Strattec reported generating $14 million in cash from operations in its second quarter of fiscal 2026.

Strattec Security Corporation (Nasdaq: STRT) ("Company" or "Strattec"), a leading provider of smart vehicle access, security and authorization solutions for the global automotive industry, reported financial results for its second quarter of fiscal year 2026, which ended December 28, 2025.

Jennifer Slater, President and CEO of Strattec, said, "We delivered a solid second quarter despite market and supply chain headwinds and unfavorable foreign exchange trends. A focus on pricing and cost reductions protected our gross margin. That focus continued during the quarter as we offered a voluntary early retirement program and implemented additional restructuring actions in our operations in Mexico. We expect $3.4 million in annual savings from these actions. We continue to generate strong cash flow even as we are investing to improve our business."

"The second half of fiscal 2026 is expected to have a softer U.S. automotive production market and continued FX headwinds. We remain centered on transforming Strattec into a better business with stronger earnings power and a predictable path for growth. We will continue to find ways to improve productivity while investing in creating the products that will provide vehicle access solutions for the future," Ms. Slater concluded.

FY 2026 Second Quarter Financial Summary

(compared with prior-year period, except where otherwise noted)

Net sales were $137.5 million, an increase of $7.6 million, or 6%. Sales growth was driven by $3.1 million of pricing, $3.0 million associated with favorable sales mix and higher content value, $2.4 million in net new program launches and $1.4 million in tariff recovery more than offsetting $2.3 million in reduced market demand.

Gross profit increased $5.6 million to $22.7 million, while gross margin expanded 330 basis points. The improvement was primarily the result of pricing actions and the contribution from higher production volumes, complemented by $1.7 million in restructuring savings. This more than offset $0.9 million of incremental tariff costs, $1.2 million of higher labor costs in Mexico related to annual merit increases, and $1.6 million related to unfavorable foreign exchange rates.

Selling, administrative and engineering ("SAE") expenses increased $2.8 million to $17.9 million, or 13.0% of sales, compared with $15.0 million, or 11.6% of sales, in the prior-year period. Elevated SAE expenses included a $1.7 million charge related to the voluntary retirement program and an increase in business transformation costs of $0.8 million. The $0.7 million investment in additional talent was mostly offset by the $1.1 million reduction in executive transition costs.

Interest income grew $0.5 million on higher cash balances, while interest expenses declined $0.2 million on lower borrowings. Other income increased $2.2 million as a result of changes in foreign currency exchange rates.

Net income attributable to Strattec was $4.9 million, or $1.20 per diluted share, compared with $1.3 million, or $0.32 per diluted share, in the prior-year period. On an adjusted basis, second quarter fiscal 2026 net income attributable to Strattec1 was $7.1 million, and adjusted diluted earnings per share1 was $1.71. Adjusted EBITDA1 for the quarter was $12.3 million compared with $8.0 million in the prior-year period. Adjusted EBITDA margin of 8.9%, compared with 6.1% in the fiscal 2025 second quarter.

Financial Flexibility with Strong Balance Sheet

Cash from operations in the second quarter of fiscal 2026 was $13.9 million, an increase of $4.4 million, or 47%, as a result of higher cash earnings.

At December 28, 2025, the Company had $99.0 million in cash and cash equivalents, up from $90.5 million at the end of the first quarter fiscal 2026 and $84.6 at the end of the fourth quarter of fiscal 2025. Inventories increased $10.3 million in the quarter to improve service levels and reduce expedites.

Second Quarter Fiscal Year 2026 Webcast and Conference Call

The Company will host a conference call and webcast tomorrow, Friday, February 6, 2026, at 9:00 am Eastern Time to review the financial and operating results for the period ended December 28, 2025, and provide an update on its transformation progress.

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