Strattec Security Corporation reported adjusted earnings of $2.06 per share for the fourth quarter of fiscal 2026, exceeding Wall Street estimates by 83.9% and driving a 3.72% rise in its shares to $82.01.
The company posted Q4 revenue of $151.8 million, up 3.26% from forecasts of $147 million and essentially flat year-over-year, defying initial expectations of a 3% to 4% decline. Adjusted net income reached $8.4 million, with adjusted diluted EPS unchanged at $2.06 compared to the prior-year period. GAAP net income fell to $3.9 million from $8.3 million a year earlier, while gross profit declined to $23.6 million from $25.4 million, resulting in a gross margin of 15.6%. Adjusted EBITDA totaled $12.5 million, down slightly from $13 million in the prior-year quarter.
For the full fiscal year 2026, Strattec reported record revenue of $579.4 million, a 2.5% increase from $565.1 million in fiscal 2025. Adjusted EPS rose 9% to $5.00, while gross profit climbed to $95.4 million from $84.6 million. Gross margin expanded by 150 basis points to 16.5%, and adjusted EBITDA grew 15% to $50.5 million, with an adjusted EBITDA margin improvement of 100 basis points to 8.7%. Operating cash flow for the year totaled $46.3 million, supported by $108.2 million in cash and no debt at year-end.
Chief Executive Officer Jennifer Slater highlighted the company's record annual revenue and improved margins, noting that automotive industry cycles require early customer engagement. Chief Financial Officer Matthew Polly emphasized that Q4 sales met expectations despite initial estimates of a 3% to 4% decline, attributing the performance to stronger-than-anticipated original equipment manufacturer build rates.
Strattec returned $7.4 million to shareholders in Q4 by repurchasing approximately 110,000 shares under a prior authorization. The board also approved a new $40 million stock repurchase program. Restructuring actions generated approximately $6 million in savings during fiscal 2026, bringing cumulative savings to $9.5 million since fiscal 2025.
Looking ahead to fiscal 2027, Strattec expects North American production to decline by about 2%, with its top three customers—Ford, Stellantis, and General Motors—projected to decrease by roughly 6%. Foreign exchange pressures, particularly from the Mexican peso, remain a cost headwind, with a 5% shift in the USD/MXN rate potentially impacting annual manufacturing costs by approximately $4 million before hedging. The company targets a normalized operating cash flow of about $10 million per quarter and capital spending of roughly $12 million, or 2% of sales. Strattec does not plan to reinstate dividends.
