STRATTEC SECURITY CORPORATION Reports Fiscal 2025 First Quarter Financial Results
-
Generated cash from operations of
$11.3 million -
Reduced pre-production costs, primarily customer tooling, by
$6.9 million - Grew revenue 2.7% year-over-year, reflecting ongoing pricing benefit and higher overall sales
- Achieved gross margin of 13.6% versus 13.8% in prior-year period (which included a 470 bps net benefit of one-time pricing)
- Rethinking product portfolio and identifying opportunities to optimize operational footprint and improve profitability
STRATTEC President and CEO
FY 2025 First Quarter
(compared with prior-year period, except where otherwise noted)
Three Months Ended |
Change |
|||||||||
($ in thousands) |
|
|
$ |
% |
||||||
Adjusted Net Sales Attributable to STRATTEC |
$ |
139,052 |
$ |
127,406 |
|
$ |
11,646 |
|
9.1 |
% |
One-time retroactive pricing |
|
- |
|
8,000 |
|
(8,000 |
) |
-100.0 |
% |
|
Net Sales Attributable to STRATTEC |
$ |
139,052 |
$ |
135,406 |
|
$ |
3,646 |
|
2.7 |
% |
See Reconciliation of Net Sales Attributable to STRATTEC and Adjusted Net Sales Attributable to STRATTEC on Page 8 |
Net sales attributable to STRATTEC were
After taking into account the impact of ongoing price increases, the following summarizes noted changes to sales:
- Sales to Hyundai/Kia increased due to timing of customer demand for power door products
- Sales to Ford Motor Company grew from new tailgate latch content on the Ford F-Series pickups
- Sales to Commercial and Other OEM customers grew from new business with Aston Martin
- Sales to Stellantis declined primarily due to inventory destocking and lower production volumes
FY 2025 First Quarter Operation Review
(compared with prior-year period, except where otherwise noted)
Gross profit increased
Adjusted gross profit1 and adjusted gross margin1 improved as a result of favorable sales mix and change in foreign exchange (“FX”) rate of
($ in thousands) |
Three Months Ended |
||||||
|
|
|
|
||||
Gross profit |
$ |
18,921 |
|
|
$ |
18,720 |
|
Add back (deduct): |
|
|
|
||||
Retroactive pricing |
|
- |
|
|
(7,100 |
) |
|
Adjusted Gross Profit1 |
$ |
18,921 |
|
$ |
11,620 |
|
|
|
|
|
|
||||
Net sales |
$ |
139,052 |
|
$ |
135,406 |
|
|
Adjusted |
$ |
139,052 |
|
|
$ |
127,406 |
|
Gross margin |
|
13.6 |
% |
|
13.8 |
% |
|
Adjusted Gross Margin |
|
13.6 |
% |
|
|
9.1 |
% |
See Reconciliation of |
Engineering, selling and administrative expenses increased
Net income attributable to STRATTEC was
1 Adjusted net sales, adjusted gross profit, adjusted gross margin, adjusted net income attributable to STRATTEC and adjusted diluted earnings per share are non-GAAP financial measure. Further information can be found under “Non-GAAP Financial Measures” and the reconciliations of GAAP financial measures to non-GAAP financial measures that accompany this press release. |
Balance Sheet and Liquidity
First quarter fiscal 2025 cash flow from operations was
At
The Company’s 51% joint venture subsidiary
Webcast and Conference Call
The Company will host a conference call and webcast today to review the financial and operating results for the period ended
First Quarter Fiscal Year 2025 Conference Call |
||
Date: |
|
|
Time: |
|
|
Phone: |
(201) 689-8470 |
|
Webcast and accompanying slide presentation: investors.strattec.com |
A telephonic replay will be available from
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
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 non-GAAP financial measures used by other companies. STRATTEC’s management uses these measures for reviewing the financial results of STRATTEC for budget planning purposes and for making operational and financial decisions. Management believes that providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, help investors evaluate STRATTEC’s core operating and financial performance and business trends consistent with how management evaluates such performance and trends.
FINANCIAL TABLES FOLLOW
|
|||||||
Condensed Results of Operations |
|||||||
(In thousands, except per share amounts) |
|||||||
(Unaudited) |
|||||||
|
|||||||
|
Three Months Ended |
|
|||||
|
|
|
|
|
|
||
Net sales |
$ |
139,052 |
|
|
$ |
135,406 |
|
Cost of goods sold |
|
120,131 |
|
|
|
116,686 |
|
Gross profit |
|
18,921 |
|
|
|
18,720 |
|
Engineering, selling and administrative expenses |
|
13,858 |
|
|
|
12,614 |
|
Income from operations |
|
5,063 |
|
|
|
6,106 |
|
Equity loss from joint ventures |
|
— |
|
|
|
(265 |
) |
Interest expense |
|
(295 |
) |
|
|
(220 |
) |
Investment income |
|
349 |
|
|
|
87 |
|
Other income, net |
|
129 |
|
|
|
134 |
|
Income before provision for income taxes and non-controlling interest |
|
5,246 |
|
|
|
5,842 |
|
Provision for income taxes |
|
1,498 |
|
|
|
1,387 |
|
Net income. |
|
3,748 |
|
|
|
4,455 |
|
Net income attributable to non-controlling interest |
|
45 |
|
|
|
290 |
|
Net income attributable to |
$ |
3,703 |
|
|
$ |
4,165 |
|
|
|
|
|
|
|
||
|
|
|
|
||||
Earnings per share attributable to
|
|
|
|
|
|
||
Basic |
$ |
0.92 |
|
|
$ |
1.05 |
|
Diluted |
$ |
0.92 |
|
|
$ |
1.05 |
|
|
|
|
|
|
|
||
Weighted Average shares outstanding: |
|
|
|
|
|
||
Basic |
|
4,005 |
|
|
|
3,948 |
|
Diluted |
|
4,046 |
|
|
|
3,974 |
|
|
|||||||
Condensed Balance Sheet Data |
|||||||
(In thousands, except share amounts) |
|||||||
(Unaudited) |
|||||||
|
|||||||
|
|
|
|
|
|
||
ASSETS |
|
|
|
|
|
||
Current Assets: |
|
|
|
|
|
||
Cash and cash equivalents |
$ |
34,403 |
|
|
$ |
25,410 |
|
Receivables, net |
|
102,266 |
|
|
|
99,297 |
|
Inventories: |
|
|
|
|
|
||
Finished products |
|
18,540 |
|
|
|
19,833 |
|
Work in process |
|
15,520 |
|
|
|
15,461 |
|
Purchased materials |
|
49,734 |
|
|
|
46,355 |
|
Inventories, net |
|
83,794 |
|
|
|
81,649 |
|
Pre-production costs |
|
15,265 |
|
|
|
22,173 |
|
Value-added tax recoverable |
|
20,624 |
|
|
|
19,684 |
|
Other current assets |
|
4,396 |
|
|
|
5,601 |
|
Total current assets. |
|
260,748 |
|
|
|
253,814 |
|
Deferred income taxes |
|
17,235 |
|
|
|
17,593 |
|
Other long-term assets |
|
6,363 |
|
|
|
6,698 |
|
Net property, plant and equipment |
|
82,521 |
|
|
|
86,184 |
|
|
$ |
366,867 |
|
|
$ |
364,289 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
||
Current Liabilities: |
|
|
|
|
|
||
Accounts payable |
$ |
59,461 |
|
|
$ |
54,911 |
|
Accrued Liabilities: |
|
|
|
|
|
||
Payroll and benefits |
|
25,421 |
|
|
|
28,953 |
|
Value-added tax payable |
|
10,982 |
|
|
|
9,970 |
|
Environmental |
|
1,390 |
|
|
|
1,390 |
|
Warranty |
|
10,698 |
|
|
|
10,695 |
|
Other |
|
11,619 |
|
|
|
12,369 |
|
Total current liabilities |
|
119,571 |
|
|
|
118,288 |
|
Borrowings under credit facilities – long-term |
|
13,000 |
|
|
|
13,000 |
|
Accrued pension obligations |
|
1,417 |
|
|
|
1,379 |
|
Accrued postretirement obligations |
|
1,041 |
|
|
|
1,050 |
|
Other long-term liabilities |
|
4,778 |
|
|
|
4,957 |
|
Shareholders’ Equity: |
|
|
|
|
|
||
Common stock, authorized 18,000,000 shares, |
|
76 |
|
|
|
76 |
|
Capital in excess of par value |
|
101,218 |
|
|
|
101,024 |
|
Retained earnings |
|
254,315 |
|
|
|
250,612 |
|
Accumulated other comprehensive loss |
|
(17,104 |
) |
|
|
(15,689 |
) |
Less: treasury stock, at cost (3,597,715 shares at |
|
(135,471 |
) |
|
|
(135,478 |
) |
Total |
|
203,034 |
|
|
|
200,545 |
|
Non-controlling interest |
|
24,026 |
|
|
|
25,070 |
|
Total shareholders’ equity |
|
227,060 |
|
|
|
225,615 |
|
|
$ |
366,867 |
|
|
$ |
364,289 |
|
|
|||||||
Condensed Cash Flow Statement Data |
|||||||
(In Thousands) |
|||||||
(Unaudited) |
|||||||
|
|||||||
|
Three Months Ended |
|
|||||
|
|
|
|
|
|
||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
||
Net income |
$ |
3,748 |
|
|
$ |
4,455 |
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
|
|
||
Depreciation |
|
3,662 |
|
|
|
4,385 |
|
Foreign currency transaction gain |
|
(1,005 |
) |
|
|
(226 |
) |
Unrealized loss on peso forward contracts |
|
652 |
|
|
|
— |
|
Stock-based compensation expense |
|
188 |
|
|
|
505 |
|
Equity loss of joint ventures. |
|
— |
|
|
|
265 |
|
Loss on settlement of pension obligation |
|
283 |
|
|
|
— |
|
Change in operating assets and liabilities: |
|
|
|
|
|
||
Receivables |
|
(3,189 |
) |
|
|
2,333 |
|
Inventories |
|
(2,145 |
) |
|
|
(3,770 |
) |
Other assets |
|
5,881 |
|
|
|
(7,665 |
) |
Accounts payable and accrued liabilities |
|
2,998 |
|
|
|
(4,054 |
) |
Other, net |
|
264 |
|
|
|
(100 |
) |
Net cash provided by (used in) operating activities |
|
11,337 |
|
|
|
(3,872 |
) |
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
||
Proceeds from sale of interest in joint ventures. |
|
— |
|
|
|
2,000 |
|
Purchase of property, plant and equipment |
|
(2,073 |
) |
|
|
(2,920 |
) |
Net cash used in investing activities |
|
(2,073 |
) |
|
|
(920 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
||
Borrowings under credit facilities |
|
3,000 |
|
|
|
2,000 |
|
Repayment of borrowings under credit facilities |
|
(3,000 |
) |
|
|
(2,000 |
) |
Exercise of stock options and employee stock purchases |
|
13 |
|
|
|
17 |
|
Net cash provided by financing activities |
|
13 |
|
|
|
17 |
|
Foreign currency impact on cash |
|
(284 |
) |
|
|
(131 |
) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
|
8,993 |
|
|
|
(4,906 |
) |
|
|
|
|
|
|
||
CASH AND CASH EQUIVALENTS |
|
|
|
|
|
||
Beginning of period |
|
25,410 |
|
|
|
20,571 |
|
End of period |
$ |
34,403 |
|
|
$ |
15,665 |
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
|
||
Cash paid during the period for: |
|
|
|
|
|
||
Income taxes |
$ |
4,081 |
|
|
$ |
764 |
|
Interest |
$ |
280 |
|
|
$ |
218 |
|
Non-cash investing activities: |
|
|
|
|
|
||
Change in capital expenditures in accounts payable |
$ |
(506 |
) |
|
$ |
(193 |
) |
NON-GAAP FINANCIAL MEASURES
The following information provides definitions and reconciliations of the non-GAAP financial measures presented in this earnings release to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The Company has provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this earnings release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this earnings release. Adjusted net sales, adjusted gross profit, adjusted gross margin, adjusted net income attributable to STRATTEC and adjusted diluted earnings per shares are not measures determined in accordance with GAAP and may not be comparable with net sales, adjusted gross profit, adjusted gross margin, adjusted net income and adjusted diluted earnings per share as used by other companies. Nevertheless, STRATTEC believes that providing these non-GAAP financial measures are important for investors and other readers of the Company’s financial statements and assists in understanding the comparison of the current quarter’s financial results to the historical periods' financial results.
Reconciliation of |
||||||
($ in thousands) |
Three Months Ended |
|||||
|
|
|||||
Net sales (GAAP) |
$ |
139,052 |
$ |
135,406 |
|
|
One-time retroactive pricing from customers |
|
- |
|
(8,000 |
) |
|
Adjusted net sales |
$ |
139,052 |
$ |
127,406 |
|
Reconciliation of Gross Profit to Adjusted Gross Profit |
||||||
($ in thousands) |
Three Months Ended |
|||||
|
|
|||||
Gross profit (GAAP) |
$ |
18,921 |
$ |
18,720 |
|
|
One-time retroactive pricing from customers |
|
- |
|
(8,000 |
) |
|
One-time retroactive pricing to suppliers |
|
- |
|
900 |
|
|
Adjusted gross profit |
$ |
18,921 |
$ |
11,620 |
|
Reconciliation of Gross Margin to Adjusted Gross Margin |
|||||
Three Months Ended |
|||||
|
|
||||
Gross margin (GAAP) |
13.6 |
% |
13.8 |
% |
|
One-time retroactive pricing from customers |
(5.4 |
) |
|||
One-time retroactive pricing to suppliers |
- |
|
0.7 |
|
|
Adjusted gross margin |
13.6 |
% |
9.1 |
% |
Reconciliation of Net Income Attributable to STRATTEC to Adjusted Net Income Attributable to STRATTEC |
||||||
($ in thousands) |
Three Months Ended |
|||||
|
|
|||||
Net income attributable to |
$ |
3,703 |
$ |
4,165 |
|
|
One-time retroactive pricing from customers |
|
- |
|
(8,000 |
) |
|
One-time retroactive pricing to suppliers |
|
- |
|
900 |
|
|
Non-controlling interest impact of retroactive pricing |
|
- |
|
1,014 |
|
|
Tax impact of retroactive pricing (1) |
|
- |
|
1,364 |
|
|
Adjusted net income attributable to |
$ |
3,703 |
$ |
(557 |
) |
|
|
Reconciliation of Diluted Earnings Per Share to Adjusted Earnings Per Share |
|
|||||
Three Months Ended |
||||||
|
|
|||||
Diluted earnings per share (GAAP) |
$ |
0.92 |
$ |
1.05 |
|
|
One-time retroactive pricing from customers |
|
- |
|
(2.01 |
) |
|
One-time retroactive pricing to suppliers |
|
- |
|
0.23 |
|
|
Non-controlling interest impact of retroactive pricing |
|
- |
|
0.26 |
|
|
Tax impact of retroactive pricing (1) |
|
- |
|
0.34 |
|
|
Adjusted diluted earnings per share |
$ |
0.92 |
$ |
(0.14 |
) |
|
(1) The tax impact is calculated using the statutory tax rate for the impacted jurisdiction |
Supplemental Information
Impact of Retroactive Pricing in Fiscal Year 2024 |
|||||||||||||||
($ in thousands) |
|||||||||||||||
One-time Pricing Impact to: |
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
FY 2024 |
||||||
|
$ |
8,000 |
|
$ |
1,600 |
|
NM(1) |
|
NM |
$ |
9,700 |
|
|||
Cost of Goods Sold(2) |
|
(900 |
) |
|
|
(910 |
) |
|
- |
|
- |
|
|
(1,700 |
) |
Gross Profit |
$ |
7,100 |
|
$ |
690 |
|
NM |
|
NM |
$ |
8,000 |
|
|||
Gross Margin Contribution |
|
4.7 |
% |
|
|
2.4 |
% |
|
NM |
|
NM |
|
|
1.3 |
% |
(1) Not meaningful |
(2)After factoring in impact of supplier one-time price increases |
View source version on businesswire.com: https://www.businesswire.com/news/home/20241104421525/en/
Investors:
Alliance Advisors IR
Phone: 716-843-3908
Email: dpawlowski@allianceadvisors.com
Source: