STRATTEC SECURITY CORP
For the period ended Sep 27, 2026. Filed Oct 30, 2026.
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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 27, 2026 · Filed Oct 30, 2026
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 2026-03-29; filed 2026-05-08.
0001193125-26-214153
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-27; filed 2026-10-30.
0001193125-26-441692
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 33 previous paragraphs and 45 current paragraphs.
7 unchanged; 9 reworded; 29 added; 16 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 3 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
Forward-Looking Statements
Current report
In this Quarterly Report on Form 10-Q for Strattec Security Corporation ("Strattec," "the Company," "we," "us," or "our"), statements that are not reported financial results or other historic information are "forward-looking statements." These forward-looking statements relate to, among other things, the Company's future financial position, business strategy, targets, projected sales, costs, income, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations. The use of words such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "should," "project," "plan," or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors, some of which are beyond the Company's control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.
Current report
The Company’s operations and financial performance are subject to certain risks and uncertainties, including:
Current report
An uncertain economic environment and inflationary conditions coupled with the cyclical nature of the automotive industry may adversely affect global production and demand for our products;
Current report
macroeconomic and geopolitical conditions, including regional conflicts, could adversely affect our business, results of operations, and financial condition;
Current report
changes in tariffs or international trade policies could adversely affect our results, particularly with respect to goods imported into the United States or produced under U.S. trade agreements such as the USMCA;
Current report
delays, restrictions impacting the import of goods, and components stemming from changes in policies implemented by the U.S. Government related to U.S.-Mexico border crossings could have a negative effect on our business;
Current report
our relatively smaller scale compared to many automotive suppliers may limit our ability to compete effectively and could adversely affect our business, financial condition, and results of operations;
Current report
a significant portion of our net sales is derived from a limited number of customers and vehicle programs, and the loss, cancellation, delay, or reduction of key customer relationships or vehicle programs could materially adversely affect our business, financial condition, and results of operations;
Current report
we operate in a highly competitive market with potential increased competition from Chinese automotive suppliers and rapidly evolving technological developments within our sphere of product offerings;
Current report
our ability to manage changes in the costs of operations, warranty claims, or adverse business and operational issues could be affected by a material global supply chain and logistics disruption;
Current report
future shortages in the supply of semiconductor chips and other matters adversely impacting the timing, availability, and costs of material component parts and raw materials for the production of our products could adversely affect our business, results of operations, and financial condition;
Current report
labor cost inflation or unionization efforts in Mexico, coupled with a shortage of skilled laborers in the United States, could increase our manufacturing expenses and impact production efficiency;
Current report
work stoppages within our operations or at the location of our key customers as a result of labor disputes could adversely impact our business, results of operations, and financial condition;
Current report
an increase in the volume and scope of product returns, warranty claims, or customer cost reimbursement actions could adversely impact our business, results of operations, and financial condition;
Current report
our ability to identify, evaluate, negotiate business development activities on acceptable terms or at all, the costs incurred in pursuing such transactions, and the Company’s ability to integrate any acquired business and realize the anticipated benefits;
Current report
interruptions to our information security management systems and cybersecurity incidents could adversely affect our business, results of operations, and financial condition; and
Current report
other matters including, but not limited to, the factors listed in the “Risk Factors” in Part I, Item 1A included in the Company’s Annual Report on Form 10-K for the year ended June 28, 2026 filed with the SEC on August 28, 2026 (the "Annual Report").
Current report
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 Form 10-Q and the Company undertakes no obligation to update such forward-looking statements.
Current report
Current Business Update
Current report
The North American automotive market remained challenging during the first quarter of fiscal 2027, reflecting lower vehicle production volumes and continued economic and trade uncertainty. Industry data indicates that North American automotive production volumes declined 3.8% compared with the prior-year period. Our net sales for the first quarter of fiscal 2027 were $147.2 million, a decrease of 3.4% compared with the prior-year period, generally consistent with the decline in industry production volumes. For the fiscal year, we continue to expect North American light vehicle production to decline approximately 2%, with production volumes of our primary customers expected to decline nearly 5%. Given the reduced level of new product launches and the long-cycle nature of our business, we are working closely with customers to create future organic growth through increased content on existing vehicle platforms, new platform awards and expansion of our customer base. Our near-term focus is on improving profitability on lower revenue. During the first quarter of fiscal 2027, we continued to take actions to improve our cost structure, including implementation of an additional restructuring program, as well as initiatives to improve supply chain performance. Our supply chain continues to be affected by elevated freight and commodity costs, industry-wide semiconductor shortages, and supplier quality and delivery challenges.
Current report
Our balance sheet remains an important strategic asset and provides flexibility to invest in our transformation and organic growth initiatives, return capital to shareholders and pursue strategic growth opportunities. Cash provided by operating activities was $10.8 million during the first quarter, and cash and cash equivalents were $111.8 million at September 27, 2026, with no borrowings outstanding under our revolving credit facilities. During the quarter, we repurchased $5.0 million of common stock under our share repurchase program and incurred costs related to business development activities intended to diversify our customer base and geographic reach, increase the scale of our operations, and enhance our product portfolio. We intend to maintain a disciplined approach to capital allocation as we invest in operational improvements and organic growth and evaluate opportunities to enhance long-term shareholder value.
Current report
First quarter fiscal 2027 net sales totaled $147.2 million, a decrease of $5.2 million, or 3.4%, compared with the prior-year first quarter. The decrease primarily reflected a $6.2 million decrease in customer production volumes, partially offset by $1.0 million of net pricing benefit.
Current report
Gross profit was $24.3 million in the first quarter of fiscal 2027, compared with $26.3 million in the prior-year period. Gross margin was 16.5% of net sales, compared with 17.3% in the prior-year period. The decrease in gross profit primarily reflected the impact of lower production volumes and $1.4 million of unfavorable foreign currency effects, partially offset by favorable pricing.
Current report
Selling, administrative and engineering expenses were $17.9 million, or 12.2% of net sales, for the first quarter of fiscal 2027, compared with $15.9 million, or 10.4% of net sales, in the prior-year period. The $2.0 million increase was the result of $2.4 million of business development costs and $0.8 million of additional investments in talent and consultants, which were partially offset by $1.2 million of incremental engineering recoveries, compared with the prior year.
Current report
Interest income increased $0.1 million due to higher average cash and cash equivalent balances. Interest expense decreased $0.1 million due to the repayment of all borrowings under our revolving credit facilities in fiscal 2026.
Current report
Other expense, net was $0.2 million in the first quarter of fiscal 2027 and $0.3 million in the prior-year period.
Current report
As a result of the factors described above, net income attributable to Strattec was $4.8 million, or $1.19 per diluted share, in the first quarter of fiscal 2027, compared with $8.5 million, or $2.07 per diluted share, in the prior-year period.
Current report
Cash provided by operating activities was $10.8 million for the first quarter of fiscal 2027, compared with $11.3 million in the prior-year period. Capital expenditures, primarily to support customer programs, were $1.2 million during the first quarter of fiscal 2027 compared with $1.5 million in the prior-year period. Operating cash flow funded $5.0 million of common-stock repurchases, and $1.0 million of taxes paid in connection with vested share-based awards. Prior-year financing cash flows included $3.0 million of repayments under credit facilities and $0.9 million of taxes paid in connection with vested share-based awards.
Removed paragraphs (16)
Previous report
Volatility in the North American automotive industry is driven by supply chain disruptions, global inflation, thinning labor availability, rising global commodity costs and a changing global trade and geopolitical climate. These macro conditions, coupled with changes in production volumes by OEMs in response to new vehicle consumer demand, impact our sales and profitability levels. An evolving tariff landscape, combined with heightened geopolitical instability in certain global regions has further disrupted supply chains and has added complexity to production and cost planning across the industry. Lower near term North American light vehicle production estimates, which are subject to change, reflect these dynamics in addition to continued industry-wide supply chain disruptions and availability of raw materials including rare earth minerals. As we look forward and navigate these macroeconomic challenges and fluctuating OEM production volumes, we are focused on executing new initiatives to improve our cost structure, continuing to mitigate the impact of incremental tariff costs, driving cash flow through improved working capital utilization and securing new platforms to solidify future sales growth.
Previous report
Third quarter fiscal 2026 sales were $137.6 million, representing a decrease of $6.5 million or 4.5%, compared to the prior year, primarily due to lower OEM production volumes and the cancellation of certain customer programs. Third quarter North American automotive industry production declined 2.7% as OEMs managed supply chain challenges and dealer inventory levels. In addition, certain customer programs were cancelled or significantly reduced as OEMs adjusted electric vehicle (“EV”) production plans and product portfolios, which resulted in a $3.5 million reduction in year-over-year third quarter sales. Partially offsetting these volume declines was $1.3 million of pricing, including $0.6 million of US tariff cost recoveries.
Previous report
Gross profit was $22.7 million in the third quarter of fiscal 2026, compared to $23.1 million in the comparable prior year quarter. Despite lower volumes and the unfavorable impact of changes in foreign currency exchange rates of $2.5m, gross margin improved from 16.0% in the prior year to 16.5% in the current year. The improvement primarily reflects the benefits of cost reduction initiatives (including $1.7 million of savings from restructuring actions), productivity improvements of $1.6 million, net pricing realization of $1.0 million and $0.3 million of lower tariff costs. Third quarter fiscal 2026 gross profit also benefited from a $0.6 million recovery of previously expensed costs associated with OEM cancelled EV programs.
Previous report
Selling, administrative, and engineering expenses were $17.6 million, a $1.6 million increase year-over-year. Increased costs in the current quarter were the result of incremental employee costs of $1.0 million, as higher benefit costs were partially offset by lower bonus provisions and timing of outside service spend. The current quarter also includes $0.7 million of incremental business transformation costs and a $0.7 million recovery associated with customer program cancellations.
Previous report
Interest income increased $0.4 million due to increased levels of cash and cash equivalents, which are invested in overnight money market funds. Interest expense decreased $0.2 million, the result of a continued reduction in the average amounts outstanding under revolving credit agreements.
Previous report
Other income (expense) was $0.7 million of expense in the current period. Changes in other income (expense) reflect foreign currency transaction gains and losses, unrealized mark-to-market gains and losses on foreign currency forward contracts, and non-service post-employment costs.
Previous report
Nine months ended March 29, 2026 compared with the nine months ended March 30, 2025
Previous report
Year-to-date net sales totaled $427.6 million, representing an increase of $14.5 million, or 4%, compared to the prior year period. The year-over-year increase in net sales was primarily driven by $9.5 million of pricing (including $2.6 million of customer recoveries for tariffs), and a $5 million increase in shipment volumes. Sales volumes reflected a $4.6 million increase on existing platforms and $3.8 million of net new program launches, which were partially offset as sales associated with cancelled EV programs declined $3.4 million compared to the prior‑year period.
Previous report
Year-to-date gross profit was $71.7 million, compared with $59.2 million in the comparable prior year period. Despite unfavorable changes in foreign currency exchange rates of $4.6 million and incremental tariff costs of $1.9 million, gross profit margin improved year-over-year from 14.3% to 16.8%, a 240 basis point improvement. Material costs increased $4.9 million on higher production levels while labor and overhead costs decreased $2.9 million. Lower year-over-year conversion costs on higher sales reflect our focused efforts to manage our cost structure, which includes a $4.6 million labor cost benefit from completed restructuring actions.
Previous report
Selling, administrative, and engineering expenses were 12.0% of sales for the nine months ended March 29, 2026, compared with 10.9% in the prior year period. Year-to-date expenses were $51.4 million, a $6.5 million increase year-over-year. The increase in costs reflects $3.0 million associated with headcount additions and higher incentive compensation costs $0.5 million, $2.5 million of business transformation costs ($0.5 million in the prior year period), and efforts to improve our cost structure including restructuring and voluntary retirement costs of $1.7 million ($1.1 million in the prior year period). These increases were partially offset by reduced executive transition costs of $1.4 million.
Previous report
Interest income increased $1.4 million due to increased levels of cash and cash equivalents, which are invested in overnight money market funds. Interest expense decreased $0.5 million, the result of a continued reduction in the average amounts outstanding under revolving credit agreements.
Previous report
Other income (expense) was $0.7 million of income in the current period. Changes in other income (expense) reflect foreign currency transaction gains and losses, unrealized mark-to-market gains and losses on foreign currency forward contracts, and non-service post-employment costs.
Previous report
The effective income tax rate was 22.9% and 24.0% for the year-to-date period of fiscal 2026 and 2025, respectively. The change in the effective rate between period was primarily impacted by earnings mix and the foreign tax rate differential.
Previous report
Cash flow from operations was $36.7 million, a decrease of $4.8 million compared with the prior year. Current year-to-date cash from operations reflects improved cash earnings, while the prior year period benefited from a $17 million reduction in operating assets and liability, including the benefit of extending vendor accounts payable. Cash used in investing activities, which includes capital expenditures to support customer programs and modernization of equipment was $5.7 million year-to-date compared with $4.2 million in the prior year period. Current year cash used in financing activities resulted from the repayment of $7.0 million under the joint venture revolving credit agreement and the payment of $1.4 million for taxes withheld related to the vesting of share-based awards.
Previous report
On April 30, 2026, ADAC-Strattec LLC entered into an amended and restated revolving credit agreement with BMO Harris N.A. (the "Amended & Restated JV Credit Facility"), which provides for a $10 million asset-based revolving line of credit, subject to a borrowing base, maturing October 2028. The Amended & Restated JV Credit Facility replaces the previous $18.0 million joint venture facility, which was terminated upon the closing of the agreement.
Previous report
Primary working capital levels at March 29, 2026 are higher than the beginning of the fiscal year, as inventory levels were increased $8.7 million to improve customer deliveries.
Reworded paragraphs (9)
Previous wording
The following Management's Discussion and Analysis should be read in conjunction with the accompanying condensed consolidated financial statements and notes.
Current wording
The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by, the consolidated condensed financial statements and related notes thereto included elsewhere in this Report and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended June 28, 2026.
Previous wording
Strattec is a global automotive access company that designs and delivers safe, secure, and highly engineered access solutions for the automotive and mobility industries. Built on generations of access and security engineering expertise, Strattec partners closely with OEMs to create differentiated, system‑level access experiences for end consumers. Strattec’s portfolio spans the access journey from Permission, enabling secure vehicle entry through advanced mechanical and electronic systems; to Motion, delivering effortless, reliable powered access that enhances everyday usability; and through to Hold, providing precision‑engineered latching solutions that give drivers confidence through proven strength, safety, and durability trusted by OEMs worldwide. As access becomes increasingly intelligent, connected, and central to vehicle experience, Strattec’s strategy is to expand its market share, further diversify its customers and geographic reach while becoming the most trusted access partner to drive long‑term growth across global automotive and mobility markets.
Current wording
Strattec is a global automotive access company that designs and delivers safe, secure, and highly engineered access solutions for the automotive and mobility industries. Built on generations of access and security engineering expertise, Strattec partners closely with OEMs to create differentiated, system-level access experiences for end consumers. Strattec’s portfolio spans the access journey from Permission, enabling secure vehicle entry through advanced mechanical and electronic systems; to Motion, delivering effortless, reliable powered access that enhances everyday usability; and through to Hold, providing precision-engineered latching solutions that give drivers confidence through proven strength, safety, and durability trusted by OEMs worldwide. As access becomes increasingly intelligent, connected, and central to vehicle experience, Strattec’s strategy is to expand its market share, further diversify its customers and geographic reach while becoming the most trusted access partner to drive long‑term growth across global automotive and mobility markets. While the Company serves major automotive OEMs globally, the majority of sales are to the three largest automobile original equipment manufacturers in North America.
Previous wording
Our strategic priority is to execute a business transformation to strengthen the Company’s profitability and deliver sustainable sales growth. We expect to improve our business with upgraded systems and processes, modernization of our support functions and a focus on productivity and efficiencies in our manufacturing operations. We believe this will result in an optimized cost structure and consistent cash generation through improved working capital velocity and efficient asset utilization. In the short term, cash generated from our operations will be reinvested in our business to fund our transformational efforts and growth initiatives. To drive organic growth, we will leverage our technical engineering expertise, market-leading positions and strong customer relationships to generate innovative solutions and capture more content on current platforms, win new platforms with current customers, gain new customers both domestically and abroad and build opportunities in the broader transportation industry.
Current wording
Our strategic priority is to execute on a business transformation to strengthen the Company’s profitability and deliver sustainable sales growth. We expect to improve our business with upgraded systems and processes, modernization of our support functions, and increasing productivity and efficiencies in our manufacturing operations through automation and lean manufacturing. We believe this will result in an optimized cost structure and consistent cash generation through improved working capital velocity and efficient asset utilization. To drive organic growth, we will leverage our technical engineering expertise, market leading positions, and strong customer relationships to generate innovative solutions to capture more content on current platforms, win new platforms with current customers, gain new customers both domestically and abroad, and build opportunities in the broader transportation industry. The strength of our balance sheet also supports continued investments in process modernization, automation, and new product innovation, as well as the flexibility needed to navigate through industry cycles. It also allows for strategic acquisitions to diversify our customers and geographies, increase the scale of our operations, and enhance our product offerings.
Previous wording
Three months ended March 29, 2026 (third quarter fiscal 2026) compared with the three months ended March 30, 2025 (third quarter fiscal 2025)
Current wording
Three months ended September 27, 2026, (first quarter fiscal 2027) compared with the three months ended September 28, 2025 (first quarter fiscal 2026)
Previous wording
The effective income tax rate was 25.1% and 22.4% for the third quarter of fiscal 2026 and 2025, respectively. The effective tax rate for each period presented differs from the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally higher than the U.S. federal statutory rate, partially offset by the recognition of U.S. research and development tax credits and discrete income tax benefits associated with share-based payments. The effective tax rate for the third quarter of fiscal 2026 increased primarily due to a shift in the geographic mix of earnings toward higher-tax jurisdictions.
Current wording
The effective income tax rate was 26.2% and 21.6% for the first quarter of fiscal 2027 and 2026, respectively. The effective rate for both periods differs from the statutory rate because of the foreign rate differential, state income taxes, research and development tax credits, limitations on the utilization of foreign tax credits, non-deductible items and discrete income tax benefits associated with share-based payments. The effective tax rate for the first quarter of fiscal 2027 included a $0.4 million increase to reserves for uncertain tax positions.
Previous wording
At March 29, 2026, we had $107.0 million of cash and cash equivalents, of which $5.3 million was held by foreign subsidiaries. Excess cash is held in money market funds. The following table summarizes our cash flows provided by (used in) operating, investing and financing activities (in millions):
Current wording
At September 27, 2026, we had $111.8 million of cash and cash equivalents, of which $3.8 million was held by our foreign subsidiaries and $108.0 million was held domestically. Excess cash is held in money market funds. The following table summarizes our cash flows provided by (used in) operating, investing and financing activities (in millions):
Previous wording
At March 29, 2026, no borrowings were outstanding under the $40.0 million Amended & Restated Credit Agreement and $1.0 million was outstanding under the $18.0 million joint venture revolving credit agreement.
Current wording
At September 27, 2026, no borrowings were outstanding under the $40.0 million Strattec Credit Facility or the $10.0 million joint venture revolving credit agreement. The Company was in compliance with all covenants under its credit facilities at September 27, 2026.
Previous wording
We believe that the revolving credit lines, combined with our existing cash and anticipated operating cash flows will be adequate to meet operating, debt service and capital expenditure funding requirements. In the short-term., cash generated from operations will be reinvested in our business to fund our transformational efforts and growth initiatives.
Current wording
We believe that the revolving credit lines, combined with our existing cash and anticipated operating cash flows, will be adequate to meet operating and capital expenditure funding requirements. In the short term, cash generated from operations will be reinvested in our business to fund our transformational efforts, organic and strategic growth initiatives, and opportunistically repurchase shares.
Previous wording
We use primary working capital as a percentage of sales (PWC %) as a key metric of working capital management. We define this metric as the sum of net accounts receivable and net inventory less accounts payable, divided by the past three months sales annualized. The following table shows a comparison of primary working capital (dollars in millions):
Current wording
We use primary working capital as a percentage of sales (PWC %) as a key metric of working capital management. We define this metric as the sum of net accounts receivable and net inventory less accounts payable, divided by the past three months sales annualized. The following table shows a comparison of primary working capital (in millions):
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
The Company's consolidated results of operations were as follows (in thousands):