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

  Key Tronic Corporation Announces Results for the Third Quarter of Fiscal

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

Business Wire

SPOKANE VALLEY, Wash. -- April 30, 2013

Key Tronic Corporation (Nasdaq: 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 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:

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              Nine Months Ended
                   March 30,      March 31,       March 30, 2013  March 31,
                   2013            2012                             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
development and    1,329           1,153           3,804            3,266
Selling, general
and                2,938          2,879          8,406           8,229
Total operating    4,267          4,032          12,210          11,495
Operating income   3,593           4,692           14,621           9,102
Interest           38             130            246             357
expense, net
Income before      3,555           4,562           14,375           8,745
income taxes
Income tax         692            1,168          4,189           930
Net income         $  2,863       $  3,394       $  10,186       $  7,815
Net income per     $  0.27         $  0.32         $  0.97          $  0.75
share — Basic
Weighted average
shares             10,489          10,447          10,488           10,437
outstanding —
Net income per     $  0.26         $  0.32         $  0.94          $  0.74
share — Diluted
Weighted average
shares             10,931          10,762          10,888           10,517
outstanding —

(In thousands)
                                                March 30, 2013   June 30, 2012
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  
Current liabilities:
Accounts payable                                $  27,284        $  43,025
Accrued compensation and vacation               6,797            6,337
Current portion of other long-term              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;                                         43,131           42,372
issued and outstanding 10,489 and 10,481
shares, respectively
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
Investor Relations
Michael Newman, 206-729-3625
Press spacebar to pause and continue. Press esc to stop.