STRATTEC(STRT) - 2026 Q2 - Quarterly Report

Financial Performance - Net sales for the second quarter of fiscal 2026 reached $137.5 million, an increase of $7.6 million or 6% compared to the prior year[54] - Gross profit improved to $22.7 million with a gross margin of 16.5%, up from 13.2%, reflecting a 330 basis point increase[55] - Income from operations rose to $4.9 million, representing a 128% increase year-over-year, with an operating margin of 3.5%[53] - Year-to-date net sales totaled $289.9 million, an increase of $21.0 million or 8% compared to the previous year[61] - Year-to-date gross profit was $49.1 million, with a gross margin improvement from 13.4% to 16.9%, a 350 basis point increase[62] Expenses and Cash Flow - Selling, administrative, and engineering expenses for the second quarter were $17.9 million, representing 13.0% of sales, up from 11.6% in the prior year[56] - Cash provided by operating activities for the six months ended December 28, 2025, was $25.2 million, an increase of $4.4 million compared to the prior year[67] Balance Sheet and Working Capital - At December 28, 2025, the company had $99.0 million in cash and cash equivalents, with no borrowings outstanding under the $40.0 million credit agreement[68] - Primary working capital as a percentage of sales (PWC %) for December 28, 2025, was 18%, consistent with the beginning of the fiscal year[70] - Accounts receivable decreased by $12.9 million to $89 million, resulting in a PWC % of 16%[70] - Inventory levels increased by $7.2 million to $72 million, with a PWC % of 13%[70] - Accounts payable reduced by $6.3 million to $(60) million, maintaining a PWC % of (11%)[70] - Net primary working capital remained stable at $101 million, with a PWC % of 18% in December 2025 and 17% in June 2025[70] Interest and Tax - Interest income increased by $1.0 million due to higher cash levels, while interest expense decreased by $0.3 million due to debt repayment[64] - The effective income tax rate for the year-to-date period was 22.2%, down from 27.0% in the prior year, reflecting changes in foreign tax credits[66]