• 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.com 

    STRATTEC 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 Cash
     405   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 


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