STRATTEC SECURITY CORP (STRT) Business

ITEM 1. BUSINESS

Overview

Strattec is a global automotive access company that designs and delivers safe, secure, and highly engineered access solutions for the automotive and mobility markets. Built on generations of access and security engineering expertise, we partner closely with OEMs to create differentiated, system level access experiences for end consumers. Our product portfolio spans the access journey from Permission, enabling secure vehicle entry through advanced mechanical and electronic systems; to Motion, delivering effortless, reliable powered access that enhances everyday usability; and through to Hold, providing precision‑engineered latching solutions that give drivers confidence through proven strength, safety, and durability trusted by OEMs worldwide. While primarily focused on key North American automotive original equipment manufacturers (“OEM”), we also provide our products globally to customers in both OEM and aftermarket channels. We believe that our engineering expertise, ability to deliver customized solutions and our quality and delivery performance are key advantages that differentiate the Company from its competitors and allow us to be a premier partner to our customers.

Products

As automotive vehicle security and safety demands continue to strengthen, our product portfolio is well positioned to meet our customers’ evolving needs. Our product offerings primarily relate to vehicle permission, motion and hold functionality.

Products that securely authorize vehicle entry and use (Permission) include mechanical, electronically enhanced locks and keys, fobs, passive entry passive start systems, digital key, steering column and instrument panel ignition lock housings, and related solutions. Our flexible, responsive service, and our deep relationships with our customers have allowed us to deliver these products both directly to our OEM customers and through our differentiated service in the aftermarket channel. We also provide vehicle door handles through our joint venture. These products leverage our deep manufacturing knowledge and understanding of automotive requirements to deliver high quality components, bringing together world-class injection mold and assembly capability with high quality paint processes.

Our Motion product portfolio, which provides powered access and movement, includes power sliding doors, power tailgates, and lift gate systems, as well as power deck lid systems. The products included in these highly-engineered systems include drivetrain mechanisms and electronic control units. These system offerings work together to provide our customers optimal performance through a deep understanding of mechanical, electrical, and software architectures.

Our patented high-function latches (Hold product portfolio) range from power clinching latches to release latches. Engineered for seamless integration, our latch technologies support diverse vehicle architectures, ranging from basic models to luxury nameplates. Our latches combine advanced mechanical design and integrated electronics to deliver secure, reliable, and precisely engineered closure performance.

All of our products are safety critical and powertrain agnostic and, therefore, are applicable for internal combustion, plug-in/hybrid or electric vehicles. Applications we serve require robust engineering partnership during the vehicle design cycle, which is typically three to five years ahead of start of production. Our engineering team works closely with our customers during the design phase to ensure our products meet specific vehicle platform requirements. Once our products are designed into an application, we are well positioned as the incumbent supplier for the life of the vehicle due to the high degree of customization and vehicle platform certification. We believe this is one of the reasons our products are rarely changed during a platform lifecycle, which typically lasts five to seven years.

Across our product lines, we have built strong platform and system competencies, including software development. This approach enables us to leverage our software and component technical capabilities to move with speed and agility and provide better package flexibility for easier integration into a variety of platforms for our customers. For example, we have elevated our key fob business with our digital key product, which leverages our system and software capability to meet increasing security, software and packaging architecture needs. Our power access solutions products are designed from a core platform approach that allows us to leverage carry-over components within a system to move faster through the design phase and provide optimal package flexibility while meeting increasing vehicle safety and security needs.

As access becomes increasingly intelligent, connected, and central to vehicle performance, our strategy is to expand our market share, further diversify our customers and geographic reach, organically and inorganically, and to create the ultimate access experience for consumers while working toward our vision to be the most trusted, global leader in safe and secure access solutions for the automotive and mobility industries.

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Customers

We work closely with our customers throughout the product development process, providing product design, engineering, testing, validation, manufacturing, and launch support. Customer relationships are generally long-term in nature and are established through early involvement in new vehicle design concepts, which can be more than five years before program launch, and competitive sourcing processes which typically are two to three years prior to launch. Our product mix varies by customer, with most customers sourcing multiple product categories from us. Sales to various OEMs (including Tier 1 suppliers) are approximately 90% of our total sales, while the remainder of our sales are to service channels, the aftermarket, and non-automotive customers.

A significant portion of our sales are to General Motors Company, Ford Motor Company, and Stellantis. The products sold to these customers are model specific, fitting only certain defined applications. As such, we are highly dependent on these customers' ability to produce and sell vehicles which utilize our products.

Sales to our customers are coordinated through direct sales personnel and supported by our program managers, application engineers, and other product engineering personnel. In addition, we distribute our components and security products to the automotive aftermarket through authorized wholesale distributors, as well as other marketers and consumers. Our sales are generally based upon purchase orders issued by the OEMs and updated for volume adjustments through production releases. As such, we do not have a firm and definitive backlog of orders. Once awarded to supply products for a particular platform, we typically support those products for the life of the vehicle, which is normally five to seven years, though this term is not guaranteed. When we are the incumbent supplier for a given platform, we believe we will typically serve this customer for the platform life.

Product Engineering Focus

Our product engineering activities, including research and development, are an essential part of our efforts to develop new or improved innovative products. Our product engineering, including the development of customized customer solutions, is accomplished in both the United States and Mexico. The development of new products, or enhancements to existing products, are the result of collaboration with customers. Our engineers and program managers follow a formalized product development process to streamline development and identify market requirements. Our advanced design and engineering capabilities contribute to the development of innovative and highly engineered products, maintain our technological leadership, and enhance our ability to provide customers with unique customized solutions and products. We specialize in integrated system, mechanical, electrical, and software engineering supported by advanced modeling and testing capabilities that enable us to meet our customers' design and timing requirements.

Patents, Trademarks and Other Intellectual Property

Intellectual property protection, innovation, and the continued development of proprietary technology are important components of our strategy to support customer relationships, maintain competitive differentiation and drive long-term growth. We protect and maintain proprietary technologies, products, processes, software, and manufacturing know-how that support our access products and solutions. We rely on a combination of patents, trademarks, trade names, copyrights, trade secrets, confidential information, proprietary manufacturing processes, non-disclosure agreements, and other intellectual property protections to establish and maintain our competitive position. While we believe our patent portfolio provides competitive advantages in specific applications, no individual patent or group of patents is material to our business as a whole.

We market our products under various trademarks, trade names, and service marks, including the Strattec name and related brands. We consider our trademarks and our reputation for quality, engineering excellence, and customer service to be valuable business assets. In addition to formal intellectual property rights, we rely extensively on trade secrets, proprietary technology, technical expertise, manufacturing methods, product specifications, software, and other confidential business information developed through years of experience serving automotive OEM customers.

Operations

We operate an integrated manufacturing and engineering platform that supports the full product lifecycle, including product development, engineering, tooling, testing, manufacturing, assembly, and customer support. Manufacturing and distribution operations are conducted through six facilities located in the United States and Mexico, which enable us to support global customer production requirements. These facilities perform a range of activities, including component manufacturing, product testing, final assembly, warehousing and distribution. Key manufacturing capabilities include precision metal stamping, zinc die casting, machining, plastic

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injection molding, plating and painting, electronics and printed circuit board assembly, automated and manual product assembly and tooling development.

The Company's footprint provides operational flexibility and proximity to customer assembly operations. Our manufacturing operations are supported by advanced quality management systems, automation technologies, and operational excellence initiatives intended to improve productivity, enhance product quality, reduce costs, and strengthen customer satisfaction.

Seasonal Nature of the Business

The automotive industry is inherently cyclical and may experience seasonal fluctuations in vehicle production levels due to model changeovers, plant shutdowns, customer production schedules, holidays, and broader economic conditions. As a supplier to automotive OEMs, our sales and operating results are generally correlated with vehicle production volumes of our customers. Historically, automotive production schedules in North America are typically lower in our fiscal second quarter due to holiday shutdowns and may be affected by customer model year changeovers, planned maintenance activities, and other production interruptions. In addition, customer production volumes may fluctuate throughout the year as a result of consumer demand, inventory levels, new vehicle launches, and other market factors.

Served Customer Vehicles

Our product solutions can be found on over 90 different customer vehicles, including electric (EV), plug-in/hybrid, and internal combustion engine platforms. Key vehicle platforms include, but are not limited to, the following:

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Raw Material Costs and Availability

We source a wide range of materials, components, and subassemblies from a network of global suppliers. Our primary raw materials are high-grade zinc, brass, nickel silver, steel, aluminum, plastic resins, semiconductor chips and other electronics. These materials are generally available from a number of suppliers and are subject to price fluctuations. We believe our sources for raw materials are reliable and adequate for our needs. In the normal course of business, we do not carry substantial inventories of these raw materials in excess of levels reasonably required to meet our near-term production requirements.

Competition

We compete with domestic and foreign competitors for business based on product design, engineering support, delivery, price, innovation, and aftermarket support. While the number of direct competitors in our product markets is currently relatively small, automotive OEMs actively encourage competition among potential suppliers.

Our competitors include Aisin, Aumovio, Alpha-Tech, Brose, Edscha, Huf Group, Inteva, JNS Auto Parts, Magna, Marquardt, MinebeaMitsumi, Mitsuba, Novares, Ohi, PHA Automotive, Shin Chang, Stabilus, Tokai-Rika, Ushin, Valeo and WITTE Automotive.

Human Capital Management

Our employees, coupled with our ability to attract, retain and develop talent, are critical to our business strategy and success. Our human capital strategy centers on cultivating an open, creative work environment and building the skills needed to strengthen our culture and drive innovation and growth. We also focus on developing talent for critical roles and leadership positions, rewarding and supporting associates through competitive compensation and benefits, and promoting the health and safety of our employees. At June 28, 2026, we had 2,654 associates including 395 in the United States, 2,252 in Mexico and 7 in other countries. We have two facilities with union representation, which covers 9.1% of our employees, including our Milwaukee, Wisconsin location (contract expires November 1, 2030) and Leon, Mexico location (contract expires April 12, 2027). In recent years, we have not experienced any significant work slowdowns, stoppages or other labor disruptions.

Executive Officers of Registrant

Our executive officers at the time of this report, together with their ages, positions, and business experience are below:

Jennifer Slater has served as our President and Chief Executive Officer, and as a Director, since July 2024. Prior to joining Strattec, Ms. Slater was Executive Vice President and General Manager, Performance Sensing, of Sensata Technologies, Inc. (NYSE: ST), a global industrial technology company. She also held the positions of Senior Vice President, Automotive & Aftermarket and Vice President and General Manager of Heavy Duty and Off-Road business from September 2022 through March 2023. Prior to her time with Sensata, Ms. Slater held the position of Group Vice President and General Manager, Global OE and Products, at Clarios, LLC from 2019 to September 2022. Ms. Slater serves as a director of Valvoline Inc. (NYSE: VVV), a retail automotive services company; she was first elected in July 2022.

Matthew Pauli has served as our Senior Vice President, Chief Financial Officer since November 2024. He previously served as Chief Financial Officer of CentroMotion, a global manufacturer of highly engineered products serving the transportation and other industrial markets. Earlier in his career, Mr. Pauli held senior finance roles at Enerpac Tool Group (NYSE: EPAC), including Corporate Controller and Chief Accounting Officer, and VP of Finance after starting his career at Ernst & Young.

Chey Varto has served as our Senior Vice President, Chief Commercial Officer since November 2024. She previously served as Chief Commercial Officer at Vayan Group, a leading provider of quality assurance solutions for automotive OEMs. Prior to that, she held leadership roles at Clarios, JD Norman Industries, and GST AutoLeather. She began her career at Lear Corporation where she advanced through roles of increasing responsibility.

James Denis has served as our Senior Vice President, General Counsel and Secretary since December 2025. Prior to joining Strattec, he served as Executive Vice President, General Counsel, Secretary & Chief Compliance Counsel for Enerpac Tool Group (NYSE: EPAC).

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Following a judicial clerkship, Mr. Denis entered private practice, most recently as a shareholder with the law firm of Reinhart Boerner Van Deuren s.c., where he was a member of the firm’s Products Liability and Insurance Risk Management Teams.

Available Information

We maintain our corporate website at www.strattec.com and make available, free of charge, our Code of Business Ethics, and reports that we file with the Securities and Exchange Commission. We are not including all the information contained on or made available through our website as a part of, or incorporating such information by reference into, this Annual Report on Form 10-K.