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): April 23, 2015
|
STRATTEC SECURITY CORPORATION
|
|
(Exact name of registrant as specified in charter)
|
|
Wisconsin
|
|
(State or other jurisdiction of incorporation)
|
|
0-25150
|
39-1804239
|
|
|
(Commission File Number)
|
(I.R.S. Employer I.D. Number)
|
|
3333 West Good Hope Road
Milwaukee, WI
|
53209
|
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
|
(414) 247-3333
|
|
(Registrant's telephone number; including area code)
|
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 (see General Instruction A.2. below):
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
1
Section 2 – Financial Information
Item 2.02. Results of Operations and Financial Condition.
On April 23, 2015, STRATTEC SECURITY CORPORATION issued a press release (the "Press Release") announcing results for the fiscal third quarter ended March 29, 2015. A copy of the Press Release is attached as Exhibit 99.1 to this report. The attached Exhibit 99.1 is furnished pursuant to Item 2.02 of Form 8-K.
The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.
Section 9 - Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 -- Press Release of STRATTEC SECURITY CORPORATION, issued April 23, 2015.
2
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 thereunto duly authorized.
STRATTEC SECURITY CORPORATION
Date: April 23, 2015
By: /s/ Patrick J. Hansen
Patrick J. Hansen, Senior Vice President and
Chief Financial Officer
3
Exhibit 99.1
FOR RELEASE AT 3:00 PM CST
Contact: Pat Hansen
Senior Vice President and
Chief Financial Officer
414-247-3435
www.strattec.com
STRATTEC SECURITY CORPORATION
REPORTS FISCAL 2015 THIRD QUARTER RESULTS
Milwaukee, Wisconsin – April 23, 2015 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal third quarter ended March 29, 2015.
Net sales for the Company’s third quarter ended March 29, 2015 were $88.8 million, compared to net sales of $85.3 million for the third quarter ended March 30, 2014. Net income for the current year quarterly period was $4.4 million, compared to net income of $3.6 million in the prior year quarter. Diluted earnings per share for the current year quarterly period were $1.20 compared to diluted earnings per share of $1.00 in the prior year quarter.
For the nine months ended March 29, 2015, the Company’s net sales were $313.0 million compared to net sales of $246.4 million in the prior year nine month period. Net income during the current year nine month period was $19.5 million compared to net income of $10.7 million in the prior year nine month period. Diluted earnings per share were $5.33 for the nine month period ended March 29, 2015 compared to diluted earnings per share of $3.00 during the nine month period ended March 30, 2014.
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
|
||||||||
|
March 29, 2015
|
March 30, 2014
|
|||||||
|
Chrysler Group LLC
|
$ | 26,151 | $ | 29,180 | ||||
|
General Motors Company
|
17,015 | 18,221 | ||||||
|
Ford Motor Company
|
10,951 | 11,707 | ||||||
|
Tier 1 Customers
|
18,637 | 14,968 | ||||||
|
Commercial and Other OEM Customers
|
10,380 | 9,947 | ||||||
|
Hyundai / Kia
|
5,683 | 1,255 | ||||||
|
TOTAL
|
$ | 88,817 | $ | 85,278 | ||||
1
Decreased sales to Chrysler Group LLC in the current year quarter were primarily due to Chrysler’s temporary shutdown of its Windsor, Canada assembly plant to re-tool the new Chrysler minivan. The negative effect of the shutdown was partially offset by increased service sales in comparison to the prior year quarter. Decreased sales to General Motors Company in the current year quarter related primarily to a sales concession recorded during the current year quarter compared to the prior year quarter. Decreased sales to Ford Motor Company in the current year quarter were attributed primarily to lower vehicle production volumes on models for which we supply components, and in particular for components we supply on the F-150 pick-up trucks offset partially by higher latch product sales. Sales to Tier 1, Commercial and Other OEM Customers during the current year quarter increased in comparison to the prior year quarter. These customers primarily represent purchasers of vehicle access control products, such as latches, fobs, and driver controls, that have been 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 the continued ramp-up of the new Kia Sedona minivan for which we supply components.
Gross profit margins were 17.7 percent in the current year quarter compared to 17.5 percent in the prior year quarter. The increase in gross profit margin was attributed to lower bonus expense provisions and a favorable Mexican Peso to US dollar exchanges rate affecting our Mexican operations offset by a customer sales concession.
Engineering, Selling and Administrative expenses as a percent of net sales in the current year quarter were 11.1% compared to 11.4% in the prior year quarter.
Included in Other Income, Net in the current year quarter compared to the prior year quarter were the following items (in thousands of dollars):
|
March 29,
2015
|
March 30,
2014
|
|||||||
|
Equity Earnings of VAST LLC Joint Venture
|
$ | 301 | $ | 365 | ||||
|
Equity Loss of STRATTEC Advanced Logic
(formerly NextLock LLC)
|
(508 | ) | (98 | ) | ||||
|
Foreign Currency Transaction Gain
|
583 | 36 | ||||||
|
Rabbi Trust Gain
|
44 | 27 | ||||||
|
Other
|
71 | 8 | ||||||
| $ | 491 | $ | 338 | |||||
The lower income tax provision in the current year quarter occurred as a result of a reduction in our tax liability for unrecognized tax benefits and related interest associated with tax years that closed during the current period.
Frank Krejci, President & CEO commented: “I am pleased to report that we were able to continue to show modest sales growth in the current year quarter, despite the negative headwinds of a slower than anticipated ramp up in Ford’s introduction of the new F-150 pick-up trucks and a reduction of about $8 million in sales due to Chrysler’s temporary shutdown of its Windsor, Canada minivan assembly plant in order to change over to their newly designed models. The Chrysler Windsor assembly plant shutdown is expected to impact us in a similar manner in the next quarter before we begin to refill their pipeline.
During this quarter we, like many other companies, had to address the challenges presented to us as a result of the West Coast dock work slowdown and eventual contract settlement. It certainly had impacts on our efficiency, the costs of expediting parts and our inventory levels.
2
During the quarter, we celebrated our 20th anniversary since STRATTEC was spun off as an independent public company, yet we are mindful that our roots go back 107 years to the founding of Briggs & Stratton Corporation. Because of both our anniversary and the progress we have made, we were honored to be invited to ring the closing bell at NASDAQ on February 23, which only added to our collective pride and sense of accomplishment this year.”
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” brand name. STRATTEC’s history in the automotive business spans over 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 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.
3
STRATTEC SECURITY CORPORATION
Results of Operations
(In Thousands except per share amounts)
(Unaudited)
|
Third Quarter Ended
|
Nine Months Ended
|
|||||||||||||||
|
March 29, 2015
|
March 30, 2014
|
March 29, 2015
|
March 30, 2014
|
|||||||||||||
|
Net Sales
|
$ | 88,817 | $ | 85,278 | $ | 313,049 | $ | 246,357 | ||||||||
|
Cost of Goods Sold
|
73,066 | 70,386 | 250,789 | 201,007 | ||||||||||||
|
Gross Profit
|
15,751 | 14,892 | 62,260 | 45,350 | ||||||||||||
|
Engineering, Selling & Administrative Expenses
|
9,847 | 9,757 | 33,524 | 28,477 | ||||||||||||
|
Income from Operations
|
5,904 | 5,135 | 28,736 | 16,873 | ||||||||||||
|
Interest Income
|
61 | 37 | 126 | 64 | ||||||||||||
|
Interest Expense
|
(17 | ) | (8 | ) | (39 | ) | (37 | ) | ||||||||
|
Other Income, Net
|
491 | 338 | 3,171 | 1,154 | ||||||||||||
|
Income before Provision for Income
Taxes and Non-Controlling Interest
|
6,439 | 5,502 | 31,994 | 18,054 | ||||||||||||
|
Provision for Income Taxes
|
1,064 | 1,285 | 9,378 | 5,302 | ||||||||||||
|
Net Income
|
5,375 | 4,217 | 22,616 | 12,752 | ||||||||||||
|
Net Income Attributable
to Non-Controlling Interest
|
(999 | ) | (616 | ) | (3,162 | ) | (2,067 | ) | ||||||||
|
Net Income Attributable to
STRATTEC SECURITY
CORPORATION
|
$ | 4,376 | $ | 3,601 | $ | 19,454 | $ | 10,685 | ||||||||
|
Earnings Per Share:
|
||||||||||||||||
|
Basic
|
$ | 1.23 | $ | 1.03 | $ | 5.47 | $ | 3.07 | ||||||||
|
Diluted
|
$ | 1.20 | $ | 1.00 | $ | 5.33 | $ | 3.00 | ||||||||
|
Average Basic
Shares Outstanding
|
3,520 | 3,443 | 3,511 | 3,413 | ||||||||||||
|
Average Diluted
Shares Outstanding
|
3,603 | 3,534 | 3,603 | 3,494 | ||||||||||||
|
Other
|
||||||||||||||||
|
Capital Expenditures
|
$ | 4,696 | $ | 2,931 | $ | 21,651 | $ | 9,381 | ||||||||
|
Depreciation & Amortization
|
$ | 2,206 | $ | 2,046 | $ | 6,467 | $ | 6,213 | ||||||||
4
STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
|
March 29, 2015
|
June 29, 2014
|
|||||||
|
(Unaudited)
|
||||||||
|
ASSETS
|
||||||||
|
Current Assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 28,035 | $ | 19,756 | ||||
|
Receivables, net
|
62,224 | 68,822 | ||||||
|
Inventories, net
|
35,835 | 30,502 | ||||||
|
Other current assets
|
14,546 | 16,559 | ||||||
|
Total Current Assets
|
140,640 | 135,639 | ||||||
|
Investment in Joint Ventures
|
10,865 | 9,977 | ||||||
|
Other Long Term Assets
|
13,400 | 11,639 | ||||||
|
Property, Plant and Equipment, Net
|
69,534 | 55,781 | ||||||
| $ | 234,439 | $ | 213,036 | |||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
|
Current Liabilities:
|
||||||||
|
Accounts Payable
|
$ | 28,836 | $ | 36,053 | ||||
|
Other
|
31,560 | 29,210 | ||||||
|
Total Current Liabilities
|
60,396 | 65,263 | ||||||
|
Accrued Pension and Post Retirement Obligations
|
3,487 | 3,842 | ||||||
|
Borrowings Under Credit Facility
|
11,000 | 2,500 | ||||||
|
Deferred Income Taxes
|
5,644 | 5,127 | ||||||
|
Other Long-term Liabilities
|
207 | 1,401 | ||||||
|
Shareholders’ Equity
|
301,534 | 281,623 | ||||||
|
Accumulated Other Comprehensive Loss
|
(23,313 | ) | (20,198 | ) | ||||
|
Less: Treasury Stock
|
(135,907 | ) | (135,919 | ) | ||||
|
Total STRATTEC SECURITY
CORPORATION Shareholders’ Equity
|
142,314 | 125,506 | ||||||
|
Non-Controlling Interest
|
11,391 | 9,397 | ||||||
|
Total Shareholders’ Equity
|
153,705 | 134,903 | ||||||
| $ | 234,439 | $ | 213,036 | |||||
5
STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)
|
Third Quarter Ended
|
Nine Months Ended
|
|||||||||||||||
|
March 31, 2015
|
March 30, 2014
|
March 31, 2015
|
March 30, 2014
|
|||||||||||||
|
Cash Flows from Operating Activities:
|
||||||||||||||||
|
Net Income
|
$ | 5,375 | $ | 4,217 | $ | 22,616 | $ | 12,752 | ||||||||
|
Adjustment to Reconcile Net Income to
|
||||||||||||||||
|
Cash Provided by Operating Activities:
|
||||||||||||||||
|
Equity Loss (Earnings) in
Joint Ventures
|
207 | (267 | ) | 138 | (858 | ) | ||||||||||
|
Depreciation and Amortization
|
2,206 | 2,046 | 6,467 | 6,213 | ||||||||||||
|
Foreign Currency Transaction Gain
|
(583 | ) | (36 | ) | (3,004 | ) | (74 | ) | ||||||||
|
Stock Based Compensation Expense
|
313 | 250 | 1,013 | 880 | ||||||||||||
|
Change in Operating Assets/Liabilities
|
(1,622 | ) | (3,705 | ) | (3,807 | ) | (9,715 | ) | ||||||||
|
Other, net
|
15 | 40 | 172 | 114 | ||||||||||||
|
Net Cash Provided by Operating Activities
|
5,911 | 2,545 | 23,595 | 9,312 | ||||||||||||
|
Cash Flows from Investing Activities:
|
||||||||||||||||
|
Investment in Joint Ventures
|
- | - | (384 | ) | - | |||||||||||
|
Additions to Property, Plant and Equipment
|
(4,696 | ) | (2,931 | ) | (21,651 | ) | (9,381 | ) | ||||||||
|
Proceeds from Sale of Property, Plant
and Equipment
|
- | 25 | - | 46 | ||||||||||||
|
Other
|
- | (285 | ) | (215 | ) | (285 | ) | |||||||||
|
Net Cash Used in Investing Activities
|
(4,696 | ) | (3,191 | ) | (22,250 | ) | (9,620 | ) | ||||||||
|
Cash Flows from Financing Activities:
|
||||||||||||||||
|
Borrowings Under Credit Facility
|
7,500 | 500 | 9,000 | 1,250 | ||||||||||||
|
Repayment of Borrowings Under Credit Facility
|
- | (1,000 | ) | (500 | ) | (1,000 | ) | |||||||||
|
Dividends Paid to Non-Controlling
Interests of Subsidiaries
|
- | - | (882 | ) | (984 | ) | ||||||||||
|
Dividends Paid
|
(428 | ) | (388 | ) | (1,282 | ) | (1,152 | ) | ||||||||
|
Exercise of Stock Options and
Employee Stock Purchases
|
20 | 1,639 | 734 | 2,428 | ||||||||||||
|
Net Cash Provided by Financing Activities
|
7,092 | 751 | 7,070 | 542 | ||||||||||||
|
Effect of Foreign Currency Fluctuations on Cash
|
(115 | ) | 1 | (136 | ) | (47 | ) | |||||||||
|
Net Increase in Cash & Cash Equivalents
|
8,192 | 106 | 8,279 | 187 | ||||||||||||
|
Cash and Cash Equivalents:
|
||||||||||||||||
|
Beginning of Period
|
19,843 | 20,388 | 19,756 | 20,307 | ||||||||||||
| End of Period | $ | 28,035 | $ | 20,494 | $ | 28,035 | $ | 20,494 | ||||||||
6