STRATTEC SECURITY CORPORATION Reports Fiscal Third Quarter Results
MILWAUKEE, April 12 -- STRATTEC SECURITY CORPORATION today reported operating results for the fiscal third quarter ended March 27, 2005.
Net sales for the Company's three months ended March 27, 2005 were $46.1 million, compared to net sales of $49.3 million for the three months ended March 28, 2004. Net income for the period was $3.7 million, compared to $4.4 million in the prior year quarter. Diluted earnings per share for the period were $.98 compared to $1.15 in the prior year quarter.
For the nine months ended March 27, 2005, net sales were $139.1 million compared to net sales of $143.7 million in the prior year period. Net income was $11.8 million compared to $12.6 million and diluted earnings per share were $3.07 compared to $3.30 in the prior year.
Overall sales to STRATTEC's largest customers decreased in the current quarter compared to the prior year quarter levels. Sales to DaimlerChrysler Corporation increased significantly during the current quarter to $13.1 million compared to $11.5 million due to additional product content. Sales to General Motors Corporation were $9.8 million compared to $11.9 million due to a combination of price reductions, discontinued models and lower production volumes on certain vehicles. Sales to Delphi Corporation were $6.8 million compared to $7.6 million due to pre-programmed price reductions and lower vehicle production volumes. Sales to Mitsubishi Motor Manufacturing of America were $1.1 million compared to $1.6 million due to lower vehicle production volumes. Sales to Ford Motor Company were $8.3 million compared to $8.8 million due to pre-programmed price reductions and lower vehicle production volumes. Sales to AutoAlliance International, Ford Motor Company's joint venture assembly plant with Mazda, were $667,000 in the current quarter. AutoAlliance is a new customer for STRATTEC. Reduced aftermarket and industrial sales represent the remaining decrease in the current quarter's overall sales.
Gross profit margins were 22.1 percent in the current quarter compared to 24.7 percent in the prior year quarter. The lower gross profit margins in the current year quarter were primarily the result of higher raw material costs for brass, zinc and magnesium, lower production volumes and a less favorable overall sales mix.
Operating expenses were $4.8 million in the current quarter, compared to $5.1 million in the prior year quarter.
Provision for income taxes in the current quarter includes a State refund claim recovery that positively impacted earnings per share by $.03.
During the third quarter, STRATTEC repurchased 44,800 shares of its common stock under the Company's stock repurchase program at a cost of approximately $2.6 million.
STRATTEC designs, develops, manufacturers and markets mechanical locks, electro-mechanical locks, latches, and related access control products for global automotive manufacturers. Its products are shipped to customers in the United States, Mexico, Europe and South America. The Company's history in the automotive business spans more than 95 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 costs of operations. 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)
Third Quarter Ended Nine Months Ended
March 27, March 28, March 27, March 28,
2005 2004 2005 2004
(Unaudited) (Unaudited)
Net Sales $46,102 $49,266 $139,129 $143,700
Cost of Goods Sold 35,892 37,082 106,700 108,956
Gross Profit 10,210 12,184 32,429 34,744
Engineering, Selling &
Administrative Expenses 4,822 5,132 14,836 15,033
Income from Operations 5,388 7,052 17,593 19,711
Interest Income 326 112 742 289
Interest Expense - - - -
Other Income (Expense),
Net (50) (49) 109 237
5,664 7,115 18,444 20,237
Provision for Income
Taxes 1,933 2,668 6,662 7,589
Net Income $3,731 $4,447 $11,782 $ 12,648
Earnings Per Share:
Basic $ .98 $1.17 $3.10 $3.35
Diluted $ .98 $1.15 $3.07 $3.30
Average Basic
Shares Outstanding 3,798 3,802 3,803 3,775
Average Diluted
Shares Outstanding 3,815 3,873 3,836 3,838
Other
Capital Expenditures $1,435 $528 $3,455 $3,550
Depreciation &
Amortization $1,759 $1,883 $5,440 $5,842
STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
March 27, 2005 June 27, 2004
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $51,357 $54,231
Receivables, net 28,793 30,931
Inventories 11,759 8,361
Other current assets 9,943 10,903
Total Current Assets 101,852 104,426
Investment in Joint Venture 1,349 1,336
Prepaid Pension Obligation 605 -
Property, Plant and Equipment, Net 29,327 31,428
$133,133 $137,190
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $16,409 $18,787
Other 13,852 16,497
Total Current Liabilities 30,261 35,284
Borrowings Under Revolving Credit Facility - -
Deferred Income Taxes 543 543
Accrued Pension and Post Retirement Obligations 5,096 11,511
Shareholders' Equity 216,874 200,713
Accumulated Other Comprehensive Loss (5,348) (5,385)
Less: Treasury Stock (114,293) (105,476)
Total Shareholders' Equity 97,233 89,852
$133,133 $137,190