STRATTEC(STRT) - 2025 Q4 - Annual Results

News Release & Executive Summary 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 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] CEO's Strategic Review and Outlook 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] - 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] - Short-term market uncertainties include reduced North American automotive production and slower new model launch cycles from key customers[3] Fiscal 2025 Fourth Quarter & Full Year Highlights 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] Fiscal Year 2025 Fourth Quarter Financial Summary 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 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] Gross Profit and Margin Expansion 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] - These positive factors offset $1.6 million in net tariff impact and $1.1 million in increased Mexican labor costs[6] Selling, Administrative and Engineering (SAE) Expenses 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] - Prior year SAE expenses included a $4.7 million one-time engineering recovery benefit[7] Interest and Other Income/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] - Other income decreased by $0.8 million due to foreign exchange rate changes[8] Net Income and Adjusted EBITDA 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] Balance Sheet and Liquidity 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 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] Cash and Cash Equivalents & Debt 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 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 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] - A telephone replay will be available by dialing +1 (412) 317-6671, PIN 13754276, until August 29, 2025[14] - A webcast replay and transcript will be available on the company's investor relations website at investors.strattec.com[12][14] About Strattec 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 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] - Company products include power access solutions, latches, vehicle immobilizers, keys, fobs and accessories, locks, door handles, and other access products[15] - Power access solutions provide motion control for power liftgates, power sliding doors, and power tailgates[15] Safe Harbor Statement 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 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] - 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] - 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] Use of Non-GAAP Financial Metrics 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 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] - Management uses these non-GAAP measures for strategic decision-making, budgeting, trend identification, and performance evaluation[17] - Investors are encouraged to review the relevant GAAP financial measures and their reconciliations to the most directly comparable GAAP measures[17] Consolidated Financial Statements (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 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 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 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 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 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 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 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 |