Exhibit 99.1
FOR RELEASE AT 3:00 PM CST
Contact: Pat Hansen
Senior Vice President and
Chief Financial Officer
414-247-3435
www.strattec.com
STRATTEC SECURITY CORPORATION
REPORTS FISCAL 2013 SECOND QUARTER RESULTS
Milwaukee, Wisconsin – January 24, 2013 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) (“STRATTEC” or the “Company”) today reported operating results for the fiscal second quarter ended December 30, 2012.
Net sales for the Company’s second quarter ended December 30, 2012 were $72.2 million, compared to net sales of $65.9 million for the second quarter ended January 1, 2012. Net income for the current quarterly period was $2.4 million, compared to net income of $1.5 million in the prior year quarter. Diluted earnings per share for the current quarterly period were $.70 compared to diluted earnings per share of $.47 during the prior year quarter.
For the six months ended December 30, 2012, net sales were $143.1 million compared to net sales of $132.3 million during the prior year six month period. Net income during the current six month period was $5.1 million compared to net income of $2.8 million during the prior year six month period. Diluted earnings per share were $1.48 for the current six month period ended December 30, 2012 compared to diluted earnings per share of $.85 for the prior year six month period ended January 1, 2012.
Net sales to each of our customers in the current year quarter and prior year quarter were as follows (in millions):
| Three Months Ended | ||||||||
| December 30, 2012 | January 1, 2012 | |||||||
| Chrysler Group LLC | $ | 23.0 | $ | 22.4 | ||||
| General Motors Company | 13.5 | 14.4 | ||||||
| Ford Motor Company | 10.5 | 8.1 | ||||||
| Tier 1 Customers | 15.0 | 11.4 | ||||||
| Commercial and Other OEM Customers | 7.7 | 5.9 | ||||||
| Hyundai / Kia | 2.5 | 3.7 | ||||||
| TOTAL | $ | 72.2 | $ | 65.9 | ||||
Increased sales to Chrysler Group LLC and Ford Motor Company in the current quarter were primarily due to increased customer vehicle production volumes on models for which we supply components. New product content also contributed to the increased sales to Ford Motor Company. The reduction in sales to General Motors Company in the current quarter was primarily attributed to business we lost to other suppliers during the latter half of the 2012 model year, partially offset by higher production on other General Motors vehicles for which we continue to supply components. Increased sales to Tier 1, Commercial and Other OEM customers during the current quarter relates to market growth and the increasing impact of other vehicle access control products such as latches, fobs, and driver controls that have been developed in recent years to complement our historic core business of locks and keys. The reduction in sales to Hyundai / Kia in the current quarter was principally due to lower customer vehicle production volume and the discontinuation of a vehicle model for which we had been supplying components.
Gross profit margins were 17.0 percent in the current quarter compared to 17.1 percent in the prior year quarter. The benefits of higher volumes on gross profit margin in the current year quarter were negatively impacted by a less favorable product sales mix, an unfavorable Mexico Peso to U.S. Dollar exchange rate affecting the Company’s operations in Mexico, higher expense provisions for our pension plan and for the accrual of bonuses earned under our incentive bonus plans. The Company froze its Defined Benefit Pension Plan for future benefit accruals effective January 1, 2010. Therefore the increase in pension expense during the current year is attributed to a lower discount rate and the corresponding lower expected return on invested assets that are measured at the end of fiscal year 2012. During the current quarter, the Company contributed $1.75 million to its Defined Benefit Pension Trust.
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Operating expenses as a percent of net sales in the current quarter decreased to 11.7% from 12.1% in comparison to the prior year quarter. These expenses would have declined further except for increased costs primarily for our pension and incentive bonus plans as discussed above.
The Company is a partner in VAST LLC, a global alliance of companies involved in the design and manufacture of automotive access products. As reported in our prior earnings releases, VAST’s operations in China incurred relocation costs associated with moves to a new facility and start-up costs associated with a new product line. The facility move has been completed but we anticipate these start-up costs and losses to continue over the remaining current fiscal year.
Included in Other (Expense) Income in the current quarter compared to the prior year quarter were the following items (in thousands of dollars):
December 30, 2012 | January 1, 2012 | |||||||
| Foreign Currency Transaction Gain (Loss) | $ | 142 | $ | (95 | ) | |||
Net Realized and Unrealized Gains on Mexican Peso Option Contracts | 38 | 397 | ||||||
| Rabbi Trust (Loss) Gain | (11 | ) | 144 | |||||
| Other | 18 | 57 | ||||||
| $ | 187 | $ | 503 | |||||
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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, 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 our products to global customers under the “VAST” brand name. STRATTEC’s history in the automotive business spans over 100 years.
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, foreign currency fluctuations, and fluctuations in costs of operations (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.
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STRATTEC SECURITY CORPORATION
Results of Operations
(In Thousands except per share amounts)
(Unaudited)
| Second Quarter Ended | Six Months Ended | |||||||||||||||
| December 30, 2012 | January 1, 2012 | December 30, 2012 | January 1, 2012 | |||||||||||||
| Net Sales | $ | 72,243 | $ | 65,886 | $ | 143,050 | $ | 132,263 | ||||||||
| Cost of Goods Sold | 59,936 | 54,646 | 117,030 | 109,519 | ||||||||||||
| Gross Profit | 12,307 | 11,240 | 26,020 | 22,744 | ||||||||||||
| Engineering, Selling & Administrative Expenses | 8,481 | 7,979 | 17,601 | 16,187 | ||||||||||||
| Income from Operations | 3,826 | 3,261 | 8,419 | 6,557 | ||||||||||||
| Interest Income | 10 | 15 | 13 | 32 | ||||||||||||
| Equity Loss of VAST LLC Joint Venture | (99 | ) | (192 | ) | (111 | ) | (312 | ) | ||||||||
| Interest Expense | (10 | ) | (23 | ) | (15 | ) | (54 | ) | ||||||||
| Other Income (Expense), Net | 187 | 503 | 169 | (365 | ) | |||||||||||
| 3,914 | 3,564 | 8,475 | 5,858 | |||||||||||||
| Provision for Income Taxes | 1,074 | 1,260 | 2,320 | 1,581 | ||||||||||||
| Net Income | 2,840 | 2,304 | 6,155 | 4,277 | ||||||||||||
| Net Income Attributable to Non-Controlling Interest | (446 | ) | (756 | ) | (1,091 | ) | (1,447 | ) | ||||||||
Net Income Attributable to STRATTEC SECURITY CORPORATION | $ | 2,394 | $ | 1,548 | $ | 5,064 | $ | 2,830 | ||||||||
| Earnings Per Share: | ||||||||||||||||
| Basic | $ | 0.71 | $ | 0.47 | $ | 1.50 | $ | 0.86 | ||||||||
| Diluted | $ | 0.70 | $ | 0.47 | $ | 1.48 | $ | 0.85 | ||||||||
| Average Basic | ||||||||||||||||
| Shares Outstanding | 3,317 | 3,301 | 3,313 | 3,298 | ||||||||||||
| Average Diluted | ||||||||||||||||
| Shares Outstanding | 3,353 | 3,329 | 3,346 | 3,328 | ||||||||||||
| Other | ||||||||||||||||
| Capital Expenditures | $ | 2,477 | $ | 2,797 | $ | 5,188 | $ | 6,289 | ||||||||
| Depreciation & Amortization | $ | 1,773 | $ | 1,679 | $ | 3,531 | $ | 3,331 | ||||||||
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STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
| December 30, 2012 | July 1, 2012 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and Cash Equivalents | $ | 18,569 | $ | 17,487 | ||||
| Receivables, Net | 40,709 | 44,496 | ||||||
| Inventories | 26,536 | 21,236 | ||||||
| Other Current Assets | 16,195 | 18,072 | ||||||
| Total Current Assets | 102,009 | 101,291 | ||||||
| Deferred Income Taxes | 9,735 | 9,742 | ||||||
| Investment in Joint Venture | 8,400 | 8,139 | ||||||
| Other Long Term Assets | 486 | 536 | ||||||
| Property, Plant and Equipment, Net | 48,285 | 46,330 | ||||||
| $ | 168,915 | $ | 166,038 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts Payable | $ | 22,483 | $ | 24,149 | ||||
| Borrowings Under Line of Credit Facility | 2,250 | - | ||||||
| Other | 30,723 | 32,824 | ||||||
| Total Current Liabilities | 55,456 | 56,973 | ||||||
| Accrued Pension and Post Retirement Obligations | 21,155 | 21,667 | ||||||
| Shareholders’ Equity | 256,524 | 252,280 | ||||||
| Accumulated Other Comprehensive Loss | (35,087 | ) | (35,757 | ) | ||||
| Less: Treasury Stock | (135,955 | ) | (135,971 | ) | ||||
| Total STRATTEC SECURITY CORPORATION Shareholders’ Equity | 85,482 | 80,552 | ||||||
| Non-Controlling Interest | 6,822 | 6,846 | ||||||
| Total Shareholders’ Equity | 92,304 | 87,398 | ||||||
| $ | 168,915 | $ | 166,038 | |||||
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STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)
| Second Quarter Ended | Six Months Ended | |||||||||||||||
| December 30, 2012 | January 1, 2012 | December 30, 2012 | January 1, 2012 | |||||||||||||
| Cash Flows from Operating Activities: | ||||||||||||||||
| Net Income | $ | 2,840 | $ | 2,304 | $ | 6,155 | $ | 4,277 | ||||||||
| Adjustment to Reconcile Net Income to | ||||||||||||||||
| Cash Provided by Operating Activities: | ||||||||||||||||
| Equity Loss in VAST LLC Joint Venture | 99 | 192 | 111 | 312 | ||||||||||||
| Depreciation and Amortization | 1,773 | 1,679 | 3,531 | 3,331 | ||||||||||||
| Foreign Currency Transaction (Gain) Loss | (142 | ) | 94 | 313 | (1,605 | ) | ||||||||||
Unrealized (Gain) Loss on Foreign Currency Option Contracts | (38 | ) | (589 | ) | (349 | ) | 1,716 | |||||||||
| Stock Based Compensation Expense | 394 | 197 | 470 | 371 | ||||||||||||
| Change in Operating Assets/Liabilities | (622 | ) | 1,541 | (4,194 | ) | (3,208 | ) | |||||||||
| Other, net | (31 | ) | - | (61 | ) | 16 | ||||||||||
| Net Cash Provided by Operating Activities | 4,273 | 5,418 | 5,976 | 5,210 | ||||||||||||
| Cash Flows from Investing Activities: | ||||||||||||||||
| Investment in Joint Ventures | - | (200 | ) | (200 | ) | (200 | ) | |||||||||
| Additions to Property, Plant and Equipment | (2,477 | ) | (2,797 | ) | (5,188 | ) | (6,289 | ) | ||||||||
| Proceeds from Sale of Property and Equipment | 31 | - | 61 | - | ||||||||||||
| Net Cash Used in Investing Activities | (2,446 | ) | (2,997 | ) | (5,327 | ) | (6,489 | ) | ||||||||
| Cash Flow from Financing Activities: | ||||||||||||||||
| Borrowings on Line of Credit Facility | 750 | - | 2,250 | - | ||||||||||||
| Dividends Paid to Non-Controlling Interest of Subsidiary | - | - | (1,131 | ) | - | |||||||||||
| Dividends Paid | (352 | ) | (335 | ) | (688 | ) | (670 | ) | ||||||||
| Repayment of Loan to Related Parties | - | (450 | ) | - | (850 | ) | ||||||||||
Exercise of Stock Options and Employee Stock Purchases | 52 | 48 | 71 | 64 | ||||||||||||
| Net Cash Provided by (Used in) Financing Activities | 450 | (737 | ) | 502 | (1,456 | ) | ||||||||||
| Effect of Foreign Currency Fluctuations on Cash | 18 | (109 | ) | (69 | ) | 248 | ||||||||||
| Net Increase (Decrease) in Cash & Cash Equivalents | 2,295 | 1,575 | 1,082 | (2,487 | ) | |||||||||||
| Cash and Cash Equivalents: | ||||||||||||||||
| Beginning of Period | 16,274 | 13,188 | 17,487 | 17,250 | ||||||||||||
| End of Period | $ | 18,569 | $ | 14,763 | $ | 18,569 | $ | 14,763 | ||||||||
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