• Grew revenue $11.4 million to $129.9 million in the quarter as a result of new program launches and increased demand from customers
• Net income attributable to STRATTEC Security Corporation was $1.3 million, or diluted EPS of $0.32, compared with $1.0 million, or diluted EPS of $0.26, in the year ago quarter
• Adjusted diluted earnings per share¹ were $0.65, compared with $0.36 in the prior year
• Generated $9.4 million in cash from operations, bringing year-to-date cashflow from operations to $20.8 million
• Delivered adjusted EBITDA¹ of $8.0 million, or 6.1% of sales, compared with $5.0 million, or 4.3%, in the prior-year second quarter
• Transformation efforts continue to focus on driving profitability, stronger cash generation and creating a sustainable business model while evaluating market opportunities and future growth plans

MILWAUKEE, February 06, 2025--(BUSINESS WIRE)--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 second quarter of fiscal year 2025, which ended December 29, 2024.

STRATTEC President and CEO Jennifer Slater said, "Our solid financial results reflect the focus the team is placing on our key priorities of stabilizing the business, optimizing costs, and identifying where our engineering innovation commands the right to win. Sales growth was the result of production trends with key customers and, in particular, with the platforms on which we have higher value content. We made progress this last quarter to strengthen our earnings power as we restructured our U.S. manufacturing operations by reducing the number of shifts, which is expected to generate $1.2 million in annualized savings. In addition, we continued to unlock value on our balance sheet as we collected on our tooling investments."

Ms. Slater concluded, "Talent is critical for our transformation, and we made further investments this quarter. We are gaining traction with our customers as our new chief commercial officer identifies opportunities for both new projects as well as pricing that reflects the value of our product offering. We recognize that an engaged and motivated team generates creativity and excitement for our future and we are creating a stronger, more open culture with new leadership in human resources. Importantly as well, we now have the financial leadership needed to support our strategic objectives. We are making solid progress as a team and, in addition to these strategic efforts, we are proactively addressing the potential challenges the tariffs may present."

FY 2025 Second Quarter Financial Summary

(compared with prior-year period, except where otherwise noted)

Net sales were $129.9 million, an increase of $11.4 million, or 9.6%, compared with the second quarter prior year. Sales growth was driven by $6.0 million of net new program launches, $1.3 million of higher content and product mix. In addition, net sales on current platforms increased $7.3 million as a result of customers building inventory, slightly higher production levels and the prior year second quarter reflecting increased customer plant shutdowns. This growth more than offset the net impact of the prior year period’s one-time pricing benefits of $3.9 million. Sales growth was broad based across most of the product portfolio, excluding keys & locksets.

Gross profit increased $3.7 million to $17.2 million, from higher volume and a $3.5 million benefit from foreign currency translation. This was mostly offset by increased labor costs in Mexico, a $0.6 million bonus provision and the favorable retroactive pricing in the prior year second quarter. Gross margin was 13.2% compared with 11.4%.

Engineering, selling and administrative expenses increased $1.6 million, or 11.7%, to $15.0 million. The increase reflected continued investments in the business, an annual bonus provision of $0.8 million and $0.3 million in restructuring charges. No bonus provision was recorded in the prior-year period.

Operating income increased $2.0 million to $2.1 million and was 1.6% of sales. Investment income increased $0.3 million on higher cash balances, while changes in foreign currency exchange rates resulted in a $1.4 million increase in other expense. Net income attributable to STRATTEC was $1.3 million compared with $1.1 million last year.

Diluted earnings per share were $0.32 compared with $0.26 last year. On an adjusted basis, net income attributable to STRATTEC¹ grew 86% to $2.6 million. Adjusted diluted earnings per share¹ increased $0.29, or 81% to $0.65. Adjusted EBITDA¹ for the quarter was $8.0 million compared with $5.0 million in the prior-year period.

Balance Sheet and Liquidity

Second quarter fiscal 2025 cash flow from operations was $9.4 million, bringing year-to-date cash flow from operations to $20.8 million. Improved working capital management and recovery of pre-production tooling costs benefited operating cash flows. Capital expenditures in the second quarter of fiscal 2025 were $0.9 million, down $0.6 million from the prior year period.

At December 29, 2024, STRATTEC had $42.6 million in cash and cash equivalents, up $8.2 million from the end of the first quarter of fiscal 2025.

At December 29, 2024 the Company had $13 million of outstanding borrowings under its joint venture revolving credit facility, which is unchanged from the end of fiscal 2024. Total availability under existing lines of credit was $47 million at December 29, 2024.

Second Quarter Fiscal Year 2025 Webcast and Conference Call

The Company will host a conference call and webcast tomorrow, Friday, February 7, 2025, at 9:00 am Eastern Time to review the financial and operating results for the period ended December 29, 2024, 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.

A telephonic replay will be available from 12:00 p.m. ET on the day of the call through Friday, February 21, 2025. To listen to the archived call, dial (412) 317-6671 and enter a replay PIN 13751178. 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 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 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.

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¹ Refer to "Use of Non-GAAP Financial Metrics and Additional Financial Information" as well as accompanying reconciliations to GAAP

FINANCIAL TABLES FOLLOW

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Contacts

Deborah K. Pawlowski
Alliance Advisors IR
Phone: 716-843-3908
Email: dpawlowski@allianceadvisors.com