STRATTEC SECURITY CORP
For the period ended Sep 29, 2024. Filed Nov 7, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 29, 2024 · Filed Nov 7, 2024
STRT$61.96+2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0000950170-24-056833
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-29; filed 2024-11-07.
0000950170-24-123365
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 97 previous paragraphs and 66 current paragraphs.
18 unchanged; 17 reworded; 29 added; 54 removed; 8 previous and 2 current paragraphs rearranged.
Tables are not compared: 16 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
Current report
Overview and Outlook
Current report
With a history spanning over 110 years, STRATTEC has consistently been at the forefront of innovation in vehicle security, transitioning from mechanical to integrated electro-mechanical systems. Our largest customers are three leading automotive OEMs in North America, but we also provide products to most other OEMs around the world. Our offering is comprised of products primarily related to vehicle and power access, security and authorization and select user interface controls. Vehicle and power access solutions include power sliding doors, tailgates and lift gate systems, as well as power deck lid systems. We also design and manufacture highly-engineered latches and door handles. Security and authorization products are comprised of mechanical and electronically enhanced locks and keys, fobs, passive entry passive start systems (PEPS), steering column and instrument panel ignition lock housings and related solutions. We established our leading market position within North American automotive customers initially with our legacy mechanical locks and keys. We built upon that reputation with our engineering expertise in security and vehicle access, our flexible and responsive service and our deep relationships with our customers.
Current report
Under new leadership since July 1, 2024, with the appointment of Jennifer L. Slater as CEO, STRATTEC is at the beginning stages of identifying the future path of its product portfolio, determining the optimal operating and cost structure and developing a strategy to strengthen profitability and drive sustainability. Through fiscal 2025 and beyond, we expect to modernize our operations with upgraded information systems, simplify our product portfolio, optimize our operating footprint, capitalize on our leading market positions and strong customer relationships and leverage our engineering expertise to drive innovative, sticky solutions to increase market penetration.
Current report
Summary of the quarter ended September 29, 2024 (first quarter fiscal 2025)
Current report
Our first quarter financial results are best understood by also recognizing that the first quarter of fiscal 2024 included some one-time benefits. Net sales of $139.1 million were up year-over-year by $3.7 million, or 2.7%. However, last year’s first quarter had benefited from $8.0 million in one-time customer pricing effects. Excluding that impact, underlying sales for the first quarter of fiscal 2025 would have increased by $11.6 million, or 9.1%. The increase included approximately $2.2 million that was associated with higher ongoing customer pricing captured after the first quarter of fiscal 2024. The remaining underlying sales growth was primarily driven by higher volume of Hyundai / Kia vehicle models that contain our power doors and latches as well as increased sales to Ford for new latch and multi-tailgate access content. These improvements helped to offset a large decline in sales to Stellantis, which reflected a combination of lower program vehicle production, expired programs, and reduced content on certain programs as well as some of the one-time pricing comparator.
Current report
The one-time pricing in last year’s first quarter also flowed through to gross profit. Gross profit in the current quarter of $18.9 million was relatively unchanged to prior year, however, last year’s first quarter had a $7.1 million benefit of the flow through of the one-time pricing impact after factoring for $900,000 of one-time higher prices paid to suppliers. Gross profit margin for the first quarter fiscal 2025 was 13.6% compared with 13.8% in the prior-year period. The impact of the one-time pricing benefit was 470 basis points in last year’s first quarter.
Current report
Net income for the quarter was $3.7 million, down $462,000 compared with the prior-year period. We are focused on improving profitability and reducing working capital requirements. Total cash increased by $9.0 million to $34.4 million at September 29, 2024 compared with June 30, 2024. Pre-production costs, which includes customer tooling, decreased $6.9 million as tooling associated with customer launches in the latter half of fiscal 2024 were approved and billed in the quarter. This was somewhat offset by higher inventory.
Current report
Current Market Conditions
Current report
We serve the automotive industry, primarily in North America. Approximately 63% of our sales in the first quarter of fiscal 2025 were to the three large automobile manufacturers in the U.S. The automotive industry can be cyclical based on economic conditions, especially as it impacts consumers. As a result, demand for our products are influenced by industry conditions. In addition to our interactions with our customers, we monitor monthly forecasts provided by S&P Global. While they are forecasting that North American light vehicle production will grow modestly between 2024 and 2028, the near-term monthly trends have been softening. In fact, S&P Global’s light vehicle production forecasts for our fiscal period have declined 4.5% in its October 2024 report from its July 2024 report, and a similar softening is forecasted cumulatively with our largest three customers.
Current report
We work to overcome production declines by getting product on new platforms and increasing content on next versions of existing platforms. There can be no guarantee however that these efforts can be sufficient to overcome overall lower production rates.
Current report
Sales to General Motors Company increased primarily due to new door handle volume for the Equinox EV, which impact was partially offset by several lockset supply programs ending.
Current report
Sales to Tier 1 Customers increased primarily due to increased volume of door hardware content that ultimately is supplied for the F-Series Super Duty Pickup as well as for the Stellantis Wagoneer, a new program.
Current report
Sales to Stellantis declined primarily due to the combination of lower vehicle production volumes of the Dodge Ram Pickup, Pacifica and the end of several passenger car programs. We also had reduced content on the Dodge Ram Pickup.
Current report
The change in total cost of goods sold reflects higher sales in the current quarter compared with prior year first quarter (which included $900,000 in one-time retroactive price increases paid to key suppliers). Total direct material costs in the first quarter of fiscal 2025 benefited from $1.3 million in lower raw material and purchased component costs. Labor and overhead costs were relatively consistent between the comparative periods as cost benefits were offset by higher costs as noted below:
Current report
Cost Decrease
Current report
A favorable foreign exchange benefit of $2.7 million due to change in U.S. dollar to Mexican peso exchange rates. The average U.S. dollar/Mexican peso exchange rate increased to approximately U.S. dollar/19.30 pesos in the current year quarter from approximately U.S. dollar/17.14 pesos in the prior year quarter, reducing the U.S. dollar cost of our Mexican operations.
Current report
Mexico manufacturing costs increased by $1.4 million driven by government mandated minimum wage increases effective January 1, 2024, partially offset by a reduction in other manufacturing costs.
Current report
The first quarter of fiscal 2025 included $650,000 of accrued expenses for our short-term incentive bonus plan. No bonus expense provisions were recorded in the prior year quarter.
Current report
Higher shipping costs of $400,000 were related to expedited shipments.
Current report
Higher variable labor and overhead costs were offset by more favorable absorption of fixed overhead costs resulting from production volume increases.
Current report
Last year’s first quarter benefited by 4.7 percentage points due to the impact of one-time retroactive pricing. Excluding that effect, gross profit and margin improved as a result of higher sales, reduced raw material and purchased component costs, a favorable foreign exchange rate, production efficiencies in Mexico and reduced royalty costs which more than offset the unfavorable impacts of higher Mexican wage and benefit costs and freight costs, as well as short-term incentive bonus plan accruals.
Current report
Engineering, selling and administrative expenses increased $1.3 million year over year mostly as a result of $820,000 of accruals for our short-term incentive plan and $550,000 of one-time CEO transition costs in the current quarter. No bonus expense provisions were recorded in the prior year quarter.
Current report
Income from operations was $5.1 million in the current year quarter compared with $6.1 million in the prior-year quarter reflecting the impact of increased engineering, selling and administrative expenses on relatively unchanged gross profit.
Current report
Included in Other Income, net was comprised of (in thousands):
Current report
Changes in Other Income, net included:
Current report
The reduction in our working capital requirements for the first quarter of fiscal 2025 was primarily due to the following:
Current report
Higher accounts receivable reflects higher sales in the latter half of the quarter.
Current report
Higher inventory for the current year period was due to higher purchased material inventory required to support increased sales of higher contented programs as well as the anticipated launch of a new program.
Current report
Majority Owned Subsidiary
Removed paragraphs (54)
Previous report
Outlook
Previous report
The key highlight of our fiscal year-to-date results has been $25.8 million of customer pricing increases, equating to $21.3 million gross margin improvement after factoring in the $4.5 million paid to key suppliers for negotiated price increases. Furthermore, of this $21.3 million gross margin improvement, $13.2 million is considered “ongoing” as it relates to present program price increases that will carry forward to subsequent years. For full fiscal year 2024, we now anticipate an annualized increase in “ongoing” pricing, net of higher costs paid to suppliers, to exceed the higher end of our originally targeted range of $10.0 million to $15.0 million. We do not anticipate any further material one-time retroactive pricing adjustments for the remainder of the fiscal year.
Previous report
When excluding the $7.0 million of customer pricing from our third quarter net sales growth over prior year, we saw an increase in sales of 5.2% primarily driven by the launch of new product programs. We anticipate such growth will continue into the fourth quarter and into fiscal 2025.
Previous report
From a cost of sales perspective, we anticipate continued cost pressures on our Mexican operations due to the current strength of the Mexican Peso relative to the U.S. Dollar and higher wages in Mexico driven by the Mexican government’s minimum wage increases, which have increased manufacturing costs fiscal year-to-date by $7.9 million and $4.6 million respectively. Additionally, we have experienced higher shipping costs fiscal year-to-date of $3.1 million, primarily driven by expedited shipping associated with the launch of new product programs. We expect some continuation of these higher costs while we implement the launch of the remaining new products.
Previous report
To help offset the increased costs of our Mexican operations, we implemented a salaried staffing reduction in our Mexican operations in the 2024 first quarter that is projected to reduce costs by an annualized amount of approximately $800,000. Additionally, we anticipate our focus on reducing non-employee cost of sales will generate between $4 million and $5 million in savings in the full fiscal year, excluding the aforementioned higher shipping costs, driven by improved cost of raw materials and production efficiencies.
Previous report
Regarding the balance sheet, we expect the balance of reimbursable customer tooling will begin to decrease significantly in the fourth quarter and continue decreasing in the first half of fiscal 2025 as we normalize to near historical levels by the end of the calendar year 2024 with the completed launch of the associated programs. We expect the Mexican VAT (see Note on page 8) will return to historical levels in first half of fiscal 2025 with the closing of the periods under audit. As for net inventory, we reduced our inventory balance by $10.8 million in the third quarter as we worked to reverse the inventory build that occurred in the first half of the fiscal year due to delays in new product launches and lower than anticipated sales. We remain committed to improving our inventory turn over the coming quarters. Lastly, we plan on renewing our ADAC-STRATTEC credit facility in the fourth quarter.
Previous report
For our fiscal 2024 capital expenditures, we continue to anticipate to spend between $9 million to $12 million.
Previous report
The quarter-over-quarter sales increase of $13.6 million reflects net price increases from our major OEM customers of $7.0 million, which is primarily attributed to ongoing increases in current part prices. In addition to the net price increases, the following items specifically impacted sales to the noted customer groups between quarters:
Previous report
Sales to General Motors Company were positively impacted by a favorable shift in product mix with increased sales of higher priced power access and user interface control products and reduced sales of lower priced key and lockset products.
Previous report
Sales to Stellantis were negatively impacted by reduced customer vehicle production volumes and reduced content we supply for the Dodge Ram Pickup and several passenger car programs ending.
Previous report
Sales to Tier 1 Customers improved in the current year quarter compared to the prior year quarter due to new door hardware content on the F-Series Super Duty Pickup, which is sold to a Tier 1 customer.
Previous report
Prior year quarter reclassifications have been made for consistency with current year quarter presentation.
Previous report
Total cost of goods sold increased $8.9 million between quarterly periods. The quarter-over-quarter increase in direct material costs of $3.5 million was the result of the net increase in sales volumes and content we supply, as discussed above, and $1.2 million of negotiated material price increases paid to key suppliers, which were primarily attributable to ongoing operations. These unfavorable impacts were partially offset by reduced zinc costs of approximately $850,000 in the current year quarter as compared to the prior year quarter. The quarter-over-quarter increase in labor and overhead costs of $5.4 million was impacted by the following:
Previous report
The U.S. dollar value of our Mexican operations was negatively impacted by approximately $2.1 million in the current year quarter as compared to the prior year quarter due to an unfavorable Mexican peso to U.S. dollar exchange rate between periods. The average U.S. dollar / Mexican peso exchange rate decreased to approximately 16.97 pesos to the dollar in the current year quarter from approximately 18.56 pesos to the dollar in the prior year quarter.
Previous report
Mexico wages and benefits increased $1.8 million in the current year quarter as compared to the prior year quarter as a result of annual wage increases, including a January 1, 2024 20 percent government mandated minimum wage increase.
Previous report
The current year quarter includes expense provisions of $942,000 under our incentive bonus plan. No bonus expense provisions were recorded in the prior year quarter.
Previous report
Freight costs increased $778,000 between quarterly periods due to a change in shipping terms with a major supplier that occurred in June 2023 and an increase in expedited shipments.
Previous report
Current year quarter reductions in our finished and work in process inventories resulted in unfavorable absorption of labor and overhead costs in the current year quarter as compared to the prior year quarter.
Previous report
Cost Decreases:
Previous report
The prior year quarter included a $1.3 million warranty provision associated with a customer's specific warranty claim involving our product.
Previous report
Mexico wages and benefits decreased by $384,000 due to a September 2023 salaried staff reduction in Mexico and current year period production efficiencies that controlled headcount and hours worked.
Previous report
Gross profit margin improvement between quarterly periods was driven by pricing increases achieved during the current year quarter, as discussed above, reduced zinc and warranty costs between quarterly periods and production efficiencies in Mexico. These favorable impacts were partially offset by an unfavorable U.S. dollar to Mexican peso exchange rate combined with Mexico wage increases, higher freight costs, bonus expense provisions recorded in the current year quarter and unfavorable absorption of our fixed overhead costs in the current year quarter as compared to the prior year quarter, all as discussed above.
Previous report
Engineering, selling and administrative expenses were consistent between quarterly periods. Reductions in new product development costs with third-party vendors in the current year quarter as compared to the prior year quarter were offset by current year quarter expense provisions of $817,000 under our incentive bonus plan. No bonus expense provisions were recorded in the prior year quarter.
Previous report
Income from operations was $2.0 million in the current year quarter compared to loss from operations of $2.5 million in the prior year quarter due to improvement in gross profit margin dollars as discussed above.
Previous report
Included in Other (Expense) Income, net in the current year quarter and prior year quarter were the following items (in thousands):
Previous report
Set forth below is a discussion of the items comprising certain of the components of our Other (Expense) Income, net:
Previous report
Nine months ended March 31, 2024 compared to the nine months ended April 2, 2023
Previous report
Sales to General Motors Company were positively impacted by a favorable shift in product mix with increased sales of higher priced power access and user interface control products and reduced sales of lower priced key and lockset products.
Previous report
Sales to Ford Motor Company were positively impacted by added power end gate content we supply on the F-Series Super Duty Pickup and by new tailgate latch content supplied on the Ford F-Series Pickups.
Previous report
Excluding the impact of net price increases described above, sales to Stellantis were negatively impacted by several passenger car programs ending during the current year period, customer plant shutdowns during the current year period negatively impacting Chrysler Pacifica minivan production, and reduced customer vehicle production volumes and reduced content we supply on the Dodge Ram Pickup.
Previous report
Sales to Tier 1 Customers improved in the current year period compared to the prior year period due to new door hardware content on the F-Series Super Duty Pickup, which is sold to a Tier 1 customer.
Previous report
Sales to Hyundai / Kia were positively impacted due to an overall increase in customer vehicle production volumes between year-to-date period.
Previous report
Prior year period reclassifications have been made for consistency with current year period presentation.
Previous report
Total cost of goods sold increased $17.0 million between year-to-date periods. The period-over-period increase in direct material costs of $4.8 million was the result of the net increase in sales volumes and content we supply, as discussed above, and $4.5 million of negotiated material price increases paid to key suppliers. Price increases paid to suppliers attributed to ongoing operations totaled $2.7 million while the remaining $1.8 million relates to one-time retroactive price increases. The impact of material price increases paid to suppliers was partially offset by reduced zinc costs of approximately $2.4 million in the current year period as compared to the prior year period. The period-over-period increase in labor and overhead costs of $12.2 million was impacted by the following:
Previous report
Cost Increases:
Previous report
The U.S. dollar value of our Mexican operations was negatively impacted by approximately $7.9 million in the current year period as compared to the prior year period due to an unfavorable Mexican peso to U.S. dollar exchange rate between periods. The average U.S. dollar / Mexican peso exchange rate decreased to approximately 17.13 pesos to the dollar in the current year period from approximately 19.44 pesos to the dollar in the prior year period.
Previous report
Mexico wages and benefits increased $4.6 million in the current year period as compared to the prior year period as a result of annual wage increases, including January 1, 2023 and January 1, 2024 20 percent government mandated minimum wage increases.
Previous report
Freight costs increased $3.1 million between year-to-date periods due to an increase in shipments from foreign vendors, a change in shipping terms with a major supplier that occurred in June 2023, and an increase in expedited shipments.
Previous report
The current year period includes expense provisions of $942,000 under our incentive bonus plan. No bonus expense provisions were recorded in the prior year period.
Previous report
Cost Decreases:
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Reworded paragraphs (17)
Previous wording
The following Management’s Discussion and Analysis should be read in conjunction with STRATTEC SECURITY CORPORATION’s accompanying Condensed Consolidated Financial Statements and Notes thereto and its 2023 Form 10-K, which was filed with the SEC on September 7, 2023. Also, refer to discussion of prior period corrections under Basis of Financial Statements included in the Notes to Condensed Consolidated Financial Statements in this Form 10-Q. Unless otherwise indicated, all references to quarters and years refer to fiscal quarters and fiscal years.
Current wording
The following Management’s Discussion and Analysis should be read in conjunction with STRATTEC SECURITY CORPORATION’s accompanying Condensed Consolidated Financial Statements and Notes thereto and its Annual Report. Also, refer to discussion of prior period corrections under Basis of Financial Statements included in the Notes to Condensed Consolidated Financial Statements in this Form 10-Q. Unless otherwise indicated, all references to quarters and years refer to fiscal quarters and fiscal years.
Previous wording
Three months ended March 31, 2024 compared to the three months ended April 2, 2023
Current wording
Three months ended September 29, 2024 (first quarter fiscal 2025) compared with the three months ended October 1, 2023 (first quarter fiscal 2024)
Previous wording
The period-over-period sales increase of $34.0 million reflects net price increases from our major OEM customers of $25.8 million of which $15.9 million is attributed to ongoing increases in current part prices and $9.9 million relates to one-time retroactive price increases for parts shipped in the prior fiscal year for which the price increases were finalized during the current year-to-date period. Period-over-period sales were not materially impacted by the UAW strike. In addition to the net price increases, the following items specifically impacted sales to the noted customer groups between year-to-date periods:
Current wording
Quarter-over-quarter sales increased $3.7 million. The prior year quarter included $8.0 million of one-time retroactive price increases, which were agreed to during the quarter for parts shipped in our fiscal year ended June 30, 2023. The current year quarter included $2.2 million of on-going price increases agreed to subsequent to the prior year quarter for parts supplied in the current quarter. In addition to net pricing changes, the following items specifically impacted sales to the noted customer groups between quarters including the net price changes:
Previous wording
Sales to Ford Motor Company were positively impacted by added power end gate content we supply on the F-Series Super Duty Pickup and by new tailgate latch content supplied on the Ford F-Series Pickups.
Current wording
Sales to Ford Motor Company grew mostly due to new tailgate latch content supplied on the Ford F-Series Pickups.
Previous wording
Sales to Commercial and Other OEM Customers, which are comprised of aftermarket products and vehicle access control products, such as latches, fobs, driver controls and door handles, were positively impacted by sales for new business awarded from Aston Martin.
Current wording
Sales to Commercial and Other OEM Customers, which are comprised of aftermarket products and vehicle access control products, such as latches, fobs, driver controls and door handles, increased primarily due to new business awarded by Aston Martin and a leading EV OEM.
Previous wording
Sales to Hyundai / Kia were positively impacted due to an overall increase in customer vehicle production volumes between quarters.
Current wording
Sales to Hyundai / Kia grew primarily due to higher demand for power door products required to meet an overall increase in customer vehicle production build timing.
Previous wording
Equity earnings of joint ventures was $819,000 in the prior year quarter. Effective June 30, 2023, STRATTEC sold its one-third interest in VAST LLC to WITTE. Refer to the discussion of the Equity Restructuring Agreement within Joint Ventures and Majority Owned Subsidiaries included in the Notes to Financial Statements within this Form 10-Q for additional information regarding the sale of STRATTEC's VAST LLC interest to WITTE Automotive.
Current wording
Equity loss from joint ventures was $265,000 in the prior year quarter. Effective June 30, 2023, STRATTEC sold its one-third interest in VAST LLC to WITTE. Refer to the discussion of the Equity Loss from Joint Ventures included in the Notes to Financial Statements within this Form 10-Q for additional information. The prior quarter loss was the result of additional professional fees incurred during the period related to the sale.
Previous wording
Our effective tax rate was 32.7 percent and (4.2) percent for the three-month periods ended March 31, 2024 and April 2, 2023, respectively. The effective rate estimate for the three-month period ended March 31, 2024 increased as compared to the prior year quarter as a result of a shift in our global earnings mix. The effective tax rate for the three-month period ended April 2, 2023 was impacted by an increase in our fiscal year 2023 pre-tax net loss estimate as of the end of our April 2, 2023 quarter as compared to our estimate as of our January 1, 2023 quarter. The change in our effective tax rate between quarterly periods was also impacted by the sale of our interest in VAST LLC and the purchase of the remaining non-controlling interest in SPA, which were both effective June 30, 2023. Our prior year period effective tax rate differs from the statutory tax rate due to the application of the Global Intangible Low Taxed Income (GILTI) tax provisions, our available R&D tax credit and the non-controlling interest portion of our pre-tax income. The non-controlling interest portion impacts the effective tax rate as ADAC-STRATTEC LLC is taxed as a partnership for U.S. tax purposes. SPA was taxed as a partnership in our fiscal 2023.
Current wording
Our effective tax rate was 28.6 percent and 23.7 percent for the three-month periods ended September 29, 2024 and October 1, 2023, respectively. The effective tax rate for the three-month periods ended September 29, 2024 and October 1, 2023 were impacted by the foreign tax rate differential. The effective tax rate for the three-month period ended September 29, 2024 was also impacted by a limitation on the utilization of our foreign tax credits and non-deductible items, which causes the effective tax rate to differ from the statutory tax rate.
Previous wording
We earn a portion of our operating income in Mexico. As of March 31, 2024, $1.7 million of our $9.6 million cash and cash equivalents balance was held in Mexico. These funds are available for repatriation as deemed necessary.
Current wording
We earn a portion of our operating income in Mexico. As of September 29, 2024, $3.3 million of our $34.4 million cash and cash equivalents balance was held in Mexico. These funds are available for repatriation as deemed necessary.
Previous wording
The reduction in cash provided by operating activities between periods was due to an increase in working capital requirements between periods partially offset by improved profitability in the current year period as compared to the prior year period. Working capital requirement changes between periods were comprised of the following items (in millions):
Current wording
The increase in cash provided by operating activities between periods was primarily due to a reduction in working capital requirements between periods. Working capital requirement changes between periods were comprised of the following items (in millions):
Previous wording
The change in other assets includes an increase in balances during both the current and prior year to date periods. Customer tooling balances and value-added tax recoverable balances related to our operations in Mexico increased during both periods. Customer tooling balances changed due to the timing of tooling development spending required to meet customer production requirements and the timing of related customer billings for tooling cost reimbursement. Value-added tax recoverable balances increased $11.4 million during the current year period due to a temporary issue with our Mexican tax certification. Although the certification issue was resolved during the quarter ended December 31, 2023, we were required to pay VAT on all parts temporarily imported into Mexico before seeking reimbursement for periods in which the certification issue was outstanding, which periods are now open to audit with the Mexican tax authority. The temporary increases in the VAT recoverable balance will remain elevated until the periods under audit are closed. Value-added tax recoverable balances increased during the prior year period due to filed returns that were under audit and pending settlement. The prior year audits have since been closed.
Current wording
The change in other assets reflects a reduction in customer tooling balances in the current year period. Customer tooling balances are impacted by the timing of tooling development spend to meet customer production requirements and related customer billings for tooling cost reimbursement.
Previous wording
Accounts payable and accrued liability balances increased in the prior year period. The increased accounts payable balances reflected the timing of purchases and payments with our vendors based on normal, established payment terms. Additionally, the accrued liability balances included an increase in value-added tax payable balances related to our operations in Mexico due to filed returns that were under audit and pending settlement. The prior year audits have since been closed.
Current wording
Accounts payable and accrued liability balances reflects increases for parts purchased from a foreign vendor, partially offset by a reduction in accrued salaries and benefits. Accounts payable balances for each period reflected the timing of purchases and payments with our vendors based on normal, established payment terms.
Previous wording
Net cash used in investing activities during the current year period of $4.1 million included capital expenditures made in support of requirements for new product programs and the upgrade and replacement of existing equipment of $6.1 million, offset by $2.0 million in proceeds received from the sale of our investment in VAST LLC, which sale was effective during the fourth quarter of our fiscal 2023. Net cash used in investing activities during the prior year period of $13.9 million included capital expenditures made in support of requirements for new product programs and the upgrade and replacement of existing equipment of $13.7 million and investments in our VAST LLC joint venture of $237,000.
Current wording
Net cash used in investing activities of $2.1 million was for capital expenditures to support new product programs as well as the upgrade and replacement of existing equipment. We anticipate total capital expenditures will be approximately $15 million in fiscal 2025. Net cash used in investing activities of $920,000 during the prior year period included $2.0 million in proceeds received from the fourth quarter fiscal 2023 sale of our investment in the VAST LLC joint venture and $2.9 million in capital expenditures for new product programs and the upgrade and replacement of existing equipment.
Previous wording
Net cash provided by financing activities of $55,000 during the current year period included $2 million of borrowings under our credit facility, which borrowings were repaid during the period resulting in no net impact to the change in cash during the period, and $55,000 received for purchases under our employee stock purchase plan. Net cash provided by financing activities of $9.6 million during the prior year period included $13 million of additional borrowings under our credit facility and $164,000 received for the exercise of stock options under our stock incentive plan and purchases under our employee stock purchase plan, partially offset by $3.0 million of repayments of borrowings under our credit facilities and $600,000 of dividend payments to non-controlling interests in our subsidiaries.
Current wording
Net cash provided by financing activities of $13,000 was from $13,000 received for purchases under our employee stock purchase plan. The $3 million of borrowings under our credit facility were repaid during the period resulting in no net change in cash during the period. Net cash provided by financing activities of $17,000 during the prior year period included $2 million of borrowings under our credit facility, which borrowings were repaid during the period resulting in no net change in cash during the period, and $17,000 received for purchases under our employee stock purchase plan.
Previous wording
Our Board of Directors has authorized a stock repurchase program to buy back outstanding shares of our common stock. Shares authorized for buy back under the program totaled 3,839,395 at March 31, 2024. A total of 3,655,322 shares have been repurchased over the life of the program through March 31, 2024, at a cost of approximately $136.4 million. No shares were repurchased during the nine-month periods ended March 31, 2024 or April 2, 2023. Additional repurchases may occur from time to time and are expected to continue to be funded by cash flow from operations and current cash balances. Based on the current economic environment and our preference to conserve cash for other uses, we anticipate modest or no stock repurchase activity for the remainder of fiscal year 2024.
Current wording
Our Board of Directors authorized a stock repurchase program to buy back outstanding shares of our common stock. Shares authorized for buy back under the program totaled 3,839,395 at September 29, 2024 at which time there were 184,073 remaining shares authorized to be repurchased under the program. A total of 3,655,322 shares have been repurchased over the life of the program through September 29, 2024, at a cost of approximately $136.4 million. No shares were repurchased during the three-month periods ended September 29, 2024 or October 1, 2023
Previous wording
STRATTEC has a $40 million secured revolving credit facility (the “STRATTEC Credit Facility”) with BMO Harris Bank N.A. ADAC-STRATTEC LLC has a $25 million secured revolving credit facility (the “ADAC-STRATTEC Credit Facility”) with BMO Harris Bank N.A., which is guaranteed by STRATTEC. The STRATTEC Credit Facility expires August 1, 2026. The ADAC-STRATTEC Credit Facility expires August 1, 2024. We are working with BMO Harris Bank on a renewal of the ADAC-STRATTEC Credit Facility for completion in our fiscal 2024. Borrowings under either credit facility are secured by our U.S. cash balances, accounts receivable, inventory, and fixed assets. Interest on borrowings under the STRATTEC Credit Facility were at varying rates based, at our option, on the bank's prime rate or LIBOR plus 1.25 percent through February 22, 2023, SOFR plus 1.35 percent for the period February 23, 2023 through September 5, 2023, and SOFR plus 1.85 percent subsequent to September 5, 2023. Interest on borrowings under the ADAC-STRATTEC Credit Facility were at varying rates based, at our option, on the bank's prime rate or LIBOR plus 1.25 percent through February 6, 2023 and SOFR plus 1.35 percent subsequent to February 6, 2023. Both credit facilities contain a restrictive financial covenant that requires the applicable borrower to maintain a minimum net worth level. The ADAC-STRATTEC Credit Facility includes an additional restrictive financial covenant that requires the maintenance of a minimum fixed charge coverage ratio. As of March 31, 2024, we were in compliance with all financial covenants required by these credit facilities. There were no outstanding borrowings under the STRATTEC Credit Facility at March 31, 2024 or July 2, 2023. The average outstanding borrowings and weighted average interest rate on the STRATTEC Credit Facility loans were approximately $44,000 and 8.5 percent, respectively, during the nine-month period ended March 31, 2024. Outstanding borrowings under the ADAC-STRATTEC Credit Facility totaled $13.0 million at March 31, 2024 and at July 2, 2023. The average outstanding borrowings and weighted average interest rate on the ADAC-STRATTEC Credit Facility loans were approximately $13.0 million and 6.7 percent, respectively, during the nine-month period ended March 31, 2024.
Current wording
STRATTEC has a $40 million secured revolving credit facility (the “STRATTEC Credit Facility”) with BMO Harris Bank N.A. ADAC-STRATTEC LLC has a $20 million secured revolving credit facility (the “ADAC-STRATTEC Credit Facility”) with BMO Harris Bank N.A., which is guaranteed by STRATTEC. The ADAC-STRATTEC Credit Facility borrowing limit decreases to $18 million on August 1, 2025. The credit facilities both expire August 1, 2026. Borrowings under either credit facility are secured by our U.S. cash balances, accounts receivable, inventory, and fixed assets located in the U.S. Interest on borrowings under the STRATTEC Credit Facility were at varying rates based, at our option, on the bank's prime rate or SOFR plus 1.35 percent through September 5, 2023 and SOFR plus 1.85 percent subsequent to September 5, 2023. Interest on borrowings under the ADAC-STRATTEC Credit Facility were at varying rates based, at our option, on the bank's prime rate with no interest rate margin through May 30, 2024 and a 2 percent interest rate margin subsequent to May 30, 2024 or SOFR plus 1.35 percent through May 30, 2024 and SOFR plus 3.10 percent subsequent to May 30, 2024. Both credit facilities contain a restrictive financial covenant that requires the applicable borrower to maintain a minimum net worth level. The ADAC-STRATTEC Credit Facility includes an additional restrictive financial covenant that requires the maintenance of a minimum fixed charge coverage ratio. As of September 29, 2024, we were in compliance with all financial covenants required by these credit facilities.
Previous wording
Refer to the discussion of Investment in Joint Ventures and Majority Owned Subsidiaries and discussion of Equity Earnings (Loss) of Joint Ventures included elsewhere in Notes to Condensed Consolidated Financial Statements within this Form 10-Q.
Current wording
Refer to the discussion of Investment in Majority Owned Subsidiary included at Note 7 in Notes to Condensed Consolidated Financial Statements within this Form 10-Q.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
While additional repurchases may occur from time to time, based on the current economic environment and our preference to conserve cash for other uses, we anticipate modest or no stock repurchase activity for the remainder of fiscal year 2025. Stock repurchases, if any, are expected to be funded by cash flow from operations and current cash balances.
Current report — wording carried from elsewhere
There were no outstanding borrowings under the STRATTEC Credit Facility as of September 29, 2024 or June 30, 2024. There were no borrowings under the STRATTEC Credit Facility during the three-month period ended September 29, 2024. Outstanding borrowings under the ADAC-STRATTEC Credit Facility totaled $13 at both September 29, 2024 and June 30, 2024. The average outstanding borrowings and weighted average interest rate on the ADAC-STRATTEC Credit Facility loans were approximately $13.7 million and 8.5 percent, respectively, during the three-month period ended September 29, 2024. We believe that the credit facilities are adequate, along with existing cash flows from operations, to meet our anticipated capital expenditure, working capital, dividend, and operating expenditure requirements.
Rearranged previous paragraphs (8)
Previous report — wording carried elsewhere
Net sales to each of our customers or customer groups in the current year period and prior year period were as follows (in millions):
Previous report — wording carried elsewhere
Sales to Commercial and Other OEM Customers, which are comprised of aftermarket products and vehicle access control products, such as latches, fobs, driver controls and door handles, were positively impacted by sales for new business awarded from Aston Martin in the current year period.
Previous report — wording carried elsewhere
Engineering, selling and administrative expenses in the current year quarter and prior year quarter were as follows:
Previous report — wording carried elsewhere
Foreign currency transaction gains and losses resulted from activity associated with foreign denominated assets held by our Mexican subsidiaries.
Previous report — wording carried elsewhere
The Rabbi Trust assets fund our amended and restated supplemental executive retirement plan. The investments held in the Trust are considered trading securities.
Previous report — wording carried elsewhere
We entered into the Mexican peso currency forward contracts to reduce earnings volatility resulting from changes in exchange rates affecting the U.S. dollar cost of our Mexican operations. Unrealized gains and losses on the peso forward contracts recognized as a result of mark-to-market adjustments as of March 31, 2024 may or may not be realized in future periods, depending on actual Mexican peso to U.S. dollar exchange rates experienced during the balance of the contract period.
Previous report — wording carried elsewhere
Pension and postretirement plan costs include the components of net periodic benefit cost other than the service cost component.
Previous report — wording carried elsewhere
We anticipate total capital expenditures will be approximately $9 million to $12 million in fiscal 2024, of which $6.1 million has been made through March 31, 2024, in support of requirements for new product programs and the upgrade and replacement of existing equipment.