Strattec Security Corporation delivered a fiscally modest Q1 2025, driven by continued pricing benefits and favorable product mix but tempered by currency volatility and manufacturing cost pressures as the company undergoes a broader transformation. Total net sales for the quarter were $139.1 million, up 2.7% year over year, with underlying growth of 9.1% excluding the one-time retroactive pricing in the prior year. Gross margin registered 13.6%, supported by ongoing price improvements, a more favorable mix, and roughly 190 basis points of foreign exchange benefit, offset by higher Mexican manufacturing costs from a 20% minimum wage increase and elevated freight. Net income was $3.7 million ($0.92 per diluted share), and operating income was $5.06 million, underscoring a profit profile that remains sensitive to volume swings in a cyclical auto industry.
The quarter also underscored the company’s deliberate transformation agenda. Management outlined a three-pillar plan: (1) rebuild a winning product portfolio anchored on profitability and growth; (2) drive operating efficiencies and modernize the supply chain and processes; (3) recruit and empower the team to execute the strategy. Notably, STRATTEC announced leadership appointments (Linda Redmann as Chief People Officer and Chey Becker-Varto as Chief Commercial Officer) to accelerate talent development, customer relationship management, and portfolio management. On the commercial front, ongoing growth was supported by Ford F-Series latch content and Hyundai/Kia power-door sales, with a shift away from legacy keys toward higher-margin, newer technology offerings (e.g., digital key fob integration).
Looking forward, management signaled continued FX tailwinds at current rates, with expectations to lap price benefits from the prior year in the subsequent quarters. The company projected approximately $15 million in capital expenditures for fiscal 2025 to support new product initiatives and productivity improvements. While the near-term path remains exposed to automotive demand and platform timing, the strategic emphasis on portfolio optimization, cost discipline, and a strengthened organizational structure provides a constructive outlook for profitability and long-term content on next-generation platforms.