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): October 22 2015
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STRATTEC SECURITY CORPORATION
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(Exact name of registrant as specified in charter)
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Wisconsin
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(State or other jurisdiction of incorporation)
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0-25150
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39-1804239
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(Commission File Number)
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(I.R.S. Employer I.D. Number)
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3333 West Good Hope Road
Milwaukee, WI
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53209
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(Address of Principal Executive Offices)
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(Zip Code)
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(414) 247-3333
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(Registrant's telephone number; including area code)
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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))
Section 2 – Financial Information
Item 2.02. Results of Operations and Financial Condition.
On October 22, 2015, STRATTEC SECURITY CORPORATION issued a press release (the "Press Release") announcing results for the fiscal 2016 first quarter ended September 27, 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 October 22, 2015.
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: October 22, 2015
By: _/s/ Patrick J. Hansen_____________________
Patrick J. Hansen, Senior Vice President and
Chief Financial Officer
Exhibit 99.1
FOR RELEASE AT 3:00 PM CDT
Contact: Pat Hansen
Senior Vice President and
Chief Financial Officer
414-247-3435
www.strattec.com
STRATTEC SECURITY CORPORATION
REPORTS FISCAL 2016 FIRST QUARTER OPERATING RESULTS
Milwaukee, Wisconsin – October 22, 2015 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal first quarter ended September 27, 2015.
Net sales for the Company’s first quarter ended September 27, 2015 were $96.5 million, compared to net sales of $122.2 million for the prior year quarter ended September 28, 2014. Net income for the current year quarter was $3.3 million, compared to net income of $9.3 million in the prior year quarter. Diluted earnings per share for the current year quarter were $0.90 compared to diluted earnings per share of $2.55 in the prior year quarter. The lower net sales and net income for the current year quarter was anticipated and primarily attributed to a $28 million decrease in incremental service sales to General Motors for parts used to support a recall campaign that were shipped during the prior year quarter.
Net sales to each of our customers or customer groups in the current year quarter and prior year quarter were as follows (in thousands):
| Three Months Ended | ||||||||
| September 27, 2015 | September 28, 2014 | |||||||
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Fiat Chrysler Automobiles
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$ | 28,528 | $ | 31,996 | ||||
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General Motors Company
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18,789 | 44,949 | ||||||
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Ford Motor Company
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13,616 | 11,808 | ||||||
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Tier 1 Customers
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17,682 | 16,974 | ||||||
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Commercial and Other OEM Customers
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10,987 | 9,072 | ||||||
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Hyundai / Kia
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6,911 | 7,443 | ||||||
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TOTAL
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$ | 96,513 | $ | 122,242 | ||||
The decreased sales to Fiat Chrysler Automobiles in the current year quarter were primarily due to lower customer vehicle production volume on the Dodge and Chrysler Minivans. As previously mentioned, the decrease in sales to General Motors Company in the current year quarter was primarily attributed to incremental service parts sales of $28 million shipped in the prior year quarter. Increased sales to Ford Motor Company in the current year quarter were attributed to increased product content on locksets and latches, in particular for the new F-150 pick-up truck. Sales to Tier 1 Customers during the current year quarter increased slightly 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 we have developed in recent years to complement our historic core business of locks and keys. The decrease in sales to Hyundai / Kia in the current year quarter was principally due to higher levels of sales in the prior year quarter resulting from a significant ramp-up in production of parts for a new model introduction for which we supply components.
The gross profit margin was 17.1 percent in the current year quarter compared to 23.0 percent in the prior year quarter. The decrease in gross profit margin in the current year quarter compared to the prior year quarter was attributed to lower sales and a less favorable product mix, offset by lower costs associated with new product launches and lower bonus expense provisions in the current year quarter.
Engineering, Selling and Administrative expenses as a percentage of net sales increased to 11.0 percent in the current year quarter from 10.8 percent in the prior year quarter. However, overall expenses were lower due to lower bonus provisions recorded during the current year quarter compared to the prior year quarter.
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 27, 2015 | September 28, 2014 | |||||
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| Equity Earnings of VAST LLC Joint Venture | $ | 133 | $ | 376 | ||
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Equity Loss of STRATTEC Advanced Logic LLC Joint Venture
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(426 | ) | (186) | |||
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Foreign Currency Transaction Gain
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957 | 786 | ||||
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Unrealized Loss on Peso Forward Contracts
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(896 | ) | - | |||
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Other
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(93 | ) | 2 | |||
| $ | (325 | ) | $ | 978 | ||
Frank Krejci, President and CEO commented: “As expected, this quarter compared unfavorably to a very unusual and strong first quarter in fiscal 2015. During this period last year, our associates worked long hours to deliver a large volume of service parts in a short amount of time to support a recall effort by one of our customers. For STRATTEC, it resulted in a spike in sales, asset utilization, overhead absorption and profits.
Comparing to years prior to fiscal 2015 gives a more normalized view of our progress. We have benefitted from product line expansion, winning new business and the strength of the automotive business, particularly in light truck and sport utility vehicles. While sales have increased, profits have increased, but not at the same rate. We are working on programs to further increase the efficiency of our operations. Earnings also continue to be impacted by our diversification efforts both in STRATTEC Component Solutions and STRATTEC Advanced Logic, which should benefit us in the long run, but are costing us in the short term.
Last quarter through our VAST partnership, we made an investment in Minda-VAST Access Systems. We are excited to have a quality partner like the Spark Minda Group as we begin our journey of collaboration with this investment in India. These efforts will be an important strategic initiative for our future. Not only do we expect to participate in the projected growth within India, but an even greater benefit will be winning additional global programs that are probable with an India presence.
Lastly, we are pleased and proud to have recently received the Supplier of the Year award from Ford Rotunda. It demonstrates the consistency of our efforts in supporting Ford’s service business, since this is the second year in a row that we have won this honor”.
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 our companies' products to global customers under the “VAST” brand name. STRATTEC’s history in the automotive business spans over 105 years.
Certain statements contained in this release are “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, foreign currency fluctuations, and costs of operations (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
Results of Operations
(In Thousands except per share amounts)
(Unaudited)
| First Quarter Ended | ||||||||
| September 27, 2015 | September 28, 2014 | |||||||
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Net Sales
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$ | 96,513 | $ | 122,242 | ||||
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Cost of Goods Sold
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80,014 | 94,185 | ||||||
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Gross Profit
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16,499 | 28,057 | ||||||
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Engineering, Selling &
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Administrative Expenses
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10,574 | 13,187 | ||||||
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Income from Operations
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5,925 | 14,870 | ||||||
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Interest Income
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7 | 22 | ||||||
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Interest Expense
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(21 | ) | (11 | ) | ||||
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Other (Expense) Income, Net
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(325 | ) | 978 | |||||
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Income before Provision for Income
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Taxes and Non-Controlling Interest
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5,586 | 15,859 | ||||||
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Provision for Income Taxes
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1,754 | 5,519 | ||||||
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Net Income
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3,832 | 10,340 | ||||||
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Net Income Attributable
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to Non-Controlling Interest
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(559 | ) | (1,040 | ) | ||||
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Net Income Attributable
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to STRATTEC SECURITY CORP.
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$ | 3,273 | $ | 9,300 | ||||
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Earnings Per Share:
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Basic
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$ | 0.92 | $ | 2.63 | ||||
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Diluted
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$ | 0.90 | $ | 2.55 | ||||
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Average Basic
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Shares Outstanding
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3,543 | 3,497 | ||||||
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Average Diluted
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Shares Outstanding
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3,617 | 3,593 | ||||||
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Other
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Capital Expenditures
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$ | 3,865 | $ | 6,963 | ||||
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Depreciation & Amortization
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$ | 2,396 | $ | 2,112 | ||||
STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
| September 27, 2015 | June 28, 2015 | |||||||
| (Unaudited) | ||||||||
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ASSETS
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Current Assets:
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Cash and cash equivalents
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$ | 19,967 | $ | 25,695 | ||||
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Receivables, net
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56,701 | 58,807 | ||||||
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Inventories, net
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42,012 | 34,786 | ||||||
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Other current assets
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18,468 | 18,873 | ||||||
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Total Current Assets
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137,148 | 138,161 | ||||||
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Investment in Joint Ventures
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14,936 | 15,326 | ||||||
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Other Long Term Assets
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10,930 | 10,816 | ||||||
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Property, Plant and Equipment, Net
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71,614 | 71,126 | ||||||
| $ | 234,628 | $ | 235,429 | |||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Current Liabilities:
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Accounts Payable
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$ | 34,050 | $ | 27,838 | ||||
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Other
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33,137 | 36,897 | ||||||
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Total Current Liabilities
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67,187 | 64,735 | ||||||
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Accrued Pension and Post Retirement Obligations
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2,932 | 2,988 | ||||||
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Borrowings Under Credit Facility
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6,500 | 10,000 | ||||||
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Deferred Income Taxes
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4,574 | 4,595 | ||||||
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Other Long-term Liabilities
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757 | 710 | ||||||
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Shareholders’ Equity
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306,857 | 303,073 | ||||||
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Accumulated Other Comprehensive Loss
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(29,203 | ) | (26,859 | ) | ||||
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Less: Treasury Stock
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(135,897 | ) | (135,902 | ) | ||||
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Total STRATTEC SECURITY
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CORPORATION Shareholders’ Equity
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141,757 | 140,312 | ||||||
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Non-Controlling Interest
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10,921 | 12,089 | ||||||
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Total Shareholders’ Equity
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152,678 | 152,401 | ||||||
| $ | 234,628 | $ | 235,429 | |||||
STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)
| First Quarter Ended | ||||||||
| September 27, 2015 | September 28, 2014 | |||||||
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Cash Flows from Operating Activities:
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Net Income
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$ | 3,832 | $ | 10,340 | ||||
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Adjustment to Reconcile Net Income to Net
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Cash Provided by Operating Activities:
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Depreciation and Amortization
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2,396 | 2,112 | ||||||
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Equity Loss (Earnings) in Joint Ventures
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293 | (190 | ) | |||||
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Foreign Currency Transaction Gain
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(957 | ) | (786 | ) | ||||
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Unrealized Loss Peso Forward Contracts
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896 | - | ||||||
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Stock Based Compensation Expense
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498 | 389 | ||||||
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Change in Operating Assets/Liabilities
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(2,982 | ) | (2,755 | ) | ||||
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Other, net
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35 | 125 | ||||||
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Net Cash Provided by Operating Activities
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4,011 | 9,235 | ||||||
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Cash Flows from Investing Activities:
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Loan to Joint Ventures
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(150 | ) | (215 | ) | ||||
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Additions to Property, Plant and Equipment
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(3,865 | ) | (6,963 | ) | ||||
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Net Cash Used in Investing Activities
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(4,015 | ) | (7,178 | ) | ||||
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Cash Flow from Financing Activities:
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Borrowings on Credit Facility
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1,000 | 1,500 | ||||||
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Repayment of Borrowings Under Credit Facility
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(4,500 | ) | - | |||||
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Dividends Paid to Non-Controlling Interest of Subsidiaries
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(1,568 | ) | (882 | ) | ||||
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Dividends Paid
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(466 | ) | (427 | ) | ||||
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Exercise of Stock Options and Employee
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Stock Purchases
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483 | 440 | ||||||
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Net Cash (Used in) Provided by Financing Activities
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(5,051 | ) | 631 | |||||
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Foreign Currency Impact on Cash
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(673 | ) | 101 | |||||
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Net (Decrease) Increase in Cash & Cash Equivalents
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(5,728 | ) | 2,789 | |||||
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Cash and Cash Equivalents:
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Beginning of Period
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25,695 | 19,756 | ||||||
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End of Period
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$ | 19,967 | $ | 22,545 | ||||