First Quarter Sales and Operating Results
MILWAUKEE, Oct. 23, 2014 (GLOBE NEWSWIRE) — STRATTEC SECURITY
CORPORATION (Nasdaq:STRT) today reported operating results for the
fiscal first quarter ended September 28, 2014.
Net sales for the Company’s first quarter ended September 28, 2014 were
$122.2 million, compared to net sales of $79.6 million for the prior
year quarter ended September 29, 2013. Net income for the current year
quarter was $9.3 million, compared to net income of $3.2 million in the
prior year quarter. Diluted earnings per share for the current year
quarter were $2.55 compared to diluted earnings per share of $.91 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
—————————————
September 28, 2014 September 29, 2013
—————————————
Chrysler Group LLC $ 31,996 $ 26,585
General Motors Company 44,949 15,004
Ford Motor Company 11,808 11,434
Tier 1 Customers 16,974 15,786
Commercial and Other OEM Customers 9,072 8,637
Hyundai / Kia 7,443 2,149
—————————————
TOTAL $ 122,242 $ 79,595
The increase in sales to General Motors Company in the current year
quarter was primarily attributed to incremental service parts sales of
$28 million, The incremental sales are expected to adjust to lower
levels during the second quarter of fiscal year 2015, after which the
service parts sales may return to more normal levels. Higher vehicle
production volumes, and greater product content on vehicle models for
which we supply components introduced for the 2015 model year also
attributed to the sales increase.
Increased sales to Chrysler Group LLC in the current year quarter were
primarily due to higher customer vehicle production volumes and
increased content on models for which we supply components. Sales to
Ford Motor Company in the current year quarter were flat. Sales to Tier
1 Customers during the current year quarter increased slightly in
comparison to the prior year quarter. These 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 the ramp-up of a new model introduction for which we
supply components.
The gross profit margin was 23.0 percent in the current year quarter
compared to 18.2 percent in the prior year quarter. The increase in
gross profit margin in the current year quarter was attributed to
higher production volumes and a more favorable product mix, offset by
higher costs associated with new product launches, higher bonus expense
provisions in the current year quarter and a lump sum bonus paid to the
Company’s Milwaukee represented hourly workers resulting from a new
4-year labor contract ratified on September 18, 2014.
Engineering, Selling and Administrative expenses as a percentage of net
sales decreased to 10.8 percent in the current year quarter from 11.9
percent in the prior year quarter. Overall, expenses were higher due to
higher bonus provisions recorded during the current year quarter
compared to the prior year quarter.
Included in “Other Income, Net” in the current year quarter compared to
the prior year quarter were the following items (in thousands of
dollars):
September 28, September 29,
2014 2013
—————————–
Equity Earnings of VAST LLC Joint Venture $376 $353
Equity Loss of NextLock LLC Joint Venture (186) (59)
Foreign Currency Transaction Gain 786 212
Other 2 67
—————————–
$978 $573
=============================
Frank Krejci, President and CEO commented: “On behalf of all STRATTEC
Associates, it is a great pleasure for us to announce the results of an
outstanding three months. In our core business, we experienced the
combination of a strong automotive market and benefits from our
strategic initiatives which resulted in an 18% increase in sales versus
last year. For a limited period of time, unpredictable market
circumstances in our service business added another 35% to our
revenues. Extra ordinary efforts by our hourly and salary associates to
respond to unusual customer demands and higher utilization of assets
combined to generate significant incremental margin. It resulted in an
unusually good quarter in which sales and profit broke our previous
records. In addition to the positive metrics, we completed a four-year
agreement with our unionized Milwaukee associates and were awarded
Supplier of the Year by Ford Rotunda for outstanding service to their
dealers. That recognition makes us especially proud, as it highlights
the service side of our business that has historically been
overshadowed by our manufacturing. It is also a nice follow-on to last
year’s Supplier of the Year award from Chrysler.”
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
105 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, 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
September 28, 2014 September 29, 2013
—————————————
Net Sales $122,242 $79,595
Cost of Goods Sold 94,185 65,080
—————————————
Gross Profit 28,057 14,515
Engineering, Selling & Administrative Expenses 13,187 9,470
—————————————
Income from Operations 14,870 5,045
Interest Income 22 6
Interest Expense (11) (14)
Other Income, Net 978 573
—————————————
Income before Provision for Income Taxes and Non-Controlling Interest
15,859 5,610
Provision for Income Taxes
5,519 1,756
—————————————
Net Income 10,340 3,854
Net Income Attributable to Non-Controlling Interest (1,040) (643)
—————————————
Net Income Attributable to STRATTEC SECURITY CORPORATION
$9,300 $3,211
=======================================
Earnings Per Share:
Basic $2.63 $0.93
=======================================
Diluted $2.55 $0.91
=======================================
Average Basic Shares Outstanding
3,497 3,382
Average Diluted Shares Outstanding
3,593 3,460
Other
Capital Expenditures $6,963 $2,876
Depreciation & Amortization
$2,112 $2,112
STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
September 28, 2014 June 29, 2014
———————————-
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 22,545 $ 19,756
Receivables, net 79,321 68,822
Inventories, net 32,047 30,502
Other current assets 17,572 16,559
———————————-
Total Current Assets
151,485 135,639
Investment in Joint Ventures 10,341 9,977
Other Long Term Assets 12,322 11,639
Property, Plant and Equipment, Net 60,669 55,781
———————————-
$ 234,817 $ 213,036
==================================
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable $ 38,138 $ 36,053
Other 38,070 29,210
———————————-
Total Current Liabilities 76,208 65,263
Accrued Pension and Post Retirement Obligations 3,679 3,842
Borrowings Under Credit Facility 4,000 2,500
Deferred Income Taxes 5,168 5,127
Other Long-term Liabilities 1,421 1,401
Shareholders’ Equity 291,323 281,623
Accumulated Other Comprehensive Loss (20,558) (20,198)
Less: Treasury Stock (135,915) (135,919)
———————————-
Total STRATTEC SECURITY CORPORATION Shareholders’ Equity
134,850 125,506
Non-Controlling Interest 9,491 9,397
———————————-
Total Shareholders’ Equity 144,341 134,903
———————————-
$ 234,817 $ 213,036
==================================
STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)
First Quarter Ended
September 28, September 29,
2014 2013
————————————-
Cash Flows from Operating Activities:
Net Income $10,340 $3,854
Adjustment to Reconcile Net Income to Net Cash Provided by (Used in) Operating
Activities:
Depreciation and Amortization 2,112 2,112
Equity Earnings in Joint Ventures (190) (294)
Foreign Currency Transaction Gain (786) (212)
Stock Based Compensation Expense 389 354
Change in Operating Assets/Liabilities (2,755) (10,040)
Other, net 125 86
————————————-
Net Cash Provided by (Used in) Operating Activities
9,235 (4,140)
Cash Flows from Investing Activities:
Loan to VAST LLC Joint Venture (215) —
Proceeds from Sale of Property, Plant and Equipment
— 8
Additions to Property, Plant and Equipment
(6,963) (2,876)
————————————-
Net Cash Used in Investing Activities
(7,178) (2,868)
Cash Flow from Financing Activities:
Borrowings on Line of Credit Facility 1,500 750
Dividends Paid to Non-Controlling Interest of Subsidiaries
(882) (984)
Dividends Paid (427) (380)
Exercise of Stock Options and Employee Stock Purchases 440 98
————————————-
Net Cash Provided by (Used in) Financing Activities
631 (516)
Foreign Currency Impact on Cash
101 23
————————————-
Net Increase (Decrease) in Cash & Cash Equivalents
2,789 (7,501)
Cash and Cash Equivalents:
Beginning of Period 19,756 20,307
————————————-
End of Period
$22,545 $12,806
=====================================
CONTACT: Pat Hansen
Senior Vice President and
Chief Financial Officer
414-247-3435
www.strattec.com
