STRT Strattec Security Corporation

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)

Wisconsin		0-25150		39-1804239
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(I.R.S. Employer 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. ☐

 

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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).

 

 

 

 

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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

 

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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)

	Three Months Ended		Year Ended
	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

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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

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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

 

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STRATTEC SECURITY CORPORATION

Condensed Results of Operations

(In Thousands except per share amounts)

(Unaudited)

 

	Three Months Ended				Year Ended
	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023
Net Sales	$ 143,055		$ 132,219		$ 537,766		$ 492,946
Cost of Goods Sold	124,488		119,951		472,298		450,794
Gross Profit	18,567		12,268		65,468		42,152
Engineering, Selling & Administrative Expenses	8,876		10,975		47,654		48,241
Income (Loss) from Operations	9,691		1,293		17,814		(6,089)
Interest Expense	(239)		(369)		(900)		(960)
Investment Income	235		-		572		-
Other Income (Expense), net	1,958		(1,089)		2,717		(619)
Income (Loss) Before Provision for Income Taxes and Non- Controlling Interest	11,645		(165)		20,203		(7,668)
Provision for Income Taxes	1,578		2,919		3,775		1,281
Net Income (Loss)	10,067		(3,084)		16,428		(8,949)
Net Income (Loss) Attributable to Non-Controlling Interest	447		(384)		115		(2,279)
Net Income (Loss) Attributable to STRATTEC SECURITY CORPORATION	$ 9,620		$ (2,700)		$ 16,313		$ (6,670)
Earnings (Loss) Per Share:
Basic	$ 2.41		$ (0.69)		$ 4.10		$ (1.70)
Diluted	$ 2.39		$ (0.69)		$ 4.07		$ (1.70)
Average Basic Shares Outstanding	3,988		3,928		3,975		3,921
Average Diluted Shares Outstanding	4,027		3,928		4,004		3,921
Other
Capital Expenditures	$ 3,723		$ 3,646		$ 9,788		$ 17,370
Depreciation	$ 3,773		$ 4,340		$ 16,547		$ 17,485

 

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STRATTEC SECURITY CORPORATION

Condensed Balance Sheet Data

(In Thousands)

(Unaudited)

 

				June 30, 2024		July 2, 2023
ASSETS
	Current Assets:
		Cash and Cash Equivalents		$ 25,410		$ 20,571
		Receivables, net		99,297		89,811
		Inventories, net		81,649		77,597
		Customer Tooling in Progress, net		22,173		20,800
		Value Added Tax Recoverable		19,684		7,912
		Other Current Assets		5,601		9,091
			Total Current Assets	253,814		225,782
	Other Long-term Assets			24,291		20,702
	Property, Plant and Equipment, net			86,184		94,446
				$ 364,289		$ 340,930
LIABILITIES AND SHAREHOLDERS' EQUITY
	Current Liabilities:
		Accounts Payable		$ 54,911		$ 57,927
		Value Added Tax Payable		9,970		6,499
		Other		53,407		44,560
			Total Current Liabilities	118,288		108,986
	Accrued Pension and Postretirement Obligations			2,429		2,363
	Borrowings Under Credit Facility - Long-Term			13,000		13,000
	Other Long-term Liabilities			4,957		5,557
	Shareholders' Equity			351,712		334,683
	Accumulated Other Comprehensive Loss			(15,689)		(14,194)
	Less: Treasury Stock			(135,478)		(135,526)
		Total STRATTEC SECURITY
			CORPORATION Shareholders' Equity	200,545		184,963
		Non-Controlling Interest		25,070		26,061
	Total Shareholders' Equity			225,615		211,024
				$ 364,289		$ 340,930

 

 

 

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STRATTEC SECURITY CORPORATION

Condensed Cash Flow Statement Data

(In Thousands)

(Unaudited)

 

				Three Months Ended		Year Ended
				June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023
Cash Flows from Operating Activities:
Net Income (Loss)				$ 10,067		$ (3,084)		$ 16,428		$ (8,949)
Adjustments to Reconcile Net Income (Loss) to Cash Provided by Operating Activities:
		Depreciation		3,773		4,340		16,547		17,485
		Equity Loss (Earnings) in Joint Ventures		62		375		331		(1,559)
		Foreign Currency Transaction (Gain) Loss		(2,279)		821		(2,153)		2,935
		Loss on Settlement of Pension Obligation		-		-		-		217
		Stock Based Compensation Expense		243		327		1,467		1,466
		Deferred Tax Provision		(4,711)		(4,937)		(4,711)		(4,937)
		Change in Operating Assets/Liabilities		11,543		4,437		(16,232)		2,670
	Other, net			790		304		588		767
Net Cash Provided by Operating Activities				19,488		2,583		12,265		10,095
Cash Flows from Investing Activities:
	Proceeds from sale of interest in VAST LLC			-		26,170		2,000		26,170
	Investment in Joint Ventures			-		(41)		-		(278)
	Purchase of VAST Korea net assets			-		354		-		354
	Additions to Property, Plant & Equipment			(3,723)		(3,646)		(9,788)		(17,370)
	Proceeds on Sales of Property, Plant & Equipment			-		10		-		25
Net Cash (Used in) Provided by Investing Activities				(3,723)		22,847		(7,788)		8,901
Cash Flows from Financing Activities:
	Borrowings on Line of Credit Facility			-		4,000		2,000		17,000
	Payments on Line of Credit Facility			-		(12,000)		(2,000)		(15,000)
	Purchase of SPA non-controlling interest			-		(9,019)		-		(9,019)
	Dividends Paid to Non-Controlling Interest of Subsidiary			-		-		-		(600)
	Exercise of Stock Options and Employee Stock Purchases			17		19		72		183
Net Cash Provided by (Used In) Financing Activities				17		(17,000)		72		(7,436)
Effect of Foreign Currency Fluctuations on Cash				34		55		290		237
Net Increase in Cash & Cash Equivalents				15,816		8,485		4,839		11,797
Cash & Cash Equivalents:
	Beginning of Period			9,594		12,086		20,571		8,774
	End of Period			$ 25,410		$ 20,571		$ 25,410		$ 20,571

 

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