8-K
false0000933034NASDAQ00009330342024-05-092024-05-09

 

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): May 9, 2024

STRATTEC SECURITY CORPORATION

(Exact Name of Registrant as Specified in Charter)

Wisconsin

0-25150

39-1804239

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

 

3333 West Good Hope Road, Milwaukee, Wisconsin 53209

(Address of Principal Executive Offices, and Zip Code)

(414) 247-3333

Registrant’s Telephone Number, Including Area Code

 

 

(Former name or former address, if changed since last report)

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:

Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, $.01 par value

 

STRT

 

The Nasdaq Global Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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Section 2 – Financial Information

 

Item 2.02. Results of Operations and Financial Condition.

 

On May 9, 2024, STRATTEC SECURITY CORPORATION (the “Company”) issued a press release (the “Press Release”) announcing results for the fiscal third quarter ended March 31, 2024. A copy of the Press Release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

 

Pursuant to General Instruction B.2 of Current Report on Form 8-K, the information in this Item 2.02 and Exhibit 99.1 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Furthermore, the information in this Item 2.02 and Exhibit 99.1 shall not be deemed to be incorporated by reference into the filings of STRATTEC under the Securities Act of 1933, as amended (the “Securities Act”), except as may be expressly set forth by specific reference in such filing.

 

Item 7.01 Regulation FD Disclosure.

 

As described in “Item 2.02 Results of Operations and Financial Condition” above, on May 9, 2024, the Company issued a press release announcing earnings results for the fiscal third quarter ended March 31, 2024. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

 

Pursuant to General Instruction B.2 of Current Report on Form 8-K, the information in this Item 7.01 and Exhibit 99.1 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Furthermore, the information in this Item 7.01 and Exhibit 99.1 shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act, except as may be expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit

Number Description

 

99.1 Press Release of STRATTEC SECURITY CORPORATION, issued May 9, 2024.

 

104 Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 

 

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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 hereunto duly authorized.

 

STRATTEC SECURITY CORPORATION

 

By: /s/ Dennis P. Bowe

Dennis P. Bowe, Vice President and

Chief Financial Officer

 

 

Date: May 9, 2024

 

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EX-99.1

Exhibit 99.1

https://cdn.kscope.io/ca21bc254d64c12cfe6b7b5085020ed4-img57970978_0.jpg 

 

STRATTEC SECURITY CORPORATION REPORTS FISCAL 2024 THIRD QUARTER

OPERATING RESULTS

May 9, 2024

Third Fiscal Quarter earnings per share $0.37 vs $0.57 loss, an improvement driven by customer pricing increases and higher sales

Milwaukee, Wisconsin – STRATTEC SECURITY CORPORATION (NASDAQ:STRT) is a market leader of a comprehensive range of "Smart" Vehicle Power Access and Electronic and Security Solutions, serving the global automotive industry.

Third Quarter Fiscal 2024 Financial Highlights

Diluted earnings per share of $0.37 versus $0.57 loss last year
Gross Margins expanded to 10.4% compared with 7.9% last year
Revenues increased by 10.7%, driven by pricing increases and new product sales

STRATTEC Interim CEO Rolando Guillot said, “This quarter we continued to make progress on our financial performance due to improved pricing and new product introductions that are expanding STRATTEC’s offerings to our customers. We will continue to focus on addressing persistent cost challenges and the opportunities we have to optimize our working capital and a strong balance sheet.”

Third Quarter Fiscal 2024 Financial Summary

 

 

Third Quarter Ending

 

 

Mar 31, 2024

 

Apr. 2, 2023

 

Inc (Dec)

(Dollars in thousands, except per share data)

 

 

 

 

 

 

Net Sales

 

 $ 140,773

 

 $ 127,183

 

 $ 13,590

Gross Profit

 

 $ 14,684

 

 $ 10,001

 

 $ 4,683

Gross Margin

 

10.4%

 

7.9%

 

 

Operating Expenses

 

 $ 12,725

 

 $ 12,485

 

 $ 240

Operating Income (Loss) from Operations

 

 $ 1,959

 

 $ (2,484)

 

 $ 4,443

Net Income (Loss)

 

 $ 1,506

 

 $ (2,256)

 

 $ 3,762

Diluted Earnings (Loss) Per Share

 

 $ 0.37

 

 $ (0.57)

 

 $ 0.94

 


 

Revenue growth was driven by $7.0 million of price increases to our major customers and $6.6 million of higher sales associated with the launch of new product programs, the latter representing a 5.2% growth in sales from prior year. The growth in new product sales primarily stems from additional content of our latch and power access product lines on a major truck platform.

Gross margin improvement was driven by pricing increases, higher sales, lower raw material costs, lower warranty costs and $384,000 of workforce and production efficiencies realized from our Mexican operations. Offsetting those positive trends were unfavorable absorption of labor and overhead costs with inventory reductions, $2.1 million of unfavorable U.S. dollar to Mexican peso exchange rate effects, $1.8 million of wage increases due to a mandatory Mexican minimum wage-increase, $1.2 million higher prices paid to certain suppliers and $778,000 of increased freight costs primarily related to the launch of new programs.

Operating expenses increased primarily due to a $817,000 expense associated with the company’s annual incentive bonus plan, which was partially offset with lower new product development costs compared with the prior year period. Net Income was $1.5 million compared to a loss of $2.3 million last year. Fully diluted earnings per share were $0.37 compared with a loss of $0.57 last year.

Balance Sheet & Cash Flow

As of March 31, 2024, the Company’s cash and cash equivalents on hand totaled $9.6 million. Total debt as of March 31, 2024 was $13.0 million, which was all held by the ADAC-STRATTEC LLC joint venture.

For the third quarter of fiscal 2024, operating cash flow was negative $309,000, compared to the prior year quarter operating cash flow of negative $1.2 million. The negative operating cash flow for the current quarter was driven by a temporary increase in working capital, specifically in accounts receivable related to higher sales in the quarter, partially offset by a $10.8 million reduction in inventory. Capital expenditures in the third quarter of fiscal 2024 were $1.7 million, compared with $4.2 million for the third quarter of fiscal 2023.

 

 

 


 

 

About STRATTEC

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, power tailgate systems for trucks, 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 as cooperating partners of the “VAST Automotive Group” brand name. STRATTEC’s history in the automotive business spans over 110 years.

Caution on Forward-Looking Statements

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.

 

Contact: Dennis Bowe

Vice President and

Chief Financial Officer

414-247-3399

www.strattec.com

 


 

STRATTEC SECURITY CORPORATION

Condensed Results of Operations

(In Thousands except per share amounts)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

March 31, 2024

 

April 2, 2023

 

March 31, 2024

 

April 2, 2023

 

 

 

 

 

 

 

 

Net Sales

 $ 140,773

 

 $ 127,183

 

 $ 394,711

 

 $ 360,727

 

 

 

 

 

 

 

 

Cost of Goods Sold

                      126,089

 

                        117,182

 

                      347,810

 

                      330,843

 

 

 

 

 

 

 

 

Gross Profit

                          14,684

 

                        10,001

 

                        46,901

 

                        29,884

 

 

 

 

 

 

 

 

Engineering, Selling &
     Administrative Expenses

                        12,725

 

                        12,485

 

                        38,778

 

                        37,266

 

 

 

 

 

 

 

 

Income (Loss) from Operations

                         1,959

 

                          (2,484)

 

                         8,123

 

                          (7,382)

 

 

 

 

 

 

 

 

Interest Expense

                    (222)

 

                  (266)

 

                   (661)

 

                     (591)

Interest Income

                            143

 

                              -

 

                            337

 

                            -

 

 

 

 

 

 

 

 

Other (Expense) Income, net

                    (208)

 

                    (404)

 

                    759

 

                        470

 

 

 

 

 

 

 

 

Income (Loss) Before Provision
     for Income Taxes and Non-
     Controlling Interest

                         1,672

 

                          (3,154)

 

8,558

 

                          (7,503)

 

 

 

 

 

 

 

 

Provision (Benefit) for Income
     Taxes

                         546

 

                             133

 

                         2,197

 

                             (1,638)

 

 

 

 

 

 

 

 

Net Income (Loss)

                         1,126

 

                          (3,287)

 

                         6,361

 

                          (5,865)

 

 

 

 

 

 

 

 

Net Loss Attributable
     to Non-Controlling Interest

                            (380)

 

                             (1,031)

 

                            (332)

 

                            (1,895)

 

 

 

 

 

 

 

 

Net Income (Loss) Attributable
     to STRATTEC SECURITY
     CORPORATION

 $ 1,506

 

 $ (2,256)

 

 $ 6,693

 

 $ (3,970)

 

 

 

 

 

 

 

 

Earnings (Loss) Per Share:

 

 

 

 

 

 

 

     Basic

 $ 0.38

 

 $ (0.57)

 

 $ 1.69

 

 $ (1.01)

     Diluted

 $ 0.37

 

 $ (0.57)

 

 $ 1.67

 

 $ (1.01)

 

 

 

 

 

 

 

 

Average Basic Shares
     Outstanding

                          3,988

 

                          3,928

 

                          3,971

 

                          3,918

 

 

 

 

 

 

 

 

Average Diluted Shares
     Outstanding

                          4,017

 

                          3,928

 

                          3,996

 

                          3,918

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Capital Expenditures

 $1,672

 

 $ 4,247

 

 $ 6,065

 

 $ 13,724

Depreciation

 $4,059

 

 $ 4,347

 

 $ 12,774

 

 $ 13,145

 


STRATTEC SECURITY CORPORATION

Condensed Balance Sheet Data

(In Thousands)

(Unaudited)

 

 

 

 

 

March 31, 2024

 

July 2, 2023

 

 

 

 

 

 

 

ASSETS

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and Cash Equivalents

 $ 9,594

 

 $ 20,571

 

 

Receivables, net

              97,524

 

               89,811

 

 

Inventories, net

               78,612

 

               77,597

 

 

Customer Tooling in Progress, net

25,505

 

20,800

 

 

Value Added Tax Recoverable

19,272

 

7,912

 

 

Other Current Assets

                10,423

 

               9,091

 

 

 

Total Current Assets

            240,930

 

             225,782

 

Other Long-term Assets

              19,309

 

               20,702

 

Property, Plant and Equipment, net

               88,310

 

                94,446

 

 

 

 

 $ 348,549

 

 $ 340,930

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts Payable

 $ 50,582

 

 $ 57,927

 

 

Value Added Tax Payable

8,906

 

6,499

 

 

Borrowings Under Credit Facility - Current

                13,000

 

 -

 

 

Other

               48,284

 

                44,560

 

 

 

Total Current Liabilities

             120,772

 

             108,986

 

Accrued Pension and Postretirement Obligations

                 2,463

 

                 2,363

 

Borrowings Under Credit Facility - Long-Term

 -

 

                13,000

 

Other Long-term Liabilities

               5,200

 

                  5,557

 

Shareholders' Equity

              342,521

 

             334,683

 

Accumulated Other Comprehensive Loss

            (13,205)

 

             (14,194)

 

Less: Treasury Stock

          (135,489)

 

           (135,526)

 

 

Total STRATTEC SECURITY

 

 

 

 

 

 

CORPORATION Shareholders' Equity

             193,827

 

              184,963

 

 

Non-Controlling Interest

               26,287

 

               26,061

 

Total Shareholders' Equity

             220,114

 

             211,024

 

 

 

 

 $ 348,549

 

 $ 340,930

 

 

 


STRATTEC SECURITY CORPORATION

Condensed Cash Flow Statement Data

(In Thousands)

(Unaudited)

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

 

March 31, 2024

 

April 2, 2023

 

March 31, 2024

 

April 2, 2023

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

Net Income (Loss)

$ 1,126

 

 $ (3,287)

 

 $ 6,361

 

 $ (5,865)

Adjustments to Reconcile Net Income (Loss) to

Cash (Used in) Provided by Operating Activities:

 

 

Depreciation

               4,059

 

                       4,347

 

                  12,774

 

                    13,145

 

 

Equity (Earnings) Loss in Joint Ventures

                       -

 

                        (819)

 

                      269

 

                         (1,934)

 

 

Foreign Currency Transaction Loss

                  475

 

                       1,529

 

                       126

 

                       2,114

 

 

 Unrealized Loss (Gain) on Peso Forward

     Contracts

222

 

                70

 

        (604)

 

            93

 

 

Loss on Settlement of Pension Obligation

                       -

 

                          217

 

                          -

 

                          217

 

 

Stock Based Compensation Expense

                  240

 

                          265

 

                    1,224

 

                       1,139

 

 

Change in Operating Assets/Liabilities

            (6,676)

 

                     (3,665)

 

                (27,775)

 

                    (1,767)

 

Other, net

                  245

 

                          120

 

                       402

 

                          370

 

 

 

 

 

 

 

 

 

 

 

Net Cash (Used in) Provided by Operating

     Activities

               (309)

 

              (1,223)

 

              (7,223)

 

                  7,512

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Proceeds from sale of interest in VAST LLC

                       -

 

                             -

 

                    2,000

 

                             -

 

Investment in Joint Ventures

                       -

 

                        (133)

 

                         -

 

                            (237)

 

Additions to Property, Plant & Equipment

            (1,672)

 

                     (4,247)

 

                  (6,065)

 

                      (13,724)

 

 Proceeds on Sales of Property, Plant &

     Equipment

                            -

 

           11

 

                              -

 

                 15

 

 

 

 

 

 

 

 

 

 

 

Net Cash Used in Investing Activities

            (1,672)

 

                 (4,369)

 

                 (4,065)

 

                 (13,946)

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Borrowings on Line of Credit Facility

                       -

 

                       4,000

 

                    2,000

 

                       13,000

 

Payments on Line of Credit Facility

                       -

 

-

 

                  (2,000)

 

                       (3,000)

 

Dividends Paid to Non-Controlling Interest of Subsidiary

                           -

 

                       -

 

               -

 

                      (600)

 

Exercise of Stock Options and Employee Stock Purchases

            18

 

18

 

 

                        55

 

                 164

 

 

 

 

 

 

 

 

 

 

 

Net Cash Provided by Financing Activities

                  18

 

                  4,018

 

                  55

 

                  9,564

Effect of Foreign Currency Fluctuations on Cash

                 (18)

 

                      82

 

                     256

 

                      182

Net (Decrease) Increase in Cash & Cash Equivalents

            (1,981)

 

                  (1,492)

 

                (10,977)

 

                    3,312

Cash & Cash Equivalents:

 

 

 

 

 

 

 

 

Beginning of Period

             11,575

 

                     13,578

 

                  20,571

 

                     8,774

 

End of Period

 $ 9,594

 

 $ 12,086

 

 $ 9,594

 

 $ 12,086