All right, we will begin our next presentation. Please give a warm welcome to both the CEO of Strattec, Jen Slater, as well as CFO, Matt Pauli.
Thank you so much. I'm excited to be here. I'm going to tell you a little bit about Strattec. We also will mention tariffs because I know not anybody has talked about that enough over the last couple of days. You know, to start, I want to talk a little bit about our business. We have a large product portfolio that's found across the vehicle, all the way from the front of the vehicle to the rear of the vehicle. I joined as CEO in July of last year, and it's been a really exciting nine months. While I want to talk about the business, I also want to talk about the transformation that we've been under over the last nine months. Starting with our products, our products really are in three product segments.
The history of our company was founded in really the lock and key business traditionally, and that's where we spent quite a bit of our time. We acquired a company that did power access components. You can think of power liftgates, power tailgates, power sliding doors. What we've done is we've taken the capabilities we have in our lock and key business and our power access business and looked for areas that we can expand those capabilities, most recently into user interface controls. You can think about steering wheel switches, paddle shifters. We've also looked for ways we can continue to increase our core platforms, our lock and key business, in taking those core fundamentals of system integration from mechanical components to software and looking at ways to expand into digital key technology.
That's really a key fob that works with your phone and allows consumers to use both their phone and their key fob to access their vehicles. We have a relatively balanced product portfolio across all of those product segments that I talked about. We've historically primarily served what was traditionally called the Big Three, Ford, GM and Stellantis. We have been expanding our customer base in recent years, and we continue to see an opportunity to take our strong engineering capabilities and customer relationships, knowledge of automotive, to expand and diversify our customer base. We've got both U.S. and Mexico manufacturing. Our headquarters is in Milwaukee, Wisconsin, and we have a customer site in Auburn Hills. It's important for us to be close to the day-to-day operations of our customers. We've got strong testing, engineering, and prototype capability. Our manufacturing goes from die-cast, injection mold, light assembly.
We do printed circuit board assembly, as well as die-cast and stampings. Now, talking a little bit about the transformation that we've been under in the last nine months, you know, for me, it all starts about having the right team so that we're impacting the pace of change and impacting the culture for delivering results and driving accountability. There's a lot of underlying opportunities within the business. For us, it's about getting the team together to make sure we're prioritizing on the right things that drive the biggest improvement to the business while we're stabilizing the fundamentals of the business. As I said, we have a strong foundation. We've got good products, good engineering capabilities, and good customer relationships.
As we work on identifying what those underlying opportunities are and prioritizing, we're also building on that strong foundation as we continue to determine where we want to grow in our product portfolio. Again, it's all about prioritization. There is a lot of opportunity in this business, and that's what I'm most excited about. It's just making sure that we're driving the team to work on the critical things. When Matt gets to the financials, I think you'll see some of the progress that we've already made in accountability with driving better cash management, unlocking some pricing and restructuring activities. Speaking of the team, I'm really privileged and excited to be here joined by Matt Pauli, our CFO, who joined in November and has made a tremendous impact on the business. He didn't pay me to say this. I don't need more work from him.
He really has been a great add to the team. We also added a Chief Commercial Officer and a Chief People Officer. We're a company of over 3,000 employees that had never had a head of HR before. And so much of what we need to do, it really starts with our team and our people. You know, these three individuals really have made a big change in the business and helped us continue the pace of change that we have in the prioritization. I'm going to talk a little bit more about the progress that we've made. Again, it's been nine months. We've made a ton of progress in a short period of time. I'm not going to say that the tariff situation hasn't been a distraction for us.
The last two months, we've spent a lot of time in understanding how the tariff situation may impact us and getting to the fundamentals on how do we put in mitigation strategies. That slowed our trajectory down a little bit. I am excited that there's still a lot of opportunity and we can hit the ground running as we've identified where we really need to prioritize. You know, again, I can't emphasize enough how it starts with a team. We've also added a Vice President of Supply Chain to help us get at, you know, our working capital, our inventory, our transportation, and logistics. She's been key in helping us better understand the tariff environment. You know, from an operational standpoint, we've looked at our footprint. We started pretty easy in our U.S. manufacturing in Milwaukee. We were oversized for our volume and our operational needs.
We reduced a shift, saving $1.2 million a year. Chey, who is our commercial leader, she hit the ground running. In Q3, we unlocked some pretty significant pricing opportunities, about $8 million annually worth of pricing that's already effective in Q3. We have also spent a lot of time on modernization. Having an efficient operational cadence and the business processes and the systems that support that allow the leadership team to have the granularity on the data to help us make sure we are prioritizing. You know, not only are we looking at opportunities, but we're really balancing those priorities with how do we stabilize and better operationalize the business. With that, I'm going to hand it over to Matt.
If we can get past each other.
Thanks, Jen. Maybe just to start out with some financial priorities. For our organization, we've really grounded our team in two key financial metrics, the first being cash flow from operations and the second being profitability, or as we measure it in EBITDA. You know, historically, there hasn't been a strong focus on cash flow management and managing our inventory and our working capital. We see a big opportunity to unlock value from a cash flow perspective. Those two metrics also align with our annual incentive for our employees. Those are kind of the two key drivers for our annual bonus program. When I joined the organization in November, I knew it was a business transformation. It was also a transformation for the finance and for the IT organizations as well. A lot of our historical processes from a finance perspective were very manual in nature.
We're working to improve those, be much more proactive in providing data to our supply chain, our operations, and our commercial team. Focusing on customer and product line profitability, focusing on financial planning and analysis. From an IT perspective, we are in the process of upgrading our IT infrastructure and our network, and we'll also look at our applications to see if there's an opportunity to modernize our applications. Overall, our focus is really on just prioritizing all the value creation opportunities and the transformational opportunities for the organization. In the short term, as Jen mentioned, our number one priority is the tariffs. We start each day with a one-hour meeting on tariffs with the top leaders across the organization, cross-functionally.
Supply chain, commercial, to understand what the customers are saying, operations, what can we do differently, and also just understanding kind of the daily changes with the various tariffs. The tariffs do have an impact on our business. We do source components globally, and a lot of our final assembly happens in Mexico. The deferral of tariffs for USMCA-compliant items is significant. It is a big benefit for us because the majority of our items that are assembled in Mexico are USMCA-compliant. With that backdrop, I just wanted to summarize kind of our financial results. As a reminder, we are at June 30 fiscal year-end. These results are for our most recently completed quarter, which was December 31. From a highlights perspective, we generated about $9 million of cash in our second quarter.
Our revenue was up about $11 million to $129 million in a market that was relatively flat during that period. Our revenue growth was primarily driven by new program launches that happened in the second half of fiscal 2024. Our revenue growth in the second quarter was about 9%. I would expect that to moderate a bit here in the back half of the year as we anniversary some of those new program launches. From a profitability standpoint, we generated about $8 million of EBITDA in our second quarter. This next slide just summarizes our sales in the quarter. As Jen touched on, our key customers, which are our relationships, measured decades on the left-hand side of the slide. About 70% of our sales are to a U.S. production facility, and the other 30% are to an international location, primarily Mexico, Canada, Korea, and some European countries.
On the right-hand side of the slide, you can see our five key product categories. We provide these products to both OEM and aftermarket customers. Our aftermarket business is about 10% of our sales. Next, just looking at our gross profits. In our second quarter, we generated $17.2 million of gross profit, which is about a 13% gross profit margin. With our operations in Mexico, obviously, the recent strengthening of the U.S. dollar has had a benefit on our financial results of about $3.5 million. On the flip side, being in Mexico, we also see the downside of higher labor costs in Mexico recently, which just government-mandated wage increases.
When I look at our gross profit, if I exclude some one-time pricing recoveries in the prior year and the impact of the currency, we improved our gross profit margin by about 100 basis points in the quarter, which was largely driven by additional volume. Next, if we just look at our SG&A, which is Sales, General, and Administrative.
Really only focused on, like I said, traditionally the Big Three. What I would say, that's what we're doing. Our IR partner always asks us, "What inning are you in, Jen?" I'm a hockey fan, so that's hard for me to translate. We're second bottom of the second, I think, is what we aligned on. It's been around stabilizing the business. Once we have a stable foundation, it's how do we continue to grow? The easy answer is we have an addressable market with customers that, you know, we haven't actually addressed. You can add on heavy vehicle, off-road markets, and then making sure we understand what we're good at first before we would go look at what other adjacent markets could we address. Yeah.
Can you talk about your portfolio from the standpoint of where the growth came from most recently from new product, what's falling off, and where you think you have, you know, strong competitive positioning versus weak positioning?
Sure. Thank you, Deb. She told me I had to repeat the question before we got in here, and then I forgot that. I do not listen, obviously. The question was, where do we think that, you know, where is our opportunity for our product portfolio to grow, and where do we think we may be falling off in our product portfolio? Some of our recent growth has been in our power access products with launches on, you know, power liftgates, tailgates. We have had growth in power sliding doors. Our traditional lock and key business, I would say there has been a lot of theory that, you know, over time that is going to decline as technology continues to increase in vehicles. While we have seen some decline, I would say that decline is not moving as fast as initially anticipated.
You know, it's hard to tell a consumer you can't have a key fob if you need to hand it to your son or a valet or something else. You know, we still see a strong market for plenty of years in our traditional business as well.
Yeah. Other than that mature market, we saw, you know, in our first half of the year, we did see growth across all of our product lines, and it's diverse across the customer base as well. It is not concentrated on a particular customer.
I would assume that your wins are locked in for the next two years or three years of startup production. You sort of, so what is, and you know what's falling out of production. What does the next scenario look like through 2027?
Yeah. The question is, what does it look like through 2027 because it's a long-cycle business? We haven't given any kind of, you know, what does the future look like, but what, you know, I'd say fundamentally is we do the programs that we're on today are the programs that we'll continue to be on because we're in a long-cycle business. Those platforms generally last in the near term. When I talked about kind of taking the engineering capabilities, leveraging and looking for opportunities of growth, that's why it's important for us to do it today because what we're working on today won't launch for three to five years.
I'd also say that the program life is a little bit longer than that. So it's probably the five to ten years for the program life than the three to five.
Yep.
What's your ultimate goal for the EBITDA margin if it's up to 6 from 3?
Yeah.
What's a respectable, achievable level?
Yeah. The question is, what's the ultimate goal for our EBITDA margin? What I would say Matt and I's focus has been on, we've demonstrated a certain level of EBITDA margin in the past, and our starting point is how do we get back to that?
You know, I think it's definitely a double-digit EBITDA margin. You know, we've made some improvements here in the first half of the year, but we haven't gotten to all the improvement opportunities that we've identified. I think the opportunities for us are both on the operations and supply chain, so a cost management perspective, as well as on a growth, additional volume in our facilities, and also on the pricing front. I think there's kind of lots of different levers that we can pull to improve our profitability.
I think for me, the exciting part of that is in nine months, we've already been able to show some of where's the right place at the right price to source those for ourselves and our customers.
Yeah. I'd say that the tariff situation has, while it's been taking time away from the business transformation, it's also shined a light on other areas where we can improve the business. You know, some things where, you know, the customers, we have a distribution center in El Paso. The customers pick it up in El Paso, which is obviously in the U.S. You know, can they pick it up directly from our facility in Juárez or León, Mexico? It also has made us relook at our global supply chain, right? How much do we want to source from China and other countries? I think those are opportunities as well for us.
Yeah. For making it in Mexico and we're shipping it to Europe, there's no reason to go Mexico to U.S. to Europe. We can just go to our customers. This is what this work has really helped us better understand, the granularity of our supply chain mechanisms. All right.
Thank you so much.
Thank you
hank you.