• STRATTEC SECURITY CORPORATION Reports Fiscal 2021 Fourth Quarter and Record Full Year Operating Results

    المصدر: Nasdaq GlobeNewswire / 05 أغسطس 2021 15:00:00   America/Chicago

    MILWAUKEE, Aug. 05, 2021 (GLOBE NEWSWIRE) -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal fourth quarter and full year ended June 27, 2021. The comparative prior year fourth quarter operating results were significantly impacted by the COVID-19 virus which is further described in this press release.

    Fourth Quarter Overview
    Net sales for the Company’s fourth quarter ended June 27, 2021 were $110.1 million, compared to net sales of $42.1 million for the fourth quarter ended June 28, 2020. Net income for the current year quarterly period was $2.9 million, compared to a net loss of $10.5 million in the prior year fourth quarter. Diluted earnings per share for the current year quarterly period were $0.75 compared to diluted loss per share of $2.80 in the prior year quarter.

    Both the current and prior fiscal year fourth quarter had certain items that negatively impacted our operating results. During the current year quarter several of our customer assembly plants were temporarily shut down due to the global semiconductor chip shortage reducing net sales and profitability in the fiscal 2021 fourth quarter. In the prior year fourth quarter, the significantly reduced net sales and net loss was primarily attributed to our customers shutting down their assembly plant operations during April and May due to the impact of the COVID-19 pandemic. Those shutdowns reduced our net sales in the prior year fourth quarter by approximately $72 million. In addition, during our prior year fourth quarter, STRATTEC incurred an impairment charge resulting from its one-third ownership interest in Vehicle Access Systems Technology LLC (“VAST LLC”) related to VAST LLC’s joint venture investment in India, Minda VAST Access Systems. STRATTEC’s one third share of the $2 million non-cash impairment charge related to this joint venture in India amounted to $667,000 on a pre-tax basis or $510,000 on an after tax basis and reduced our diluted earnings per share in the prior year fourth quarter by $0.14.

    Full Year Earnings Overview
    For the year ended June 27, 2021, the Company’s net sales were $485.3 million compared to net sales of $385.3 million in the prior year period. Net income during the current year was $22.5 million compared to a net loss of $7.6 million in the prior year period. Diluted earnings per share were $5.85 for the year ended June 27, 2021 compared to diluted loss per share of $2.04 during the prior year ended June 28, 2020. Fiscal year 2021 set a Company record for both net income and diluted earnings per share.

    Discussion of Quarterly Results
    Net 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 
       June 27, 2021 June 28, 2020 
           
     General Motors Company $35,225 $11,588 
     Fiat Chrysler Automobiles 15,710 6,324 
     Ford Motor Company 13,314 6,139 
     Tier 1 Customers 13,332 5,982 
     Commercial and Other OEM Customers 18,689 8,910 
     Hyundai / Kia 13,787 3,174 
     TOTAL $110,057 $42,117 

    As mentioned previously, the current year quarter sales were adversely impacted by the global semiconductor chip shortage and, in the prior year quarter, our global sales were significantly and negatively impacted by the decision of our OEM customers to fully close their assembly plants in April and May 2020 due to the Coronavirus (COVID-19) pandemic. The impact of these production schedule reductions reduced our net sales in the prior year quarter by approximately $72.0 million dollars. Sales to all customer groups in the current year quarter were significantly higher in comparison to the prior year quarter due to the foregoing impact of the COVID-19 virus disruption. Sales to Hyundai / Kia were also exceptionally higher in the current year quarter due to the introduction of the new Kia Sedona and Hyundai Starex minivans for which we supply primarily power sliding door components.

    Gross profit margins were 13.9 percent in the current year quarter compared to a negative 18.5 percent in the prior year quarter. The increase in gross profit margin in the current year quarter compared to the prior year quarter was primarily attributed to being more fully operational in the current year quarter as compared to temporarily shutting down our operations at both our Milwaukee and Mexico production facilities due to the COVID-19 virus in the prior year quarter. The current year quarter gross profit margins were also negatively impacted by an unfavorable U.S. Dollar to Mexican Peso exchange rate affecting our operations in Mexico, accruals for bonus expense and higher purchased costs for certain raw materials and components.

    Engineering, Selling and Administrative expenses overall were higher in the current year quarter as compared to the prior year quarter. The prior year quarter was significantly lower due to a ten percent reduction in the salaried work force, a temporary reduction in hours worked, and reductions in various other operating costs, many of which were implemented as cost saving measures to mitigate the impact of the COVID-19 pandemic on our reduced sales levels.

    Included in Other Income, Net in the current year quarter compared to the prior year quarter were the following items (in thousands of dollars):

       June 27, 2021 June 28, 2020  
            
     Equity Earnings (Loss) of VAST LLC Joint Venture $716 $(601) 
     Equity Earnings of SAL Joint Venture -    337  
     Gain on Rabbi Trust 393 363  
     Net Foreign Currency Realized and      
     Unrealized Transaction (Loss) Gain (231
    		)65  
     Other (Expense) Income (156
    		)265  
       $722 $429  

    The lower profitability at our VAST LLC operations during the prior year quarter related primarily to our one third share of the impairment charge, or $667,000, relating to our Minda VAST Access Systems joint venture previously discussed. In addition, our VAST China and Minda VAST Access Systems Operations were impacted by the COVID -19 virus with lower sales and profitability during the prior year quarter. The STRATTEC Advanced Logic (SAL) Joint Venture was dissolved during the prior year quarter.

    Frank Krejci, President & CEO commented: “Over the last few months, our sales and profits have been reduced because of customers temporarily shutting down their assembly plants. This is due to the widely reported shortages of semiconductor chips, not because of reduced demand. In fact, inventories on dealer lots and car rental agencies are at abnormally low levels.

    Despite these issues, we are pleased to highlight summary results for the year:

    • Diluted earnings per share of $5.85, our highest earnings since our spinoff from Briggs and Stratton Corporation over 26 years ago.
    • Cash flow from operations of $35.2 million or $9.13 per share.
    • $23 million of debt reduction.
    • Significantly improved overall net cash position (cash on-hand less debt outstanding).

    After a tumultuous fiscal 2020 in which our Associates worked to overcome the negative effects of the pandemic, we have experienced the positive benefits of their efforts in our financial results for fiscal 2021. We believe their continuing dedicated efforts to win more new business, implement structural efficiencies and pursue new technologies for expanded opportunities will serve the Company well in fiscal 2022 and the years ahead.”

    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, adverse business and operational issues resulting from 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.


    STRATTEC SECURITY CORPORATION
    Condensed Results of Operations
    (In Thousands except per share amounts)
    (Unaudited)

      Fourth Quarter Ended  Years Ended 
      June 27, 2021  June 28, 2020  June 27, 2021  June 28, 2020 
                 
    Net Sales $110,057  $42,117  $485,295  $385,300 
                 
    Cost of Goods Sold 94,805  49,900  406,637  349,854 
                 
    Gross Profit (Loss) 15,252  (7,783) 78,658  35,446 
                 
    Engineering, Selling &
       Administrative Expenses    		 11,200  8,333  44,743  44,108 
                 
    Income (Loss) from Operations 4,052  (16,116) 33,915  (8,662)
                 
    Interest Expense (43) (128) (302) (920)
                 
    Other Income, Net 722  429  1,395  1,459 
                 
    Income (Loss) before Provision (Benefit)
     for Income Taxes
             and Non-Controlling Interest    		 4,731  (15,815) 35,008  (8,123)
                 
    Provision (Benefit) for Income Taxes 390  (3,460) 5,111  (2,266)
                 
    Net Income (Loss) 4,341  (12,355) 29,897  (5,857)
                 
    Net Income (Loss) Attributable to
      Non-Controlling Interest    		 1,415  (1,853) 7,365  1,748  
                 
    Net Income (Loss) Attributable to
      STRATTEC SECURITY
          CORPORATION    		 $2,926  $(10,502) $22,532  $(7,605)
                 
    Net Income (Loss) Per Share:            
    Basic $0.77  $(2.80) $5.95  $(2.04)
    Diluted $0.75  $(2.80) $5.85  $(2.04)
    Average Basic
       Shares Outstanding    		 3,805  3,749  3,788  3,737 
                 
    Average Diluted
       Shares Outstanding    		 3,890  3,749  3,852  3,737 
                 
    Other            
    Capital Expenditures $2,528  $2,074  $8,929  $12,381 
    Depreciation $5,056  $4,980  $19,786  $19,329 

                    

    STRATTEC SECURITY CORPORATION
    Condensed Balance Sheet Data
    (In Thousands)

      June 27, 2021
    		 June 28, 2020
      (Unaudited)   
    ASSETS    
    Current Assets: $14,465 $11,774
    Cash and cash equivalents 69,902 41,955
    Receivables, net 70,860 54,400
    Inventories, net 19,677 17,239
    Other current assets 174,904 125,368
    Total Current Assets 27,224 22,068
    Investment in Joint Ventures 12,034 12,961
    Other Long Term Assets 96,401 105,148
    Property, Plant and Equipment, Net $310,563 $265,545
         
         
    LIABILITIES AND SHAREHOLDERS’ EQUITY    
    Current Liabilities:    
    Accounts Payable $36,727 $18,549
    Other 40,845 29,591
    Total Current Liabilities 77,572 48,140
    Accrued Pension and Post Retirement Obligations 2,933 1,956
    Borrowings Under Credit Facility 12,000 35,000
    Other Long-term Liabilities 4,625 5,008
    Shareholders’ Equity 334,058 309,991
    Accumulated Other Comprehensive Loss (16,797)(22,113)
    Less: Treasury Stock (135,615)(135,656)
    Total STRATTEC SECURITY
       CORPORATION Shareholders’ Equity    		 181,646 152,222
    Non-Controlling Interest 31,787 23,219
    Total Shareholders’ Equity 213,433 175,441
      $310,563 $265,545



    STRATTEC SECURITY CORPORATION
    Condensed Cash Flow Statement Data
    (In Thousands)
    (Unaudited)

                  
         Fourth Quarter Ended       Years Ended   
      June 27, 2021
    		  June 28, 2020  June 27, 2021
    		 June 28, 2020
                  
    Cash Flows from Operating Activities:             
    Net Income (Loss)$4,341 $(12,355)$29,897 $ (5,857) 
    Adjustment to Reconcile Net Income (Loss) to Cash Provided by Operating Activities:             
      Equity (Earnings) Loss in Joint Ventures (716) 264  (2,560)   209 
      Depreciation 5,056  4,980  19,786   19,329 
      Foreign Currency Transaction Loss (Gain) 519  85  2,445   (1,982) 
      Unrealized (Gain) Loss on Peso Forward Contracts (211) (568
    		) (723
    		)    480 
      Stock Based Compensation Expense 197  207  972   996 
      Non-Cash Compensation Expense -  351  -   4,824 
      Loss on disposition of property, plant & equipment -  99  1,421   369 
      Deferred Income taxes 1,473  (2,557)  1,473   (3,589) 
      Change in Operating Assets/Liabilities (1,087)  5,207  (18,099)   10,616 
      Other, net  182  (223
    		)   538   29 
                  
    Net Cash Provided (Used in) by Operating Activities 9,754  (4,510)  35,150   25,424 
                  
    Cash Flows from Investing Activities:    
      Investment in Joint Ventures -  -  (100)   - 
      Additions to Property, Plant and Equipment (2,528)  (2,074)  (8,929)    (12,381) 
      Other      -  3
    		   8   32
    		 
    Net Cash Used in Investing Activities (2,528)  (2,071)  (9,021)   (12,349) 
                  
    Cash Flows from Financing Activities:    
      Borrowings Under Credit Facility -  8,000  -   8,000 
      Repayment of Borrowings Under Credit Facility (4,000)  -  (23,000)   (15,000) 
      Dividends Paid to Non-Controlling Interests of Subsidiaries -  -  (490)   (980) 
      Dividends Paid -  -  -   (1,572) 
      Exercise of Stock Options and Employee Stock Purchases  19  17
    		   604   560
    		 
                  
    Net Cash (Used In) Provided By Financing Activities (3,981)  8,017  (22,886)   (8,992) 
                  
    Effect of Foreign Currency Fluctuations on Cash  (115)  165
    		   (552)   (118
    		) 
                  
    Net Increase in Cash & Cash Equivalents 3,130  1,601  2,691   3,965 
                  
    Cash and Cash Equivalents:        
      Beginning of Period  11,335  10,173
    		   11,774   7,809
    		 
      End of Period $14,465 $ 11,774  $14,465  $11,774 

    Contact: Pat Hansen
    Senior Vice President and
    Chief Financial Officer
    414-247-3435
    www.strattec.com


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