Strattec Security Corporation Announces Second Quarter Results
16 January 1998
Strattec Security Corporation Reports Fiscal Second Quarter Results and Announces QS-9000 Registration
MILWAUKEE, Jan. 15 -- STRATTEC SECURITY CORPORATION
today reported operating results for the fiscal second quarter
and six months ending December 28, 1997.
Net sales for the three months ended December 28, 1997 were $49.7 million,
an increase of 31 percent compared to net sales of $37.9 million for the three
months ended December 29, 1996. Net income was $3.4 million, compared to
$2.6 million in the prior year quarter. Basic earnings per share for the
three months ended December 28, 1997, were $.60 compared to $.45 in the prior
year quarter. As previously announced by the Company, a pre-tax charge of
$750,000 ($473,000 after tax or $.08 per share) was included in the operating
results for the December 28, 1997 quarter as a result of initial cash payments
to its represented employees upon ratification of a new collective bargaining
agreement. The new collective bargaining agreement is in effect through May
31, 2001, and provided for a cash payment of $1,300 to each represented
employee in November 1997, and provides for wage increases of 2 percent
effective January 1, 1999 and 3 percent effective January 1, 2000.
For the six months ended December 28, 1997, net sales were $92.6 million,
an increase of 25 percent compared to net sales of $74.1 million in the prior
year period. Net income was $5.8 million compared to $3.8 million and basic
earnings per share were $1.02 compared to $.66.
Sales to all three of STRATTEC's largest customers increased in the
current quarter compared to the prior year levels, with General Motors
Corporation increasing $9.3 million or 61 percent, Chrysler Corporation
increasing $2.9 million or 57 percent and Ford Motor Company increasing
$1.3 million or 11 percent. This sales growth was due to higher value
mechanical and electro-mechanical content, and continued strong production
levels of the vehicles STRATTEC supplies. In addition, prior year sales to
General Motors had been negatively affected by labor disruptions at their
operations.
Gross profit margins were 20.4 percent in the current quarter compared to
22.5 percent in the prior year quarter. The $750,000 charge relating to
ratification of a collective bargaining agreement reduced the gross profit
margin by 1.5 percentage points in the current quarter. The market cost of
zinc, the company's primary raw material, continued to decline in the current
quarter but remained significantly above the prior year levels after
increasing dramatically over the previous 12 months, with a resulting negative
affect on gross profit margins.
Operating expenses were $4.7 million in the current quarter, compared to
$4.4 million in the prior year quarter. Engineering expenses in support of
current and future programs increased approximately $300,000, accounting for
the increase.
STRATTEC also announced that effective December 19, 1997 it achieved
QS-9000 and ISO 9001 compliance certification. QS-9000 is an automotive
quality requirement established by the Big Three North American Automotive
Manufacturers to promote continuous improvement and customer satisfaction.
QS-9000 is based upon the internationally recognized ISO 9000 standards.
Harold M. Stratton II, President and Chief Executive Officer, commented,
"It is very gratifying to have achieved QS certification, reflecting a
significant organizational commitment and effort over the past 18 months. We
will continue to drive continuous improvement to ensure our customer
satisfaction and ongoing compliance with QS requirements, as well as enhance
shareholder value."
He continued, "The operating results experienced in the second quarter are
indicative of strong sales gains from continuing content expansion and
aggressive customer build schedules. We were able to effectively meet our
customers' requirements during the first half of the fiscal year and are well
positioned to fulfill their requirements in the second half. However, we do
not anticipate sales gains to continue at the same level as the most recent
quarter, due to a relatively slow ramp up of customer production after the
Christmas holidays, and more challenging comparisons to the prior year's
strong sales levels."
STRATTEC SECURITY CORPORATION designs, develops, manufactures and markets
mechanical locks, electro-mechanical locks and related security products for
North American and select European automotive manufacturers.
Forward looking statements in this release are subject to many
uncertainties in the Company's operations and business environment. These
uncertainties include general economic conditions, demand for the Company's
products and costs of operations. 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)
(Unaudited)
Three Months Ended Six Months Ended
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
1997 1996 1997 1996
Net Sales $49,722 $37,926 $92,590 $74,140
Cost of Goods Sold 39,580 29,398 73,960 59,359
Gross Profit 10,142 8,528 18,630 14,781
Engineering, Selling &
Administrative Expenses 4,741 4,356 9,388 8,518
Income from Operations 5,401 4,172 9,242 6,263
Interest Expense (7) (57) (19) (137)
Other Income, Net 59 73 40 14
5,453 4,188 9,263 6,140
Provision for
Income Taxes 2,020 1,590 3,432 2,341
Net Income $ 3,433 $ 2,598 $ 5,831 $ 3,799
Earnings Per Share:
Basic $ .60 $ .45 $ 1.02 $ .66
Diluted $ .59 $ .45 $ 1.00 $ .65
Average Basic
Shares Outstanding 5,716 5,737 5,696 5,762
SOURCE Strattec Security Corporation