STRATTEC SECURITY CORPORATION Reports Fiscal Second Quarter Results
MILWAUKEE, Jan 27, 2011 (GlobeNewswire via COMTEX) -- STRATTEC SECURITY CORPORATION (Nasdaq:STRT) today reported operating results for the fiscal second quarter ended December 26, 2010.
Net sales for the Company's second quarter ended December 26, 2010 were $61.2 million, compared to net sales of $52.5 million for the second quarter ended December 27, 2009. Net income for the period was $1.2 million, compared to net income of $844,000 in the prior year quarter. Diluted earnings per share for the period were $.37 compared to diluted earnings per share of $.26 during the prior year quarter. The higher sales and profitability for the quarter were primarily the result of increased customer production volumes.
For the six months ended December 26, 2010, net sales were $121.1 million compared to net sales of $93.7 million during the prior year period. Net income during the current year period was $2.7 million compared to net income of $1.8 million during the prior year period and diluted earnings per share were $.80 compared to diluted earnings per share of $.55.
Sales to STRATTEC's largest customers overall increased in the current quarter compared to the prior year quarter levels. Sales to Chrysler Group LLC were $17.6 million in the current quarter compared to $16.5 million in the prior year quarter. Sales to General Motors Company were $16.3 million compared to $12.3 million. Sales to Ford Motor Company were $6.1 million compared to $5.2 million. However sales to Hyundai/Kia decreased to $3.4 million compared to $4.3 million in the prior year quarter.
Gross profit margins were 16.3 percent in the current quarter compared to 14.6 percent in the prior year quarter. The higher gross profit margin in the current year quarter was primarily the result of favorable customer vehicle production volumes, offset by an unfavorable Mexico Peso to U.S. dollar exchange rate affecting the Company's operations in Mexico. The prior year quarter included a significant amount of premium freight costs and overtime incurred during the months of October and November 2009 to meet significantly increased production requirements from the Company's largest customers as they rebuilt retail inventories following the U.S. Government's "Cash for Clunkers" program that ended in August 2009.
Operating expenses were $8.3 million in the current quarter, compared to $7.5 million in the prior year quarter. The increase in operating expenses during the current quarter was primarily attributed to higher spending for new product development. Additionally, expenses in the prior year period were lower due to temporary actions implemented with respect to the U.S. salaried work force to help conserve cash during the recession. These actions included reductions in wages and the Company 401(k) match.
Included in the prior year quarter results were the following non-recurring items:
-- A $505,000 curtailment loss to immediately recognize the prior service
cost associated with freezing STRATTEC's defined benefit retirement plan
effective December 31, 2009;
-- A $223,000 impairment charge to write off the goodwill recorded as part
of the acquisition of STRATTEC POWER ACCESS in November 2008;
-- A $1,125,000 favorable adjustment to an environmental reserve resulting
from a re-evaluation of the potential remaining cost to satisfy
outstanding environmental remediation issues at the Milwaukee production
facility dating back to 1985; and
-- A $201,000 recovery of the allowance for doubtful accounts recorded in
the third quarter of fiscal 2009, relating to Chrysler LLC's bankruptcy
filing on April 30, 2009.
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 the VAST Alliance in which STRATTEC participates with WITTE Automotive of Velbert, Germany and ADAC Automotive of Grand Rapids, Michigan. STRATTEC's history in the automotive business spans over 100 years.
The STRATTEC SECURITY CORPORATION logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4700
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 (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
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Results of Operations
(In Thousands except per share amounts)
(Unaudited)
Second Quarter
Ended Six Months Ended
December December December December
26, 2010 27, 2009 26, 2010 27, 2009
-------- -------- -------- --------
Net Sales $61,212 $52,540 $121,061 $93,721
Cost of Goods Sold 51,239 44,887 100,935 79,270
-------- -------- -------- --------
Gross Profit 9,973 7,653 20,126 14,451
Engineering, Selling &
Administrative Expenses 8,318 7,455 16,483 13,654
Impairment Charge -- 223 -- 223
Environmental -- (1,125) -- (1,125)
Recovery of Bad Debts -- (201) -- (421)
-------- -------- -------- --------
Income from Operations 1,655 1,301 3,643 2,120
Interest Income 25 19 48 42
Interest Expense (45) (59) (96) (115)
Other Income, Net 438 306 1,059 790
-------- -------- -------- --------
2,073 1,567 4,654 2,837
Provision for Income
Taxes 331 721 1,132 1,062
-------- -------- -------- --------
Net Income 1,742 846 3,522 1,775
Net Income Attributable
to Non-Controlling
Interest (495) (2) (857) 12
-------- -------- -------- --------
Net Income Attributable
to
STRATTEC SECURITY
CORPORATION $1,247 $844 $2,665 $1,787
======== ======== ======== ========
Earnings Per Share:
Basic $0.38 $0.26 $0.81 $0.55
======== ======== ======== ========
Diluted $0.37 $0.26 $0.80 $0.55
======== ======== ======== ========
Average Basic
Shares Outstanding 3,286 3,272 3,283 3,269
Average Diluted
Shares Outstanding 3,329 3,272 3,314 3,271
Other
------------------------
Capital Expenditures $1,706 $1,342 $3,482 $3,104
Depreciation &
Amortization $1,589 $1,827 $3,227 $3,578
STRATTEC SECURITY CORPORATION
----------------------------------------------------
Condensed Balance Sheet Data
(In Thousands)
December June 27,
26, 2010 2010
----------- ---------
(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents $17,811 $21,867
Restricted Cash (A) -- 2,100
Receivables, Net 33,397 36,084
Inventories 22,415 17,086
Other Current Assets 14,798 12,871
----------- ---------
Total Current Assets 88,421 90,008
Deferred Income Taxes 10,534 10,534
Loan to Joint Venture 1,500 1,500
Investment in Joint Venture 6,302 5,176
Other Long Term Assets 684 733
Property, Plant and
Equipment, Net 37,539 37,051
----------- ---------
$144,980 $145,002
=========== =========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $23,082 $21,192
Other 22,858 25,038
----------- ---------
Total Current
Liabilities 45,940 46,230
Borrowings Under Line of
Credit Facility -- --
Accrued Pension and Post
Retirement Obligations 22,868 22,982
Shareholders' Equity 241,115 242,115
Accumulated Other
Comprehensive Loss (31,421) (31,941)
Less: Treasury Stock (136,029) (136,047)
----------- ---------
Total STRATTEC SECURITY
CORPORATION
Shareholders' Equity 73,665 74,127
Non-Controlling Interest 2,507 1,663
----------- ---------
Total Shareholders' Equity 76,172 75,790
----------- ---------
$144,980 $145,002
=========== =========
NOTE A: Represents a commercial guarantee by
STRATTEC SECURITY CORPORATION relating to a
promissory note issued by Vehicle Access Systems
Technology, LLC (VAST, LLC). This guarantee was
canceled in October 2010.
STRATTEC SECURITY CORPORATION
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Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)
Second Quarter
Ended Six Months Ended
December December December December
26, 2010 27, 2009 26, 2010 27, 2009
-------- -------- -------- --------
Cash Flows from Operating
Activities:
Net Income $1,742 $846 $3,522 $1,775
Adjustment to Reconcile Net Income
to
Cash Provided by Operating
Activities:
Equity Earnings in VAST LLC
Joint Venture (381) (383) (803) (479)
Depreciation and Amortization 1,589 1,827 3,227 3,578
Foreign Currency Transaction
Loss 160 222 190 157
Stock Based Compensation Expense 156 98 298 204
Recovery of Doubtful Accounts -- (201) -- (421)
Deferred Tax Provision -- 3,258 -- 3,258
Curtailment Loss -- 505 -- 505
Impairment Charge -- 223 -- 223
Environmental -- (1,125) -- (1,125)
Change in Operating
Assets/Liabilities 1,256 (289) (4,197) (1,540)
Other, net 11 (10) 17 22
-------- -------- -------- --------
Net Cash Provided by Operating
Activities 4,533 4,971 2,254 6,157
Cash Flows from Investing
Activities:
Investment in Joint Ventures (150) (100) (150) (100)
Loan to Joint Venture -- (1,500) -- (1,500)
Restricted Cash 2,100 (2,100) 2,100 (2,100)
Purchase of Additional Interest in
ADAC-STRATTEC LLC -- -- (22) --
Additions to Property, Plant and
Equipment (1,706) (1,342) (3,482) (3,104)
Proceeds from Sale of Property,
Plant
and Equipment -- 10 -- 10
-------- -------- -------- --------
Net Cash Provided by (Used in)
Investing Activities 244 (5,032) (1,554) (6,794)
Cash Flow from Financing
Activities:
Dividends Paid (3,989) -- (3,989) --
Repayment of Loan to Related
Parties (250) -- (750) --
Exercise of Stock Options and
Employee Stock Purchases 15 12 28 23
-------- -------- -------- --------
Net Cash Provided by (Used in)
Financing Activities (4,224) 12 (4,711) 23
Effect of Foreign Currency
Fluctuations on Cash (64) (165) (45) (134)
-------- -------- -------- --------
Net Increase (Decrease) in Cash &
Cash Equivalents 489 (214) (4,056) (748)
Cash and Cash Equivalents:
Beginning of Period 17,322 22,230 21,867 22,764
-------- -------- -------- --------
End of Period $17,811 $22,016 $17,811 $22,016
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This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: STRATTEC SECURITY CORPORATION
CONTACT: Pat Hansen
Senior Vice President and
Chief Financial Officer
414-247-3435
www.strattec.com