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