473
|
|
|
|
6,499
|
|
|
Borrowings Under Credit Facility - Current
|
|
|
13,000
|
|
|
|
-
|
|
|
Other
|
|
|
45,624
|
|
|
|
44,560
|
|
|
Total Current Liabilities
|
|
|
117,394
|
|
|
|
108,986
|
|
|
Accrued Pension and Postretirement Obligations
|
|
|
2,392
|
|
|
|
2,363
|
|
|
Borrowings Under Credit Facility - Long-Term
|
|
|
-
|
|
|
|
13,000
|
|
|
Other Long-term Liabilities
|
|
|
5,532
|
|
|
|
5,557
|
|
|
Shareholders’ Equity
|
|
|
339,261
|
|
|
|
334,683
|
|
|
Accumulated Other Comprehensive Loss
|
|
|
(14,527
|
)
|
|
|
(14,194
|
)
|
|
Less: Treasury Stock
|
|
|
(135,514
|
)
|
|
|
(135,526
|
)
|
|
Total STRATTEC SECURITY
|
|
|
|
|
|
|
|
|
|
CORPORATION Shareholders’ Equity
|
|
|
189,220
|
|
|
|
184,963
|
|
|
Non-Controlling Interest
|
|
|
26,081
|
|
|
|
26,061
|
|
|
Total Shareholders’ Equity
|
|
|
215,301
|
|
|
|
211,024
|
|
| |
|
$
|
340,619
|
|
|
$
|
340,930
|
|
STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)
| |
|
First Quarter Ended
|
|
| |
|
October 1,
2023
|
|
|
October 2,
2022
|
|
| |
|
|
|
|
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
4,455
|
|
|
$
|
(63
|
)
|
|
Adjustments to Reconcile Net Income (Loss) to
|
|
|
|
|
|
|
|
|
|
Cash (Used in) Provided by Operating Activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
4,385
|
|
|
|
4,497
|
|
|
Equity Loss (Earnings) in Joint Ventures
|
|
|
265
|
|
|
|
(527
|
)
|
|
Foreign Currency Transaction (Gain) Loss
|
|
|
(226
|
)
|
|
|
71
|
|
|
Unrealized Gain on Peso Forward Contracts
|
|
|
-
|
|
|
|
35
|
|
|
Stock Based Compensation Expense
|
|
|
505
|
|
|
|
611
|
|
|
Change in Operating Assets/Liabilities
|
|
|
(13,156
|
)
|
|
|
(45
|
)
|
|
Other, net
|
|
|
(100
|
)
|
|
|
122
|
|
| |
|
|
|
|
|
|
|
|
|
Net Cash (Used in) Provided by Operating Activities
|
|
|
(3,872
|
)
|
|
|
4,701
|
|
| |
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from Sale of Interest in VAST LLC
|
|
|
2,000
|
|
|
|
-
|
|
|
Additions to Property, Plant & Equipment
|
|
|
(2,920
|
)
|
|
|
(4,718
|
)
|
| |
|
|
|
|
|
|
|
|
|
Net Cash Used in Investing Activities
|
|
|
(920
|
)
|
|
|
(4,718
|
)
|
| |
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
Borrowings on Line of Credit Facility
|
|
|
2,000
|
|
|
|
5,000
|
|
|
Payments on Line of Credit Facility
|
|
|
(2,000
|
)
|
|
|
(3,000
|
)
|
|
Dividends Paid to Non-Controlling Interest of Subsidiary
|
|
|
-
|
|
|
|
(600
|
)
|
|
Exercise of Stock Options and Employee Stock Purchases
|
|
|
17
|
|
|
|
126
|
|
| |
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
|
17
|
|
|
|
1,526
|
|
| |
|
|
|
|
|
|
|
|
|
Effect of Foreign Currency Fluctuations on Cash
|
|
|
(131
|
)
|
|
|
47
|
|
| |
|
|
|
|
|
|
|
|
|
Net (Decrease) Increase in Cash & Cash Equivalents
|
|
|
(4,906
|
)
|
|
|
1,556
|
|
| |
|
|
|
|
|
|
|
|
|
Cash & Cash Equivalents:
|
|
|
|
|
|
|
|
|
|
Beginning of Period
|
|
|
20,571
|
|
|
|
8,774
|
|
|
End of Period
|
|
$
|
15,665
|
|
|
$
|
10,330
|
|