Key Tronic Corporation Announces Results for the Fourth Quarter and Fiscal Year End 2013

Key Tronic Corporation Announces Results for the Fourth Quarter and Fiscal
Year End 2013

Record Annual Revenue and Net Income; Strong Operating Efficiencies and
Balance Sheet; Continued New Customer Wins and Revenue Diversification

SPOKANE VALLEY, Wash., Aug. 20, 2013 (GLOBE NEWSWIRE) -- Key Tronic
Corporation (Nasdaq:KTCC), a provider of electronic manufacturing services
(EMS), today announced its results for the three months and full year ended
June 29, 2013.

For the fourth quarter of fiscal 2013, Key Tronic reported total revenue of
$84.6 million, compared to $96.7 million in the same period of fiscal 2012.
For the full year of fiscal 2013, total revenue was $361.0 million, up 4% from
$346.5 million for fiscal 2012.

Net income for the fourth quarter of fiscal 2013 was $2.4 million or $0.22 per
diluted share, compared to $3.8 million or $0.35 per diluted share for the
same period of fiscal 2012. For the full year of fiscal 2013, net income was
$12.6 million or $1.15 per diluted share, up 8% from $11.6 million or $1.10
per diluted share for the same period of fiscal 2012.

For the fourth quarter of fiscal year 2013, gross margin was 9% and operating
margin was 4%, compared to 10% and 5%, respectively, in the same period of
fiscal 2012. For the full year of fiscal 2013, gross margin was 10% and
operating margin was 5%, up from 9% and 4%, respectively, for fiscal 2012.

On July 1, 2013, the Company completed its previously announced acquisition of
Sabre Manufacturing, a sheet metal fabrication company, for approximately $6.0
million in cash. Sabre enables Key Tronic to offer metal fabrication directly
to its customers, in combination with plastic molding, PCB assembly, complete
product assembly, design engineering and testing engineering services. The
acquisition furthers the Company's strategic focus on providing all the EMS
services available from a much larger tier I company, while still bringing the
flexibility and high customer service levels of a tier II supplier.

"For fiscal 2013, despite a challenging second half, we achieved record annual
revenue and earnings," said Craig Gates, President and Chief Executive
Officer. "After strong year-over-year growth in the first half of fiscal 2013,
our revenue in the second half was primarily impacted by the anticipated
slowdown from a large customer. At the same time, we saw the continued ramp up
of our new programs, while maintaining strong operating efficiencies and
significantly strengthening our balance sheet. During fiscal 2013, we
increased our cash by over $10 million, fully paid off over $15 million of
bank debt and reduced our inventory by approximately $14 million.

"We continue to see a robust pipeline of potential new business and have
further diversified our future revenue base during the fourth quarter by
winning new customer programs involving automotive, RFID, power supply and off
road vehicle equipment. At the end of the fourth quarter of fiscal 2013, we
were generating revenue from 183 separate programs and had 56 distinct
customers, up from 165 programs and 48 customers a year ago.

"Moving into the first quarter of fiscal 2014, we are currently seeing a
reduction in orders from another large customer and a few of our new programs
are not ramping up as rapidly as anticipated. Nevertheless, most of our new
customer programs continue to steadily ramp up and we expect to see renewed
sequential growth during the second quarter. Moreover, our recent acquisition
of Sabre is already paying off. It is accretive to our earnings, winning us
new business and generating strong interest in our expanded capabilities
across our combined customer base."

Business Outlook

For the first quarter of fiscal 2014, the Company expects to report revenue in
the range of $73 million to $78 million, and earnings in the range of $0.15 to
$0.20 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
877-654-5175 or +1-914-495-8527. A 48-hour replay will be available by calling
855-859-2056 or +1 404-537-3406 (Conference ID: 17454857). 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
2014. 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 29,  June 30, June 29, 2013 June 30,
                                     2013      2012                   2012
Net sales                            $84,615   $96,733  $361,033      $346,475
Cost of sales                        76,934    87,494   326,521       316,639
Gross profit                         7,681     9,239    34,512        29,836
Research, development and            1,352     1,178    5,156         4,444
engineering expenses
Selling, general and administrative  2,824     2,812    11,230        11,041
expenses
Total operating expenses             4,176     3,990    16,386        15,485
Operating income                     3,505     5,249    18,126        14,351
Interest expense, net                25        153      271           510
Income before income taxes           3,480     5,096    17,855        13,841
Income tax provision                 1,083     1,285    5,272         2,215
Net income                           $2,397    $3,811   $12,583       $11,626
Net income per share — Basic         $0.23     $0.36    $1.20         $1.11
Weighted average shares outstanding  10,495    10,474   10,490        10,447
— Basic
Net income per share — Diluted       $0.22     $0.35    $1.15         $1.10
Weighted average shares outstanding  10,946    10,843   10,897        10,609
— Diluted
                                                                  

                                                               
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                               
                                                  June 29, 2013 June 30, 2012
ASSETS                                                          
Current assets:                                                 
Cash and cash equivalents                          $10,819       $502
Trade receivables, net                             47,009        60,709
Inventories                                        44,664        58,439
Deferred income tax asset                          507           5,201
Other                                              7,508         4,639
Total current assets                               110,507       129,490
Property, plant and equipment, net                 17,911        17,306
Other assets:                                                   
Deferred income tax asset                          4,439         2,703
Other                                              2,273         1,413
Total other assets                                 6,712         4,116
Total assets                                       $135,130      $150,912
LIABILITIES AND SHAREHOLDERS' EQUITY                            
Current liabilities:                                            
Accounts payable                                   $26,400       $43,025
Accrued compensation and vacation                  7,413         6,337
Current portion of other long-term obligations     576           729
Other                                              3,551         3,163
Total current liabilities                          37,940        53,254
Long-term liabilities:                                          
Revolving loan                                     —             15,011
Deferred income tax liability                      1,585         1,094
Other long-term obligations                        1,445         2,945
Total long-term liabilities                        3,030         19,050
Total liabilities                                  40,970        72,304
Shareholders' equity:                                           
Common stock, no par value—shares authorized
25,000; issued and outstanding 10,502 and 10,481   43,369        42,372
shares, respectively
Retained earnings                                  49,478        36,895
Accumulated other comprehensive income (loss)      1,313         (659)
Total shareholders' equity                         94,160        78,608
Total liabilities and shareholders' equity         $135,130      $150,912
                                                               

CONTACT: Ron Klawitter
         Chief Financial Officer
         Key Tronic Corporation
         (509) 927-5295
        
         Michael Newman
         Investor Relations
         StreetConnect
         (206) 729-3625
 
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