Core Insights - The article emphasizes the focus on growth and momentum stocks that are reasonably priced and expected to outperform the market in the long term [1] - It highlights a significant investment opportunity, noting that the S&P 500 increased by 367% and the Nasdaq by 685% from March 2009 to 2019, indicating a strong recovery and growth potential in the market [1] Investment Strategy - The investment strategy involves long-term investment in quality stocks, with the use of options to enhance returns [1] - The article suggests that investors should consider high-quality growth stocks to maximize their investment returns [1]

Core Viewpoint - Strattec Security Corporation (NASDAQ: STRT) has been identified as a top quant-rated stock, with a previous recommendation to buy the stock based on its performance and ratings [1]. Group 1 - The company was reviewed on July 12, and the analysis supported the quant rating, indicating a positive outlook for the stock [1]. - The analyst holds a beneficial long position in STRT shares, which may influence the perspective presented in the analysis [1].

Group 1 - Strattec Security Corporation (NASDAQ: STRT) was reviewed on July 12 and was identified as a top quant-rated stock [1] - The analysis at that time supported the quant rating and indicated that the stock was a buy [1] - The company has a beneficial long position in its shares through stock ownership, options, or other derivatives [1]

Summary of Strattec Security (STRT) FY Conference Call - August 26, 2025 Company Overview - **Company Name**: Strattec Security (STRT) - **Industry**: Automotive parts manufacturing - **Headquarters**: Milwaukee, Wisconsin - **Public Company Since**: 1995 - **Key Customers**: Ford, General Motors, Stellantis [3][27] Core Business and Product Portfolio - **Product Range**: Includes power access products (power lift gates, tailgates, power sliding doors), lock and key systems, and key fobs [2][3] - **Powertrain Agnostic**: Products are designed for both electric vehicles and internal combustion engines, allowing for a balanced product offering amid industry transformation [3] Transformation and Operational Improvements - **Transformation Status**: The company is in the early stages of transformation, focusing on team alignment and operational excellence [4][11] - **Team Enhancements**: A refreshed executive team has been established, including new roles such as Chief Commercial Officer and Chief People Officer [5][7] - **Cost Structure**: Achieved $8 million in annual pricing improvements and reduced headcount by 15% without impacting customer service [6][11] - **Modernization Efforts**: Focus on updating outdated processes, systems, and tools to ensure sustainable business growth [6][40] Financial Performance - **Revenue Growth**: Achieved $152 million in sales for Q4, a 6% year-over-year increase, with 60% of the increase driven by volume and 40% by pricing [14][15] - **Gross Profit Margin**: Finished Q4 with a gross profit margin of 16.7%, with a full-year margin of 15% [15][19] - **Adjusted Net Income**: Generated $21 million in adjusted net income for FY 2025, equating to $5.38 per share [19] - **Cash Flow**: Generated $71 million in cash flow from operations, driven by cash earnings and a reduction in working capital [20][23] Future Outlook - **2026 Projections**: Expected revenues to be flat or modestly down, with a projected 6% decline in North American automotive production volumes [21][22] - **Margin Improvement Focus**: Continued emphasis on improving margins and cash generation, with long-term gross profit targets of 18% to 20% [22][34] - **M&A Considerations**: M&A will be considered for long-term growth, but the focus remains on stabilizing the business first [47] Strategic Opportunities - **Geographic Expansion**: Plans to explore opportunities outside traditional North American customers and into other transportation markets [27] - **Hedging Against Currency Volatility**: Engaging in hedging activities to mitigate risks associated with peso fluctuations, with approximately $60 million of spend in pesos [31] Key Takeaways - **Transformation Journey**: The company is in the early innings of a significant transformation, with a strong focus on operational efficiencies and modernization [24] - **Leadership and Talent**: A new leadership team is in place to drive growth and operational improvements [24] - **Strong Financial Position**: The company maintains a strong balance sheet with $84 million in cash and only $8 million in debt, providing a solid foundation for future initiatives [19][20]

PART I [Business](index=4&type=section&id=ITEM%201.%20Business) STRATTEC is a global manufacturer of highly engineered automotive access and security products with over 100 years of industry experience - STRATTEC has over **100 years** of history in the automotive industry, incorporated as a stand-alone company in **1995**[15](index=15&type=chunk) - The company's product portfolio includes security and authorization solutions (mechanical/electronic locks, keys, fobs, passive entry/start, digital key), vehicle access systems (power sliding doors, tailgates, liftgate systems), and user-interface control products (steering wheel switches, e-shifters)[16](index=16&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) - All products are safety-critical, powertrain agnostic (applicable to ICE, hybrid, EV), and require robust engineering partnership during the **3-5 year** vehicle design cycle[21](index=21&type=chunk) - Direct sales to OEMs (including Tier 1 suppliers) represented approximately **90%** of total sales for both fiscal **2025** and **2024**[24](index=24&type=chunk) - Significant portion of annual sales are to General Motors Company (**29%** in FY25, **30%** in FY24), Ford Motor Company (**23%** in FY25, **21%** in FY24), and Stellantis (**12%** in FY25, **14%** in FY24)[25](index=25&type=chunk)[47](index=47&type=chunk) - Manufacturing operations are primarily in the United States (Milwaukee, WI) and Mexico (Juarez and Leon facilities), specializing in die casting, stamping, plating, plastic injection molding, and assembly[31](index=31&type=chunk) - The company competes based on product design, engineering support, quality, delivery, and price, with key competitors including Aisin, Brose, Continental, Magna, and Valeo[36](index=36&type=chunk)[37](index=37&type=chunk) - As of June 29, 2025, STRATTEC had **2,848** employees globally (**417** in US, **2,425** in Mexico, **6** in other countries), with **9.4%** unionized[38](index=38&type=chunk) [Risk Factors](index=10&type=section&id=ITEM%201A.%20Risk%20Factors) The company faces various risks that could materially affect its business, operations, financial condition, and liquidity - Top three customers (GM, Ford, Stellantis) accounted for **64%** of annual sales in fiscal **2025** (**29%**, **23%**, **12%** respectively) and **66%** in fiscal **2024** (**30%**, **21%**, **14%** respectively), posing a significant customer concentration risk[47](index=47&type=chunk)[225](index=225&type=chunk) - The business is highly dependent on the global automobile industry, making it vulnerable to production slowdowns, economic downturns, global conflicts, pandemics, and part supply shortages[49](index=49&type=chunk) - Operations are impacted by international trade dynamics, tariffs (e.g., recently announced broad tariffs on goods imported into the U.S.), and the potential non-renewal or adverse changes to trade agreements like USMCA[50](index=50&type=chunk)[51](index=51&type=chunk)[55](index=55&type=chunk) - The automotive component supply industry is highly competitive, with pressure on pricing and margins from competitors and customers[56](index=56&type=chunk) - Supply chain disruptions, increases in raw material costs (zinc, brass, nickel silver, steel, aluminum, plastic resins, semiconductor chips), and labor cost inflation (especially in Mexico) are ongoing operational risks[13](index=13&type=chunk)[35](index=35&type=chunk)[60](index=60&type=chunk)[63](index=63&type=chunk)[103](index=103&type=chunk) - Cybersecurity incidents, including sophisticated attacks leveraging AI, pose risks to sensitive data, critical systems, and business operations, potentially leading to financial and reputational damage[13](index=13&type=chunk)[66](index=66&type=chunk) - Fluctuations in the U.S. dollar/Mexican peso exchange rate can materially affect profitability and cash flows due to manufacturing operations in Mexico[76](index=76&type=chunk)[103](index=103&type=chunk) - The company is exposed to warranty claims if products fail, with potential for material costs depending on the nature and volume of claims[84](index=84&type=chunk)[127](index=127&type=chunk) [Unresolved Staff Comments](index=21&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - No unresolved staff comments were reported[88](index=88&type=chunk) [Cybersecurity](index=21&type=section&id=ITEM%201C.%20Cybersecurity) STRATTEC maintains a robust cybersecurity governance framework, conducting regular internal and third-party risk assessments - The company conducts regular cybersecurity risk assessments internally and with third-party assistance[89](index=89&type=chunk) - The Information Technology Director reports on assessment results and recommendations to the Board of Directors at least annually[89](index=89&type=chunk) - Cybersecurity strategy is based on the NIST framework, focusing on prevention, detection, and mitigation, with a cross-functional approach to preserve confidentiality, manage data security, and respond to incidents[89](index=89&type=chunk) - Key risk management practices include multi-factor authentication, updated security solutions, annual employee training, email phishing campaigns, external penetration testing, and disaster recovery/incident response plans[91](index=91&type=chunk) - No cybersecurity incidents have materially affected or are reasonably likely to materially affect the business strategy, results of operations, or financial condition[91](index=91&type=chunk) [Properties](index=21&type=section&id=ITEM%202.%20Properties) STRATTEC operates five manufacturing plants, one warehouse, and two sales offices, believed to be well-maintained and sufficient Company Facilities as of June 29, 2025 | Location | Type | Sq. Ft. | Owned or Leased | | :-------------------- | :--------------------------------- | :-------- | :-------------- | | Milwaukee, Wisconsin | Corporate headquarters and manufacturing | 345,123 | Owned | | Juarez, Chihuahua Mexico | Manufacturing | 169,926 | Owned | | Juarez, Chihuahua Mexico | Manufacturing | 77,527 | Owned | | Juarez, Chihuahua Mexico | Manufacturing | 114,841 | Owned | | Leon, Mexico | Manufacturing | 130,532 | Owned | | El Paso, Texas | Distribution warehouse | 114,715 | Leased | | Auburn Hills, Michigan | Sales and engineering | 62,736 | Owned | | Seoul, South Korea | Sales and engineering | 2,859 | Leased | [Legal Proceedings](index=21&type=section&id=ITEM%203.%20Legal%20Proceedings) The company is involved in various legal proceedings but does not anticipate a material adverse effect on its financial condition - The company is involved in various legal proceedings and claims incidental to its business, but none are expected to have a material adverse effect on financial condition, results of operations, or cash flows[93](index=93&type=chunk) [Mine Safety Disclosures](index=23&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the company[94](index=94&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=24&type=section&id=ITEM%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) STRATTEC's common stock trades on NASDAQ, with 756 shareholders and 184,073 shares remaining for repurchase - Common stock is traded on the NASDAQ Global Market under the symbol "**STRT**"[4](index=4&type=chunk) - As of June 29, 2025, there were **756** registered shareholders[96](index=96&type=chunk) - **184,073** shares remain available for repurchase under the stock repurchase program, but no shares were repurchased in fiscal **2025** or **2024**[118](index=118&type=chunk)[211](index=211&type=chunk) [RESERVED](index=24&type=section&id=ITEM%206.%20%5BRESERVED%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=ITEM%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) STRATTEC's fiscal 2025 saw significant financial improvement, with sales and net income growth from new programs and operational efficiencies Key Financial Highlights (Fiscal 2025 vs. 2024) | Metric | FY2025 ($M) | FY2024 ($M) | Change ($M) | Change (%) | | :-------------------------------------- | :---------- | :---------- | :---------- | :--------- | | Net sales | 565.1 | 537.8 | 27.3 | 5% | | Net income attributable to Strattec | 18.7 | 16.3 | 2.4 | 15% | | Diluted EPS | 4.58 | 4.07 | 0.51 | 12% | | Cash flow from operations | 71.7 | 12.2 | 59.5 | 488% | | Gross profit | 84.6 | 65.5 | 19.1 | 29% | | Gross margin | 15.0% | 12.2% | 2.8 pp | 23% | | Income from operations | 22.8 | 17.8 | 5.0 | 28% | | Operating margin | 4.0% | 3.3% | 0.7 pp | 21% | | Selling, administrative and engineering expenses | 61.8 | 47.7 | 14.1 | 30% | - Sales growth in fiscal **2025** was driven by **$15.9 million** from net new program launches and favorable mix, plus **$13.9 million** from higher production volumes and customer inventory builds, partially offset by a **$2.6 million** reduction in pricing[106](index=106&type=chunk) - Gross margin improvement was attributed to a stronger U.S. dollar, improved leverage of fixed cost structure on higher sales, and benefits from pricing and restructuring actions[108](index=108&type=chunk) - Selling, administrative, and engineering expenses increased by **$14.1 million**, partly due to a prior-year one-time recovery of **$4.8 million** in engineering costs, increased incentive compensation (**$5.2 million**), and business transformation costs (**$1.0 million**)[109](index=109&type=chunk) - North American light vehicle production is forecasted to be flat over the next several years, with a projected **5-6%** decline in fiscal **2026** due to tariff uncertainties and fewer new platform launches[101](index=101&type=chunk) - The company estimates an annual impact of **$5-$7 million** increase in cost of goods sold from recently enacted tariffs, with a majority already mitigated through supply chain changes, cost pass-throughs, and logistics process changes[102](index=102&type=chunk) - Restructuring activities in Milwaukee and Mexico operations are expected to generate approximately **$5 million** in annual cost reductions[103](index=103&type=chunk) - Cash flow from operations significantly improved to **$71.7 million** in fiscal **2025** from **$12.3 million** in fiscal **2024**, driven by reduced purchasing levels, accounts receivable collection, and pre-production cost recovery[114](index=114&type=chunk) Primary Working Capital Management (FY2025 vs. FY2024) | Metric | June 29, 2025 ($M) | PWC % | June 30, 2024 ($M) | PWC % | | :-------------------------- | :----------------- | :---- | :----------------- | :---- | | Accounts receivable, net | 102 | 17% | 99 | 17% | | Inventory, net | 65 | 11% | 82 | 14% | | Accounts payable | (66) | (11%) | (55) | (10%) | | Net primary working capital | 101 | 17% | 126 | 22% | - Anticipated capital expenditures for fiscal **2026** are approximately **$13 million** for new product programs and equipment upgrades[116](index=116&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=33&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is marked as not applicable, providing no specific market risk disclosures beyond other sections - This item is not applicable[132](index=132&type=chunk) [Financial Statements and Supplementary Data](index=34&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements with an unqualified opinion, noting a critical audit matter for warranty reserves - Deloitte & Touche LLP issued an unqualified opinion on the consolidated financial statements for fiscal years ended June 29, 2025, and June 30, 2024[133](index=133&type=chunk) - Deloitte & Touche LLP also issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of June 29, 2025[134](index=134&type=chunk)[146](index=146&type=chunk) - A critical audit matter was identified concerning the specific warranty reserve, highlighting the significant management judgment and auditor effort required to evaluate future warranty costs[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) Consolidated Statements of Income (in thousands) | Metric | June 29, 2025 | June 30, 2024 | | :-------------------------------------- | :------------ | :------------ | | Net sales | $565,066 | $537,766 | | Cost of goods sold | 480,489 | 472,298 | | Gross profit | 84,577 | 65,468 | | Selling, administrative and engineering expenses | 61,793 | 47,654 | | Income from operations | 22,784 | 17,814 | | Interest income | 2,039 | 572 | | Interest expense | (1,007) | (900) | | Other income, net | 820 | 2,717 | | Income before income taxes and non-controlling interest | 24,636 | 20,203 | | Income tax expense | 5,717 | 3,775 | | Net income | 18,919 | 16,428 | | Net income attributable to non-controlling interest | 234 | 115 | | Net income attributable to Strattec | $18,685 | $16,313 | | Basic EPS | $4.64 | $4.10 | | Diluted EPS | $4.58 | $4.07 | Consolidated Balance Sheets (in thousands) | Asset/Liability/Equity | June 29, 2025 | June 30, 2024 | | :-------------------------------------- | :------------ | :------------ | | **ASSETS** | | | | Cash and cash equivalents | $84,579 | $25,410 | | Receivables, net | 102,061 | 99,297 | | Inventories, net | 64,701 | 81,649 | | Total current assets | 290,063 | 253,814 | | Property, plant and equipment, net | 77,410 | 86,184 | | Total Assets | $391,454 | $364,289 | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | Accounts payable | $65,824 | $54,911 | | Total current liabilities | 119,350 | 118,288 | | Borrowings under credit facilities | 8,000 | 13,000 | | Total Liabilities | $145,023 | $138,674 | | Total Strattec shareholders' equity | 221,592 | 200,545 | | Total Shareholders' Equity | 246,431 | 225,615 | | Total Liabilities and Shareholders' Equity | $391,454 | $364,289 | Consolidated Statements of Cash Flows (in thousands) | Activity | June 29, 2025 | June 30, 2024 | | :-------------------------------------- | :------------ | :------------ | | Net cash provided by operating activities | $71,677 | $12,265 | | Net cash used in investing activities | (7,156) | (7,788) | | Net cash (used in) provided by financing activities | (4,939) | 72 | | Net increase in cash and cash equivalents | $59,169 | $4,839 | | Cash and cash equivalents, end of year | $84,579 | $25,410 | [NOTE 1. ORGANIZATION AND NATURE OF BUSINESS](index=45&type=section&id=NOTE%201.%20ORGANIZATION%20AND%20NATURE%20OF%20BUSINESS) STRATTEC is a global provider of automotive security and access solutions, primarily serving major North American OEMs - STRATTEC is a leading global provider of advanced automotive security, access, and user interface solutions[163](index=163&type=chunk) - The majority of sales are to the three largest North American automotive OEMs[163](index=163&type=chunk) [NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=45&type=section&id=NOTE%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines STRATTEC's significant accounting policies, including consolidation, estimates, and recently issued accounting standards - Financial statements are prepared in accordance with U.S. GAAP, with the fiscal year ending on the Sunday nearest June 30[164](index=164&type=chunk) - Recently adopted ASU 2023-07 (Improvements to Reportable Segment Disclosures) requires disclosure of significant segment expenses and CODM information[166](index=166&type=chunk) - New ASUs on Income Tax Disclosures (ASU 2023-09, effective FY2026) and Expense Disaggregation Disclosures (ASU 2024-03, effective FY2028) are being evaluated for impact[167](index=167&type=chunk)[168](index=168&type=chunk) - Inventories are stated at the lower of cost or market using the FIFO method, with excess and obsolete inventory reserves recorded based on historical and estimated future demand[171](index=171&type=chunk)[172](index=172&type=chunk) - The excess and obsolete reserve balance increased to **$11.2 million** at June 29, 2025, from **$7.8 million** at June 30, 2024[172](index=172&type=chunk) - Research and development expenditures were **$21.7 million** in fiscal **2025** and **$14.8 million** in fiscal **2024**, expensed as incurred[180](index=180&type=chunk) - The company uses currency forward contracts to minimize earnings volatility from Mexican peso/U.S. dollar exchange rate changes, not for trading or speculative purposes[182](index=182&type=chunk) Warranty Reserve Changes (in thousands) | Metric | June 29, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Balance, beginning of period | $10,695 | $9,725 | | Provision charged to expense | (376) | 2,608 | | Payments | (1,419) | (1,638) | | Balance, end of period | $8,900 | $10,695 | - A valuation allowance for deferred tax assets was **$3.9 million** at June 29, 2025, and **$2.6 million** at June 30, 2024[129](index=129&type=chunk) - The liability for unrecognized tax benefits was **$1.9 million** at June 29, 2025, and **$1.6 million** at June 30, 2024[130](index=130&type=chunk) [NOTE 3. CREDIT FACILITIES](index=51&type=section&id=NOTE%203.%20CREDIT%20FACILITIES) STRATTEC has a $40 million secured revolving credit facility and guarantees a $20 million facility for its joint venture, both expiring in 2026 - STRATTEC has a **$40 million** secured revolving credit facility (Strattec Credit Facility) and guarantees a **$20 million** secured revolving credit facility for its joint venture (ADAC-Strattec Credit Facility)[119](index=119&type=chunk)[193](index=193&type=chunk) - Availability under the ADAC-Strattec Credit Facility will reduce to **$18 million** on August 1, 2025[119](index=119&type=chunk)[193](index=193&type=chunk) - Both credit facilities expire on August 1, 2026, and are secured by U.S. cash balances, accounts receivable, inventory, and fixed assets[193](index=193&type=chunk) Outstanding Borrowings Under Credit Facilities (in thousands) | Credit Facility | June 29, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------ | | Strattec Credit Facility | $0 | $0 | | ADAC-Strattec Credit Facility | $8,000 | $13,000 | Average Outstanding Borrowings and Weighted Average Interest Rate (in thousands, except percentages) | Credit Facility | FY2025 Average Outstanding Borrowings | FY2025 Weighted Average Interest Rate | FY2024 Average Outstanding Borrowings | FY2024 Weighted Average Interest Rate | | :-------------------- | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Strattec Credit Facility | $0 | 0% | $33 | 8.5% | | ADAC-Strattec Credit Facility | $12,654 | 7.9% | $13,000 | 6.8% | - The company was in compliance with all financial covenants as of June 29, 2025[194](index=194&type=chunk) [NOTE 4. DERIVATIVE INSTRUMENTS](index=51&type=section&id=NOTE%204.%20DERIVATIVE%20INSTRUMENTS) STRATTEC uses monthly Mexican peso currency forward contracts to hedge operating costs and minimize earnings volatility - The company uses monthly Mexican peso currency forward contracts to hedge a portion of peso-denominated operating costs[196](index=196&type=chunk) - These contracts are not designated as accounting hedges; changes in fair value are recognized in Other income, net[182](index=182&type=chunk) Outstanding Forward Contracts as of June 29, 2025 (in thousands) | Effective Dates | Notional Amount | Average Forward Contractual Exchange Rate | Fair Market Value | | :------------------------ | :-------------- | :---------------------------------------- | :---------------- | | July 7, 2025 - June 15, 2026 | $31,959 | 20.64 | $2,314 | [NOTE 5. LEASES](index=51&type=section&id=NOTE%205.%20LEASES) STRATTEC has one operating lease for its El Paso distribution warehouse, with a weighted average remaining term of 3.5 years - The company has one operating lease for its El Paso, Texas distribution warehouse[197](index=197&type=chunk) Operating Lease Expense (in thousands) | Metric | June 29, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------ | | Operating lease expense | $951 | $989 | Operating Lease Metrics | Metric | June 29, 2025 | June 30, 2024 | | :------------------------------ | :------------ | :------------ | | Weighted average remaining lease term (years) | 3.5 | 4.5 | | Weighted average discount rate | 6.2% | 6.2% | Future Minimum Lease Payments (in thousands) | Fiscal Year | Amount | | :---------- | :----- | | 2026 | $988 | | 227 | $1,037 | | 2028 | $1,089 | | 2029 | $558 | | Thereafter | $0 | | Total future minimum lease payments | $3,672 | | Less: imputed interest | ($386) | | Total lease obligations | $3,286 | [NOTE 6. INCOME TAXES](index=52&type=section&id=NOTE%206.%20INCOME%20TAXES) STRATTEC's income tax expense increased to $5.7 million in fiscal 2025, with an effective tax rate of 23.2% Income Tax Expense (in thousands) | Category | June 29, 2025 | June 30, 2024 | | :------------ | :------------ | :------------ | | Current | $7,607 | $8,486 | | Deferred | (1,890) | (4,711) | | Total | $5,717 | $3,775 | Effective Income Tax Rate Reconciliation | Factor | June 29, 2025 | June 30, 2024 | | :---------------------------- | :------------ | :------------ | | Federal statutory rate | 21.0% | 21.0% | | State taxes, net of federal tax benefit | 1.0 | 2.7 | | Foreign subsidiaries | (1.7) | 5.4 | | Valuation allowance | 4.9 | 2.6 | | Research and development tax credit | (6.0) | (8.1) | | Effective income tax rate | 23.2% | 18.7% | Components of Deferred Tax Assets and Liabilities (in thousands) | Category | June 29, 2025 | June 30, 2024 | | :---------------------------- | :------------ | :------------ | | Gross deferred tax assets | $28,697 | $25,385 | | Valuation allowance | (3,865) | (2,569) | | Net deferred tax assets | 24,832 | 22,816 | | Gross deferred tax liabilities | (5,301) | (5,223) | | Net deferred tax assets (total) | $19,531 | $17,593 | - The total liability for unrecognized tax benefits was **$1.9 million** as of June 29, 2025, and **$1.6 million** as of June 30, 2024[201](index=201&type=chunk) - The One Big Beautiful Bill Act, signed July 4, 2025, may impact the company by allowing immediate expensing of R&D costs and permanent extensions of certain 2017 Tax Cuts and Jobs Act provisions; the company is evaluating its future impact[203](index=203&type=chunk) [NOTE 7. RETIREMENT PLANS AND OTHER POST-EMPLOYMENT BENEFITS](index=54&type=section&id=NOTE%207.%20RETIREMENT%20PLANS%20AND%20OTHER%20POST-EMPLOYMENT%20BENEFITS) STRATTEC maintains a SERP, postretirement health plans, and Mexico post-employment benefits, with 401(k) contributions of $2.0 million - The Supplemental Executive Retirement Plan (SERP) had a projected benefit obligation of **$1.6 million** at June 29, 2025, down from **$2.6 million** at June 30, 2024[204](index=204&type=chunk) - Rabbi Trust assets related to the SERP were valued at **$1.6 million** at June 29, 2025[204](index=204&type=chunk) Mexico Post-employment Benefits Net Periodic Benefit Cost (in thousands) | Component | June 29, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------ | | Service cost | $1,012 | $1,027 | | Interest cost | 849 | 910 | | Return on plan assets | (118) | (113) | | Net periodic benefit cost | $1,709 | $1,665 | Mexico Post-employment Benefit Obligation and Plan Assets (in thousands) | Metric | June 29, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------ | | Benefit obligation at end of year | $11,998 | $12,296 | | Fair value of plan assets at end of year | $1,253 | $1,158 | | Funded status – accrued benefit obligations | $(10,745) | $(11,138) | - The company expects to contribute **$956,000** to its Mexico post-employment benefit plan assets in fiscal **2026**[209](index=209&type=chunk) - Contributions to the 401(k) plan for U.S. employees were **$2.0 million** in fiscal **2025**, up from **$1.9 million** in fiscal **2024**[210](index=210&type=chunk) [NOTE 8. SHAREHOLDERS' EQUITY](index=56&type=section&id=NOTE%208.%20SHAREHOLDERS'%20EQUITY) As of June 29, 2025, STRATTEC had 4,039,334 common shares outstanding, with no repurchases in fiscal 2025 or 2024 Common Stock Changes | Metric | June 29, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------ | | Outstanding at beginning of period | 3,988,794 | 3,929,046 | | Shares issued under employee stock purchase plan | 1,577 | 2,998 | | Shares issued under equity incentive plans | 48,963 | 56,750 | | Outstanding at end of period | 4,039,334 | 3,988,794 | - **184,073** shares remain available for repurchase under the stock repurchase program; no shares were repurchased in fiscal **2025** or **2024**[211](index=211&type=chunk) - **41,227** shares remain available for purchase under the Employee Stock Purchase Plan as of June 29, 2025[217](index=217&type=chunk) [NOTE 9. EARNINGS PER SHARE](index=56&type=section&id=NOTE%209.%20EARNINGS%20PER%20SHARE) STRATTEC reported basic EPS of $4.64 and diluted EPS of $4.58 for fiscal 2025, reflecting employee stock compensation Earnings Per Share Attributable to Strattec | Metric | June 29, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------ | | Net income attributable to Strattec | $18,685 | $16,313 | | Basic weighted-average shares outstanding | 4,030 | 3,975 | | Effect of dilutive securities - employee stock compensation plan | 46 | 29 | | Diluted weighted-average shares outstanding | 4,076 | 4,004 | | Basic EPS | $4.64 | $4.10 | | Diluted EPS | $4.58 | $4.07 | [NOTE 10. STOCK-BASED COMPENSATION](index=56&type=section&id=NOTE%2010.%20STOCK-BASED%20COMPENSATION) STRATTEC grants RSAs and PSUs under its 2024 Equity Incentive Plan, with $3.2 million in unrecognized compensation cost - The company grants service-based restricted stock awards (RSAs) and performance stock units (PSUs) under the **2024** Equity Incentive Plan[213](index=213&type=chunk) - As of June 29, 2025, **435,742** shares were available for future awards under the **2024** Equity Incentive Plan[214](index=214&type=chunk) Restricted Stock Award (RSA) and Performance Stock Unit (PSU) Activity | Metric | RSAs (Shares) | RSAs (Avg. Grant Date Fair Value) | PSUs (Shares) | PSUs (Avg. Grant Date Fair Value) | | :------------------------------------ | :------------ | :-------------------------------- | :------------ | :-------------------------------- | | Nonvested Balance at July 2, 2023 | 87,900 | $32.09 | - | — | | Granted | 51,675 | $22.16 | - | — | | Vested | (56,750) | $30.12 | - | — | | Forfeited | (3,500) | $29.79 | - | — | | Nonvested Balance at June 30, 2024 | 79,325 | $27.21 | - | — | | Granted | 115,302 | $39.31 | 16,878 | $39.16 | | Vested | (48,963) | $29.49 | - | — | | Forfeited | (16,525) | $31.26 | - | — | | Nonvested Balance at June 29, 2025 | 129,139 | $36.37 | 16,878 | $39.16 | - As of June 29, 2025, unrecognized compensation cost was **$567,000** for PSUs and **$2.6 million** for RSAs, to be expensed over approximately **2 years**[215](index=215&type=chunk)[216](index=216&type=chunk) [NOTE 11. OTHER INCOME, NET](index=57&type=section&id=NOTE%2011.%20OTHER%20INCOME%2C%20NET) Other income, net, decreased to $0.8 million in fiscal 2025, primarily due to foreign currency transaction losses Components of Other Income, Net (in thousands) | Component | June 29, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Foreign currency transaction (loss) gain | $(591) | $2,153 | | Rabbi Trust assets gain | 186 | 211 | | Realized and unrealized gain on Mexican peso forward contracts, net | 1,908 | 885 | | Non-service pension and postemployment expense | (1,176) | (395) | | Other | 493 | (137) | | Total Other income, net | $820 | $2,717 | [NOTE 12. ACCUMULATED OTHER COMPREHENSIVE LOSS](index=58&type=section&id=NOTE%2012.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) Accumulated other comprehensive loss increased to $16.1 million, driven by foreign currency translation adjustments Changes in Accumulated Other Comprehensive Loss (in thousands) | Component | June 29, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Balance as of beginning of period | $15,689 | $14,194 | | Other comprehensive loss (income) | 889 | 2,601 | | Other comprehensive loss attributable to non-controlling interest | 465 | 1,106 | | Balance as of end of period | $16,113 | $15,689 | - Foreign currency translation adjustments resulted in a loss of **$1.17 million** in fiscal **2025**, compared to a loss of **$2.79 million** in fiscal **2024**[155](index=155&type=chunk)[219](index=219&type=chunk) - Pension and postretirement plans contributed an income of **$281,000** in fiscal **2025**, compared to an income of **$193,000** in fiscal **2024**[155](index=155&type=chunk)[219](index=219&type=chunk) [NOTE 13. RELATED PARTY](index=58&type=section&id=NOTE%2013.%20RELATED%20PARTY) STRATTEC owns 51% of a joint venture with ADAC Automotive, supporting customers with painted door handle products - STRATTEC owns **51%** of a joint venture with ADAC Automotive, focused on painted door handle and exterior trim products[220](index=220&type=chunk) Related Party Transactions (in thousands) | Transaction | June 29, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Management fee expense | $9,893 | $9,511 | | Net sales to joint venture partner | $6,916 | $9,718 | | Accounts receivable from joint venture partner | $731 | $833 | | Accounts payable to joint venture partner | $7,413 | $1,679 | [NOTE 14. SEGMENT INFORMATION](index=59&type=section&id=NOTE%2014.%20SEGMENT%20INFORMATION) STRATTEC operates as a single reportable segment, with the CEO using consolidated net income for performance evaluation - The company operates as a single reportable segment within the automotive industry[221](index=221&type=chunk) - The Chief Executive Officer is the Chief Operating Decision Maker (CODM), using Net income attributable to Strattec to evaluate performance and allocate resources[222](index=222&type=chunk) Net Sales by Country (in thousands) | Country | June 29, 2025 | June 30, 2024 | | :------------ | :------------ | :------------ | | United States | $381,405 | $382,386 | | Mexico | $52,845 | $42,979 | | Canada | 59,717 | 57,061 | | Korea | 56,855 | 44,735 | | Other | 14,244 | 10,605 | | Total Foreign | $183,661 | $155,380 | Tangible Long-Lived Assets, Net by Country (in thousands) | Country | June 29, 2025 | June 30, 2024 | | :------------ | :------------ | :------------ | | United States | $26,186 | $28,542 | | Mexico | $53,633 | $60,726 | | Canada | $20 | $9 | | Korea | $9 | $155 | | Other | $504 | $553 | | Total Foreign | $54,166 | $61,443 | Sales by Product Group (in thousands and percent of total net sales) | Product Group | June 29, 2025 Net Sales | June 29, 2025 % | June 30, 2024 Net Sales | June 30, 2024 % | | :------------------------ | :---------------------- | :-------------- | :---------------------- | :-------------- | | Power access solutions | $138,402 | 24% | $126,680 | 24% | | Door handles & exterior trim | $140,554 | 25% | $135,355 | 25% | | Keys & locksets | $99,788 | 18% | $106,374 | 20% | | Latches | $75,359 | 13% | $67,844 | 13% | | User interface controls | $53,405 | 9% | $47,637 | 9% | | Aftermarket and service | $46,703 | 8% | $42,732 | 8% | | Other | $10,855 | 2% | $11,144 | 2% | | Total | $565,066 | 100% | $537,766 | 100% | Sales to and Receivables from Major Customers (in thousands and percent of total) | Customer | June 29, 2025 Net Sales | June 29, 2025 % | June 30, 2024 Net Sales | June 30, 2024 % | June 29, 2025 Receivables | June 29, 2025 % | June 30, 2024 Receivables | June 30, 2024 % | | :------------------- | :---------------------- | :-------------- | :---------------------- | :-------------- | :------------------------ | :-------------- | :------------------------ | :-------------- | | General Motors Company | $165,701 | 29% | $163,097 | 30% | $26,581 | 26% | $28,645 | 29% | | Ford Motor Company | $129,193 | 23% | $114,937 | 21% | $19,916 | 20% | $24,832 | 25% | | Stellantis | $65,821 | 12% | $77,665 | 14% | $14,812 | 15% | $12,213 | 12% | | Total | $360,715 | 64% | $355,699 | 66% | $61,309 | 60% | $65,690 | 66% | [NOTE 15. COMMITMENTS AND CONTINGENCIES](index=60&type=section&id=NOTE%2015.%20COMMITMENTS%20AND%20CONTINGENCIES) The company does not anticipate material adverse impacts from legal actions and maintains a $1.4 million environmental reserve - The company does not anticipate any materially adverse impact on its financial statements from current legal actions and claims[226](index=226&type=chunk) - An environmental reserve of **$1.4 million** is maintained for a **1985** solvent spill at the Milwaukee facility, considered adequate as of June 29, 2025[227](index=227&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=61&type=section&id=ITEM%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with accountants on accounting and financial disclosure matters - No changes in or disagreements with accountants on accounting and financial disclosure were reported[229](index=229&type=chunk) [Controls and Procedures](index=61&type=section&id=ITEM%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal control over financial reporting were effective as of June 29, 2025 - The CEO and CFO concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 29, 2025[230](index=230&type=chunk) - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[231](index=231&type=chunk) - Management assessed the company's internal control over financial reporting as effective as of June 29, 2025, based on the COSO framework[235](index=235&type=chunk) - Deloitte & Touche LLP issued an attestation report on the effectiveness of the company's internal control over financial reporting[235](index=235&type=chunk) [Other Information](index=63&type=section&id=ITEM%209B.%20Other%20Information) This item is marked as not applicable, indicating no other information is required to be disclosed - This item is not applicable[236](index=236&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=63&type=section&id=ITEM%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is marked as not applicable, indicating no foreign jurisdictions prevent inspections of the company's operations - This item is not applicable[237](index=237&type=chunk) PART III [Directors, Executive Officers, and Corporate Governance](index=64&type=section&id=ITEM%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the Proxy Statement - Information is incorporated by reference from the Proxy Statement for the annual meeting on October 15, 2025[7](index=7&type=chunk)[240](index=240&type=chunk) - The Audit Committee comprises five outside independent directors: Matteo Anversa (Chairman), Frederic Jack Liebau, Jr., Bruce Lisman, Thomas W. Florsheim, Jr., and Tina Chang[241](index=241&type=chunk) - The company has adopted a Code of Business Ethics applicable to its principal executive and senior financial officers, available on its website[242](index=242&type=chunk) - An Insider Trading Policy is applicable to all directors, officers, and employees, as well as the company itself, to promote compliance with insider trading laws[243](index=243&type=chunk) [Executive Compensation](index=64&type=section&id=ITEM%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the company's Proxy Statement - Information on executive compensation is incorporated by reference from the Proxy Statement[244](index=244&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=64&type=section&id=ITEM%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Details on security ownership and related stockholder matters are incorporated by reference from the company's Proxy Statement - Information on security ownership and related stockholder matters is incorporated by reference from the Proxy Statement[245](index=245&type=chunk) [Certain Relationships and Related Transactions and Director Independence](index=64&type=section&id=ITEM%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Information concerning certain relationships, related transactions, and director independence is incorporated by reference from the Proxy Statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the Proxy Statement[246](index=246&type=chunk) [Principal Accounting Fees and Services](index=64&type=section&id=ITEM%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the company's Proxy Statement - Information on principal accounting fees and services is incorporated by reference from the Proxy Statement[247](index=247&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=65&type=section&id=ITEM%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits and financial statement schedules filed as part of the Form 10-K, many incorporated by reference - Includes the Report of Independent Registered Public Accounting Firm and consolidated financial statements for fiscal years ended June 29, 2025, and June 30, 2024[251](index=251&type=chunk) - Lists various exhibits, including amended and restated articles of incorporation, credit agreements, and stock incentive plans, many of which are incorporated by reference from prior SEC filings[250](index=250&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk)[257](index=257&type=chunk) [FORM 10-K Summary](index=71&type=section&id=ITEM%2016.%20FORM%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided - No Form 10-K Summary is provided[258](index=258&type=chunk) [Signatures](index=72&type=section&id=Signatures) The report is duly signed by the President and CEO, CFO, and other directors, certifying its submission to the SEC - The report is signed by Jennifer L. Slater (President and CEO) and Matthew P. Pauli (Senior VP, CFO), along with other directors[260](index=260&type=chunk)[261](index=261&type=chunk) - Signatures are dated August 25, 2025, for executive officers and August 19, 2025, for directors[261](index=261&type=chunk)

Financial Data and Key Metrics Changes - The company reported a revenue growth of 6% in the fourth quarter and 5% for the fiscal year [7] - Cash generated from operations was $30 million for the quarter and $71 million for the fiscal year, indicating strong cash generation [7][18] - Gross margin expanded by 370 basis points to 16.7% in the fourth quarter and improved by 280 basis points for the year [12][14] - Adjusted EBITDA margin for the fourth quarter was 8.5%, with a year-over-year expansion of 220 basis points to 7.7% [7][16] Business Line Data and Key Metrics Changes - The company is focusing on digital key and power access products to expand its customer base and drive growth [10] - The gross profit for the fourth quarter increased to $25.4 million, driven by strategic pricing actions and higher production volumes [12] Market Data and Key Metrics Changes - North American automotive production is projected to decline by about 5% to 6% in fiscal year 2026, with softness expected in the second half [20] - The company anticipates that its sales will generally follow North American OEM production volumes [20] Company Strategy and Development Direction - The company aims to create shareholder value through transformation actions and operational improvements [8] - Future growth will focus on leveraging product expertise and expanding into new customer segments, particularly in transportation and heavy vehicles [10][30] - The company is committed to maintaining a healthy balance sheet to weather market uncertainties and invest in growth [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing transformation process, indicating that significant changes have been made but more long-term efforts are required [26] - The company expects to continue generating solid cash from operations but at a more normalized rate moving forward [21] - Management highlighted the importance of pricing actions and operational improvements to achieve long-term gross margins in the 18% to 20% range [21] Other Important Information - The company reduced headcount by 15% and simplified operations as part of its transformation efforts [6] - Capital expenditures for the year totaled $7.2 million, focusing on new product programs and IT infrastructure upgrades [19] Q&A Session Summary Question: How far along is the transformation process? - Management indicated that they are still in the early stages of transformation, having addressed many low-hanging fruits in the past fiscal year [26] Question: Is the company considering exiting or divesting product lines? - Management mentioned that they are refocusing efforts on products with more growth potential, such as power access products and digital key fobs, while still supporting existing customers [28] Question: What is the expected sustainable range for gross margin in fiscal 2026? - Management expects gross margins to be impacted by pricing actions and labor inflation, with a target of maintaining margins around 15% [31] Question: How much cash is the company willing to hold given uncertain times? - Management expressed comfort with their current cash position, emphasizing the importance of liquidity for focusing on business transformation [39] Question: What are the expectations for free cash flow in the future? - Management indicated that free cash flow is expected to return to more normalized levels, estimating around $20 million to $30 million per year [58]

Financial Performance Highlights - Q4 FY25 revenue increased by $9 million, representing a 63% growth, reaching $152 million[8] - FY25 revenue grew by $273 million, a 51% increase, totaling $5651 million[21] - Q4 FY25 gross margin expanded by 370 basis points[31] - FY25 gross margin expanded by 280 basis points[6, 32] - FY25 Adjusted EBITDA margin expanded by 220 basis points to 77%[9, 41] - FY25 Net Income increased by 145%[41] - FY25 Adjusted EPS grew by 75% to $538[41] Cash Flow and Capitalization - Q4 FY25 operational cash flow was $302 million[6] - FY25 cash from operations reached $717 million[6] - Cash and cash equivalents stood at $846 million as of June 29, 2025[44] - Debt was reduced by $5 million to $8 million[46]

[News Release & Executive Summary](index=1&type=section&id=News%20Release%20%26%20Executive%20Summary) This section introduces Strattec Security Corporation, reviews the CEO's strategic outlook for fiscal year 2025, and highlights key financial achievements for the fourth quarter and full year [Company Introduction](index=1&type=section&id=Company%20Introduction) Strattec Security Corporation is a leading global provider of intelligent vehicle access, security, and authorization solutions for the automotive industry - Strattec Security Corporation (Nasdaq: STRT) is a leading global supplier of intelligent vehicle access, security, and authorization solutions for the automotive industry[2](index=2&type=chunk) [CEO's Strategic Review and Outlook](index=1&type=section&id=CEO's%20Strategic%20Review%20and%20Outlook) CEO Jennifer Slater reviews fiscal year 2025 as a period of significant transformation, achieving improved performance, higher margins, and strong cash flow, while acknowledging short-term market uncertainties - Fiscal year 2025 was a year of significant transformation and progress for Strattec, achieving substantially improved results including higher margins and cash flow[3](index=3&type=chunk) - The company implemented over **$8 million** in new annual pricing, restructured operations to cut **$5 million** in costs, and significantly improved working capital turns and cash flow[3](index=3&type=chunk) - Short-term market uncertainties include reduced North American automotive production and slower new model launch cycles from key customers[3](index=3&type=chunk) [Fiscal 2025 Fourth Quarter & Full Year Highlights](index=1&type=section&id=Fiscal%202025%20Fourth%20Quarter%20%26%20Full%20Year%20Highlights) Strattec achieved significant financial improvements in Q4 and full-year FY2025, marked by substantial gross margin expansion, robust cash flow, and successful debt reduction Fiscal 2025 Fourth Quarter & Full Year Key Financial Highlights | Metric | FY2025 Q4 | FY2024 Q4 | Change | FY2025 Full Year | FY2024 Full Year | Change | | :--------------------------------- | :----------------: | :----------------: | :--- | :-------------: | :-------------: | :--- | | Gross Margin | 16.7% | 13.0% | +3.7% | 15.0% | 12.2% | +2.8% | | Operating Cash Flow | $30.2 Million USD | - | - | $71.7 Million USD | - | - | | Net Income Attributable to Strattec | $8.3 Million USD | $9.6 Million USD | -13.5% | $18.7 Million USD | $16.3 Million USD | +14.7% | | Diluted Earnings Per Share | $2.01 | $2.39 | -15.9% | $4.58 | $4.07 | +12.5% | | Adjusted EBITDA | $13.0 Million USD | - | - | - | - | - | | Adjusted EBITDA as % of Sales | 8.5% | - | - | - | - | - | - A healthy balance sheet was further strengthened by reducing **$5 million** in debt; **$84.6 million** in cash supports ongoing transformation investments and provides a short-term market buffer[4](index=4&type=chunk) [Fiscal Year 2025 Fourth Quarter Financial Summary](index=2&type=section&id=Fiscal%20Year%202025%20Fourth%20Quarter%20Financial%20Summary) This section provides a detailed financial overview of Strattec's fourth quarter fiscal year 2025, analyzing net sales, gross profit, operating expenses, and net income performance [Net Sales Analysis](index=2&type=section&id=Net%20Sales%20Analysis) Fourth quarter net sales reached $152 million, increasing 6.3% year-over-year, driven by pricing adjustments, increased demand, new program launches, and a favorable sales mix Fiscal 2025 Fourth Quarter Net Sales | Metric | FY2025 Q4 | FY2024 Q4 | Change Amount | Change Percentage | | :--- | :----------------: | :----------------: | :-------: | :---------: | | Net Sales | $152.0 Million USD | $143.0 Million USD | +$9.0 Million USD | +6.3% | - Sales growth was primarily driven by **$3.7 million** in additional pricing, **$4.1 million** in increased demand, **$1.2 million** from new program launches, and a favorable sales mix[5](index=5&type=chunk) [Gross Profit and Margin Expansion](index=2&type=section&id=Gross%20Profit%20and%20Margin%20Expansion) Gross profit increased by $6.8 million to $25.4 million, with gross margin expanding 370 basis points, primarily due to favorable exchange rates, restructuring savings, pricing, and volume contributions Fiscal 2025 Fourth Quarter Gross Profit and Margin | Metric | FY2025 Q4 | FY2024 Q4 | Change Amount | Change Basis Points | | :--- | :----------------: | :----------------: | :-------: | :-------: | | Gross Profit | $25.4 Million USD | $18.6 Million USD | +$6.8 Million USD | - | | Gross Margin | 16.7% | 13.0% | - | +370 | | Favorable Foreign Exchange Impact | $3.0 Million USD | - | - | +210 | | Restructuring Savings | $1.3 Million USD | - | - | - | - Gross margin expansion was primarily driven by favorable foreign exchange rates (**$3.0 million**, **210 basis points**), **$1.3 million** in restructuring savings, and improved pricing and volume contributions[6](index=6&type=chunk) - These positive factors offset **$1.6 million** in net tariff impact and **$1.1 million** in increased Mexican labor costs[6](index=6&type=chunk) [Selling, Administrative and Engineering (SAE) Expenses](index=2&type=section&id=Selling,%20Administrative%20and%20Engineering%20(SAE)%20Expenses) SAE expenses increased by $8 million to $16.9 million, mainly due to higher professional service fees, additional performance compensation, and business transformation costs, contrasting with a prior-year engineering recovery Fiscal 2025 Fourth Quarter SAE Expenses | Metric | FY2025 Q4 | FY2024 Q4 | Change Amount | | :--- | :----------------: | :----------------: | :-------: | | SAE Expenses | $16.9 Million USD | $8.9 Million USD | +$8.0 Million USD | | Additional Performance Compensation | $2.2 Million USD | - | - | - The increase in SAE expenses also included business transformation costs and talent investments[7](index=7&type=chunk) - Prior year SAE expenses included a **$4.7 million** one-time engineering recovery benefit[7](index=7&type=chunk) [Interest and Other Income/Expense](index=2&type=section&id=Interest%20and%20Other%20Income/Expense) Interest income increased by $0.5 million due to higher cash balances, while other income decreased by $0.8 million due to foreign exchange rate changes - Interest income increased by **$0.5 million** due to higher cash balances[8](index=8&type=chunk) - Other income decreased by **$0.8 million** due to foreign exchange rate changes[8](index=8&type=chunk) [Net Income and Adjusted EBITDA](index=2&type=section&id=Net%20Income%20and%20Adjusted%20EBITDA) Net income attributable to Strattec for Q4 FY2025 was $8.3 million, with diluted EPS of $2.01, while adjusted EBITDA was $13.0 million, representing an 8.5% margin Fiscal 2025 Fourth Quarter Net Income and Adjusted EBITDA | Metric | FY2025 Q4 | FY2024 Q4 | Change Amount/Percentage | | :--------------------------------- | :----------------: | :----------------: | :---------------: | | Net Income Attributable to Strattec | $8.3 Million USD | $9.6 Million USD | -$1.3 Million USD | | Diluted Earnings Per Share | $2.01 | $2.39 | -$0.38 | | Adjusted Net Income Attributable to Strattec | $8.5 Million USD | - | - | | Adjusted Diluted Earnings Per Share | $2.06 | - | - | | Adjusted EBITDA | $13.0 Million USD | $13.8 Million USD | -$0.8 Million USD | | Adjusted EBITDA Margin | 8.5% | 9.6% | -1.1% | - Gross margin expansion and sales growth largely offset the ED&D benefit in SAE expenses from the fourth quarter of fiscal year 2024[9](index=9&type=chunk) [Balance Sheet and Liquidity](index=2&type=section&id=Balance%20Sheet%20and%20Liquidity) This section details Strattec's balance sheet and liquidity position, focusing on cash flow from operations, cash and cash equivalents, and debt levels [Cash Flow from Operations](index=2&type=section&id=Cash%20Flow%20from%20Operations) Operating cash flow for Q4 FY2025 significantly increased to $30.2 million from $19.5 million in the prior year, with full-year operating cash flow reaching $71.7 million Cash Flow from Operations | Metric | FY2025 Q4 | FY2024 Q4 | Change Amount | | :--- | :----------------: | :----------------: | :-------: | | Operating Cash Flow | $30.2 Million USD | $19.5 Million USD | +$10.7 Million USD | | FY2025 Full Year Operating Cash Flow | $71.7 Million USD | - | - | - Increased cash earnings and improved working capital management drove the growth in operating cash flow[10](index=10&type=chunk) [Cash and Cash Equivalents & Debt](index=2&type=section&id=Cash%20and%20Cash%20Equivalents%20%26%20Debt) As of June 29, 2025, the company held $84.6 million in cash, with no outstanding borrowings under its $40 million revolving credit facility and reduced joint venture debt Cash and Cash Equivalents & Debt | Metric | June 29, 2025 | FY2025 Q3 End | Change Amount | | :--------------------------------- | :-------------: | :------------------: | :-------: | | Cash and Cash Equivalents | $84.6 Million USD | $62.1 Million USD | +$22.5 Million USD | | Company Revolving Credit Facility Outstanding Borrowings | $0 | - | - | | Joint Venture Revolving Credit Facility Outstanding Borrowings | $8.0 Million USD | $13.0 Million USD | -$5.0 Million USD | [Conference Call Information](index=2&type=section&id=Conference%20Call%20Information) This section provides details for Strattec's upcoming conference call and webcast to discuss financial and operational results, along with replay information [Webcast and Conference Call Details](index=3&type=section&id=Webcast%20and%20Conference%20Call%20Details) Strattec will host a conference call and webcast on Friday, August 15, 2025, at 9:00 AM ET to review financial results and provide updates on transformation progress - The conference call and webcast will be held on Friday, August 15, 2025, at 9:00 AM ET[12](index=12&type=chunk) - A telephone replay will be available by dialing +1 (412) 317-6671, PIN 13754276, until August 29, 2025[14](index=14&type=chunk) - A webcast replay and transcript will be available on the company's investor relations website at investors.strattec.com[12](index=12&type=chunk)[14](index=14&type=chunk) [About Strattec](index=3&type=section&id=About%20Strattec) This section offers an overview of Strattec's history, its position as a leading provider of automotive access solutions, and its diverse product portfolio [Company Profile and Products](index=3&type=section&id=Company%20Profile%20and%20Products) Strattec is a global leader with over 110 years of history, providing advanced automotive access, security, and authorization solutions, evolving from mechanical to integrated electromechanical systems - Strattec is a leading global provider of advanced automotive access, security, and authorization solutions, with over **110 years** of history[15](index=15&type=chunk) - Company products include power access solutions, latches, vehicle immobilizers, keys, fobs and accessories, locks, door handles, and other access products[15](index=15&type=chunk) - Power access solutions provide motion control for power liftgates, power sliding doors, and power tailgates[15](index=15&type=chunk) [Safe Harbor Statement](index=3&type=section&id=Safe%20Harbor%20Statement) This section outlines the company's safe harbor statement, detailing the inherent risks and uncertainties associated with forward-looking statements in the press release [Forward-Looking Statements Disclaimer](index=3&type=section&id=Forward-Looking%20Statements%20Disclaimer) This press release contains "forward-looking statements" subject to uncertainties including economic conditions, consumer demand, competition, and trade policies, with no obligation for public updates - This press release contains “forward-looking statements” subject to numerous uncertainties including general economic conditions, the automotive industry, consumer demand, competition, and technological developments[16](index=16&type=chunk) - Additional uncertainties include changes in customer purchasing behavior, warranty terms and product recall policies, labor disputes, foreign currency fluctuations, and U.S. trade policies and tariffs[16](index=16&type=chunk) - The company undertakes no obligation to publicly update these forward-looking statements to reflect events or circumstances occurring after the date of this release[16](index=16&type=chunk) [Use of Non-GAAP Financial Metrics](index=3&type=section&id=Use%20of%20Non-GAAP%20Financial%20Metrics) This section explains Strattec's use of non-GAAP financial measures as supplementary information for evaluating core operational and financial performance [Explanation of Non-GAAP Measures](index=3&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Strattec provides adjusted non-GAAP information as a supplement to GAAP results, used by management for strategic decisions and performance evaluation, encouraging investors to review GAAP reconciliations - Strattec provides adjusted non-GAAP information as a supplement to operating results, which are not required by or a substitute for GAAP[17](index=17&type=chunk) - Management uses these non-GAAP measures for strategic decision-making, budgeting, trend identification, and performance evaluation[17](index=17&type=chunk) - Investors are encouraged to review the relevant GAAP financial measures and their reconciliations to the most directly comparable GAAP measures[17](index=17&type=chunk) [Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) This section presents Strattec's unaudited consolidated financial statements, including statements of income, balance sheets, and cash flows for the reported periods [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) This section presents Strattec Security Corporation's unaudited consolidated statements of income for the three and twelve months ended June 29, 2025, and June 30, 2024, detailing key metrics like net sales, gross profit, and net income Consolidated Statements of Income Summary (Unaudited, in thousands, except per share amounts) | Metric | June 29, 2025 (3 Months) | June 30, 2024 (3 Months) | June 29, 2025 (Annual) | June 30, 2024 (Annual) | | :--------------------------------- | :--------------------: | :--------------------: | :------------------: | :------------------: | | Net Sales | $152,013 Thousand USD | $143,055 Thousand USD | $565,066 Thousand USD | $537,766 Thousand USD | | Cost of Sales | $126,613 Thousand USD | $124,488 Thousand USD | $480,489 Thousand USD | $472,298 Thousand USD | | Gross Profit | $25,400 Thousand USD | $18,567 Thousand USD | $84,577 Thousand USD | $65,468 Thousand USD | | Gross Margin | 16.7% | 13.0% | 15.0% | 12.2% | | Selling, Administrative and Engineering Expenses | $16,898 Thousand USD | $8,876 Thousand USD | $61,793 Thousand USD | $47,654 Thousand USD | | Operating Income | $8,502 Thousand USD | $9,691 Thousand USD | $22,784 Thousand USD | $17,814 Thousand USD | | Operating Margin | 5.6% | 6.8% | 4.0% | 3.3% | | Net Income Attributable to Strattec | $8,267 Thousand USD | $9,620 Thousand USD | $18,685 Thousand USD | $16,313 Thousand USD | | Diluted Earnings Per Share | $2.01 | $2.39 | $4.58 | $4.07 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This section provides Strattec Security Corporation's unaudited consolidated balance sheets as of June 29, 2025, and June 30, 2024, outlining assets, liabilities, and stockholders' equity Consolidated Balance Sheets Summary (Unaudited, in thousands) | Metric | June 29, 2025 | June 30, 2024 | | :----------------------- | :-------------: | :-------------: | | **Assets** | | | | Cash and Cash Equivalents | $84,579 Thousand USD | $25,410 Thousand USD | | Accounts Receivable, Net | $102,061 Thousand USD | $99,297 Thousand USD | | Inventories, Net | $64,701 Thousand USD | $81,649 Thousand USD | | Total Current Assets | $290,063 Thousand USD | $253,814 Thousand USD | | Property, Plant and Equipment, Net | $77,410 Thousand USD | $86,184 Thousand USD | | Total Assets | $391,454 Thousand USD | $364,289 Thousand USD | | **Liabilities and Stockholders' Equity** | | | | Accounts Payable | $65,824 Thousand USD | $54,911 Thousand USD | | Total Current Liabilities | $119,350 Thousand USD | $118,288 Thousand USD | | Borrowings under Credit Facilities | $8,000 Thousand USD | $13,000 Thousand USD | | Total Liabilities | $145,023 Thousand USD | $138,674 Thousand USD | | Stockholders' Equity Attributable to Strattec | $221,592 Thousand USD | $200,545 Thousand USD | | Total Stockholders' Equity | $246,431 Thousand USD | $225,615 Thousand USD | | Total Liabilities and Stockholders' Equity | $391,454 Thousand USD | $364,289 Thousand USD | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents Strattec Security Corporation's unaudited consolidated statements of cash flows for the three and twelve months ended June 29, 2025, and June 30, 2024, detailing cash flows from operating, investing, and financing activities Consolidated Statements of Cash Flows Summary (Unaudited, in thousands) | Metric | June 29, 2025 (3 Months) | June 30, 2024 (3 Months) | June 29, 2025 (Annual) | June 30, 2024 (Annual) | | :--------------------------------- | :--------------------: | :--------------------: | :------------------: | :------------------: | | Net Cash Provided by Operating Activities | $30,176 Thousand USD | $19,488 Thousand USD | $71,677 Thousand USD | $12,265 Thousand USD | | Net Cash Used in Investing Activities | $(2,996) Thousand USD | $(3,723) Thousand USD | $(7,156) Thousand USD | $(7,788) Thousand USD | | Net Cash Provided by (Used in) Financing Activities | $(4,983) Thousand USD | $17 Thousand USD | $(4,939) Thousand USD | $72 Thousand USD | | Net Increase in Cash and Cash Equivalents | $22,473 Thousand USD | $15,816 Thousand USD | $59,169 Thousand USD | $4,839 Thousand USD | | Cash and Cash Equivalents at End of Period | $84,579 Thousand USD | $25,410 Thousand USD | $84,579 Thousand USD | $25,410 Thousand USD | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=7&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section provides detailed reconciliations of GAAP financial measures to their non-GAAP counterparts, including adjusted net sales, EBITDA, net income, and earnings per share [Adjusted Net Sales](index=7&type=section&id=Adjusted%20Net%20Sales) This section provides a reconciliation of GAAP net sales to non-GAAP adjusted net sales, showing adjustments for fiscal years 2024 and 2025, primarily related to a one-time retroactive pricing recovery Adjusted Net Sales (in thousands) | Metric | FY2024 Q4 | FY2024 Full Year | FY2025 Q4 | FY2025 Full Year | | :--------------------------------- | :----------: | :----------: | :----------: | :----------: | | Net Sales (GAAP) | $143,055 Thousand USD | $537,766 Thousand USD | $152,013 Thousand USD | $565,066 Thousand USD | | Adjustment: Retroactive FY23 One-Time Pricing Recovery | $175 Thousand USD | $(9,723) Thousand USD | - | - | | Adjusted Net Sales (Non-GAAP) | $143,230 Thousand USD | $528,043 Thousand USD | $152,013 Thousand USD | $565,066 Thousand USD | [Adjusted EBITDA](index=7&type=section&id=Adjusted%20EBITDA) This section reconciles GAAP net income attributable to Strattec to non-GAAP adjusted EBITDA, detailing adjustments for depreciation, non-cash equity compensation, restructuring, executive transition, and business transformation costs Adjusted EBITDA (in thousands) | Metric | FY2024 Q4 | FY2024 Full Year | FY2025 Q4 | FY2025 Full Year | | :--------------------------------- | :----------: | :----------: | :----------: | :----------: | | Net Income Attributable to Strattec (GAAP) | $9,620 Thousand USD | $16,313 Thousand USD | $8,267 Thousand USD | $18,685 Thousand USD | | Adjustments: | | | | | | Depreciation | $3,773 Thousand USD | $16,547 Thousand USD | $3,812 Thousand USD | $14,764 Thousand USD | | Non-Cash Equity Compensation | $243 Thousand USD | $1,467 Thousand USD | $887 Thousand USD | $2,726 Thousand USD | | Restructuring and Similar Charges | - | - | $(676) Thousand USD | $398 Thousand USD | | Executive Transition Costs | $73 Thousand USD | $1,058 Thousand USD | $(17) Thousand USD | $2,058 Thousand USD | | Business Transformation Costs | - | - | $479 Thousand USD | $1,027 Thousand USD | | Adjusted EBITDA (Non-GAAP) | $13,804 Thousand USD | $28,893 Thousand USD | $12,987 Thousand USD | $43,758 Thousand USD | | Adjusted EBITDA as % of Adjusted Net Sales | 9.6% | 5.5% | 8.5% | 7.7% | [Adjusted Net Income and Earnings Per Share](index=7&type=section&id=Adjusted%20Net%20Income%20and%20Earnings%20Per%20Share) This section reconciles GAAP net income and diluted EPS attributable to Strattec to non-GAAP adjusted net income and diluted EPS, including adjustments for restructuring, executive transition, business transformation, non-controlling interest, and tax impacts Adjusted Net Income and Earnings Per Share (in thousands, except per share amounts) | Metric | FY2024 Q4 | FY2024 Full Year | FY2025 Q4 | FY2025 Full Year | | :--------------------------------- | :----------: | :----------: | :----------: | :----------: | | Net Income Attributable to Strattec (GAAP) | $9,620 Thousand USD | $16,313 Thousand USD | $8,267 Thousand USD | $18,685 Thousand USD | | Adjustments: | | | | | | Restructuring and Similar Charges | $63 Thousand USD | $331 Thousand USD | $(676) Thousand USD | $398 Thousand USD | | Executive Transition Costs | $73 Thousand USD | $1,257 Thousand USD | $115 Thousand USD | $2,778 Thousand USD | | Business Transformation Costs | - | - | $479 Thousand USD | $1,027 Thousand USD | | Non-Controlling Interest Impact | $22 Thousand USD | $1,272 Thousand USD | $160 Thousand USD | - | | Tax Impact | $(41) Thousand USD | $1,155 Thousand USD | $107 Thousand USD | $(945) Thousand USD | | Adjusted Net Income Attributable to Strattec (Non-GAAP) | $9,761 Thousand USD | $12,335 Thousand USD | $8,452 Thousand USD | $21,943 Thousand USD | | Diluted Earnings Per Share (GAAP) | $2.39 | $4.07 | $2.01 | $4.58 | | Adjusted Diluted Earnings Per Share (Non-GAAP) | $2.42 | $3.08 | $2.06 | $5.38 |

Core Insights - Strattec Security Corporation (STRT) is expected to release its fourth-quarter fiscal 2025 results on August 14, with earnings per share (EPS) estimated at $1.07 and revenues at $143.51 million, indicating a year-over-year revenue growth of 0.32% [1][2][7] - The consensus estimate for STRT's EPS has increased by 16 cents over the past 90 days, but this reflects a significant decline of 55.23% compared to the same quarter last year [1][7] Financial Performance - In the third quarter of fiscal 2025, Strattec reported earnings of $1.50 per share, exceeding the Zacks Consensus Estimate of 95 cents, and showing a substantial increase from 37 cents in the third quarter of fiscal 2024 [2] - The company achieved revenues of $144 million in the third quarter, surpassing the Zacks Consensus Estimate of $141 million, and representing a 2.1% increase from the previous year [2] Margin and Efficiency - Strattec's gross margin improved by 560 basis points year-over-year to 16%, driven by efficiencies in material and labor costs [3] - Adjusted EBITDA for the third quarter reached $12.9 million, or 9% of sales, compared to 4.4% a year earlier, indicating enhanced operational performance [3] Tariff Impact - Approximately 6% of STRT's total sales, equating to $30 million, are currently affected by recent U.S. tariffs, with an estimated annualized impact of $9-$12 million before mitigation measures [4] Earnings Prediction - The current model does not predict an earnings beat for Strattec, as it lacks the necessary combination of a positive Earnings ESP and a favorable Zacks Rank [5][6] - STRT has an Earnings ESP of 0.00%, indicating that the Most Accurate Estimate aligns with the Zacks Consensus Estimate [6]

Group 1 - The article highlights Strattec Security Corporation (STRT) as an undercovered stock that may have been overlooked by investors [1] - The author expresses a potential interest in initiating a long position in STRT through stock or options purchase within the next 72 hours [1]