MILWAUKEE, Jan. 17 /PRNewswire-FirstCall/ — STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal second quarter ended December 30, 2007.
Net sales for the Company’s second quarter ended December 30, 2007 were $39.9 million, compared to net sales of $37.9 million for the second quarter ended December 31, 2006. Net income for the period was $1.3 million, compared to $1.1 million in the prior year quarter. Diluted earnings per share for the period were $.38 compared to $.31 in the prior year quarter.
For the six months ended December 30, 2007, net sales were $82.6 million compared to net sales of $76.0 million in the prior year period. Net income was $3.7 million compared to net income of $1.8 million in the prior year period and diluted earnings per share were $1.06 compared to $.51.
Sales to STRATTEC’s largest customers overall were flat in the current quarter compared to the prior year quarter. Sales to General Motors Corporation in the current quarter were $11.9 million compared to $7.4 million in the prior year quarter due to higher product content on certain GM vehicles and the takeover of certain passenger car locksets production from another supplier. Sales to Chrysler LLC were $10.0 million compared to $14.3 million and sales to Delphi Corporation were $3.8 million compared to $4.2 million due to reduced component content and lower vehicle production volumes. Sales to Ford Motor Company were $4.4 million compared to $4.3 million. Sales during the current quarter were weaker than initially anticipated for the above four customers due to their production cut backs. Subsequently, these customers announced additional production cuts that will effect both our sales and profitability for the third fiscal quarter ending March 30, 2008.
Gross profit margins were 17.3% in the current quarter compared to 13.3% in the prior year quarter. The year-over-year increase in gross profit margins was primarily attributed to lower purchased material costs for zinc and brass along with price increases to recover the higher purchased raw material costs we experienced last year. In addition, the prior year quarter included a charge for severance and separation costs related to the move of service product assembly from Milwaukee, Wisconsin to Juarez, Mexico that reduced the gross profit margin by approximately 1%.
Operating expenses were $5.8 million in the current quarter, compared to $4.9 million in the prior year quarter. The increased spending is attributed to hiring additional engineering personnel along with costs associated with new product development.
The provision for income taxes in the current quarter was our normal 37% effective tax rate where as the prior year quarter included a State refund claim recovery that positively impacted earnings per share by $.09.
During the current quarter, the Company contributed $1.5 million to its Pension Fund and repurchased 25,500 STRATTEC SECURITY CORPORATION shares under the Company’s stock repurchase program at a cost of $1,146,000.
STRATTEC designs, develops, manufactures and markets mechanical locks and keys, electronically enhanced locks and keys, steering column and instrument panel ignition lock housings, latches and related access control products for North American automotive customers, and for global automotive manufacturers through the VAST Alliance in which it participates with WITTE Automotive of Velbert, Germany and ADAC Plastics, Inc. of Grand Rapids, Michigan. The Company’s history in the automotive business spans nearly 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. 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)Second Quarter Ended Six Months Ended
December 30, December 31, December 30, December 31,
2007 2006 2007 2006Net Sales $39,908 $37,913 $82,647 $ 75,963
Cost of Goods Sold 33,002 32,873 67,347 65,641
Gross Profit 6,906 5,040 15,300 10,322
Engineering, Selling
& Administrative
Expenses 5,838 4,852 11,631 9,908Income from
Operations 1,068 188 3,669 414Interest Income 814 905 1,727 1,827
Interest Expense – – – –
Other Income, Net 158 121 466 149
Minority Interest 69 – 118 –
2,109 1,214 5,980 2,390
Provision for Income
Taxes 786 120 2,238 555Net Income $1,323 $1,094 $3,742 $1,835
Earnings Per Share:
Basic $0.38 $0.31 $1.07 $0.51
Diluted $0.38 $0.31 $1.06 $0.51
Average Basic
Shares
Outstanding 3,506 3,539 3,513 3,568Average Diluted
Shares
Outstanding 3,512 3,542 3,518 3,571Other
Capital
Expenditures $2,728 $1,377 $4,474 $2,292
Depreciation
& Amortization $1,758 $1,768 $3,496 $3,517STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)December 30, 2007 July 1, 2007
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $60,242 $65,491
Receivables, net 20,090 26,890
Inventories 10,726 7,166
Other current assets 13,308 13,017
Total Current Assets 104,366 112,564
Deferred Income Taxes 2,420 2,117
Investment in Joint Ventures 3,201 2,813
Prepaid Pension Cost 6,948 4,385
Other Long Term Assets 35 41
Property, Plant and Equipment, Net 27,479 26,526
$144,449 $148,446LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable $12,524 $16,575
Other 16,049 14,906
Total Current Liabilities 28,573 31,481
Borrowings Under Line of Credit Facility – –
Accrued Pension and Postretirement Obligations 13,639 13,431
Minority Interest 775 574
Shareholders’ Equity 243,755 244,119
Accumulated Other Comprehensive Loss (14,333) (14,341)
Less: Treasury Stock (127,960) (126,818)
Total Shareholders’ Equity 101,462 102,960
$144,449 $148,446STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)Second Quarter Ended Six Months Ended
December 30, December 31, December 30, December 31,
2007 2006 2007 2006Cash Flows from
Operating Activities:
Net Income $1,323 $1,094 $3,742 $ 1,835
Adjustment to
Reconcile
Net Income to
Cash Provided by
Operating Activities:
Minority Interest (87) – (148) –
Depreciation 1,758 1,768 3,496 3,517
Stock Based
Compensation Expense 179 186 492 379
Change in Operating
Assets/Liabilities 19 852 (3,400) 986
Other, net (124) 33 (342) 132Net Cash Provided by
Operating Activities 3,068 3,933 3,840 6,849Cash Flows from
Investing Activities:
Investment in
Joint Ventures – (100) – (100)
Additions to Property,
Plant and Equipment (2,728) (1,377) (4,474) (2,292)
Proceeds from Sale
of Property, Plant
and Equipment – – – 21
Net Cash Used in
Investing Activities (2,728) (1,477) (4,474) (2,371)Cash Flow from
Financing Activities:
Purchase of Common
Stock (1,146) (596) (1,146) (3,922)
Dividends Paid (31) – (4,081) –
Contribution from
Minority Interest – – 349 –
Loan from
Minority Interest 250 – 250 –
Exercise of Stock
Options and Employee
Stock Purchases 6 8 13 17Net Cash Used in
Financing Activities (921) (588) (4,615) (3,905)Net Increase (Decrease)
in Cash & Cash
Equivalents (581) 1,868 (5,249) 573Cash and Cash Equivalents:
Beginning of Period 60,823 64,417 65,491 65,712
End of Period $60,242 $66,285 $60,242 $66,285
First Call Analyst:
FCMN Contact:
Source: STRATTEC SECURITY CORPORATION
