STRATTEC added $14.3 million of annual sales, then generated $25.4 million less operating cash. The auto-parts maker's latest year looks healthier on the income statement and thinner in the cash-flow statement, which is an unusual way for a business transformation to read.
For the twelve months ended June 28, 2026, revenue rose 2.5% to $579.4 million. Gross margin widened from 15.0% to 16.5%, operating income increased 16.4% to $26.5 million, and net income rose 10.2% to $20.6 million.
The cash number went the other way. Operating cash flow fell 35.4% to $46.3 million, taking cash conversion from 3.84 times net income to 2.25 times. Cash on the balance sheet still climbed to $108.2 million, but that increase was not supplied by the year's operating cash alone.
Management credits pricing, volume, and cost work for the profit improvement. The largest piece of the sales increase was pricing, including tariff surcharges, rather than volume.
"The year-over-year increase was driven by $11.0 million of pricing, including $2.6 million of U.S. tariff surcharges and price increases, and $3.3 million of additional volume."
STRATTEC 10-K, Aug. 28, 2026
That breakdown matters because pricing can lift revenue without requiring a comparable number of new vehicles or parts shipped. STRT also said material costs increased $3.3 million, primarily because of higher sales volumes, while labor and overhead costs rose $0.2 million.
The margin result came despite unfavorable foreign-exchange rates, according to the company. It attributed the 150-basis-point improvement to cost-structure work, higher production volumes, and pricing actions.
"Despite unfavorable changes in foreign currency exchange rates, gross margin improved year-over-year from 15.0% to 16.5%, a 150 basis point improvement, reflecting our focused efforts to manage our cost structure, incremental production volumes and pricing actions."
STRATTEC 10-K, Aug. 28, 2026
The filing gives a clean explanation for the margin expansion, but not for the cash conversion drop. STRT says the $46.3 million of operating cash was driven by cash earnings and working-capital management; it does not spell out which working-capital movement accounts for the gap between cash generation and profit. Inventory was essentially flat, and capital spending was also little changed at $7.3 million, leaving working capital as the unresolved accounting bridge rather than a disclosed investment surge.
There is a customer concentration angle to that bridge. General Motors represents 29.0% of STRT's revenue, and GM's July 21 filing showed revenue up 2.1% year over year. STRT also says its largest automaker customers are adjusting vehicle inventories, production schedules, and electrification plans. That gives the sales growth some context, but it does not explain the cash-flow decline.
The balance sheet offers another piece of the picture: interest income increased $1.5 million as cash levels rose, while interest expense declined $0.6 million after debt repayments. The company repurchased more than 2% of its outstanding common stock for $7.4 million, so cash also left the business through shareholder returns even as the year ended with more cash.
STRATTEC's next report should make the tension easier to track by showing whether operating cash flow and the working-capital bridge move back toward the earnings line. For now, the latest annual report leaves a business with improving margins and a lower conversion of those margins into cash.
STRATTEC's 2026 10-K shows higher net income and lower operating cash flow over the same twelve months.