Slides
Page 1
East Coast IDEAS Conference June 11, 2025 Nasdaq: STRT Jennifer Slater President and CEO Matthew Pauli Senior Vice President and CFO www.strattec.com
Page 2
Safe Harbor Statement 2 Safe Harbor Statement Certain statements contained in this presentation contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “intend,” “may,” “planned,” “potential,” “should,” “will,” and “would.” Such forward-looking statements are inherently subject to many uncertainties in the Company’s operations and business environment. These uncertainties include general economic conditions, in particular, relating to the automotive industry, consumer demand for the Company’s and its customers’ products, competitive and technological developments, customer purchasing actions, changes in warranty provisions and customer product recall policies, work stoppages at the Company or at the location of its key customers as a result of labor disputes, foreign currency fluctuations, uncertainties stemming from U.S. trade policies, tariffs and reactions to same from foreign countries, the volume and scope of product returns, matters adversely impacting the timing and availability of component parts and raw materials needed for the production of our products and the products of our customers and fluctuations in our costs of operation (including fluctuations in the cost of raw materials). Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this presentation and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances occurring after the date of this presentation. In addition, such uncertainties and other operational matters are discussed further in the Company’s quarterly and annual filings with the Securities and Exchange Commission. Use of Non-GAAP Financial Metrics and Additional Financial Information In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, STRATTEC provides Adjusted Non-GAAP information as additional information for its operating results. References to Adjusted Non-GAAP information are to non-GAAP financial measures. These measures are not required by, in accordance with, or an alternative for, GAAP and may be different from non-GAAP financial measures used by other companies. STRATTEC’s management uses these measures for reviewing the financial results of STRATTEC for budget planning purposes and for making operational and financial decisions. Management believes that providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, help investors evaluate STRATTEC’s core operating and financial performance and business trends consistent with how management evaluates such performance and trends. Additionally, management believes these measures facilitate comparisons with the core operating and financial results and business trends of competitors and other companies.
Page 3
3 Delivering Innovative, Comprehensive Range of Solutions to the Automotive Industry Leader in Smart Vehicle Access, Security and Authorization Solutions Nasdaq: STRT Founded: 1908 Public: 1995 Headquarters: Milwaukee, WI Market Capitalization: $222M Recent Closing Price: $54.34 52-week High/Low: $56.70 / $21.05 Shares Outstanding: 4.1M Institutional Ownership: 68% Insider Ownership: 9% Market data as of market close June 9, 2025 Shares Outstanding as of Q3 FY2025 Ownership as of most recent filing.
Page 4
Platform Solutions Power Access Solutions Tailgates and liftgate Sliding and swing doors Decklid and frunk VEHICLE ACCESS Latches Tailgates and liftgate Hood and frunk Seat back Power Access Components SELECT USER INTERFACE CONTROLS Steering Wheel Switches Electronic Shifter Modules Transmission Paddle Shifters SECURITY & AUTHORIZATION Passive Entry Passive Start Systems Key Fobs & Start Stop Buttons Locksets & Steering Column Locks Digital Key Fob 4 Door handles PRIORITIZED GROWTH LEGACY CONTINUITY
Page 5
Leading Capabilities & Low-cost Manufacturing Core Capabilities • Design and Engineering • Quality Control and Inspection • Injection Molding • Zinc Die Cast • Stamping • Plating • Assembly 5 Milwaukee, WI • STRATTEC HQ • Sales • Engineering • Testing • Manufacturing • Die cast • Stamping • Plating Auburn Hills, MI • Sales • Engineering • Program Management • Prototype Development • Testing Juarez, Mexico (3 facilities) • Engineering • Testing • Manufacturing • Assembly • PCBA • Injection Mold Leon, Mexico • Injection Molding • Door Handle Mfg and Painting El Paso, TX • Distribution Q3 FY25 TTM REVENUE: $552.1M 12% Com’l & Other OEMs 30% 23% 11% Tier 1 14% 10% TTM Sales By Customer TTM Sales By Product 25% 25% 17% 14% 12% 7% Door Handles Power Access Keys & Locksets Latches Other Aftermarket
Page 6
• Focus on talent to affect change and drive sustainable performance • Introducing a performance culture to instill accountability, ownership and urgency • Modernizing infrastructure and implementing best-in-class processes to improve execution and drive margin expansion • Driving cost discipline and profitability enhancement as new launches within our existing customer base stabilize • Rationalizing footprint and reducing headcount to simplify organization • Leveraging engineering expertise and enduring customer relationships to define the future • Evaluating product portfolio to drive profitable future; deemphasizing switches Transforming STRATTEC 6
Page 7
Well positioned to manage dynamic tariff environment. • ~93% of US imports are USMCA compliant and are not subject to additional tariffs. • Strong balance sheet and cost focus provide support as mitigation actions are implemented. • Numerous levers available to achieve 100% tariff mitigation. 7 T A R I F F I M P A C T Reassessing supplier and logistics network. Active customer engagement on mitigation plans. Established daily “T ariff T ask Force” to align cross functionally. Engaged third party to assist in review of USMCA compliance & HTS code classification. Indirect: • Uncertainty in potential changes in North American automotive production schedules • Identified additional areas for operational cost improvements (i.e. logistics) M I T I G A T I O N A C T I O N S Direct: • Current incremental tariffs impact ~$30m of sales (6% of consolidated sales) • Total estimated tariff costs are $9 million to $12 million before mitigation efforts* Manageable Tariff Exposure * Tariff impact as determined on May 12,2025
Page 8
Building the Team • Investing in upgrading talent and enhanced leadership • Adding additional talent – VP Supply Chain Management • Increasing accountability and sense of urgency • Driving change Driving to Operational Excellence • Announced listing of Milwaukee facility for economic analysis • Optimizing cost structure across entire footprint (Milwaukee shift reduction, Mexico restructuring) Creating Revenue Opportunities • Captured $8 million in annualized pricing to start in Q3FY25 • Advancing strategic product portfolio review • Create brand recognition • Differentiate from the competition Developing Modernization Plan • Upgrade equipment • Right size business offices • Implement information systems to better capture data for analysis • Implement systems for supply chain, production, transportation, customer interface Making Rapid Progress…More to be Done 8 Transforming STRATTEC
Page 9
Financial Review Progress demonstrated in margin expansion and cash generation 9
Page 10
Gears in Motion: Financial Priorities 10 Establish processes for reporting and analysis Drive operating leverage Drive working capital velocity and B/S strength Manage JV to strengthen performance Execute on tariff mitigation plans
Page 11
OPERATIONAL CASH FLOW: Generated $20.7 million in Q3 • YTD cash from operations of $41.5 million REVENUE GROWTH: up $3.3 million to $144.1 million • Driven by increased price increases and favorable product mix • Boosted by successful new program launches PROFITABILITY: Delivered adj. EBITDA of $12.9 million (8.9% of sales) • Up from $6.2 million (4.4% of sales) in Q3 FY24 • Restructuring in Q3 FY25 expected to deliver ~$5M in annual savings • Price actions delivering margin improvement 11 STRATTEC Q3 FY2025 Highlights
Page 12
28% 23% 14% 14% 11% 10% GM Ford Stellantis Tier 1 Com'l & Other Hyundai/Kia • Ford up 6%: higher volume and added content for power tailgate and latches • Stellantis up 14%: new key and lockset content on Dodge Ram Heavy Duty trucks • GM down 4%: lower demand across products 12 ($ in millions; narrative compared with prior-year period unless otherwise noted) 25% 25% 19% 13% 11% 7% Door Handles Power Access Keys & Locksets Latches Other Aftermarket Q3 FY25 Sales Increased 2.4% Y/Y NET SALES GROWTH Net sales up $3.3 million • $2.5 million of strategic pricing increases and $2.2 million in higher value content placement • $1.6 million due to net new program launches • Offset by $3.0 million reduction in sales volumes for existing platforms • 6% growth y/y in Power Access products on higher value content placement across SUV/Pickup platforms • Keys & locksets up 7% y/y on pricing and new launches including high-content Dodge Ram Heavy Duty platform • Door Handles & Latches down slightly Q3 FY25 SALES BY CUSTOMER Q3 FY25 SALES BY PRODUCT Q3 FY24 Q3 FY25 $140.8 $144.1 Above market sales growth driven by strategic pricing actions, higher value content and net new program launches
Page 13
Gross margin expanded 560 basis points in Q3 + Stronger US dollar • $4.4 million, or 310 bps, FX benefit • Current rate of ~20 MXN peso at 5-year average + Margin-accretive strategic pricing actions + Materials and labor cost improvements – $0.8 million tariff expenses related to U.S. tariff policy changes YTD gross margin expanded 240 basis points + FX tailwinds, stronger pricing and operational leverage – Partially offset by Mexico labor costs (govt mandated) and tariff impacts ($ in millions; narrative compared with prior-year period unless otherwise noted) Higher Gross Profit and Margin Expansion GROSS PROFIT & MARGIN (QTR) 13 11.4% 13.2% GROSS PROFIT & MARGIN (YTD) $46.9 $59.2 YTD Q3FY24 YTD Q3FY25 $14.7 $23.1 Q3FY24 Q3FY25 16.0%10.4% 14.3%11.9%
Page 14
Increase in ES&A(1) reflects business investment, transformation costs and investments in human capital • Up $3.3 million to 11.1% of sales • $1.2 million incentive and bonus compensation • $0.8 million in restructuring charges • $0.8 million timing of engineering spend and outside services Investments in leadership expected to deliver process efficiencies and related savings over time • YTD results include $2.1 million of executive transition costs compared with $1.0 million in prior year, $0.5 million business transformation costs and $1.0 million of restructuring costs. • $2.8 million incremental incentive and bonus compensation ($ in millions; narrative compared with prior-year period unless otherwise noted) Strengthening Operations for Efficiency ES&A(1) | % OF SALES (QTR) 14 11.4% 13.2% $12.7 $16.0 9.0% 11.1% Q3FY24 Q3FY25 ES&A(1) | OF SALES (YTD) (1) Engineering, selling and administrative expenses $38.8 $44.9 9.8% 10.9% YTD Q3FY24 YTD Q3FY25
Page 15
15 ($ in millions except earnings per share data; narrative compared with prior-year period unless otherwise noted) Q3 FY25 Net Income(1) up 258% Q3 FY25 Adj. EPS(2) grew 305% to $1.50 Q3 FY25 Adj. EBITDA(2) margin expanded 450 basis points • Driven by higher sales volume, FX and cost management initiatives; higher bonus accruals on improving performance Focused on driving sustainable margin improvement Enhanced Earnings Power (1) Net Income Attributable to STRATTEC (2) Adjusted Net Income, Adjusted Diluted Earnings per Share, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP metrics. Refer to the reconciliation of GAAP to non-GAAP metrics in the supplemental tables of this presentation. ADJ. NET INCOME(2) (QTR) $1.5 $6.1 $0.37 $1.50 Q3 FY24 Q3 FY25 ADJ. NET INCOME(2) (YTD) $2.6 $13.5 $0.64 $3.32 YTD Q3FY24 YTD Q3FY25 NET INCOME(1) (QTR) $1.5 $5.4 $0.37 $1.32 Q3 FY24 Q3 FY25 NET INCOME(1) (YTD) $6.7 $10.4 $1.67 $2.56 YTD Q3FY24 YTD Q3FY25 ADJ. EBITDA(2) & MARGIN (QTR) $6.2 $12.9 4.4% 8.9% Q3 FY24 Q3 FY25 ADJ. EBITDA(2) & MARGIN (YTD) $15.1 $30.8 3.9% 7.4% YTD Q3FY24 YTD Q3FY25
Page 16
• Conserve cash through uncertain times and moderated market conditions • Operational efficiencies & productivity: equipment and IT modernization, people • $4.2M YTD CapEx primarily includes capital to support new customer programs and $1.2 million for upgraded equipment to improve productivity • Organic growth initiatives: market positioning, brand and selling processes 16 CAPITALIZATION March 30, 2024 December 29, 2024 Cash and cash equivalents $ 62.1 $ 42.6 Total debt 13.0 13.0 Shareholders’ equity 234.6 228.2 Total capitalization $ 247.2 $ 241.2 Debt / total capitalization 5.3% 5.4% THREE MONTHS ENDED March 30, 2025 March 31, 2024 Net cash provided by operating activities $ 20.7 $ (0.3) CapEx (1.2) (1.7) Free cash flow (FCF)(1) $ 19.5 $ (2.0) ($ in millions; narrative compared with prior-year period unless otherwise noted) (1) Free cash flow is a non-GAAP metric defined as cash flow from operations less capital expenditures (CapEx) Strong Cash Generation CASH CUSHION FOR UNCERTAIN TIMES $25.4 $34.4 $42.6 $62.1 Q4 FY24Q1 FY25Q2 FY25Q3 FY25 • Improved operating performance and margin expansion driving cash flow • Working capital efficiency improvements, including improvement in days payable outstanding • $47 million available under lines of credit CAPITAL PRIORITIES ($ in millions)
Page 17
Early stages of transformation to strengthen earnings power and competitive position Reimagining product portfolios to drive sustainable growth Improving operational efficiency to drive profits and consistency Developing team and talent to execute change Strong balance sheet to support modernization and upgrade investments STRATTEC Investment Rationale 17
Page 18
Q&A 18
Page 19
June 11, 2025 www.strattec.com Nasdaq: STRT 19 Investor Relations Contact: Deborah K. Pawlowski, Alliance Advisors IR 716-843-3908 dpawlowski@allianceadvisors.com
Page 20
2025 Vehicle List 20 Acura ZDX (EV) Aston Martin Vantage * Chevrolet Malibu Aston Martin AMR24 * Cadillac ATS * Dodge Charger (EV) Aston Martin DB 12 * Cadillac CT4 Ford Focus Aston Martin DBS * Cadillac CT5 * Ford Focus (Mild Hybrid EV) Aston Martin DBX * Cadillac Celestiq (EV) Ford Mustang Aston Martin Valhalla * Chevrolet Corvette Volkswagen Jetta Aston Martin Valkyrie * Chevrolet Corvette E-Ray (Hybrid EV) Aston Martin Valour * Chevrolet Joy * Volvo Polestar 3 (EV) GMC Sierra Pickup (EV) Volvo EX90 (EV) GMC Terrain Volvo Heavy Truck Chevrolet Silverado (EV) Ford Bronco Sport Jeep Meridian Cadillac Lyriq (EV) Ford Escape (PH option) Chevrolet S-10 * GMC Savana Volkswagen Tiguan (PH option) Chevrolet Seeker * GMC Sierra & Sierra HD Lincoln Corsair (PH option) Chevrolet Blazer (EV) Acura MDX Chevrolet Spin * GMC Yukon and Yukon XL Acura RDX Chevrolet Suburban Honda Odyssey Audi Q5 Chevrolet Tahoe Honda Passport Brightdrop EV400 (EV) Chevrolet Trail Blazer * Honda Prologue (EV) Brightdrop EV600 (EV) Chevrolet Traverse Jeep Recon (EV) Cadillac Optiq (EV) Ford Expedition (PH option) Jeep Wagoneer Cadillac Vistiq (EV) Ford Explorer (PH option) Jeep Wrangler/Wrangler Unlimited (PH option) Cadillac XT4 Ford F-150 Lightning (EV) Cadillac XT5 Ford F-Series Pickup (PH option) Kia Carnival * Cadillac XT6 Ford F-Series Super Duty Pickup Lincoln Aviator (PH option) Chevrolet Blazer Ford Maverick Pickup (PH option) Lincoln Navigator (PH option) Chevrolet Cobalt * Ford Ranger Pickup * (PH option) Ram 1500 Classic Pickup Chevrolet Colorado * Ford Transit Connect * (PH option) Ram 1500 Pickup Chevrolet Equinox GMC Acadia Ram HD Pickup Chevrolet Equinox (EV) GMC Canyon * Ram REV Pickup (EV) Chevrolet Express Van GMC Hummer (EV) Tesla Everest (EV) Lincoln Navigator (PH option) The following cars and light trucks will be equipped with STRATTEC components during our 2025 fiscal year Passenger Cars Light Trucks, Vans, and Sport Utility Vehicles Hyundai Staria * Buick Enclave Chevrolet Trax * Jeep Commander * Buick Envista * Chrysler Pacifica (PH option) Jeep Compass BMW X7 Chevrolet Silverado Chevrolet Silverado HD Pickup Dodge Durango Jeep Gladiator Cadillac Escalade Dodge Hornet (PH option) Jeep Grand Cherokee Cadillac Escalade IQ (EV) Ford Mustang Mach-E (EV) * Vehicles produced outside of North America, or both in and outside North America. EV – Electric Vehicle PH – Plug-In Hybrid
Page 21
21 STRATTEC Variety of Competitors Across Product Categories: Door Handles Keys & Locksets Power Access User Interface Controls Wireless Latches Aisin Inteva Shinchang Industry Atech Motorsports Kiekert Stabilus Brose Magna Tokai Rika Group Edscha Marquardt Group U-Shin Ltd. GECOM Corp Mitsuba Valeo Honda Lock Novares HUF Group OHI Automotive