Key Tronic Corporation Announces Fourth Quarter and Year End Results

  Key Tronic Corporation Announces Fourth Quarter and Year End Results

             Year-over-Year Revenue Up 36% and Net Income Up 103%

           Continued New Customer Wins and Revenue Diversification

Business Wire

SPOKANE VALLEY, Wash. -- August 21, 2012

Key Tronic Corporation (Nasdaq:KTCC), a provider of electronic manufacturing
services (EMS), today announced its results for the quarter and year ended
June 30, 2012.

For the fourth quarter of fiscal 2012, Key Tronic reported total revenue of
$96.7 million, up 46% from $66.0 million in the same period of fiscal 2011.
For the full year of fiscal 2012, total revenue was a record $346.5 million,
up 36% from $253.8 million in fiscal 2011.

Net income for the fourth quarter of fiscal 2012 was $3.8 million or $0.35 per
diluted share, up 148% from $1.5 million or $0.15 per diluted share for the
same period of fiscal 2011. For the full year of fiscal 2012, net income was
$11.6 million or $1.10 per diluted share, up 103% from $5.7 million or $0.55
per diluted share for fiscal 2011.

“Fiscal 2012 was another great year for Key Tronic, with strong growth in
revenue and earnings, driven by the rapid production ramp up of new customer
programs,” said Craig Gates, President and Chief Executive Officer. “We
achieved record revenue and continued to increase our operating efficiencies.
At the end of fiscal 2012, we were generating revenue from 165 separate
programs and had 48 distinct customers, up from 119 programs and 33 customers
at the end of the prior fiscal year. We also continued to diversify our future
revenue base during the fourth quarter by winning new programs involving
robotic, automotive, industrial and gaming products.

“Moving into fiscal 2013, we continue to face global macroeconomic
uncertainty. Nevertheless, we believe that with our unique combination of
world-class engineering and global logistics, together with the cost and
logistical advantages of our substantial and expanding production capabilities
in Mexico, China and the United States, we will continue to see our new
programs ramp up, our market share increase and our revenue base diversify. As
we grow our business, we remain focused on maintaining outstanding customer
service, carefully managing our operating expenses and maximizing our return
on invested capital.”

Business Outlook

For the first quarter of fiscal 2013, the Company expects to report revenue in
the range of $94 million to $99 million, and earnings in the range of $0.32 to
$0.39 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 www.keytronic.com under “Investor Relations” or by calling
877-941-0844 or +1-480-629-9835. A 48-hour replay will be available by calling
800-406-7325 or +1 303 590 3030 (Access Code: 4552865). 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      Twelve Months Ended
                                 June 30,   July 2,      June 30,    July 2,
                                 2012       2011         2012        2011
                                                                      
Net sales                        $ 96,733   $ 66,044     $ 346,475   $ 253,846
Cost of sales                      87,494     61,041       316,639     233,198
Gross profit on sales              9,239      5,003        29,836      20,648
                                                                      
Operating expenses:
Research, development and          1,178      988          4,444       3,782
engineering
Selling, general and               2,812      2,352        11,041      9,927
administrative
                                                                      
Total operating expenses           3,990      3,340        15,485      13,709
                                                                      
Operating income                   5,249      1,663        14,351      6,939
                                                                      
Interest expense                   153        138          510         457
                                                                      
Income before income taxes         5,096      1,525        13,841      6,482
                                                                      
Income tax provision (benefit)     1,285      (12    )     2,215       746
                                                                      
Net income                       $ 3,811    $ 1,537      $ 11,626    $ 5,736
                                                                      
                                                                      
Earnings per share:
                                                                      
Earnings per common share -      $ 0.36     $ 0.15       $ 1.11      $ 0.55
basic
Weighted average shares            10,474     10,380       10,447      10,344
outstanding - basic
                                                                      
Earnings per common share -      $ 0.35     $ 0.15       $ 1.10      $ 0.55
diluted
Weighted average shares            10,843     10,435       10,609      10,407
outstanding - diluted
 

 
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
                                                       June 30,      July 2,
                                                       2012          2011
ASSETS
Current assets:
Cash and cash equivalents                              $ 502         $ 1,232
Trade receivables                                        60,709        40,350
Inventories                                              58,439        41,554
Deferred income tax asset                                3,037         3,900
Other                                                    4,639         4,549
Total current assets                                     127,326       91,585
                                                                      
Property, plant and equipment - net                      17,306        14,917
                                                                      
Other assets:
Deferred income tax asset                                7,870         4,219
Other                                                    1,413         1,643
Total other assets                                       9,283         5,862
                                                                      
Total assets                                           $ 153,915     $ 112,364
                                                                      
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable                                       $ 43,025      $ 26,149
Accrued compensation and vacation                        6,337         4,436
Current portion of other long-term obligations           728           761
Other                                                    3,163         1,932
Total current liabilities                                53,253        33,278
                                                                      
Long-term liabilities:
Revolving loan                                           15,011        6,000
Deferred income tax liability                            1,094         1,542
Other long-term obligations                              5,949         3,521
Total long-term liabilities                              22,054        11,063
                                                                      
Shareholders' equity:
Common stock, no par value ( in thousands) - shares
authorized 25,000; issued and outstanding 10,481 and     42,372        41,014
10,399 shares, respectively
Retained earnings                                        36,895        25,269
Accumulated other comprehensive (loss) income            (659    )     1,740
Total shareholders' equity                               78,608        68,023
                                                                      
Total liabilities and shareholders' equity             $ 153,915     $ 112,364
 

Contact:

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