STRATTEC SECURITY CORPORATION Reports Fiscal Third Quarter Results
MILWAUKEE, Wis., April 17, 2008 (PRIME NEWSWIRE) -- STRATTEC SECURITY CORPORATION (Nasdaq:STRT) today reported operating results for the fiscal third quarter ended March 30, 2008.
Net sales for the Company's third quarter ended March 30, 2008 were $38.4 million, compared to net sales of $45.6 million for the third quarter ended April 1, 2007. Net income for the period was $446,000, compared to $2.9 million in the prior year quarter. Diluted earnings per share for the period were $.13 compared to $.82 in the prior year quarter. The lower sales and net income for the quarter reflect the negative impact of several factors depressing the demand for new vehicles in North America, and the effects of a prolonged strike against a major supplier to General Motors Corporation. These factors have resulted in significantly lower vehicle production and correspondingly reduced sales of STRATTEC's products.
For the nine months ended March 30, 2008, net sales were $121.1 million compared to net sales of $121.6 million in the prior year period. Net income was $4.2 million compared to net income of $4.7 million in the prior year period and diluted earnings per share were $1.19 compared to $1.33.
Overall, sales to STRATTEC's largest customers were significantly lower in the current quarter compared to the prior year quarter. However, sales to General Motors Corporation in the current quarter were slightly higher, at $10.1 million compared to $9.5 million in the prior year quarter due to higher product content on certain GM vehicles and the takeover of some passenger car lockset production from another supplier. These sales gains were partially offset by reduced sales directly related to a strike called by the UAW against a major General Motors supplier which caused General Motors to close several of its assembly plants supplied by STRATTEC. Sales to Chrysler LLC were $9.7 million compared to $15.9 million and sales to Delphi Corporation were $3.8 million compared to $4.8 million due to reduced component content and lower vehicle production volumes. Sales to Ford Motor Company were $5.0 million compared to $5.7 million due to lower production volumes.
Sales during the current quarter were generally in line with previously announced production cuts by STRATTEC's three largest customers. However, the impact of the strike referenced earlier was not expected and reduced sales to General Motors and Delphi Corporation by approximately $1.2 million in the current quarter. As this strike has continued into April, we expect a similar reduction in our sales to these two customers during our fiscal fourth quarter.
Gross profit margins were 16.3% in the current quarter compared to 18.3% in the prior year quarter. The decrease in gross profit margins was primarily attributed to the reduction in customer vehicle production volumes somewhat offset by lower purchased raw material cost for zinc in comparison to last year.
Operating expenses were $6.1 million in the current quarter, compared to $5.0 million in the prior year quarter. The increased spending is attributed to hiring additional engineering personnel along with costs associated with new product development important to STRATTEC's future and more near-term customer programs that are anticipated to launch during the later part of our fiscal fourth quarter.
During the current quarter, the Company contributed $1.0 million to its Pension Fund and repurchased 30,805 STRATTEC SECURITY CORPORATION shares under the Company's stock repurchase program at a cost of $1,187,000.
STRATTEC designs, develops, manufactures and markets mechanical locks and keys, electronically enhanced locks and keys, steering column and instrument panel ignition lock housings, latches and related access control products for North American automotive customers, and for global automotive manufacturers through the VAST Alliance in which it participates with WITTE Automotive of Velbert, Germany and ADAC Automotive of Grand Rapids, Michigan. The Company's history in the automotive business spans nearly 100 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, foreign currency fluctuations, and costs of operations. 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
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Results of Operations
(In Thousands except per share amounts)
Third Quarter Ended Nine Months Ended
March 30, April 1, March 30, April 1,
2008 2007 2008 2007
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Net Sales $ 38,428 $ 45,647 $ 121,075 $ 121,610
Cost of Goods Sold 32,161 37,293 99,508 102,934
--------- --------- --------- ---------
Gross Profit 6,267 8,354 21,567 18,676
Engineering, Selling &
Administrative
Expenses 6,109 4,974 17,740 14,882
--------- --------- --------- ---------
Income from Operations 158 3,380 3,827 3,794
Interest Income 617 879 2,344 2,706
Other Income (Expense),
Net (58) 341 408 490
Minority Interest (48) 25 70 25
--------- --------- --------- ---------
669 4,625 6,649 7,015
Provision for Income
Taxes 223 1,711 2,461 2,266
--------- --------- --------- ---------
Net Income $ 446 $ 2,914 $ 4,188 $ 4,749
========= ========= ========= =========
Earnings Per Share:
Basic $ 0.13 $ 0.82 $ 1.20 $ 1.33
========= ========= ========= =========
Diluted $ 0.13 $ 0.82 $ 1.19 $ 1.33
========= ========= ========= =========
Average Basic
Shares Outstanding 3,476 3,537 3,500 3,558
Average Diluted
Shares Outstanding 3,482 3,541 3,506 3,561
Other
Capital Expenditures $ 4,013 $ 1,353 $ 8,487 $ 3,645
Depreciation &
Amortization $ 1,665 $ 1,699 $ 5,161 $ 5,216
STRATTEC SECURITY CORPORATION
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Condensed Balance Sheet Data
(In Thousands)
March 30, 2008 July 1, 2007
-------------- --------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 59,130 $ 65,491
Receivables, net 20,892 26,890
Inventories 10,044 7,166
Other current assets 14,690 13,017
-------------- --------------
Total Current Assets 104,756 112,564
Deferred Income Taxes 1,890 2,117
Investment in Joint Ventures 3,456 2,813
Prepaid Pension Cost 7,730 4,385
Other Long Term Assets 31 41
Property, Plant and Equipment,
Net 29,849 26,526
-------------- --------------
$ 147,712 $ 148,446
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LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts Payable $ 16,121 $ 16,575
Other 16,489 14,906
------------- --------------
Total Current Liabilities 32,610 31,481
Borrowings Under Line of
Credit Facility -- --
Accrued Pension and
Postretirement Obligations 13,680 13,431
Minority Interest 813 574
Shareholders' Equity 243,806 244,119
Accumulated Other
Comprehensive Loss (14,054) (14,341)
Less: Treasury Stock (129,143) (126,818)
------------- --------------
Total Shareholders' Equity 100,609 102,960
------------- --------------
$ 147,712 $ 148,446
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STRATTEC SECURITY CORPORATION
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Condensed Cash Flow Statement Data
(In Thousands)
Third Quarter Ended Nine Months Ended
March 30, April 1, March 30, April 1,
2008 2007 2008 2007
------------------- -------------------
(Unaudited) (Unaudited)
Cash Flows from Operating
Activities:
Net Income $ 446 $ 2,914 $ 4,188 $ 4,749
Adjustment to Reconcile
Net Income to Cash Used
in Operating Activities:
Minority Interest 37 (25) (111) (25)
Depreciation and
Amortization 1,665 1,699 5,161 5,216
Stock Based
Compensation Expense 124 187 616 566
Tax Benefit from
Options Exercised -- 13 -- 13
Change in Operating
Assets/Liabilities 1,802 (7,280) (1,598) (6,294)
Other, net (15) (177) (357) (45)
-------- -------- -------- --------
Net Cash Provided (Used)
by Operating Activities 4,059 (2,669) 7,899 4,180
Cash Flows from Investing
Activities:
Investment in Joint
Ventures -- -- -- (100)
Additions to Property,
Plant and Equipment (4,013) (1,353) (8,487) (3,645)
Proceeds from Sale of
Property, Plant and
Equipment -- -- -- 21
-------- -------- -------- --------
Net Cash Used in
Investing Activities (4,013) (1,353) (8,487) (3,724)
Cash Flow from Financing
Activities:
Purchase of Common Stock (1,188) -- (2,334) (3,922)
Dividends Paid (528) -- (4,609) --
Contribution from
Minority Interest -- 274 349 274
Loan from Minority
Interest 550 -- 800 --
Reissue/Exercise of Stock
Options 8 82 21 99
-------- -------- -------- --------
Net Cash Provided (Used)
by Financing Activities (1,158) 356 (5,773) (3,549)
-------- -------- -------- --------
Net Decrease in Cash &
Cash Equivalents (1,112) (3,666) (6,361) (3,093)
Cash and Cash Equivalents:
Beginning of Period 60,242 66,285 65,491 65,712
-------- -------- -------- --------
End of Period $ 59,130 $ 62,619 $ 59,130 $ 62,619
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CONTACT: STRATTEC SECURITY CORPORATION Pat Hansen, Senior Vice President and
Chief Financial Officer
414-247-3435
www.strattec.com