STRT · Strattec Security Corporation

Strattec Security Corporation announced fiscal third quarter 2026 results on May 7, 2026, reflecting ongoing transformation efforts amid automotive industry headwinds. Net sales declined 4.5% to $137.6 million, primarily from $7.7 million lower volumes including $3.4 million tied to customer EV program cancellations, partially offset by $1.3 million in pricing and tariff recoveries. Despite the sales drop, gross margin improved 50 basis points to 16.5%, bolstered by $1.7 million in restructuring savings and $0.6 million from cancelled program recoveries. These gains were tempered by a $2.5 million foreign exchange headwind, higher labor costs, and incremental tariffs. SAE expenses rose $1.6 million to 12.8% of sales, driven by business transformation costs, executive transitions, salary increases, and professional fees, though offset by restructuring savings and EV recoveries. Net income attributable to Strattec fell to $3.2 million ($0.78 diluted EPS) from $5.4 million ($1.32), with FX impacts notably pressuring results; adjusted diluted EPS was $0.90 versus $1.50 prior year. Adjusted EBITDA was $10.1 million (7.3% margin), down from $12.9 million (8.9%). Cash generation remained robust at $11.4 million from operations, supporting a $107 million cash balance and minimal $1.0 million debt. Post-quarter, the Company secured a new revolving credit facility for its JV. Management highlighted progress in cost structure improvements, supply chain stabilization, and positioning for 2029+ programs, targeting 18-20% gross margins and 10-11% SAE over time. Q4 revenue outlook signals 3-4% decline, aligned with NA production and EV shifts, underscoring focus on predictability and liquidity for growth and M&A.