Exhibit 99.1
STRATTEC SECURITY CORPORATION REPORTS FISCAL 2024 THIRD QUARTER
OPERATING RESULTS
May 9, 2024
Third Fiscal Quarter earnings per share $0.37 vs $0.57 loss, an improvement driven by customer pricing increases and higher sales
Milwaukee, Wisconsin – 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.
Third Quarter Fiscal 2024 Financial Highlights
STRATTEC Interim CEO Rolando Guillot said, “This quarter we continued to make progress on our financial performance due to improved pricing and new product introductions that 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.”
Third Quarter Fiscal 2024 Financial Summary
|
| Third Quarter Ending | ||||
|
| Mar 31, 2024 |
| Apr. 2, 2023 |
| Inc (Dec) |
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
Net Sales |
| $ 140,773 |
| $ 127,183 |
| $ 13,590 |
Gross Profit |
| $ 14,684 |
| $ 10,001 |
| $ 4,683 |
Gross Margin |
| 10.4% |
| 7.9% |
|
|
Operating Expenses |
| $ 12,725 |
| $ 12,485 |
| $ 240 |
Operating Income (Loss) from Operations |
| $ 1,959 |
| $ (2,484) |
| $ 4,443 |
Net Income (Loss) |
| $ 1,506 |
| $ (2,256) |
| $ 3,762 |
Diluted Earnings (Loss) Per Share |
| $ 0.37 |
| $ (0.57) |
| $ 0.94 |
Revenue growth was driven by $7.0 million of price increases to our major customers and $6.6 million of higher sales associated with the launch of new product programs, the latter representing a 5.2% 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 driven by pricing increases, higher sales, lower raw material costs, lower warranty costs and $384,000 of workforce and production efficiencies realized from our Mexican operations. Offsetting those positive trends were unfavorable absorption of labor and overhead costs with inventory reductions, $2.1 million of unfavorable U.S. dollar to Mexican peso exchange rate effects, $1.8 million of wage increases due to a mandatory Mexican minimum wage-increase, $1.2 million higher prices paid to certain suppliers and $778,000 of increased freight costs primarily related to the launch of new programs.
Operating expenses increased primarily due to a $817,000 expense associated with the company’s annual incentive bonus plan, which was partially offset with lower new product development costs compared with the prior year period. Net Income was $1.5 million compared to a loss of $2.3 million last year. Fully diluted earnings per share were $0.37 compared with a loss of $0.57 last year.
Balance Sheet & Cash Flow
As of March 31, 2024, the Company’s cash and cash equivalents on hand totaled $9.6 million. Total debt as of March 31, 2024 was $13.0 million, which was all held by the ADAC-STRATTEC LLC joint venture.
For the third quarter of fiscal 2024, operating cash flow was negative $309,000, compared to the prior year quarter operating cash flow of negative $1.2 million. The negative operating cash flow for the current quarter was driven by a temporary increase in working capital, specifically in accounts receivable related to higher sales in the quarter, partially offset by a $10.8 million reduction in inventory. Capital expenditures in the third quarter of fiscal 2024 were $1.7 million, compared with $4.2 million for the third 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 |
| Nine Months Ended | ||||
| March 31, 2024 |
| April 2, 2023 |
| March 31, 2024 |
| April 2, 2023 |
|
|
|
|
|
|
|
|
Net Sales | $ 140,773 |
| $ 127,183 |
| $ 394,711 |
| $ 360,727 |
|
|
|
|
|
|
|
|
Cost of Goods Sold | 126,089 |
| 117,182 |
| 347,810 |
| 330,843 |
|
|
|
|
|
|
|
|
Gross Profit | 14,684 |
| 10,001 |
| 46,901 |
| 29,884 |
|
|
|
|
|
|
|
|
Engineering, Selling & | 12,725 |
| 12,485 |
| 38,778 |
| 37,266 |
|
|
|
|
|
|
|
|
Income (Loss) from Operations | 1,959 |
| (2,484) |
| 8,123 |
| (7,382) |
|
|
|
|
|
|
|
|
Interest Expense | (222) |
| (266) |
| (661) |
| (591) |
Interest Income | 143 |
| - |
| 337 |
| - |
|
|
|
|
|
|
|
|
Other (Expense) Income, net | (208) |
| (404) |
| 759 |
| 470 |
|
|
|
|
|
|
|
|
Income (Loss) Before Provision | 1,672 |
| (3,154) |
| 8,558 |
| (7,503) |
|
|
|
|
|
|
|
|
Provision (Benefit) for Income | 546 |
| 133 |
| 2,197 |
| (1,638) |
|
|
|
|
|
|
|
|
Net Income (Loss) | 1,126 |
| (3,287) |
| 6,361 |
| (5,865) |
|
|
|
|
|
|
|
|
Net Loss Attributable | (380) |
| (1,031) |
| (332) |
| (1,895) |
|
|
|
|
|
|
|
|
Net Income (Loss) Attributable | $ 1,506 |
| $ (2,256) |
| $ 6,693 |
| $ (3,970) |
|
|
|
|
|
|
|
|
Earnings (Loss) Per Share: |
|
|
|
|
|
|
|
Basic | $ 0.38 |
| $ (0.57) |
| $ 1.69 |
| $ (1.01) |
Diluted | $ 0.37 |
| $ (0.57) |
| $ 1.67 |
| $ (1.01) |
|
|
|
|
|
|
|
|
Average Basic Shares | 3,988 |
| 3,928 |
| 3,971 |
| 3,918 |
|
|
|
|
|
|
|
|
Average Diluted Shares | 4,017 |
| 3,928 |
| 3,996 |
| 3,918 |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
Capital Expenditures | $1,672 |
| $ 4,247 |
| $ 6,065 |
| $ 13,724 |
Depreciation | $4,059 |
| $ 4,347 |
| $ 12,774 |
| $ 13,145 |
STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
(Unaudited)
|
|
|
| March 31, 2024 |
| July 2, 2023 |
|
|
|
|
|
|
|
ASSETS |
|
|
| |||
| Current Assets: |
|
|
| ||
|
| Cash and Cash Equivalents | $ 9,594 |
| $ 20,571 | |
|
| Receivables, net | 97,524 |
| 89,811 | |
|
| Inventories, net | 78,612 |
| 77,597 | |
|
| Customer Tooling in Progress, net | 25,505 |
| 20,800 | |
|
| Value Added Tax Recoverable | 19,272 |
| 7,912 | |
|
| Other Current Assets | 10,423 |
| 9,091 | |
|
|
| Total Current Assets | 240,930 |
| 225,782 |
| Other Long-term Assets | 19,309 |
| 20,702 | ||
| Property, Plant and Equipment, net | 88,310 |
| 94,446 | ||
|
|
|
| $ 348,549 |
| $ 340,930 |
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
| |||
| Current Liabilities: |
|
|
| ||
|
| Accounts Payable | $ 50,582 |
| $ 57,927 | |
|
| Value Added Tax Payable | 8,906 |
| 6,499 | |
|
| Borrowings Under Credit Facility - Current | 13,000 |
| - | |
|
| Other | 48,284 |
| 44,560 | |
|
|
| Total Current Liabilities | 120,772 |
| 108,986 |
| Accrued Pension and Postretirement Obligations | 2,463 |
| 2,363 | ||
| Borrowings Under Credit Facility - Long-Term | - |
| 13,000 | ||
| Other Long-term Liabilities | 5,200 |
| 5,557 | ||
| Shareholders' Equity | 342,521 |
| 334,683 | ||
| Accumulated Other Comprehensive Loss | (13,205) |
| (14,194) | ||
| Less: Treasury Stock | (135,489) |
| (135,526) | ||
|
| Total STRATTEC SECURITY |
|
|
| |
|
|
| CORPORATION Shareholders' Equity | 193,827 |
| 184,963 |
|
| Non-Controlling Interest | 26,287 |
| 26,061 | |
| Total Shareholders' Equity | 220,114 |
| 211,024 | ||
|
|
|
| $ 348,549 |
| $ 340,930 |
STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)
|
|
|
| Three Months Ended |
| Nine Months Ended | ||||||
|
|
|
| March 31, 2024 |
| April 2, 2023 |
| March 31, 2024 |
| April 2, 2023 | ||
Cash Flows from Operating Activities: |
|
|
|
|
|
|
| |||||
Net Income (Loss) | $ 1,126 |
| $ (3,287) |
| $ 6,361 |
| $ (5,865) | |||||
Adjustments to Reconcile Net Income (Loss) to Cash (Used in) Provided by Operating Activities: | ||||||||||||
|
| Depreciation | 4,059 |
| 4,347 |
| 12,774 |
| 13,145 | |||
|
| Equity (Earnings) Loss in Joint Ventures | - |
| (819) |
| 269 |
| (1,934) | |||
|
| Foreign Currency Transaction Loss | 475 |
| 1,529 |
| 126 |
| 2,114 | |||
|
| Unrealized Loss (Gain) on Peso Forward Contracts | 222 |
| 70 |
| (604) |
| 93 | |||
|
| Loss on Settlement of Pension Obligation | - |
| 217 |
| - |
| 217 | |||
|
| Stock Based Compensation Expense | 240 |
| 265 |
| 1,224 |
| 1,139 | |||
|
| Change in Operating Assets/Liabilities | (6,676) |
| (3,665) |
| (27,775) |
| (1,767) | |||
| Other, net | 245 |
| 120 |
| 402 |
| 370 | ||||
|
|
|
|
|
|
|
|
|
|
| ||
Net Cash (Used in) Provided by Operating Activities | (309) |
| (1,223) |
| (7,223) |
| 7,512 | |||||
Cash Flows from Investing Activities: |
|
|
|
|
|
|
| |||||
| Proceeds from sale of interest in VAST LLC | - |
| - |
| 2,000 |
| - | ||||
| Investment in Joint Ventures | - |
| (133) |
| - |
| (237) | ||||
| Additions to Property, Plant & Equipment | (1,672) |
| (4,247) |
| (6,065) |
| (13,724) | ||||
| Proceeds on Sales of Property, Plant & Equipment | - |
| 11 |
| - |
| 15 | ||||
|
|
|
|
|
|
|
|
|
|
| ||
Net Cash Used in Investing Activities | (1,672) |
| (4,369) |
| (4,065) |
| (13,946) | |||||
Cash Flows from Financing Activities: |
|
|
|
|
|
|
| |||||
| Borrowings on Line of Credit Facility | - |
| 4,000 |
| 2,000 |
| 13,000 | ||||
| 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 | 18 |
| 18 |
|
55 |
| 164 | ||||
|
|
|
|
|
|
|
|
|
|
| ||
Net Cash Provided by Financing Activities | 18 |
| 4,018 |
| 55 |
| 9,564 | |||||
Effect of Foreign Currency Fluctuations on Cash | (18) |
| 82 |
| 256 |
| 182 | |||||
Net (Decrease) Increase in Cash & Cash Equivalents | (1,981) |
| (1,492) |
| (10,977) |
| 3,312 | |||||
Cash & Cash Equivalents: |
|
|
|
|
|
|
| |||||
| Beginning of Period | 11,575 |
| 13,578 |
| 20,571 |
| 8,774 | ||||
| End of Period | $ 9,594 |
| $ 12,086 |
| $ 9,594 |
| $ 12,086 | ||||