Exhibit 99.1
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FOR RELEASE AT 3:00 PM CST
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Contact: Pat Hansen
Senior Vice President and
Chief Financial Officer
414-247-3435
www.strattec.com
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STRATTEC SECURITY CORPORATION
REPORTS FISCAL 2022 THIRD QUARTER OPERATING RESULTS
Milwaukee, Wisconsin – April 21, 2022 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal third quarter ended March 27, 2022.
Net sales for the Company’s third quarter ended March 27, 2022 were $115.9 million, compared to net sales of $121.6 million for the third quarter ended March 28, 2021.
Net income for the current year quarterly period was $3.1 million, compared to net income of $4.5 million in the prior year quarter. Diluted earnings per share for the
current year quarterly period were $0.80 compared to diluted earnings per share of $1.15 in the prior year quarter.
For the nine months ended March 27, 2022, the Company’s net sales were $329.2 million compared to net sales of $375.2 million in the prior year nine month period.
Net income during the current year nine month period was $6.6 million compared to net income of $19.6 million in the prior year nine month period. Diluted earnings per
share were $1.70 for the nine month period ended March 27, 2022 compared to diluted earnings per share of $5.11 during the nine month period ended March 28, 2021.
Net sales and profitability for both our current year quarter and for the year to date period continued to be impacted by supply chain shortages (including semiconductor
chip shortages) that resulted in several of our customers shutting down certain plants and/or production lines for periods of time during our fiscal 2022.
Net sales to each of our customers or customer groups in the current year quarter and prior year quarter were as follows (in thousands):
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Three Months Ended
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||||||||
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March 27, 2022
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March 28, 2021
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|||||||
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Stellantis / Fiat Chrysler Automobiles
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$
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23,047
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$
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21,685
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||||
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General Motors Company
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34,738
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34,544
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||||||
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Ford Motor Company
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19,162
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21,721
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||||||
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Tier 1 Customers
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15,279
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17,289
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||||||
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Commercial and Other OEM Customers
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16,518
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17,241
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||||||
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Hyundai / Kia
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7,199
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9,164
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||||||
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TOTAL
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$
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115,943
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$
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121,644
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||||
Sales to Stellantis / Fiat Chrysler Automobiles in the current year quarter increased in comparison to the prior year quarter due to higher production volumes on
Chrysler Pacifica power sliding doors and for several lock set product platforms. Sales to General Motors Company in the current year quarter were flat compared to the prior year quarter. Sales to Ford Motor Company decreased in the current year
quarter compared to the prior year quarter due primarily to lower production volumes on the F-150 pickup trucks. Sales to Tier 1 Customers decreased in the current year quarter compared to the prior year quarter primarily due to lower volumes on our
driver control steering column lock products. Sales to Commercial and Other OEM Customers during the current year quarter decreased in comparison to the prior year quarter mainly due to decreases in sales related to door handle products sold to
Volkswagen. These Commercial and Other OEM Customers, along with the Tier 1 Customers, primarily represent purchasers of vehicle access control products, such as latches, key fobs, driver controls, steering column locks and door handles that we have
developed in recent years to complement our historic core business of locks and keys. The decreased sales to Hyundai / Kia in the current year quarter were principally due to lower levels of production on the Kia Carnival, formerly the Kia Sedona
and Hyundai Starex minivans, for which we supply primarily power sliding door components.
Gross profit margins were 12.6 percent in the current year quarter compared to 15.3 percent in the prior year quarter. The decrease in gross profit margin in the
current year quarter compared to the prior year quarter was primarily attributed to higher costs for raw material and purchased components and the mandatory minimum wage increase enacted by the Mexican Government effective January 1, 2022. Partially
offsetting the decreased gross profit margins between periods were improved manufacturing efficiencies both at our Milwaukee and Mexico production facilities, despite the ongoing supply chain disruptions described above, and lower expense provisions
for accrual of bonuses.
Engineering, Selling and Administrative expenses represented 9.7 percent in the current year quarter as a percent of net sales compared to 9.8 percent in the prior year
quarter. The decrease in overall operating expenses in the current year quarter was primarily due to lower expense provisions for accrual of bonuses between quarters.
Included in Other Income, Net in the current year quarter compared to the prior year quarter were the following items (in thousands of dollars):
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March 27, 2022
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March 28, 2021
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Equity Earnings (Loss) of VAST LLC Joint Venture
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$
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577
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$
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(56
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)
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|||
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Net Foreign Currency Realized and
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||||||||
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Unrealized Transaction Gain
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470
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429
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||||||
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Other
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(185
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)
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26
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|||||
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$
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862
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$
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399
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|||||
The increase in Other Income, Net in the current year quarter was primarily related to improved profitability in our VAST LLC China operation which had supply chain
issues and extended OEM customer plant shutdowns associated with the coronavirus (COVID-19) pandemic in the prior year quarter. In addition, during the current year quarter VAST China’s plant in Taicang experienced a fire in its painting facility.
As a result, certain door handle and painting operations were subsequently transferred to VAST China’s new Jingzhou facility that impacted the current quarter profitability.
The favorable tax provision in the current year quarter compared to the prior year quarter relates primarily to favorable tax adjustments from foreign tax credits.
Frank Krejci, President & CEO commented: “I am pleased with the efforts of our team over the last few quarters. We have effectively dealt with supply chain
challenges and cut expenses to align with lower production volumes forced upon our customers. While facing inflationary material costs, we have implemented efficiency improvements to somewhat offset the spikes in costs. Those efficiency improvements
will provide long term benefits for us.
Unfortunately, the challenges are not yet behind us. Our operations in China and their customers are now facing COVID lockdowns. Those lockdowns will impact supply chain
challenges world-wide.
Despite the current challenges, we see good things on the horizon. Customer inventories are very low. There is excellent acceptance by consumers of our award-winning
products like the power tailgates on pick-up trucks. There is significant opportunity with our product variations for the rapidly expanding electric vehicle market. We continue to win new business and use these production slowdowns as an opportunity
to continue to improve our operations”.
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 each company’s products to global customers
under the “VAST Automotive Group” brand name. STRATTEC’s history in the automotive business spans over 110 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, changes in warranty provisions and customer product recall policies, work stoppages at the Company or at the location of its key customers
as a result of labor disputes, foreign currency fluctuations, uncertainties stemming from U.S. trade policies, tariffs and reactions to same from foreign countries, the volume and scope of product returns or customer cost reimbursement actions,
adverse business and operational issues resulting from the global supply chain and semiconductor chip shortages and the coronavirus pandemic, matters adversely impacting the timing and availability of material component parts and raw materials for
the production of our products and the products of our customers and fluctuations in our costs of operation (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.
Condensed Results of Operations
(In Thousands except per share amounts)
(Unaudited)
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Third Quarter Ended
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Nine Months Ended
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March 27, 2022
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March 28, 2021
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March 27, 2022
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March 28, 2021
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Net Sales
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$
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115,943
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$
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121,644
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$
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329,192
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$
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375,238
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Cost of Goods Sold
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101,305
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102,990
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287,072
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311,832
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Gross Profit
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14,638
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18,654
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42,120
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63,406
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Engineering, Selling & Administrative Expenses
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11,261
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11,927
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34,683
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33,543
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Income from Operations
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3,377
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6,727
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7,437
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29,863
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Interest Expense
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(54
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)
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(63
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)
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(159
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)
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(259
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)
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Other Income, Net
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862
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399
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1,261
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673
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Income before Provision for Income Taxes and Non-Controlling Interest
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4,185
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7,063
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8,539
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30,277
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Provision for Income Taxes
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50
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1,153
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342
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4,721
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Net Income
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4,135
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5,910
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8,197
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25,556
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||||||||||||
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Net Income Attributable to Non-Controlling Interest
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(989
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)
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(1,425
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)
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(1,556
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)
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(5,950
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)
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Net Income Attributable to STRATTEC SECURITY CORPORATION
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$
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3,146
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$
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4,485
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$
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6,641
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$
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19,606
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Earnings (Loss) Per Share:
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Basic
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$
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0.81
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$
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1.18
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$
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1.72
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$
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5.18
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Diluted
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$
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0.80
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$
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1.15
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$
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1.70
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$
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5.11
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Average Basic Shares Outstanding
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3,871
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3,797
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3,856
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3,783
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Average Diluted Shares Outstanding
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3,916
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3,886
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3,906
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3,839
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Other
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Capital Expenditures
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$
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4,045
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$
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1,808
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$
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9,407
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$
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6,401
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Depreciation
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$
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4,135
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$
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4,933
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$
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14,724
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$
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14,730
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STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
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March 27, 2022
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June 27, 2021
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(Unaudited)
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ASSETS
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||||||||
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Current Assets:
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||||||||
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Cash and cash equivalents
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$
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16,459
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$
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14,465
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||||
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Receivables, net
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76,526
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69,902
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Inventories, net
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73,310
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70,860
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||||||
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Other current assets
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23,422
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19,677
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||||||
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Total Current Assets
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189,717
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174,904
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||||||
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Investment in Joint Ventures
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28,405
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27,224
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||||||
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Other Long-Term Assets
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11,619
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12,034
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Property, Plant and Equipment, Net
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91,423
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96,401
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||||||
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$
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321,164
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$
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310,563
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|||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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||||||||
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Current Liabilities:
|
||||||||
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Accounts Payable
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$
|
43,513
|
$
|
36,727
|
||||
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Other
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36,479
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40,845
|
||||||
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Total Current Liabilities
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79,992
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77,572
|
||||||
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Accrued Pension and Post Retirement Obligations
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2,937
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2,933
|
||||||
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Borrowings Under Credit Facility
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12,000
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12,000
|
||||||
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Other Long-Term Liabilities
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4,381
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4,625
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||||||
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Shareholders’ Equity
|
342,432
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334,058
|
||||||
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Accumulated Other Comprehensive Loss
|
(17,000
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)
|
(16,797
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)
|
||||
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Less: Treasury Stock
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(135,591
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)
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(135,615
|
)
|
||||
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Total STRATTEC SECURITY CORPORATION Shareholders’ Equity
|
189,841
|
181,646
|
||||||
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Non-Controlling Interest
|
32,013
|
31,787
|
||||||
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Total Shareholders’ Equity
|
221,854
|
213,433
|
||||||
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$
|
321,164
|
$
|
310,563
|
|||||
STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)
|
Third Quarter Ended
|
Nine Months Ended
|
|||||||||||||||
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March 27, 2022
|
March 28, 2021
|
March 27, 2022
|
March 28, 2021
|
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Cash Flows from Operating Activities:
|
||||||||||||||||
|
Net Income
|
$
|
4,135
|
$
|
5,910
|
$
|
8,197
|
$
|
25,556
|
||||||||
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Adjustment to Reconcile Net Income to Cash Provided by Operating Activities:
|
||||||||||||||||
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Equity (Earnings) Loss in Joint Ventures
|
(577
|
)
|
56
|
(941
|
)
|
(1,844
|
)
|
|||||||||
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Depreciation
|
4,756
|
4,933
|
14,724
|
14,730
|
||||||||||||
|
Foreign Currency Transaction Loss (Gain)
|
319
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(386
|
)
|
76
|
1,926
|
|||||||||||
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Unrealized Gain on Peso Forward Contracts
|
(724
|
)
|
(32
|
)
|
(500
|
)
|
(512
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)
|
||||||||
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Stock Based Compensation Expense
|
239
|
193
|
873
|
775
|
||||||||||||
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Loss (Gain) on disposition of property, plant & equipment
|
60
|
(5
|
)
|
153
|
1,421
|
|||||||||||
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Change in Operating Assets/Liabilities
|
3,436
|
(2,450
|
)
|
(11,160
|
)
|
(17,012
|
)
|
|||||||||
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Other, net
|
121
|
121
|
361
|
356
|
||||||||||||
|
Net Cash Provided by Operating Activities
|
11,765
|
8,340
|
11,783
|
25,396
|
||||||||||||
|
Cash Flows from Investing Activities:
|
||||||||||||||||
|
Investment in Joint Ventures
|
(75
|
)
|
-
|
(75
|
)
|
(100
|
)
|
|||||||||
|
Additions to Property, Plant and Equipment
|
(4,045
|
)
|
(1,808
|
)
|
(9,407
|
)
|
(6,401
|
)
|
||||||||
|
Proceeds from Sale of Property, Plant and Equipment
|
-
|
5
|
-
|
8
|
||||||||||||
|
Net Cash Used in Investing Activities
|
(4,120
|
)
|
(1,803
|
)
|
(9,482
|
)
|
(6,493
|
)
|
||||||||
|
Cash Flows from Financing Activities:
|
||||||||||||||||
|
Borrowings Under Credit Facility
|
3,000
|
-
|
11,000
|
-
|
||||||||||||
|
Repayment of Borrowings Under Credit Facility
|
(8,000
|
)
|
(6,000
|
)
|
(11,000
|
)
|
(19,000
|
)
|
||||||||
|
Dividends Paid to Non-Controlling Interests of Subsidiaries
|
(600
|
)
|
-
|
(1,200
|
)
|
(490
|
)
|
|||||||||
|
Dividends Paid
|
-
|
-
|
-
|
-
|
||||||||||||
|
Exercise of Stock Options and Employee Stock Purchases
|
245
|
545
|
884
|
585
|
||||||||||||
|
Net Cash Used In Financing Activities
|
(5,355
|
)
|
(5,455
|
)
|
(316
|
)
|
(18,905
|
)
|
||||||||
|
Effect of Foreign Currency Fluctuations on Cash
|
98
|
(179
|
)
|
9
|
(437
|
)
|
||||||||||
|
Net Increase (Decrease) in Cash & Cash Equivalents
|
2,388
|
903
|
1,994
|
(439
|
)
|
|||||||||||
|
Cash and Cash Equivalents:
|
||||||||||||||||
|
Beginning of Period
|
14,071
|
10,432
|
14,465
|
11,774
|
||||||||||||
|
End of Period
|
$
|
16,459
|
$
|
11,335
|
$
|
16,459
|
$
|
11,335
|
||||||||