Strattec Security (STRT) Q2 2026 earnings summary

Executive summary

• Q2 FY26 sales increased 6% year-over-year to $137.5 million, driven by pricing, favorable mix, new program launches, and tariff recovery, despite supply chain and FX pressures.

• Net income attributable to shareholders nearly quadrupled to $4.9 million ($1.20 per diluted share), with adjusted EPS up 163% to $1.71.

• Gross margin expanded 330 basis points to 16.5%, with gross profit rising to $22.7 million.

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

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

Financial highlights

• Q2 FY26 net sales: $137.5M (+6% YoY); YTD net sales: $289.9M (+8% YoY).

• Q2 gross profit: $22.7M (+32% YoY); gross margin: 16.5% (up from 13.2%).

• Adjusted EBITDA for Q2 FY26 was $12.3M (8.9% margin), up from 6.1% prior year; YTD adjusted EBITDA $27.8M, up 55%.

• Free cash flow for Q2 FY26 was $11.3M; YTD: $21M.

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

Outlook and guidance

• Second half FY26 sales projected down 3%-4% year-over-year; automotive production expected to soften.

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

• CapEx for FY26 expected to be under $10M; Q2 CapEx was $2.6M.

• Annual operating cash flow guidance remains at ~$40M; cash generation expected to normalize at ~$10M per quarter.

• Focus on business transformation, cost structure optimization, and investing in future vehicle access solutions.