Earnings

Strattec's Adjusted EBITDA Margin Rebounds to 9.2%

The Tip Desk · October 29, 2026 · 3 min read

Net sales were $147.2 million in the first quarter ended September 27, 2026, as the company posted $10.8 million of operating cash flow and $111.8 million of cash with no debt.

Strattec Security Corporation (STRT), a global provider of highly engineered access solutions for the automotive and mobility industries, reported net sales of $147.2 million for the first quarter of fiscal 2027, down $5.2 million, or 3%, from $152.4 million a year earlier. Pricing of $1.0 million somewhat offset a $6.2 million impact of lower customer production volumes.

Adjusted EBITDA was $13.5 million, or 9.2% of net sales, compared with $15.6 million, or 10.2% of sales, in the year-ago quarter. The margin rebounded sequentially from 8.3% in the fourth quarter of fiscal 2026 after 7.3% in the third quarter.

Gross profit was $24.3 million. Gross margin contracted 80 basis points to 16.5% from 17.3% a year earlier. The company said pricing, $0.9 million in restructuring savings, lower overhead costs and better mix were more than offset by lower volume, elevated premium freight and annual labor cost increases. Unfavorable foreign currency of $1.4 million had a 90 basis point negative impact to gross margin. Sequentially, gross margin improved from 15.6% in the fourth quarter of fiscal 2026 to 16.5% in the first quarter, on lower sales.

Selling, administrative and engineering expenses were $17.9 million, or 12.2% of sales, compared with $15.9 million, or 10.4% of sales, a year earlier. The increase was due to $2.4 million in business development expenses, primarily related to advancing and evaluating inorganic growth opportunities. Excluding business development, business transformation and executive transition costs, adjusted SAE was $15.0 million, or 10.2% of sales, in line with the company’s target of SAE being 10% to 11% of sales. The company said additional acquisition-related expenses may be incurred in subsequent periods, with the amount and timing dependent on the progress of acquisition activities.

Income from operations was $6.4 million, or 4.4% of sales, versus $10.4 million, or 6.9% of sales, a year earlier.

Net income attributable to Strattec was $4.8 million, or $1.19 per diluted share, compared with $8.5 million, or $2.07 per diluted share, in the prior-year period. Adjusted diluted earnings per share were $1.85, compared with $2.22. The effective tax rate was 26.2%, compared with 21.6% in the prior-year period, primarily reflecting discrete tax items. Net income attributable to non-controlling interest was $0.5 million, compared with less than $0.1 million.

Cash provided by operating activities was $10.8 million, compared with $11.3 million in the prior-year period. During the quarter the company repurchased 67,904 shares of common stock for $5.0 million, leaving $35.0 million remaining available under its share repurchase authorization. At September 27, 2026, cash and cash equivalents were $111.8 million with no debt, compared with $108.2 million at the end of fiscal 2026 and $90.5 million at the end of the first quarter of fiscal 2026. Interest income was $1.0 million on higher cash balances; interest expense declined as the company had no outstanding bank borrowings.

President and CEO Jennifer Slater said the first-quarter results demonstrated the impact of transformation efforts, which enabled a 9.2% adjusted EBITDA margin on $147.2 million in net sales. She said the company continued to improve its cost structure through targeted operational initiatives and that actions in Mexico operations are expected to generate $1.3 million in annualized savings. She said there remain meaningful opportunities to reduce costs through supply chain improvements and automation, which the company expects to support margin improvement.

Slater said the balance sheet provides flexibility to invest in the business while returning capital to shareholders and pursuing strategic growth. The company said it has an active acquisition funnel of strategic opportunities designed to diversify customers and geographies, increase the scale of operations and enhance product offerings within Permission, Motion and Hold.

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