STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported
operating results for the fiscal fourth quarter and full year ended
July 3, 2022. The comparative current year fourth quarter operating
results were negatively impacted by higher costs for raw materials
and purchased components in our manufacturing operations,
reductions in output at some of our OEM customers’ assembly plants
and the COVID-19 virus that temporarily shut down our VAST China
operations which is further described in this press release.
Fourth Quarter Overview Net
sales for the Company’s fourth quarter ended July 3, 2022 were
$123.1 million, compared to net sales of $110.1 million for the
fourth quarter ended June 27, 2021. The 2022 fiscal fourth quarter
was a 14 week period while fiscal 2021’s fourth quarter was the
typical 13 week period. The impact of the additional week of
customer shipments during the current year quarter increased net
sales by approximately $7.4 million over the prior year quarter.
Net income for the current year quarterly period was $391,000,
compared to net income of $2.9 million in the prior year fourth
quarter. Diluted earnings per share for the current year quarterly
period were $0.10 compared to diluted earnings per share of $0.75
in the prior year quarter. Despite higher sales levels in the
current year quarter versus the prior year quarter, as noted above,
our net income and diluted earnings per share were adversely
impacted by higher costs for raw materials and purchased components
in the current year quarter.
Full Year Earnings OverviewFor
the year ended July 3, 2022, the Company’s net sales were $452.3
million compared to net sales of $485.3 million in the prior year
period. Net income during the current year was $7.0 million
compared to net income of $22.5 million in the prior year period.
Diluted earnings per share were $1.80 for the year ended July 3,
2022 compared to diluted earnings per share of $5.85 during the
prior year ended June 27, 2021.
Discussion of Quarterly
ResultsNet sales to each of our customers or customer
groups in the current year quarter and prior year quarter were as
follows (in thousands):
|
Three Months
Ended |
|
|
July 3, 2022 |
June 27, 2021 |
|
|
|
|
|
General Motors Company |
$ |
38,633 |
$ |
35,225 |
|
Stellantis /
Fiat Chrysler Automobiles |
|
20,598 |
|
15,710 |
|
Ford Motor
Company |
|
21,808 |
|
13,314 |
|
Tier 1
Customers |
|
16,443 |
|
13,332 |
|
Commercial
and Other OEM Customers |
|
14,901 |
|
18,689 |
|
Hyundai /
Kia |
|
10,690 |
|
13,787 |
|
TOTAL |
$ |
123,073 |
$ |
110,057 |
|
|
|
|
|
As mentioned previously, the current year
quarter sales had one additional week of sales in comparison to the
prior year quarter that totaled $7.4 million. Notwithstanding that
extra week of sales, the global semiconductor chip shortage and
adverse issues impacting the availability of other raw materials
and component parts arising from the Coronavirus (COVID-19)
pandemic continue to adversely impact our OEM customers’ output at
their assembly plants, thereby reducing our potential sales.
Sales to General Motors in the current year
quarter increased in comparison to the prior year quarter due to
higher production volumes on the Chevrolet Silverado power tailgate
and increased sales from several lock set product platforms with
General Motors. Sales to Stellantis / Fiat Chrysler Automobiles
increased in the current year quarter compared to the prior year
quarter due to higher volumes on the Chrysler Pacifica for which we
supply power sliding door components and other access control
products. Sales to Ford Motor Company increased in the current year
quarter compared to the prior year quarter due to higher production
volumes on our lock set product platforms with Ford and increased
production for the F-150 pick-up truck for which we supply power
tailgate components. Sales to Tier 1 Customers increased in the
current year quarter compared to the prior year quarter due to
increased volumes on sales of our door handle product. Sales to
Commercial and Other OEM Customers during the current year quarter
decreased in comparison to the prior year quarter mainly due to
decreases in our Aftermarket service keys business between
quarters. These Commercial and Other OEM Customers, along with
Tier1 Customers, primarily represent purchasers of vehicle access
control products, such as latches, key fobs, driver controls,
steering column locks and door handles that we have developed to
complement our historic core business of locks and keys. Sales to
Hyundai / Kia were lower in the current year quarter compared to
the prior year quarter due to lower production volumes on the Kia
Carnival and Hyundai Starex minivans for which we supply primarily
power sliding door components.
Gross profit margins were 11.3 percent in the
current year quarter compared to 13.9 percent in the prior year
quarter. The decrease in gross profit margin in the current year
quarter compared to the prior year quarter was primarily attributed
to higher costs for production materials that impacted the gross
profit margin by 340 basis points and the mandatory minimum wage
increase enacted by the Mexican Government effective January 1,
2022. Partially offsetting the decreased gross profit margins
between periods were improved manufacturing efficiencies both at
our Milwaukee and Mexico production facilities, despite the ongoing
supply chain disruptions described above, and lower expense
provisions for accrual of bonuses under our incentive bonus
plans.
Engineering, Selling and Administrative expenses
overall were $12.4 million in the current year quarter and $11.2
million in the prior year quarter. As a percent of net sales in the
current year quarter (14 weeks) these expenses were 10.1% percent
compared to 10.2% in the prior year quarter (13 weeks).
Included in Other Income, Net in the current
year quarter compared to the prior year quarter were the following
items (in thousands of
dollars):
|
July 3, 2022 |
|
June 27, 2021 |
|
|
|
|
|
|
Equity
(Loss) Earnings of VAST LLC Joint Venture |
$ |
(760 |
) |
|
$ |
716 |
|
(Loss) Gain on Rabbi Trust Assets |
(243 |
) |
|
|
393 |
|
Net Foreign
Currency Realized and Unrealized Transaction Gain (Loss) |
|
358 |
|
|
|
(231 |
) |
Other
(Expense) Income |
|
(12 |
) |
|
|
(156 |
) |
|
$ |
(657 |
) |
|
$ |
722 |
|
|
|
|
|
|
|
The net loss at VAST LLC during the current year
quarter related primarily to our VAST China operations being
temporarily shut down due to COVID -19 restrictions enacted by the
Chinese Government.
Frank Krejci, President & CEO commented: “We
have dealt well with the things we could control. Unfortunately for
our bottom line, there were significant factors which were out of
our control like supply chains limiting customer production and
spikes in material cost which we were forced to absorb. In
addition, our operations in China were impacted by the aggressive
shutdowns imposed by their government to combat the spread of
COVID.
The negative impacts were reduced significantly
through our cost controls and implementation of efficiency
improvements. Those improvements are beginning to benefit us today
and many will have a continuing long-term positive impact.
Strategically, with our strong balance sheet, we have been able to
make a significant investment in inventory levels to dampen
problems from supply chain issues. Our financial position also
allows us to focus on long-term decisions like investing in new
opportunities while still remaining ready to deal with current
market uncertainties.
We see continuing growth of our award-winning
designs for the power tailgates on the Chevrolet Silverado and the
Ford F150 pick-up trucks. As the Electric Vehicle market rapidly
grows, we see opportunity for new product development as well as
refined versions of much of our present product lines. We are
pleased with the acceptance of our new product by our customers and
the new business that has been awarded to us over the last
year.
As we complete our first month of a new fiscal
year, we are encouraged by the higher production schedules from our
customers and their press releases anticipating continuing
improvement in the industry during the last half of calendar year
2022”.
STRATTEC designs, develops, manufactures and
markets automotive Access Control Products including mechanical
locks and keys, electronically enhanced locks and keys, steering
column and instrument panel ignition lock housings, latches, power
sliding side door systems, power lift gate systems, power deck lid
systems, door handles and related products. These products are
provided to customers in North America, and on a global basis
through a unique strategic relationship with WITTE Automotive of
Velbert, Germany and ADAC Automotive of Grand Rapids, Michigan.
Under this relationship, STRATTEC, WITTE and ADAC market each
company’s products to global customers under the “VAST Automotive
Group” brand name. STRATTEC’s history in the automotive business
spans over 110 years.
Certain statements contained in this release
contain “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements
may be identified by the use of forward-looking words or phrases
such as “anticipate,” “believe,” “could,” “expect,” “intend,”
“may,” “planned,” “potential,” “should,” “will,” and “would.” Such
forward-looking statements in this release are inherently subject
to many uncertainties in the Company’s operations and business
environment. These uncertainties include general economic
conditions, in particular, relating to the automotive industry,
consumer demand for the Company’s and its customers’ products,
competitive and technological developments, customer purchasing
actions, 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 or customer cost reimbursement
actions, adverse business and operational issues resulting from the
global supply chain disruptions, the semiconductor chip shortages
and the coronavirus pandemic, matters adversely impacting the
timing and availability of material component parts and raw
materials 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: Pat HansenSenior Vice President
andChief Financial Officer414-247-3435www.strattec.com
STRATTEC SECURITY
CORPORATIONCondensed Results of
Operations(In Thousands except per share
amounts)(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
Ended |
|
Years Ended |
|
|
|
July 3, 2022 |
|
June 27, 2021 |
|
July 3, 2022 |
|
June 27, 2021 |
|
|
|
|
|
|
|
|
|
|
|
Net Sales |
|
$ |
123,073 |
|
|
$ |
110,057 |
|
|
$ |
452,265 |
|
|
$ |
485,295 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Goods Sold |
|
|
109,177 |
|
|
|
94,805 |
|
|
|
396,249 |
|
|
|
406,637 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit |
|
|
13,896 |
|
|
|
15,252 |
|
|
|
56,016 |
|
|
|
78,658 |
|
|
|
|
|
|
|
|
|
|
|
|
Engineering,
Selling & Administrative Expenses |
|
|
12,436 |
|
|
|
11,200 |
|
|
|
47,119 |
|
|
|
44,743 |
|
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations |
|
|
1,460 |
|
|
|
4,052 |
|
|
|
8,897 |
|
|
|
33,915 |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense |
|
|
(62 |
) |
|
|
(43 |
) |
|
|
(221 |
) |
|
|
(302 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
(Expense) Income, Net |
|
|
(657 |
) |
|
|
722 |
|
|
|
604 |
|
|
|
1,395 |
|
|
|
|
|
|
|
|
|
|
|
|
Income
before Provision for Income Taxes and Non-Controlling Interest |
|
|
741 |
|
|
|
4,731 |
|
|
|
9,280 |
|
|
|
35,008 |
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for Income Taxes |
|
|
78 |
|
|
|
390 |
|
|
|
420 |
|
|
|
5,111 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income |
|
|
663 |
|
|
|
4,341 |
|
|
|
8,860 |
|
|
|
29,897 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to Non-Controlling Interest |
|
|
272 |
|
|
|
1,415 |
|
|
|
1,828 |
|
|
|
7,365 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to STRATTEC SECURITY CORPORATION |
|
$ |
391 |
|
|
$ |
2,926 |
|
|
$ |
7,032 |
|
|
$ |
22,532 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Per Share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.10 |
|
|
$ |
0.77 |
|
|
$ |
1.82 |
|
|
$ |
5.95 |
|
|
Diluted |
|
$ |
0.10 |
|
|
$ |
0.75 |
|
|
$ |
1.80 |
|
|
$ |
5.85 |
|
|
|
|
|
|
|
|
|
|
|
|
Average
Basic Shares Outstanding |
|
|
3,876 |
|
|
|
3,805 |
|
|
|
3,861 |
|
|
|
3,788 |
|
|
|
|
|
|
|
|
|
|
|
|
Average
Diluted Shares Outstanding |
|
|
3,920 |
|
|
|
3,890 |
|
|
|
3,910 |
|
|
|
3,852 |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
Capital Expenditures |
|
$ |
4,781 |
|
|
$ |
2,528 |
|
|
$ |
14,188 |
|
|
$ |
8,929 |
|
|
Depreciation |
|
$ |
4,655 |
|
|
$ |
5,056 |
|
|
$ |
19,379 |
|
|
$ |
19,786 |
|
|
STRATTEC SECURITY
CORPORATIONCondensed Balance Sheet
Data(In Thousands)
|
|
|
July 3, 2022 |
|
|
June 27, 2021 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
8,774 |
|
$ |
14,465 |
Receivables, net |
|
|
75,827 |
|
|
69,902 |
Inventories, net |
|
|
80,482 |
|
|
70,860 |
Other current assets |
|
|
23,149 |
|
|
19,677 |
Total Current Assets |
|
|
188,232 |
|
|
174,904 |
Investment in Joint Ventures |
|
|
26,344 |
|
|
27,224 |
Other Long Term Assets |
|
|
12,375 |
|
|
12,034 |
Property, Plant and Equipment, Net |
|
|
91,729 |
|
|
96,401 |
|
|
$ |
318,680 |
|
$ |
310,563 |
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
Accounts Payable |
|
$ |
43,950 |
|
$ |
36,727 |
Other |
|
|
37,525 |
|
|
40,845 |
Total Current Liabilities |
|
|
81,475 |
|
|
77,572 |
Accrued Pension and Post Retirement Obligations |
|
|
1,722 |
|
|
2,933 |
Borrowings Under Credit Facility |
|
|
11,000 |
|
|
12,000 |
Other Long-term Liabilities |
|
|
4,070 |
|
|
4,625 |
Shareholders’ Equity |
|
|
343,103 |
|
|
334,058 |
Accumulated Other Comprehensive Loss |
|
|
(18,657) |
|
|
(16,797) |
Less: Treasury Stock |
|
|
(135,580) |
|
|
(135,615) |
Total STRATTEC SECURITY CORPORATION Shareholders’ Equity |
|
188,866 |
|
|
181,646 |
Non-Controlling Interest |
|
|
31,547 |
|
|
31,787 |
Total Shareholders’ Equity |
|
|
220,413 |
|
|
213,433 |
|
|
$ |
318,680 |
|
$ |
310,563 |
|
|
|
|
|
|
|
STRATTEC SECURITY
CORPORATIONCondensed Cash Flow Statement
Data(In Thousands)(Unaudited)
|
|
Fourth Quarter
Ended |
|
Years Ended |
|
|
|
|
July 3, 2022 |
|
June 27, 2021 |
|
July 3, 2022 |
|
June 27, 2021 |
|
|
Cash Flows
from Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
$ |
663 |
|
|
$ |
4,341 |
|
|
$ |
8,860 |
|
|
$ |
29,897 |
|
|
|
Adjustment
to Reconcile Net Income to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash (Used In) Provided By Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Loss (Earnings) in Joint Ventures |
|
|
760 |
|
|
|
(716 |
) |
|
|
(181 |
) |
|
|
(2,560 |
) |
|
|
Depreciation |
|
|
4,655 |
|
|
|
5,056 |
|
|
|
19,379 |
|
|
|
19,786 |
|
|
|
Foreign Currency Transaction (Gain) Loss |
|
|
(313 |
) |
|
|
519 |
|
|
|
(237 |
) |
|
|
2,445 |
|
|
|
Unrealized Loss (Gain) on Peso |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Contracts |
|
|
116 |
|
|
|
(211 |
) |
|
|
(384 |
) |
|
|
(723 |
) |
|
|
Stock Based Compensation Expense |
|
|
267 |
|
|
|
197 |
|
|
|
1,140 |
|
|
|
972 |
|
|
|
Loss on disposition of property, plant & equipment |
|
|
39 |
|
|
|
- |
|
|
|
192 |
|
|
|
1,421 |
|
|
|
Deferred Income taxes |
|
|
(1,981 |
) |
|
|
1,473 |
|
|
|
(1,981 |
) |
|
|
1,473 |
|
|
|
Change in Operating Assets/Liabilities |
|
|
(5,677 |
) |
|
|
(1,087 |
) |
|
|
(16,837 |
) |
|
|
(18,099 |
) |
|
|
Other, net |
|
|
124 |
|
|
|
182 |
|
|
|
485 |
|
|
|
538 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash
(Used In) Provided By Operating Activities |
|
|
(1,347 |
) |
|
|
9,754 |
|
|
|
10,436 |
|
|
|
35,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows
from Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in Joint Ventures |
|
|
(75 |
) |
|
|
- |
|
|
|
(150 |
) |
|
|
(100 |
) |
|
|
Additions to Property, Plant and Equipment |
|
|
(4,781 |
) |
|
|
(2,528 |
) |
|
|
(14,188 |
) |
|
|
(8,929 |
) |
|
|
Other |
|
|
5 |
|
|
|
- |
|
|
|
5 |
|
|
|
8 |
|
|
|
Net Cash
Used in Investing Activities |
|
|
(4,851 |
) |
|
|
(2,528 |
) |
|
|
(14,333 |
) |
|
|
(9,021 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows
from Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings Under Credit Facility |
|
|
2,000 |
|
|
|
- |
|
|
|
13,000 |
|
|
|
- |
|
|
|
Repayment of Borrowings Under Credit Facility |
|
|
(3,000 |
) |
|
|
(4,000 |
) |
|
|
(14,000 |
) |
|
|
(23,000 |
) |
|
|
Dividends Paid to Non-Controlling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interests of Subsidiaries |
|
|
(600 |
) |
|
|
- |
|
|
|
(1,800 |
) |
|
|
(490 |
) |
|
|
Exercise of Stock Options and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee Stock Purchases |
|
|
24 |
|
|
|
19 |
|
|
|
908 |
|
|
|
604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used In Financing Activities |
|
|
(1,576 |
) |
|
|
(3,981 |
) |
|
|
(1,892 |
) |
|
|
(22,886 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
Foreign Currency Fluctuations on Cash |
|
|
89 |
|
|
|
(115 |
) |
|
|
98 |
|
|
|
(552 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(Decrease) Increase in Cash & Cash Equivalents |
|
|
(7,685 |
) |
|
|
3,130 |
|
|
|
(5,691 |
) |
|
|
2,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
Cash Equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Period |
|
|
16,459 |
|
|
|
11,335 |
|
|
|
14,465 |
|
|
|
11,774 |
|
|
|
End of Period |
|
$ |
8,774 |
|
|
$ |
14,465 |
|
|
$ |
8,774 |
|
|
$ |
14,465 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strattec Security (NASDAQ:STRT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Strattec Security (NASDAQ:STRT)
Historical Stock Chart
From Apr 2023 to Apr 2024