STRATTEC Security Corporation Reports 9.6% Net Sales Increase in Q2 Fiscal 2025

STRATTEC Security Corporation reported its financial results for the second quarter and first half of fiscal 2025, revealing a net sales increase of 9.6% to $129.9 million for the three months ended December 29, 2024, compared to $118.5 million in the same period last year. For the first half of the fiscal year, net sales reached $269.0 million, up 5.9% from $253.9 million in the prior year. The company attributed this growth to new program launches and increased production volumes, despite a reduction in pricing due to prior year one-time recoveries.

The company's gross profit for the second quarter was $17.2 million, reflecting a gross margin improvement from 11.4% to 13.2% year-over-year. This increase was driven by higher sales volumes and favorable foreign currency exchange rates, which offset rising material and labor costs. Engineering, selling, and administrative expenses rose to $15.0 million, primarily due to investments in business transformation and increased compensation expenses. The net income attributable to STRATTEC for the second quarter was $1.3 million, compared to $1.0 million in the prior year.

In terms of operational metrics, STRATTEC's cash and cash equivalents increased significantly to $42.6 million as of December 29, 2024, up from $25.4 million at the end of the previous fiscal year. The company reported a net cash provided by operating activities of $20.8 million for the first half of fiscal 2025, a notable recovery from a cash use of $6.9 million in the same period last year. The improvement was attributed to better working capital management and increased sales.

Strategically, STRATTEC is undergoing a leadership transition and is focused on enhancing profitability and sustainable sales growth. The company is reviewing its product portfolio and optimizing its cost structure to leverage its engineering expertise and strong customer relationships. Despite challenges such as inflation and supply chain disruptions, STRATTEC anticipates modest growth in the North American automotive industry and aims to capitalize on new platforms to secure future sales growth.

Looking ahead, STRATTEC's management remains cautious about the economic environment, noting potential impacts from inflation, labor costs, and geopolitical conditions. The company is committed to improving its operational efficiencies and cash flow management while navigating the complexities of the automotive market.