Strattec posts $147.2 million in first-quarter sales as earnings decline
Key Facts
Strattec reported results on October 29 for the first quarter of its fiscal 2027, which ended September 27, posting net sales of $147.2 million. Sales declined $5.2 million, or 3%, from the year-earlier period. The company said lower customer production volumes reduced sales by $6.2 million, while price increases offset the impact by $1 million. The results show simultaneous declines in revenue and profitability from a year earlier, as the company continues to report the effect of its transformation measures on margins. Management was scheduled to hold a conference call the day after the results announcement to review them and update investors on transformation progress.
Net income attributable to Strattec was $4.8 million, or $1.19 per diluted share, compared with $8.5 million and $2.07 per share a year earlier. On an adjusted basis, net income was $7.5 million, or $1.85 per diluted share, versus $9.2 million and $2.22 per share in the year-earlier period. Adjusted EBITDA fell to $13.5 million from $15.6 million a year earlier. Its margin also declined to 9.2% from 10.2%. Chief Executive Jennifer Slater said transformation efforts enabled the company to achieve an adjusted margin of 9.2% on sales of $147.2 million, and pointed to measures in its Mexico operations expected to generate annual savings of $1.3 million.
Gross profit was $24.3 million, compared with $26.3 million in the year-earlier period, and gross margin contracted 80 basis points year over year to 16.5%. It improved, however, from 15.6% in the fourth quarter of fiscal 2026, despite lower first-quarter sales. The company attributed the pressures to lower volumes, higher premium freight and annual wage increases, whose effects outweighed pricing, restructuring savings, lower overhead and an improved product mix. Restructuring savings were $0.9 million, while lower overhead and a better mix had a positive effect. The company added that unfavorable foreign exchange rates reduced margin by 90 basis points, with a financial impact of $1.4 million.
Selling, administrative and engineering expenses rose to $17.9 million, or 12.2% of sales, from $15.9 million and 10.4% a year earlier. The company said the increase included $2.4 million in business development expenses, primarily related to acquisition-driven growth opportunities. This is consistent with its fiscal 2026 annual report, which said it had begun evaluating strategic acquisitions that could broaden its reach, diversify its customer base, expand its product portfolio or strengthen its capabilities. The company said in the report that it would continue to evaluate opportunities based on their strategic and financial merits. It also noted that the cyclical and evolving nature of the automotive industry underscores the importance of building a larger company with a broader customer base and a more diversified range of products and programs.
Operations generated $10.8 million in cash during the quarter, compared with $11.3 million a year earlier. The company repurchased 67,904 shares for $5 million, with $35 million remaining available under its buyback authorization. On September 27, cash and cash equivalents totaled $111.8 million, compared with $108.2 million at the end of fiscal 2026, and the company had no debt. The figures put share repurchases alongside available liquidity as the company recorded annual declines in sales and income. The conference call and webcast were scheduled for October 30 at 8:00 a.m. Central Time to review results and transformation progress, with a telephone replay available through November 13. STRT shares closed at $64.38 on October 29.