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): February 8, 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. ☐

Section 2 – Financial Information

Item 2.02.
Results of Operations and Financial Condition.

On February 8, 2024, STRATTEC SECURITY CORPORATION issued a press release (the “Press Release”) announcing results for the fiscal second quarter ended December 31, 2023.  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.

Pursuant to General Instruction B.2 of Current Report on Form 8-K, the information in this Item 2.02 and the Exhibit attached hereto 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 the Exhibit attached hereto 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.

Section 9 - Financial Statements and Exhibits

Item 9.01.
Financial Statements and Exhibits.

 
(d)
Exhibits

99.1 ‑‑ Press Release of STRATTEC SECURITY CORPORATION, issued February 8, 2024.
 
104 – Cover Page Interactive Data File (embedded within the Inline XBRL document).

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: February 8, 2024



Exhibit 99.1
STRATTEC SECURITY CORPORATION REPORTS FISCAL 2024 SECOND QUARTER
OPERATING RESULTS
 
February 8, 2024
 
Second Fiscal Quarter earnings per share $0.26 vs $0.47 loss, an improvement driven by customer pricing increases
 
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.
 
Second Quarter Fiscal 2024 Financial Highlights
 

 •
Diluted earnings per share of $0.26 versus $0.47 loss last year

•
Gross Margins expanded to 11.4% compared with 6.5% last year

•
Revenues increased by 4.7%, driven by pricing increases with major customers

STRATTEC Interim CEO Rolando Guillot said, “This quarter demonstrated the progress we are making in improving our financial performance.  It also highlighted opportunities to optimize our working capital and strong balance sheet. We intend to take advantage of a more predictable supply chain to bring greater efficiencies to our operations. Looking forward, we will focus on new product introductions that will expand STRATTEC’s offerings to our customers.”
 
Second Quarter Fiscal 2024 Financial Summary
 
   
Second Quarter Ending
  
   
Dec. 31, 2023
    
Jan. 1, 2023
    
Inc (Dec)
  
(Dollars in thousands, except per share data)
                  
Net Sales
  
$
118,532
    
$
113,184
    
$
5,348
  
Gross Profit
  
$
13,497
    
$
7,387
    
$
6,110
  
Gross Margin
    
11.4
%
    
6.5
%
        
Operating Expenses
  
$
13,439
    
$
12,081
    
$
1,358
  
Operating Income
  
$
58
    
$
(4,694
)
  
$
4,752
  
Net Income
  
$
1,022
    
$
(1,839
)
  
$
2,861
  
Diluted Earnings Per Share
  
$
0.26
    
$
(0.47
)
  
$
0.73
  

Revenue growth was driven primarily by pricing increases to our major customers.  Those price increases were $8.0 million, of which $3.8 million represents ongoing pricing increases.  Total pricing increases were partially offset by a $2.7 million decline in net sales, primarily due to lower sales to a major customer and some effects of the UAW strike against the U.S. auto industry in October.
 
Gross margin improvement was driven by pricing increases, lower raw material costs, operating leverage from higher production levels and $780,000 of efficiencies realized from our Mexican operations.  Offsetting those positive trends were higher prices paid to certain suppliers, $2.5 million of unfavorable U.S. dollar to Mexican peso exchange rate effects, $1.3 million of wage increases due to a mandatory Mexican minimum wage-increase and $1.3 million higher freight costs.
 
One-time costs of $900,000 associated with the retirement of our former CEO were recorded during the quarter.  In addition, higher development expenses in support of new products also impacted results, largely explaining the remaining $458,000 increase in expenses.  Net Income was $1.0 million compared to a loss of $1.8 million last year.  Fully diluted earnings per share were $0.26 compared with a loss of $0.47 last year.
 
Balance Sheet & Cash Flow
 
As of December 31, 2023, the Company’s cash and cash equivalents on hand totaled $11.6 million.  Total debt as of December 31, 2023 was $13.0 million, which was all held by the ADAC-STRATTEC LLC joint venture.
 
For the second quarter of fiscal 2024, cash flow provided by operations was negative $3.0 million, compared to the prior year quarter cash flow provided by operations of $4.0 million.  The decrease in cash flow for the current quarter was driven by temporary increases in working capital, specifically inventory, customer tooling in progress and a value added tax recoverable.  Capital expenditures in the second quarter of fiscal 2024 were $1.5 million, compared with $4.8 million for the second quarter of fiscal 2023.
 
As announced on January 5, 2024, F. Jack Liebau, Jr. has been appointed Chairman of the Company's Board of Directors and Harold M. Stratton II has been appointed Vice Chairman of the Board. "As Board Chairman, I look forward to working with the Board in the near term to improve governance policies consistent with current best practices while strengthening the Company’s focus on providing long-term shareholder returns," Mr. Liebau said.
 
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
    
Six Months Ended
  
   
December 31, 2023
    
January 1, 2023
    
December 31, 2023
    
January 1, 2023
  
                         
Net Sales
  
$
118,532
    
$
113,184
    
$
253,938
    
$
233,544
  
                                 
Cost of Goods Sold
    
105,035
      
105,797
      
221,721
      
213,661
  
                                 
Gross Profit
    
13,497
      
7,387
      
32,217
      
19,883
  
                                 
Engineering, Selling & Administrative Expenses
    
13,439
      
12,081
      
26,053
      
24,781
  
                                 
Income (Loss) from Operations
    
58
      
(4,694
)
    
6,164
      
(4,898
)
                                 
Interest Expense
    
(219
)
    
(196
)
    
(439
)
    
(325
)
                                 
Interest Income
    
107
      
-
      
194
      
-
  
                                 
Other Income, net
    
1,098
      
640
      
967
      
874
  
                                 
Income (Loss) Before Provision for Income Taxes and Non-Controlling Interest
    
1,044
      
(4,250
)
    
6,886
      
(4,349
)
                                 
Provision (Benefit) for Income Taxes
    
264
      
(1,735
)
    
1,651
      
(1,771
)
                                 
Net Income (Loss)
    
780
      
(2,515
)
    
5,235
      
(2,578
)
                                 
Net (Loss) Income Attributable to Non-Controlling Interest
    
(242
)
    
(676
)
    
48
      
(864
)
                                 
Net Income (Loss) Attributable to STRATTEC SECURITY CORPORATION
  
$
1,022
    
$
(1,839
)
  
$
5,187
    
$
(1,714
)
                                 
Earnings (Loss) Per Share:
                                
Basic
  
$
0.26
    
$
(0.47
)
  
$
1.31
    
$
(0.44
)
Diluted
  
$
0.26
    
$
(0.47
)
  
$
1.30
    
$
(0.44
)
                                 
Average Basic Shares Outstanding
    
3,976
      
3,927
      
3,962
      
3,913
  
                                 
Average Diluted Shares Outstanding
    
3,998
      
3,927
      
3,986
      
3,913
  
                                 
Other
                                
Capital Expenditures
  
$
1,473
    
$
4,759
    
$
4,393
    
$
9,477
  
Depreciation
  
$
4,330
    
$
4,301
    
$
8,715
    
$
8,798
  

STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
(Unaudited)

   
December 31, 2023
    
July 2, 2023
  
             
ASSETS
            
Current Assets:
            
Cash and Cash Equivalents
  
$
11,575
    
$
20,571
  
Receivables, net
    
70,802
      
89,811
  
Inventories, net
    
89,439
      
77,597
  
Customer Tooling in Progress, net
    
24,951
      
20,800
  
Value Added Tax Recoverable
    
17,906
      
7,912
  
Other Current Assets
    
7,624
      
9,091
  
Total Current Assets
    
222,297
      
225,782
  
Other Long-term Assets
    
19,317
      
20,702
  
Property, Plant and Equipment, net
    
90,137
      
94,446
  
   
$
331,751
    
$
340,930
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
Current Liabilities:
                
Accounts Payable
  
$
41,308
    
$
57,927
  
Value Added Tax Payable
    
7,122
      
6,499
  
Borrowings Under Credit Facility - Current
    
13,000
      
-
  
Other
    
44,906
      
44,560
  
Total Current Liabilities
    
106,336
      
108,986
  
Accrued Pension and Postretirement Obligations
    
2,440
      
2,363
  
Borrowings Under Credit Facility - Long-Term
    
-
      
13,000
  
Other Long-term Liabilities
    
5,334
      
5,557
  
Shareholders' Equity
    
340,769
      
334,683
  
Accumulated Other Comprehensive Loss
    
(13,878
)
    
(14,194
)
Less: Treasury Stock
    
(135,501
)
    
(135,526
)
Total STRATTEC SECURITY
                
CORPORATION Shareholders' Equity
    
191,390
      
184,963
  
Non-Controlling Interest
    
26,251
      
26,061
  
Total Shareholders' Equity
    
217,641
      
211,024
  
   
$
331,751
    
$
340,930
  

STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)

      
Three Months Ended
    
Six Months Ended
  
      
December 31, 2023
    
January 1, 2023
    
December 31, 2023
    
January 1, 2023
  
                         
Cash Flows from Operating Activities:
                        
Net Income (Loss)
  
$
780
    
$
(2,515
)
  
$
5,235
    
$
(2,578
)
Adjustments to Reconcile Net Income (Loss) to
                                
Cash (Used in) Provided by Operating Activities:
                                
Depreciation
    
4,330
      
4,301
      
8,715
      
8,798
  
Equity Loss (Earnings) in Joint Ventures
    
4
      
(588
)
    
269
      
(1,115
)
Foreign Currency Transaction (Gain) Loss
    
(123
)
    
514
      
(349
)
    
585
  
Unrealized (Gain) Loss on Peso Forward Contracts
    
(826
)
    
(12
)
    
(826
)
    
23
  
Stock Based Compensation Expense
    
479
      
263
      
984
      
874
  
Change in Operating Assets/Liabilities
    
(7,943
)
    
1,943
      
(21,099
)
    
1,898
  
Other, net
    
257
      
128
      
157
      
250
  
                                 
Net Cash (Used in) Provided by Operating Activities
    
(3,042
)
    
4,034
      
(6,914
)
    
8,735
  
Cash Flows from Investing Activities:
                                
Proceeds from sale of interest in VAST LLC
    
-
      
-
      
2,000
      
-
  
Investment in Joint Ventures
    
-
      
(104
)
    
-
      
(104
)
Additions to Property, Plant & Equipment
    
(1,473
)
    
(4,759
)
    
(4,393
)
    
(9,477
)
Proceeds on Sales of Property, Plant & Equipment
    
-
      
4
      
-
      
4
  
 
                                
Net Cash Used in Investing Activities
    
(1,473
)
    
(4,859
)
    
(2,393
)
    
(9,577
)
Cash Flows from Financing Activities:
                                
Borrowings on Line of Credit Facility
    
-
      
4,000
      
2,000
      
9,000
  
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
    
20
      
20
      
37
      
146
  
                                 
Net Cash Provided by Financing Activities
    
20
      
4,020
      
37
      
5,546
  
Effect of Foreign Currency Fluctuations on Cash
    
405
      
53
      
274
      
100
  
Net (Decrease) Increase in Cash & Cash Equivalents
    
(4,090
)
    
3,248
      
(8,996
)
    
4,804
  
Cash & Cash Equivalents:
                                
Beginning of Period
    
15,665
      
10,330
      
20,571
      
8,774
  
End of Period
  
$
11,575
    
$
13,578
    
$
11,575
    
$
13,578
  


v3.24.0.1
Document and Entity Information
Feb. 08, 2024
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Feb. 08, 2024
Entity File Number 0-25150
Entity Registrant Name STRATTEC SECURITY CORPORATION
Entity Central Index Key 0000933034
Entity Incorporation, State or Country Code WI
Entity Tax Identification Number 39-1804239
Entity Address, Address Line One 3333 West Good Hope Road
Entity Address, City or Town Milwaukee
Entity Address, State or Province WI
Entity Address, Postal Zip Code 53209
City Area Code 414
Local Phone Number 247-3333
Title of 12(b) Security Common Stock, $.01 par value
Trading Symbol STRT
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
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