Strattec Security reported lower sales and earnings for the first quarter of fiscal 2027, as reduced customer production volumes and higher costs outweighed pricing gains and cost savings. The automotive access-solutions maker generated $10.8 million in cash from operations and ended the quarter with $111.8 million in cash and no debt.
The company also bought back 67,904 shares for $5 million during the quarter. Chief Executive Jennifer Slater said Strattec is continuing cost-reduction work, investing in its business and pursuing potential acquisitions.
Key details
- Sales declined 3% year over year to $147.2 million from $152.4 million. Lower customer production volumes reduced sales by $6.2 million, partly offset by $1 million in pricing.
- Gross profit fell to $24.3 million from $26.3 million. Gross margin was 16.5%, down 0.8 percentage point from a year earlier. Pricing, restructuring savings, lower overhead and a better sales mix helped, but were outweighed by lower volume, premium freight costs and annual labor-cost increases. Unfavorable currency movements reduced gross profit by $1.4 million and weighed on gross margin by 0.9 percentage point.
- Margin improved from the prior quarter: Gross margin rose to 16.5% from 15.6% in the fourth quarter of fiscal 2026, despite lower sales.
- Net income attributable to Strattec was $4.8 million, or $1.19 per diluted share, compared with $8.5 million, or $2.07 per share, a year earlier. On an adjusted basis, net income was $7.5 million, or $1.85 per share, versus $9.2 million, or $2.22 per share.
- Adjusted EBITDA was $13.5 million, or 9.2% of sales, compared with $15.6 million, or 10.2% of sales, in the prior-year quarter.
- Selling, administrative and engineering expenses rose to $17.9 million, or 12.2% of sales, from $15.9 million, or 10.4%. The increase included $2.4 million in business-development expenses. Excluding business-development, transformation and executive-transition costs, adjusted expenses were $15 million, or 10.2% of sales—within the company’s stated 10%–11% target.
- A Mexico operations initiative is expected to deliver $1.3 million in annualized savings. Strattec also cited further opportunities to reduce costs through supply-chain improvements and automation.
- Interest income increased to $1 million as cash balances grew. Interest expense declined by $0.1 million, with no outstanding bank borrowings.
- The effective tax rate rose to 26.2% from 21.6%, primarily because of discrete tax items.
Plain-English implications
Strattec’s cash generation and debt-free balance sheet give it capacity to fund operations and transformation efforts while also repurchasing shares and pursuing strategic growth. At the same time, the quarter’s lower sales, profit and adjusted EBITDA show the pressure from weaker customer volumes and higher operating costs.