MILWAUKEE, April 21, 2016 (GLOBE NEWSWIRE) -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal third quarter ended March 27, 2016.

Net sales for the Company’s third quarter ended March 27, 2016 were $94.0 million, compared to net sales of $88.8 million for the third quarter ended March 29, 2015.  Net income for the current year quarterly period was $1.9 million, compared to net income of $4.4 million in the prior year quarter.  Diluted earnings per share for the current year quarterly period were $.52 compared to diluted earnings per share of $1.20 in the prior year quarter.

For the nine months ended March 27, 2016, the Company’s net sales were $293.1 million compared to net sales of $313.0 million in the prior year nine month period.  Net income during the current year nine month period was $8.6 million compared to net income of $19.5 million in the prior year nine month period.  Diluted earnings per share were $2.35 for the nine month period ended March 27, 2016 compared to diluted earnings per share of $5.33 during the nine month period ended March 29, 2015. The lower net sales and net income for the year to date period was anticipated and was primarily attributed to a $34 million decrease in incremental service parts sales to General Motors to support a recall campaign for service parts that were shipped during the prior year period. Those incremental sales did not continue during the current year nine month period ended March 27, 2016.

Net sales to each of our customers or customer groups in the current year quarter and prior year quarter were as follows (in thousands):

Sales to Fiat Chrysler Automobiles in the current year quarter increased slightly. During the current year quarter, Fiat Chrysler Automobiles temporarily shutdown production at its Sterling Heights, Michigan and Toluca, Mexico assembly plants which are primarily responsible for production of the Chrysler 200 and Dodge Journey.  This shutdown reduced our sales by $4.5 million during the current year quarter.  During the prior year quarter, Fiat Chrysler implemented a temporary shutdown of its Windsor, Canada assembly plant to re-tool for production of the new Chrysler Pacifica minivan. The negative effect of that shutdown last year was partially offset by increased service sales during the prior year quarter in comparison to the current year quarter. These two items reflected a reduction in sales to Fiat Chrysler Automobiles between the current year quarter and the prior year quarter of $6.5 million. Increased sales to General Motors Company in the current year quarter related primarily to a sales concession recorded during the prior year quarter. Increased sales to Ford Motor Company in the current year quarter were attributed primarily to higher vehicle production volumes and content on models for which we supply components, in particular for components we supply for F-150 pick-up trucks.  Sales to Tier 1 Customers decreased in the current quarter due to lower production volume on passenger cars for which we supply driver control and door handle components. Commercial and Other OEM Customers during the current year quarter increased in comparison to the prior year quarter.  These customers primarily represent purchasers of vehicle access control products, such as latches and fobs, that have been developed in recent years to complement our historic core business of locks and keys.  The increased sales to Hyundai / Kia in the current year quarter were principally due to higher vehicle production volumes on the Kia Sedona minivan for which we supply components.

Gross profit margins were 15.4 percent in the current year quarter compared to 17.7 percent in the prior year quarter. The decrease in gross profit margin was attributed to a combination of product sales mix, higher costs associated with diversifying our product portfolio and agreed upon customer price reductions that became effective at the start of the new calendar year. These negative items were offset by a favorable Mexican Peso to US dollar exchange rate affecting our Mexican operations.

Engineering, Selling and Administrative expenses as a percent of net sales in the current year quarter were 11.4% compared to 11.1% 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.

Included in Other Income, Net in the current year quarter compared to the prior year quarter were the following items (in thousands of dollars):

During the current year quarter STRATTEC contributed $3.0 million to its Defined Benefit Pension Trust to improve the overall funded status of the Plan.

Frank Krejci, President & CEO commented: “While overall sales levels remained strong, profits were impacted by product mix and following our strategy for long term growth. We are spending money now on design expenses for programs which we are excited to have recently been awarded.   This current activity will be very positive for earnings and strategic growth in the future. Attractive returns are also expected from recent investments to improve our efficiency and the quality processes within our operations. Lastly, our efforts to diversify continue to progress, but they are not yet contributing to the bottom line.”

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” brand name.  STRATTEC’s history in the automotive business spans over 105 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, foreign currency fluctuations, 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.

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