STRATTEC SECURITY CORPORATION Reports Fiscal 2024 Fourth Quarter and Full Year Operating Results

MILWAUKEE, Aug. 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.

Fourth Quarter Fiscal 2024 Financial Highlights

• Diluted earnings per share of $2.39 versus $0.69 loss last year
• Gross Margins expanded to 13.0% compared with 9.3% last year
• Revenues increased by 8.2%, driven by pricing increases and new product sales
  

STRATTEC President and CEO Jennifer Slater said, “The financial performance of the business continued due to improved pricing, and new product introductions which are expanding STRATTEC’s offerings to our customers. We will continue to focus on addressing persistent cost challenges and the opportunities we have to optimize our working capital and a strong balance sheet.”

Fourth Quarter and Full Year Fiscal 2024 Financial Summary
(Dollars in thousands, except per share data)

	Three Months Ended						Year Ended
	June 30, 2024			July 2, 2023			June 30, 2024			July 2, 2023
Net Sales	$	143,055		$	132,219		$	537,766		$	492,946
Gross Profit	$	18,567		$	12,268		$	65,468		$	42,152
Gross Margin		13.0	%		9.3	%		12.2	%		8.6	%
Operating Expenses	$	8,876		$	10,975		$	47,654		$	48,241
Operating Income (Loss) from Operations	$	9,691		$	1,293		$	17,814		$	(6,089	)
Net Income (Loss)	$	9,620		$	(2,700	)	$	16,313		$	(6,670	)
Diluted Earnings (Loss) Per Share	$	2.39		$	(0.69	)	$	4.07		$	(1.70	)

Fourth Quarter Financial Overview

Revenue growth was driven by $6.9 million of price increases to our major customers and $3.9 million of higher sales associated with the launch of new product programs, the latter representing a 3.0% growth in sales from prior year. The growth in new product sales primarily stems from additional content of our latch and power access product lines on a major truck platform.

Gross margin improvement was primarily driven by pricing increases, higher sales and lower raw material costs. Offsetting those positive trends was primarily $2.1 million of wage increases due to a mandatory Mexican minimum wage-increase, $1.7 million for increase in the company’s annual incentive bonus plan, $1.2 million higher prices paid to certain suppliers, $1.1 million of higher warranty costs, $1.0 million of increased freight costs primarily related to the launch of new programs, and $660,000 of unfavorable U.S. dollar to Mexican peso exchange rate effects.

Operating expenses decreased by $2.1 million primarily due to a $3.2 million increase in customer billings for the reimbursement of development costs, offset by a $1.1 increase in the company’s annual incentive bonus plan. Other Income was $2.0 million compared to a loss of $1.1 million last year due to foreign currency transaction gains in the current year and losses in the prior year. Net Income was $9.6 million compared to a loss of $2.7 million last year. Fully diluted earnings per share were $2.39 compared with a loss of $0.69 last year.

Full Year Financial Overview

Full year revenue growth of $44.8 million was primarily driven by $32.7 million of customer pricing of which $9.7 million relates to one-time retroactive pricing that is not expected to recur in the future. Total gross margins improved by $23.3 million due to customer pricing, higher sales, lower raw material costs and salaried staff reductions and production efficiencies in Mexico, offset primarily by $5.7 million of higher prices paid to key suppliers, $8.5 million of unfavorable exchange rate impact between the U.S. dollar and the Mexican peso, $6.6 million of mandatory Mexican minimum wage increases and $4.1 million of higher shipping costs, primarily attributable to expediting associated with new product launches. Operating expenses were $587,000 lower due to $3.4 million increase in customer billings for the reimbursement of engineering development costs offset primarily by $1.0 million in one-time charges associated with the transition of the Chief Executive Officer position and $1.9 million of annual incentive bonus expense. Net Income was $16.3 million compared to a loss of $6.7 million last year. Fully diluted earnings per share were $4.07 compared with a loss of $1.70 last year.

Fourth Quarter Balance Sheet & Cash Flow

As of June 30, 2024, the Company’s cash and cash equivalents on hand totaled $25.4 million. Total debt as of June 30, 2024 was $13.0 million, which was all held by the ADAC-STRATTEC LLC joint venture.

For the fourth quarter of fiscal 2024, operating cash flow was $19.4 million, compared to the prior year quarter operating cash flow of $2.6 million. The operating cash flow for the current quarter was driven by improved operating performance and a reduction in net working capital. Capital expenditures in the fourth quarter of fiscal 2024 were $3.7 million, compared with $3.6 million for the fourth quarter of fiscal 2023.

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								Year Ended
	June 30, 2024				July 2, 2023				June 30, 2024				July 2, 2023
Net Sales	$	143,055			$	132,219			$	537,766			$	492,946
Cost of Goods Sold		124,488				119,951				472,298				450,794
Gross Profit		18,567				12,268				65,468				42,152
Engineering, Selling & Administrative Expenses		8,876				10,975				47,654				48,241
Income (Loss) from Operations		9,691				1,293				17,814				(6,089	)
Interest Expense		(239	)			(369	)			(900	)			(960	)
Investment Income		235				-				572				-
Other Income (Expense), net		1,958				(1,089	)			2,717				(619	)
Income (Loss) Before Provision for Income Taxes and Non-Controlling Interest		11,645				(165	)			20,203				(7,668	)
Provision for Income Taxes		1,578				2,919				3,775				1,281
Net Income (Loss)		10,067				(3,084	)			16,428				(8,949	)
Net Income (Loss) Attributable to Non-Controlling Interest		447				(384	)			115				(2,279	)
Net Income (Loss) Attributable to STRATTEC SECURITY CORPORATION	$	9,620			$	(2,700	)		$	16,313			$	(6,670	)
Earnings (Loss) Per Share:
Basic	$	2.41			$	(0.69	)		$	4.10			$	(1.70	)
Diluted	$	2.39			$	(0.69	)		$	4.07			$	(1.70	)
Average Basic Shares Outstanding		3,988				3,928				3,975				3,921
Average Diluted Shares Outstanding		4,027				3,928				4,004				3,921
Other
Capital Expenditures	$	3,723			$	3,646			$	9,788			$	17,370
Depreciation	$	3,773			$	4,340			$	16,547			$	17,485

STRATTEC SECURITY CORPORATION Condensed Balance Sheet Data (In Thousands) (Unaudited)
				June 30, 2024				July 2, 2023
ASSETS
	Current Assets:
		Cash and Cash Equivalents		$	25,410			$	20,571
		Receivables, net			99,297				89,811
		Inventories, net			81,649				77,597
		Customer Tooling in Progress, net			22,173				20,800
		Value Added Tax Recoverable			19,684				7,912
		Other Current Assets			5,601				9,091
			Total Current Assets		253,814				225,782
	Other Long-term Assets				24,291				20,702
	Property, Plant and Equipment, net				86,184				94,446
				$	364,289			$	340,930
LIABILITIES AND SHAREHOLDERS' EQUITY
	Current Liabilities:
		Accounts Payable		$	54,911			$	57,927
		Value Added Tax Payable			9,970				6,499
		Other			53,407				44,560
			Total Current Liabilities		118,288				108,986
	Accrued Pension and Postretirement Obligations				2,429				2,363
	Borrowings Under Credit Facility - Long-Term				13,000				13,000
	Other Long-term Liabilities				4,957				5,557
	Shareholders' Equity				351,712				334,683
	Accumulated Other Comprehensive Loss				(15,689	)			(14,194	)
	Less: Treasury Stock				(135,478	)			(135,526	)
		Total STRATTEC SECURITY
			CORPORATION Shareholders' Equity		200,545				184,963
		Non-Controlling Interest			25,070				26,061
	Total Shareholders' Equity				225,615				211,024
				$	364,289			$	340,930

STRATTEC SECURITY CORPORATION Condensed Cash Flow Statement Data (In Thousands) (Unaudited)
				Three Months Ended									Year Ended
				June 30, 2024				July 2, 2023					June 30, 2024				July 2, 2023
Cash Flows from Operating Activities:
Net Income (Loss)				$	10,067			$	(3,084		)		$	16,428			$	(8,949		)
Adjustments to Reconcile Net Income (Loss) to Cash Provided by Operating Activities:
		Depreciation			3,773				4,340					16,547				17,485
		Equity Loss (Earnings) in Joint Ventures			62				375					331				(1,559		)
		Foreign Currency Transaction (Gain) Loss			(2,279	)			821					(2,153	)			2,935
		Loss on Settlement of Pension Obligation			-				-					-				217
		Stock Based Compensation Expense			243				327					1,467				1,466
		Deferred Tax Provision			(4,711	)			(4,937		)			(4,711	)			(4,937		)
		Change in Operating Assets/Liabilities			11,543				4,437					(16,232	)			2,670
	Other, net				790				304					588				767
Net Cash Provided by Operating Activities					19,488				2,583					12,265				10,095
Cash Flows from Investing Activities:
	Proceeds from sale of interest in VAST LLC				-				26,170					2,000				26,170
	Investment in Joint Ventures				-				(41		)			-				(278		)
	Purchase of VAST Korea net assets				-				354					-				354
	Additions to Property, Plant & Equipment				(3,723	)			(3,646		)			(9,788	)			(17,370		)
	Proceeds on Sales of Property, Plant & Equipment				-				10					-				25
Net Cash (Used in) Provided by Investing Activities					(3,723	)			22,847					(7,788	)			8,901
Cash Flows from Financing Activities:
	Borrowings on Line of Credit Facility				-				4,000					2,000				17,000
	Payments on Line of Credit Facility				-				(12,000		)			(2,000	)			(15,000		)
	Purchase of SPA non-controlling interest				-				(9,019		)			-				(9,019		)
	Dividends Paid to Non-Controlling Interest of Subsidiary				-				-					-				(600		)
	Exercise of Stock Options and Employee Stock Purchases				17				19					72				183
Net Cash Provided by (Used In) Financing Activities					17				(17,000		)			72				(7,436		)
Effect of Foreign Currency Fluctuations on Cash					34				55					290				237
Net Increase in Cash & Cash Equivalents					15,816				8,485					4,839				11,797
Cash & Cash Equivalents:
	Beginning of Period				9,594				12,086					20,571				8,774
	End of Period			$	25,410			$	20,571				$	25,410			$	20,571