Strattec Security Corp 10-Q for FY2027 Q1
Strattec Security Corp (STRT)
About this 10-Q
Strattec Security Corp filed this 10-Q on October 30, 2026, covering the quarter ended September 27, 2026 (FY2027 Q1).
Strattec Security Corporation reported first-quarter fiscal 2027 net sales of $147.2 million, down 3.4%, and net income attributable to Strattec of $4.8 million, down 43%. Cash was $111.8 million, no borrowings were outstanding, and $5.0 million of stock was repurchased. AI summary
Headline figures
Quarter ended September 27, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $147.2M
- down 3.4% from $152.4M a year earlier
- Net income
- $4.83M
- down 43.3% from net income of $8.53M a year earlier
- Diluted EPS
- $1.19
- down 42.5% from $2.07 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number
(Exact Name of Registrant as Specified in Its Charter)
|
||
(State of Incorporation) |
|
(I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices)
(
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol |
|
Name of exchange on which registered |
|
|
The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated filer |
|
☐ |
|
|
☒ |
|
Non-accelerated filer |
|
☐ |
|
Smaller Reporting Company |
|
|
Emerging growth company |
|
|
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
Common stock, par value $0.01 per share:
STRATTEC SECURITY CORPORATION
TABLE OF CONTENTS
September 27, 2026
|
|
|
Page |
Item 1. |
|
3 |
|
|
|
3 |
|
|
|
Condensed Consolidated Statement of Comprehensive Income (Unaudited) |
4 |
|
|
5 |
|
|
|
6 |
|
|
|
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) |
7 |
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited) |
8 |
ITEM 2. |
|
Management's Discussion and Analysis of Financial Condition and Results of Operations |
14 |
ITEM 3. |
|
18 |
|
ITEM 4. |
|
18 |
|
|
|
|
|
ITEM 1. |
|
19 |
|
ITEM 1A. |
|
19 |
|
ITEM 2. |
|
19 |
|
ITEM 5. |
|
20 |
|
ITEM 6. |
|
20 |
|
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STRATTEC SECURITY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(in thousands, except per share amounts)
|
|
Three Months Ended |
|
|||||
|
|
September 27, |
|
|
September 28, |
|
||
Net sales |
|
$ |
|
|
$ |
|
||
Cost of goods sold |
|
|
|
|
|
|
||
Gross profit |
|
|
|
|
|
|
||
Selling, administrative and engineering expenses |
|
|
|
|
|
|
||
Income from operations |
|
|
|
|
|
|
||
Interest income |
|
|
|
|
|
|
||
Interest expense |
|
|
( |
) |
|
|
( |
) |
Other expense, net |
|
|
( |
) |
|
|
( |
) |
Income before income taxes and non-controlling interest |
|
|
|
|
|
|
||
Income tax expense |
|
|
|
|
|
|
||
Net income |
|
|
|
|
|
|
||
Net income attributable to non-controlling interest |
|
|
|
|
|
|
||
Net income attributable to Strattec |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Earnings per share attributable to Strattec |
|
|
|
|
|
|
||
Basic |
|
$ |
|
|
$ |
|
||
Diluted |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Weighted average shares outstanding: |
|
|
|
|
|
|
||
Basic |
|
|
|
|
|
|
||
Diluted |
|
|
|
|
|
|
||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements
3
STRATTEC SECURITY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
(in thousands)
|
|
Three Months Ended |
|
|||||
|
|
September 27, |
|
|
September 28, |
|
||
Net income |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
||
Currency translation adjustments |
|
|
( |
) |
|
|
|
|
Pension and postretirement funded status adjustment, net of tax |
|
|
|
|
|
|
||
Total other comprehensive income (loss), net of tax |
|
|
( |
) |
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
||
Comprehensive income attributable to non-controlling interest |
|
|
|
|
|
|
||
Comprehensive income attributable to Strattec |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements
4
STRATTEC SECURITY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(in thousands, except share amounts and per share amounts)
|
|
September 27, |
|
|
June 28, |
|
||
ASSETS |
|
|
|
|
|
|
||
Current Assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Receivables, net |
|
|
|
|
|
|
||
Inventories: |
|
|
|
|
|
|
||
Finished products |
|
|
|
|
|
|
||
Work in process |
|
|
|
|
|
|
||
Purchased materials |
|
|
|
|
|
|
||
Inventories, net |
|
|
|
|
|
|
||
Pre-production costs |
|
|
|
|
|
|
||
Value-added tax recoverable |
|
|
|
|
|
|
||
Income tax recoverable |
|
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Noncurrent Assets: |
|
|
|
|
|
|
||
Property, plant and equipment: |
|
|
|
|
|
|
||
Land and improvements |
|
|
|
|
|
|
||
Buildings and improvements |
|
|
|
|
|
|
||
Machinery and equipment |
|
|
|
|
|
|
||
Total property, plant and equipment |
|
|
|
|
|
|
||
Less: accumulated depreciation |
|
|
|
|
|
|
||
Property, plant and equipment, net |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
||
Other noncurrent assets |
|
|
|
|
|
|
||
Total Assets |
|
$ |
|
|
$ |
|
||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
||
Current Liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Accrued payroll and benefits |
|
|
|
|
|
|
||
Value-added tax payable |
|
|
|
|
|
|
||
Income tax payable |
|
|
|
|
|
|
||
Warranty reserve |
|
|
|
|
|
|
||
Other current liabilities |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Noncurrent Liabilities: |
|
|
|
|
|
|
||
Post-employment benefits |
|
|
|
|
|
|
||
Other noncurrent liabilities |
|
|
|
|
|
|
||
Total Liabilities |
|
|
|
|
|
|
||
Shareholders' Equity: |
|
|
|
|
|
|
||
Common stock, authorized |
|
|
|
|
|
|
||
Capital in excess of par value |
|
|
|
|
|
|
||
Retained earnings |
|
|
|
|
|
|
||
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Less: treasury stock, at cost ( |
|
|
( |
) |
|
|
( |
) |
Total Strattec shareholders’ equity |
|
|
|
|
|
|
||
Non-controlling interest |
|
|
|
|
|
|
||
Total Shareholders' Equity |
|
|
|
|
|
|
||
Total Liabilities and Shareholders' Equity |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements
5
STRATTEC SECURITY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(in thousands)
|
|
Three Months Ended |
|
|||||
|
|
September 27, |
|
|
September 28, |
|
||
OPERATING ACTIVITIES: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash provided by operating |
|
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
|
||
Foreign currency transaction (gain) loss |
|
|
( |
) |
|
|
|
|
Unrealized loss (gain) on peso contracts |
|
|
|
|
|
( |
) |
|
Stock-based compensation expense |
|
|
|
|
|
|
||
Other, net |
|
|
|
|
|
|
||
Change in operating assets and liabilities: |
|
|
|
|
|
|
||
Receivables |
|
|
|
|
|
( |
) |
|
Inventories |
|
|
( |
) |
|
|
|
|
Prepaids and other assets |
|
|
|
|
|
|
||
Accounts payable |
|
|
|
|
|
( |
) |
|
Accrued liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
||
INVESTING ACTIVITIES: |
|
|
|
|
|
|
||
Purchase of property, plant and equipment |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
Repayments under credit facilities |
|
|
|
|
|
( |
) |
|
Payment for taxes withheld from stock-based awards |
|
|
( |
) |
|
|
( |
) |
Repurchases of common stock under share repurchase program |
|
|
( |
) |
|
|
|
|
Employee stock purchases |
|
|
|
|
|
|
||
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
Foreign currency impact on cash |
|
|
( |
) |
|
|
( |
) |
NET INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
CASH AND CASH EQUIVALENTS: |
|
|
|
|
|
|
||
Beginning of period |
|
|
|
|
|
|
||
End of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
||
Cash paid during the period for: |
|
|
|
|
|
|
||
Income taxes, net |
|
$ |
|
|
$ |
|
||
Interest |
|
|
|
|
$ |
|
||
Non-cash investing activities: |
|
|
|
|
|
|
||
Change in capital expenditures in accounts payable |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements
6
STRATTEC SECURITY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(in thousands)
|
Common Stock |
|
|
Capital in Excess of Par Value |
|
|
Retained Earnings |
|
|
Accumulated Other Comprehensive Loss |
|
|
Treasury Stock |
|
|
Non-Controlling Interest |
|
|
Total |
|
|||||||
Balance -- June 28, 2026 |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Net income |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Currency translation adjustments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Pension and postretirement funded status adjustment, net of tax |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Stock-based compensation |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Shares withheld for taxes on stock-based awards |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Share issuances |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Repurchase of common stock under share repurchase program |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance -- September 27, 2026 |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
|
Common Stock |
|
|
Capital in Excess of Par Value |
|
|
Retained Earnings |
|
|
Accumulated Other Comprehensive Loss |
|
|
Treasury Stock |
|
|
Non-Controlling Interest |
|
|
Total |
|
|||||||
Balance -- June 29, 2025 |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Net income |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Currency translation adjustments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Pension and postretirement funded status adjustment, net of tax |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Stock-based compensation |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Shares withheld for taxes on stock-based awards |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Share issuances |
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Balance -- September 28, 2025 |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements
7
STRATTEC SECURITY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Strattec Security Corporation (the "Company" or “Strattec”), headquartered in Milwaukee, Wisconsin, is a leading global manufacturer and provider of highly engineered advanced automotive access and security products and solutions. Products include power access solutions, locks & locksets, keys & fobs, engineered latches, vehicle start systems, door handles, and other vehicle access products. Power access solutions provide the motion control for power liftgates, sliding power doors, and power tailgates. While the Company serves major automotive OEMs globally, the majority of sales are to the three largest automobile original equipment manufacturers (“OEMs”) in North America.
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial reporting and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The condensed consolidated balance sheet data as of June 28, 2026, was derived from the Company’s audited financial statements but does not include all disclosures required by GAAP. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes in the Annual Report.
In the opinion of management, all adjustments considered necessary for a fair statement of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Operating results for the three months ended September 27, 2026, are not necessarily indicative of the results that may be expected for the entire fiscal year ending June 27, 2027. The condensed consolidated financial statements include the results of all wholly owned subsidiaries, as well as the results of a majority owned joint venture.
NOTE 2. RECENTLY ISSUED ACCOUNTING STANDARDS
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion) included in certain expense captions presented on the face of the income statement. The ASU is effective for fiscal years beginning after December 15, 2026, (fiscal 2028) and for interim periods beginning after December 15, 2027 (fiscal 2029). The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.
NOTE 3. WARRANTY
The Company generally offers its customers an assurance warranty on products sold, although warranty periods may vary by product type and application. The Company has a warranty reserve related to known and potential exposure to warranty claims in the event products fail to perform as expected and in the event the Company may be required to participate in the repair costs incurred by customers for such products. The estimation of the warranty reserve involves judgment and assumptions and is based on an analysis of historical warranty data as well as current trends and information.
|
|
Three Months Ended |
|
|
|||||
|
|
September 27, |
|
|
September 28, |
|
|
||
Balance, beginning of period |
|
$ |
|
|
$ |
|
|
||
Provision charged to expense |
|
|
|
|
|
|
|
||
Payments, net of recoveries |
|
|
( |
) |
|
|
( |
) |
|
Balance, end of period |
|
$ |
|
|
$ |
|
|
||
8
NOTE 4. CREDIT FACILITIES
The Company has a revolving credit agreement with BMO Harris N.A. ("Amended and Restated Credit Agreement"), which provides for a $
The Company's joint venture, ADAC-Strattec LLC, has a revolving credit agreement with BMO Harris N.A. ("Amended and Restated JV Credit Facility"), which provides for a $
The Company and the joint venture were in compliance with all financial covenants as of September 27, 2026.
NOTE 5. DERIVATIVE INSTRUMENTS
A significant portion of the Company's manufacturing costs are incurred in Mexican pesos, which causes earnings and cash flows to fluctuate with changes in the U.S. dollar/Mexican peso exchange rate. The Company enters into contracts with a creditworthy counterparty that provide for monthly Mexican peso forward currency contracts for a portion of peso denominated operating costs. The aggregate notional amounts of outstanding foreign currency forward contracts were $
Balance Sheet Classification |
|
September 27, |
|
|
June 28, |
|
||
Other Current Assets |
|
$ |
|
|
$ |
|
||
Other Current Liabilities |
|
$ |
( |
) |
|
$ |
( |
) |
Other Noncurrent Liabilities |
|
$ |
( |
) |
|
$ |
( |
) |
NOTE 6. INCOME TAXES
The Company's income tax expense and effective tax rate for the three-month periods ended September 27, 2026, and September 28, 2025, were as follows (in thousands and percentage of Income before income taxes and non-controlling interest):
|
Three Months Ended |
|
|||||
|
September 27, |
|
|
September 28, |
|
||
Income before income taxes and non-controlling interest |
$ |
|
|
$ |
|
||
Income tax expense |
$ |
|
|
$ |
|
||
Effective tax rate |
|
% |
|
|
% |
||
The Company is subject to income taxes in the United States and foreign jurisdictions, primarily Mexico. The Company's income tax positions are based on interpretations of income tax laws and rulings in each of the jurisdictions in which the Company operates. Interim income tax expense is determined based on an estimate of the overall annual effective income tax rate which can vary due to the relationship of foreign and domestic earnings, state taxes and available deductions, credits, and discrete items. The effective tax rate for the three months ended September 27, 2026, is higher than the U.S. federal statutory rate of
9
NOTE 7. EARNINGS PER SHARE
A reconciliation of the components of the basic and diluted per-share computations follows (in thousands, except per share amounts):
|
Three Months Ended |
|
|||||
|
September 27, |
|
|
September 28, |
|
||
Net income attributable to Strattec |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Basic weighted-average shares outstanding |
|
|
|
|
|
||
Effect of dilutive securities - employee stock compensation plan |
|
|
|
|
|
||
Diluted weighted-average shares outstanding |
|
|
|
|
|
||
Earnings per share attributable to Strattec |
|
|
|
|
|
||
Basic |
$ |
|
|
$ |
|
||
Diluted |
$ |
|
|
$ |
|
||
NOTE 8. STOCK-BASED COMPENSATION
The Company has granted service-based restricted stock awards ("RSAs") and performance stock units ("PSUs") to employees and non-employee directors under existing stock incentive plans. The number of shares of the Company's common stock authorized under the current 2024 Equity Incentive Plan is
A summary of restricted stock award and performance stock unit activity was as follows:
|
|
RSAs |
|
|
PSUs |
|
||||||||||
|
|
|
|
|
Weighted |
|
|
|
|
|
Weighted |
|
||||
|
|
|
|
|
Grant Date |
|
|
|
|
|
Grant Date |
|
||||
|
|
Shares |
|
|
Fair Value |
|
|
Shares |
|
|
Fair Value |
|
||||
Nonvested balance, June 28, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Vested |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
Nonvested balance, September 27, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
NOTE 9. OTHER EXPENSE, NET
The following table summarizes the components of other expense, net included in the accompanying consolidated statements of income (in thousands):
10
|
Three Months Ended |
|
|
|||||
|
September 27, |
|
|
September 28, |
|
|
||
Foreign currency transaction gain (loss) |
$ |
|
|
$ |
( |
) |
|
|
Realized gain (loss) on peso forward contracts, net |
|
|
|
|
|
|
||
Unrealized gain (loss) on peso forward contracts, net |
|
( |
) |
|
|
|
|
|
Non-service pension and postemployment cost |
|
( |
) |
|
|
( |
) |
|
Other |
|
|
|
|
|
|
||
|
$ |
( |
) |
|
$ |
( |
) |
|
NOTE 10. ACCUMULATED OTHER COMPREHENSIVE LOSS BY COMPONENT
The following tables summarize the changes in accumulated other comprehensive loss (“AOCL”) by component (in thousands):
|
Three Months Ended |
|
|
|||||
|
September 27, |
|
|
September 28, |
|
|
||
Foreign currency translation adjustments: |
|
|
|
|
|
|
||
Balance, beginning of period |
$ |
|
|
$ |
|
|
||
Other comprehensive loss (income) before reclassifications |
|
|
|
|
( |
) |
|
|
Other comprehensive income attributable to non-controlling interest |
|
( |
) |
|
|
( |
) |
|
Balance, end of period |
|
|
|
|
|
|
||
Retirement and postretirement benefit plans: |
|
|
|
|
|
|
||
Balance, beginning of period |
$ |
|
|
$ |
|
|
||
Amortizations in net periodic benefit cost |
|
( |
) |
|
|
( |
) |
|
Balance, end of period |
|
|
|
|
|
|
||
Accumulated other comprehensive loss, end of period |
$ |
|
|
$ |
|
|
||
NOTE 11. RELATED PARTY
The Company owns
|
|
Three Months Ended |
|
|||||
|
|
September 27, |
|
|
September 28, |
|
||
Management fee expense |
|
$ |
|
|
$ |
|
||
Net sales to joint venture partner |
|
$ |
|
|
$ |
|
||
|
|
September 27, |
|
|
June 28, |
|
||
Accounts receivable from joint venture partner |
|
$ |
|
|
$ |
|
||
Accounts payable to joint venture partner |
|
$ |
|
|
$ |
|
||
NOTE 12. SEGMENT INFORMATION
The Company's Chief Operating Decision Maker ("CODM") is the . The CODM assesses the performance and makes capital and resource allocation decisions based on net income
11
Net sales and significant segment expenses are as follows (in thousands):
|
Three Months Ended |
|
|||||
|
September 27, 2026 |
|
|
September 28, 2025 |
|
||
Net sales |
$ |
|
|
$ |
|
||
Significant expenses: |
|
|
|
|
|
||
Direct material costs |
|
|
|
|
|
||
Labor and overhead costs |
|
|
|
|
|
||
Selling costs |
|
|
|
|
|
||
Administrative costs |
|
|
|
|
|
||
Engineering costs |
|
|
|
|
|
||
Interest income |
|
( |
) |
|
|
( |
) |
Interest expense |
|
|
|
|
|
||
Other expense, net |
|
|
|
|
|
||
Income tax expense |
|
|
|
|
|
||
Net income |
|
|
|
|
|
||
Net income attributable to non-controlling interest |
|
|
|
|
|
||
Net income attributable to Strattec |
$ |
|
|
$ |
|
||
Sales by product line were as follows (in thousands):
|
Three Months Ended |
|
|
|||||
|
September 27, |
|
|
September 28, |
|
|
||
Power access solutions |
$ |
|
|
$ |
|
|
||
Door handles & exterior trim |
|
|
|
|
|
|
||
Keys & locksets |
|
|
|
|
|
|
||
Latches |
|
|
|
|
|
|
||
User interface controls |
|
|
|
|
|
|
||
Aftermarket and service |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
|
$ |
|
|
$ |
|
|
||
Sales to and receivables from customers that individually accounted for 10% or more of the Company's total net sales were as follows (in thousands and percent of total):
12
|
Three Months Ended |
|
||||||||||
|
September 27, 2026 |
|
September 28, 2025 |
|
||||||||
|
Net Sales |
|
|
% |
|
Net Sales |
|
|
% |
|
||
General Motors Company |
$ |
|
|
|
$ |
|
|
|
||||
Ford Motor Company |
|
|
|
|
|
|
|
|
||||
Stellantis |
|
|
|
|
|
|
|
|
||||
|
$ |
|
|
|
$ |
|
|
|
||||
|
September 27, 2026 |
|
June 28, 2026 |
|
||||||||
|
Receivables |
|
|
% |
|
Receivables |
|
|
% |
|
||
General Motors Company |
$ |
|
|
|
$ |
|
|
|
||||
Ford Motor Company |
|
|
|
|
|
|
|
|
||||
Stellantis |
|
|
|
|
|
|
|
|
||||
|
$ |
|
|
|
$ |
|
|
|
||||
NOTE 13. COMMITMENTS AND CONTINGENCIES
From time to time, the Company is party to various legal actions, administrative proceedings, and claims arising in the ordinary course of business, including matters related to alleged product defects and warranties, contract disputes, intellectual property, and employment issues. The Company recognizes accruals for such matters in accordance with U.S. GAAP when a loss is probable and reasonably estimable. While the outcome of these matters cannot be predicted with certainty, based on currently available information, management does not believe the ultimate resolution of these proceedings, individually or in the aggregate, will have a material adverse effect on the Company's financial position, results of operations, or cash flows.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Forward-Looking Statements
In this Quarterly Report on Form 10-Q for Strattec Security Corporation ("Strattec," "the Company," "we," "us," or "our"), statements that are not reported financial results or other historic information are "forward-looking statements." These forward-looking statements relate to, among other things, the Company's future financial position, business strategy, targets, projected sales, costs, income, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations. The use of words such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "should," "project," "plan," or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors, some of which are beyond the Company's control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.
The Company’s operations and financial performance are subject to certain risks and uncertainties, including:
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 Form 10-Q and the Company undertakes no obligation to update such forward-looking statements.
The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by, the consolidated condensed financial statements and related notes thereto included elsewhere in this Report and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended June 28, 2026.
14
Business Overview
Strattec is a global automotive access company that designs and delivers safe, secure, and highly engineered access solutions for the automotive and mobility industries. Built on generations of access and security engineering expertise, Strattec partners closely with OEMs to create differentiated, system-level access experiences for end consumers. Strattec’s portfolio spans the access journey from Permission, enabling secure vehicle entry through advanced mechanical and electronic systems; to Motion, delivering effortless, reliable powered access that enhances everyday usability; and through to Hold, providing precision-engineered latching solutions that give drivers confidence through proven strength, safety, and durability trusted by OEMs worldwide. As access becomes increasingly intelligent, connected, and central to vehicle experience, Strattec’s strategy is to expand its market share, further diversify its customers and geographic reach while becoming the most trusted access partner to drive long‑term growth across global automotive and mobility markets. While the Company serves major automotive OEMs globally, the majority of sales are to the three largest automobile original equipment manufacturers in North America.
Our strategic priority is to execute on a business transformation to strengthen the Company’s profitability and deliver sustainable sales growth. We expect to improve our business with upgraded systems and processes, modernization of our support functions, and increasing productivity and efficiencies in our manufacturing operations through automation and lean manufacturing. We believe this will result in an optimized cost structure and consistent cash generation through improved working capital velocity and efficient asset utilization. To drive organic growth, we will leverage our technical engineering expertise, market leading positions, and strong customer relationships to generate innovative solutions to capture more content on current platforms, win new platforms with current customers, gain new customers both domestically and abroad, and build opportunities in the broader transportation industry. The strength of our balance sheet also supports continued investments in process modernization, automation, and new product innovation, as well as the flexibility needed to navigate through industry cycles. It also allows for strategic acquisitions to diversify our customers and geographies, increase the scale of our operations, and enhance our product offerings.
Current Business Update
The North American automotive market remained challenging during the first quarter of fiscal 2027, reflecting lower vehicle production volumes and continued economic and trade uncertainty. Industry data indicates that North American automotive production volumes declined 3.8% compared with the prior-year period. Our net sales for the first quarter of fiscal 2027 were $147.2 million, a decrease of 3.4% compared with the prior-year period, generally consistent with the decline in industry production volumes. For the fiscal year, we continue to expect North American light vehicle production to decline approximately 2%, with production volumes of our primary customers expected to decline nearly 5%. Given the reduced level of new product launches and the long-cycle nature of our business, we are working closely with customers to create future organic growth through increased content on existing vehicle platforms, new platform awards and expansion of our customer base. Our near-term focus is on improving profitability on lower revenue. During the first quarter of fiscal 2027, we continued to take actions to improve our cost structure, including implementation of an additional restructuring program, as well as initiatives to improve supply chain performance. Our supply chain continues to be affected by elevated freight and commodity costs, industry-wide semiconductor shortages, and supplier quality and delivery challenges.
Our balance sheet remains an important strategic asset and provides flexibility to invest in our transformation and organic growth initiatives, return capital to shareholders and pursue strategic growth opportunities. Cash provided by operating activities was $10.8 million during the first quarter, and cash and cash equivalents were $111.8 million at September 27, 2026, with no borrowings outstanding under our revolving credit facilities. During the quarter, we repurchased $5.0 million of common stock under our share repurchase program and incurred costs related to business development activities intended to diversify our customer base and geographic reach, increase the scale of our operations, and enhance our product portfolio. We intend to maintain a disciplined approach to capital allocation as we invest in operational improvements and organic growth and evaluate opportunities to enhance long-term shareholder value.
15
Analysis of Results of Operations
Three months ended September 27, 2026, (first quarter fiscal 2027) compared with the three months ended September 28, 2025 (first quarter fiscal 2026)
The Company's consolidated results of operations were as follows (in thousands):
|
|
Three Months Ended |
|
|
Change |
|
||||||||||
|
|
September 27, 2026 |
|
|
September 28, 2025 |
|
|
$ |
|
|
% |
|
||||
Net sales |
|
$ |
147,197 |
|
|
$ |
152,399 |
|
|
$ |
(5,202 |
) |
|
|
-3 |
% |
Direct material costs |
|
|
80,936 |
|
|
|
83,888 |
|
|
|
(2,952 |
) |
|
|
-4 |
% |
Labor and overhead costs |
|
|
41,946 |
|
|
|
42,176 |
|
|
|
(230 |
) |
|
|
-1 |
% |
Cost of goods sold |
|
|
122,882 |
|
|
|
126,064 |
|
|
|
(3,182 |
) |
|
|
-3 |
% |
Gross profit |
|
|
24,315 |
|
|
|
26,335 |
|
|
|
(2,020 |
) |
|
|
-8 |
% |
Gross margin |
|
|
16.5 |
% |
|
|
17.3 |
% |
|
|
|
|
|
-80 |
bp |
|
Selling, administrative and engineering expenses |
|
|
17,892 |
|
|
|
15,888 |
|
|
|
2,004 |
|
|
|
13 |
% |
Income from operations |
|
|
6,423 |
|
|
|
10,447 |
|
|
|
(4,024 |
) |
|
|
-39 |
% |
Operating margin |
|
|
4.4 |
% |
|
|
6.9 |
% |
|
|
|
|
|
-250 |
bp |
|
Interest income |
|
|
989 |
|
|
|
877 |
|
|
|
112 |
|
|
|
13 |
% |
Interest expense |
|
|
(37 |
) |
|
|
(156 |
) |
|
|
119 |
|
|
|
-76 |
% |
Other expense, net |
|
|
(183 |
) |
|
|
(275 |
) |
|
|
92 |
|
|
|
-33 |
% |
Income before income taxes and non-controlling interest |
|
|
7,192 |
|
|
|
10,893 |
|
|
|
(3,701 |
) |
|
|
-34 |
% |
Income tax expense |
|
|
1,881 |
|
|
|
2,356 |
|
|
|
(475 |
) |
|
|
-20 |
% |
Net income |
|
|
5,311 |
|
|
|
8,537 |
|
|
|
(3,226 |
) |
|
|
-38 |
% |
Net income attributable to non-controlling interest |
|
|
478 |
|
|
|
8 |
|
|
|
470 |
|
|
N/M |
|
|
Net income attributable to Strattec |
|
$ |
4,833 |
|
|
$ |
8,529 |
|
|
$ |
(3,696 |
) |
|
|
-43 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per share attributable to Strattec: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
1.22 |
|
|
$ |
2.10 |
|
|
$ |
(0.88 |
) |
|
|
-42 |
% |
Diluted |
|
$ |
1.19 |
|
|
$ |
2.07 |
|
|
$ |
(0.87 |
) |
|
|
-42 |
% |
First quarter fiscal 2027 net sales totaled $147.2 million, a decrease of $5.2 million, or 3.4%, compared with the prior-year first quarter. The decrease primarily reflected a $6.2 million decrease in customer production volumes, partially offset by $1.0 million of net pricing benefit.
Gross profit was $24.3 million in the first quarter of fiscal 2027, compared with $26.3 million in the prior-year period. Gross margin was 16.5% of net sales, compared with 17.3% in the prior-year period. The decrease in gross profit primarily reflected the impact of lower production volumes and $1.4 million of unfavorable foreign currency effects, partially offset by favorable pricing.
Selling, administrative and engineering expenses were $17.9 million, or 12.2% of net sales, for the first quarter of fiscal 2027, compared with $15.9 million, or 10.4% of net sales, in the prior-year period. The $2.0 million increase was the result of $2.4 million of business development costs and $0.8 million of additional investments in talent and consultants, which were partially offset by $1.2 million of incremental engineering recoveries, compared with the prior year.
Interest income increased $0.1 million due to higher average cash and cash equivalent balances. Interest expense decreased $0.1 million due to the repayment of all borrowings under our revolving credit facilities in fiscal 2026.
Other expense, net was $0.2 million in the first quarter of fiscal 2027 and $0.3 million in the prior-year period.
The effective income tax rate was 26.2% and 21.6% for the first quarter of fiscal 2027 and 2026, respectively. The effective rate for both periods differs from the statutory rate because of the foreign rate differential, state income taxes, research and development tax credits, limitations on the utilization of foreign tax credits, non-deductible items and discrete income tax benefits associated with share-based payments. The effective tax rate for the first quarter of fiscal 2027 included a $0.4 million increase to reserves for uncertain tax positions.
As a result of the factors described above, net income attributable to Strattec was $4.8 million, or $1.19 per diluted share, in the first quarter of fiscal 2027, compared with $8.5 million, or $2.07 per diluted share, in the prior-year period.
16
Liquidity and Capital Resources
At September 27, 2026, we had $111.8 million of cash and cash equivalents, of which $3.8 million was held by our foreign subsidiaries and $108.0 million was held domestically. Excess cash is held in money market funds. The following table summarizes our cash flows provided by (used in) operating, investing and financing activities (in millions):
|
Three Months Ended |
|
|||||
|
September 27, 2026 |
|
|
September 28, 2025 |
|
||
Cash provided by operating activities |
$ |
10.8 |
|
|
$ |
11.3 |
|
Cash used in investing activities |
|
(1.2 |
) |
|
|
(1.5 |
) |
Cash used in financing activities |
|
(6.0 |
) |
|
|
(3.9 |
) |
Effect of exchange rate changes on cash |
|
(0.1 |
) |
|
|
- |
|
Net increase in cash and cash equivalents |
$ |
3.5 |
|
|
$ |
5.9 |
|
Cash provided by operating activities was $10.8 million for the first quarter of fiscal 2027, compared with $11.3 million in the prior-year period. Capital expenditures, primarily to support customer programs, were $1.2 million during the first quarter of fiscal 2027 compared with $1.5 million in the prior-year period. Operating cash flow funded $5.0 million of common-stock repurchases, and $1.0 million of taxes paid in connection with vested share-based awards. Prior-year financing cash flows included $3.0 million of repayments under credit facilities and $0.9 million of taxes paid in connection with vested share-based awards.
At September 27, 2026, no borrowings were outstanding under the $40.0 million Strattec Credit Facility or the $10.0 million joint venture revolving credit agreement. The Company was in compliance with all covenants under its credit facilities at September 27, 2026.
We believe that the revolving credit lines, combined with our existing cash and anticipated operating cash flows, will be adequate to meet operating and capital expenditure funding requirements. In the short term, cash generated from operations will be reinvested in our business to fund our transformational efforts, organic and strategic growth initiatives, and opportunistically repurchase shares.
Primary Working Capital Management
We use primary working capital as a percentage of sales (PWC %) as a key metric of working capital management. We define this metric as the sum of net accounts receivable and net inventory less accounts payable, divided by the past three months sales annualized. The following table shows a comparison of primary working capital (in millions):
|
September 27, |
|
|
PWC % |
|
June 28, |
|
|
PWC % |
||
Accounts Receivable, net |
$ |
95.1 |
|
|
16% |
|
$ |
99.1 |
|
|
16% |
Inventory, net |
$ |
64.9 |
|
|
11% |
|
$ |
64.3 |
|
|
11% |
Accounts payable |
$ |
(55.1 |
) |
|
(9%) |
|
$ |
(55.0 |
) |
|
(9%) |
Net primary working capital |
$ |
104.9 |
|
|
18% |
|
$ |
108.4 |
|
|
18% |
17
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the Company’s market risk exposures from those described under Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 28, 2026.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of such period, our disclosure controls and procedures were effective at reaching a level of reasonable assurance. It should be noted that in designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. We have designed our disclosure controls and procedures to reach a level of reasonable assurance of achieving the desired control objectives.
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
18
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the normal course of business, we may be involved in various legal proceedings from time to time. We do not believe we are currently involved in any claim or action the ultimate disposition of which would have a material adverse effect on our financial statements.
ITEM 1A. RISK FACTORS
An investment in our Common Stock involves risks. Before making an investment decision, you should carefully consider all of the information in this Quarterly Report, including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Condensed Consolidated Financial Statements and related notes. In addition, you should carefully consider the risks and uncertainties described in the section entitled “Risk Factors” in our Annual Report. If any of the identified risks are realized, our business, financial condition and operating results could be materially and adversely affected. In that case, the trading price of our Common Stock may decline. In addition, other risks of which we are currently unaware, or which we currently do not view as material, could have a material adverse effect on our business, financial condition and operating results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On May 28, 2026, the Board of Directors authorized a new share repurchase program under which the Company may repurchase up to $40.0 million of its outstanding common stock. In connection with the authorization of the new program, we terminated our previous share repurchase program. The new share repurchase program has no fixed expiration date, does not obligate us to acquire any specific amount of common stock, and may be modified, suspended or terminated at any time at the discretion of the Board of Directors. The following table provides information with respect to the purchases by the Company of Common Stock under this authorization during the three months ended September 27, 2026 (in millions, except share and per share amounts):
|
|
Total Number of Shares Purchased |
|
|
Average Price Paid per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Programs |
|
|
Maximum Approx. Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs |
|
||||
6/29/2026 - 7/26/2026 |
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
40.0 |
|
7/27/2026 - 8/30/2026 |
|
|
21,652 |
|
|
$ |
72.88 |
|
|
|
21,652 |
|
|
$ |
38.4 |
|
8/31/2026 - 9/27/2026 |
|
|
46,252 |
|
|
$ |
73.41 |
|
|
|
46,252 |
|
|
$ |
35.0 |
|
|
|
|
67,904 |
|
|
$ |
73.24 |
|
|
|
67,904 |
|
|
$ |
35.0 |
|
19
ITEM 5. OTHER INFORMATION
During the period ended September 27, 2026, no director or officer of the Company
ITEM 6. EXHIBITS
Exhibit |
|
|
|
If Incorporated by Reference, Documents with Which Exhibit was Previously Filed with SEC |
10.1 |
|
Employment Agreement between the Company and James P. Denis III effective December 1, 2025 |
|
Filed herewith |
10.2 |
|
Non-Employee Director Compensation Program for Fiscal Year 2027 |
|
Filed herewith |
31.1 |
|
Rule 13a-14(a) Certification of Jennifer L. Slater, Chief Executive Officer |
|
Filed herewith |
31.2 |
|
Rule 13a-14(a) Certification of Matthew Pauli, Chief Financial Officer |
|
Filed herewith |
32 |
|
|
This certification is not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. |
|
101 |
|
Inline XBRL documents (the Inline XBRL instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
|
|
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
|
|
20
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
Strattec Security Corporation (Registrant) |
||
|
|
|
|
Date: October 30, 2026 |
By: |
|
/s/ Matthew Pauli |
|
|
|
Matthew Pauli |
|
|
|
Senior Vice President, |
|
|
|
Chief Financial Officer and Treasurer |
|
|
|
(Principal Financial and Accounting Officer) |
Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made as of the 13th day of November, 2025, by and between Strattec Security Corporation, a Wisconsin corporation (the “Company”), and James Denis (the “Employee”).
RECITAL
The Company desires to employ the Employee and the Employee is willing to make the Employee’s services available to the Company on the terms and conditions set forth below.
AGREEMENTS
In consideration of the premises and the mutual agreements which follow, the parties agree as follows:
(i) managing the Employee’s passive personal investments, or (ii) subject to the prior written consent of the Company, participation in community, civic, charitable or other similar activities which do not unreasonably interfere with the Employee’s responsibilities hereunder or create a business or fiduciary conflict.
1
Exhibit 10.1
2
Exhibit 10.1
to the contrary, the Company may amend, modify, discontinue or terminate at any time any employee benefit plan, policy, or program described in this Section 5(a), now existing or hereafter adopted, to the extent permitted by the terms of such plan, policy, or program and will not be required to compensate the Employee for such amendment, modification, discontinuance or termination. To the extent there is any conflict between the terms of this Agreement and the applicable employee benefit plan, policy, or program document, the terms of the applicable employee benefit plan, policy, or program document shall govern.
3
Exhibit 10.1
for purposes of this Agreement. Termination of the Employment Period and the Employee’s employment hereunder due to the Employee’s Disability shall not change the Employee’s rights to receive benefits, if any, pursuant to any disability plan or policy then maintained by the Company.
4
Exhibit 10.1
Company for Good Reason (as defined below). If the Employee’s employment is terminated by the Company for any reason other than the reasons set forth in Sections 6(a), (b) or (c) or the Employee resigns and terminates the Employee’s employment for Good Reason, the Employee will be entitled to the following payments and benefits:
(I) affect all Senior Management in substantially the same proportions as approved by the Board or the Compensation Committee, and (II) is no greater than 15% of the Employee’s then-current Base Salary and Target Annual Bonus in the aggregate;
Notwithstanding the foregoing, Good Reason shall not be deemed to exist unless (x) the Employee gives the Company written notice within 90 days after the Employee first has knowledge of the occurrence of the event which the Employee believes constitutes the basis for Good Reason, specifying the particular act or failure to act which the Employee believes constitutes the basis for Good Reason, (y) the Company fails to cure such act or failure to act within 60 days after receipt of such notice, and (z) the Employee terminates the Employee’s employment within 60 days after the end of the period specified in clause (y).
5
Exhibit 10.1
shall not be entitled to any bonus, including any Annual Bonus, that has not been paid as of the date of the Employee’s termination of employment.
(I) the Employee’s Base Salary in effect on the date of the Employee’s termination of employment, plus (II) an amount equal to the average of the Annual Bonuses paid to the Employee for the two completed fiscal years immediately preceding the date of the Employee's termination of employment or, if less than two completed fiscal years have occurred during the Employment Period, the current target Annual Bonus amount. Such payment shall be made on the first business day following the date that is 60 days after the date of the Employee’s termination of employment;
(II) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company,
6
Exhibit 10.1
or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (I), (II) and (III) of subsection (C) of this Section 6(f)(ii); or
7
Exhibit 10.1
entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by any Person (excluding any employee benefit plan (or related trust) of the Company or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities prior to the sale or disposition, and (c) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of the Company or were elected, appointed or nominated by the Board.
All references in this Section 6(f)(ii) to common stock shall include, to the extent applicable, references to equity interests, and all references in this Section 6(f)(ii) to directors or board of directors shall include, to the extent applicable, references to any other applicable management body of a person.
8
Exhibit 10.1
adequately compensate the Employee for agreeing to such restrictions. The Employee acknowledges that the Employee could continue to actively pursue the Employee’s career and earn sufficient compensation in the same or similar business without breaching any of the restrictions contained in this Agreement. For purposes of this Section 7, the Company shall include any Affiliates.
(A) ”Customer” means any customer of the Company or any of its Affiliates with whom the Employee has had contact in connection with the performance of the Employee’s services under this Agreement in the five year period preceding the effective date of the Employee’s termination of employment for any reason and who has purchased the products or services offered by the Company or its Affiliates during the 24-month period preceding the effective date of the Employee’s termination of employment for any reason; and (B) ”Competitive Business” means a business which is involved in designing, developing, manufacturing, or marketing mechanical, electro-mechanical, and/or electronic security and access control products in the global motor vehicle industry.
9
Exhibit 10.1
10
Exhibit 10.1
covenant will be inadequate. Therefore, if the Employee engages in any act in violation of the provisions of Section 7, 8, 9, or 10, the Employee agrees that the Company shall be entitled, in addition to specific performance and such other remedies and damages as may be available to it by law or under this Agreement, to injunctive relief to enforce the provisions of Sections 7, 8, 9, and 10.
11
Exhibit 10.1
Employee is contractually or otherwise legally prohibited from providing to the Company or any of its Affiliates.
12
Exhibit 10.1
13
Exhibit 10.1
payment payable under the Agreement shall be deemed to be a “separate payment” within the meaning of Section 409A of the Code.
[Remainder of page intentionally left blank; signature page follows]
14
Exhibit 10.1
IN WITNESS WHEREOF, the parties have executed or caused this Agreement to be executed as of the day, month and year first above written.
EMPLOYEE
/s/ James Denis
James Denis
Strattec Security Corporation
By: /s/ Jennifer L. Slater
Jennifer L. Slater
President and Chief Executive Officer
15
Exhibit 10.2
STRATTEC SECURITY CORPORATION
Non-Employee Director Compensation Program
Fiscal Year 2027
Each non-employee director of Strattec Security Corporation (the “Corporation”) shall receive with respect to fiscal year 2027 service an annual retainer fee of $190,000, payable $95,000 in cash, quarterly in arrears, and $95,000 in restricted stock or restricted stock units, generally to be awarded on the day of the annual meeting of shareholders during the fiscal year, subject to vesting on the date of the following year’s annual meeting of shareholders at the completion of the non-employee directors’ elected terms.
Non-employee directors with significant additional duties shall receive the following additional annual retainers: (i) $75,000 for the Chair of the Board of Directors; (ii) $25,000 for the Chair of the Audit Committee, and (iii) $15,000 for the Chairs of the Compensation and Nominating and Corporate Governance Committees.
1
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jennifer L. Slater, certify that:
Date: October 30, 2026
/s/ Jennifer L. Slater
Jennifer L. Slater,
Chief Executive Officer
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Matthew Pauli, certify that:
Date: October 30, 2026
/s/ Matthew Pauli
Matthew Pauli,
Chief Financial Officer
Exhibit 32
Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 1350
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Strattec Security Corporation (the "Company") certifies that the Quarterly Report on Form 10-Q of the Company for the quarter ended September 27, 2026, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: October 30, 2026 |
|
/s/ Jennifer L. Slater |
|
|
Jennifer L. Slater, |
|
|
Chief Executive Officer |
|
|
|
|
|
|
Dated: October 30, 2026 |
|
/s/ Matthew Pauli |
|
|
Matthew Pauli, |
|
|
Chief Financial Officer |
This certification is made solely for purpose of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose.