STRT Strattec Security Corporation

• Grew revenue $11.4 million to $129.9 million in the quarter as a result of new program launches and increased demand from customers
• Net income attributable to STRATTEC Security Corporation was $1.3 million, or diluted EPS of $0.32, compared with $1.0 million, or diluted EPS of $0.26, in the year ago quarter
• Adjusted diluted earnings per share1 were $0.65, compared with $0.36 in the prior year
• Generated $9.4 million in cash from operations, bringing year-to-date cashflow from operations to $20.8 million
• Delivered adjusted EBITDA1 of $8.0 million, or 6.1% of sales, compared with $5.0 million, or 4.3%, in the prior-year second quarter
• Transformation efforts continue to focus on driving profitability, stronger cash generation and creating a sustainable business model while evaluating market opportunities and future growth plans

STRATTEC SECURITY CORPORATION (Nasdaq: STRT) (“Company”), a leading provider of smart vehicle access, security and authorization solutions for the global automotive industry, reported financial results for its second quarter of fiscal year 2025, which ended December 29, 2024.

STRATTEC President and CEO Jennifer Slater said, “Our solid financial results reflect the focus the team is placing on our key priorities of stabilizing the business, optimizing costs, and identifying where our engineering innovation commands the right to win. Sales growth was the result of production trends with key customers and, in particular, with the platforms on which we have higher value content. We made progress this last quarter to strengthen our earnings power as we restructured our U.S. manufacturing operations by reducing the number of shifts, which is expected to generate $1.2 million in annualized savings. In addition, we continued to unlock value on our balance sheet as we collected on our tooling investments.”

Ms. Slater concluded, “Talent is critical for our transformation, and we made further investments this quarter. We are gaining traction with our customers as our new chief commercial officer identifies opportunities for both new projects as well as pricing that reflects the value of our product offering. We recognize that an engaged and motivated team generates creativity and excitement for our future and we are creating a stronger, more open culture with new leadership in human resources. Importantly as well, we now have the financial leadership needed to support our strategic objectives. We are making solid progress as a team and, in addition to these strategic efforts, we are proactively addressing the potential challenges the tariffs may present.”

FY 2025 Second Quarter Financial Summary

(compared with prior-year period, except where otherwise noted)

Net sales were $129.9 million, an increase of $11.4 million, or 9.6%, compared with the second quarter prior year. Sales growth was driven by $6.0 million of net new program launches, $1.3 million of higher content and product mix. In addition, net sales on current platforms increased $7.3 million as a result of customers building inventory, slightly higher production levels and the prior year second quarter reflecting increased customer plant shutdowns. This growth more than offset the net impact of the prior year period’s one-time pricing benefits of $3.9 million. Sales growth was broad based across most of the product portfolio, excluding keys & locksets.

Gross profit increased $3.7 million to $17.2 million, from higher volume and a $3.5 million benefit from foreign currency translation. This was mostly offset by increased labor costs in Mexico, a $0.6 million bonus provision and the favorable retroactive pricing in the prior year second quarter. Gross margin was 13.2% compared with 11.4%.

Engineering, selling and administrative expenses increased $1.6 million, or 11.7%, to $15.0 million. The increase reflected continued investments in the business, an annual bonus provision of $0.8 million and $0.3 million in restructuring charges. No bonus provision was recorded in the prior-year period.

Operating income increased $2.0 million to $2.1 million and was 1.6% of sales. Investment income increased $0.3 million on higher cash balances, while changes in foreign currency exchange rates resulted in a $1.4 million increase in other expense. Net income attributable to STRATTEC was $1.3 million compared with $1.1 million last year.

Diluted earnings per share were $0.32 compared with $0.26 last year. On an adjusted basis, net income attributable to STRATTEC1 grew 86% to $2.6 million. Adjusted diluted earnings per share1 increased $0.29, or 81% to $0.65. Adjusted EBITDA1 for the quarter was $8.0 million compared with $5.0 million in the prior-year period.

Balance Sheet and Liquidity

Second quarter fiscal 2025 cash flow from operations was $9.4 million, bringing year-to-date cash flow from operations to $20.8 million. Improved working capital management and recovery of pre-production tooling costs benefited operating cash flows. Capital expenditures in the second quarter of fiscal 2025 were $0.9 million, down $0.6 million from the prior year period.

At December 29, 2024, STRATTEC had $42.6 million in cash and cash equivalents, up $8.2 million from the end of the first quarter of fiscal 2025.

At December 29, 2024 the Company had $13 million of outstanding borrowings under its joint venture revolving credit facility, which is unchanged from the end of fiscal 2024. Total availability under existing lines of credit was $47 million at December 29, 2024.

Second Quarter Fiscal Year 2025 Webcast and Conference Call

The Company will host a conference call and webcast tomorrow, Friday, February 7, 2025, at 9:00 am Eastern Time to review the financial and operating results for the period ended December 29, 2024, and provide an update on its transformation progress. A question-and-answer session will follow.

You can access the call by phoning (201) 689-8470 or find the webcast and accompanying slide presentation at investors.strattec.com.

A telephonic replay will be available from 12:00 p.m. ET on the day of the call through Friday, February 21, 2025. To listen to the archived call, dial (412) 317-6671 and enter a replay PIN 13751178. The webcast replay will be available on the Investor Relations section of the Company’s website where a transcript will be posted once available.

About STRATTEC

STRATTEC is a leading global provider of advanced automotive access, security & authorization and select user interface solutions. With a history spanning over 110 years, STRATTEC has consistently been at the forefront of innovation in vehicle security, transitioning from mechanical to integrated electro-mechanical systems. The Company serves a broad range of customers, including leading automotive OEMs, offering power access solutions and advanced security systems that include door handles, lift gates, latches, and key fobs.

For more information on STRATTEC and its solutions, visit www.strattec.com.

Safe Harbor Statement

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 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 the same from foreign countries, 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. 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.

Use of Non-GAAP Financial Metrics and Additional Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, STRATTEC provides Adjusted Non-GAAP information as additional information for its operating results. References to Adjusted Non-GAAP information are to non-GAAP financial measures. These measures are not required by, in accordance with, or an alternative for, GAAP and may be different from similarly titled non-GAAP financial measures used by other companies. STRATTEC’s management uses these measures to make strategic decisions, establish budget plans and forecasts, identify trends affecting STRATTEC’s business, and evaluate performance. Management believes that providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, will help investors evaluate STRATTEC’s core operating and financial performance and business trends consistent with how management evaluates such performance and trends. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

________________________

1 Refer to “Use of Non-GAAP Financial Metrics and Additional Financial Information” as well as accompanying reconciliations to GAAP

FINANCIAL TABLES FOLLOW

STRATTEC SECURITY CORPORATION Condensed Results of Operations (In Thousands, except per share amounts) (Unaudited)   Three Months Ended Six Months Ended December 29,2024 December 31,2023 December 29,2024 December 31,2023 Net sales

$

129,919

 

$

118,532

 

$

268,971

 

$

253,938

 

Cost of goods sold

 

112,768

 

 

105,035

 

 

232,899

 

 

221,721

 

Gross profit

 

17,151

 

 

13,497

 

 

36,072

 

 

32,217

 

Engineering, selling and administrative expenses

 

15,017

 

 

13,439

 

 

28,875

 

 

26,053

 

Income from operations

 

2,134

 

 

58

 

 

7,197

 

 

6,164

 

Interest expense

 

(257

)

 

(219

)

 

(552

)

 

(439

)

Investment income

 

408

 

 

107

 

 

757

 

 

194

 

Other (expense) income, net

 

(482

)

 

1,098

 

 

(353

)

 

967

 

Income before provision for income taxes and non-controlling interest

 

1,803

 

 

1,044

 

 

7,049

 

 

6,886

 

Provision for income taxes

 

405

 

 

264

 

 

1,903

 

 

1,651

 

Net income

 

1,398

 

 

780

 

 

5,146

 

 

5,235

 

Net income (loss) attributable to non- controlling interest

 

79

 

 

(242

)

 

124

 

 

48

 

Net income attributable to STRATTEC SECURITY CORPORATION

$

1,319

 

$

1,022

 

$

5,022

 

$

5,187

 

  Earnings per share attributable to STRATTEC SECURITY CORPORATION: Basic

$

0.33

 

$

0.26

 

$

1.25

 

$

1.31

 

Diluted

$

0.32

 

$

0.26

 

$

1.24

 

$

1.30

 

  Weighted Average shares outstanding: Basic

 

4,035

 

 

3,976

 

 

4,020

 

 

3,962

 

Diluted

 

4,070

 

 

3,998

 

 

4,058

 

 

3,986

 

STRATTEC SECURITY CORPORATION Condensed Balance Sheet (In Thousands, except share amounts) (Unaudited)   December 29,2024 June 30,2024 ASSETS Current Assets: Cash and cash equivalents

$

42,625

 

$

25,410

 

Receivables, net

 

91,567

 

 

99,297

 

Inventories: Finished products

 

18,808

 

 

19,833

 

Work in process

 

13,462

 

 

15,461

 

Purchased materials

 

49,241

 

 

46,355

 

Inventories, net

 

81,511

 

 

81,649

 

Pre-production costs

 

11,651

 

 

22,173

 

Value-added tax recoverable

 

21,083

 

 

19,684

 

Other current assets

 

5,497

 

 

5,601

 

Total current assets

 

253,934

 

 

253,814

 

Deferred income taxes

 

17,102

 

 

17,593

 

Other long-term assets

 

5,587

 

 

6,698

 

Net property, plant and equipment

 

79,272

 

 

86,184

 

$

355,895

 

$

364,289

 

LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Accounts payable

$

50,615

 

$

54,911

 

Accrued Liabilities: Payroll and benefits

 

15,604

 

 

28,953

 

Value-added tax payable

 

10,054

 

 

9,970

 

Environmental

 

1,390

 

 

1,390

 

Warranty

 

10,946

 

 

10,695

 

Other current liabilities

 

8,966

 

 

12,369

 

Total current liabilities

 

97,575

 

 

118,288

 

Borrowings under credit facilities

 

13,000

 

 

13,000

 

Postemployment obligations

 

12,563

 

 

2,429

 

Other long-term liabilities

 

4,602

 

 

4,957

 

Shareholders’ Equity: Common stock, authorized 18,000,000 shares, $.01 par value, 7,635,883 issued shares at December 29, 2024 and 7,586,920 issued shares at June 30, 2024

 

76

 

 

76

 

Capital in excess of par value

 

102,118

 

 

101,024

 

Retained earnings

 

255,634

 

 

250,612

 

Accumulated other comprehensive loss

 

(17,827

)

 

(15,689

)

Less: treasury stock, at cost (3,597,299 shares at December 29, 2024 and 3,598,126 shares at June 30, 2024)

 

(135,465

)

 

(135,478

)

Total STRATTEC SECURITY CORPORATION shareholders’ equity

 

204,536

 

 

200,545

 

Non-controlling interest

 

23,619

 

 

25,070

 

Total shareholders’ equity

 

228,155

 

 

225,615

 

$

355,895

 

$

364,289

 

STRATTEC SECURITY CORPORATION Condensed Cash Flow Statement (In Thousands) (Unaudited)   Three Months Ended Six Months Ended December 29,2024 December 31,2023 December 29,2024 December 31,2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net income

$

1,398

 

$

780

 

$

5,146

 

$

5,235

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation

 

3,544

 

 

4,330

 

 

7,206

 

 

8,715

 

Foreign currency transaction gain

 

(188

)

 

(123

)

 

(1,193

)

 

(349

)

Unrealized loss (gain) on peso forward contracts

 

284

 

 

(826

)

 

936

 

 

(826

)

Stock-based compensation expense

 

891

 

 

479

 

 

1,079

 

 

984

 

Loss on settlement of postemployment obligation

 

—

 

 

—

 

 

283

 

 

—

 

Change in operating assets and liabilities: Receivables

 

10,568

 

 

16,845

 

 

7,379

 

 

19,178

 

Inventories

 

2,283

 

 

(8,072

)

 

138

 

 

(11,842

)

Prepaid and other assets

 

1,963

 

 

(4,739

)

 

7,844

 

 

(12,404

)

Accounts payable

 

(9,026

)

 

(9,083

)

 

(3,990

)

 

(16,441

)

Accrued liabilities

 

(2,542

)

 

(2,894

)

 

(4,580

)

 

410

 

Other, net

 

269

 

 

261

 

 

533

 

 

426

 

Net cash provided by (used in) operating activities

 

9,444

 

 

(3,042

)

 

20,781

 

 

(6,914

)

CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of interest in joint ventures

 

—

 

 

—

 

 

—

 

 

2,000

 

Purchase of property, plant and equipment

 

(917

)

 

(1,473

)

 

(2,990

)

 

(4,393

)

Net cash used in investing activities

 

(917

)

 

(1,473

)

 

(2,990

)

 

(2,393

)

CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under credit facilities

 

—

 

 

—

 

 

3,000

 

 

2,000

 

Repayment of borrowings under credit facilities

 

—

 

 

—

 

 

(3,000

)

 

(2,000

)

Employee stock purchases

 

15

 

 

20

 

 

28

 

 

37

 

Net cash provided by financing activities

 

15

 

 

20

 

 

28

 

 

37

 

Foreign currency impact on cash

 

(320

)

 

405

 

 

(604

)

 

274

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

8,222

 

 

(4,090

)

 

17,215

 

 

(8,996

)

  CASH AND CASH EQUIVALENTS Beginning of period

 

34,403

 

 

15,665

 

 

25,410

 

 

20,571

 

End of period

$

42,625

 

$

11,575

 

$

42,625

 

$

11,575

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Income taxes

$

4,458

 

$

682

 

$

8,539

 

$

1,446

 

Interest

$

279

 

$

222

 

$

559

 

$

440

 

Non-cash investing activities: Change in capital expenditures in accounts payable

$

56

 

$

18

 

$

(450

)

$

(175

)

STRATTEC SECURITY CORPORATION

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands, except per share amounts)

  Fiscal 2024 Fiscal 2025 Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total ADJUSTED NET SALES: Net Sales (GAAP)

 

135,406

 

 

118,532

 

 

140,773

 

 

143,055

 

$

537,766

 

 

139,052

 

 

129,919

 

 

-

 

-

$

268,971

 

Adjustments: Retroactive FY23 one-time pricing recovery

 

(7,950

)

 

(1,551

)

 

(397

)

 

175

 

 

(9,723

)

 

-

 

 

-

 

 

-

 

-

 

-

 

Adjusted Sales (Non-GAAP)

 

127,456

 

 

116,981

 

 

140,376

 

 

143,230

 

 

528,043

 

 

139,052

 

 

129,919

 

 

-

 

-

 

268,971

 

    ADJUSTED EBITDA: Net income attributable to STRATTEC (GAAP)

$

4,165

 

$

1,022

 

$

1,506

 

$

9,620

 

$

16,313

 

$

3,703

 

$

1,319

 

$

-

$

-

$

5,022

 

Net income (loss) attributable to non-controlling interest

 

290

 

 

(242

)

 

(380

)

 

447

 

 

115

 

 

45

 

 

79

 

 

-

 

-

 

124

 

Provision for income tax

 

1,387

 

 

264

 

 

546

 

 

1,578

 

 

3,775

 

 

1,498

 

 

405

 

 

-

 

-

 

1,903

 

Other (income) expense, net

 

131

 

 

(1,098

)

 

208

 

 

(1,958

)

 

(2,717

)

 

(129

)

 

482

 

 

-

 

-

 

353

 

Investment and interest income

 

(87

)

 

(107

)

 

(143

)

 

(235

)

 

(572

)

 

(349

)

 

(408

)

 

-

 

-

 

(757

)

Interest expense

 

220

 

 

219

 

 

222

 

 

239

 

 

900

 

 

295

 

 

257

 

 

-

 

-

 

552

 

Income from operations

 

6,106

 

 

58

 

 

1,959

 

 

9,691

 

 

17,814

 

 

5,063

 

 

2,134

 

 

-

 

-

 

7,197

 

  Adjustments: Depreciation

 

4,385

 

 

4,330

 

 

4,059

 

 

3,773

 

$

16,547

 

 

3,662

 

 

3,544

 

 

-

 

-

$

7,206

 

Non-cash stock-based compensation

 

505

 

 

479

 

 

240

 

 

243

 

 

1,467

 

 

188

 

 

891

 

 

-

 

-

 

1,079

 

Restructuring and similar charges

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

265

 

 

-

 

-

 

265

 

Retroactive FY23 one-time pricing recovery, net

 

(7,078

)

 

(641

)

 

(298

)

 

24

 

 

(7,993

)

 

-

 

 

-

 

 

-

 

-

 

-

 

Executive transition costs

 

-

 

 

774

 

 

211

 

 

73

 

 

1,058

 

 

941

 

 

921

 

 

-

 

-

 

1,862

 

Business transformation costs

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

73

 

 

215

 

 

-

 

-

 

288

 

 

(2,188

)

 

4,942

 

 

4,212

 

 

4,113

 

 

11,079

 

 

4,864

 

 

5,836

 

 

-

 

-

 

10,700

 

Adjusted EBITDA (Non-GAAP)

$

3,918

 

$

5,000

 

$

6,171

 

$

13,804

 

$

28,893

 

$

9,927

 

$

7,970

 

$

-

$

-

$

17,897

 

  Adjusted EBITDA as a % of Adjusted Net Sales

 

3.1

%

 

4.3

%

 

4.4

%

 

9.6

%

 

5.5

%

 

7.1

%

 

6.1

%

 

6.7

%

    ADJUSTED NET INCOME AND EARNINGS/(LOSS) PER SHARE: Net income attributable to STRATTEC (GAAP)

$

4,165

 

$

1,022

 

$

1,506

 

$

9,620

 

$

16,313

 

$

3,703

 

$

1,319

 

$

-

$

-

$

5,022

 

Adjustments: Restructuring and similar charges

 

265

 

 

3

 

 

-

 

 

63

 

 

331

 

 

-

 

 

265

 

 

-

 

-

 

265

 

Retroactive FY23 one-time pricing recovery, net

 

(7,078

)

 

(641

)

 

(298

)

 

24

 

 

(7,993

)

 

-

 

 

-

 

 

-

 

-

 

-

 

Executive transition costs

 

-

 

 

973

 

 

211

 

 

73

 

 

1,257

 

 

1,224

 

 

1,225

 

 

-

 

-

 

2,449

 

Business transformation costs

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

73

 

 

215

 

 

-

 

-

 

288

 

Non-controlling interest impact on above adjustments

 

1,014

 

 

181

 

 

55

 

 

22

 

 

1,272

 

 

-

 

 

-

 

 

-

 

-

 

-

 

Tax effect on above adjustments

 

1,305

 

 

(116

)

 

7

 

 

(41

)

 

1,155

 

 

(292

)

 

(384

)

 

-

 

-

 

(676

)

 

(4,494

)

 

400

 

 

(25

)

 

141

 

 

(3,978

)

 

1,005

 

 

1,321

 

 

-

 

-

 

2,326

 

Adjusted Net Income/(Loss) attributable to STRATTEC (Non-GAAP)

$

(329

)

$

1,422

 

$

1,481

 

$

9,761

 

$

12,335

 

$

4,708

 

$

2,640

 

$

-

$

-

$

7,348

 

  Weighted Average Basic Shares Outstanding

 

3,948

 

 

3,976

 

 

3,988

 

 

3,988

 

 

3,975

 

 

4,005

 

 

4,035

 

 

-

 

-

 

4,020

 

Weighted Average Diluted Shares Outstanding

 

3,974

 

 

3,998

 

 

4,017

 

 

4,027

 

 

4,004

 

 

4,046

 

 

4,070

 

 

-

 

-

 

4,058

 

  Diluted earnings per share (GAAP)

$

1.05

 

$

0.26

 

$

0.37

 

$

2.39

 

$

4.07

 

$

0.92

 

$

0.32

 

$

-

$

-

$

1.24

 

Adjusted dilutive earnings/(loss) per share (Non-GAAP)

$

(0.08

)

$

0.36

 

$

0.37

 

$

2.42

 

$

3.08

 

$

1.16

 

$

0.65

 

$

-

$

-

$

1.81

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250206064011/en/

Deborah K. Pawlowski Alliance Advisors IR Phone: 716-843-3908 Email: dpawlowski@allianceadvisors.com