STRATTEC's Q1 Net Income Soars 130% on Strong Sales Growth

TL;DR

**STRT is firing on all cylinders, with net income exploding 130% – buy the dip if you can find one.**

AI Summary

STRATTEC SECURITY CORP (STRT) reported a significant financial improvement for the three months ended September 28, 2025, with net sales increasing by 9.6% to $152.4 million from $139.1 million in the prior year. Net income attributable to Strattec more than doubled, surging by 130.3% to $8.5 million, compared to $3.7 million in the same period last year. This led to a diluted EPS of $2.07, a substantial increase from $0.92. Gross profit saw a robust rise of 39.2% to $26.3 million, up from $18.9 million, while income from operations jumped 106.3% to $10.4 million. The company also refinanced its $40 million Strattec Credit Facility, extending its maturity to October 2028 with a new SOFR plus 1.50% margin. Cash and cash equivalents increased to $90.5 million from $84.6 million at June 29, 2025, demonstrating strong liquidity. Key risks include an uncertain economic environment, inflationary conditions, and potential supply chain disruptions, particularly regarding semiconductor chips.

Why It Matters

STRT's impressive Q1 performance, with net income more than doubling, signals strong operational execution and demand for its automotive access and security products, particularly from North American OEMs. This robust growth could attract new investors and potentially lead to increased shareholder value. For employees, sustained profitability might translate into job security and future growth opportunities. Customers benefit from a financially stable supplier, ensuring continued product innovation and reliability in a competitive automotive market. The company's ability to navigate inflationary pressures and supply chain challenges, as evidenced by its improved gross profit, positions it favorably against competitors in the evolving automotive technology landscape.

Risk Assessment

Risk Level: medium — The risk level is medium due to STRT's significant reliance on the cyclical automotive industry and major North American OEMs, as highlighted in the 'Special Note Regarding Forward-Looking Statements'. While current results are strong, the filing explicitly mentions risks like 'an uncertain economic environment and inflationary conditions coupled with the cyclical nature of the automotive industry may adversely affect global vehicle production and demand for our products' and 'future shortages in the supply of semiconductor chips'. These external factors, largely beyond the company's control, could quickly reverse positive trends.

Analyst Insight

Investors should consider STRT's strong Q1 results as a positive indicator of operational efficiency and market demand. Given the 130% surge in net income and improved liquidity with $90.5 million in cash, a deeper dive into its long-term growth strategy and competitive advantages is warranted. Monitor future filings for sustained growth and management's commentary on mitigating automotive industry cyclicality and supply chain risks.

Financial Highlights

revenue

$152.4M

operating Margin

6.86%

total Assets

$290.1M

net Income

$8.5M

eps

$2.07

gross Margin

17.28%

cash Position

$90.5M

revenue Growth

+9.6%

Key Numbers

• $152.4M — Net Sales (Increased 9.6% from $139.1M in Q1 2024)
• $8.5M — Net Income Attributable to Strattec (Increased 130.3% from $3.7M in Q1 2024)
• $2.07 — Diluted EPS (Increased from $0.92 in Q1 2024)
• $26.3M — Gross Profit (Increased 39.2% from $18.9M in Q1 2024)
• $10.4M — Income from Operations (Increased 106.3% from $5.1M in Q1 2024)
• $90.5M — Cash and Cash Equivalents (Increased from $84.6M at June 29, 2025)
• $40M — Revolving Credit Facility (Refinanced with maturity extended to October 2028)
• 7.4% — Weighted Average Interest Rate (For ADAC-Strattec Credit Facility, down from 8.5% in Q1 2024)

Key Players & Entities

• STRATTEC SECURITY CORP (company) — Registrant and leading global manufacturer
• BMO Harris Bank N.A. (company) — Lender for credit facilities
• SEC (regulator) — Securities and Exchange Commission
• $152,399 (dollar_amount) — Net sales for the three months ended September 28, 2025
• $139,052 (dollar_amount) — Net sales for the three months ended September 29, 2024
• $8,529 (dollar_amount) — Net income attributable to Strattec for the three months ended September 28, 2025
• $3,703 (dollar_amount) — Net income attributable to Strattec for the three months ended September 29, 2024
• $2.07 (dollar_amount) — Diluted earnings per share for the three months ended September 28, 2025
• $0.92 (dollar_amount) — Diluted earnings per share for the three months ended September 29, 2024
• $90,473 (dollar_amount) — Cash and cash equivalents as of September 28, 2025

FAQ

Risk Factors

• Uncertain Economic Environment and Automotive Cyclicality [high — market]: An uncertain economic environment and inflationary conditions, coupled with the cyclical nature of the automotive industry, may adversely affect global vehicle production and demand for STRATTEC's products. This could lead to reduced sales and profitability.
• Supply Chain Disruptions and Component Shortages [high — operational]: Delays and restrictions impacting the import of goods and components, particularly semiconductor chips, can negatively affect business operations. Heightened security procedures or changes in U.S.-Mexico border crossing policies can also cause disruptions.
• Labor Costs and Skilled Labor Shortages [medium — operational]: Labor cost inflation or unionization efforts in Mexico, along with a shortage of skilled laborers in the United States, could increase manufacturing expenses and impact production efficiency.
• Competitive Market and Evolving Technology [medium — market]: STRATTEC operates in a highly competitive market where technological developments are rapidly evolving. Failure to keep pace with these advancements could lead to a loss of market share.
• Customer Purchasing Actions and Warranty Provisions [medium — financial]: Changes in customer purchasing actions, warranty provisions, and product recall policies could adversely affect the company's business, results of operations, and financial condition.
• Work Stoppages and Labor Disputes [medium — operational]: Work stoppages within STRATTEC's operations or at key customer locations due to labor disputes could adversely impact business operations and financial results.
• Tariffs and International Trade Policies [low — market]: Changes in tariffs or international trade policies could adversely affect results, particularly for goods imported into the United States or produced under trade agreements like the USMCA.

Industry Context

STRATTEC operates within the highly competitive automotive parts industry, which is characterized by rapid technological evolution and cyclical demand tied to global vehicle production. Key challenges include managing supply chain complexities, particularly for electronic components like semiconductor chips, and navigating an uncertain economic environment with inflationary pressures.

Regulatory Implications

STRATTEC must comply with various trade policies and tariffs, which can impact the cost of imported goods and the competitiveness of its products. Changes in U.S.-Mexico border crossing policies could also affect supply chain logistics and operational efficiency, requiring proactive management of cross-border operations.

What Investors Should Do

1. Monitor supply chain resilience and management strategies.
2. Evaluate the impact of economic conditions on automotive demand.
3. Assess the company's debt management and liquidity.
4. Track competitive positioning and technological innovation.

Key Dates

• 2025-09-28: End of Q1 2025 fiscal period — Reported significant financial improvements, including a 9.6% increase in net sales and a 130.3% surge in net income.
• 2025-10-01: Credit Facility Maturity Extension — STRATTEC refinanced its $40 million credit facility, extending the maturity to October 2028, providing long-term financial flexibility.
• 2025-06-29: End of Q4 2024 fiscal period — Cash and cash equivalents stood at $84.6 million, serving as a baseline for the current period's increase.
• 2024-09-29: End of Q1 2024 fiscal period — Reported net sales of $139.1 million and net income of $3.7 million, providing a comparison for the current period's strong performance.

Glossary

Diluted EPS

Earnings per share calculated by dividing net income by the total number of outstanding shares, including all dilutive potential common shares. (Indicates the profitability per share on a fully diluted basis, showing a significant increase to $2.07 from $0.92.)

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. (Demonstrates the company's efficiency in production and cost management, with a substantial increase to $26.3 million.)

Income from Operations

A company's profit before interest and taxes, calculated by subtracting operating expenses from gross profit. (Measures the profitability of the company's core business operations, showing a strong increase to $10.4 million.)

SOFR

Secured Overnight Financing Rate, a benchmark interest rate for U.S. dollar-denominated derivatives and loans. (The new credit facility is priced at SOFR plus a margin, indicating the benchmark rate used for its debt.)

Non-controlling interest

The portion of equity ownership in a subsidiary that is not attributable to the parent company. (Reflects the portion of net income and comprehensive income belonging to minority shareholders in consolidated subsidiaries.)

Comprehensive Income

The total change in equity from non-owner sources, including net income and other comprehensive income (OCI) items like currency translation adjustments. (Provides a broader view of the company's financial performance beyond just net income, showing a significant increase to $9.2 million attributable to Strattec.)

Year-Over-Year Comparison

STRATTEC SECURITY CORP has demonstrated a significant turnaround in its most recent filing compared to the prior year. Net sales increased by 9.6% to $152.4 million, while net income attributable to Strattec more than doubled, surging by 130.3% to $8.5 million. This robust performance is reflected in a substantial increase in diluted EPS to $2.07 from $0.92. Gross profit and income from operations also saw significant gains of 39.2% and 106.3%, respectively, indicating improved operational efficiency and profitability. The company also strengthened its financial position by refinancing its credit facility and increasing its cash reserves.

Key Financial Figures

• $0.01 — ticable date. Common stock, par value $0.01 per share: 4,185,271 shares outstanding

Filing Documents

• strt-20250928.htm (10-Q) — 1480KB
• strt-ex10_1.htm (EX-10.1) — 5KB
• strt-ex10_2.htm (EX-10.2) — 31KB
• strt-ex10_3.htm (EX-10.3) — 34KB
• strt-ex31_1.htm (EX-31.1) — 16KB
• strt-ex31_2.htm (EX-31.2) — 15KB
• strt-ex32.htm (EX-32) — 14KB
• 0001193125-25-260138.txt ( ) — 6932KB
• strt-20250928.xsd (EX-101.SCH) — 1080KB
• strt-20250928_htm.xml (XML) — 1082KB

Financial Statements

Financial Statements 4 Condensed Consolidated Statement of Income (Unaudited) 4 Condensed Consolidated Statement of Comprehensive Income (Unaudited) 5 Condensed Consolidated Balance Sheets (Unaudited) 6 Condensed Consolidated Statements of Cash Flows (Unaudited) 7 Condensed Consolidated Statements of Shareholders' Equity (Unaudited) 8 Notes to Condensed Consolidated Financial Statements (Unaudited) 9 ITEM 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 16 ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 19 ITEM 4.

Controls and Procedures

Controls and Procedures 19

OTHER INFORMATION

Part II. OTHER INFORMATION ITEM 1.

Legal Proceedings

Legal Proceedings ITEM 1A.

Risk Factors

Risk Factors 20 ITEM 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 20 ITEM 3. Defaults Upon Senior Securities 21 ITEM 4. Mine Safety Disclosures 21 ITEM 5. Other Information 21 ITEM 6. Exhibits 21 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS In this Quarterly Report on Form 10-Q for Strattec Security Corporation ("Strattec," "the Company," "we," "us," or "our"), statements that are not reported financial results or other historic information are "forward-looking statements." These forward-looking statements relate to, among other things, the Company's future financial position, business strategy, targets, projected sales, costs, income, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations. The use of words such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "should," "project" or "plan" or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors, some of which are beyond the Company's control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. The Company's operations and financial performance are subject to certain risks and uncertainties, including: an uncertain economic environment and inflationary conditions coupled with the cyclical nature of the automotive industry may adversely affect global vehicle production and demand for our products; we operate in a highly competitive market and technological developments within our sphere of offerings are rapidly evolving; changes in customer purchasing actions, warranty provisions and product recall policies could adversely affect our business, results of operations and finan

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION I TEM 1. FINANCIAL STATEMENTS STRATTEC SECURITY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands, except per share amounts) Three Months Ended September 28, 2025 September 29, 2024 Net sales $ 152,399 $ 139,052 Cost of goods sold 126,064 120,131 Gross profit 26,335 18,921 Selling, administrative and engineering expenses 15,888 13,858 Income from operations 10,447 5,063 Interest income 877 349 Interest expense ( 156 ) ( 295 ) Other (expense) income, net ( 275 ) 129 Income before income taxes and non-controlling interest 10,893 5,246 Income tax expense 2,356 1,498 Net income 8,537 3,748 Net income attributable to non-controlling interest 8 45 Net income attributable to Strattec $ 8,529 $ 3,703 Earnings per share attributable to Strattec Basic $ 2.10 $ 0.92 Diluted $ 2.07 $ 0.92 Weighted average shares outstanding: Basic 4,054 4,005 Diluted 4,127 4,046 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements 4 STRATTEC SECURITY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (in thousands) Three Months Ended September 28, 2025 September 29, 2024 Net income $ 8,537 $ 3,748 Other comprehensive income (loss), net of tax: Currency translation adjustments 1,013 ( 2,760 ) Pension and postretirement plans 32 256 Total other comprehensive income (loss), net of tax 1,045 ( 2,504 ) Comprehensive income 9,582 1,244 Comprehensive income (loss) attributable to non-controlling interest 393 ( 1,044 ) Comprehensive income attributable to Strattec $ 9,189 $ 2,288 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements 5 STRATTEC SECURITY CORPORATION AND SUBSIDIARI

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