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• Cash from Operations: $21 million in Q3, $41.5 million year-to-date.

• Cash Position: Over $60 million with limited borrowings.

• Gross Margin: Expanded 560 basis points year-over-year, 280 basis points sequentially.

• Net Income: $1.32 per diluted share, over threefold increase from last year.

• Adjusted EBITDA: $12.9 million or 9% of sales, up from 4.4% in the prior year period.

• Gross Profit: $23.1 million, up from $14.7 million in the prior year period.

• Tariff Impact: Estimated $9 million to $12 million annually before mitigation.

• Engineering, Selling, and Administrative Expenses: $16 million, up $3.3 million from the prior year.

• Operating Cash Flow: $20.7 million for the quarter, $41.5 million year-to-date.

• Capital Expenditures: $4.2 million year-to-date.

• Warning! GuruFocus has detected 6 Warning Signs with ITUB.

Release Date: May 09, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Strattec Security Corp (NASDAQ:STRT) generated nearly $21 million in cash from operations in the third quarter, bringing the year-to-date total to $41.5 million, reflecting improved earnings power and disciplined working capital management.

• The company reported a significant year-over-year gross margin expansion of 560 basis points, demonstrating effective cost management and pricing strategies.

• Net income per diluted share increased more than threefold from the previous year's third quarter, reaching $1.32.

• Adjusted EBITDA rose to $12.9 million, representing 9% of sales, up from 4.4% in the prior year period, indicating strong margin expansion.

• Strattec Security Corp (NASDAQ:STRT) has a strong cash position with over $60 million in cash and limited borrowings, providing flexibility to navigate market conditions and execute strategic priorities.

Negative Points

• The company faces potential tariff-related costs estimated at $9 million to $12 million annually, which could impact profitability if not fully mitigated.

• Engineering, selling, and administrative expenses increased by $3.3 million from the prior year, reflecting higher restructuring charges and additional salaries.

• The company is experiencing elevated labor costs in Mexico, which partially offset the benefits of pricing discipline and cost optimization.

• Despite strong financial performance, macroeconomic uncertainties, including tariffs and industry volume pressures, remain a concern.

• Strattec Security Corp (NASDAQ:STRT) has not yet reinstated its dividend, citing uncertainty in the current environment as a reason for maintaining a conservative cash management approach.