Strattec Security Corp 8-K, filed Aug 8, 2024
Strattec Security Corp (STRT)
About this 8-K
Strattec Security Corp filed this 8-K on August 8, 2024, reporting on events of June 30, 2024.
Items reported
- Item 2.02: Financial results
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
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): August 8, 2024
STRATTEC SECURITY CORPORATION
(Exact Name of Registrant as Specified in Charter)
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Wisconsin |
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0-25150 |
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39-1804239 |
(State or Other Jurisdiction of Incorporation) |
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(Commission File Number) |
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(I.R.S. Employer Identification No.) |
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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:
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Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol |
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Name of each exchange on which registered |
Common Stock, $.01 par value |
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STRT |
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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 August 8, 2024, STRATTEC SECURITY CORPORATION (the “Company”) issued a press release (the “Press Release”) announcing results for the fiscal fourth quarter and year ended June 30, 2024. A copy of the Press Release is attached as Exhibit 99.1 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 2.02 and Exhibit 99.1 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 Exhibit 99.1 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 August 8, 2024, the Company issued a press release announcing earnings results for the fiscal fourth quarter and year ended June 30, 2024. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 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 Exhibit 99.1 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 Exhibit 99.1 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 August 8, 2024.
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/ Dennis P. Bowe
Dennis P. Bowe, Vice President and
Chief Financial Officer
Date: August 8, 2024
Exhibit 99.1
STRATTEC SECURITY CORPORATION REPORTS FISCAL 2024 FOURTH QUARTER AND FULL YEAR OPERATING RESULTS
August 8, 2024
Fourth Fiscal Quarter earnings per share $2.39 vs $0.69 loss, an improvement driven by customer price increases and higher sales
Milwaukee, Wisconsin – STRATTEC SECURITY CORPORATION (NASDAQ:STRT) is a market leader of a comprehensive range of "Smart" Vehicle Power Access and Electronic and Security Solutions, serving the global automotive industry.
Fourth Quarter Fiscal 2024 Financial Highlights
STRATTEC President and CEO Jennifer Slater said, “The financial performance of the business continued due to improved pricing, and new product introductions which are expanding STRATTEC’s offerings to our customers. We will continue to focus on addressing persistent cost challenges and the opportunities we have to optimize our working capital and a strong balance sheet.”
Fourth Quarter and Full Year Fiscal 2024 Financial Summary
(Dollars in thousands, except per share data)
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Three Months Ended |
Year Ended |
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June 30, 2024 |
July 2, 2023 |
June 30, 2024 |
July 2, 2023 |
Net Sales |
$ 143,055 |
$ 132,219 |
$ 537,766 |
$ 492,946 |
Gross Profit |
$ 18,567 |
$ 12,268 |
$ 65,468 |
$ 42,152 |
Gross Margin |
13.0% |
9.3% |
12.2% |
8.6% |
Operating Expenses |
$ 8,876 |
$ 10,975 |
$ 47,654 |
$ 48,241 |
Operating Income (Loss) from Operations |
$ 9,691 |
$ 1,293 |
$ 17,814 |
$ (6,089) |
Net Income (Loss) |
$ 9,620 |
$ (2,700) |
$ 16,313 |
$ (6,670) |
Diluted Earnings (Loss) Per Share |
$ 2.39 |
$ (0.69) |
$ 4.07 |
$ (1.70) |
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Fourth Quarter Financial Overview
Revenue growth was driven by $6.9 million of price increases to our major customers and $3.9 million of higher sales associated with the launch of new product programs, the latter representing a 3.0% growth in sales from prior year. The growth in new product sales primarily stems from additional content of our latch and power access product lines on a major truck platform.
Gross margin improvement was primarily driven by pricing increases, higher sales and lower raw material costs. Offsetting those positive trends was primarily $2.1 million of wage increases due to a mandatory Mexican minimum wage-increase, $1.7 million for increase in the company’s annual incentive bonus plan, $1.2 million higher prices paid to certain suppliers, $1.1 million of higher warranty costs, $1.0 million of increased freight costs primarily related to the launch of new programs, and $660,000 of unfavorable U.S. dollar to Mexican peso exchange rate effects.
Operating expenses decreased by $2.1 million primarily due to a $3.2 million increase in customer billings for the reimbursement of development costs, offset by a $1.1 increase in the company’s annual incentive bonus plan. Other Income was $2.0 million compared to a loss of $1.1 million last year due to foreign currency transaction gains in the current year and losses in the prior year. Net Income was $9.6 million compared to a loss of $2.7 million last year. Fully diluted earnings per share were $2.39 compared with a loss of $0.69 last year.
Full Year Financial Overview
Full year revenue growth of $44.8 million was primarily driven by $32.7 million of customer pricing of which $9.7 million relates to one-time retroactive pricing that is not expected to recur in the future. Total gross margins improved by $23.3 million due to customer pricing, higher sales, lower raw material costs and salaried staff reductions and production efficiencies in Mexico, offset primarily by $5.7 million of higher prices paid to key suppliers, $8.5 million of unfavorable exchange rate impact between the U.S. dollar and the Mexican peso, $6.6 million of mandatory Mexican minimum wage increases and $4.1 million of higher shipping costs, primarily attributable to expediting associated with new product launches. Operating expenses were $587,000 lower due to $3.4 million increase in customer billings for the reimbursement of engineering development costs offset primarily by $1.0 million in one-time charges associated with the transition of the Chief Executive Officer position and $1.9 million of annual incentive
bonus expense. Net Income was $16.3 million compared to a loss of $6.7 million last year. Fully diluted earnings per share were $4.07 compared with a loss of $1.70 last year.
Fourth Quarter Balance Sheet & Cash Flow
As of June 30, 2024, the Company’s cash and cash equivalents on hand totaled $25.4 million. Total debt as of June 30, 2024 was $13.0 million, which was all held by the ADAC-STRATTEC LLC joint venture.
For the fourth quarter of fiscal 2024, operating cash flow was $19.4 million, compared to the prior year quarter operating cash flow of $2.6 million. The operating cash flow for the current quarter was driven by improved operating performance and a reduction in net working capital. Capital expenditures in the fourth quarter of fiscal 2024 were $3.7 million, compared with $3.6 million for the fourth quarter of fiscal 2023.
About STRATTEC
STRATTEC designs, develops, manufactures and markets automotive Access Control Products, including mechanical locks and keys, electronically enhanced locks and keys, steering column and instrument panel ignition lock housings, latches, power sliding side door systems, power lift gate systems, power deck lid systems, power tailgate systems for trucks, door handles and related products. These products are provided to customers in North America, and on a global basis through a unique strategic relationship with WITTE Automotive of Velbert, Germany and ADAC Automotive of Grand Rapids, Michigan. Under this relationship, STRATTEC, WITTE and ADAC market each company’s products to global customers as cooperating partners of the “VAST Automotive Group” brand name. STRATTEC’s history in the automotive business spans over 110 years.
Caution on Forward-Looking Statements
Certain statements contained in this release contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “intend,” “may,” “planned,” “potential,” “should,” “will,” and “would.” Such forward-looking statements in this release are inherently subject to many uncertainties in the Company’s operations and business environment. These uncertainties include general economic conditions, in particular, relating to the
automotive industry, consumer demand for the Company’s and its customers’ products, competitive and technological developments, customer purchasing actions, changes in warranty provisions and customer product recall policies, work stoppages at the Company or at the location of its key customers as a result of labor disputes, foreign currency fluctuations, uncertainties stemming from U.S. trade policies, tariffs and reactions to same from foreign countries, the volume and scope of product returns, adverse business and operational issues resulting from the continuing effects of the coronavirus (COVID-19) pandemic, matters adversely impacting the timing and availability of component parts and raw materials needed for the production of our products and the products of our customers and fluctuations in our costs of operation (including fluctuations in the cost of raw materials). Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances occurring after the date of this release. In addition, such uncertainties and other operational matters are discussed further in the Company’s quarterly and annual filings with the Securities and Exchange Commission.
Contact: Dennis Bowe
Vice President and
Chief Financial Officer
414-247-3399
www.strattec.com
STRATTEC SECURITY CORPORATION
Condensed Results of Operations
(In Thousands except per share amounts)
(Unaudited)
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Three Months Ended |
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Year Ended |
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June 30, 2024 |
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July 2, 2023 |
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June 30, 2024 |
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July 2, 2023 |
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Net Sales |
$ 143,055 |
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$ 132,219 |
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$ 537,766 |
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$ 492,946 |
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Cost of Goods Sold |
124,488 |
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119,951 |
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472,298 |
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450,794 |
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Gross Profit |
18,567 |
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12,268 |
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65,468 |
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42,152 |
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Engineering, Selling & |
8,876 |
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10,975 |
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47,654 |
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48,241 |
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Income (Loss) from Operations |
9,691 |
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1,293 |
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17,814 |
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(6,089) |
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Interest Expense |
(239) |
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(369) |
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(900) |
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(960) |
Investment Income |
235 |
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- |
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572 |
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- |
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Other Income (Expense), net |
1,958 |
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(1,089) |
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2,717 |
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(619) |
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Income (Loss) Before Provision |
11,645 |
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(165) |
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20,203 |
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(7,668) |
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Provision for Income |
1,578 |
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2,919 |
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3,775 |
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1,281 |
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Net Income (Loss) |
10,067 |
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(3,084) |
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16,428 |
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(8,949) |
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Net Income (Loss) Attributable |
447 |
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(384) |
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115 |
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(2,279) |
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Net Income (Loss) Attributable |
$ 9,620 |
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$ (2,700) |
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$ 16,313 |
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$ (6,670) |
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Earnings (Loss) Per Share: |
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Basic |
$ 2.41 |
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$ (0.69) |
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$ 4.10 |
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$ (1.70) |
Diluted |
$ 2.39 |
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$ (0.69) |
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$ 4.07 |
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$ (1.70) |
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Average Basic Shares |
3,988 |
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3,928 |
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3,975 |
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3,921 |
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Average Diluted Shares |
4,027 |
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3,928 |
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4,004 |
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3,921 |
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Other |
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Capital Expenditures |
$ 3,723 |
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$ 3,646 |
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$ 9,788 |
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$ 17,370 |
Depreciation |
$ 3,773 |
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$ 4,340 |
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$ 16,547 |
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$ 17,485 |
STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
(Unaudited)
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June 30, 2024 |
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July 2, 2023 |
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ASSETS |
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Current Assets: |
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Cash and Cash Equivalents |
$ 25,410 |
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$ 20,571 |
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Receivables, net |
99,297 |
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89,811 |
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Inventories, net |
81,649 |
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77,597 |
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Customer Tooling in Progress, net |
22,173 |
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20,800 |
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Value Added Tax Recoverable |
19,684 |
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7,912 |
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Other Current Assets |
5,601 |
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9,091 |
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Total Current Assets |
253,814 |
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225,782 |
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Other Long-term Assets |
24,291 |
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20,702 |
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Property, Plant and Equipment, net |
86,184 |
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94,446 |
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$ 364,289 |
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$ 340,930 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current Liabilities: |
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Accounts Payable |
$ 54,911 |
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$ 57,927 |
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Value Added Tax Payable |
9,970 |
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6,499 |
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Other |
53,407 |
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44,560 |
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Total Current Liabilities |
118,288 |
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108,986 |
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Accrued Pension and Postretirement Obligations |
2,429 |
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2,363 |
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Borrowings Under Credit Facility - Long-Term |
13,000 |
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13,000 |
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Other Long-term Liabilities |
4,957 |
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5,557 |
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Shareholders' Equity |
351,712 |
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334,683 |
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Accumulated Other Comprehensive Loss |
(15,689) |
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(14,194) |
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Less: Treasury Stock |
(135,478) |
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(135,526) |
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Total STRATTEC SECURITY |
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CORPORATION Shareholders' Equity |
200,545 |
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184,963 |
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Non-Controlling Interest |
25,070 |
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26,061 |
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Total Shareholders' Equity |
225,615 |
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211,024 |
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$ 364,289 |
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$ 340,930 |
STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)
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Three Months Ended |
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Year Ended |
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June 30, 2024 |
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July 2, 2023 |
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June 30, 2024 |
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July 2, 2023 |
Cash Flows from Operating Activities: |
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Net Income (Loss) |
$ 10,067 |
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$ (3,084) |
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$ 16,428 |
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$ (8,949) |
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Adjustments to Reconcile Net Income (Loss) to Cash Provided by Operating Activities: |
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Depreciation |
3,773 |
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4,340 |
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16,547 |
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17,485 |
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Equity Loss (Earnings) in Joint Ventures |
62 |
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375 |
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331 |
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(1,559) |
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Foreign Currency Transaction (Gain) Loss |
(2,279) |
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821 |
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(2,153) |
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2,935 |
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Loss on Settlement of Pension Obligation |
- |
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- |
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- |
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217 |
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Stock Based Compensation Expense |
243 |
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327 |
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1,467 |
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1,466 |
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Deferred Tax Provision |
(4,711) |
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(4,937) |
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(4,711) |
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(4,937) |
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Change in Operating Assets/Liabilities |
11,543 |
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4,437 |
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(16,232) |
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2,670 |
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Other, net |
790 |
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304 |
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588 |
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767 |
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Net Cash Provided by Operating |
19,488 |
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2,583 |
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12,265 |
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10,095 |
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Cash Flows from Investing Activities: |
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Proceeds from sale of interest in VAST LLC |
- |
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26,170 |
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2,000 |
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26,170 |
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Investment in Joint Ventures |
- |
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(41) |
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- |
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(278) |
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Purchase of VAST Korea net assets |
- |
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354 |
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- |
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354 |
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Additions to Property, Plant & Equipment |
(3,723) |
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(3,646) |
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(9,788) |
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(17,370) |
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Proceeds on Sales of Property, Plant & |
- |
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10 |
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- |
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25 |
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Net Cash (Used in) Provided by Investing Activities |
(3,723) |
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22,847 |
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(7,788) |
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8,901 |
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Cash Flows from Financing Activities: |
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Borrowings on Line of Credit Facility |
- |
|
4,000 |
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2,000 |
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17,000 |
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Payments on Line of Credit Facility |
- |
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(12,000) |
|
(2,000) |
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(15,000) |
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Purchase of SPA non-controlling interest |
- |
|
(9,019) |
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- |
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(9,019) |
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Dividends Paid to Non-Controlling Interest of |
- |
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- |
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- |
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(600) |
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Exercise of Stock Options and Employee Stock |
17 |
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19 |
|
72 |
|
183 |
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Net Cash Provided by (Used In) Financing Activities |
17 |
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(17,000) |
|
72 |
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(7,436) |
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Effect of Foreign Currency Fluctuations on Cash |
34 |
|
55 |
|
290 |
|
237 |
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Net Increase in Cash & Cash Equivalents |
15,816 |
|
8,485 |
|
4,839 |
|
11,797 |
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Cash & Cash Equivalents: |
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|
|
|
|
|
|||
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Beginning of Period |
9,594 |
|
12,086 |
|
20,571 |
|
8,774 |
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End of Period |
$ 25,410 |
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$ 20,571 |
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$ 25,410 |
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$ 20,571 |
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