Strattec — First Quarter Fiscal 2027 Earnings Summary

Financial Performance:

• Net sales were $147.2 million, a 3% decrease from $152.4 million in the prior-year period; lower customer production volumes reduced sales by $6.2 million, partially offset by $1.0 million in pricing.
• Gross profit was $24.3 million compared to $26.3 million in the prior year; gross margin contracted 80 basis points to 16.5% (from 17.3%), impacted by unfavorable foreign currency exchange rates ($1.4 million, 90 basis points), elevated premium freight, and labor cost increases, offset by pricing, restructuring savings, and better mix.
• Selling, administrative, and engineering (SAE) expenses were $17.9 million (12.2% of sales) compared to $15.9 million (10.4% of sales); excluding $2.4 million in business development expenses, adjusted SAE was $15.0 million (10.2% of sales).
• Net income attributable to Strattec was $4.8 million ($1.19 diluted share) compared to $8.5 million ($2.07 diluted share) in the prior year.
• Adjusted net income was $7.5 million ($1.85 diluted share) compared to $9.2 million ($2.22 diluted share) in the prior year.
• Adjusted EBITDA was $13.5 million (9.2% of sales) compared to $15.6 million (10.2% of sales) in the prior year.
• Cash provided by operating activities was $10.8 million compared to $11.3 million in the prior year.
• The effective tax rate was 26.2% compared to 21.6% in the prior year, primarily due to discrete tax items.
• Net income attributable to non-controlling interest was $0.5 million compared to less than $0.1 million in the prior year.

Guidance and Future Outlook:

• Management expects actions taken in Mexico operations to generate $1.3 million in annualized savings.
• Management identifies meaningful opportunities to reduce costs through supply chain improvements and automation to support margin improvement.
• The company maintains an active acquisition funnel to diversify customers and geographies, increase scale, and enhance product offerings within Permission, Motion, and Hold segments.
• Additional acquisition-related expenses may be incurred in subsequent periods depending on the progress of acquisition activities.

Business Segments and Product Lines:

• The company's portfolio spans Permission (secure vehicle entry), Motion (powered access), and Hold (precision-engineered latching solutions).
• Transformation efforts included targeted operational initiatives and actions in Mexico operations.
• Sequential gross margin improved from 15.6% in Q4 fiscal 2026 to 16.5% in Q1 fiscal 2027.

Market and Competitive Landscape:

• Strattec aims to expand market share, diversify customers and geographic reach, and become the most trusted access partner in global automotive and mobility markets.
• The company faces headwinds from lower customer production volumes and unfavorable foreign currency exchange rates.

Risks and Challenges:

• Forward-looking statements highlight risks including general economic conditions, automotive industry demand, competitive and technological developments, customer purchasing actions, warranty provisions, labor disputes, foreign currency fluctuations, U.S. trade policies, tariffs, component part availability, and acquisition integration risks.

Management Commentary and Tone:

• Jennifer Slater, President and CEO, stated that financial results demonstrate the impact of transformation efforts, enabling a 9.2% adjusted EBITDA margin.
• Management expressed confidence that the strong balance sheet provides flexibility to invest in the business, return capital to shareholders, and pursue strategic growth.
• Management noted continued progress with the transformation as evidenced by sequential gross margin improvement.

Other Key Points:

• The company generated $10.8 million in cash from operations in the quarter.
• At quarter end, the company held $111.8 million in cash and cash equivalents with no debt.
• During the quarter, the company repurchased 67,904 shares for $5.0 million, leaving $35.0 million remaining under the share repurchase authorization.
• Business development expenses totaled $2.4 million, primarily related to advancing inorganic growth opportunities.
• The company will host a conference call and webcast on October 30, 2026, at 8:00 am Central Time to review results.