EX-99.1 2 ex991tostrtform8k.htm EXHIBIT 99.1 TO STRT FORM 8-K ex991tostrtform8k.htm
Exhibit 99.1


FOR RELEASE AT 3:00 PM CST

Contact:  Pat Hansen
Senior Vice President and
Chief Financial Officer
414-247-3435
www.strattec.com


STRATTEC SECURITY CORPORATION
REPORTS FISCAL 2012 THIRD QUARTER RESULTS
 

Milwaukee, Wisconsin – April 26, 2012 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal third quarter ended April 1, 2012.

Net sales for the Company’s third quarter ended April 1, 2012 were $70.6 million, compared to net sales of $65.7 million for the third quarter ended March 27, 2011.  The higher net sales for the current quarter can be primarily attributed to increased customer production volumes.  Higher content on certain products also contributed to the net sales improvement during the current quarter.

Net income for the current quarterly period was $2.7 million, compared to a net income of $55,000 in the prior year quarter.  Diluted earnings per share for the current quarterly period were $.82 compared to diluted earnings per share of $.02 in the prior year quarter. The lower net income for the prior year quarter was significantly affected by a combination of STRATTEC’s share of the cost associated with a customer’s specific warranty claim, and an adjustment for customer price concessions.  These two items resulted in a pre-tax provision of $1.8 million during the prior year quarter and reduced diluted earnings per share by $.33 in the prior year quarter.

 
 

 

For the nine months ended April 1, 2012, the Company’s net sales were $202.9 million compared to net sales of $186.7 million in the prior year period.  Net income during the current year to date period was $5.6 million compared to net income of $2.7 million in the prior year period and diluted earnings per share during the current year to date period were $1.67 compared to diluted earnings per share of $.82 in the prior year period.

The year-over-year net sales increase for the current quarter reflected increased sales to STRATTEC’s three largest customers.  Sales to Chrysler Group LLC were $23.6 million in the current quarter compared to $21.6 million in the prior year quarter.  Sales to General Motors Company were $16.8 million compared to $14.8 million.  Sales to Ford Motor Company were $8.4 million compared to $7.0 million.  Sales to Hyundai/Kia were $3.6 million compared to $4.0 million.

Gross profit margins were 18.5 percent in the current quarter compared to 13.9 percent in the prior year quarter.   The higher gross profit margin in the current year quarter was primarily the result of a favorable Mexico Peso to U.S. Dollar exchange rate positively affecting the Company’s operations in Mexico and favorable customer vehicle production volumes, which increased overhead absorption of STRATTEC’s manufacturing costs, offset by higher expense provisions for the Company’s Economic Value Added (EVA®) incentive bonus plan.  Items negatively impacting the year-over-year comparison of the prior year quarter gross margin was the $1.8 million pre-tax provision mentioned above, in connection with STRATTEC’s share of the cost associated with a customer specific warranty claim and an adjustment for customer price concessions which reduced the prior year gross profit margin by 2.7 percentage points.

 
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Operating expenses were $8.7 million in the current quarter, compared to $8.0 million in the prior year quarter.  As referenced above, this increase in operating expenses was primarily driven by the higher incentive bonus expense incurred during the current quarter.

Included in Other (Expense) Income in the current quarter compared to the prior year quarter were the following items (in thousands of dollars):
 
   
April 1,
   
March 27,
 
   
2012
   
2011
 
             
Foreign Currency Transaction Loss
  $ (698 )   $ (368 )
Impact of Mexican Peso Option Contracts, Net Gain (Loss)
    1,126       (114 )
Rabbi Trust Gain
    161       75  
Equity (Loss) Earnings of VAST LLC Joint Venture
    (140 )     197  
Other
    73       50  
    $ 522     $ (160 )

As reported in our previous fiscal 2012 quarterly operating results, the VAST LLC operations in China and Brazil both incurred relocation costs associated with moves to new facilities and start-up costs associated with a new product line.  Both of these items resulted in STRATTEC incurring an equity loss from this joint venture in all three quarters of fiscal year 2012 compared to the same quarters in the prior year in which STRATTEC had equity earnings from the joint venture.  We anticipate these transition costs and losses to continue over the remaining 2012 calendar year.

 
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During the current quarter the Company voluntarily contributed $500,000 to its Defined Benefit Pension Trust.
 
EVA® is a registered trademark of Stern, Stewart & Co.
 
STRATTEC designs, develops, manufactures and markets automotive Access Control Products, including mechanical locks and keys, electronically enhanced locks and keys, steering column and instrument panel ignition lock housings, latches, power sliding side door systems, power lift gate systems, power deck lid systems, door handles and related products. These products are provided to customers in North America, and on a global basis through a unique strategic relationship with WITTE Automotive of Velbert, Germany and ADAC Automotive of Grand Rapids, Michigan.  Under this relationship, STRATTEC, WITTE and ADAC market our products to global customers under the “VAST” brand name.  STRATTEC’s history in the automotive business spans over 100 years.

Certain statements contained in this release contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “intend,” “may,” “planned,” “potential,” “should,” “will,” and “would.”   Such forward-looking statements in this release are inherently subject to many uncertainties in the Company’s operations and business environment.  These uncertainties include general economic conditions, in particular, relating to the automotive industry, consumer demand for the Company’s and its customers’ products, competitive and technological developments, customer purchasing actions, foreign currency fluctuations, and costs of operations (including fluctuations in the cost of raw materials).  Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward looking statements and are cautioned not to place undue reliance on such forward-looking statements.  The forward-looking statements made herein are only made as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances occurring after the date of this release.  In addition, such uncertainties and other operational matters are discussed further in the Company’s quarterly and annual filings with the Securities and Exchange Commission.

 
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STRATTEC SECURITY CORPORATION
Results of Operations
(In Thousands except per share amounts)
(Unaudited)

   
Third Quarter Ended
    Nine Months Ended  
   
April 1, 2012
   
March 27, 2011
   
April 1, 2012
   
March 27, 2011
 
                         
Net Sales
    70,608     $ 65,650     $ 202,871     $ 186,711  
                                 
Cost of Goods Sold
    57,556       56,531       167,075       157,466  
                                 
Gross Profit
    13,052       9,119       35,796       29,245  
                                 
 
                               
Engineering, Selling & Administrative Expenses
    8,720       7,953       24,907       24,436  
                                 
Income from Operations
    4,332       1,166       10,889       4,809  
                                 
Interest Income
    15       36       47       84  
                                 
Interest Expense – Related Parties
    (19 )     (38 )     (73 )     (134 )
                                 
Other Income (Expense), Net
    522       (160 )     (155 )     899  
                                 
      4,850       1,004       10,708       5,658  
                                 
Provision for Income Taxes
    1,136       262       2,717       1,394  
                                 
Net Income
    3,714       742       7,991       4,264  
                                 
Net Income Attributable to Non-Controlling Interest
    986       687       2,433       1,544  
                                 
Net Income Attributable to
     STRATTEC SECURITY CORPORATION
  $ 2,728     $ 55     $ 5,558     $ 2,720  
 
                               
Earnings Per Share:
                               
Basic
  $ 0.83     $ 0.02     $ 1.68     $ 0.83  
Diluted
  $ 0.82     $ 0.02     $ 1.67     $ 0.82  
                                 
                                 
Average Basic Shares Outstanding
    3,303       3,286       3,299       3,284  
                                 
Average Diluted Shares Outstanding
    3,333       3,339       3,329       3,322  
                                 
Other
                               
  Capital Expenditures
  $ 3,296     $ 2,245     $ 9,585     $ 5,727  
  Depreciation & Amortization
  $ 1,752     $ 1,677     $ 5,083     $ 4,904  


 
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STRATTEC SECURITY CORPORATION

Condensed Balance Sheet Data
(In Thousands)
 
   
April 1, 2012
   
July 3, 2011
 
                                                                                            
  (Unaudited)        
ASSETS
           
   Current Assets:
           
       Cash and Cash Equivalents
  $ 15,664       17,250  
       Receivables, Net
    41,591       39,649  
       Inventories
    23,059       22,135  
       Other Current Assets
    17,366       15,368  
            Total Current Assets
    97,680       94,402  
   Deferred Income Taxes
    3,667       3,639  
   Loan to Joint Venture
    -       1,500  
   Investment in Joint Venture
    8,890       7,276  
   Other Long Term Assets
    560       635  
   Property, Plant and Equipment, Net
    44,425       40,636  
    $ 155,222     $ 148,088  

LIABILITIES AND SHAREHOLDERS’ EQUITY
   Current Liabilities:
           
       Accounts Payable
  $ 24,373     $ 22,851  
       Other
    28,875       28,137  
            Total Current Liabilities
    53,248       50,988  
   Borrowings Under Line of Credit Facility
    -       -  
   Accrued Pension and Post Retirement Obligations
    5,414       7,036  
   Other Long Term Liabilities
    85       -  
   Shareholders’ Equity
    249,197       243,974    
   Accumulated Other Comprehensive Loss
    (22,982 )     (21,750 )
   Less:  Treasury Stock
    (135,980 )     (136,009 )
       Total STRATTEC SECURITY CORPORATION Shareholders’ Equity     90,235       86,215  
       Non-Controlling Interest
    6,240       3,849  
   Total Shareholders’ Equity
    96,475       90,064  
    $ 155,222     $ 148,088  

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

   
Third Quarter Ended
   
Nine Months Ended
 
   
April 1, 2012
   
March 27, 2011
   
April 1, 2012
   
March 27, 2011
 
                         
Cash Flows from Operating Activities:
                       
Net Income
    3,714     $ 742     $ 7,991     $ 4,264  
Adjustment to Reconcile Net Income to
                               
     Cash Provided by (Used In) Operating Activities:
                               
     Equity Loss (Earnings) in VAST LLC Joint Venture
    140       (197 )     452       (1,000 )
     Depreciation and Amortization
    1,752       1,677       5,083       4,904  
     Foreign Currency Transaction Loss (Gain)
    698       368       (907 )     558  
     Unrealized (Gain) Loss Foreign Currency Option
         Contracts
    (1,174 )     114       542       114  
     Stock Based Compensation Expense
    251       155       622       453  
     Change in Operating Assets/Liabilities
    (728 )     (5,453 )     (3,936 )     (9,650 )
     Other, net
    (10 )     32       6       49  
                                 
Net Cash Provided by (Used In) Operating Activities
    4,643       (2,562 )     9,853       (308 )
                                 
Cash Flows from Investing Activities:
                               
     Investment in Joint Ventures
    -       (150 )     (200 )     (300 )
     Restricted Cash
    -       -       -       2,100  
     Purchase of Additional Interest in
         ADAC-STRATTEC LLC
    -       -       -       (22 )
     Additions to Property, Plant and Equipment
    (3,296 )     (2,245 )     (9,585 )     (5,727 )
     Proceeds from Sale of Property, Plant and Equipment
    9       21       9       21  
Net Cash Used in Investing Activities
    (3,287 )     (2,374 )     (9,776 )     (3,928 )
                                 
Cash Flow from Financing Activities:
                               
     Dividends Paid
    (336 )     -       (1,006 )     (3,989 )
     Repayment of Loan to Related Parties
    -       (100 )     (850 )     (850 )
     Exercise of Stock Options and Employee
         Stock Purchases
    10       16       74       44  
                                 
Net Cash Used in Financing Activities
    (326 )     (84 )     (1,782 )     (4,795 )
                                 
Effect of Foreign Currency Fluctuations on Cash
    (129 )     (111 )     119       (156 )
                                 
Net Increase (Decrease) in Cash & Cash Equivalents
    901       (5,131 )     (1,586 )     (9,187 )
                                 
Cash and Cash Equivalents:
                               
     Beginning of Period
    14,763       17,811       17,250       21,867  
     End of Period
  $ 15,664     $ 12,680     $ 15,664     $ 12,680  
 
 
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