8-K
STRATTEC SECURITY CORP (STRT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 8, 2025
STRATTEC SECURITY CORPORATION
(Exact Name of Registrant as Specified in Charter)
| Wisconsin | 0-25150 | 39-1804239 |
|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission<br><br>File Number) | (I.R.S. Employer<br><br>Identification No.) |
3333 West Good Hope Road, Milwaukee, Wisconsin 53209
(Address of Principal Executive Offices, and Zip Code)
(414)
247-3333
Registrant’s Telephone Number, Including Area Code
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| | Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| | Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $.01 par value | STRT | The Nasdaq Global Stock Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Section 2 – Financial Information
Item 2.02. Results of Operations and Financial Condition.
On May 8, 2025, STRATTEC SECURITY CORPORATION (the “Company”) issued a press release (the “Press Release”) announcing results for the fiscal third quarter ended March 30, 2024. A copy of the Press Release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
Also on May 8, 2025, the Company first provided investors with a supplemental presentation regarding fiscal third quarter earnings and other current financial information, attached as Exhibit 99.2 hereto and incorporated by reference herein (the “Investor Presentation”).
Pursuant to General Instruction B.2 of Current Report on Form 8-K, the information in this Item 2.02 and Exhibits 99.1 and 99.2 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Furthermore, the information in this Item 2.02 and Exhibits 99.1 and 99.2 shall not be deemed to be incorporated by reference into the filings of STRATTEC under the Securities Act of 1933, as amended (the “Securities Act”), except as may be expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosure.
As described in “Item 2.02 Results of Operations and Financial Condition” above, on May 8, 2025, the Company issued a Press Release announcing earnings results for the fiscal third quarter ended March 30, 2024 and an Investor Presentation containing supplemental fiscal first quarter earnings and other current financial information. The Press Release and Investor Presentation issued in connection with the announcement are attached as Exhibits 99.1 and 99.2 to this Current Report on Form 8-K.
Pursuant to General Instruction B.2 of Current Report on Form 8-K, the information in this Item 7.01 and Exhibits 99.1 and 99.2 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Furthermore, the information in this Item 7.01 and Exhibits 99.1 and 99.2 shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act, except as may be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description |
|---|---|
| 99.1 | Press Release of STRATTEC SECURITY CORPORATION, issued May 8, 2025 |
| 99.2 | Investor Presentation |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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 hereunto duly authorized.
STRATTEC SECURITY CORPORATION
By: /s/ Matthew Pauli
Matthew Pauli, Senior Vice President and
Chief Financial Officer
Date: May 8, 2025
EX-99.1
STRATTEC SECURITY CORPORATION Generated $20.7 million in Cash from Operations in Fiscal 2025 Third Quarter
May 8, 2025
Page 1
Exhibit 99.1
News Release
3333 West Good Hope Rd. • Milwaukee, Wisconsin 53209
IMMEDIATE RELEASE
STRATTEC SECURITY CORPORATION Generated $20.7 million in Cash from Operations in Fiscal 2025 Third Quarter
- Strong cash generation of $20.7 million in fiscal 2025 third quarter, the result of cash earnings and improved working capital velocity
- Healthy balance sheet with limited debt and $62 million of cash provides safeguard against near term tariff turmoil and tempering market conditions
- Net income attributable to STRATTEC Security Corporation was $5.4 million, or $1.32 per diluted share, compared with $1.5 million, or $0.37 per diluted share, in the year ago quarter
- Delivered adjusted EBITDA1 of $12.9 million, or 8.9% of sales, compared with $6.2 million, or 4.4%, in prior-year period
- Further advanced cost reduction efforts with restructuring of Mexico operations in March; bringing total annualized restructuring savings to approximately $5 million including changes in Milwaukee operations in January
MILWAUKEE, WI, May 8, 2025 – STRATTEC SECURITY CORPORATION (Nasdaq: STRT) (“Company”), a leading provider of smart vehicle access, security and authorization solutions for the global automotive industry, reported financial results for its third quarter of fiscal year 2025, which ended March 30, 2025.
Jennifer Slater, President and CEO of STRATTEC, said, “We delivered another strong quarter as the actions we are taking to transform STRATTEC into a more predictable, higher performing business are flowing through to our bottom line. During the quarter, we captured margin accretive pricing, benefited from both increased and higher value content on winning platforms and improved operational performance.”
Addressing the evolving state of global trade, Ms. Slater added, “The tariff situation has created a rapidly changing environment with significant unknowns. Nevertheless, given what we know today with the USMCA exemption, we estimate that the annual impact of tariffs is approximately $9 million to $12 million of incremental costs, prior to any mitigation efforts. We have been moving quickly to implement tariff mitigation actions to reduce the impact on profit margins including shifting sources within our supply chain, passing through costs to customers and changing logistics processes with customers.”
“We have been making measurable change within the organization to drive cost savings which in the short term will help offset these tariff costs as we work through mitigation actions. In the long term, we believe these actions will make STRATTEC a better business. In total, we have reduced our headcount by 12% in the first nine months of fiscal 2025, including recent restructuring actions we have taken in Mexico. We believe there is additional potential for cost savings through modernization and rethinking our manufacturing and assembly processes. We are focused on instilling a culture of operational excellence to create an enterprise that can deliver stronger earnings power,” Ms. Slater concluded.
STRATTEC SECURITY CORPORATION Generated $20.7 million in Cash from Operations in Fiscal 2025 Third Quarter
May 8, 2025
Page 2
FY 2025 Third Quarter Financial Summary (compared with prior-year period, except where otherwise noted)
Net sales were $144.1 million, an increase of $3.3 million, or 2.4%. Sales growth was driven by $2.5 million of price increases, $2.2 million in favorable product mix, and $1.6 million in net new program launches. This more than offset a $3.0 million reduction in sales volumes for existing platforms.
Gross profit increased $8.4 million to $23.1 million, while gross margin expanded 560 basis points. The improvement was due in part to $4.4 million, or 305 basis points, of favorable foreign currency exchange. The remainder of the increase was the result of pricing actions and materials and labor cost improvements which more than offset the $0.8 million increase in tariff expenses as a result of recent changes in U.S. tariff policy.
Engineering, selling and administrative (“ES&A”) expenses increased $3.3 million, or 25.9%, to $16.0 million. The increase reflected continued investments in the business, $1.2 million of higher incentive and bonus compensation as a result of better than expected performance and $0.8 million in restructuring charges.
A slight increase in interest expense was more than offset by the $0.4 million increase in interest income on higher cash balances and the $0.2 million improvement in other expense related to foreign currency forward contracts.
Net income attributable to STRATTEC was $5.4 million, or $1.32 per diluted share, compared with $1.5 million, or $0.37 per diluted share, in the prior-year period. On an adjusted basis, net income attributable to STRATTEC1 grew 315% to $6.1 million. Adjusted diluted earnings per share1 increased $1.13, or 305%, to $1.50. Adjusted EBITDA1 for the quarter was $12.9 million compared with $6.2 million in the prior-year period. Expanded gross margin on higher sales more than offset investments in ES&A which led to adjusted EBITDA margin of 8.9%, a 450 basis point improvement over the third quarter of fiscal 2024.
Restructuring and Business Transformation Progress
During the third quarter of fiscal 2025, the Company made continued progress on improving its cost structure, by completing the elimination of a production shift in its Milwaukee operations and implementing a restructuring action in its operations in Mexico. The cash cost of the Mexico restructuring actions was $1.6 million, which will result in expected annual savings of $4.5 million. Collectively, restructuring activities implemented in fiscal 2025 are now expected to generate approximately $5 million of annual cost reductions, with savings amounts expected to be phased in and fully realized by the first quarter of fiscal 2026.
Balance Sheet and Liquidity
Increased cash earnings and improved working capital management delivered $20.7 million in cash from operations in the third quarter of fiscal 2025, compared with a use of cash in the prior-year period. Cash from operations for the nine-month period were $41.5 million.
At March 30, 2025, the Company had $62.1 million in cash and cash equivalents, up $19.5 million from the end of the second quarter of fiscal 2025. The Company had no borrowings outstanding under its $40 million revolving credit agreement, while our joint venture had $13.0 million outstanding under its $20 million revolving credit agreement.
Third Quarter Fiscal Year 2025 Webcast and Conference Call
The Company will host a conference call and webcast tomorrow, Friday, May 9, 2025, at 9:00 am Eastern Time to review the financial and operating results for the period ended March 30, 2025, and provide an update on its transformation progress. A question-and-answer session will follow.
You can access the call by phoning (201) 689-8470 or find the webcast and accompanying slide presentation at investors.strattec.com.
1 Refer to “Use of Non-GAAP Financial Metrics and Additional Financial Information” as well as accompanying reconciliations to GAAP
STRATTEC SECURITY CORPORATION Generated $20.7 million in Cash from Operations in Fiscal 2025 Third Quarter
May 8, 2025
Page 3
A telephonic replay will be available from 12:00 p.m. ET on the day of the call through Friday, May 23, 2025. To listen to the archived call, dial (412) 317-6671 and enter a replay PIN 13752650. The webcast replay will be available on the Investor Relations section of the Company’s website where a transcript will be posted once available.
About STRATTEC
STRATTEC is a leading global provider of advanced automotive access, security & authorization and select user interface solutions. With a history spanning over 110 years, STRATTEC has consistently been at the forefront of innovation in vehicle security, transitioning from mechanical to integrated electro-mechanical systems. The Company serves a broad range of customers, including leading automotive OEMs, offering power access solutions and advanced security systems that include door handles, lift gates, latches, and key fobs.
For more information on STRATTEC and its solutions, visit www.strattec.com.
Safe Harbor Statement Certain statements contained in this release contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “intend,” “may,” “planned,” “potential,” “should,” “will,” and “would.” Such forward-looking statements are inherently subject to many uncertainties in the Company’s operations and business environment. These uncertainties include general economic conditions, in particular, relating to the automotive industry, consumer demand for the Company’s and its customers’ products, competitive and technological developments, customer purchasing actions, changes in warranty provisions and customer product recall policies, work stoppages at the Company or at the location of its key customers as a result of labor disputes, foreign currency fluctuations, uncertainties stemming from U.S. trade policies, tariffs and reactions to the same from foreign countries, matters adversely impacting the timing and availability of component parts and raw materials needed for the production of the Company’s products and the products of its customers and fluctuations in costs of operation. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances occurring after the date of this release. In addition, such uncertainties and other operational matters are discussed further in the Company’s quarterly and annual filings with the Securities and Exchange Commission.
Use of Non-GAAP Financial Metrics and Additional Financial Information In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, STRATTEC provides Adjusted Non-GAAP information as additional information for its operating results. References to Adjusted Non-GAAP information are to non-GAAP financial measures. These measures are not required by, in accordance with, or an alternative for, GAAP and may be different from similarly titled non-GAAP financial measures used by other companies. STRATTEC’s management uses these measures to make strategic decisions, establish budget plans and forecasts, identify trends affecting STRATTEC’s business, and evaluate performance. Management believes that providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, will help investors evaluate STRATTEC’s core operating and financial performance and business trends consistent with how management evaluates such performance and trends. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.
Contact:
| Deborah K. Pawlowski |
|---|
| Alliance Advisors IR |
| Phone: 716-843-3908 |
| Email: dpawlowski@allianceadvisors.com |
FINANCIAL TABLES FOLLOW
STRATTEC SECURITY CORPORATION Generated $20.7 million in Cash from Operations in Fiscal 2025 Third Quarter
May 8, 2025
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| STRATTEC SECURITY CORPORATION | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Condensed Results of Operations | ||||||||||||
| (In Thousands, except per share amounts) | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| March 30,<br>2025 | March 31,<br>2024 | March 30,<br>2025 | March 31,<br>2024 | |||||||||
| Net sales | $ | 144,082 | $ | 140,773 | $ | 413,053 | $ | 394,711 | ||||
| Cost of goods sold | 120,977 | 126,089 | 353,876 | 347,810 | ||||||||
| Gross profit | 23,105 | 14,684 | 59,177 | 46,901 | ||||||||
| Gross margin | 16.0 | % | 10.4 | % | 14.3 | % | 11.9 | % | ||||
| Engineering, selling and administrative expenses | 16,020 | 12,725 | 44,895 | 38,778 | ||||||||
| Income from operations | 7,085 | 1,959 | 14,282 | 8,123 | ||||||||
| Operating margin | 4.9 | % | 1.4 | % | 3.5 | % | 2.1 | % | ||||
| Interest expense | (243 | ) | (222 | ) | (795 | ) | (661 | ) | ||||
| Investment income | 529 | 143 | 1,286 | 337 | ||||||||
| Other (expense) income, net | (16 | ) | (208 | ) | (369 | ) | 759 | |||||
| Income before provision for<br> income taxes and non-controlling interest | 7,355 | 1,672 | 14,404 | 8,558 | ||||||||
| Provision for income taxes | 1,644 | 546 | 3,547 | 2,197 | ||||||||
| Net income | 5,711 | 1,126 | 10,857 | 6,361 | ||||||||
| Net income (loss) attributable to non- <br> controlling interest | 315 | (380 | ) | 439 | (332 | ) | ||||||
| Net income attributable to STRATTEC<br> SECURITY CORPORATION | $ | 5,396 | $ | 1,506 | $ | 10,418 | $ | 6,693 | ||||
| Earnings per share attributable to<br> STRATTEC SECURITY CORPORATION: | ||||||||||||
| Basic | $ | 1.34 | $ | 0.38 | $ | 2.59 | $ | 1.69 | ||||
| Diluted | $ | 1.32 | $ | 0.37 | $ | 2.56 | $ | 1.67 | ||||
| Weighted Average shares outstanding: | ||||||||||||
| Basic | 4,039 | 3,988 | 4,026 | 3,971 | ||||||||
| Diluted | 4,085 | 4,017 | 4,067 | 3,996 |
STRATTEC SECURITY CORPORATION Generated $20.7 million in Cash from Operations in Fiscal 2025 Third Quarter
May 8, 2025
Page 5
| STRATTEC SECURITY CORPORATION | |||||
|---|---|---|---|---|---|
| Condensed Balance Sheet Data | |||||
| (In Thousands, except share amounts) | |||||
| (Unaudited) | |||||
| June 30, <br>2024 | |||||
| ASSETS | |||||
| Current Assets: | |||||
| Cash and cash equivalents | 62,106 | $ | 25,410 | ||
| Receivables, net | 109,160 | 99,297 | |||
| Inventories: | |||||
| Finished products | 14,563 | 19,833 | |||
| Work in process | 12,228 | 15,461 | |||
| Purchased materials | 48,800 | 46,355 | |||
| Inventories, net | 75,591 | 81,649 | |||
| Pre-production costs | 9,740 | 22,173 | |||
| Value-added tax recoverable | 22,342 | 19,684 | |||
| Other current assets | 8,276 | 5,601 | |||
| Total current assets | 287,215 | 253,814 | |||
| Deferred income taxes | 17,084 | 17,593 | |||
| Other long-term assets | 5,277 | 6,698 | |||
| Net property, plant and equipment | 77,816 | 86,184 | |||
| 387,392 | $ | 364,289 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||
| Current Liabilities: | |||||
| Accounts payable | 72,582 | $ | 54,911 | ||
| Accrued Liabilities: | |||||
| Payroll and benefits | 19,431 | 28,953 | |||
| Value-added tax payable | 10,844 | 9,970 | |||
| Environmental | 1,390 | 1,390 | |||
| Warranty | 10,745 | 10,695 | |||
| Other current liabilities | 8,312 | 12,369 | |||
| Total current liabilities | 123,304 | 118,288 | |||
| Borrowings under credit facilities | 13,000 | 13,000 | |||
| Postemployment obligations | 12,076 | 2,429 | |||
| Other long-term liabilities | 4,411 | 4,957 | |||
| Shareholders’ Equity: | |||||
| Common stock, authorized 18,000,000 shares, .01 par value, 7,635,883 issued shares at March 30, 2025 and 7,586,920 issued shares at June 30, 2024 | 76 | 76 | |||
| Capital in excess of par value | 102,888 | 101,024 | |||
| Retained earnings | 261,030 | 250,612 | |||
| Accumulated other comprehensive loss | (17,836 | ) | (15,689 | ) | |
| Less: treasury stock, at cost (3,596,918 shares at March 30, 2025 and 3,598,126 shares at June 30, 2024) | (135,459 | ) | (135,478 | ) | |
| Total STRATTEC SECURITY CORPORATION shareholders’ equity | 210,699 | 200,545 | |||
| Non-controlling interest | 23,902 | 25,070 | |||
| Total shareholders’ equity | 234,601 | 225,615 | |||
| 387,392 | $ | 364,289 |
All values are in US Dollars.
STRATTEC SECURITY CORPORATION Generated $20.7 million in Cash from Operations in Fiscal 2025 Third Quarter
May 8, 2025
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STRATTEC SECURITY CORPORATION Generated $20.7 million in Cash from Operations in Fiscal 2025 Third Quarter
May 8, 2025
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| STRATTEC SECURITY CORPORATION | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Condensed Cash Flow Statement Data | ||||||||||||
| (In Thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| March 30,<br>2025 | March 31, <br>2024 | March 30,<br>2025 | March 31, <br>2024 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net income | $ | 5,711 | $ | 1,126 | $ | 10,857 | $ | 6,361 | ||||
| Adjustments to reconcile net income to net cash <br> provided by (used in) operating activities: | ||||||||||||
| Depreciation | 3,746 | 4,059 | 10,952 | 12,774 | ||||||||
| Foreign currency transaction loss (gain) | 141 | 475 | (1,052 | ) | 126 | |||||||
| Unrealized (gain) loss on peso forward<br> contracts | (705 | ) | 222 | 231 | (604 | ) | ||||||
| Stock-based compensation expense | 760 | 240 | 1,839 | 1,224 | ||||||||
| Loss on settlement of postemployment obligation | — | — | 283 | — | ||||||||
| Change in operating assets and liabilities: | ||||||||||||
| Receivables | (17,616 | ) | (26,685 | ) | (10,237 | ) | (7,507 | ) | ||||
| Inventories | 5,920 | 10,827 | 6,058 | (1,015 | ) | |||||||
| Prepaid and other assets | (1,850 | ) | (4,494 | ) | 5,994 | (16,898 | ) | |||||
| Accounts payable | 20,720 | 9,339 | 16,730 | (7,102 | ) | |||||||
| Accrued liabilities | 3,632 | 4,337 | (948 | ) | 4,747 | |||||||
| Other, net | 261 | 245 | 794 | 671 | ||||||||
| Net cash provided by (used in) operating activities | 20,720 | (309 | ) | 41,501 | (7,223 | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
| Proceeds from sale of interest in joint ventures | — | — | — | 2,000 | ||||||||
| Purchase of property, plant and equipment | (1,170 | ) | (1,672 | ) | (4,160 | ) | (6,065 | ) | ||||
| Net cash used in investing activities | (1,170 | ) | (1,672 | ) | (4,160 | ) | (4,065 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Borrowings under credit facilities | — | — | 3,000 | 2,000 | ||||||||
| Repayment of borrowings under credit facilities | — | — | (3,000 | ) | (2,000 | ) | ||||||
| Employee stock purchases | 16 | 18 | 44 | 55 | ||||||||
| Net cash provided by financing activities | 16 | 18 | 44 | 55 | ||||||||
| Foreign currency impact on cash | (85 | ) | (18 | ) | (689 | ) | 256 | |||||
| NET INCREASE (DECREASE) IN CASH AND CASH <br> EQUIVALENTS | 19,481 | (1,981 | ) | 36,696 | (10,977 | ) | ||||||
| CASH AND CASH EQUIVALENTS | ||||||||||||
| Beginning of period | 42,625 | 11,575 | 25,410 | 20,571 | ||||||||
| End of period | $ | 62,106 | $ | 9,594 | $ | 62,106 | $ | 9,594 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW <br> INFORMATION: | ||||||||||||
| Cash paid during the period for: | ||||||||||||
| Income taxes | $ | 596 | $ | 1,731 | $ | 9,135 | $ | 3,177 | ||||
| Interest | $ | 172 | $ | 219 | $ | 731 | $ | 659 | ||||
| Non-cash investing activities: |
STRATTEC SECURITY CORPORATION Generated $20.7 million in Cash from Operations in Fiscal 2025 Third Quarter
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| Change in capital expenditures in accounts <br> payable | $ | 1,176 | $ | (89 | ) | $ | 726 | $ | (264 | ) |
|---|
STRATTEC SECURITY CORPORATION Generated $20.7 million in Cash from Operations in Fiscal 2025 Third Quarter
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| STRATTEC SECURITY CORPORATION ("STRATTEC") | |||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Reconciliation of GAAP to Non-GAAP Financial Measures | |||||||||||||||||||||||||||||
| (in thousands, except per share amounts) | |||||||||||||||||||||||||||||
| Fiscal 2024 | Fiscal 2025 | ||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Total | Q1 | Q2 | Q3 | Q4 | Total | ||||||||||||||||||||
| ADJUSTED NET SALES: | |||||||||||||||||||||||||||||
| Net Sales (GAAP) | 135,406 | 118,532 | 140,773 | 143,055 | $ | 537,766 | 139,052 | 129,919 | 144,082 | - | $ | 413,053 | |||||||||||||||||
| Adjustments: | - | ||||||||||||||||||||||||||||
| Retroactive FY23 one-time pricing recovery | (7,950 | ) | (1,551 | ) | (397 | ) | 175 | (9,723 | ) | - | - | - | - | - | |||||||||||||||
| Adjusted Sales (Non-GAAP) | 127,456 | 116,981 | 140,376 | 143,230 | 528,043 | 139,052 | 129,919 | 144,082 | - | 413,053 | |||||||||||||||||||
| ADJUSTED EBITDA: | |||||||||||||||||||||||||||||
| Net income attributable to STRATTEC (GAAP) | $ | 4,165 | $ | 1,022 | $ | 1,506 | $ | 9,620 | $ | 16,313 | $ | 3,703 | $ | 1,319 | $ | 5,396 | $ | - | $ | 10,418 | |||||||||
| Net income (loss) attributable to non-controlling interest | 290 | (242 | ) | (380 | ) | 447 | 115 | 45 | 79 | 315 | - | 439 | |||||||||||||||||
| Provision for income tax | 1,387 | 264 | 546 | 1,578 | 3,775 | 1,498 | 405 | 1,644 | - | 3,547 | |||||||||||||||||||
| Other (income) expense, net | 131 | (1,098 | ) | 208 | (1,958 | ) | (2,717 | ) | (129 | ) | 482 | 16 | - | 369 | |||||||||||||||
| Investment and interest income | (87 | ) | (107 | ) | (143 | ) | (235 | ) | (572 | ) | (349 | ) | (408 | ) | (529 | ) | - | (1,286 | ) | ||||||||||
| Interest expense | 220 | 219 | 222 | 239 | 900 | 295 | 257 | 243 | - | 795 | |||||||||||||||||||
| Income from operations | 6,106 | 58 | 1,959 | 9,691 | 17,814 | 5,063 | 2,134 | 7,085 | - | 14,282 | |||||||||||||||||||
| Adjustments: |
STRATTEC SECURITY CORPORATION Generated $20.7 million in Cash from Operations in Fiscal 2025 Third Quarter
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| Depreciation | 4,385 | 4,330 | 4,059 | 3,773 | $ | 16,547 | 3,662 | 3,544 | 3,746 | - | $ | 10,952 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Non-cash stock-based compensation | 505 | 479 | 240 | 243 | 1,467 | 188 | 891 | 760 | - | 1,839 | |||||||||||||||||||
| Restructuring and similar charges | - | - | - | - | - | - | 265 | 809 | - | 1,074 | |||||||||||||||||||
| Retroactive FY23 one-time pricing recovery, net | (7,078 | ) | (641 | ) | (298 | ) | 24 | (7,993 | ) | - | - | - | - | - | |||||||||||||||
| Executive transition costs | - | 774 | 211 | 73 | 1,058 | 941 | 921 | 214 | - | 2,076 | |||||||||||||||||||
| Business transformation costs | - | - | - | - | - | 74 | 215 | 259 | - | 548 | |||||||||||||||||||
| (2,188 | ) | 4,942 | 4,212 | 4,113 | 11,079 | 4,865 | 5,836 | 5,788 | - | 16,489 | |||||||||||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 3,918 | $ | 5,000 | $ | 6,171 | $ | 13,804 | $ | 28,893 | $ | 9,928 | $ | 7,970 | $ | 12,873 | $ | - | $ | 30,771 | |||||||||
| Adjusted EBITDA as a % of Adjusted Net Sales | 3.1 | % | 4.3 | % | 4.4 | % | 9.6 | % | 5.5 | % | 7.1 | % | 6.1 | % | 8.9 | % | 7.4 | % | |||||||||||
| ADJUSTED NET INCOME AND EARNINGS/(LOSS) PER SHARE: | |||||||||||||||||||||||||||||
| Net income attributable to STRATTEC (GAAP) | $ | 4,165 | $ | 1,022 | $ | 1,506 | $ | 9,620 | $ | 16,313 | $ | 3,703 | $ | 1,319 | $ | 5,396 | $ | - | $ | 10,418 | |||||||||
| Adjustments: | |||||||||||||||||||||||||||||
| Restructuring and similar charges | 265 | 3 | - | 63 | 331 | - | 265 | 809 | - | 1,074 | |||||||||||||||||||
| Retroactive FY23 one-time pricing recovery, net | (7,078 | ) | (641 | ) | (298 | ) | 24 | (7,993 | ) | - | - | - | - | - | |||||||||||||||
| Executive transition costs | - | 973 | 211 | 73 | 1,257 | 1,224 | 1,225 | 214 | - | 2,663 | |||||||||||||||||||
| Business transformation costs | - | - | - | - | - | 74 | 215 | 259 | - | 548 |
STRATTEC SECURITY CORPORATION Generated $20.7 million in Cash from Operations in Fiscal 2025 Third Quarter
May 8, 2025
Page 11
| Non-controlling interest impact on above adjustments | 1,014 | 181 | 55 | 22 | 1,272 | - | - | (160 | ) | - | (160 | ) | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tax effect on above adjustments | 1,305 | (116 | ) | 7 | (41 | ) | 1,155 | (292 | ) | (384 | ) | (376 | ) | - | (1,052 | ) | |||||||||||||
| (4,494 | ) | 400 | (25 | ) | 141 | (3,978 | ) | 1,006 | 1,321 | 746 | - | 3,073 | |||||||||||||||||
| Adjusted Net Income/(Loss) attributable to STRATTEC (Non-GAAP) | $ | (329 | ) | $ | 1,422 | $ | 1,481 | $ | 9,761 | $ | 12,335 | $ | 4,709 | $ | 2,640 | $ | 6,142 | $ | - | $ | 13,491 | ||||||||
| Weighted Average Basic Shares Outstanding | 3,948 | 3,976 | 3,988 | 3,988 | 3,975 | 4,005 | 4,035 | 4,039 | - | 4,026 | |||||||||||||||||||
| Weighted Average Diluted Shares Outstanding | 3,974 | 3,998 | 4,017 | 4,027 | 4,004 | 4,046 | 4,070 | 4,085 | - | 4,067 | |||||||||||||||||||
| Diluted earnings per share (GAAP) | $ | 1.05 | $ | 0.26 | $ | 0.37 | $ | 2.39 | $ | 4.07 | $ | 0.92 | $ | 0.32 | $ | 1.32 | $ | - | $ | 2.56 | |||||||||
| Adjusted dilutive earnings/(loss) per share (Non-GAAP) | $ | (0.08 | ) | $ | 0.36 | $ | 0.37 | $ | 2.42 | $ | 3.08 | $ | 1.16 | $ | 0.65 | $ | 1.50 | $ | - | $ | 3.32 |
Q3 FY2025 Financial Results Conference Call May 9, 2025 Nasdaq: STRT Jennifer Slater President and CEO Matthew Pauli Senior Vice President and CFO www.strattec.com
Safe Harbor Statement Safe Harbor Statement Certain statements contained in this presentation contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “intend,” “may,” “planned,” “potential,” “should,” “will,” and “would.” Such forward-looking statements are inherently subject to many uncertainties in the Company’s operations and business environment. These uncertainties include general economic conditions, in particular, relating to the automotive industry, consumer demand for the Company’s and its customers’ products, competitive and technological developments, customer purchasing actions, changes in warranty provisions and customer product recall policies, work stoppages at the Company or at the location of its key customers as a result of labor disputes, foreign currency fluctuations, the impact of U.S. trade policies, tariffs and reactions to the same from foreign countries on costs and customer demand, 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. 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 presentation 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 presentation. In addition, such uncertainties and other operational matters are discussed further in the Company’s quarterly and annual filings with the Securities and Exchange Commission. Use of Non-GAAP Financial Metrics and Additional Financial Information In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, STRATTEC provides Adjusted Non-GAAP information as additional information for its operating results. References to Adjusted Non-GAAP information are to non-GAAP financial measures. These measures are not required by, in accordance with, or an alternative for, GAAP and may be different from similarly titled non-GAAP financial measures used by other companies. STRATTEC’s management uses these measures to make strategic decisions, establish budget plans and forecasts, identify trends affecting STRATTEC’s business, and evaluate performance. Management believes that providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, will help investors evaluate STRATTEC’s core operating and financial performance and business trends consistent with how management evaluates such performance and trends. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures. The Company has provided reconciliations of comparable GAAP to non-GAAP measures in the supplemental slides of this presentation.
Operational Cash Flow: Generated $20.7 million in Q3 YTD cash from operations of $41.5 million Revenue Growth: up $3.3 million to $144.1 million Driven by strategic pricing actions & favorable product mix Boosted by net new program launches Profitability: Delivered adj. EBITDA of $12.9 million (8.9% of sales) Up from $6.2 million (4.4% of sales) in Q3 FY24 Executing Operational Transformation: FY 2025 restructuring actions in Milwaukee and Mexico to deliver approximately $5 million in annual savings 12% headcount reduction YTD improves operational leverage Driving self-help efforts to expand margins while changing culture Tariff mitigation underway via USMCA compliance, logistics changes, pricing and sourcing STRATTEC Q3 FY2025 Highlights
Executing Transformation Amid Uncertainty Managing Through Trade Uncertainty Executing Plan to Deliver Value Restructuring in Q3 FY25 expected to deliver ~$5M in annual savings 12% total headcount reduction FYTD Evaluating long-term modernization of manufacturing and assembly processes Price actions delivering margin improvement Building A Stronger Business Cash provides buffer for uncertain outlook and enables continued execution of plans Margin expansion and working capital improvements driving cash flow Cash Cushion for Uncertain Times Excluding USMCA compliant sales, estimated annual tariff impact of $9M to $12M, before mitigation Mitigation plans underway: logistics adjustments, supplier shifts, pricing actions Tariff uncertainty causing adverse auto industry production outlook Focused on earnings power and margin expansion Strengthening operational discipline and accountability Continued investment in organization and people ($ in millions)
Ford up 6%: higher volume and added content for power tailgate and latches Stellantis up 14%: new key and lockset content on Dodge Ram Heavy Duty trucks GM down 4%: lower demand across products ($ in millions; narrative compared with prior-year period unless otherwise noted) Q3 FY25 Sales Increased 2.4% Y/Y Net Sales Growth Net sales up $3.3 million $2.5 million of strategic pricing increases and $2.2 million in higher value content placement $1.6 million due to net new program launches Offset by $3.0 million reduction in sales volumes for existing platforms 6% growth y/y in Power Access products on higher value content placement across SUV/Pickup platforms Keys & locksets up 7% y/y on pricing and new launches including high-content Dodge Ram Heavy Duty platform Door Handles & Latches down slightly Q3 FY25 Sales by Customer Q3 FY25 Sales by Product $140.8 $144.1 Above market sales growth driven by strategic pricing actions, higher value content and net new program launches
Gross margin expanded 560 basis points in Q3 Stronger US dollar $4.4 million, or 310 bps, FX benefit Current rate of ~20 MXN peso at 5-year average Margin-accretive strategic pricing actions Materials and labor cost improvements $0.8 million tariff expenses related to U.S. tariff policy changes YTD gross margin expanded 240 basis points FX tailwinds, stronger pricing and operational leverage Partially offset by Mexico labor costs (govt mandated) and tariff impacts ($ in millions; narrative compared with prior-year period unless otherwise noted) Higher Gross Profit and Margin Expansion Gross Profit & Margin (Qtr) 11.4% 13.2% Gross Profit & Margin (YTD) 16.0% 10.4% 14.3% 11.9%
Well positioned to manage dynamic tariff environment. ~93% of US imports are USMCA compliant and are not subject to additional tariffs. Strong balance sheet and cost focus provide support as mitigation actions are implemented. TARIFF IMPACT Reassessing our supplier network – focused on in-region for region procurement. Active customer engagement on mitigation plans. Expect 100% commercial recoveries. Established daily “Tariff Task Force” to align cross functionally. Engaged third party to assist in review of USMCA compliance & HTS code classification. Indirect: Uncertainty in potential changes in North American automotive production schedules Identified additional areas for operational cost improvements (i.e. logistics) MITIGATION ACTIONS Direct: Current incremental tariffs impact ~$30m of sales (6% of consolidated sales). Total estimated tariff costs are $9-12 million before mitigation efforts. Manageable Tariff Exposure
Increase in ES&A(1) reflects business investment, transformation costs and investments in human capital Up $3.3 million to 11.1% of sales $1.2 million incentive and bonus compensation $0.8 million in restructuring charges $0.8 million timing of engineering spend and outside services Investments in leadership expected to deliver process efficiencies and related savings over time YTD results include $2.1 million of executive transition costs compared with $1.0 million in prior year, $0.5 million business transformation costs and $1.0 million of restructuring costs. $2.8 million incremental incentive and bonus compensation ($ in millions; narrative compared with prior-year period unless otherwise noted) Strengthening Operations for Efficiency ES&A(1) | % of Sales (Qtr) 11.4% 13.2% ES&A(1) | of Sales (YTD) (1) Engineering, selling and administrative expenses
($ in millions except earnings per share data; narrative compared with prior-year period unless otherwise noted) Q3 FY25 Net Income(1) up 258% Q3 FY25 Adj. EPS(2) grew 305% to $1.50 Q3 FY25 Adj. EBITDA(2) margin expanded 450 basis points Driven by higher sales volume, FX and cost management initiatives; higher bonus accruals on improving performance Focused on driving sustainable margin improvement Enhanced Earnings Power (1) Net Income Attributable to STRATTEC (2) Adjusted Net Income, Adjusted Diluted Earnings per Share, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP metrics. Refer to the reconciliation of GAAP to non-GAAP metrics in the supplemental tables of this presentation. Adj. Net Income(2) (Qtr) Adj. Net Income(2) (YTD) Net Income(1) (Qtr) Net Income(1) (YTD) Adj. EBITDA(2) & Margin (Qtr) Adj. EBITDA(2) & Margin (YTD)
$21.0 million increase in operating cash flow Improved operating performance Working capital efficiency improvements, including improvement in days payable outstanding Financial flexibility $62.1 million in cash $47 million available under lines of credit FY 2025 CapEx Focused on new product programs and equipment replacements/upgrades for safety and productivity improvements $4.2M YTD CapEx primarily includes capital to support new customer programs and $1.2 million for upgraded equipment to improve productivity Capital priorities Conserve cash through uncertain times and moderated market conditions Operational efficiencies & productivity: equipment and IT modernization, people Organic growth initiatives: market positioning, brand and selling processes Capitalization March 30, 2024 December 29, 2024 Cash and cash equivalents $ 62.1 $ 42.6 Total debt 13.0 13.0 Shareholders’ equity 234.6 228.2 Total capitalization $ 247.2 $ 241.2 Debt / total capitalization 5.3% 5.4% Three Months Ended March 30, 2025 March 31, 2024 Net cash provided by operating activities $ 20.7 $ (0.3) CapEx (1.2) (1.7) Free cash flow (FCF)(1) $ 19.5 $ (2.0) ($ in millions; narrative compared with prior-year period unless otherwise noted) (1) Free cash flow is a non-GAAP metric defined as cash flow from operations less capital expenditures (CapEx) Strong Cash Generation
www.strattec.com Q3 FY2025 Financial Results Supplemental Slides
Reconciliation of GAAP to Non-GAAP Financial Measures Fiscal 2024 Fiscal 2025 Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total ADJUSTED NET SALES: Net Sales (GAAP) 135,406 118,532 140,773 143,055 $537,766 139,052 129,919 144,082 - $413,053 Adjustments: - Retroactive FY23 one-time pricing recovery (7,950) (1,551) (397) 175 (9,723) - - - - - Adjusted Sales (Non-GAAP) 127,456 116,981 140,376 143,230 528,043 139,052 129,919 144,082 - 413,053 ADJUSTED EBITDA: Net income attributable to STRATTEC (GAAP) $ 4,165 $ 1,022 $ 1,506 $ 9,620 $ 16,313 $ 3,703 $ 1,319 $ 5,396 $ - $ 10,418 Net income (loss) attributable to non-controlling interest 290 (242) (380) 447 115 45 79 315 - 439 Provision for income tax 1,387 264 546 1,578 3,775 1,498 405 1,644 - 3,547 Other (income) expense, net 131 (1,098) 208 (1,958) (2,717) (129) 482 16 - 369 Investment and interest income (87) (107) (143) (235) (572) (349) (408) (529) - (1,286) Interest expense 220 219 222 239 900 295 257 243 - 795 Income from operations 6,106 58 1,959 9,691 17,814 5,063 2,134 7,085 - 14,282 Adjustments: Depreciation 4,385 4,330 4,059 3,773 $ 16,547 3,662 3,544 3,746 - $ 10,952 Non-cash stock-based compensation 505 479 240 243 1,467 188 891 760 - 1,839 Restructuring and similar charges - - - - - - 265 809 - 1,074 Retroactive FY23 one-time pricing recovery, net (7,078) (641) (298) 24 (7,993) - - - - - Executive transition costs - 774 211 73 1,058 941 921 214 - 2,076 Business transformation costs - - - - - 74 215 259 - 548 (2,188) 4,942 4,212 4,113 11,079 4,865 5,836 5,788 - 16,489 Adjusted EBITDA (Non-GAAP) $ 3,918 $ 5,000 $ 6,171 $ 13,804 $ 28,893 $ 9,928 $ 7,970 $ 12,873 $ - $ 30,771 Adjusted EBITDA as a % of Adjusted Net Sales 3.1% 4.3% 4.4% 9.6% 5.5% 7.1% 6.1% 8.9% 7.4%
Reconciliation of GAAP to Non-GAAP Financial Measures Fiscal 2024 Fiscal 2025 Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total ADJUSTED NET INCOME AND EARNINGS/(LOSS) PER SHARE: Net income attributable to STRATTEC (GAAP) $ 4,165 $ 1,022 $ 1,506 $ 9,620 $ 16,313 $ 3,703 $ 1,319 $ 5,396 $ - $ 10,418 Adjustments: Restructuring and similar charges 265 3 - 63 331 - 265 809 - 1,074 Retroactive FY23 one-time pricing recovery, net (7,078) (641) (298) 24 (7,993) - - - - - Executive transition costs - 973 211 73 1,257 1,224 1,225 214 - 2,663 Business transformation costs - - - - - 74 215 259 - 548 Non-controlling interest impact on above adjustments 1,014 181 55 22 1,272 - - (160) - (160) Tax effect on above adjustments 1,305 (116) 7 (41) 1,155 (292) (384) (376) - (1,052) (4,494) 400 (25) 141 (3,978) 1,006 1,321 746 - 3,073 Adjusted Net Income/(Loss) attributable to STRATTEC (Non-GAAP) $ (329) $ 1,422 $ 1,481 $ 9,761 $ 12,335 $ 4,709 $ 2,640 $ 6,142 $ - $ 13,491 Weighted Average Basic Shares Outstanding 3,948 3,976 3,988 3,988 3,975 4,005 4,035 4,039 - 4,026 Weighted Average Diluted Shares Outstanding 3,974 3,998 4,017 4,027 4,004 4,046 4,070 4,085 - 4,067 Diluted earnings per share (GAAP) $ 1.05 $ 0.26 $ 0.37 $ 2.39 $ 4.07 $ 0.92 $ 0.32 $ 1.32 $ - $ 2.56 Adjusted dilutive earnings/(loss) per share (Non-GAAP) $ (0.08) $ 0.36 $ 0.37 $ 2.42 $ 3.08 $ 1.16 $ 0.65 $ 1.50 $ - $ 3.32
Q3 FY2025 Financial Results May 8, 2025 Nasdaq: STRT www.strattec.com Investor Relations Contact: Deborah K. Pawlowski, Alliance Advisors IR 716-843-3908 dpawlowski@Allianceadvisors.com