Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the three months ended September 29, 2012.

For the first quarter of fiscal year 2013, Key Tronic reported total revenue of $97.5 million, up 40% from $69.8 million in the same period of fiscal year 2012. Net income for the first quarter of fiscal year 2013 was $3.7 million or $0.35 per diluted share, up 200% from $1.2 million or $0.12 per diluted share for the same period of fiscal year 2012.

For the first quarter of fiscal year 2013, gross margin was 10% and operating margin was 6%, compared to 7% and 2%, respectively, in the same period of fiscal year 2012.

“We’re pleased with our strong year-over-year growth in revenue and earnings for the first quarter of fiscal year 2013,” said Craig Gates, President and Chief Executive Officer. “We achieved record quarterly revenue and continued to increase our operating efficiencies. At the end of the first quarter of fiscal 2013, we were generating revenue from 168 separate programs and had 51 distinct customers, up from 135 programs and 36 customers a year ago. We also continued to diversify our future revenue base during the first quarter of fiscal 2013 by winning new programs involving solar energy and power management products.

“While we continue to face global macroeconomic uncertainty, we believe our unique combination of world-class engineering, global logistics and world-class production capabilities in Mexico, China and the United States continues to provide us with competitive advantage. We expect to continue to see our new programs ramp up, our market share increase and our revenue base diversify. As we grow our business over the long term, we remain focused on maintaining outstanding customer service, carefully managing our operating expenses and maximizing our return on invested capital.”

Business Outlook

For the second quarter of fiscal year 2013, the Company expects to report revenue in the range of $93 million to $99 million, and earnings in the range of $0.32 to $0.38 per diluted share. The expected earnings range assumes an effective tax rate of 30%.

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 under “Investor Relations” or by calling 888-549-7880 or +1-480-629-9770. A 48-hour replay will be available by calling 800-406-7325 or +1 303 590 3030 (Access Code: 4569452). 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:

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 2013. 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.



(In thousands, except per share amounts)

      Three Months Ended
September 29, 2012     October 1, 2011
Net sales $ 97,508 $ 69,761
Cost of sales 88,033   64,756
Gross profit 9,475 5,005
Research, development and engineering expenses 1,250 956
Selling, general and administrative expenses 2,529   2,434
Total operating expenses 3,779   3,390
Operating income 5,696 1,615
Interest expense, net 116   103
Income before income taxes 5,580 1,512

Income tax provision
1,836   265

Net income
3,744   1,247
Net income per share — Basic $


$ 0.12
Weighted average shares outstanding — Basic 10,486 10,418
Net income per share — Diluted $ 0.35 $ 0.12
Weighted average shares outstanding — Diluted 10,830 10,446


(In thousands)

      September 29, 2012     June 30, 2012
Current assets:
Cash and cash equivalents $ 1,801 $ 502
Trade receivables, net (allowance for doubtful accounts of $54 and $0) 56,691 60,709
Inventories 56,912 58,439
Deferred income tax asset 3,835 5,201
Other 6,240   4,639  
Total current assets 125,479   129,490  
Property, plant and equipment—net 17,463 17,306
Other assets:
Deferred income tax asset 2,416 2,703
Other 1,980   1,413  
Total other assets 4,396   4,116  
Total assets $ 147,338   $ 150,912  
Current liabilities:
Accounts payable $ 37,918 $ 43,025
Accrued compensation and vacation 7,162 6,337
Current portion of other long-term obligations 739 729
Other 4,080   3,163  
Total current liabilities 49,899   53,254  
Long-term liabilities:
Revolving loan 11,093 15,011
Deferred income tax liability 1,301 1,094
Other long-term obligations 1,141   2,945  
Total long-term liabilities 13,535   19,050  
Total liabilities 63,434   72,304  
Shareholders' equity:
Common stock, no par value—shares authorized 25,000; issued and outstanding 10,489 and 10,481 shares, respectively 42,692 42,372
Retained earnings 40,639 36,895
Accumulated other comprehensive income (loss) 573   (659 )
Total shareholders' equity 83,904   78,608  
Total liabilities and shareholders’ equity $ 147,338   $ 150,912  

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