MILWAUKEE, Jan. 23, 2014 (GLOBE NEWSWIRE) -- STRATTEC SECURITY CORPORATION (Nasdaq:STRT) ("STRATTEC" or the "Company") today reported operating results for the fiscal second quarter ended December 29, 2013.
Net sales for the Company's second quarter ended December 29, 2013 were $81.5 million, compared to net sales of $72.2 million for the second quarter ended December 30, 2012. Net income for the current quarterly period was $3.9 million, compared to net income of $2.4 million in the prior year quarter. Diluted earnings per share for the current quarterly period were $1.09 compared to diluted earnings per share of $.70 during the prior year quarter.
For the six months ended December 29, 2013, net sales were $161.1 million compared to net sales of $143.1 million during the prior year six month period. Net income during the current year six month period was $7.1 million compared to net income of $5.1 million during the prior year six month period. Diluted earnings per share were $2.00 for the current year six month period ended December 29, 2013 compared to diluted earnings per share of $1.48 for the prior year six month period ended December 30, 2012.
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 29, 2013 | December 30, 2012 | |
| Chrysler Group LLC | $ 28.7 | $ 23.0 |
| General Motors Company | 16.0 | 13.5 |
| Ford Motor Company | 11.3 | 10.5 |
| Tier 1 Customers | 15.2 | 15.0 |
| Commercial and Other OEM Customers | 8.6 | 7.7 |
| Hyundai / Kia | 1.7 | 2.5 |
| TOTAL | $ 81.5 | $ 72.2 |
Increased sales to Chrysler Group LLC, General Motors Company and Ford Motor Company in the current quarter were primarily due to increased customer vehicle production volumes on models for which we supply components. Increased sales to Tier 1, Commercial and Other OEM customers during the current quarter related to market growth and the increasing impact of sales of other vehicle access control products such as latches, fobs, and driver controls that have been developed in recent years to complement our historic locks and keys access control products. The reduction in sales to Hyundai / Kia in the current quarter was principally due to lower customer vehicle production volume on models for which we supply components.
Gross profit margins were 19.6 percent in the current quarter compared to 17.0 percent in the prior year quarter. The benefits of higher customer production volumes and lower pension expense provisions attributed to a significantly improved funded status on our frozen Defined Benefit Pension Plan increased our gross profit margin in the current year quarter over the same period in the prior year. Gross profit margins during the current quarter were also negatively impacted by increased provisions under our incentive bonus plans due to increased profitability and higher raw material costs for zinc.
Operating expenses as a percent of net sales in the current year quarter decreased to 11.4% from 11.7% in comparison to the prior year quarter. This expense percentage would have declined further except for increased costs primarily for provisions under our incentive bonus plans as discussed above.
Frank Krejci, President and CEO commented: "Given the normal disruptions of customer shutdowns and the holidays during this quarter, we feel that our reported results are even more noteworthy. It was our best quarterly earnings per share since the quarter ending March 2006. This quarter is also a significant milestone. We have now completed 105 years in business, 86 years of that as part of Briggs & Stratton Corp. Over the last 19 years, we have greatly expanded our products and geographic reach in serving the automotive industry. There are ever increasing opportunities being created both tactically and strategically through working with our partners to advance the VAST brand. We are encouraged by the expectations of continued strong automotive production, substantial progress at our VAST China operations and the long-term opportunities with biometric security in both automotive and non-automotive markets through our recent investment in NextLock (www.getnextlock.com)."
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.
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.
| STRATTEC SECURITY CORPORATION | ||||
| Results of Operations | ||||
| (In Thousands except per share amounts) | ||||
| (Unaudited) | ||||
| Second Quarter Ended | Six Months Ended | |||
| December 29, 2013 | December 30, 2012 | December 29, 2013 | December 30, 2012 | |
| Net Sales | $81,484 | $72,243 | $161,079 | $143,050 |
| Cost of Goods Sold | 65,541 | 59,936 | 130,621 | 117,030 |
| Gross Profit | 15,943 | 12,307 | 30,458 | 26,020 |
| Engineering, Selling & | ||||
| Administrative Expenses | 9,250 | 8,481 | 18,720 | 17,601 |
| Income from Operations | 6,693 | 3,826 | 11,738 | 8,419 |
| Interest Income | 21 | 10 | 27 | 13 |
| Equity Earnings (Loss) of Joint Ventures | 297 | (99) | 591 | (111) |
| Interest Expense | (15) | (10) | (29) | (15) |
| Other (Expense) Income, Net | (54) | 187 | 225 | 169 |
| 6,942 | 3,914 | 12,552 | 8,475 | |
| Provision for Income Taxes | 2,261 | 1,074 | 4,017 | 2,320 |
| Net Income | 4,681 | 2,840 | 8,535 | 6,155 |
| Net Income Attributable | ||||
| to Non-Controlling Interest | (808) | (446) | (1,451) | (1,091) |
| Net Income Attributable to | ||||
| STRATTEC SECURITY | ||||
| CORPORATION | $3,873 | $2,394 | $7,084 | $5,064 |
| Earnings Per Share: | ||||
| Basic | $1.11 | $0.71 | $2.05 | $1.50 |
| Diluted | $1.09 | $0.70 | $2.00 | $1.48 |
| Average Basic | ||||
| Shares Outstanding | 3,413 | 3,317 | 3,397 | 3,313 |
| Average Diluted | ||||
| Shares Outstanding | 3,487 | 3,353 | 3,473 | 3,346 |
| Other | ||||
| Capital Expenditures | $3,574 | $2,477 | $6,450 | $5,188 |
| Depreciation & Amortization | $2,055 | $1,773 | $4,167 | $3,531 |
| STRATTEC SECURITY CORPORATION | ||
| Condensed Balance Sheet Data | ||
| (In Thousands) | ||
| December 29, 2013 | June 30, 2013 | |
| (Unaudited) | ||
| ASSETS | ||
| Current Assets: | ||
| Cash and cash equivalents | $20,388 | $20,307 |
| Receivables, net | 44,348 | 47,514 |
| Inventories, net | 30,035 | 24,312 |
| Other current assets | 14,855 | 14,366 |
| Total Current Assets | 109,626 | 106,499 |
| Investment in Joint Ventures | 9,809 | 9,166 |
| Other Long-term Assets | 6,867 | 2,420 |
| Property, Plant and Equipment, Net | 53,570 | 51,415 |
| $179,872 | $169,500 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current Liabilities: | ||
| Accounts Payable | $25,923 | $25,543 |
| Borrowings Under Credit Facility | 3,000 | 2,250 |
| Other | 23,138 | 22,932 |
| Total Current Liabilities | 52,061 | 50,725 |
| Accrued Pension and Post Retirement Obligations | 4,145 | 4,181 |
| Deferred Income Taxes | 1,090 | 1,009 |
| Other Long-term Liabilities | 1,753 | 1,705 |
| Shareholders' Equity | 270,104 | 262,368 |
| Accumulated Other Comprehensive Loss | (21,471) | (22,212) |
| Less: Treasury Stock | (135,928) | (135,938) |
| Total STRATTEC SECURITY | ||
| CORPORATION Shareholders' Equity | 112,705 | 104,218 |
| Non-Controlling Interest | 8,118 | 7,662 |
| Total Shareholders' Equity | 120,823 | 111,880 |
| $179,872 | $169,500 | |
| STRATTEC SECURITY CORPORATION | ||||
| Condensed Cash Flow Statement Data | ||||
| (In Thousands) | ||||
| (Unaudited) | ||||
| Second Quarter Ended | Six Months Ended | |||
| December 29, 2013 | December 30, 2012 | December 29, 2013 | December 30, 2012 | |
| Cash Flows from Operating Activities: | ||||
| Net Income | $4,681 | $2,840 | $8,535 | $6,155 |
| Adjustments to Reconcile Net Income to | ||||
| Cash Provided by Operating Activities: | ||||
| Equity (Earnings) Loss in Joint Ventures | (297) | 99 | (591) | 111 |
| Depreciation and Amortization | 2,055 | 1,773 | 4,167 | 3,531 |
| Foreign Currency Transaction Loss (Gain) | 174 | (142) | (38) | 313 |
| Unrealized Gain on Foreign Currency Option Contracts | -- | (38) | -- | (349) |
| Stock Based Compensation Expense | 276 | 394 | 630 | 470 |
| Change in Operating Assets/Liabilities | 4,030 | (622) | (6,010) | (4,194) |
| Other, net | (12) | (31) | 74 | (61) |
| Net Cash Provided by Operating Activities | 10,907 | 4,273 | 6,767 | 5,976 |
| Cash Flows from Investing Activities: | ||||
| Investment in Joint Ventures | -- | -- | -- | (200) |
| Additions to Property, Plant and Equipment | (3,574) | (2,477) | (6,450) | (5,188) |
| Proceeds from Sale of Property and Equipment | 13 | 31 | 21 | 61 |
| Net Cash Used in Investing Activities | (3,561) | (2,446) | (6,429) | (5,327) |
| Cash Flow from Financing Activities: | ||||
| Borrowings on Line of Credit Facility | -- | 750 | 750 | 2,250 |
| Dividends Paid to Non-Controlling Interest of Subsidiary | -- | -- | (984) | (1,131) |
| Dividends Paid | (384) | (352) | (764) | (688) |
| Exercise of Stock Options and Employee Stock Purchases | 691 | 52 | 789 | 71 |
| Net Cash Provided by (Used in) Financing Activities | 307 | 450 | (209) | 502 |
| Effect of Foreign Currency Fluctuations on Cash | (71) | 18 | (48) | (69) |
| Net Increase in Cash & Cash Equivalents | 7,582 | 2,295 | 81 | 1,082 |
| Cash and Cash Equivalents: | ||||
| Beginning of Period | 12,806 | 16,274 | 20,307 | 17,487 |
| End of Period | $20,388 | $18,569 | $20,388 | $18,569 |