Slides
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LD Micro Invitational XV April 10, 2025 Nasdaq: STRT Jennifer Slater President and CEO Matthew Pauli Senior Vice President and CFO www.strattec.com
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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. The Company has provided reconciliations of comparable GAAP to non-GAAP measures in the supplemental slides of this presentation.
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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: $171M Recent Closing Price: $39.48 52-week High/Low: $51.52 / $21.50 Shares Outstanding: 4.3M Institutional Ownership: 65% Insider Ownership: 5% Market data as of market close April 1, 2025
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Three 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
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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 Q2 FY25 TTM REVENUE: $548.8M 12% Com’l & Other OEMs 30% 23% 10% Tier 1 15% 10% TTM Sales By Customer TTM Sales By Product 25% 25% 17% 14% 10% 7% 2% Door Handles Power Access Keys & Locksets Latches User Interface Controls Aftermarket Other
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• Reinvigorating talent to affect change • Introducing a performance culture to instill accountability, ownership and urgency • Driving process improvement to drive margin expansion • Rationalizing footprint and reducing headcount to simplify organization • Evaluating product portfolio to drive sustainable, profitable future • Modernizing infrastructure and implementing best-in-class processes to improve execution • Leveraging engineering expertise and enduring customer relationships to define the future Transforming STRATTEC 6
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Bringing on New Talent to Accelerate Change 7 Matthew Pauli SVP , Chief Financial Officer Linda Redmann Chief People Officer Chey Becker-Varto Chief Commercial Officer
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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 • Reduced from three shifts to two shifts for $1.2 million in annualized savings • Adopted 10-hour, 4-day work week 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
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Financial Review Managing through the tariff turmoil 9
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Gears in Motion: Financial Priorities 10 Drive working capital velocity and B/S strength Establish processes for reporting and analysis Integrate SaaS into financial reporting processes Drive operating leverage Manage JV to strengthen performance Execute on tariff mitigation plans
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OPERATIONAL CASH FLOW: Generated $9.4 million in Q2 • YTD cash from operations of $20.8 million REVENUE GROWTH: up $11.4 million to $129.9 million • Driven by increased customer demand for higher value products • Boosted by successful new program launches PROFITABILITY: Delivered adj. EBITDA of $8.0 million (6.1% of sales) • Up from $5.0 million (4.3% of sales) in Q2 FY24 11 STRATTEC Q2 FY2025 Highlights
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31% 22% 9% 14% 13% 11% GM Ford Stellantis Tier 1 Com'l & Other Hyundai/Kia • Kia drove 21% increase to meet production plans (power access) • Ford up 18% driven by new latch programs on pickups and higher product value • GM up 9% with increased demand across product categories for SUV/truck volume growth 12 ($ in millions; narrative compared with prior-year period unless otherwise noted) 25% 25% 15% 14% 11% 8% 2% Door Handles Power Access Keys & Locksets Latches User Interface Controls Aftermarket Other Q2 FY25 Sales Increased 9.6% Y/Y NET SALES Net sales up $11.4 million • $5.9 million of net new program launches and $1.3 million of favorable mix • $7.4 million due to higher production volumes on existing platforms • Offset by a year-over year change in pricing from one-time benefit in prior-year period • 27% growth y/y with Power Access products on increased production levels and OEM inventory build • Innovation/new program launches drove 20% growth in latches and User interface controls • Keys & locksets down 19% y/y; less relevant in product portfolio Q2 FY25 SALES BY CUSTOMER Q2 FY25 SALES BY PRODUCT Q2 FY24 Q2 FY25 One-time Retro Pricing $118.5 $129.9 Above market growth driven by new product launches, customer production plans, and higher value content
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Gross margin expanded 180 basis points in Q2 + Stronger US dollar • $3.5 million, or 270 bps, FX benefit associated with our Mexico operations • Current rate of ~20 MXN peso at 5-year average + Operating leverage gained on volume + $0.8 million reduction in depreciation expense – $1.4 million increase in Mexico labor costs (government mandated) – Provisions for annual bonus expense of $0.6 million (no provision in prior year) YTD gross margin expanded 70 basis points + Stronger US dollar and higher production volumes – Prior year included $9.5 million of one-time retroactive pricing recovery ($ 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) $32.2 $36.1 YTD Q2FY24 YTD Q2FY25 $13.5 $17.2 Q2 FY24 Q2 FY25 13.2%11.4% 13.4%12.7%
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Increase in ES&A reflects transformation costs and investments in human capital • Up $1.6 million to 11.6% of sales • $0.8 million annual bonus provision (no provision in the prior year) • $0.3 million of incremental equity compensation expense • $0.2 million in business transformation costs and $0.3 million restructuring charge 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 $1.0 million in prior year ($ in millions; narrative compared with prior-year period unless otherwise noted) Strengthening Operations for Efficiency ES&A(1) & MARGIN (QTR) 14 11.4% 13.2% $13.4 $15.0 11.3% 11.6% Q2 FY24 Q2 FY25 ES&A(1) & MARGIN (YTD) (1) Engineering, selling and administrative expenses $26.1 $28.9 10.3% 10.7% YTD Q2FY24 YTD Q2FY25
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15 ($ in millions except earnings per share data; narrative compared with prior-year period unless otherwise noted) Q2 FY25 Net Income(1) up 29% Q2 FY25 Adj. EPS(2) grew 81% to $0.65 Q2 FY25 Adj. EBITDA(2) margin expanded 180 basis points • Driven by higher sales volume, FX and cost management initiatives; includes impact of reinstating bonus accruals 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) $1.4 $2.6 $0.36 $0.65 Q2 FY24 Q2 FY25 ADJ. NET INCOME(2) (YTD) $1.1 $7.3 $0.28 $1.81 YTD Q2FY24 YTD Q2FY25 NET INCOME(1) (QTR) $1.0 $1.3 $0.26 $0.32 Q2 FY24 Q2 FY25 NET INCOME(1) (YTD) $5.2 $5.0 $1.30 $1.24 YTD Q2FY24 YTD Q2FY25 ADJ. EBITDA(2) & MARGIN (QTR) $5.0 $8.0 4.3% 6.1% Q2 FY24 Q2 FY25 ADJ. EBITDA(2) & MARGIN (YTD) $8.9 $17.9 3.5% 6.7% YTD Q2FY24 YTD Q2FY25
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$12.5 million increase in operating cash flow • Improved operating performance • Working capital efficiency improvements, primarily pre- production cost recoveries Financial flexibility • $42.6 million in cash • $47 million available under lines of credit FY 2025 CapEx • Focused on new product programs and equipment replacements/upgrades for safety and productivity improvements • Includes $3.0 million in 1H FY25 for new product programs and upgraded equipment to improve productivity Capital priorities • Operational efficiencies • Invest in productivity tools: processes, IT, people • Organic growth initiatives: market positioning, brand and selling processes 16 CAPITALIZATION December 29, 2024 June 30, 2024 Cash and cash equivalents $ 42.6 $ 25.4 Total debt 13.0 13.0 Shareholders’ equity 228.2 225.6 Total capitalization $ 241.2 $ 238.6 Debt / total capitalization 5.4% 5.4% THREE MONTHS ENDED December 29, 2024 December 31, 2023 Net cash provided by operating activities $ 9.4 $ (3.0) CapEx (0.9) (1.5) Free cash flow (FCF)(1) $ 8.5 $ (4.5) ($ 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
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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
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Q&A 18
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April 10, 2025 www.strattec.com Nasdaq: STRT 19 Investor Relations Contact: Deborah K. Pawlowski, Alliance Advisors IR 716-843-3908 dpawlowski@allianceadvisors.com
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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
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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