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Strattec Security Corp. (STRT) filed Quarterly Report for the period ended 2011-03-27.
Strattec Security Corp. has a market cap of $90.8 million; its shares were traded at around $27.62 with a P/E ratio of 19.7 and P/S ratio of 0.4.
This is the annual revenues and earnings per share of STRT over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of STRT.
Highlight of Business Operations:
Net sales for the three months ended March 27, 2011 were $65.7 million compared to net sales of $52.9 million for the three months ended March 28, 2010. Sales to our largest customers overall increased in the current quarter compared to the prior year quarter levels primarily due to higher customer vehicle production volumes. Higher value content on certain new products also contributed to the net sales improvement. Sales to Chrysler Group LLC were $21.6 million in the current quarter compared to $17.0 million in the prior year quarter. Sales to General Motors Company were $14.8 million in the current quarter compared to $13.5 million in the prior year quarter. Included in the prior year sales to General Motors were $1.7 million of sales to Nexteer Automotive, which was a unit of General Motors until November 30, 2010. Sales to Ford Motor Company increased to $7.0 million in the current quarter compared to $4.5 million in the prior year quarter. Sales to Hyundai/Kia were $4.0 million in the current quarter compared to $2.8 million in the prior year quarter. In the current quarter, net sales were reduced by $650,000 resulting from an adjustment for customer price concessions. Also, in the prior year quarter historical customer pricing issues were resolved which increased our net sales in that period by approximately $1.2 million.
Gross profit as a percentage of net sales was 13.9 percent in the current quarter compared to 16.8 percent in the prior year quarter. The lower gross profit margin in the current quarter was primarily the result of a combination of the $650,000 adjustment for customer price concessions noted above and $1.15 million in costs related to our share of the cost associated with a customer’s specific warranty claim involving one of our products. Also impacting the current quarter were higher purchased raw material costs for zinc and brass along with an unfavorable U.S. dollar exchange rate affecting the U.S. dollar cost of our Mexican operations. The prior year quarter was also unfavorably impacted by the recording of a $1.2 million warranty reserve. Historically, we had experienced relatively low warranty charges from our customers due to our contractual arrangements and improvements in the quality, reliability and durability of our products. More recently, our largest customers extended their warranty protection for their vehicles and are also demanding higher warranty cost sharing arrangements from suppliers. The prior year quarter warranty provisions included additional accruals to address the warranty exposure related to the demand for higher warranty cost sharing. The average zinc price paid per pound increased to $1.03 in the current quarter from $0.94 in the prior year quarter. During the current quarter we used approximately 2.5 million pounds of zinc. This resulted in increased zinc costs of approximately $235,000 in the current quarter as compared to the prior year quarter. The average brass price paid per pound increased to $4.09 in the current quarter from $3.40 in the prior year quarter. During the current quarter we used approximately 228,000 pounds of brass. This resulted in increased brass costs of approximately $158,000 in the current quarter as compared to the prior year quarter. The average U.S. dollar/Mexican peso exchange rate decreased to approximately 12.17 pesos to the dollar in the current quarter from approximately 12.84 pesos to the dollar in the prior year quarter. This resulted in increased U.S. dollar costs related to our Mexican operations of approximately $435,000 in the current year quarter compared to the prior year quarter.
Net sales for the nine months ended March 27, 2011 were $186.7 million compared to net sales of $146.6 million for the nine months ended March 28, 2010. Sales to our largest customers overall increased in the current period compared to the prior year period levels due to higher customer vehicle production volumes. Higher value content on certain new products also contributed to the net sales improvement. Sales to Chrysler Group LLC were $58.8 million in the current period compared to $46.3 million in the prior year period. Sales to General Motors Company were $46.1 million in the current period compared to $35.8 million in the prior year period. Sales to Ford Motor Company increased to $18.6 million in the current period compared to $13.4 million in the prior year period. Sales to Hyundai/Kia were $11.8 million in the current period compared to $10.1 million in the prior year period. In the current year period, net sales were reduced by $650,000 resulting from an adjustment for customer price concessions. In the prior year period historical customer pricing issues were resolved which increased our net sales during that period by approximately $1.2 million. The pricing issues related to a specific vehicle program and were fully resolved as of the end of the prior year period.
Gross profit as a percentage of net sales was 15.7 percent in the current period compared to 15.9 percent in the prior year period. The current year period impact to the gross margin from favorable customer vehicle production volumes which resulted in more favorable absorption of fixed manufacturing costs and reduced premium freight and overtime costs as compared to the prior year period, were offset by a combination of the $650,000 adjustment for customer price concessions noted above and $1.15 million in costs related to our share of costs associated with a customer’s specific warranty claim involving one of our products. Also impacting the current quarter were higher purchased raw material costs for zinc and brass along with an unfavorable Mexico Peso to U.S. dollar exchange rate affecting the U.S. dollar cost of our Mexican operations and increased expense provisions of approximately $414,000 for the accrual of bonuses under our Economic Value Added (EVA®) Incentive Bonus Plans. The average brass price paid per pound increased to $3.86 in the current period from $3.22 in the prior year period. During the current period, we used approximately 748,000 pounds of brass. This resulted in increased brass costs of approximately $480,000 in the current period compared to the prior year period. The average zinc price paid per pound decreased to $1.00 in the current period from $1.04 in the prior year period. During the current period, we used approximately 7.5 million pounds of zinc. This resulted in decreased zinc costs of approximately $280,000 in the current period compared to the prior year period. The average U.S. dollar/Mexican peso exchange rate decreased to approximately 12.45 pesos to the dollar in the current year period from approximately 13.08 pesos to the dollar in the prior year period. This resulted in increased U.S. dollar costs related to our Mexican operations of approximately $1.2 million in the current year period compared to the prior year period.
Net other expense was $101,000 in the current period compared to net other income of $327,000 in the prior year period. This change was primarily due to decreased Rabbi Trust gains in the current period as compared to the prior year period, an increase in transaction losses resulting from foreign currency transactions entered into by our Mexican subsidiaries in the current period compared to the prior year period, and an unrealized loss of $114,000 in the current period on outstanding peso option contracts, which were entered into in January 2011 to minimize our earnings volatility resulting from changes in exchange rates affecting the U.S. dollar cost of our Mexican operations. The Rabbi Trust funds our supplemental executive retirement plan. Gains related to the Rabbi Trust totaled $343,000 in the current period compared to $454,000 in the prior year period. The investments held in the Trust are considered trading securities. Foreign currency transaction losses totaled $558,000 in the current period compared to $324,000 in the prior year period.
The VAST LLC investments are accounted for using the equity method of accounting. The activities related to the VAST LLC joint ventures resulted in equity earnings of joint ventures to STRATTEC of approximately $1.0 million during the nine months ended March 27, 2011 and approximately $639,000 during the nine months ended March 28, 2010. During the nine months ended March 27, 2011, capital contributions totaling $450,000 were made to VAST LLC in support of general operating expenses. STRATTEC’s portion of the capital contributions totaled $150,000. During the nine months ended March 28, 2010, capital contributions totaling $300,000 were made to VAST LLC in support of general operating expenses. STRATTEC’s portion of the capital contributions totaled $100,000.
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