Key Tronic Corporation Announces First Quarter Results

Key Tronic Corporation (Nasdaq:KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended October 1, 2011.

For the first quarter of fiscal 2012, Key Tronic reported total revenue of $69.8 million, up 10% from $63.3 million in the same period of fiscal 2011. Net income for the first quarter of fiscal 2012 was $1.2 million or $0.12 per diluted share, compared to $1.7 million or $0.17 per diluted share for the same period of fiscal 2011.

For the first quarter of fiscal 2012, gross margin was 7% and operating margin was 2%, compared to 9% and 4%, respectively, in the same period of fiscal 2011. As projected, gross margins were impacted this quarter by expenses associated with several steep new program ramps, as well as product mix changes. For the coming quarter, given its anticipated growth and product mix, the Company expects to see its gross margins in the range of 7% to 8%.

“We’re very pleased with our strong growth in revenue for the first quarter of fiscal 2012, driven by the production ramp up for new programs from both new and longstanding customers,” said Craig Gates, President and Chief Executive Officer, “During the quarter, we achieved the highest quarterly revenue in Key Tronic’s history and continued to diversify our future revenue base by winning new programs involving industrial processing equipment, medical devices, military equipment, educational displays and consumer products.

“Moving into the second quarter, we expect continued strong revenue growth and increased earnings. We also see more potential customers recognizing the competitive advantages of our EMS services based in North America. With our unique combination of world-class engineering, global logistics and cost-effective production, we’re increasingly well positioned to continue to capture market share and capitalize on emerging opportunities.”

Business Outlook

For the second quarter of fiscal 2012, the Company expects to report revenue in the range of $75 million to $80 million, and earnings in the range of $0.15 to $0.20 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 877-941-8609 or +1 480-629-9818. A 48-hour replay will be available by calling 800-406-7325 or +1 303 590 3030 (Access Code: 4476291). 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 2012. 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
October 1,   October 2,
2011 2010
 
Net sales $ 69,761 $ 63,340
Cost of sales   64,756   57,370
Gross profit on sales 5,005 5,970
 
Operating expenses:
Research, development and engineering 956 914
Selling, general and administrative   2,434   2,432
 
Total operating expenses   3,390   3,346
 
Operating income 1,615 2,624
 
Interest expense   103   72
 
Income before income taxes 1,512 2,552
 
Income tax provision   265   810
 
Net income $ 1,247 $ 1,742
 
 
Earnings per share:
 
Earnings per common share - basic $ 0.12 $ 0.17
Weighted average shares outstanding - basic 10,418 10,296
 
Earnings per common share - diluted $ 0.12 $ 0.17
Weighted average shares outstanding - diluted 10,446 10,403
 
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
   
 
October 1, July 2,
2011 2011
ASSETS
Current assets:
Cash and cash equivalents $ 347 $ 1,232
Trade receivables 48,277 40,350
Inventories 46,728 41,554
Deferred income tax asset 4,689 3,900
Other   3,432     4,549
Total current assets   103,473     91,585
 
Property, plant and equipment - net 14,757 14,917
 
Other assets:
Deferred income tax asset 4,947 4,219
Other   516     1,643
Total other assets   5,463     5,862
 
Total assets $ 123,693   $ 112,364
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 32,568 $ 26,149
Accrued compensation and vacation 3,726 4,436
Current portion of other long-term obligations 771 761
Other   3,107     1,932
Total current liabilities   40,172     33,278
 
Long-term liabilities:
Revolving loan 11,339 6,000
Deferred income tax liability 1,040 1,542
Other long-term obligations   5,911     3,521
Total long-term liabilities   18,290     11,063
 
Shareholders' equity:
Common stock, no par value ( in thousands) - shares
authorized 25,000; issued and outstanding
10,447 and 10,399 shares, respectively 41,288 41,014
Retained earnings 26,516 25,269
Accumulated other comprehensive (loss) income   (2,573 )   1,740
Total shareholders' equity   65,231     68,023
 
Total liabilities and shareholders' equity $ 123,693   $ 112,364

Copyright Business Wire 2010

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