Milwaukee-based Strattec Security Corp. reported fiscal fourth quarter net income of $1.9 million, or 33 cents per share, down from $6.4 million, or $1.58 per share, in the fourth quarter of 2014.
The company, which manufactures automotive access control products, reported operating income of $2.4 million, down from $9.7 million in the same period a year ago.
Revenue totaled $98.4 million in the fourth quarter, down from $102.1 million in the fourth quarter of 2014.
The decrease in net income was attributed to an $8.5 million provision in the quarter for customer warranty reserves, as the company expects to make warranty payments, in addition to operating losses and impairment write-downs, on its Advanced Logic LLC biometric joint venture.
Sales were also down to Fiat Chrysler Automobiles and General Motors Co. versus the year ago quarter.
For the full year, Strattec reported net income of $24.6 million, up from $19.1 million in 2014.
Full-year operating income was $31.1 million, up from $26.5 million last year.
And 2015 revenue totaled $411.5 million, up from $348.4 million a year ago.
“After STRATTEC associates performed at an exceptionally high level throughout the year, I am disappointed to end the year with poor reported earnings for the fourth quarter,” said Frank Krejci, president and chief executive officer. “The underlying business and performance remains strong. However, in addition to the Chrysler Windsor Assembly Plant shutdown, significant unusual charges drastically hurt the quarter. Despite all of that, we still chalked up a year of both record sales and record profits for STRATTEC.
“Throughout the automotive industry there has been a heightened focus on supplier cost-sharing in vehicle manufacturers’ warranty repairs and vehicle recalls. The larger charge of $8.5 million of warranty expenses reflects this new reality. While we expect this trend to continue, we do not expect the magnitude of the impact on our financial results to continue. For example, one particularly impactful problem this past year was the result of a new vehicle launch with significant time pressures and customer-driven late design changes. We have learned from it and will make it an area of focus for this upcoming year. Some of the charges relate to our efforts to diversify our business. We recognized nearly $2 million of start-up and impairment costs in the current quarter relating to STRATTEC Component Solutions and STRATTEC Advanced Logic. We are still optimistic about these initiatives, but the birthing process has been more costly than we expected.”
