Outlook for Q3 and Reports Full-Year 2025
STRATTEC SECURITY CORPORATION , a leading provider of smart vehicle access, security, and authorization solutions for the global automotive industry, has announced its financial results for the second quarter of fiscal year 2025, ending December 29, 2024.
Jennifer Slater, STRATTEC’s President and CEO, emphasized that the company’s solid financial performance reflects a strong focus on stabilizing operations, optimizing costs, and leveraging engineering innovations to capture new market opportunities. The sales growth observed during the quarter was largely driven by production trends among key customers, especially on platforms where STRATTEC provides high-value content.
In a strategic move to strengthen earnings, the company restructured its U.S. manufacturing operations by reducing the number of shifts, a decision projected to save approximately $1.2 million annually. Additionally, STRATTEC improved its balance sheet by successfully recovering investments tied to tooling projects.
Ms. Slater highlighted that talent development is critical to the company’s transformation. Investments in human capital continued this quarter, with the appointment of a new Chief Commercial Officer tasked with identifying growth opportunities and optimizing pricing strategies. The company is fostering a more open and dynamic culture, supported by new leadership in human resources, aimed at enhancing employee engagement and creativity. The financial leadership team has also been strengthened to align with STRATTEC’s strategic objectives.
Moreover, STRATTEC is proactively addressing potential challenges posed by tariffs, ensuring the company remains resilient amid shifting global trade dynamics.
Fiscal Year 2025 Second Quarter Financial Summary
Compared to the same period last year, net sales reached $129.9 million, Reports marking an increase of $11.4 million or 9.6%. This growth was fueled by $6.0 million from new program launches and $1.3 million from enhanced content and product mix. Additionally, net sales on existing platforms rose by $7.3 million, driven by customer inventory builds, slightly higher production levels, and reduced customer plant shutdowns compared to the previous year.
This sales growth more than offset the prior year’s one-time pricing benefits totaling $3.9 million. Growth Reports was observed across most product categories, except for keys and locksets.
Gross profit increased by $3.7 million, reaching $17.2 million, benefiting from higher sales volumes and a $3.5 million gain from favorable foreign currency translations. These gains were somewhat offset by increased labor costs in Mexico, a $0.6 million bonus provision, and retroactive pricing adjustments from the prior year. The gross margin improved to 13.2%, up from 11.4% in the previous year.
Engineering, selling, and administrative expenses rose by $1.6 million, or 11.7%, totaling $15.0 million. This increase reflects ongoing investments in business growth, Reports a $0.8 million annual bonus provision, and $0.3 million in restructuring charges. Notably, no bonus provision was recorded in the same period last year.
Operating income increased by $2.0 million, reaching $2.1 million, representing 1.6% of net sales. Investment income rose by $0.3 million due to higher cash balances, while foreign currency exchange fluctuations resulted in a $1.4 million increase in other expenses. Net income attributable to STRATTEC grew to $1.3 million, up from $1.1 million in the previous year.
Diluted earnings per share were $0.32, compared to $0.26 last year. On an adjusted basis, net income attributable to STRATTEC grew by 86% to $2.6 million. Adjusted diluted earnings per share increased by $0.29, or 81%, reaching $0.65. Adjusted EBITDA for the quarter was $8.0 million, compared to $5.0 million in the prior-year period.
Balance Sheet and Liquidity
STRATTEC generated $9.4 million in cash flow from operations in the second quarter of fiscal 2025, bringing the year-to-date total to $20.8 million. This improvement was driven by effective working capital management and the recovery of pre-production tooling costs.
Capital expenditures during the quarter were $0.9 million, reflecting a decrease of $0.6 million compared to the same period last year. As of December 29, 2024, the company held $42.6 million in cash and cash equivalents, an increase of $8.2 million from the end of the first fiscal quarter.
STRATTEC maintained $13 million in outstanding borrowings under its joint venture revolving credit facility, consistent with the end of fiscal 2024. The total availability under existing credit lines was $47 million as of December 29, 2024.
