August 11, 2022 16:00 ET | Source: STRATTEC SECURITY CORPORATION STRATTEC SECURITY CORPORATION
MILWAUKEE, Wis., Aug. 11, 2022 (GLOBE NEWSWIRE) -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal fourth quarter and full year ended July 3, 2022. The comparative current year fourth quarter operating results were negatively impacted by higher costs for raw materials and purchased components in our manufacturing operations, reductions in output at some of our OEM customers’ assembly plants and the COVID-19 virus that temporarily shut down our VAST China operations which is further described in this press release.
Fourth Quarter Overview Net sales for the Company’s fourth quarter ended July 3, 2022 were $123.1 million, compared to net sales of $110.1 million for the fourth quarter ended June 27, 2021. The 2022 fiscal fourth quarter was a 14 week period while fiscal 2021’s fourth quarter was the typical 13 week period. The impact of the additional week of customer shipments during the current year quarter increased net sales by approximately $7.4 million over the prior year quarter. Net income for the current year quarterly period was $391,000, compared to net income of $2.9 million in the prior year fourth quarter. Diluted earnings per share for the current year quarterly period were $0.10 compared to diluted earnings per share of $0.75 in the prior year quarter. Despite higher sales levels in the current year quarter versus the prior year quarter, as noted above, our net income and diluted earnings per share were adversely impacted by higher costs for raw materials and purchased components in the current year quarter.
Full Year Earnings Overview For the year ended July 3, 2022, the Company’s net sales were $452.3 million compared to net sales of $485.3 million in the prior year period. Net income during the current year was $7.0 million compared to net income of $22.5 million in the prior year period. Diluted earnings per share were $1.80 for the year ended July 3, 2022 compared to diluted earnings per share of $5.85 during the prior year ended June 27, 2021.
Discussion of Quarterly Results Net sales to each of our customers or customer groups in the current year quarter and prior year quarter were as follows (in thousands):
As mentioned previously, the current year quarter sales had one additional week of sales in comparison to the prior year quarter that totaled $7.4 million. Notwithstanding that extra week of sales, the global semiconductor chip shortage and adverse issues impacting the availability of other raw materials and component parts arising from the Coronavirus (COVID-19) pandemic continue to adversely impact our OEM customers’ output at their assembly plants, thereby reducing our potential sales.
Sales to General Motors in the current year quarter increased in comparison to the prior year quarter due to higher production volumes on the Chevrolet Silverado power tailgate and increased sales from several lock set product platforms with General Motors. Sales to Stellantis / Fiat Chrysler Automobiles increased in the current year quarter compared to the prior year quarter due to higher volumes on the Chrysler Pacifica for which we supply power sliding door components and other access control products. Sales to Ford Motor Company increased in the current year quarter compared to the prior year quarter due to higher production volumes on our lock set product platforms with Ford and increased production for the F-150 pick-up truck for which we supply power tailgate components. Sales to Tier 1 Customers increased in the current year quarter compared to the prior year quarter due to increased volumes on sales of our door handle product. Sales to Commercial and Other OEM Customers during the current year quarter decreased in comparison to the prior year quarter mainly due to decreases in our Aftermarket service keys business between quarters. These Commercial and Other OEM Customers, along with Tier1 Customers, primarily represent purchasers of vehicle access control products, such as latches, key fobs, driver controls, steering column locks and door handles that we have developed to complement our historic core business of locks and keys. Sales to Hyundai / Kia were lower in the current year quarter compared to the prior year quarter due to lower production volumes on the Kia Carnival and Hyundai Starex minivans for which we supply primarily power sliding door components.
Gross profit margins were 11.3 percent in the current year quarter compared to 13.9 percent in the prior year quarter. The decrease in gross profit margin in the current year quarter compared to the prior year quarter was primarily attributed to higher costs for production materials that impacted the gross profit margin by 340 basis points and the mandatory minimum wage increase enacted by the Mexican Government effective January 1, 2022. Partially offsetting the decreased gross profit margins between periods were improved manufacturing efficiencies both at our Milwaukee and Mexico production facilities, despite the ongoing supply chain disruptions described above, and lower expense provisions for accrual of bonuses under our incentive bonus plans.
Engineering, Selling and Administrative expenses overall were $12.4 million in the current year quarter and $11.2 million in the prior year quarter. As a percent of net sales in the current year quarter (14 weeks) these expenses were 10.1% percent compared to 10.2% in the prior year quarter (13 weeks).
Included in Other Income, Net in the current year quarter compared to the prior year quarter were the following items (in thousands of dollars):
The net loss at VAST LLC during the current year quarter related primarily to our VAST China operations being temporarily shut down due to COVID -19 restrictions enacted by the Chinese Government.
Frank Krejci, President & CEO commented: “We have dealt well with the things we could control. Unfortunately for our bottom line, there were significant factors which were out of our control like supply chains limiting customer production and spikes in material cost which we were forced to absorb. In addition, our operations in China were impacted by the aggressive shutdowns imposed by their government to combat the spread of COVID.
The negative impacts were reduced significantly through our cost controls and implementation of efficiency improvements. Those improvements are beginning to benefit us today and many will have a continuing long-term positive impact. Strategically, with our strong balance sheet, we have been able to make a significant investment in inventory levels to dampen problems from supply chain issues. Our financial position also allows us to focus on long-term decisions like investing in new opportunities while still remaining ready to deal with current market uncertainties.
We see continuing growth of our award-winning designs for the power tailgates on the Chevrolet Silverado and the Ford F150 pick-up trucks. As the Electric Vehicle market rapidly grows, we see opportunity for new product development as well as refined versions of much of our present product lines. We are pleased with the acceptance of our new product by our customers and the new business that has been awarded to us over the last year.
As we complete our first month of a new fiscal year, we are encouraged by the higher production schedules from our customers and their press releases anticipating continuing improvement in the industry during the last half of calendar year 2022”.
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 company’s products to global customers under the “VAST Automotive Group” brand name. STRATTEC’s history in the automotive business spans over 110 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, 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 U.S. trade policies, tariffs and reactions to same from foreign countries, the volume and scope of product returns or customer cost reimbursement actions, adverse business and operational issues resulting from the global supply chain disruptions, the semiconductor chip shortages and the coronavirus pandemic, matters adversely impacting the timing and availability of material component parts and raw materials for the production of our products and the products of our customers and fluctuations in our costs of operation (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 Condensed Results of Operations (In Thousands except per share amounts) (Unaudited)
STRATTEC SECURITY CORPORATION Condensed Balance Sheet Data (In Thousands)
STRATTEC SECURITY CORPORATION Condensed Cash Flow Statement Data (In Thousands) (Unaudited)