Key Tronic Corporation Announces Results for the Third Quarter of Fiscal 2013

Updated

Key Tronic Corporation Announces Results for the Third Quarter of Fiscal 2013

Maintaining Strong Operating Efficiencies; Strengthening Balance Sheet; Continued New Customer Wins and Revenue Diversification

SPOKANE VALLEY, Wash.--(BUSINESS WIRE)-- Key Tronic Corporation (NAS: KTCC) , a provider of electronic manufacturing services (EMS), today announced its results for the three and nine months ended March 30, 2013.


For the third quarter of fiscal year 2013, Key Tronic reported total revenue of $84.3 million, compared to $95.5 million in the same period of fiscal year 2012. For the first nine months of fiscal 2013, total revenue was $276.4 million, up 11% from $249.7 million in the same period of fiscal 2012.

Net income for the third quarter of fiscal year 2013 was $2.9 million or $0.26 per diluted share, compared to $3.4 million or $0.32 per diluted share for the same period of fiscal year 2012. For the first nine months of fiscal 2013, net income was $10.2 million or $0.94 per diluted share, up 30% from $7.8 million or $0.74 per diluted share for the same period of fiscal 2012.

For the third quarter of fiscal year 2013, gross margin was 9% and operating margin was 4%, compared to 9% and 5%, respectively, in the same period of fiscal year 2012.

"After strong year-over-year growth in the first half of fiscal 2013, our revenue in the third quarter was primarily impacted by the anticipated and previously disclosed slowdown from the large customer that began to reduce production levels in the second quarter," said Craig Gates, President and Chief Executive Officer. "Although we saw a continued ramp up of our new programs in the third quarter, those increases did not yet offset the decreased demand from this one customer. At the same time, we maintained strong operating efficiencies and further strengthened our balance sheet. Over the last year we, paid off over $16.0 million of bank debt, bringing the debt balance to zero, and increased our cash balance by nearly $3.0 million.

"We continue to see a robust pipeline of potential new business and have further diversified our future revenue base during the third quarter by winning new customer programs involving RFID, industrial power, LED lighting and commercial washroom equipment. At the end of the third quarter of fiscal 2013, we were generating revenue from 177 separate programs and had 56 distinct customers, up from 155 programs and 42 customers a year ago. While we expect our fourth quarter results to be similar to the third quarter, we currently anticipate renewed sequential growth during the coming fiscal year."

Business Outlook

For the fourth quarter of fiscal year 2013, the Company expects to report revenue in the range of $83 million to $87 million, and earnings in the range of $0.21 to $0.27 per diluted share. The expected earnings range assumes an effective tax rate of 32%.

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 +1-480-629-9645. A 48-hour replay will be available by calling 800-406-7325 or +1 303 590 3030 (Access Code: 4588514). 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 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.

KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended

Nine Months Ended

March 30, 2013

March 31, 2012

March 30, 2013

March 31, 2012

Net sales

$

84,343

$

95,527

$

276,418

$

249,742

Cost of sales

76,483

86,803

249,587

229,145

Gross profit

7,860

8,724

26,831

20,597

Research, development and engineering expenses

1,329

1,153

3,804

3,266

Selling, general and administrative expenses

2,938

2,879

8,406

8,229

Total operating expenses

4,267

4,032

12,210

11,495

Operating income

3,593

4,692

14,621

9,102

Interest expense, net

38

130

246

357

Income before income taxes

3,555

4,562

14,375

8,745

Income tax provision

692

1,168

4,189

930

Net income

$

2,863

$

3,394

$

10,186

$

7,815

Net income per share — Basic

$

0.27

$

0.32

$

0.97

$

0.75

Weighted average shares outstanding — Basic

10,489

10,447

10,488

10,437

Net income per share — Diluted

$

0.26

$

0.32

$

0.94

$

0.74

Weighted average shares outstanding — Diluted

10,931

10,762

10,888

10,517

KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

March 30, 2013

June 30, 2012

ASSETS

Current assets:

Cash and cash equivalents

$

3,202

$

502

Trade receivables, net

48,435

60,709

Inventories

47,743

58,439

Deferred income tax asset

891

5,201

Other

7,610

4,639

Total current assets

107,881

129,490

Property, plant and equipment—net

18,195

17,306

Other assets:

Deferred income tax asset

4,270

2,703

Other

3,896

1,413

Total other assets

8,166

4,116

Total assets

$

134,242

$

150,912

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

27,284

$

43,025

Accrued compensation and vacation

6,797

6,337

Current portion of other long-term obligations

762

729

Other

3,802

3,163

Total current liabilities

38,645

53,254

Long-term liabilities:

Revolving loan

15,011

Deferred income tax liability

1,607

1,094

Other long-term obligations

956

2,945

Total long-term liabilities

2,563

19,050

Total liabilities

41,208

72,304

Shareholders' equity:

Common stock, no par value—shares authorized 25,000;
issued and outstanding 10,489 and 10,481 shares, respectively

43,131

42,372

Retained earnings

47,081

36,895

Accumulated other comprehensive income (loss)

2,822

(659

)

Total shareholders' equity

93,034

78,608

Total liabilities and shareholders' equity

$

134,242

$

150,912



Key Tronic Corporation
Chief Financial Officer
Ron Klawitter, 509-927-5295
or
StreetConnect
Investor Relations
Michael Newman, 206-729-3625

KEYWORDS: United States North America Washington

INDUSTRY KEYWORDS:

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