STRATTEC SECURITY CORPORATION Reports Fiscal Third Quarter Results
MILWAUKEE, Apr 21, 2011 (GlobeNewswire via COMTEX) --
STRATTEC SECURITY CORPORATION (Nasdaq:STRT) today reported operating results for the fiscal third quarter ended March 27, 2011.
Net sales for the Company's third quarter ended March 27, 2011 were $65.7 million, compared to net sales of $52.9 million for the third quarter ended March 28, 2010. The higher net sales for the current quarter can be primarily attributed to increased customer production volumes. Higher content on certain new products also contributed to the net sales improvement.
Net income for the period was $55,000, compared to a net income of $781,000 in the prior year quarter. Diluted earnings per share for the period were $.02 compared to diluted earnings per share of $.24 in the prior year quarter. The lower net income for the current quarter was primarily due to a combination of STRATTEC's share of the cost associated with a customer's specific warranty claim, and an adjustment for customer price concessions. These two items resulted in a pre-tax provision of $1.8 million during the current quarter and reduced diluted earnings per share by $.33.
For the nine months ended March 27, 2011, net sales were $186.7 million compared to net sales of $146.6 million in the prior year period. Net income was $2.7 million compared to net income of $2.6 million in the prior year period and diluted earnings per share were $.82 compared to diluted earnings per share of $.78 in the prior year period.
The year-over-year net sales increase for the current quarter reflected increased sales to STRATTEC's largest customers. Sales to Chrysler Group LLC were $21.6 million in the current quarter compared to $17.0 million in the prior year quarter. Sales to General Motors Company were $14.8 million compared to $13.5 million. Included in the prior year quarter sales to General Motors were $1.7 million of sales to Nexteer Automotive, formerly a unit of General Motors. Sales to Ford Motor Company were $7.0 million compared to $4.5 million. Sales to Hyundai/Kia were $4.0 million compared to $2.8 million.
Gross profit margins were 13.9 percent in the current quarter compared to 16.8 percent in the prior year quarter. The lower gross profit margin in the current year quarter was primarily the result of the $1.8 million pre-tax provision related to the two issues mentioned previously. Also impacting the current quarter were higher purchased raw material costs for zinc and brass along with an unfavorable Mexico Peso to U.S. dollar exchange rate affecting the Company's operations in Mexico. Collectively, these items reduced the current quarter gross profit margin by 4 percentage points.
Operating expenses were $8.0 million in the current quarter, compared to $7.6 million in the prior year quarter.
During the current quarter, the Company contributed $1.5 million to its Defined Benefit Pension Trust.
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
Third Quarter
Ended Nine Months Ended
March March
27, 28, March March
2011 2010 27, 2011 28, 2010
------- ------- -------- --------
Net Sales $65,650 $52,883 $186,711 $146,604
Cost of Goods Sold 56,531 44,022 157,466 123,292
------- ------- -------- --------
Gross Profit 9,119 8,861 29,245 23,312
Engineering, Selling &
Administrative Expenses 7,953 7,620 24,436 21,274
Impairment Charge -- -- -- 223
Environmental -- -- -- (1,125)
Recovery of Bad Debts -- -- -- (421)
------- ------- -------- --------
Income from Operations 1,166 1,241 4,809 3,361
Interest Income 36 16 84 58
Interest Expense (38) (56) (134) (171)
Other (Expense)/Income,
Net (160) 176 899 966
------- ------- -------- --------
1,004 1,377 5,658 4,214
Provision for Income Taxes 262 328 1,394 1,390
------- ------- -------- --------
Net Income 742 1,049 4,264 2,824
Net Income Attributable to
Non-Controlling Interest 687 268 1,544 256
------- ------- -------- --------
Net Income Attributable to
STRATTEC SECURITY
CORPORATION $55 $781 $2,720 $2,568
======= ======= ======== ========
Earnings Per Share:
Basic $ 0.02 $0.24 $0.83 $0.79
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Diluted $ 0.02 $0.24 $0.82 $0.78
======= ======= ======== ========
Average Basic Shares
Outstanding 3,286 3,273 3,284 3,270
Average Diluted Shares
Outstanding 3,339 3,284 3,322 3,275
Other
--------------------------
Capital Expenditures $2,245 $1,841 $5,727 $4,945
Depreciation &
Amortization $1,677 $1,757 $4,904 $5,335
STRATTEC SECURITY CORPORATION
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Condensed Balance Sheet Data
(In Thousands)
March 27, June 27,
2011 2010
----------- ---------
ASSETS (Unaudited)
Current Assets:
Cash and Cash Equivalents $12,680 $21,867
Restricted Cash (A) -- 2,100
Receivables, Net 42,528 36,084
Inventories 23,431 17,086
Other Current Assets 14,290 12,871
----------- ---------
Total Current Assets 92,929 90,008
Deferred Income Taxes 10,534 10,534
Loan to Joint Venture 1,500 1,500
Investment in Joint
Venture 6,759 5,176
Other Long Term Assets 659 733
Property, Plant and
Equipment, Net 38,315 37,051
----------- ---------
$150,696 $145,002
=========== =========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $26,659 $21,192
Other 25,120 25,038
----------- ---------
Total Current
Liabilities 51,779 46,230
Borrowings Under Line of
Credit Facility -- --
Accrued Pension and Post
Retirement Obligations 21,236 22,982
Shareholders' Equity 241,334 242,115
Accumulated Other
Comprehensive Loss (30,838) (31,941)
Less: Treasury Stock (136,022) (136,047)
----------- ---------
Total STRATTEC SECURITY
CORPORATION
Shareholders' Equity 74,474 74,127
Non-Controlling Interest 3,207 1,663
----------- ---------
Total Shareholders' Equity 77,681 75,790
----------- ---------
$150,696 $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)
Third Quarter Nine Months
Ended Ended
March March March March
27, 28, 27, 28,
2011 2010 2011 2010
------- ------- ------- -------
Cash Flows from Operating Activities:
Net Income $742 $1,049 $4,264 $2,824
Adjustment to Reconcile Net Income to
Cash (Used In) Provided by Operating
Activities:
Equity Earnings in VAST LLC Joint
Venture (197) (160) (1,000) (639)
Depreciation and Amortization 1,677 1,757 4,904 5,335
Foreign Currency Transaction Loss 368 168 558 325
Unrealized Loss Foreign Currency
Option
Contracts 114 -- 114 --
Stock Based Compensation Expense 155 136 453 340
Recovery of Doubtful Accounts -- -- -- (421)
Deferred Tax Provision -- -- -- 3,258
Curtailment Loss -- -- -- 505
Impairment Charge -- -- -- 223
Environmental -- -- -- (1,125)
Change in Operating
Assets/Liabilities (5,453) (7,622) (9,650) (9,162)
Other, net 32 13 49 35
------- ------- ------- -------
Net Cash (Used In) Provided by
Operating Activities (2,562) (4,659) (308) 1,498
Cash Flows from Investing Activities:
Investment in Joint Ventures (150) -- (300) (100)
Loan to Joint Venture -- -- -- (1,500)
Restricted Cash -- -- 2,100 (2,100)
Purchase of Additional Interest in
ADAC-STRATTEC LLC -- -- (22) --
Additions to Property, Plant and
Equipment (2,245) (1,841) (5,727) (4,945)
Proceeds from Sale of Property,
Plant and Equipment 21 -- 21 10
------- ------- ------- -------
Net Cash Used in Investing Activities (2,374) (1,841) (3,928) (8,635)
Cash Flow from Financing Activities:
Dividends Paid -- -- (3,989) --
Repayment of Loan to Related Parties (100) (225) (850) (225)
Exercise of Stock Options and
Employee Stock Purchases 16 10 44 33
------- ------- ------- -------
Net Cash Used in Financing Activities (84) (215) (4,795) (192)
Effect of Foreign Currency
Fluctuations on Cash (111) (103) (156) (237)
------- ------- ------- -------
Net Decrease in Cash & Cash
Equivalents (5,131) (6,818) (9,187) (7,566)
Cash and Cash Equivalents:
Beginning of Period 17,811 22,016 21,867 22,764
------- ------- ------- -------
End of Period $12,680 $15,198 $12,680 $15,198
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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