Strattec Security (STRT) Q2 2026 earnings summary

Executive summary

• Q2 FY2026 sales increased 6% year-over-year to $137.5 million, driven by pricing, favorable mix, new program launches, and customer inventory builds.

• Gross margin expanded 330 basis points to 16.5%, with gross profit rising to $22.7 million, supported by pricing, higher volumes, and restructuring savings.

• Net income attributable to shareholders nearly quadrupled year-over-year to $4.95 million ($1.21 per diluted share); adjusted EPS up 163% to $1.71.

• Operating cash flow reached $13.9 million in Q2, with cash at quarter end of $99 million and debt reduced to $2.5 million.

• Transformation initiatives, including a voluntary retirement program and restructuring, are expected to generate $3.4 million in annualized savings.

Financial highlights

• Q2 gross profit was $22.7 million (+32% YoY); gross margin: 16.5% (up from 13.2%); YTD gross margin: 16.9% (up 350 bps YoY).

• Adjusted EBITDA for Q2 was $12.3 million (8.9% margin), up from 6.1% prior year; YTD adjusted EBITDA $27.8 million, up 55%.

• Free cash flow for Q2 was $11.3 million; YTD free cash flow $21 million.

• Shareholders’ equity increased to $263.0 million as of December 28, 2025.

• Q2 EPS: $1.21 basic, $1.20 diluted; YTD EPS: $3.31 basic, $3.26 diluted.

Outlook and guidance

• Second half revenue projected to decline 3%-4% year-over-year, with automotive market expected to be flat or slightly down.

• Margins expected to vary quarter-to-quarter, with long-term improvement targeted.

• Cash generation expected to normalize at ~$10 million per quarter; annual operating cash flow guidance remains at ~$40 million.

• CapEx for fiscal 2026 expected to be less than $10 million.

• SAE expenses expected to normalize to 10%-11% of sales in the back half of the year.