MILWAUKEE, Oct. 27, 2016 (GLOBE NEWSWIRE) -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal first quarter ended October 2, 2016.
Net sales for the Company’s fiscal 2017 first quarter ended October 2, 2016 were $100.2 million, compared to net sales of $96.5 million for the prior year quarter ended September 27, 2015. Net income for the current year quarter was $1.5 million, compared to net income of $3.3 million in the prior year quarter. Diluted earnings per share for the current year quarter were $0.42 compared to diluted earnings per share of $0.90 in the prior year quarter.
Net sales to each of our customers or customer groups in the current year quarter and prior year quarter were as follows (in thousands):
| Three Months Ended | |||||||
| October 2, 2016 | September 27, 2015 | ||||||
| Fiat Chrysler Automobiles | $ | 23,872 | $ | 28,528 | |||
| General Motors Company | 21,983 | 18,789 | |||||
| Ford Motor Company | 14,953 | 13,616 | |||||
| Tier 1 Customers | 17,838 | 17,682 | |||||
| Commercial and Other OEM Customers | 13,612 | 10,987 | |||||
| Hyundai / Kia | 7,986 | 6,911 | |||||
| TOTAL | $ | 100,244 | $ | 96,513 | |||
The decreased sales to Fiat Chrysler Automobiles in the current year quarter were primarily due to lower customer vehicle production volume and content in particular on the Chrysler 200 which is to be discontinued in December 2016 and content on the new Chrysler Pacifica Minivan. The increase in sales to General Motors Company in the current year quarter was primarily attributed to higher production volumes and content on products we supply. Increased sales to Ford Motor Company in the current year quarter were attributed to increased product content on locksets and latches, in particular for the new F-150 pick-up truck. Sales to Tier 1 Customers during the current year quarter were flat in comparison to the prior year quarter. Sales to Commercial and Other OEM Customers during the current year quarter increased in comparison to the prior year quarter primarily due to new customer programs. These customers, along with the Tier 1 Customers, primarily represent purchasers of vehicle access control products, such as latches, fobs, and driver controls, that we have developed in recent years to complement our historic core business of locks and keys. The increase in sales to Hyundai / Kia in the current year quarter was principally due to higher levels of production on vehicles for which we supply components.
The gross profit margin was 14.6 percent in the current year quarter compared to 17.1 percent in the prior year quarter. The decrease in gross profit margin in the current year quarter compared to the prior year quarter was attributed to agreed upon customer price reductions that became effective at the start of the 2016 calendar year, higher than expected production and expediting costs to meet certain customer schedules which were offset partially by a favorable Mexican Peso to US Dollar exchange rate affecting our operations in Mexico.
Engineering, Selling and Administrative expenses as a percentage of net sales increased to 11.3 percent in the current year quarter from 11.0 percent in the prior year quarter. Overall, operating expenses were higher in the current year quarter primarily due to new product development costs associated with utilizing third party vendors for a portion of the development work offset by lower bonus provisions recorded during the current year quarter compared to the prior year quarter for bonuses accrued under our incentive bonus plans.
Included in “Other Income (Expense), Net” in the current year quarter compared to the prior year quarter were the following items (in thousands of dollars):
| October 2, | September 27, | ||||||
| 2016 | 2015 | ||||||
| Equity Earnings of VAST LLC Joint Venture | $ | 390 | $ | 133 | |||
| Equity Loss of STRATTEC Advanced Logic LLC | (328 | ) | (426 | ) | |||
| Net Foreign Currency Transaction (Loss) Gain | (440 | ) | 61 | ||||
| Other | 483 | (93 | ) | ||||
| $ | 105 | $ | (325 | ) | |||
During the current year quarter, STRATTEC contributed $3.0 million to its Defined Benefit Pension Trust to improve the funded status of the Plan.
Frank Krejci, President and CEO commented: “The results of this last quarter have been impacted by both a combination of business challenges and investments in the future. We are focused on finding ways to reduce costs, improve quality of our products and capture efficiencies to offset price reductions to customers. In addition, we are investing in the future through product development costs necessary to support a record amount of new business won last year, construction of our new plant in Leon, Mexico driven by incremental business awards and adding people to implement process improvements.”
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 companies' 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 are “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, 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.
| STRATTEC SECURITY CORPORATION | |||||||||
| Results of Operations | |||||||||
| (In Thousands except per share amounts) | |||||||||
| (Unaudited) | |||||||||
| First Quarter Ended | |||||||||
| October 2, 2016 | September 27, 2015 | ||||||||
| Net Sales | $ | 100,244 | $ | 96,513 | |||||
| Cost of Goods Sold | 85,639 | 80,014 | |||||||
| Gross Profit | 14,605 | 16,499 | |||||||
| Engineering, Selling & | |||||||||
| Administrative Expenses | 11,370 | 10,574 | |||||||
| Income from Operations | 3,235 | 5,925 | |||||||
| Interest Income | 41 | 7 | |||||||
| Interest Expense | (78 | ) | (21 | ) | |||||
| Other Income (Expense), Net | 105 | (325 | ) | ||||||
| Income before Provision for Income | |||||||||
| Taxes and Non-Controlling Interest | 3,303 | 5,586 | |||||||
| Provision for Income Taxes | 898 | 1,754 | |||||||
| Net Income | 2,405 | 3,832 | |||||||
| Net Income Attributable | |||||||||
| to Non-Controlling Interest | (863 | ) | (559 | ) | |||||
| Net Income Attributable | |||||||||
| to STRATTEC SECURITY CORP. | $ | 1,542 | $ | 3,273 | |||||
| Earnings Per Share: | |||||||||
| Basic | $ | 0.43 | $ | 0.92 | |||||
| Diluted | $ | 0.42 | $ | 0.90 | |||||
| Average Basic | |||||||||
| Shares Outstanding | 3,576 | 3,543 | |||||||
| Average Diluted | |||||||||
| Shares Outstanding | 3,661 | 3,617 | |||||||
| Other | |||||||||
| Capital Expenditures | $ | 7,446 | $ | 3,865 | |||||
| Depreciation & Amortization | $ | 2,760 | $ | 2,396 | |||||
| STRATTEC SECURITY CORPORATION | |||||||||||
| Condensed Balance Sheet Data | |||||||||||
| (In Thousands) | |||||||||||
| October 2, 2016 | July 3, 2016 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 17,069 | $ | 15,477 | |||||||
| Receivables, net | 68,060 | 63,726 | |||||||||
| Inventories, net | 38,686 | 38,683 | |||||||||
| Other current assets | 14,985 | 16,565 | |||||||||
| Total Current Assets | 138,800 | 134,451 | |||||||||
| Investment in Joint Ventures | 14,419 | 14,168 | |||||||||
| Other Long Term Assets | 11,413 | 8,408 | |||||||||
| Property, Plant and Equipment, Net | 86,984 | 85,149 | |||||||||
| $ | 251,616 | $ | 242,176 | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current Liabilities: | |||||||||||
| Accounts Payable | $ | 37,008 | $ | 32,416 | |||||||
| Other | 30,057 | 31,799 | |||||||||
| Total Current Liabilities | 67,065 | 64,215 | |||||||||
| Accrued Pension and Post Retirement Obligations | 2,682 | 2,728 | |||||||||
| Borrowings Under Credit Facility | 24,000 | 20,000 | |||||||||
| Other Long-term Liabilities | 925 | 721 | |||||||||
| Shareholders’ Equity | 314,406 | 312,876 | |||||||||
| Accumulated Other Comprehensive Loss | (38,711 | ) | (37,673 | ) | |||||||
| Less: Treasury Stock | (135,860 | ) | (135,871 | ) | |||||||
| Total STRATTEC SECURITY | |||||||||||
| CORPORATION Shareholders’ Equity | 139,835 | 139,332 | |||||||||
| Non-Controlling Interest | 17,109 | 15,180 | |||||||||
| Total Shareholders’ Equity | 156,944 | 154,512 | |||||||||
| $ | 251,616 | $ | 242,176 | ||||||||
| STRATTEC SECURITY CORPORATION | ||||||||
| Condensed Cash Flow Statement Data | ||||||||
| (In Thousands) | ||||||||
| (Unaudited) | ||||||||
| First Quarter Ended | ||||||||
| October 2, 2016 | September 27, 2015 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Income | $ | 2,405 | $ | 3,832 | ||||
| Adjustment to Reconcile Net Income to Net | ||||||||
| Cash Provided by Operating Activities: | ||||||||
| Depreciation and Amortization | 2,760 | 2,396 | ||||||
| Equity Loss (Earnings) in Joint Ventures | (62 | ) | 293 | |||||
| Foreign Currency Transaction Gain | (689 | ) | (957 | ) | ||||
| Unrealized Loss Peso Forward Contracts | 899 | 896 | ||||||
| Stock Based Compensation Expense | 428 | 498 | ||||||
| Change in Operating Assets/Liabilities | (540 | ) | (2,982 | ) | ||||
| Other, net | (172 | ) | 35 | |||||
| Net Cash Provided by Operating Activities | 5,029 | 4,011 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Loan to Joint Ventures | (850 | ) | (150 | ) | ||||
| Repayments from Loan to Joint Ventures | 75 | - | ||||||
| Additions to Property, Plant and Equipment | (7,446 | ) | (3,865 | ) | ||||
| Net Cash Used in Investing Activities | (8,221 | ) | (4,015 | ) | ||||
| Cash Flow from Financing Activities: | ||||||||
| Borrowings on Credit Facility | 8,000 | 1,000 | ||||||
| Repayment of Borrowings under Credit Facility | (4,000 | ) | (4,500 | ) | ||||
| Contribution from Non-controlling Interest | 2,940 | - | ||||||
| Dividends Paid to Non-Controlling Interest of Subsidiaries | (1,764 | ) | (1,568 | ) | ||||
| Dividends Paid | (503 | ) | (466 | ) | ||||
| Exercise of Stock Options and Employee | ||||||||
| Stock Purchases | 74 | 483 | ||||||
| Net Cash Provided by (Used in) Financing Activities | 4,747 | (5,051 | ) | |||||
| Foreign Currency Impact on Cash | 37 | (673 | ) | |||||
| Net Increase (Decrease) in Cash & Cash Equivalents | 1,592 | (5,728 | ) | |||||
| Cash and Cash Equivalents: | ||||||||
| Beginning of Period | 15,477 | 25,695 | ||||||
| End of Period | $ | 17,069 | $ | 19,967 | ||||