STRATTEC Security Corporation Reports Fiscal 2022 First Quarter Operating Results
First Quarter
Net sales for the first quarter ended
The current year quarter net sales and profitability were significantly impacted by the global semiconductor chip shortage that temporarily closed several of our customer’s assembly plants in
Additionally, the prior year quarter tax results included a favorable tax adjustment due to changes to the Federal tax law generally referred to as the “Tax Cuts and Jobs Act of 2017”, which reduced our income tax provision by
Net sales to each of our customers in the current year quarter and prior year quarter were as follows (in thousands):
| Three Months Ended | ||||||||||
| Stellantis / |
$ | 16,560 | $ | 25,083 | ||||||
| General Motors Company | 25,684 | 37,756 | ||||||||
| Ford Motor Company | 17,695 | 15,846 | ||||||||
| Tier 1 Customers | 11,975 | 17,495 | ||||||||
| Commercial and Other OEM Customers | 17,412 | 21,435 | ||||||||
| Hyundai / Kia | 11,015 | 8,619 | ||||||||
| TOTAL | $ | 100,341 | $ | 126,234 | ||||||
Sales to Stellantis /
Gross Profit margins declined to 12.5% in the current year quarter compared to 17.8% in the prior year quarter primarily due to lower customer vehicle production volumes, higher costs for both raw materials and purchased components, an unfavorable Mexican Peso to US dollar exchange rate affecting the cost of our Mexican operations and the mandatory minimum wage increase enacted by the Mexican Government effective
Engineering, Selling and Administrative expenses as a percent of net sales in the current year quarter were 12.1% compared to 9.0% in the prior year quarter. This increase in overall operating expense spending in the current year quarter was primarily due to higher costs for our salaried work force as the prior year quarter had temporary wage reductions that we implemented to address the impact of the COVID-19 pandemic on our operations.
Included in Other (Expense) Income, Net in the current year quarter compared to the prior year quarter were the following items (in thousands of dollars):
| 2021 | 2020 | |||||||||
| Equity (Loss) Earnings of |
$ | (251 | ) | $ | 825 | |||||
| Net Foreign Currency Transaction Gain (Loss) | 180 | (123 | ) | |||||||
| Other | (50 | ) | (137 | ) | ||||||
| $ | (121 | ) | $ | 565 | ||||||
The equity loss of
"There has been some recent improvement in supply chain issues, a trend that will hopefully continue. Longer term, reasons for optimism remain because of continued consumer demand, extremely thin industry inventory levels and recent reductions of assembly plant closures.
"We were still able to remain profitable through operational adjustments and cost containment efforts. This was in the face of efficiency disruptions from unexpected customer shipping curtailments, a 20% decline in sales versus last year, added logistics costs, price increases from suppliers and losses in our
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
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
| Condensed Results of Operations | ||||||||
| (In Thousands except per share amounts) | ||||||||
| (Unaudited) | ||||||||
| First Quarter Ended | ||||||||
| $ | 100,341 | $ | 126,234 | |||||
| Cost of Goods Sold | 87,792 | 103,723 | ||||||
| Gross Profit | 12,549 | 22,511 | ||||||
| Engineering, Selling & | ||||||||
| Administrative Expenses | 12,121 | 11,314 | ||||||
| Income from Operations | 428 | 11,197 | ||||||
| Interest Expense | (48 | ) | (112 | ) | ||||
| Other (Expense) Income, Net | (121 | ) | 565 | |||||
| Income before Provision for Income | ||||||||
| Taxes and Non-Controlling Interest | 259 | 11,650 | ||||||
| Provision for Income Taxes | 37 | 1,577 | ||||||
| Net Income | 222 | 10,073 | ||||||
| Net Income Attributable | ||||||||
| to Non-Controlling Interest | (121 | ) | (2,065 | ) | ||||
| Net Income Attributable | ||||||||
| to |
$ | 101 | $ | 8,008 | ||||
| Earnings Per Share: | ||||||||
| Basic | $ | 0.03 | $ | 2.13 | ||||
| Diluted | $ | 0.03 | $ | 2.11 | ||||
| Average Basic | ||||||||
| Shares Outstanding | 3,830 | 3,765 | ||||||
| Average Diluted | ||||||||
| Shares Outstanding | 3,893 | 3,788 | ||||||
| Other | ||||||||
| Capital Expenditures | $ | 2,789 | $ | 1,514 | ||||
| Depreciation | $ | 5,057 | $ | 4,885 | ||||
| Condensed Balance Sheet Data | ||||||||
| (In Thousands) | ||||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 7,024 | $ | 14,465 | ||||
| Receivables, net | 66,614 | 69,902 | ||||||
| Inventories, net | 77,707 | 70,860 | ||||||
| Other current assets | 24,295 | 19,677 | ||||||
| Total Current Assets | 175,640 | 174,904 | ||||||
| Investment in Joint Ventures | 26,617 | 27,224 | ||||||
| Other Long Term Assets | 11,874 | 12,034 | ||||||
| Property, Plant and Equipment, Net | 94,213 | 96,401 | ||||||
| $ | 308,344 | $ | 310,563 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts Payable | $ | 34,533 | $ | 36,727 | ||||
| Other | 35,901 | 40,845 | ||||||
| Total Current Liabilities | 70,434 | 77,572 | ||||||
| Accrued Pension and Post Retirement Obligations | 2,923 | 2,933 | ||||||
| Borrowings Under Credit Facility | 17,000 | 12,000 | ||||||
| Other Long-term Liabilities | 4,548 | 4,625 | ||||||
| Shareholders’ Equity | 335,167 | 334,058 | ||||||
| Accumulated Other Comprehensive Loss | (17,278 | ) | (16,797 | ) | ||||
| Less: Treasury Stock | (135,608 | ) | (135,615 | ) | ||||
| Total |
||||||||
| CORPORATION Shareholders’ Equity | 182,281 | 181,646 | ||||||
| Non-Controlling Interest | 31,158 | 31,787 | ||||||
| Total Shareholders’ Equity | 213,439 | 213,433 | ||||||
| $ | 308,344 | $ | 310,563 | |||||
| Condensed Cash Flow Statement Data | ||||||||
| (In Thousands) | ||||||||
| (Unaudited) | ||||||||
| First Quarter Ended | ||||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Income | $ | 222 | $ | 10,073 | ||||
| Adjustment to Reconcile Net Income to Net | ||||||||
| Cash Provided by Operating Activities: | ||||||||
| Depreciation | 5,057 | 4,885 | ||||||
| Equity Loss (Earnings) in Joint Ventures | 251 | (825 | ) | |||||
| Foreign Currency Transaction (Gain) Loss | (139 | ) | 399 | |||||
| Unrealized Gain on Peso Forward Contracts | 98 | (335 | ) | |||||
| Stock Based Compensation Expense | 396 | 208 | ||||||
| Change in Operating Assets/Liabilities | (15,659 | ) | (7,443 | ) | ||||
| Other, net | 127 | 338 | ||||||
| (9,647 | ) | 7,300 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Additions to Property, Plant and Equipment | (2,789 | ) | (1,514 | ) | ||||
| Proceeds Received on Sale of Property, Plant | ||||||||
| and Equipment | - | 3 | ||||||
| (2,789 | ) | (1,511 | ) | |||||
| Cash Flow from Financing Activities: | ||||||||
| Borrowings on Credit Facility | 7,000 | - | ||||||
| Repayment of Borrowings under Credit Facility | (2,000 | ) | (5,000 | ) | ||||
| Dividends Paid to Non-Controlling Interest of Subsidiaries | (600 | ) | (490 | ) | ||||
| Exercise of Stock Options and Employee | ||||||||
| Stock Purchases | 619 | 19 | ||||||
| Net Cash Provided (Used In) Financing Activities | 5,019 | (5,471 | ) | |||||
| Foreign Currency Impact on Cash | (24 | ) | (109 | ) | ||||
| Net (Decrease) Increase in Cash & Cash Equivalents | (7,441 | ) | 209 | |||||
| Cash and Cash Equivalents: | ||||||||
| Beginning of Period | 14,465 | 11,774 | ||||||
| End of Period | $ | 7,024 | $ | 11,983 | ||||
Contact:
Senior Vice President and
Chief Financial Officer
414-247-3435
www.strattec.com
Source: STRATTEC SECURITY CORPORATION