• STRATTEC Security Corporation Reports Fiscal 2022 First Quarter Operating Results

    المصدر: Nasdaq GlobeNewswire / 21 أكتوبر 2021 16:00:00   America/New_York

    MILWAUKEE, Wis., Oct. 21, 2021 (GLOBE NEWSWIRE) -- STRATTEC SECURITY CORPORATION (“STRATTEC” or the “Company”) (NASDAQ:STRT) today reported operating results for the fiscal first quarter ended September 26, 2021.

    First Quarter
    Net sales for the first quarter ended September 26, 2021 were $100.3 million, compared to net sales of $126.2 million for the first quarter ended September 27, 2020. Net income was $101,000 in the current year first quarter, compared to net income of $8.0 million in the prior year first quarter. Diluted earnings per share for the first quarter were $0.03 compared to diluted earnings per share of $2.11 in the prior year first quarter.

    The current year quarter net sales and profitability were significantly impacted by the global semiconductor chip shortage that temporarily closed several of our customer’s assembly plants in North America for extended periods of time resulting in significantly reduced sales during the current year quarter.

    Additionally, the prior year quarter tax results included a favorable tax adjustment due to changes to the Federal tax law generally referred to as the “Tax Cuts and Jobs Act of 2017”, which reduced our income tax provision by $675,000 and increased our diluted earnings per share by $0.18 in the prior year quarter in comparison to the current year quarter.

    Net sales to each of our customers in the current year quarter and prior year quarter were as follows (in thousands):

       Three Months Ended  
        September 26, 2021   September 27, 2020  
               
     Stellantis / Fiat Chrysler Automobiles $16,560  $25,083  
     General Motors Company  25,684   37,756  
     Ford Motor Company  17,695   15,846  
     Tier 1 Customers  11,975   17,495  
     Commercial and Other OEM Customers  17,412   21,435  
     Hyundai / Kia  11,015   8,619  
     TOTAL $100,341  $126,234  


     

    Sales to Stellantis / Fiat Chrysler Automobiles (FCA) and General Motors Company in the current year quarter decreased over the same period in the prior year quarter due primarily to lower vehicle production volumes for which we supply components due to the continuing impact of the global semiconductor chip shortage. Sales to the Ford Motor Company in the current quarter increased primarily due to the increased content on the F-150 pick-up truck for which we supply components. Tier 1 Customers and Commercial and Other OEM Customers were down in the current year quarter compared to the prior year quarter due to lower production vehicle volumes relating to the semiconductor chip shortage referenced above. Sales to Tier 1 Customers, Commercial and Other OEM Customers primarily represent purchasers of vehicle access control products, such as latches, fobs, driver controls and door handles, that we have developed in recent years to complement our historic core business of locks and keys. The increased sales to Hyundai / Kia in the current year quarter were principally due to higher levels of production on their recently launched new Kia Carnival, formerly the Kia Sedona and Hyundai Starex minivans for which we supply components.

    Gross Profit margins declined to 12.5% in the current year quarter compared to 17.8% in the prior year quarter primarily due to lower customer vehicle production volumes, higher costs for both raw materials and purchased components, an unfavorable Mexican Peso to US dollar exchange rate affecting the cost of our Mexican operations and the mandatory minimum wage increase enacted by the Mexican Government effective January 1, 2021.

    Engineering, Selling and Administrative expenses as a percent of net sales in the current year quarter were 12.1% compared to 9.0% in the prior year quarter. This increase in overall operating expense spending in the current year quarter was primarily due to higher costs for our salaried work force as the prior year quarter had temporary wage reductions that we implemented to address the impact of the COVID-19 pandemic on our operations.

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

        September 26,   September 27,  
        2021   2020  
             
     Equity (Loss) Earnings of VAST LLC Joint Venture $(251) $825  
     Net Foreign Currency Transaction Gain (Loss)  180   (123) 
     Other  (50)  (137) 
       $(121) $565  
             

    The equity loss of VAST LLC in the current year quarter related primarily to the global semiconductor chip shortage referred to above that impacted profitability in our VAST China operation as compared to the same period in the prior year quarter. VAST LLC (including VAST China) is a crucial part of our global strategy and we anticipate that it will contribute to our overall long-term market and financial strength.

    Frank Krejci, President and CEO commented: “This has been a very challenging quarter. For example, industry vehicle build rates in September 2021 were 34% below those in April 2021 due to supply chain issues, forcing many temporary assembly plant closures by our customers during the current quarter.

    "There has been some recent improvement in supply chain issues, a trend that will hopefully continue. Longer term, reasons for optimism remain because of continued consumer demand, extremely thin industry inventory levels and recent reductions of assembly plant closures.

    "We were still able to remain profitable through operational adjustments and cost containment efforts. This was in the face of efficiency disruptions from unexpected customer shipping curtailments, a 20% decline in sales versus last year, added logistics costs, price increases from suppliers and losses in our China operations. Much credit is due to the efforts of our Associates. With a strong balance sheet and lower production pressures, we kept a long-term perspective and maintained a view of this situation as an opportunity to continue to invest in our future products and operational efficiencies."

    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 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.



    STRATTEC SECURITY CORPORATION
    Condensed Results of Operations
    (In Thousands except per share amounts)
    (Unaudited)
           
      First Quarter Ended
           
      September 26, 2021 September 27, 2020
           
    Net Sales $100,341  $126,234 
    Cost of Goods Sold  87,792   103,723 
    Gross Profit  12,549   22,511 
           
    Engineering, Selling &      
    Administrative Expenses  12,121   11,314 
    Income from Operations  428   11,197 
           
    Interest Expense  (48)  (112)
    Other (Expense) Income, Net  (121)  565 
    Income before Provision for Income      
    Taxes and Non-Controlling Interest  259   11,650 
           
    Provision for Income Taxes  37   1,577 
           
    Net Income  222   10,073 
    Net Income Attributable      
    to Non-Controlling Interest  (121)  (2,065)
           
    Net Income Attributable      
    to STRATTEC SECURITY CORP. $101  $8,008 
    Earnings Per Share:      
    Basic $0.03  $2.13 
    Diluted $0.03  $2.11 
    Average Basic      
    Shares Outstanding  3,830   3,765 
           
    Average Diluted      
    Shares Outstanding  3,893   3,788 
           
    Other      
    Capital Expenditures $2,789  $1,514 
    Depreciation $5,057  $4,885 



    STRATTEC SECURITY CORPORATION
    Condensed Balance Sheet Data
    (In Thousands)
           
           
           
           
       September 26, 2021  June 27, 2021
       (Unaudited)   
    ASSETS      
    Current Assets:      
    Cash and cash equivalents $7,024  $14,465 
    Receivables, net  66,614   69,902 
    Inventories, net  77,707   70,860 
    Other current assets  24,295   19,677 
    Total Current Assets  175,640   174,904 
    Investment in Joint Ventures  26,617   27,224 
    Other Long Term Assets  11,874   12,034 
    Property, Plant and Equipment, Net  94,213   96,401 
      $308,344  $310,563 
           
           
    LIABILITIES AND SHAREHOLDERS’ EQUITY      
    Current Liabilities:      
    Accounts Payable $34,533  $36,727 
    Other  35,901   40,845 
    Total Current Liabilities  70,434   77,572 
    Accrued Pension and Post Retirement Obligations  2,923   2,933 
    Borrowings Under Credit Facility  17,000   12,000 
    Other Long-term Liabilities  4,548   4,625 
    Shareholders’ Equity  335,167   334,058 
    Accumulated Other Comprehensive Loss  (17,278)  (16,797)
    Less: Treasury Stock  (135,608)  (135,615)
    Total STRATTEC SECURITY      
      CORPORATION Shareholders’ Equity  182,281   181,646 
    Non-Controlling Interest  31,158   31,787 
    Total Shareholders’ Equity  213,439   213,433 
      $308,344  $310,563 



    STRATTEC SECURITY CORPORATION
    Condensed Cash Flow Statement Data
    (In Thousands)
    (Unaudited)
           
      First Quarter Ended
           
       September 26, 2021   September 27, 2020 
           
           
    Cash Flows from Operating Activities:      
    Net Income $222  $10,073 
    Adjustment to Reconcile Net Income to Net      
    Cash Provided by Operating Activities:      
    Depreciation  5,057   4,885 
    Equity Loss (Earnings) in Joint Ventures  251   (825)
    Foreign Currency Transaction (Gain) Loss  (139)  399 
    Unrealized Gain on Peso Forward Contracts  98   (335)
    Stock Based Compensation Expense  396   208 
    Change in Operating Assets/Liabilities  (15,659)  (7,443)
    Other, net  127   338 
           
    Net Cash (Used In) Provided by Operating Activities  (9,647)  7,300 
           
    Cash Flows from Investing Activities:      
    Additions to Property, Plant and Equipment  (2,789)  (1,514)
    Proceeds Received on Sale of Property, Plant      
    and Equipment  -   3 
    Net Cash Used in Investing Activities  (2,789)  (1,511)
           
    Cash Flow from Financing Activities:      
    Borrowings on Credit Facility  7,000   - 
    Repayment of Borrowings under Credit Facility  (2,000)  (5,000)
    Dividends Paid to Non-Controlling Interest of Subsidiaries  (600)  (490)
    Exercise of Stock Options and Employee      
    Stock Purchases  619   19 
           
    Net Cash Provided (Used In) Financing Activities  5,019   (5,471)
           
    Foreign Currency Impact on Cash  (24)  (109)
           
    Net (Decrease) Increase in Cash & Cash Equivalents  (7,441)  209 
           
    Cash and Cash Equivalents:      
    Beginning of Period  14,465   11,774 
    End of Period $7,024  $11,983 

     

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


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