STRATTEC SECURITY CORPORATION Generated $9.4 million in Cash from Operations in Fiscal 2025 Second Quarter

MILWAUKEE--(BUSINESS WIRE)--STRATTEC SECURITY CORPORATION (Nasdaq: STRT) (“Company”), 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 2025, which ended December 29, 2024. STRATTEC President and CEO Jennifer Slater said, “Our solid financial results reflect the focus the team is placing on our key priorities of stabilizing the business, optimizing costs, and identifying where our engineering innovation commands the right to win. Sales growth was the result of production trends with key customers and, in particular, with the platforms on which we have higher value content. We made progress this last quarter to strengthen our earnings power as we restructured our U.S. manufacturing operations by reducing the number of shifts, which is expected to generate $1.2 million in annualized savings. In addition, we continued to unlock value on our balance sheet as we collected on our tooling investments.” Ms. Slater concluded, “Talent is critical for our transformation, and we made further investments this quarter. We are gaining traction with our customers as our new chief commercial officer identifies opportunities for both new projects as well as pricing that reflects the value of our product offering. We recognize that an engaged and motivated team generates creativity and excitement for our future and we are creating a stronger, more open culture with new leadership in human resources. Importantly as well, we now have the financial leadership needed to support our strategic objectives. We are making solid progress as a team and, in addition to these strategic efforts, we are proactively addressing the potential challenges the tariffs may present.” FY 2025 Second Quarter Financial Summary (compared with prior-year period, except where otherwise noted) Net sales were $129.9 million, an increase of $11.4 million, or 9.6%, compared with the second quarter prior year. Sales growth was driven by $6.0 million of net new program launches, $1.3 million of higher content and product mix. In addition, net sales on current platforms increased $7.3 million as a result of customers building inventory, slightly higher production levels and the prior year second quarter reflecting increased customer plant shutdowns. This growth more than offset the net impact of the prior year period’s one-time pricing benefits of $3.9 million. Sales growth was broad based across most of the product portfolio, excluding keys & locksets. Gross profit increased $3.7 million to $17.2 million, from higher volume and a $3.5 million benefit from foreign currency translation. This was mostly offset by increased labor costs in Mexico, a $0.6 million bonus provision and the favorable retroactive pricing in the prior year second quarter. Gross margin was 13.2% compared with 11.4%. Engineering, selling and administrative expenses increased $1.6 million, or 11.7%, to $15.0 million. The increase reflected continued investments in the business, an annual bonus provision of $0.8 million and $0.3 million in restructuring charges. No bonus provision was recorded in the prior-year period. Operating income increased $2.0 million to $2.1 million and was 1.6% of sales. Investment income increased $0.3 million on higher cash balances, while changes in foreign currency exchange rates resulted in a $1.4 million increase in other expense. Net income attributable to STRATTEC was $1.3 million compared with $1.1 million last year. Diluted earnings per share were $0.32 compared with $0.26 last year. On an adjusted basis, net income attributable to STRATTEC1 grew 86% to $2.6 million. Adjusted diluted earnings per share1 increased $0.29, or 81% to $0.65. Adjusted EBITDA1 for the quarter was $8.0 million compared with $5.0 million in the prior-year period. Balance Sheet and Liquidity Second quarter fiscal 2025 cash flow from operations was $9.4 million, bringing year-to-date cash flow from operations to $20.8 million. Improved working capital management and recovery of pre-production tooling costs benefited operating cash flows. Capital expenditures in the second quarter of fiscal 2025 were $0.9 million, down $0.6 million from the prior year period. At December 29, 2024, STRATTEC had $42.6 million in cash and cash equivalents, up $8.2 million from the end of the first quarter of fiscal 2025. At December 29, 2024 the Company had $13 million of outstanding borrowings under its joint venture revolving credit facility, which is unchanged from the end of fiscal 2024. Total availability under existing lines of credit was $47 million at December 29, 2024. Second Quarter Fiscal Year 2025 Webcast and Conference Call The Company will host a conference call and webcast tomorrow, Friday, February 7, 2025, at 9:00 am Eastern Time to review the financial and operating results for the period ended December 29, 2024, and provide an update on its transformation progress. A question-and-answer session will follow. You can access the call by phoning (201) 689-8470 or find the webcast and accompanying slide presentation at investors.strattec.com. A telephonic replay will be available from 12:00 p.m. ET on the day of the call through Friday, February 21, 2025. To listen to the archived call, dial (412) 317-6671 and enter a replay PIN 13751178. The webcast replay will be available on the Investor Relations section of the Company’s website where a transcript will be posted once available. About STRATTEC STRATTEC is a leading global provider of advanced automotive access, security & authorization and select user interface solutions. 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. The Company serves a broad range of customers, including leading automotive OEMs, offering power access solutions and advanced security systems that include door handles, lift gates, latches, and key fobs. For more information on STRATTEC and its solutions, visit www.strattec.com. Safe Harbor Statement Certain statements contained in this release 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 the same from foreign countries, 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. 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 press release 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 release. 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 similarly titled non-GAAP financial measures used by other companies. STRATTEC’s management uses these measures to make strategic decisions, establish budget plans and forecasts, identify trends affecting STRATTEC’s business, and evaluate performance. Management believes that providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, will help investors evaluate STRATTEC’s core operating and financial performance and business trends consistent with how management evaluates such performance and trends. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures. ________________________ 1 Refer to “Use of Non-GAAP Financial Metrics and Additional Financial Information” as well as accompanying reconciliations to GAAP FINANCIAL TABLES FOLLOW STRATTEC SECURITY CORPORATION Condensed Results of Operations (In Thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended December 29,2024 December 31,2023 December 29,2024 December 31,2023 Net sales $ 129,919 $ 118,532 $ 268,971 $ 253,938 Cost of goods sold 112,768 105,035 232,899 221,721 Gross profit 17,151 13,497 36,072 32,217 Engineering, selling and administrative expenses 15,017 13,439 28,875 26,053 Income from operations 2,134 58 7,197 6,164 Interest expense (257 ) (219 ) (552 ) (439 ) Investment income 408 107 757 194 Other (expense) income, net (482 ) 1,098 (353 ) 967 Income before provision for income taxes and non-controlling interest 1,803 1,044 7,049 6,886 Provision for income taxes 405 264 1,903 1,651 Net income 1,398 780 5,146 5,235 Net income (loss) attributable to non- controlling interest 79 (242 ) 124 48 Net income attributable to STRATTEC SECURITY CORPORATION $ 1,319 $ 1,022 $ 5,022 $ 5,187 Earnings per share attributable to STRATTEC SECURITY CORPORATION: Basic $ 0.33 $ 0.26 $ 1.25 $ 1.31 Diluted $ 0.32 $ 0.26 $ 1.24 $ 1.30 Weighted Average shares outstanding: Basic 4,035 3,976 4,020 3,962 Diluted 4,070 3,998 4,058 3,986 STRATTEC SECURITY CORPORATION Condensed Balance Sheet (In Thousands, except share amounts) (Unaudited) December 29,2024 June 30,2024 ASSETS Current Assets: Cash and cash equivalents $ 42,625 $ 25,410 Receivables, net 91,567 99,297 Inventories: Finished products 18,808 19,833 Work in process 13,462 15,461 Purchased materials 49,241 46,355 Inventories, net 81,511 81,649 Pre-production costs 11,651 22,173 Value-added tax recoverable 21,083 19,684 Other current assets 5,497 5,601 Total current assets 253,934 253,814 Deferred income taxes 17,102 17,593 Other long-term assets 5,587 6,698 Net property, plant and equipment 79,272 86,184 $ 355,895 $ 364,289 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 50,615 $ 54,911 Accrued Liabilities: Payroll and benefits 15,604 28,953 Value-added tax payable 10,054 9,970 Environmental 1,390 1,390 Warranty 10,946 10,695 Other current liabilities 8,966 12,369 Total current liabilities 97,575 118,288 Borrowings under credit facilities 13,000 13,000 Postemployment obligations 12,563 2,429 Other long-term liabilities 4,602 4,957 Shareholders’ Equity: Common stock, authorized 18,000,000 shares, $.01 par value, 7,635,883 issued shares at December 29, 2024 and 7,586,920 issued shares at June 30, 2024 76 76 Capital in excess of par value 102,118 101,024 Retained earnings 255,634 250,612 Accumulated other comprehensive loss (17,827 ) (15,689 ) Less: treasury stock, at cost (3,597,299 shares at December 29, 2024 and 3,598,126 shares at June 30, 2024) (135,465 ) (135,478 ) Total STRATTEC SECURITY CORPORATION shareholders’ equity 204,536 200,545 Non-controlling interest 23,619 25,070 Total shareholders’ equity 228,155 225,615 $ 355,895 $ 364,289 STRATTEC SECURITY CORPORATION Condensed Cash Flow Statement (In Thousands) (Unaudited) Three Months Ended Six Months Ended December 29,2024 December 31,2023 December 29,2024 December 31,2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,398 $ 780 $ 5,146 $ 5,235 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 3,544 4,330 7,206 8,715 Foreign currency transaction gain (188 ) (123 ) (1,193 ) (349 ) Unrealized loss (gain) on peso forward contracts 284 (826 ) 936 (826 ) Stock-based compensation expense 891 479 1,079 984 Loss on settlement of postemployment obligation — — 283 — Change in operating assets and liabilities: Receivables 10,568 16,845 7,379 19,178 Inventories 2,283 (8,072 ) 138 (11,842 ) Prepaid and other assets 1,963 (4,739 ) 7,844 (12,404 ) Accounts payable (9,026 ) (9,083 ) (3,990 ) (16,441 ) Accrued liabilities (2,542 ) (2,894 ) (4,580 ) 410 Other, net 269 261 533 426 Net cash provided by (used in) operating activities 9,444 (3,042 ) 20,781 (6,914 ) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of interest in joint ventures — — — 2,000 Purchase of property, plant and equipment (917 ) (1,473 ) (2,990 ) (4,393 ) Net cash used in investing activities (917 ) (1,473 ) (2,990 ) (2,393 ) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under credit facilities — — 3,000 2,000 Repayment of borrowings under credit facilities — — (3,000 ) (2,000 ) Employee stock purchases 15 20 28 37 Net cash provided by financing activities 15 20 28 37 Foreign currency impact on cash (320 ) 405 (604 ) 274 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 8,222 (4,090 ) 17,215 (8,996 ) CASH AND CASH EQUIVALENTS Beginning of period 34,403 15,665 25,410 20,571 End of period $ 42,625 $ 11,575 $ 42,625 $ 11,575 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Income taxes $ 4,458 $ 682 $ 8,539 $ 1,446 Interest $ 279 $ 222 $ 559 $ 440 Non-cash investing activities: Change in capital expenditures in accounts payable $ 56 $ 18 $ (450 ) $ (175 ) STRATTEC SECURITY CORPORATION Reconciliation of GAAP to Non-GAAP Financial Measures (in thousands, except per share amounts) Fiscal 2024 Fiscal 2025 Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total ADJUSTED NET SALES: Net Sales (GAAP) 135,406 118,532 140,773 143,055 $ 537,766 139,052 129,919 - - $ 268,971 Adjustments: Retroactive FY23 one-time pricing recovery (7,950 ) (1,551 ) (397 ) 175 (9,723 ) - - - - - Adjusted Sales (Non-GAAP) 127,456 116,981 140,376 143,230 528,043 139,052 129,919 - - 268,971 ADJUSTED EBITDA: Net income attributable to STRATTEC (GAAP) $ 4,165 $ 1,022 $ 1,506 $ 9,620 $ 16,313 $ 3,703 $ 1,319 $ - $ - $ 5,022 Net income (loss) attributable to non-controlling interest 290 (242 ) (380 ) 447 115 45 79 - - 124 Provision for income tax 1,387 264 546 1,578 3,775 1,498 405 - - 1,903 Other (income) expense, net 131 (1,098 ) 208 (1,958 ) (2,717 ) (129 ) 482 - - 353 Investment and interest income (87 ) (107 ) (143 ) (235 ) (572 ) (349 ) (408 ) - - (757 ) Interest expense 220 219 222 239 900 295 257 - - 552 Income from operations 6,106 58 1,959 9,691 17,814 5,063 2,134 - - 7,197 Adjustments: Depreciation 4,385 4,330 4,059 3,773 $ 16,547 3,662 3,544 - - $ 7,206 Non-cash stock-based compensation 505 479 240 243 1,467 188 891 - - 1,079 Restructuring and similar charges - - - - - - 265 - - 265 Retroactive FY23 one-time pricing recovery, net (7,078 ) (641 ) (298 ) 24 (7,993 ) - - - - - Executive transition costs - 774 211 73 1,058 941 921 - - 1,862 Business transformation costs - - - - - 73 215 - - 288 (2,188 ) 4,942 4,212 4,113 11,079 4,864 5,836 - - 10,700 Adjusted EBITDA (Non-GAAP) $ 3,918 $ 5,000 $ 6,171 $ 13,804 $ 28,893 $ 9,927 $ 7,970 $ - $ - $ 17,897 Adjusted EBITDA as a % of Adjusted Net Sales 3.1 % 4.3 % 4.4 % 9.6 % 5.5 % 7.1 % 6.1 % 6.7 % ADJUSTED NET INCOME AND EARNINGS/(LOSS) PER SHARE: Net income attributable to STRATTEC (GAAP) $ 4,165 $ 1,022 $ 1,506 $ 9,620 $ 16,313 $ 3,703 $ 1,319 $ - $ - $ 5,022 Adjustments: Restructuring and similar charges 265 3 - 63 331 - 265 - - 265 Retroactive FY23 one-time pricing recovery, net (7,078 ) (641 ) (298 ) 24 (7,993 ) - - - - - Executive transition costs - 973 211 73 1,257 1,224 1,225 - - 2,449 Business transformation costs - - - - - 73 215 - - 288 Non-controlling interest impact on above adjustments 1,014 181 55 22 1,272 - - - - - Tax effect on above adjustments 1,305 (116 ) 7 (41 ) 1,155 (292 ) (384 ) - - (676 ) (4,494 ) 400 (25 ) 141 (3,978 ) 1,005 1,321 - - 2,326 Adjusted Net Income/(Loss) attributable to STRATTEC (Non-GAAP) $ (329 ) $ 1,422 $ 1,481 $ 9,761 $ 12,335 $ 4,708 $ 2,640 $ - $ - $ 7,348 Weighted Average Basic Shares Outstanding 3,948 3,976 3,988 3,988 3,975 4,005 4,035 - - 4,020 Weighted Average Diluted Shares Outstanding 3,974 3,998 4,017 4,027 4,004 4,046 4,070 - - 4,058 Diluted earnings per share (GAAP) $ 1.05 $ 0.26 $ 0.37 $ 2.39 $ 4.07 $ 0.92 $ 0.32 $ - $ - $ 1.24 Adjusted dilutive earnings/(loss) per share (Non-GAAP) $ (0.08 ) $ 0.36 $ 0.37 $ 2.42 $ 3.08 $ 1.16 $ 0.65 $ - $ - $ 1.81

STRATTEC SECURITY CORPORATION Generated $9.4 million in Cash from Operations in Fiscal 2025 Second Quarter

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