• 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

MILWAUKEE--(BUSINESS WIRE)--Nov. 4, 2024-- 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 first quarter of fiscal year 2025, which ended September 29, 2024.

STRATTEC President and CEO Jennifer Slater said, “We delivered a solid quarter through improved pricing, favorable mix, and by providing innovative content on the right platforms. We are making headway on rethinking the STRATTEC business model including the evaluation of our product portfolio, determining an optimal operating and cost structure and developing a strategy to strengthen profitability and drive sustainability. We are in the very early stages of the process as we delve further into the operations to better understand the variability in performance of the business and what needs to change to provide more consistent, profitable results. We separately announced today the addition of a chief people officer, a new role for this organization of over 3,300 people. We also appointed a new chief commercial officer who brings a breadth of experience that incorporates the depth of knowledge required to grow revenue profitably. We expect to leverage the deep relationships we have with our customers and provide high quality, timely and value-added solutions for our mutual success.”

FY 2025 First Quarter Net Sales

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

Net sales attributable to STRATTEC were $139.1 million, which included $2.2 million of ongoing price increases to major customers made subsequent to last year’s first quarter. This compares with net sales of $135.4 million in fiscal first quarter 2024, which included $8.0 million in one-time retroactive price increases. Excluding that one-time pricing impact, adjusted net sales attributable to STRATTEC¹ increased by $11.6 million, or 9.1%.

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 $0.2 million to $18.9 million. Gross margin was 13.6% compared with 13.8% in prior-year period (which included a 470 basis point benefit from one-time pricing).

Adjusted gross profit¹ and adjusted gross margin¹ improved as a result of favorable sales mix and change in foreign exchange (“FX”) rate of $2.7 million, improved pricing of $2.2 million, and $1.3 million reduction in raw material and purchased component costs. The favorable change in FX provided a 190 basis point benefit to gross margin between quarterly periods. These benefits more than offset unfavorable impacts of $1.4 million in higher Mexico manufacturing costs, $0.7 million of accrual for short-term incentive bonus plans and $0.4 million of expedited shipping costs.

Engineering, selling and administrative expenses increased $1.2 million, or 9.9%, to $13.9 million primarily due to increased accrual for short-term incentive plan compensation and organizational investments. As a result, operating income decreased $1.0 million to $5.1 million compared with the prior-year period. Last year’s first quarter benefited by

$7.1 million for the one-time pricing impact.

Net income attributable to STRATTEC was $3.7 million compared with $4.2 million last year. Diluted earnings per share were $0.92 compared with $1.05 last year. Adjusted net income attributable to STRATTEC¹ was $3.7 million compared with a loss of $0.6 million in last fiscal year’s first quarter. Adjusted diluted earnings per share was $0.92 compared with a loss of $0.14 in the prior-year period.

Balance Sheet and Liquidity

First quarter fiscal 2025 cash flow from operations was $11.3 million, compared with operating cash used in operations of $3.9 million in the prior year first quarter, primarily reflecting a reduction in working capital between periods. Capital expenditures in the first quarter of fiscal 2025 were $2.1 million, compared with $2.9 million for the first quarter of fiscal 2024.

At September 29, 2024, STRATTEC had $34.4 million in cash and cash equivalents, compared with $25.4 million at June 30, 2024. Pre-production costs, which are primarily related to customer tooling, declined $6.9 million. The Company’s objective is to return the customer tooling balance to approximately $10 million by the end of the fiscal year.

The Company’s 51% joint venture subsidiary ADAC-STRATTEC LLC had $13.0 million in debt, unchanged from the end of fiscal 2024. STRATTEC had $40 million and ADAC-STRATTEC LLC had $7 million in borrowing capacity as of September 29, 2024.

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 September 29, 2024. A question-and-answer session will follow.

A telephonic replay will be available from 8:00 p.m. ET on the day of the call through Monday, November 18, 2024. To listen to the archived call, dial (412) 317-6671 and enter replay PIN 13749209. The webcast replay will be available on the Investor Relations section of the Company’s website investors.strattec.com, 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 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.

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

STRATTEC SECURITY CORPORATION

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.

Supplemental Information

View source version on businesswire.com: https://www.businesswire.com/news/home/20241104421525/en/

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

Source: STRATTEC SECURITY CORPORATION