Strattec Security (NasdaqGM:STRT) Conference December 09, 2025 10:00 AM ET Company ParticipantsJennifer Slater - CEOMatt Pauli - CFOModeratorGood day and welcome to the iAccess Alpha Virtual Best Ideas Winter Investment Conference of 2025. The next presenting company is Strattec Security Corp. If you would like to ask a question during the webcast, you may do so at any point during the presentation by clicking on the Ask Question button on the left side of your screen. Type your question into the box and hi ...

Company Overview - STRATTEC was founded in 1908 and went public in 1995, with a market capitalization of $277 million as of October 28, 2025 [5] - Institutional ownership is 76%, while insider ownership is 3.6% [5] - The company's revenue for the trailing twelve months (TTM) ending Q1 FY26 was $578.4 million [9] - The company provides highly engineered products for leading OEMs, with sales by product including Door Handles (25%), Power Access (25%), Keys & Locksets (18%), Latches (13%), Other (11%), and Aftermarket (8%) [8, 9] Financial Performance - Revenue has steadily increased from $492.9 million in FY2023 to $578.4 million in TTM Q1 FY26 [14] - Cash from operations has improved significantly, reaching $71.7 million in FY2025 and TTM Q1 FY26 [14] - Gross profit has risen from $42.2 million in FY2023 to $92.0 million in TTM Q1 FY26 [17] - Q1 FY26 net sales increased by $13.3 million, or 9.6%, to $152.4 million compared to $139.1 million in Q1 FY25 [35, 36] - Q1 FY26 gross margin expanded by 370 basis points year-over-year [44] - Net income attributable to STRATTEC was up 130% year-over-year in Q1 FY26 [49] Strategic Initiatives - The company reduced headcount by 15% in FY25, resulting in $5 million in savings [12] - The company captured $8 million in annualized pricing in FY2025 [12] - The company signed a new $40 million revolving credit facility in October 2025, extending the maturity to 2028 [61]

Financial Performance - Q1 FY26 revenue increased by $133 million, a 96% increase, reaching $1524 million[6, 18] - Gross margin improved to 173%, a 370 bps increase[6] - Net income increased by 130% year-over-year[31] - Adjusted EBITDA margin expanded by 310 bps year-over-year to 102%[37] Cash Flow and Capitalization - Generated $113 million in operational cash flow in Q1 FY26[6, 40] - Ended the quarter with $905 million in cash on hand[6] - Total debt reduced to $50 million[43] - A new $40 million revolving credit facility was extended to 2028[15, 43] Strategic Initiatives and Challenges - Restructuring actions in Mexico are expected to generate approximately $1 million in annualized savings starting in the latter half of Q2 FY26[7, 14] - Supply chain issues, including aluminum fire and semiconductor chip shortages, are expected to impact Q2 FY26[45, 49]

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]

Company Overview - STRATTEC is a leader in smart vehicle access, security, and authorization solutions[5] - The company's market capitalization is $222 million, with a recent closing price of $54.34 per share[5] - Institutional ownership is 68%, and insider ownership is 9%[5] Financial Performance - Q3 FY25 sales increased by 2.4% year-over-year, reaching $144.1 million[36, 39] - Adjusted EBITDA for Q3 FY25 was $12.9 million, representing 8.9% of sales, up from $6.2 million (4.4% of sales) in Q3 FY24[34] - Gross margin expanded by 560 basis points in Q3 and 240 basis points year-to-date[46, 47] - The company generated $20.7 million in operational cash flow in Q3, with $41.5 million year-to-date[34] Strategic Initiatives - The company is focused on talent development, performance culture, and infrastructure modernization to drive sustainable performance[14] - STRATTEC is actively managing the tariff environment, with approximately 93% of US imports being USMCA compliant and not subject to additional tariffs[15, 20] - The company has captured $8 million in annualized pricing to start in Q3 FY25[31] Sales Breakdown - TTM revenue is $552.1 million[10] - By customer, OEMs account for 30% of sales, Tier 1 customers account for 23% of sales, and Commercial & Other customers account for 12% of sales[10] - By product, Keys & Locksets account for 25% of sales, Power Access accounts for 25% of sales, and Latches account for 14% of sales[10]

Financial Performance - Revenue increased by $33 million, reaching $1441 million in Q3 FY25[6, 21] - Adjusted EBITDA was $129 million, representing 89% of sales, up from $62 million or 44% of sales in Q3 FY24[6] - Net income attributable to STRATTEC increased by 258% in Q3 FY25[44] - Adjusted diluted earnings per share grew by 305% to $150 in Q3 FY25[44] - Gross margin expanded by 560 basis points in Q3 FY25[28] Cash Flow and Capitalization - Generated $207 million in operational cash flow in Q3 FY25[6] - Year-to-date cash from operations totaled $415 million[6] - Cash and cash equivalents stood at $621 million[16, 45] Operational Efficiency and Cost Management - Implemented restructuring actions in Milwaukee and Mexico, expected to yield approximately $5 million in annual savings[9, 16] - Achieved a 12% headcount reduction year-to-date, improving operational leverage[9, 16] - Estimated annual tariff impact of $9 million to $12 million before mitigation, excluding USMCA compliant sales[17, 35]