MILWAUKEE, Feb. 02, 2023 (GLOBE NEWSWIRE) -- STRATTEC SECURITY CORPORATION (“STRATTEC” or the “Company”) (NASDAQ:STRT) today reported operating results for the fiscal second quarter ended January 1, 2023.

Net sales for the second quarter ended January 1, 2023 were $113.2 million, compared to net sales of $112.9 million for the second quarter ended December 26, 2021. Net loss was $1.8 million in the current year second quarter, compared to net income of $3.4 million in the prior year second quarter. Diluted loss per share for the current year second quarter was $0.47 compared to diluted earnings per share of $0.87 in the prior year second quarter.

For the six months ended January 1, 2023, the Company’s net sales were $233.5 million compared to net sales of $213.2 million in the prior year six-month period. Net loss during the current year six-month period was $1.7 million compared to a net income of $3.5 million during the prior year six-month period. Diluted loss per share was $0.44 during the six-month period ended January 1, 2023 compared to diluted earnings per share of $0.89 during the six-month period ended December 26, 2021. Profitability for both the current year quarter and for the six-month period ended January 1, 2023 was negatively impacted by higher inflationary costs of materials, labor and shipping rates compared with that for the respective prior year periods.

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

Overall net sales were stable for the current quarter relative to the prior year quarter. Sales to General Motors Company, Ford Motor Company and Hyundai/Kia were positively impacted in the current year quarter due to higher vehicle production volumes resulting from improved global semiconductor chip availability relative to the prior year quarter. Specifically, sales growth to General Motors Company in the current year quarter was attributed to higher production volumes of their GM and Chevrolet pickup trucks and SUVs. Sales to Hyundai / Kia increased quarter-over-quarter due to higher levels of production of the Kia Carnival minivan in the current year quarter as compared to the prior year quarter.

The decrease in sales to Stellantis resulted primarily from its plant shutdowns in the quarter, which reduced production volumes compared to the prior year quarter. Sales to Commercial and Other OEM Customers, which are comprised of aftermarket products and vehicle access control products, such as latches, fobs, driver controls and door handles, declined in the current year quarter as compared to the prior year quarter due to continued semiconductor chip availability issues, primarily for aftermarket keys. The increases in availability of semiconductor chips were allocated toward the production of components for production vehicles ahead of aftermarket products and therefore, sales to aftermarket customers continued to be negatively impacted in the current year quarter due to these issues.

Gross Profit margins declined to 6.5% in the current year quarter compared to 13.2% in the prior year quarter primarily due to higher costs of raw materials, purchased materials and shipping as well as increased costs in our Mexican operations related to the mandatory minimum wage increase enacted by the Mexican Government effective January 1, 2022.

Engineering, Selling and Administrative expenses increased $780,000 in the current year quarter compared with prior year quarter primarily due to increased salary and recruiting costs in the current year quarter and lower costs in the prior year quarter due to a customer reimbursement of engineering and design costs incurred on a new program

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

The equity earnings of VAST LLC in the current year quarter compared to the prior year quarter were slightly lower primarily due to higher engineering spending in China associated with future programs.

Frank Krejci President and CEO commented: “This proved to be a difficult quarter with continued inflationary pressures on both purchased parts from suppliers and the sourcing of raw materials like zinc, steel and resins. Zinc and resin prices remain stubbornly high. The recent relief in steel prices will provide a benefit once we have worked through prior purchase commitments.
Raising our product prices to offset the cost increases has been challenging due to long term contracts with our customers. Nevertheless, our Team continues to focus on securing price increases, implementing efficiency improvements, launching significant new business won over the last two years and pursuing new business with a heightened focus on Electric Vehicle opportunities.”

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 customers’ 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 reaction to same from foreign countries, the volume and scope of product returns or customer cost reimbursement actions, adverse business and operational issues resulting from semiconductor chip supply shortages and the coronavirus (COVID-19) pandemic and costs of operations (including fluctuations in the cost, and factors impacting the availability, of necessary 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.

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Contact: Dennis Bowe
Vice President and
Chief Financial Officer
414-247-3399
www.strattec.com 

Source: STRATTEC SECURITY CORPORATION