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STRATTEC SECURITY CORPORATION Reports Fiscal 2024 Second Quarter Operating Results
ソース: Nasdaq GlobeNewswire / 08 2 2024 16:00:00 America/New_York
MILWAUKEE, Wis., Feb. 08, 2024 (GLOBE NEWSWIRE) -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) is a market leader of a comprehensive range of "Smart" Vehicle Power Access and Electronic and Security Solutions, serving the global automotive industry.
Second Quarter Fiscal 2024 Financial Highlights
- Diluted earnings per share of $0.26 versus $0.47 loss last year
- Gross Margins expanded to 11.4% compared with 6.5% last year
- Revenues increased by 4.7%, driven by pricing increases with major customers
STRATTEC Interim CEO Rolando Guillot said, “This quarter demonstrated the progress we are making in improving our financial performance. It also highlighted opportunities to optimize our working capital and strong balance sheet. We intend to take advantage of a more predictable supply chain to bring greater efficiencies to our operations. Looking forward, we will focus on new product introductions that will expand STRATTEC’s offerings to our customers.”
Second Quarter Fiscal 2024 Financial Summary
Second Quarter Ending Dec. 31, 2023 Jan. 1, 2023 Inc (Dec) (Dollars in thousands, except per share data) Net Sales $ 118,532 $ 113,184 $ 5,348 Gross Profit $ 13,497 $ 7,387 $ 6,110 Gross Margin 11.4 % 6.5 % Operating Expenses $ 13,439 $ 12,081 $ 1,358 Operating Income $ 58 $ (4,694 ) $ 4,752 Net Income $ 1,022 $ (1,839 ) $ 2,861 Diluted Earnings Per Share $ 0.26 $ (0.47 ) $ 0.73 Revenue growth was driven primarily by pricing increases to our major customers. Those price increases were $8.0 million, of which $3.8 million represents ongoing pricing increases. Total pricing increases were partially offset by a $2.7 million decline in net sales, primarily due to lower sales to a major customer and some effects of the UAW strike against the U.S. auto industry in October.
Gross margin improvement was driven by pricing increases, lower raw material costs, operating leverage from higher production levels and $780,000 of efficiencies realized from our Mexican operations. Offsetting those positive trends were higher prices paid to certain suppliers, $2.5 million of unfavorable U.S. dollar to Mexican peso exchange rate effects, $1.3 million of wage increases due to a mandatory Mexican minimum wage-increase and $1.3 million higher freight costs.
One-time costs of $900,000 associated with the retirement of our former CEO were recorded during the quarter. In addition, higher development expenses in support of new products also impacted results, largely explaining the remaining $458,000 increase in expenses. Net Income was $1.0 million compared to a loss of $1.8 million last year. Fully diluted earnings per share were $0.26 compared with a loss of $0.47 last year.
Balance Sheet & Cash Flow
As of December 31, 2023, the Company’s cash and cash equivalents on hand totaled $11.6 million. Total debt as of December 31, 2023 was $13.0 million, which was all held by the ADAC-STRATTEC LLC joint venture.
For the second quarter of fiscal 2024, cash flow provided by operations was negative $3.0 million, compared to the prior year quarter cash flow provided by operations of $4.0 million. The decrease in cash flow for the current quarter was driven by temporary increases in working capital, specifically inventory, customer tooling in progress and a value added tax recoverable. Capital expenditures in the second quarter of fiscal 2024 were $1.5 million, compared with $4.8 million for the second quarter of fiscal 2023.
As announced on January 5, 2024, F. Jack Liebau, Jr. has been appointed Chairman of the Company's Board of Directors and Harold M. Stratton II has been appointed Vice Chairman of the Board. "As Board Chairman, I look forward to working with the Board in the near term to improve governance policies consistent with current best practices while strengthening the Company’s focus on providing long-term shareholder returns," Mr. Liebau said.
About STRATTEC
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, power tailgate systems for trucks, 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.
Caution on Forward-Looking Statements
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.
Contact: Dennis Bowe
Vice President and
Chief Financial Officer
414-247-3399
www.strattec.comSTRATTEC SECURITY CORPORATION
Condensed Results of Operations
(In Thousands except per share amounts)
(Unaudited)Three Months Ended Six Months Ended December 31, 2023 January 1, 2023 December 31, 2023 January 1, 2023 Net Sales $ 118,532 $ 113,184 $ 253,938 $ 233,544 Cost of Goods Sold 105,035 105,797 221,721 213,661 Gross Profit 13,497 7,387 32,217 19,883 Engineering, Selling & Administrative Expenses 13,439 12,081 26,053 24,781 Income (Loss) from Operations 58 (4,694 ) 6,164 (4,898 ) Interest Expense (219 ) (196 ) (439 ) (325 ) Interest Income 107 - 194 - Other Income, net 1,098 640 967 874 Income (Loss) Before Provision for Income Taxes and Non-Controlling Interest 1,044 (4,250 ) 6,886 (4,349 ) Provision (Benefit) for Income Taxes 264 (1,735 ) 1,651 (1,771 ) Net Income (Loss) 780 (2,515 ) 5,235 (2,578 ) Net (Loss) Income Attributable to Non-Controlling Interest (242 ) (676 ) 48 (864 ) Net Income (Loss) Attributable to STRATTEC SECURITY CORPORATION $ 1,022 $ (1,839 ) $ 5,187 $ (1,714 ) Earnings (Loss) Per Share: Basic $ 0.26 $ (0.47 ) $ 1.31 $ (0.44 ) Diluted $ 0.26 $ (0.47 ) $ 1.30 $ (0.44 ) Average Basic Shares Outstanding 3,976 3,927 3,962 3,913 Average Diluted Shares Outstanding 3,998 3,927 3,986 3,913 Other Capital Expenditures $ 1,473 $ 4,759 $ 4,393 $ 9,477 Depreciation $ 4,330 $ 4,301 $ 8,715 $ 8,798 STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
(Unaudited)December 31, 2023 July 2, 2023 ASSETS Current Assets: Cash and Cash Equivalents $ 11,575 $ 20,571 Receivables, net 70,802 89,811 Inventories, net 89,439 77,597 Customer Tooling in Progress, net 24,951 20,800 Value Added Tax Recoverable 17,906 7,912 Other Current Assets 7,624 9,091 Total Current Assets 222,297 225,782 Other Long-term Assets 19,317 20,702 Property, Plant and Equipment, net 90,137 94,446 $ 331,751 $ 340,930 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts Payable $ 41,308 $ 57,927 Value Added Tax Payable 7,122 6,499 Borrowings Under Credit Facility - Current 13,000 - Other 44,906 44,560 Total Current Liabilities 106,336 108,986 Accrued Pension and Postretirement Obligations 2,440 2,363 Borrowings Under Credit Facility - Long-Term - 13,000 Other Long-term Liabilities 5,334 5,557 Shareholders' Equity 340,769 334,683 Accumulated Other Comprehensive Loss (13,878 ) (14,194 ) Less: Treasury Stock (135,501 ) (135,526 ) Total STRATTEC SECURITY CORPORATION Shareholders' Equity 191,390 184,963 Non-Controlling Interest 26,251 26,061 Total Shareholders' Equity 217,641 211,024 $ 331,751 $ 340,930 STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)Three Months Ended Six Months Ended December 31, 2023 January 1, 2023 December 31, 2023 January 1, 2023 Cash Flows from Operating Activities: Net Income (Loss) $ 780 $ (2,515 ) $ 5,235 $ (2,578 ) Adjustments to Reconcile Net Income (Loss) to Cash (Used in) Provided by Operating Activities: Depreciation 4,330 4,301 8,715 8,798 Equity Loss (Earnings) in Joint Ventures 4 (588 ) 269 (1,115 ) Foreign Currency Transaction (Gain) Loss (123 ) 514 (349 ) 585
Unrealized (Gain) Loss on Peso Forward Contracts
(826
)(12 ) (826 ) 23 Stock Based Compensation Expense 479 263 984 874 Change in Operating Assets/Liabilities (7,943 ) 1,943 (21,099 ) 1,898 Other, net 257 128 157 250 Net Cash (Used in) Provided by Operating Activities (3,042 ) 4,034 (6,914 ) 8,735
Cash Flows from Investing Activities:Proceeds from sale of interest in VAST LLC - - 2,000 - Investment in Joint Ventures - (104 ) - (104 ) Additions to Property, Plant & Equipment (1,473 ) (4,759 ) (4,393 ) (9,477 )
Proceeds on Sales of Property, Plant & Equipment- 4 - 4 Net Cash Used in Investing Activities (1,473 ) (4,859 ) (2,393 ) (9,577 )
Cash Flows from Financing Activities:Borrowings on Line of Credit Facility - 4,000 2,000 9,000 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 20 20 37 146 Net Cash Provided by Financing Activities 20 4,020 37 5,546
Effect of Foreign Currency Fluctuations on Cash405 53 274 100
Net (Decrease) Increase in Cash & Cash Equivalents(4,090 ) 3,248 (8,996 ) 4,804
Cash & Cash Equivalents:Beginning of Period 15,665 10,330 20,571 8,774 End of Period $ 11,575 $ 13,578 $ 11,575 $ 13,578 
