STRATTEC SECURITY Reports $9.4M Cash Flow in Q2 FY2025
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, which ended on December 29, 2024.
Strong Performance and Strategic Progress
Jennifer Slater, STRATTEC’s President and CEO, emphasized that the company’s strong financial results reflect its strategic focus on stabilizing the business, optimizing costs, and leveraging engineering innovation to drive competitive advantage.
Sales growth for the quarter was primarily fueled by production trends among key customers and increased content value in certain vehicle platforms. The company also restructured its U.S. manufacturing operations, reducing the number of shifts, a move expected to result in $1.2 million in annualized savings. Additionally, STRATTEC continued to unlock value on its balance sheet by collecting on tooling investments.
Slater also highlighted the importance of talent investment in the company’s transformation journey. STRATTEC has taken steps to enhance its commercial strategies under the leadership of its new Chief Commercial Officer, who is focusing on identifying opportunities for new projects and ensuring pricing accurately reflects the value of its product offerings. A new human resources leadership team has been tasked with fostering a more engaged and open workplace culture, which is expected to spur innovation and strengthen operational execution.
In addition to these initiatives, the company is also proactively addressing potential challenges related to tariffs that may impact the industry.
FY 2025 Second Quarter Financial Summary
Revenue Growth and Sales Performance
Net sales for the second quarter of fiscal 2025 reached $129.9 million, marking an increase of $11.4 million, or 9.6%, compared to the prior-year period. The primary drivers of this growth included:
- $6.0 million from net new program launches
- $1.3 million from a more favorable product mix and higher content
- $7.3 million from increased customer inventory building and slightly higher production levels
This sales growth offset the impact of last year’s one-time pricing benefits, which totaled $3.9 million. Most of the product portfolio experienced positive sales momentum, with the exception of keys and locksets.
Profitability and Margin Expansion
Gross profit for the quarter rose by $3.7 million, reaching $17.2 million, supported by higher volumes and a $3.5 million benefit from foreign currency translation. However, these gains were partially offset by increased labor costs in Mexico, a $0.6 million bonus provision, and the absence of favorable retroactive pricing adjustments from the prior year. As a result, gross margin improved from 11.4% in the prior year to 13.2%.
Engineering, selling, and administrative expenses rose by $1.6 million, or 11.7%, totaling $15.0 million. This increase reflected continued investment in business growth initiatives, an annual bonus provision of $0.8 million, and $0.3 million in restructuring charges. Notably, no bonus provision was recorded in the prior-year period.
Operating income saw a significant improvement, increasing by $2.0 million to $2.1 million, representing 1.6% of net sales. Investment income grew by $0.3 million due to higher cash balances, though this was partially offset by a $1.4 million increase in other expenses, primarily driven by foreign currency exchange rate fluctuations.
Net income attributable to STRATTEC reached $1.3 million, up from $1.1 million in the same quarter last year. Diluted earnings per share rose to $0.32, compared with $0.26 in the prior-year period. On an adjusted basis, net income attributable to STRATTEC surged by 86% to $2.6 million, and adjusted diluted earnings per share climbed by 81% to $0.65. Adjusted EBITDA also showed strong growth, increasing to $8.0 million from $5.0 million in the prior year.
Balance Sheet and Liquidity Position
STRATTEC generated $9.4 million in operating cash flow during the second quarter of fiscal 2025, bringing year-to-date cash flow from operations to $20.8 million. Improved working capital management and the recovery of pre-production tooling costs significantly bolstered operating cash flows.
Capital expenditures for the quarter were $0.9 million, representing a decrease of $0.6 million compared to the prior-year period. The company ended the quarter with $42.6 million in cash and cash equivalents, an $8.2 million increase from the first quarter of fiscal 2025.
At the end of the quarter, STRATTEC maintained $13 million in outstanding borrowings under its joint venture revolving credit facility, unchanged from the end of fiscal 2024. The company’s total available credit under existing lines of credit stood at $47 million as of December 29, 2024, ensuring a strong liquidity position to support future growth initiatives.
Strategic Outlook and Future Priorities
STRATTEC’s leadership remains committed to executing its transformation strategy by optimizing costs, leveraging engineering innovation, and strengthening commercial execution. The company’s focus on talent development, cultural transformation, and financial discipline is expected to support long-term value creation.
Moreover, the proactive management of potential tariff challenges underscores STRATTEC’s commitment to mitigating risks while capitalizing on emerging market opportunities. With a robust balance sheet, strong liquidity, and improving profitability, the company is well-positioned to navigate industry challenges and sustain its growth trajectory.
Second Quarter Fiscal Year 2025 Webcast and Conference Call
STRATTEC will host a conference call and webcast on Friday, February 7, 2025, at 9:00 AM Eastern Time to discuss its financial and operational results for the second quarter. During the call, company executives will provide further insights into STRATTEC’s performance and ongoing transformation initiatives, followed by a Q&A session.
Investors can access the call by dialing (201) 689-8470 or by visiting STRATTEC’s investor relations website at investors.strattec.com.
A telephonic replay will be available from 12:00 PM Eastern Time on the day of the call through Friday, February 21, 2025. To listen to the replay, dial (412) 317-6671 and enter the PIN 13751178. Additionally, a webcast replay will be available on STRATTEC’s investor relations website, where a transcript of the call will be posted once available.
STRATTEC SECURITY CORPORATION delivered solid financial results in the second quarter of fiscal 2025, demonstrating the effectiveness of its strategic initiatives. With strong sales growth, margin expansion, and disciplined cost management, the company is making meaningful progress in enhancing profitability and positioning itself for long-term success. Looking ahead, STRATTEC remains focused on strengthening its market position, optimizing operations, and investing in innovation to drive continued growth.
