• Key Tronic Corporation Announces Results for the Second Quarter of Fiscal Year 2021

    Source: Nasdaq GlobeNewswire / 26 Jan 2021 15:35:04   America/Chicago

    SPOKANE VALLEY, Wash., Jan. 26, 2021 (GLOBE NEWSWIRE) -- Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended December 26, 2020.

    For the second quarter of fiscal year 2021, Key Tronic reported total revenue of $128.3 million, up 10% from $116.7 million in the same period of fiscal year 2020. For the first six months of fiscal year 2021, total revenue was $251.5 million, up 13% from $222.0 million in the same period of fiscal year 2020.

    The revenue increase during the second quarter of fiscal year 2021 was due to the successful ramp of new customer programs and increased demand from existing customers. At the same time, the Company’s revenue continued to be constrained by government imposed shutdowns and labor shortages at its facilities in Juarez due to the COVID-19 pandemic and associated public health measures.

    For the second quarter of fiscal year 2021, net income was $1.6 million or $0.14 per share, up from $0.8 million or $0.08 per share for the same period of fiscal year 2020. For the first six months of fiscal year 2021, net income was $3.3 million or $0.30 per share, up from $2.4 million or $0.22 per share for the same period of fiscal year 2020.

    During the second quarter of fiscal year 2021, the Company incurred additional costs caused by the COVID-19 crisis totaling approximately $1.8 million or $0.13 per share. Despite the pandemic’s adverse impact on revenue and expenses, the Company’s margins improved in the second quarter of fiscal year 2021 due to increased revenue. Gross margin was 8.3% and operating margin was 2.1%, up from a gross margin of 7.0% and an operating margin of 1.3%, in the same period of fiscal year 2020.

    “We’re pleased with the successful ramp of new programs and our strong revenue growth in the second quarter of fiscal 2021, despite the continued headwinds from COVID-19,” said Craig Gates, President and Chief Executive Officer. “During the second quarter of fiscal 2021, we continued to see the favorable trend of contract manufacturing returning to North America and won new programs involving security and home automation and industrial products.”

    “Moving into the third quarter of fiscal 2021, we expect continued revenue and earnings growth. Nevertheless, the COVID-19 crisis continues to present macroeconomic uncertainty and multiple business challenges, including industry-wide electronic component shortages, workforce disruptions and higher labor costs. As we endeavor to mitigate these issues and continue to invest in new capacity to prepare for long-term growth, we remain committed to protecting the health of all of our employees.”

    The financial data presented for the second quarter of fiscal year 2021 should be considered preliminary and could be subject to change, as the Company’s independent auditor has not completed their review.

    Business Outlook

    For the third quarter of fiscal year 2021, Key Tronic expects to report revenue of approximately $130 million to $140 million, and earnings of approximately $0.20 to $0.25 per diluted share. These expected results assume an effective tax rate of 25% in the coming quarter. Key Tronic is working closely with its customers, key suppliers and employees to minimize the impact of the continued global pandemic. While the Company’s facilities in the US, Mexico, China and Vietnam are currently operating and rigorously following current health guidelines, uncertainty as to the possibility of future temporary closures, customer demand and costs, and future supply chain disruptions during the rapidly changing COVID-19 environment could significantly impact operations in coming periods. Due to the heightened risks associated with the above, we may issue updated guidance during the upcoming quarter.

    Conference Call

    Key Tronic will host a conference call to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern) today. A broadcast of the conference call will be available at www.keytronic.com under “Investor Relations” or by calling 800-437-2398 or +1-323-289-6576 (Access Code: 2393766). A replay will be available by calling 888-203-1112 or +1-719-457-0820 (Access Code: 2393766).

    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, 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 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, but are not limited to those including such word as aims, anticipates, believes, 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 release include, without limitation, the Company’s statements regarding its expectations with respect to financial conditions and results, including revenue and earnings during periods of fiscal year 2021, risks of manufacturing supply chain and operational disruptions and relating to the health of employees due to COVID-19 health pandemic, demand for certain products and the effectiveness of some of our programs, effects of recent tax reform and tariff measures and trade tensions, business from new customers and programs, improvement of supply chain delivery and impacts from legal proceedings and operational streamlining. 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, 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 Six Months Ended
     December 26, 2020 December 28, 2019 December 26, 2020 December 28, 2019
    Net sales$128,262  $116,722  $251,469  $222,007 
    Cost of sales117,640  108,600  230,832  204,612 
    Gross profit10,622  8,122  20,637  17,395 
    Research, development and engineering expenses2,392  1,720  4,637  3,380 
    Selling, general and administrative expenses5,510  4,904  10,484  9,978 
    Total operating expenses7,902  6,624  15,121  13,358 
    Operating income2,720  1,498  5,516  4,037 
    Interest expense, net848  524  1,529  1,234 
    Income before income taxes1,872  974  3,987  2,803 
    Income tax provision292  150  688  427 
    Net income$1,580  $824  $3,299  $2,376 
    Net income per share — Basic$0.15  $0.08  $0.31  $0.22 
    Weighted average shares outstanding — Basic10,760  10,760  10,760  10,760 
    Net income per share — Diluted$0.14  $0.08  $0.30  $0.22 
    Weighted average shares outstanding — Diluted11,385  10,877  11,040  10,811 


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

     December 26, 2020 June 27, 2020
    ASSETS   
    Current assets:   
    Cash and cash equivalents$5,007  $553 
    Trade receivables, net of allowance for doubtful accounts of $587 and $609100,105  86,123 
    Contract assets22,635  23,753 
    Inventories, net119,439  115,020 
    Other19,961  17,315 
    Total current assets267,147  242,764 
    Property, plant and equipment, net35,490  31,764 
    Operating lease right-of-use assets, net15,184  17,568 
    Other assets:   
    Deferred income tax asset8,656  10,178 
    Other1,557  2,587 
    Total other assets10,213  12,765 
    Total assets$328,034  $304,861 
    LIABILITIES AND SHAREHOLDERS’ EQUITY   
    Current liabilities:   
    Accounts payable$69,937  $80,204 
    Accrued compensation and vacation9,040  10,428 
    Current portion of debt, net1,706  7,508 
    Other12,576  14,079 
    Total current liabilities93,259  112,219 
    Long-term liabilities:   
    Term loans8,997  3,258 
    Revolving loan89,357  60,094 
    Operating lease liabilities11,003  12,624 
    Deferred income tax liability207  234 
    Other long-term obligations2,047  875 
    Total long-term liabilities111,611  77,085 
    Total liabilities204,870  189,304 
    Shareholders’ equity:   
    Common stock, no par value—shares authorized 25,000; issued and outstanding 10,760 and 10,760 shares, respectively47,060  46,946 
    Retained earnings73,410  70,111 
    Accumulated other comprehensive income (loss)2,694  (1,500)
    Total shareholders’ equity123,164  115,557 
    Total liabilities and shareholders’ equity$328,034  $304,861 


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

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