NASDAQ:STRT Strattec Security Q1 2025 Earnings Report $33.32 -0.09 (-0.27%) Closing price 04/30/2025 04:00 PM EasternExtended Trading$33.32 +0.00 (+0.00%) As of 08:53 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings History Strattec Security EPS ResultsActual EPS$0.92Consensus EPS $0.56Beat/MissBeat by +$0.36One Year Ago EPS$1.05Strattec Security Revenue ResultsActual Revenue$139.05 millionExpected Revenue$139.32 millionBeat/MissMissed by -$270.00 thousandYoY Revenue GrowthN/AStrattec Security Announcement DetailsQuarterQ1 2025Date11/4/2024TimeAfter Market ClosesConference Call DateMonday, November 4, 2024Conference Call Time4:45PM ETUpcoming EarningsStrattec Security's Q3 2025 earnings is scheduled for Thursday, May 8, 2025, with a conference call scheduled on Friday, May 9, 2025 at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Strattec Security Q1 2025 Earnings Call TranscriptProvided by QuartrNovember 4, 2024 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:01Greetings, and welcome to the Stratex Security Corporation First Quarter Fiscal Year 2025 Financial Results. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Deborah Pawlowski, Investor Relations. Operator00:00:29Please go ahead. Speaker 100:00:31Thank you, and good morning, everyone. We greatly appreciate you joining us for Strathc's first financial results conference call. With me on the call are Jennifer Slater, our President and CEO and Dennis Bau, our Vice President and Chief Financial Officer. Speaker 200:00:48Jennifer and Dennis are going Speaker 100:00:49to review our Q1 2025 financial results and provide an update on the company's priorities. You can find a copy of the press release and the slides accompanying our discussion today on the Investor Relations section of the company's website at www.stratek.com. If you are reviewing those slides, please turn to Slide 2 for the Safe Harbor statement. As you are aware, we may make some forward looking statements on this call during the formal discussion as well as during the Q and A. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated on today's call. Speaker 100:01:30These risks and uncertainties and other factors are discussed in the earnings release as well as with other documents filed by the company with the Securities and Exchange Commission. You can find these documents on our website or atsec.gov. I want to point out as well that during today's call, we will discuss some non GAAP financial measures. We believe these will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. Speaker 100:02:02We have provided reconciliations of non GAAP to comparable GAAP measures in the tables accompanying the earnings release and slides. So with that, if you would please turn to Slide 3, I will turn it over to Jen to begin. Jen? Speaker 200:02:18Thank you, Deb, and welcome, everyone. I'm excited to start hosting these quarterly calls, so we can keep our investors up to date on the changes we are making here at Stratech. While still in the early stages, I am encouraged by the efforts of our team as we work to uncover potential operating efficiencies, identify an optimal cost structure and lay the foundation needed to strengthen profitability and drive sustainable growth. We are in the process of doing deep dives across all areas of the business to better understand why we have historically had so much variability in our performance and what systems, tools and operating model we need to provide more consistent profitable results. Let me start by reviewing some key highlights of our Q1 results. Speaker 200:03:13We generated 11 point $3,000,000 in cash from operations, a substantial increase from last year, raising our cash balance to $34,000,000 at the end of the quarter. Revenue increased 2.7% year over year. When you exclude the impact of the one time retroactive pricing from last year's Q1, net sales increased 9.1%. Growth was primarily driven by ongoing pricing benefits, our solid market position on the F Series pickup and some new programs growing through their launch. Our gross margin for the quarter was 13.6%, which had the benefit of ongoing price improvement as well as more favorable mix. Speaker 200:04:08The quarter also benefited from 190 basis points in favorable FX, while last year's Q1 had a 4 70 basis point benefit related to one time pricing. These two elements make the year over year comparison a little challenging. We are encouraged with our results amid the automotive industry headwinds, which reflect broader macroeconomic conditions. Demand for our products is driven by long cycle sourcing and heavily influenced by the production rates of the automotive industry. We aim to address these headwinds with an improved operating model, innovative products and winning positions on new platforms. Speaker 200:04:55As we look ahead and develop our strategy, we will focus on our future pipeline to increase profitable content on the next generation of platforms. Turning to Slide 4, as I stated earlier, we are thoughtfully assessing our strategy and the future path of Stratek. As there is much to do to uncover the underlying potential of the organization, we have prioritized our efforts into developing a winning product portfolio, driving operational efficiencies and developing our team and talent base. Let me talk you through the work we are doing in each of these areas. 1st, on our product portfolio, we are taking a market driven approach to define our future product roadmap. Speaker 200:05:47This starts with an understanding of our addressable markets given our technologies and products and how the industry is evolving. We will focus where we can add value to our customers and where we have differentiators to create a defensible position. Once that is defined, we plan to prioritize products and investments based on profitability, returns on investment and growth. This work will also inform our efforts to drive operational efficiencies. We are evaluating our supply chain, inventory and operational processes, all of which need modernization. Speaker 200:06:28Stratech has not made much change in how it operates and well over the last decade and we have the opportunity in front of us to make meaningful change. We are in the early stages of rethinking our operational footprint. This encompasses our capacity utilization, our sourcing and supply chain and manufacturing footprint for the future. The fundamentals on our business processes, tools and visibility into the data will help identify opportunities and provide stability in the business performance. I look forward to continuing to provide updates on progress in this area as our assessment evolves and matures. Speaker 200:07:13Finally, but as much a priority, we consider our team to be a fundamental strength of Stratek, making talent development and acquisition key to our future success. Starting with accountability and responsibility, by simply providing expectations and holding people accountable to them, we can drive improvement. The reduction in our preproduction tooling balance is a prime example of this at work. Identifying for the team what is key to our financial performance and what is expected of them drives the right behaviors. I am proud of the work the team has done in this area of the business. Speaker 200:07:57We also need the right people in the right roles. Today, we announced the appointment of Linda Rudman as our Chief People Officer, a new role focused on overseeing talent management and employee engagement for our organization of over 3,300 employees. Linda has been helping us since not long after I joined Stratek and we are excited that she has accepted a full time role as we undergo this transformation. Her experience spans people leadership roles across world class, high growth, strong operational organizations and we believe her contributions will be invaluable to our efforts. We also welcome Shay Becker Barto as our new Chief Commercial Officer. Speaker 200:08:47Shay is an accomplished leader with diverse experience driving revenue growth and resolving complex issues across multiple industries. Her knowledge in customer relationship management systems, prescriptive revenue forecasting models and product portfolio management will fill a vacuum in our current information systems, processes and deliver bottom line improvements. I am thrilled to have these accomplished women join our team on November 11, 2024. We have a lot of work in front of us and as I mentioned, we will be providing progress updates as we advance our transformation. We will establish milestones for you to measure our progress as we define them and share a vision of our future as our strategy is developed. Speaker 200:09:40Let me now shift gears to Slide 5, so we can focus on our sales in the quarter. Total net sales for the Q1 reached $139,100,000 an increase of $3,600,000 or 2.7 percent. Last year's Q1 had the benefit of price of $8,000,000 in one time retroactive pricing. Excluding this pricing impact, underlying sales rose by $11,600,000 or 9.1%. The improvement in sales was primarily due to the effects of $2,200,000 in ongoing price increases and customer demand for existing products, new offerings and content on new platforms. Speaker 200:10:31Notably, we experienced increased sales of our power door products to Hyundai Kia, which we believe was demand driven by inventory stocking to meet their production build rate. We had a 19% increase in sales to Ford attributed to new latch content on all F Series pickups. From a product perspective, growth is primarily in power access, door handles and latches. We continue to see a decline in sales of legacy keys and locksets during the quarter. We are however investing in new technology including a digital key fob that integrates this technology with your phone. Speaker 200:11:17I would like to now hand it over to Dennis who will continue to discuss our financial results in the quarter. Speaker 300:11:26Thanks, Jen, and good afternoon, everyone. Moving to Slide 6, gross profit rose slightly to $18,900,000 up from $18,700,000 in Q1 2024. Gross margin during the quarter was 13.6%. This quarter's gross profit and gross margin benefited from $2,700,000 or 190 basis points of favorable foreign exchange. At current rates, we would expect similar favorability for the December quarter. Speaker 300:11:57However, I should point out that we have seen significant volatility in the U. S. Dollar to peso exchange rate over the last 6 months. As Jen mentioned earlier, we also had ongoing price contribution of $2,200,000 that flowed through to gross profit in the quarter. We will lap that improvement in the second quarter and the rest of the fiscal year based on the timing that new pricing had taken effect last fiscal year. Speaker 300:12:24Gross profit and margin also benefited from improved sales mix, specifically the Hyundai Kia sales that Jen mentioned. There also was $1,300,000 reduction in raw material and purchase component costs. We've had 5 consecutive quarters now of lower material costs and expect that comparative improvements will now begin to diminish within the next quarter. Benefits to gross profit were partially offset by higher manufacturing costs in Mexico, which were primarily driven by a 20% government mandated minimum wage increase. This is the 3rd consecutive year that we have seen the wage increase at these levels. Speaker 300:13:10We had about $400,000 in elevated freight costs related to expedited shipping. We expect to have better control of unexpected operational costs as we implement improved processes and controls in our supply chain and production planning. Adjusted gross margin would exclude the one time retroactive pricing benefit Q1 of the previous year extended 4.50 basis points. But again, 190 basis points or about 40% of that margin expansion was related to favorable foreign exchange. The remaining margin expansion was due to the benefits I already discussed. Speaker 300:13:49As you can see on Slide 7, engineering, selling and administrative expenses or ES and A totaled $13,900,000 which was up $1,300,000 compared with last year's Q1. The increase was primarily due to $800,000 in costs associated with accruing for our short term incentive plan for which there was none last year. We also had about $600,000 in non recurring executive transition expenses in the quarter. As a percentage of sales, ES and A expanded by 70 basis points to 10%. Our ES and A expenses are primarily people costs and are relatively fixed. Speaker 300:14:29As we work on our transformation, we are expecting to make investments both short term and long term, while identifying the opportunities for streamlining and simplifying the organization. The ultimate goal is to get a better business model that drives improved profitability. Moving to Slide 8. Net income for the Q1 was $3,700,000 or $0.92 per diluted share. This was down from last year on a GAAP basis, but improved when excluding adjustments related to the one time retroactive pricing benefit from Q1 2024. Speaker 300:15:05Without the retroactive pricing, last year's Q1 would have been at a loss. Next, Slide 9 highlights our solid balance sheet and financial position. Operating cash flow increased by $15,200,000 versus last year's Q1 due to the improved operating performance and reduced net working capital. We ended the Q1 with $34,400,000 in cash. We anticipate capital expenditures of approximately $15,000,000 in fiscal 2025 focused on supporting new product initiatives, productivity improvements and general maintenance. Speaker 300:15:44In closing, we are pleased with our financial performance this quarter. We're excited about the changes happening in the organization to enhance our strategic focus, rethink our product portfolio and identify opportunities to optimize our operational footprint and improve profitability. With that, operator, we can open the line for questions. Operator00:16:06Thank you. We will now be conducting a question and answer session. Your first question comes from John Franzreb with Sidoti and Company. Please go ahead. Speaker 400:16:38Hello, everyone, and congratulations on a good start to fiscal 2025. Jennifer, I'd like to start with you. You've been on board for a couple of months now. I'm wondering what your impressions are at the company relative to your expectations going in. Speaker 200:16:54Hi, John. Thanks for the question. When I came into the company, the reason I came into the company was it had a strong history in the automotive industry, good solid product portfolio and good people. And my impression of the business is those three things still hold true. And what I'm working on now with the team is how do we build upon those things to continue to drive improvement for the business. Speaker 400:17:24All right. Fair enough. Going into the quarter, the 13.6% gross margin, your prepared remarks seem to suggest that it's sustainable absent the variability of the 190 basis point impact of FX. Is that how we should be thinking about the business model on a go forward basis? Or is there any of the puts and takes we should be cognizant of? Speaker 200:17:48Thanks, John, for the question. So when we look at our profitability, we have a large part of that subject to variability in volume and sales. We're a seasonal business, typical automotive, you've got lower volume in production when you get around the holiday period. We do have variability in our customer and our product mix. So some of our products have higher margin. Speaker 200:18:13And then obviously, we've got, FX variability. And I think an example of our mix is we talked a bit about Hyundai Kia. That's a good product for us. We know that was probably more of an inventory build than it was ongoing higher production. And that shows the sensitivity of our business through customer and volume mix. Speaker 400:18:40Interesting. That's actually very helpful. When you think about 2025 versus 2024, are you thinking you're going to be in operating environment with higher unit volumes or flat unit volumes or when you see things like we're seeing on the lightning and you probably can address that specifically, that you might be looking at diminishing volumes in 2025 versus 2024? Speaker 200:19:04Thanks for that question, John. There is a lot of variability, but it all starts with the industry and the automotive production. And then a layer underneath that is what platforms we're on. You specifically called out the lightning. I think one benefit of our business is we are powertrain agnostic. Speaker 200:19:22So the platform matters, but not necessarily, the difference between an internal combustion engine and an electric vehicle. Speaker 400:19:34And one last question and I'll get back into queue. You mentioned in your prepared remarks about reducing the pre tooling balance. Can you kind of walk us through that process? It seems like you're encouraged by it. And how is that going to kind of look on a go forward basis? Speaker 200:19:49Thanks for that one too, John. I talked a lot about aligning the organization and breaking down silos and defining accountability. I think that's a great example of where we aligned on what was important to the business to recover our tooling for our customers and made sure we understood the accountability and the goal and had a cadence with the team making sure we are making progress. And that is the highlight that I'm excited by that we were able to show the progress there and it's just identifying further opportunities of the business that we can drive performance improvement. Speaker 400:20:27All right. Well, welcome aboard and congratulations on a good start. Speaker 200:20:32Thanks, John. Operator00:20:47Next question comes from Ethan Starr. Please go ahead. Speaker 500:20:51Welcome to the company and thanks for a great first quarter. I'm curious to know, has your pricing caught up with the inflation in costs in your inputs? Speaker 200:21:02Hi, Ethan. Thank you for that question. We did make good progress in our pricing last year. What we are seeing is the industry is getting back to more normalized view of pricing. We are looking for opportunities still where there is price, but it would be a fraction of what we were able to recover last year. Speaker 500:21:21Okay. Thanks. And then, what growth opportunities do you see in power tailgates for pickup trucks, both in terms of adding new makes of trucks and increased popularity among retail purchasers? Speaker 200:21:34Thank you for that question. One of the things that we're doing is we're continuing to define our strategy is looking for the areas of opportunity within our product portfolio, where we have opportunity to grow the customer base that we have today as well as new customers within the transportation automotive market. I'm excited about having Shay join the team to leverage her knowledge and experience in this space to continue to look for opportunities for those products that have been good growth products for us. Speaker 500:22:09Okay. Thank you. And then, what are the prospects for either a small stock buyback and or reinstating the dividend? I mean, you have plenty of cash in the balance sheet right now. So, I'm curious. Speaker 200:22:20Yes. Thank you for that question too, Ethan. So for us right now, it's about making sure that we've got a stable business. We are in a cyclical industry and we want to make sure that as we're looking at our long term strategy and that unfolds that we have a better understanding of the cash generating potential of the business and the best usage uses of the cash in the future. Operator00:22:47Thank you. I would like to turn the floor over to Deborah for closing remarks. Speaker 100:22:52Thank you, everybody. We appreciate you joining us here today. My contact information is available on the materials that we published. Let me know if you have any more questions or would you would like some follow-up. Have a good day. Operator00:23:08This concludes today's teleconference. We thank you for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallStrattec Security Q1 202500:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Strattec Security Earnings HeadlinesSTRATTEC SECURITY CORPORATION Announces Third Quarter Fiscal Year 2025 Financial Results Conference Call and WebcastApril 24, 2025 | businesswire.comWhy Strattec Security (STRT) Is Skyrocketing So Far In 2025?February 13, 2025 | msn.comDonald Trump is about to free crypto from its chains …Sure enough, Bitcoin took off on the exact day Juan said it would. It's up more than 40% since the election … surpassing $100,000 on Dec. 8 .… Now Juan believes it could hit $150,000 … or higher in 2025.May 1, 2025 | Weiss Ratings (Ad)Strattec Security stock hits 52-week high at $45.96February 11, 2025 | msn.comStrattec projects $8M in new pricing gains amid operational transformationFebruary 8, 2025 | msn.comDo Strattec Security's (NASDAQ:STRT) Earnings Warrant Your Attention?February 8, 2025 | finance.yahoo.comSee More Strattec Security Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Strattec Security? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Strattec Security and other key companies, straight to your email. Email Address About Strattec SecurityStrattec Security (NASDAQ:STRT) designs, develops, manufactures, and markets automotive access control products under the VAST Automotive Group brand primarily in North America. The company provides mechanical and electronically enhanced locks and keys, passive entry passive start systems, steering column and instrument panel ignition lock housings, latches, power sliding side door systems, power tailgate and lift gate systems, power deck lid systems, door handles, and related products. It also offers full service and aftermarket support services for its products. The company markets its products to automotive and light truck original equipment manufacturers, as well as other transportation-related manufacturers; and through wholesale distributors, other marketers, and users of component parts, as well as certain products to non-automotive commercial customers. It also exports its products to Europe, South America, Korea, China, and India. Strattec Security Corporation was founded in 1908 and is headquartered in Milwaukee, Wisconsin.View Strattec Security ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Amazon's Earnings Will Make or Break the Stock's Comeback CrowdStrike Stock Nears Record High, Dip Ahead of Earnings?Alphabet Rebounds After Strong Earnings and Buyback AnnouncementMarkets Think Robinhood Earnings Could Send the Stock UpIs the Floor in for Lam Research After Bullish Earnings?Texas Instruments: Earnings Beat, Upbeat Guidance Fuel RecoveryMarket Anticipation Builds: Joby Stock Climbs Ahead of Earnings Upcoming Earnings NatWest Group (5/2/2025)Shell (5/2/2025)Exxon Mobil (5/2/2025)Chevron (5/2/2025)Apollo Global Management (5/2/2025)Eaton (5/2/2025)The Cigna Group (5/2/2025)Palantir Technologies (5/5/2025)Vertex Pharmaceuticals (5/5/2025)Realty Income (5/5/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 6 speakers on the call. Operator00:00:01Greetings, and welcome to the Stratex Security Corporation First Quarter Fiscal Year 2025 Financial Results. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Deborah Pawlowski, Investor Relations. Operator00:00:29Please go ahead. Speaker 100:00:31Thank you, and good morning, everyone. We greatly appreciate you joining us for Strathc's first financial results conference call. With me on the call are Jennifer Slater, our President and CEO and Dennis Bau, our Vice President and Chief Financial Officer. Speaker 200:00:48Jennifer and Dennis are going Speaker 100:00:49to review our Q1 2025 financial results and provide an update on the company's priorities. You can find a copy of the press release and the slides accompanying our discussion today on the Investor Relations section of the company's website at www.stratek.com. If you are reviewing those slides, please turn to Slide 2 for the Safe Harbor statement. As you are aware, we may make some forward looking statements on this call during the formal discussion as well as during the Q and A. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated on today's call. Speaker 100:01:30These risks and uncertainties and other factors are discussed in the earnings release as well as with other documents filed by the company with the Securities and Exchange Commission. You can find these documents on our website or atsec.gov. I want to point out as well that during today's call, we will discuss some non GAAP financial measures. We believe these will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. Speaker 100:02:02We have provided reconciliations of non GAAP to comparable GAAP measures in the tables accompanying the earnings release and slides. So with that, if you would please turn to Slide 3, I will turn it over to Jen to begin. Jen? Speaker 200:02:18Thank you, Deb, and welcome, everyone. I'm excited to start hosting these quarterly calls, so we can keep our investors up to date on the changes we are making here at Stratech. While still in the early stages, I am encouraged by the efforts of our team as we work to uncover potential operating efficiencies, identify an optimal cost structure and lay the foundation needed to strengthen profitability and drive sustainable growth. We are in the process of doing deep dives across all areas of the business to better understand why we have historically had so much variability in our performance and what systems, tools and operating model we need to provide more consistent profitable results. Let me start by reviewing some key highlights of our Q1 results. Speaker 200:03:13We generated 11 point $3,000,000 in cash from operations, a substantial increase from last year, raising our cash balance to $34,000,000 at the end of the quarter. Revenue increased 2.7% year over year. When you exclude the impact of the one time retroactive pricing from last year's Q1, net sales increased 9.1%. Growth was primarily driven by ongoing pricing benefits, our solid market position on the F Series pickup and some new programs growing through their launch. Our gross margin for the quarter was 13.6%, which had the benefit of ongoing price improvement as well as more favorable mix. Speaker 200:04:08The quarter also benefited from 190 basis points in favorable FX, while last year's Q1 had a 4 70 basis point benefit related to one time pricing. These two elements make the year over year comparison a little challenging. We are encouraged with our results amid the automotive industry headwinds, which reflect broader macroeconomic conditions. Demand for our products is driven by long cycle sourcing and heavily influenced by the production rates of the automotive industry. We aim to address these headwinds with an improved operating model, innovative products and winning positions on new platforms. Speaker 200:04:55As we look ahead and develop our strategy, we will focus on our future pipeline to increase profitable content on the next generation of platforms. Turning to Slide 4, as I stated earlier, we are thoughtfully assessing our strategy and the future path of Stratek. As there is much to do to uncover the underlying potential of the organization, we have prioritized our efforts into developing a winning product portfolio, driving operational efficiencies and developing our team and talent base. Let me talk you through the work we are doing in each of these areas. 1st, on our product portfolio, we are taking a market driven approach to define our future product roadmap. Speaker 200:05:47This starts with an understanding of our addressable markets given our technologies and products and how the industry is evolving. We will focus where we can add value to our customers and where we have differentiators to create a defensible position. Once that is defined, we plan to prioritize products and investments based on profitability, returns on investment and growth. This work will also inform our efforts to drive operational efficiencies. We are evaluating our supply chain, inventory and operational processes, all of which need modernization. Speaker 200:06:28Stratech has not made much change in how it operates and well over the last decade and we have the opportunity in front of us to make meaningful change. We are in the early stages of rethinking our operational footprint. This encompasses our capacity utilization, our sourcing and supply chain and manufacturing footprint for the future. The fundamentals on our business processes, tools and visibility into the data will help identify opportunities and provide stability in the business performance. I look forward to continuing to provide updates on progress in this area as our assessment evolves and matures. Speaker 200:07:13Finally, but as much a priority, we consider our team to be a fundamental strength of Stratek, making talent development and acquisition key to our future success. Starting with accountability and responsibility, by simply providing expectations and holding people accountable to them, we can drive improvement. The reduction in our preproduction tooling balance is a prime example of this at work. Identifying for the team what is key to our financial performance and what is expected of them drives the right behaviors. I am proud of the work the team has done in this area of the business. Speaker 200:07:57We also need the right people in the right roles. Today, we announced the appointment of Linda Rudman as our Chief People Officer, a new role focused on overseeing talent management and employee engagement for our organization of over 3,300 employees. Linda has been helping us since not long after I joined Stratek and we are excited that she has accepted a full time role as we undergo this transformation. Her experience spans people leadership roles across world class, high growth, strong operational organizations and we believe her contributions will be invaluable to our efforts. We also welcome Shay Becker Barto as our new Chief Commercial Officer. Speaker 200:08:47Shay is an accomplished leader with diverse experience driving revenue growth and resolving complex issues across multiple industries. Her knowledge in customer relationship management systems, prescriptive revenue forecasting models and product portfolio management will fill a vacuum in our current information systems, processes and deliver bottom line improvements. I am thrilled to have these accomplished women join our team on November 11, 2024. We have a lot of work in front of us and as I mentioned, we will be providing progress updates as we advance our transformation. We will establish milestones for you to measure our progress as we define them and share a vision of our future as our strategy is developed. Speaker 200:09:40Let me now shift gears to Slide 5, so we can focus on our sales in the quarter. Total net sales for the Q1 reached $139,100,000 an increase of $3,600,000 or 2.7 percent. Last year's Q1 had the benefit of price of $8,000,000 in one time retroactive pricing. Excluding this pricing impact, underlying sales rose by $11,600,000 or 9.1%. The improvement in sales was primarily due to the effects of $2,200,000 in ongoing price increases and customer demand for existing products, new offerings and content on new platforms. Speaker 200:10:31Notably, we experienced increased sales of our power door products to Hyundai Kia, which we believe was demand driven by inventory stocking to meet their production build rate. We had a 19% increase in sales to Ford attributed to new latch content on all F Series pickups. From a product perspective, growth is primarily in power access, door handles and latches. We continue to see a decline in sales of legacy keys and locksets during the quarter. We are however investing in new technology including a digital key fob that integrates this technology with your phone. Speaker 200:11:17I would like to now hand it over to Dennis who will continue to discuss our financial results in the quarter. Speaker 300:11:26Thanks, Jen, and good afternoon, everyone. Moving to Slide 6, gross profit rose slightly to $18,900,000 up from $18,700,000 in Q1 2024. Gross margin during the quarter was 13.6%. This quarter's gross profit and gross margin benefited from $2,700,000 or 190 basis points of favorable foreign exchange. At current rates, we would expect similar favorability for the December quarter. Speaker 300:11:57However, I should point out that we have seen significant volatility in the U. S. Dollar to peso exchange rate over the last 6 months. As Jen mentioned earlier, we also had ongoing price contribution of $2,200,000 that flowed through to gross profit in the quarter. We will lap that improvement in the second quarter and the rest of the fiscal year based on the timing that new pricing had taken effect last fiscal year. Speaker 300:12:24Gross profit and margin also benefited from improved sales mix, specifically the Hyundai Kia sales that Jen mentioned. There also was $1,300,000 reduction in raw material and purchase component costs. We've had 5 consecutive quarters now of lower material costs and expect that comparative improvements will now begin to diminish within the next quarter. Benefits to gross profit were partially offset by higher manufacturing costs in Mexico, which were primarily driven by a 20% government mandated minimum wage increase. This is the 3rd consecutive year that we have seen the wage increase at these levels. Speaker 300:13:10We had about $400,000 in elevated freight costs related to expedited shipping. We expect to have better control of unexpected operational costs as we implement improved processes and controls in our supply chain and production planning. Adjusted gross margin would exclude the one time retroactive pricing benefit Q1 of the previous year extended 4.50 basis points. But again, 190 basis points or about 40% of that margin expansion was related to favorable foreign exchange. The remaining margin expansion was due to the benefits I already discussed. Speaker 300:13:49As you can see on Slide 7, engineering, selling and administrative expenses or ES and A totaled $13,900,000 which was up $1,300,000 compared with last year's Q1. The increase was primarily due to $800,000 in costs associated with accruing for our short term incentive plan for which there was none last year. We also had about $600,000 in non recurring executive transition expenses in the quarter. As a percentage of sales, ES and A expanded by 70 basis points to 10%. Our ES and A expenses are primarily people costs and are relatively fixed. Speaker 300:14:29As we work on our transformation, we are expecting to make investments both short term and long term, while identifying the opportunities for streamlining and simplifying the organization. The ultimate goal is to get a better business model that drives improved profitability. Moving to Slide 8. Net income for the Q1 was $3,700,000 or $0.92 per diluted share. This was down from last year on a GAAP basis, but improved when excluding adjustments related to the one time retroactive pricing benefit from Q1 2024. Speaker 300:15:05Without the retroactive pricing, last year's Q1 would have been at a loss. Next, Slide 9 highlights our solid balance sheet and financial position. Operating cash flow increased by $15,200,000 versus last year's Q1 due to the improved operating performance and reduced net working capital. We ended the Q1 with $34,400,000 in cash. We anticipate capital expenditures of approximately $15,000,000 in fiscal 2025 focused on supporting new product initiatives, productivity improvements and general maintenance. Speaker 300:15:44In closing, we are pleased with our financial performance this quarter. We're excited about the changes happening in the organization to enhance our strategic focus, rethink our product portfolio and identify opportunities to optimize our operational footprint and improve profitability. With that, operator, we can open the line for questions. Operator00:16:06Thank you. We will now be conducting a question and answer session. Your first question comes from John Franzreb with Sidoti and Company. Please go ahead. Speaker 400:16:38Hello, everyone, and congratulations on a good start to fiscal 2025. Jennifer, I'd like to start with you. You've been on board for a couple of months now. I'm wondering what your impressions are at the company relative to your expectations going in. Speaker 200:16:54Hi, John. Thanks for the question. When I came into the company, the reason I came into the company was it had a strong history in the automotive industry, good solid product portfolio and good people. And my impression of the business is those three things still hold true. And what I'm working on now with the team is how do we build upon those things to continue to drive improvement for the business. Speaker 400:17:24All right. Fair enough. Going into the quarter, the 13.6% gross margin, your prepared remarks seem to suggest that it's sustainable absent the variability of the 190 basis point impact of FX. Is that how we should be thinking about the business model on a go forward basis? Or is there any of the puts and takes we should be cognizant of? Speaker 200:17:48Thanks, John, for the question. So when we look at our profitability, we have a large part of that subject to variability in volume and sales. We're a seasonal business, typical automotive, you've got lower volume in production when you get around the holiday period. We do have variability in our customer and our product mix. So some of our products have higher margin. Speaker 200:18:13And then obviously, we've got, FX variability. And I think an example of our mix is we talked a bit about Hyundai Kia. That's a good product for us. We know that was probably more of an inventory build than it was ongoing higher production. And that shows the sensitivity of our business through customer and volume mix. Speaker 400:18:40Interesting. That's actually very helpful. When you think about 2025 versus 2024, are you thinking you're going to be in operating environment with higher unit volumes or flat unit volumes or when you see things like we're seeing on the lightning and you probably can address that specifically, that you might be looking at diminishing volumes in 2025 versus 2024? Speaker 200:19:04Thanks for that question, John. There is a lot of variability, but it all starts with the industry and the automotive production. And then a layer underneath that is what platforms we're on. You specifically called out the lightning. I think one benefit of our business is we are powertrain agnostic. Speaker 200:19:22So the platform matters, but not necessarily, the difference between an internal combustion engine and an electric vehicle. Speaker 400:19:34And one last question and I'll get back into queue. You mentioned in your prepared remarks about reducing the pre tooling balance. Can you kind of walk us through that process? It seems like you're encouraged by it. And how is that going to kind of look on a go forward basis? Speaker 200:19:49Thanks for that one too, John. I talked a lot about aligning the organization and breaking down silos and defining accountability. I think that's a great example of where we aligned on what was important to the business to recover our tooling for our customers and made sure we understood the accountability and the goal and had a cadence with the team making sure we are making progress. And that is the highlight that I'm excited by that we were able to show the progress there and it's just identifying further opportunities of the business that we can drive performance improvement. Speaker 400:20:27All right. Well, welcome aboard and congratulations on a good start. Speaker 200:20:32Thanks, John. Operator00:20:47Next question comes from Ethan Starr. Please go ahead. Speaker 500:20:51Welcome to the company and thanks for a great first quarter. I'm curious to know, has your pricing caught up with the inflation in costs in your inputs? Speaker 200:21:02Hi, Ethan. Thank you for that question. We did make good progress in our pricing last year. What we are seeing is the industry is getting back to more normalized view of pricing. We are looking for opportunities still where there is price, but it would be a fraction of what we were able to recover last year. Speaker 500:21:21Okay. Thanks. And then, what growth opportunities do you see in power tailgates for pickup trucks, both in terms of adding new makes of trucks and increased popularity among retail purchasers? Speaker 200:21:34Thank you for that question. One of the things that we're doing is we're continuing to define our strategy is looking for the areas of opportunity within our product portfolio, where we have opportunity to grow the customer base that we have today as well as new customers within the transportation automotive market. I'm excited about having Shay join the team to leverage her knowledge and experience in this space to continue to look for opportunities for those products that have been good growth products for us. Speaker 500:22:09Okay. Thank you. And then, what are the prospects for either a small stock buyback and or reinstating the dividend? I mean, you have plenty of cash in the balance sheet right now. So, I'm curious. Speaker 200:22:20Yes. Thank you for that question too, Ethan. So for us right now, it's about making sure that we've got a stable business. We are in a cyclical industry and we want to make sure that as we're looking at our long term strategy and that unfolds that we have a better understanding of the cash generating potential of the business and the best usage uses of the cash in the future. Operator00:22:47Thank you. I would like to turn the floor over to Deborah for closing remarks. Speaker 100:22:52Thank you, everybody. We appreciate you joining us here today. My contact information is available on the materials that we published. Let me know if you have any more questions or would you would like some follow-up. Have a good day. Operator00:23:08This concludes today's teleconference. 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