UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 29, 2015
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STRATTEC SECURITY CORPORATION
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(Exact name of registrant as specified in charter)
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Wisconsin
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(State or other jurisdiction of incorporation)
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0-25150
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39-1804239
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(Commission File Number)
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(I.R.S. Employer I.D. Number)
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3333 West Good Hope Road
Milwaukee, WI
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53209
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(Address of Principal Executive Offices)
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(Zip Code)
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(414) 247-3333
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(Registrant's telephone number; including area code)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 2 – Financial Information
Item 2.02. Results of Operations and Financial Condition.
On January 29, 2015, STRATTEC SECURITY CORPORATION issued a press release (the "Press Release") announcing results for the fiscal second quarter ended December 28, 2014. A copy of the Press Release is attached as Exhibit 99.1 to this report. The attached Exhibit 99.1 is furnished pursuant to Item 2.02 of Form 8-K.
The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.
Section 9 - Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 -- Press Release of STRATTEC SECURITY CORPORATION, issued January 29, 2015.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
STRATTEC SECURITY CORPORATION
Date: January 29, 2015
By: /s/ Patrick J. Hansen
Patrick J. Hansen, Senior Vice President and
Chief Financial Officer
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Exhibit 99.1
FOR RELEASE AT 3:00 PM CST
Contact: Pat Hansen
Senior Vice President and
Chief Financial Officer
414-247-3435
www.strattec.com
STRATTEC SECURITY CORPORATION
REPORTS FISCAL 2015 SECOND QUARTER RESULTS
Milwaukee, Wisconsin – January 29, 2015 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) (“STRATTEC” or the “Company”) today reported operating results for the fiscal second quarter ended December 28, 2014.
Net sales for the Company’s second quarter ended December 28, 2014 were $102.0 million, compared to net sales of $81.5 million for the second quarter ended December 29, 2013. Net income for the current quarterly period was $5.8 million, compared to net income of $3.9 million in the prior year quarter. Diluted earnings per share for the current quarterly period were $1.58 compared to diluted earnings per share of $1.09 during the prior year quarter.
For the six months ended December 28, 2014, net sales were $224.2 million compared to net sales of $161.1 million during the prior year six month period. Net income during the current year six month period was $15.1 million compared to net income of $7.1 million during the prior year six month period. Diluted earnings per share were $4.13 for the current year six month period ended December 28, 2014 compared to diluted earnings per share of $2.00 for the prior year six month period ended December 29, 2013.
Net sales to each of our customers or customer groups in the current year quarter and prior year quarter were as follows (in millions):
| Three Months Ended | ||||||||
| December 28, 2014 | December 29, 2013 | |||||||
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Chrysler Group LLC
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$ | 32.8 | $ | 28.7 | ||||
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General Motors Company
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23.7 | 16.0 | ||||||
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Ford Motor Company
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11.6 | 11.3 | ||||||
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Tier 1 Customers
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17.1 | 15.2 | ||||||
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Commercial and Other OEM Customers
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8.9 | 8.6 | ||||||
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Hyundai / Kia
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7.9 | 1.7 | ||||||
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TOTAL
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$ | 102.0 | $ | 81.5 | ||||
The increase in sales to General Motors Company in the current year quarter was primarily attributed to incremental service parts sales of $6 million. The service parts sales are expected to be at more normal levels during the third quarter and the remainder of our 2015 fiscal year. Higher vehicle production volumes, and greater product content on vehicle models for which we supply components that were introduced for the 2015 model year also contributed 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 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 continued ramp-up of a new model introduction for which we supply components.
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Gross profit margins were 18.1 percent in the current year quarter compared to 19.6 percent in the prior year quarter. The benefits of higher customer production volumes and favorable Mexican Peso to U.S. Dollar exchange rate affecting our Mexican Operations were negatively impacted by an unfavorable product sales mix and higher costs associated with new product launches, thus adversely affecting our gross profit margin in the current year quarter.
Engineering, Selling and Administrative expenses as a percent of net sales in the current year quarter decreased to 10.3% from 11.4% in comparison 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):
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December 28,
2014
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December 29,
2013
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|||||||
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Equity Earnings of VAST LLC Joint Venture
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$ | 142 | $ | 389 | ||||
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Equity Loss of NextLock LLC Joint Venture
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(263 | ) | (92 | ) | ||||
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Foreign Currency Transaction Gain (Loss)
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1,635 | (174 | ) | |||||
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Other
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188 | 120 | ||||||
| $ | 1,702 | $ | 243 |
Frank Krejci, President and CEO commented: “During the quarter, we continued to benefit from a strong automotive market and new product introductions that have resulted in growth of sales and profits compared to last year. We began moving into two purchased facilities to expand manufacturing capacity in Juarez, Mexico and to consolidate Detroit-area sales and engineering efforts in Auburn Hills, Michigan.
“For calendar year 2014, shareholders experienced a total return exceeding 85%. We are extremely pleased that our overall Company performance has been recognized and appreciated. Next month, STRATTEC will celebrate its 20th anniversary as an independent public company. During that time, we have evolved from a North American Company with a single product to a global Company with a family of access products. Recent efforts toward complimentary product diversification has further stimulated fresh thinking in our core business. We are encouraged that our associates, both hourly and salaried, have responded so positively to the strategic initiatives which have influenced our current positive results. ”
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Outlook Going Forward
Chrysler has announced that they are planning an extended downtime or shutdown from February 16, 2015 through May, 24 2015 for their Windsor, Canada Assembly Plant in preparation of their changeover to the production of the new Chrysler minivan. In the event this shutdown does occur for the time period previously announced, the shutdown is expected to result in lost power access and lockset product sales estimated to be between $15-$17 million.
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 member company’s products to global customers under the “VAST” brand name. STRATTEC’s history in the automotive business spans over 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 fluctuations in 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.
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STRATTEC SECURITY CORPORATION
Results of Operations
(In Thousands except per share amounts)
(Unaudited)
| Second Quarter Ended | Six Months Ended | |||||||||||||||
| December 28, 2014 | December 29, 2013 | December 28, 2014 | December 29, 2013 | |||||||||||||
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Net Sales
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$ | 101,990 | $ | 81,484 | $ | 224,232 | $ | 161,079 | ||||||||
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Cost of Goods Sold
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83,538 | 65,541 | 177,723 | 130,621 | ||||||||||||
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Gross Profit
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18,452 | 15,943 | 46,509 | 30,458 | ||||||||||||
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Engineering, Selling & Administrative Expenses
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10,490 | 9,250 | 23,677 | 18,720 | ||||||||||||
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Income from Operations
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7,962 | 6,693 | 22,832 | 11,738 | ||||||||||||
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Interest Income
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43 | 21 | 65 | 27 | ||||||||||||
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Interest Expense
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(11 | ) | (15 | ) | (22 | ) | (29 | ) | ||||||||
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Other Income, Net
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1,702 | 243 | 2,680 | 816 | ||||||||||||
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Income Before Provision for Income Taxes
and Non-Controlling Interest
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9,696 | 6,942 | 25,555 | 12,552 | ||||||||||||
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Provision for Income Taxes
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2,795 | 2,261 | 8,314 | 4,017 | ||||||||||||
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Net Income
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6,901 | 4,681 | 17,241 | 8,535 | ||||||||||||
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Net Income Attributable to
Non-Controlling Interest
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(1,123 | ) | (808 | ) | (2,163 | ) | (1,451 | ) | ||||||||
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Net Income Attributable to
STRATTEC SECURITY
CORPORATION
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$ | 5,778 | $ | 3,873 | $ | 15,078 | $ | 7,084 | ||||||||
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Earnings Per Share:
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Basic
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$ | 1.62 | $ | 1.11 | $ | 4.25 | $ | 2.05 | ||||||||
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Diluted
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$ | 1.58 | $ | 1.09 | $ | 4.13 | $ | 2.00 | ||||||||
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Average Basic
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Shares Outstanding
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3,518 | 3,413 | 3,507 | 3,397 | ||||||||||||
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Average Diluted
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Shares Outstanding
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3,612 | 3,487 | 3,603 | 3,473 | ||||||||||||
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Other
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Capital Expenditures
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$ | 9,992 | $ | 3,574 | $ | 16,955 | $ | 6,450 | ||||||||
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Depreciation & Amortization
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$ | 2,149 | $ | 2,055 | $ | 4,261 | $ | 4,167 | ||||||||
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STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
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December 28, 2014
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June 29, 2014 | |||||||
| ASSETS | (Unaudited) | |||||||
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Current Assets:
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Cash and cash equivalents
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$ | 19,843 | $ | 19,756 | ||||
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Receivables, net
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61,537 | 68,822 | ||||||
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Inventories, net
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38,893 | 30,502 | ||||||
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Other current assets
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16,143 | 16,559 | ||||||
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Total Current Assets
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136,416 | 135,639 | ||||||
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Investment in Joint Ventures
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10,687 | 9,977 | ||||||
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Other Long Term Assets
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12,862 | 11,639 | ||||||
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Property, Plant and Equipment, Net
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67,275 | 55,781 | ||||||
| $ | 227,240 | $ | 213,036 | |||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Current Liabilities:
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Accounts Payable
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$ | 33,179 | $ | 36,053 | ||||
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Other
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31,151 | 29,210 | ||||||
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Total Current Liabilities
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64,330 | 65,263 | ||||||
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Accrued Pension and Post Retirement Obligations
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3,547 | 3,842 | ||||||
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Borrowings Under Credit Facility
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3,500 | 2,500 | ||||||
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Deferred Income Taxes
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5,184 | 5,127 | ||||||
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Other Long-term Liabilities
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1,440 | 1,401 | ||||||
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Shareholders’ Equity
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297,257 | 281,623 | ||||||
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Accumulated Other Comprehensive Loss
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(22,562 | ) | (20,198 | ) | ||||
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Less: Treasury Stock
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(135,912 | ) | (135,919 | ) | ||||
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Total STRATTEC SECURITY
CORPORATION Shareholders’ Equity
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138,783 | 125,506 | ||||||
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Non-Controlling Interest
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10,456 | 9,397 | ||||||
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Total Shareholders’ Equity
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149,239 | 134,903 | ||||||
| $ | 227,240 | $ | 213,036 | |||||
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STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)
| Second Quarter Ended | Six Months Ended | |||||||||||||||
| December 28, 2014 | December 29, 2013 | December 28, 2014 | December 29, 2013 | |||||||||||||
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Cash Flows from Operating Activities:
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Net Income
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$ | 6,901 | $ | 4,681 | $ | 17,241 | $ | 8,535 | ||||||||
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Adjustments to Reconcile Net Income to
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Cash Provided by Operating Activities:
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Equity Loss (Earnings) in Joint Ventures
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121 | (297 | ) | (69 | ) | (591 | ) | |||||||||
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Depreciation and Amortization
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2,149 | 2,055 | 4,261 | 4,167 | ||||||||||||
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Foreign Currency Transaction (Gain) Loss
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(1,635 | ) | 174 | (2,421 | ) | (38 | ) | |||||||||
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Stock Based Compensation Expense
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311 | 276 | 700 | 630 | ||||||||||||
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Change in Operating Assets/Liabilities
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570 | 4,030 | (2,185 | ) | (6,010 | ) | ||||||||||
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Other, net
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32 | (12 | ) | 157 | 74 | |||||||||||
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Net Cash Provided by Operating Activities
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8,449 | 10,907 | 17,684 | 6,767 | ||||||||||||
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Cash Flows from Investing Activities:
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Investment in Joint Ventures
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(384 | ) | - | (384 | ) | - | ||||||||||
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Loan to Joint Venture
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- | - | (215 | ) | - | |||||||||||
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Additions to Property, Plant and Equipment
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(9,992 | ) | (3,574 | ) | (16,955 | ) | (6,450 | ) | ||||||||
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Proceeds from Sale of Property and Equipment
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- | 13 | - | 21 | ||||||||||||
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Net Cash Used in Investing Activities
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(10,376 | ) | (3,561 | ) | (17,554 | ) | (6,429 | ) | ||||||||
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Cash Flow from Financing Activities:
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Borrowings on Line of Credit Facility
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- | - | 1,500 | 750 | ||||||||||||
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Payments on Line of Credit Facility
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(500 | ) | - | (500 | ) | - | ||||||||||
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Dividends Paid to Non-Controlling
Interest of Subsidiary
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- | - | (882 | ) | (984 | ) | ||||||||||
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Dividends Paid
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(427 | ) | (384 | ) | (854 | ) | (764 | ) | ||||||||
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Exercise of Stock Options and Employee
Stock Purchases
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274 | 691 | 714 | 789 | ||||||||||||
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Net Cash (Used in) Provided by Financing Activities
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(653 | ) | 307 | (22 | ) | (209 | ) | |||||||||
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Effect of Foreign Currency Fluctuations on Cash
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(122 | ) | (71 | ) | (21 | ) | (48 | ) | ||||||||
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Net (Decrease) Increase in Cash & Cash Equivalents
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(2,702 | ) | 7,582 | 87 | 81 | |||||||||||
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Cash and Cash Equivalents:
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Beginning of Period
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22,545 | 12,806 | 19,756 | 20,307 | ||||||||||||
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End of Period
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$ | 19,843 | $ | 20,388 | $ | 19,843 | $ | 20,388 | ||||||||
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