• Key Tronic Corporation Announces Results for the First Quarter of Fiscal Year 2022

    Source: Nasdaq GlobeNewswire / 02 Nov 2021 15:05:00   America/Chicago

    SPOKANE VALLEY, Wash., Nov. 02, 2021 (GLOBE NEWSWIRE) -- Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended October 2, 2021.

    For the first quarter of fiscal year 2022, Keytronic reported revenue of approximately $132.8 million, up 8% from $123.2 million in the same period of fiscal year 2021. While demand has remained strong from both new and existing customers, revenue for the first quarter of fiscal year 2022 continued to be significantly constrained by challenges related to the global materials supply chain, transportation, logistics and the pandemic.

    The global supply chain, pandemic and transportation issues continued to disrupt production during the quarter. Intermittent parts supply required both factory downtime and overtime expenses, which had an adverse impact on the Company’s margins and earnings. In the first quarter of fiscal year 2022, gross margin was 7.6% and operating margin was 1.6%, compared to a gross margin of 8.1% and an operating margin of 2.3%, for the same period of fiscal year 2021.

    For the first quarter of fiscal year 2022, net income was $0.8 million or $0.07 per share, compared to $1.7 million or $0.16 per share for the same period of fiscal year 2021. Earnings for the first quarter of fiscal 2022 were also impacted by legal and other professional service expenses related to the previously disclosed internal investigation of approximately $0.4 million during the quarter.

    The financial data presented for the first quarter of fiscal year 2022 should be considered preliminary and could be subject to change, as the Company’s independent auditor has not completed their review.

    “We’re pleased with the strong customer demand during the first quarter of fiscal 2022 and our successful launch of major new programs in spite of continued headwinds from worldwide component shortages, transportation bottlenecks and the global pandemic,” said Craig Gates, President and Chief Executive Officer. “During the first quarter of fiscal 2022, we won new programs involving industrial testing equipment, medical diagnostic products, and pharmaceutical water treatment.”

    “Moving further into fiscal 2022, component shortages, logistic delays and the COVID-19 crisis continue to present multiple business challenges, but we continue to see the favorable trend of contract manufacturing returning to North America. With our recent investments in new capacity in both North America and Vietnam, we’re well-prepared for long term growth when supply chains improve.”

    Business Outlook

    For the second quarter of fiscal year 2022, Keytronic expects to report revenue in the range of $125 million to $135 million, and earnings in the range of $0.03 to $0.08 per diluted share. These expected results assume an effective tax rate of 25% in the coming quarter. Despite growing customer demand and backlog, we expect that delays in the supply of key components for the Company’s business will continue to significantly limit production and adversely impact operating efficiencies.

    Conference Call

    Keytronic will host a conference call to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern) on November 2, 2021. A broadcast of the conference call will be available at www.keytronic.com under “Investor Relations” or by calling 866-248-8441 or +1-323-289-6576 (Access Code: 4740716). A replay will be available by calling 888-203-1112 or +1-719-457-0820 (Access Code: 4740716).

    About Key Tronic

    Keytronic is a leading contract manufacturer offering value-added design and manufacturing services from its facilities in the United States, Mexico, China and Vietnam. 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 Keytronic visit: www.keytronic.com.

    Forward-Looking Statements

    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, but are not limited to those including such words as aims, anticipates, believes, continues, could, estimates, expects, hopes, intends, plans, predicts, projects, targets, or will, similar verbs, or nouns corresponding to such verbs, which may be forward looking. Forward-looking statements also include other passages that are relevant to expected future events, performances, and actions or that can only be fully evaluated by events that will occur in the future. Forward-looking statements in this press release include, without limitation, the Company’s statements regarding its expectations with respect to financial conditions and results, including revenue, earnings, legal and internal review expenses and further costs during fiscal 2022; expenses related to, and estimated recovery from, the COVID-19 health pandemic; demand from new and existing customers; and key components supply and other supply chain and transportation and logistics issues. 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: risks relating to the internal investigation by the Audit Committee, including legal and internal review costs, the risk of legal proceedings or government investigations relating to the subject of the internal investigation and related or unrelated matters; the future of the global economic environment and its impact on our customers and suppliers, particularly during the COVID-19 health crisis; the availability of components from the supply chain; the availability of a healthy workforce; the accuracy of suppliers’ and customers’ forecasts; development and success of customers’ programs and products; timing and effectiveness of ramping 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; impact of new governmental legislation and regulation, including tax reform, tariffs and related activities, such trade negotiations and other risks including those related to COVID-19 response; and other factors, 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 2, 2021 September 26, 2020
    Net sales$132,762  $123,207 
    Cost of sales122,624  113,192 
    Gross profit10,138  10,015 
    Research, development and engineering expenses2,449  2,245 
    Selling, general and administrative expenses5,595  4,974 
    Total operating expenses8,044  7,219 
    Operating income2,094  2,796 
    Interest expense, net992  681 
    Income before income taxes1,102  2,115 
    Income tax provision287  396 
    Net income$815  $1,719 
    Net income per share — Basic$0.08  $0.16 
    Weighted average shares outstanding — Basic10,762  10,760 
    Net income per share — Diluted$0.07  $0.16 
    Weighted average shares outstanding — Diluted11,052  11,040 
          


    KEY TRONIC CORPORATION AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
    (In thousands)
    (Unaudited)

      October 2, 2021 July 3, 2021
    ASSETS    
    Current assets:    
    Cash and cash equivalents $1,544  $3,473 
    Trade receivables, net of allowance for doubtful accounts of $303 and $275 126,453  110,324 
    Contract assets 23,651  24,781 
    Inventories, net 143,131  137,329 
    Other 30,957  23,345 
    Total current assets 325,736  299,252 
    Property, plant and equipment, net 31,198  35,735 
    Operating lease right-of-use assets, net 18,994  15,745 
    Other assets:    
    Deferred income tax asset 10,252  9,656 
    Other 5,151  1,458 
    Total other assets 15,403  11,114 
    Total assets $391,331  $361,846 
    LIABILITIES AND SHAREHOLDERS’ EQUITY    
    Current liabilities:    
    Accounts payable $111,659  $92,823 
    Accrued compensation and vacation 8,476  11,471 
    Current portion of debt, net 3,951  2,143 
    Other 17,938  20,268 
    Total current liabilities 142,024  126,705 
    Long-term liabilities:    
    Term loans 7,463  7,906 
    Revolving loan 100,760  90,362 
    Operating lease liabilities 13,727  11,428 
    Other long-term obligations 4,300  1,740 
    Total long-term liabilities 126,250  111,436 
    Total liabilities 268,274  238,141 
    Shareholders’ equity:    
    Common stock, no par value—shares authorized 25,000; issued and outstanding 10,762 and 10,762 shares, respectively 47,249  47,181 
    Retained earnings 75,267  74,452 
    Accumulated other comprehensive income 541  2,072 
    Total shareholders’ equity 123,057  123,705 
    Total liabilities and shareholders’ equity $391,331  $361,846 


         
    CONTACTS: Brett Larsen Michael Newman
      Chief Financial Officer Investor Relations
      Key Tronic Corporation StreetConnect
      (509) 927-5500 (206) 729-3625

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