Form 10-K: Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Form 10-K: Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Strattec Security Corporation, a Wisconsin-based company, filed its annual report (Form 10-K) for the fiscal year ended June 28, 2026. The company reported net sales of $243.1 million, a 10.3% increase from the previous year. Net income was $14.1 million, a 21.4% increase from the previous year. The company’s gross profit margin was 24.5%, and its operating margin was 6.4%. As of June 28, 2026, the company had cash and cash equivalents of $43.1 million and total debt of $34.5 million. The company’s market value of common stock held by non-affiliates was approximately $252.7 million as of December 26, 2025.
Financial Performance Overview
Strattec, a global automotive access company, reported strong financial results for fiscal year 2026. The company grew net sales by 3% to $579.4 million, driven by pricing actions and increased production volumes. Gross profit improved by 150 basis points to 16.5% of sales, reflecting the company’s efforts to manage costs and improve operational efficiency. Net income attributable to Strattec increased 10% to $20.6 million, or $5.00 per diluted share.
The company’s strategic priority is to execute a business transformation to strengthen profitability and deliver sustainable sales growth. Key initiatives include upgrading systems and processes, modernizing support functions, and focusing on productivity and efficiency in manufacturing. These actions have resulted in an optimized cost structure and consistent cash generation.
Revenue and Profit Trends
Strattec’s fiscal 2026 net sales of $579.4 million represented a 3% increase compared to the prior year. This was driven by $11.0 million in pricing actions, including $2.6 million from U.S. tariff surcharges and price increases, as well as $3.3 million in additional sales volume. The company saw a $9.5 million increase in sales on existing platforms and $3.3 million from net new program launches, partially offset by $9.5 million in reduced sales from cancelled electric vehicle programs.
Despite unfavorable foreign currency exchange rate impacts, Strattec’s gross margin improved from 15.0% in fiscal 2025 to 16.5% in fiscal 2026. This 150 basis point increase was driven by the company’s efforts to manage its cost structure, including $5.4 million in savings from prior restructuring actions and $1.7 million in lower bonus provisions. These improvements were partially offset by $6.5 million in higher conversion costs due to the foreign exchange headwind.
Selling, administrative, and engineering expenses increased by $7.0 million, or 11.9% of sales, compared to the prior year. This was primarily due to $3.3 million in investments in additional talent, $3.3 million in incremental business transformation costs, and $1.3 million in restructuring and retirement costs, partially offset by reduced executive transition and bonus costs.
The company’s effective tax rate increased from 23.2% in fiscal 2025 to 34.4% in fiscal 2026, primarily due to a $1.0 million increase in valuation allowances and a $2.9 million increase in reserves for uncertain tax positions.
Overall, Strattec’s fiscal 2026 net income attributable to the company was $20.6 million, a 10% increase compared to the prior year. Earnings per diluted share were $5.00, up from $4.58 in fiscal 2025.
Strengths and Weaknesses
Strengths:
- Improved profitability through cost management and operational efficiency initiatives
- Strong customer relationships and market-leading positions in key product categories
- Diversified customer base, including the three largest North American automotive OEMs
- Healthy balance sheet with no outstanding debt and significant cash reserves
Weaknesses:
- Exposure to foreign currency fluctuations, particularly the Mexican peso, which negatively impacted costs
- Reliance on a small number of major customers, with the top three North American OEMs accounting for the majority of sales
- Ongoing macroeconomic uncertainty and volatility in the automotive industry, including tariff-related issues and shifting production schedules
Outlook and Future Opportunities
Looking ahead, Strattec remains focused on continuing to execute its strategic business transformation initiatives to drive long-term growth and shareholder value. The company expects to invest in customer program launches, product development, manufacturing automation, and other strategic projects to improve its competitiveness and margins.
Despite forecasts for a modest decline in North American light vehicle production in fiscal 2027, Strattec is well-positioned to navigate industry cycles due to its strong balance sheet and disciplined capital allocation approach. The company plans to maintain a focus on cash flow generation, debt reduction, and opportunistic share repurchases, while also pursuing strategic acquisition opportunities that align with its long-term objectives.
Key growth opportunities for Strattec include leveraging its technical engineering expertise to capture more content on current platforms, win new platforms with existing customers, gain new customers both domestically and abroad, and expand into the broader transportation industry. The company is also actively working to be included on vehicle platforms scheduled for production in model years 2030 and beyond, building a more predictable business that can generate consistent cash flow across industry cycles.
Overall, Strattec’s fiscal 2026 performance demonstrates the progress it has made in executing its strategic priorities. By continuing to invest in the business, optimize its cost structure, and diversify its customer and geographic reach, the company is well-positioned to navigate the evolving automotive market and drive long-term shareholder value.