Key Tronic Corporation Announces Third Quarter Results

Key Tronic Corporation (NASDAQ:KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended April 2, 2011.

For the third quarter of fiscal 2011, Key Tronic reported total revenue of $63.4 million, up 23% from $51.7 million in the same period of fiscal 2010. For the first nine months of fiscal 2011, total revenue was $187.8 million, up 36% from $137.8 million in the same period of fiscal 2010.

Net income for the third quarter of fiscal 2011 was $0.7 million or $0.07 per diluted share, compared to $4.4 million or $0.43 per diluted share for the same period of fiscal 2010. Results for the third quarter of fiscal 2011 reflect increased material, freight and operational expenses associated with the Company’s new product mix and program startups. Results for the third quarter of fiscal 2010 included a net deferred tax benefit of $2.2 million or approximately $0.22 per diluted share. For the first nine months of fiscal 2011, net income was $4.2 million or $0.40 per diluted share, compared to $6.4 million or $0.63 per diluted share for the same period of fiscal 2010.

“We’re pleased with our strong year-over-year revenue growth for the third quarter and for the first nine months of fiscal 2011, driven primarily by the production ramp ups of new programs,” said Craig Gates, President and Chief Executive Officer, “During the third quarter of fiscal 2011, the revenue contribution from those of our new programs that have been ramped was mostly offset by forecast reductions in some longstanding customer programs. At the same time, we have continued to diversify our future revenue base by winning new programs involving mobile device accessories, aerospace and household products.

“Moving into the fourth quarter of fiscal 2011, we are seeing some increased demand in the forecasts from our longstanding customers, and we continue to focus on moving the new programs into production. We expect to be generating revenue from 30 EMS customers in the fourth quarter compared to 20 EMS customers contributing to fourth quarter revenue in fiscal year 2010.”

Business Outlook

For the fourth quarter of fiscal 2011, the Company expects to report revenue in the range of $61 million to $65 million, and earnings in the range of $0.07 to $0.12 per diluted share.

Conference Call

Key Tronic will host a conference call today to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern). A broadcast of the conference call will be available at www.keytronic.com under “Investor Relations” or by calling 866-225-8754 or +1 480-629-9692. A 48-hour replay will be available by calling 800-406-7325 or +1 303-590-3030 (Access Code: 4422531). 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 2011. 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 availability of parts from the supply chain, 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 INCOME
(In thousands, except per share amounts)
(Unaudited)
       
Three Months Ended Nine Months Ended
April 2, April 3 April 2, April 3
2011 2010   2011 2010  
 
Net sales $ 63,424 $ 51,697 $ 187,802 $ 137,756
Cost of sales   59,195   46,455     172,157   125,129  
Gross profit on sales 4,229 5,242 15,645 12,627
 
Operating expenses:
Research, development and engineering 919 796 2,794 2,063
Selling, general and administrative   2,373   2,216     7,575   6,225  
 
Total operating expenses   3,292   3,012     10,369   8,288  
 
Operating income 937 2,230 5,276 4,339
 
Interest expense   172   13     319   77  
 
Income before income taxes 765 2,217 4,957 4,262
 
Income tax (benefit) provision   41   (2,197 )   758   (2,117 )
 
Net income $ 724 $ 4,414   $ 4,199 $ 6,379  
 
 
Earnings per share:
 
Earnings per common share - basic $ 0.07 $ 0.44 $ 0.41 $ 0.63
Weighted average shares outstanding - basic 10,353 10,126 10,332 10,094
 
Earnings per common share - diluted $ 0.07 $ 0.43 $ 0.40 $ 0.63
Weighted average shares outstanding - diluted 10,436 10,254 10,420 10,148
 
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
   
 
April 2, July 3,
2011 2010  
ASSETS
Current assets:
Cash and cash equivalents $ 629 $ 770
Trade receivables 42,326 34,617
Inventories 45,384 39,775
Deferred income tax asset 3,518 4,420
Other   6,353   3,115  
Total current assets   98,210   82,697  
 
Property, plant and equipment - net 15,255 13,898
 
Other assets:
Deferred income tax asset 4,356 4,394
Other   1,499   653  
Total other assets   5,855   5,047  
 
Total assets $ 119,320 $ 101,642  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 27,927 $ 29,158
Accrued compensation and vacation 4,179 5,097
Current portion of other long-term obligations 752 146
Other   2,719   3,588  
Total current liabilities   35,577   37,989  
 
Long-term liabilities:
Revolving loan 13,738 1,554
Other long-term obligations   3,591   2,682  
Total long-term liabilities   17,329   4,236  
 
Shareholders' equity:

 

Common stock, no par value (in thousands) - sharesauthorized 25,000; issued and outstanding 10,356and 10,264 shares, respectively
41,149 40,126
Retained earnings 23,732 19,533
Accumulated other comprehensive income (loss)   1,533   (242 )
Total shareholders' equity   66,414   59,417  
 
Total liabilities and shareholders' equity $ 119,320 $ 101,642  
 

Copyright Business Wire 2010

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