Key Tronic Corporation (NASDAQ:KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended April 3, 2010.

For the third quarter of fiscal 2010, Key Tronic reported total revenue of $51.7 million, up 16% from $44.8 million in the previous quarter and up 17% from $44.2 million in the same period of fiscal 2009. For the first nine months of fiscal 2010, total revenue was $137.8 million, compared to $139.5 million in the same period of fiscal 2009.

Net income for the third quarter of fiscal 2010 was $4.4 million or $0.43 per diluted share, up from $1.7 million or $0.17 per diluted share in the previous quarter and up from $0.3 million or $0.03 per diluted share for the same period of fiscal 2009. Results for the third quarter of fiscal 2010 include a net deferred tax benefit of $2.2 million or approximately $0.22 per diluted share. For the first nine months of fiscal 2010, net income was $6.4 million or $0.63 per diluted share, up from $0.8 million or $0.08 per diluted share for the same period of fiscal 2009.

Higher than anticipated production volumes for the third quarter of fiscal 2010 resulted in a strong gross margin of 10% and an operating margin of 4%, up from 7% and 1%, respectively, in the same period of fiscal 2009.

“We’re very pleased with our strong sequential growth in revenue and earnings during the third quarter of fiscal 2010, driven by increased demand from both new and longstanding customers,” said Craig Gates, President and Chief Executive Officer. “We’ve remained profitable for 25 consecutive quarters by continuing to control our costs, maintain strong operating efficiencies and improve our new product introduction processes, even as we have brought many new programs into production and grown our business.

“During the third quarter of fiscal 2010, we continued to diversify our revenue base by winning new programs involving specialty printers, motion warning systems and video communications equipment. We had about $5 million in orders that were delayed to the fourth quarter because of industry-wide shortages in the global supply chain. In coming periods, we plan to expand capacity in our world-class campuses in Mexico and China to accommodate new programs that we have already won and are moving into production.”

Business Outlook

For the fourth quarter of fiscal 2010, the Company expects to report revenue in the range of $52 million to $58 million, and earnings in the range of $0.14 to $0.19 per share, reflecting an effective tax rate of approximately 33%. Previous quarters have had near zero effective tax rates because profits were offset by the benefits of net operating loss carryforwards, which have now been fully recognized. The Company’s forecast for the fourth quarter of fiscal 2010 may be impacted by continuing supply chain issues that could result in variances in its results as the world’s solid state supply ramps up to meet demand.

Conference Call

Key Tronic will host a conference call today to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern) on April 27, 2010. A broadcast of the conference call will be available at www.keytronic.com under “Investor Relations” or by calling 877-941-6010 or +1 480-629-9773. A 48-hour replay will be available by calling 800-406-7325 or +1-303-590-3030 (Access Code: 4282480). A replay will also be available on the Company’s Web site.

About Key Tronic

Key Tronic is a leading contract manufacturer offering value-added design and manufacturing services from its facilities in the United States, Mexico and China. The Company provides its customers full engineering services, materials management, worldwide manufacturing facilities, assembly services, in-house testing, and worldwide distribution. Its customers include some of the world's leading original equipment manufacturers. For more information about Key Tronic visit: www.keytronic.com

Some of the statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages containing verbs such as ‘aims, anticipates, believes, estimates, expects, hopes, intends, plans, predicts, projects or targets’ or nouns corresponding to such verbs. Forward-looking statements also include other passages that are primarily relevant to expected future events or that can only be fully evaluated by events that will occur in the future. Forward-looking statements in this release include, without limitation, the Company’s statements regarding its expectations with respect to quarterly revenue and earnings during fiscal 2010. There are many factors, risks and uncertainties that could cause actual results to differ materially from those predicted or projected in forward-looking statements, including but not limited to the future of the global economic environment and its impact on our customers and suppliers, the accuracy of customers’ forecasts; success of customers’ programs; timing of new programs; success of new-product introductions; acquisitions or divestitures of operations or facilities; technology advances; changes in pricing policies by the Company, its competitors, customers or suppliers; and the other risks and uncertainties detailed from time to time in the Company’s SEC filings.
KEY TRONIC CORPORATION AND SUBSIDIARIES            
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

 
   
Three Months Ended Nine Months Ended

 

 

 

 
April 3   March 28 April 3   March 28
2010   2009 2010   2009
   
Net sales $ 51,697 $ 44,233 $ 137,756 $ 139,460

 

 

 

 
Cost of sales   46,455     40,921   125,129     128,925

 

 

 

 

 
Gross profit on sales 5,242 3,312 12,627 10,535

 

 

 

 
 
Operating expenses:
Research, development and engineering 796 533 2,063 1,751

 

 

 

 
Selling, general and administrative 2,216 2,340 6,225 6,533

 

 

 

 
Goodwill impairment   0     0   0     765

 

 

 

 
Total operating expenses 3,012 2,873 8,288 9,049

 

 

 

 
 
Operating income 2,230 439 4,339 1,486

 

 

 

 
Interest expense   13     131   77     493

 

 

 

 
Income before income taxes 2,217 308 4,262 993

 

 

 

 
 
(Benefit from) provision for income taxes   (2,197 )   46   (2,117 )   217

 

 

 

 

 

 
 
Net income

$
4,414  

$
262

$
6,379  

$
776

 

 

 

 
 
 
Earnings per share:
 
Earnings per common share - basic

$
0.44 $ 0.03 $ 0.63 $ 0.08
Weighted average shares outstanding - basic 10,126 10,066 10,094 10,057
 
Earnings per common share - diluted $ 0.43 $ 0.03 $ 0.63 $ 0.08
Weighted average shares outstanding - diluted 10,254 10,066 10,148 10,075
KEY TRONIC CORPORATION AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
   
 
April 3 June 27
2010 2009

 
ASSETS
Current assets:
Cash and cash equivalents $ 4,610 $ 729

 
Trade receivables 27,079 24,867

 
Inventories 36,002 32,291

 
Other   7,506   3,168

 
Total current assets   75,197   61,055

 
 
Property, plant and equipment - net 11,598 11,199

 
 
Other assets:

 
Restricted cash - 124

 
Deferred income tax asset 4,625 4,611

 
Other   706   766

 
Total other assets 5,331 5,501

 
 
Total assets $ 92,126 $ 77,755

 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 26,663 $ 18,703

 
Accrued compensation and vacation 4,496 3,198

 
Current portion of other long-term obligations 187 359

 
Other   1,669   1,351

 
Total current liabilities   33,015   23,611

 
 
Long-term liabilities:
Revolving loan - 2,412

 
Other long-term obligations   767   618

 
Total long-term liabilities   767   3,030

 

 

Shareholders' equity:
 
Common stock, no par value - share authorized
25,000; issued and outstanding 10,126 and 10,066
shares, respectively 39,616 39,359
Retained earnings 17,222 10,843

 

Accumulated other comprehensive income
  1,506   912

 
Total shareholders' equity   58,344   51,114

 
 
Total liabilities and shareholders' equity $ 92,126 $ 77,755

 
 

 

 

 

Copyright Business Wire 2010

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