STRATTEC SECURITY CORPORATION Reports Fiscal 2012 First Quarter Results
MILWAUKEE, Oct 27, 2011 (GlobeNewswire via COMTEX) -- STRATTEC SECURITY CORPORATION (Nasdaq:STRT) today reported operating results for the fiscal first quarter ended October 2, 2011.
Net sales for the Company's first quarter ended October 2, 2011 were $66.4 million, compared to net sales of $59.8 million for the prior year quarter ended September 26, 2010. Net income for the current year quarter was $1,282,000, compared to net income of $1,418,000 in the prior year quarter. Diluted earnings per share for the current quarter were $.39 compared to diluted earnings per share of $.43 in the prior year quarter.
Overall sales to STRATTEC's largest customers increased in the current quarter compared to the prior year quarter levels primarily due to higher customer vehicle production volumes. Sales to Chrysler Group LLC were $19.8 million in the current quarter compared to $19.6 million in the prior year quarter. Sales to General Motors Company were $16.1 million in the current quarter compared to $14.8 million in the prior year quarter. 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 $8.3 million in the current quarter compared to $5.5 million in the prior year quarter. Net sales to Hyundai/Kia were $3.8 million in the current quarter compared to $4.3 million in the prior year quarter, a reduction of $0.5 million primarily due to lower vehicle production in the current quarter.
The gross profit margin was 17.3 percent in the current quarter compared to 17.0 percent in the prior year quarter. The higher gross profit margin in the current year quarter was largely the result of higher customer vehicle production volumes which increased overhead absorption of STRATTEC's manufacturing costs. Items negatively impacting the current quarter gross margin were an unfavorable Mexico peso to U.S. dollar exchange rate affecting the Company's operations in Mexico for most of the quarter, a less favorable product content sales mix and higher purchased raw material costs for zinc and brass.
Operating expenses were essentially flat at $8.2 million in both the current quarter and prior year quarter.
Included in Other (Expense) Income in the current quarter compared to the prior year quarter were the following items (in thousands of dollars):
October September
2, 26,
2011 2010
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Foreign Currency Transaction Gain (Loss) $ 1,699 $ (31)
Unrealized Loss on Mexican Peso Option Contracts (2,305) --
Rabbi Trust (Loss) Gain (241) 124
Equity (Loss) Earnings of VAST LLC Joint Venture (120) 422
Other (21) 106
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$ (988) $ 621
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Increase (Decrease) Diluted Earnings Per Share $ (.13) $ .11
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During the later part of the current quarter, the Mexican peso devalued significantly to the US dollar creating both transaction gains and unrealized losses on our Mexican peso currency option contracts entered into during the later half of fiscal 2011 and early 2012. Our objective in entering into these currency option contracts is to minimize our earnings volatility resulting from changes in exchange rates affecting the U.S. dollar cost of our Mexican operations. The unrealized loss recognized in the current quarter results from mark-to-market adjustments as of October 2, 2011 and may or may not be realized, depending on actual Mexican peso to US dollar exchange rates experienced during the balance of the fiscal year.
During the current quarter our joint ventures in China and Brazil both incurred relocation costs associated with moves to new facilities and start-up costs associated with a new product line. Both of these items caused STRATTEC to incur an equity loss from joint ventures in the current year quarter compared to the prior year quarter equity earnings from joint ventures. We anticipate these transition costs to continue over most of the remaining fiscal year.
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 our products to global customers under the "VAST" brand name. 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)
First Quarter
Ended
October September
2, 2011 26, 2010
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Net Sales $66,377 $59,849
Cost of Goods Sold 54,873 49,696
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Gross Profit 11,504 10,153
Engineering, Selling &
Administrative Expenses 8,208 8,165
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Income from Operations 3,296 1,988
Interest Income 17 23
Interest Expense-Related
Parties (31) (51)
Other (Expense) Income, Net (988) 621
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2,294 2,581
Provision for Income Taxes 321 801
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Net Income 1,973 1,780
Net Income Attributable to
Non-Controlling Interest (691) (362)
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Net Income Attributable to
STRATTEC SECURITY
CORPORATION $1,282 $1,418
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Earnings Per Share:
Basic $0.39 $0.43
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Diluted $0.39 $0.43
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Average Basic Shares
Outstanding 3,294 3,280
Average Diluted Shares
Outstanding 3,326 3,299
Other
Capital Expenditures $3,492 $1,776
Depreciation &
Amortization $1,652 $1,638
STRATTEC SECURITY CORPORATION
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Condensed Balance Sheet Data
(In Thousands)
October 2, July 3,
2011 2011
----------- ---------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 13,188 $ 17,250
Receivables, net 41,232 39,649
Inventories 24,312 22,135
Other current assets 15,120 15,368
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Total Current Assets 93,852 94,402
Deferred Income Taxes 3,945 3,639
Loan to Joint Venture 1,500 1,500
Investment in Joint Venture 7,293 7,276
Other Long Term Assets 610 635
Property, Plant and
Equipment, Net 40,781 40,636
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$ 147,981 $ 148,088
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LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts Payable $ 24,906 $ 22,851
Other 26,333 28,137
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Total Current Liabilities 51,239 50,988
Borrowings Under Line of
Credit Facility -- --
Accrued Pension and Post
Retirement Obligations 6,995 7,036
Other Long Term Liabilities 804 --
Shareholders' Equity 245,102 243,974
Accumulated Other
Comprehensive Loss (24,619) (21,750)
Less: Treasury Stock (136,000) (136,009)
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Total STRATTEC SECURITY
CORPORATION Shareholders'
Equity 84,483 86,215
Non-Controlling Interest 4,460 3,849
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Total Shareholders' Equity 88,943 90,064
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$ 147,981 $ 148,088
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STRATTEC SECURITY CORPORATION
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Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)
First Quarter
Ended
October September
2, 2011 26, 2010
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Cash Flows from Operating Activities:
Net Income $1,973 $1,780
Adjustment to Reconcile Net Income to Net
Cash Used in Operating Activities:
Equity Loss (Earnings) in Joint Venture 120 (422)
Depreciation and Amortization 1,652 1,638
Foreign Currency Transaction Loss (Gain) (1,699) 31
Unrealized Loss on Foreign Currency
Option Contracts 2,305 --
Stock Based Compensation Expense 174 143
Change in Operating Assets/Liabilities (4,749) (5,453)
Other, net 16 4
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Net Cash Used In Operating Activities (208) (2,279)
Cash Flows from Investing Activities:
Purchase of Additional Interest in
Minority Owned Subsidiaries -- (22)
Additions to Property, Plant and
Equipment (3,492) (1,776)
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Net Cash Used in Investing Activities (3,492) (1,798)
Cash Flow from Financing Activities:
Dividends Paid (335) --
Repayment of Loan to Related Parties (400) (500)
Exercise of Stock Options and Employee
Stock Purchases 16 13
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Net Cash Used In Financing Activities (719) (487)
Foreign Currency Impact on Cash 357 19
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Net Decrease in Cash & Cash Equivalents (4,062) (4,545)
Cash and Cash Equivalents:
Beginning of Period 17,250 21,867
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End of Period $13,188 $17,322
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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