Key Tronic Corporation Announces Results for the First Quarter of Fiscal Year 2014

Key Tronic Corporation Announces Results for the First Quarter of Fiscal Year
2014

Expecting Strong Sequential Revenue Growth in Second Half of Fiscal 2014;
Increasing Revenue Diversification; Continued New Customer Wins

SPOKANE VALLEY, Wash., Oct. 29, 2013 (GLOBE NEWSWIRE) -- Key Tronic
Corporation (Nasdaq:KTCC), a provider of electronic manufacturing services
(EMS), today announced its results for the three months ended September 28,
2013. The Company's actual results were in line with its previous guidance.

For the first quarter of fiscal year 2014, Key Tronic reported total revenue
of $78.0 million, compared to $97.5 million in the same period of fiscal year
2013. Net income for the first quarter of fiscal year 2014 was $1.7 million or
$0.16 per diluted share, compared to $3.7 million or $0.35 per diluted share
for the same period of fiscal year 2013. For the first quarter of fiscal year
2014, gross margin was 8.5% and operating margin was 3.2%, compared to 9.7%
and 5.8%, respectively, in the same period of fiscal year 2013.

"As expected, our revenue and earnings were impacted by a significant
reduction in orders from some of our large, longstanding customers in the
first quarter of fiscal year 2014," said Craig Gates, President and Chief
Executive Officer. "While our new programs typically take over 18 months to
begin contributing revenue, we saw the continued ramp up of these new programs
and increasing revenue diversification. As a result, we expect to see strong
sequential growth during the second half of fiscal year 2014, as growing
revenue from several new customers should offset and then exceed the revenue
reductions in recent periods by certain large customers."

"At the end of the first quarter of fiscal year 2014, we were generating
revenue from 189 separate programs and had 57 distinct customers, up from 168
programs and 51 customers a year ago. We expect the increase in revenue
generating programs and customers to reduce our revenue concentration. During
the fourth quarter of the previous fiscal year, our largest customer
contributed around 23% of our total revenue and our top three customers
contributed around 61% of our total revenue. By the fourth quarter of fiscal
year 2014, we expect our largest customer to be contributing around 15% of our
total revenue and our top three customers to be contributing about 41% of
total revenue."

"We continue to see a robust pipeline of potential new business and have
further diversified our future revenue base during the first quarter by
winning new customer programs involving fitness equipment and HVAC controls.
Furthermore, our continued integration of Sabre Manufacturing into our
operations is allowing us to begin rapidly expanding our sheet metal
fabrication business across our customer base."

Business Outlook

For the second quarter of fiscal year 2014, the Company expects to report
revenue in the range of $75 million to $80 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
888-549-7880 or +1-480-629-9770. A 48-hour replay will be available by calling
800-406-7325 or +1 303 590 3030 (Access Code: 4644972).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)
                                                          
                                        ThreeMonthsEnded
                                        September 28, 2013 September 29, 2012
Net sales                                $77,974          $97,508
Cost of sales                            71,352             88,033
Gross profit                             6,622              9,475
Research, development and engineering    1,345              1,250
expenses
Selling, general and administrative      2,817              2,529
expenses
Total operating expenses                 4,162              3,779
Operating income                         2,460              5,696
Interest expense, net                    22                 116
Income before income taxes               2,438              5,580
Income tax provision                     733                1,836
Net income                               $1,705           $3,744
Net income per share — Basic             $0.16            $0.36
Weighted average shares outstanding —    10,507             10,486
Basic
Net income per share — Diluted           $0.16            $0.35
Weighted average shares outstanding —    10,933             10,830
Diluted


KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                               
                                                               
                                             September 28, 2013 June 29, 2013
ASSETS                                                          
Current assets:                                                 
Cash and cash equivalents                     $1,960           $10,819
Trade receivables, net                        48,570             47,009
Inventories                                   45,631             44,664
Deferred income tax asset                     1,272              1,767
Other                                         7,788              7,508
Total current assets                          105,221            111,767
Property, plant and equipment—net             19,489             17,911
Other assets:                                                   
Deferred income tax asset                     4,070              3,179
Other                                         3,622              2,273
Goodwill                                      1,639              —
Other intangibles                             2,267              —
Total other assets                            11,598             5,452
Total assets                                  $136,308         $135,130
LIABILITIES AND SHAREHOLDERS' EQUITY                            
Current liabilities:                                            
Accounts payable                              $27,600          $26,400
Accrued compensation and vacation             6,007              7,413
Current portion of other long-term            387                576
obligations
Other                                         3,807              3,551
Total current liabilities                     37,801             37,940
Long-term liabilities:                                          
Deferred income tax liability                 1,741              1,585
Other long-term obligations                   907                1,445
Total long-term liabilities                   2,648              3,030
Total liabilities                             40,449             40,970
Shareholders' equity:                                           
Common stock, no par value—shares authorized
25,000; issued and outstanding 10,516 and     43,617             43,369
10,502 shares, respectively
Retained earnings                             51,183             49,478
Accumulated other comprehensive income        1,059              1,313
Total shareholders' equity                    95,859             94,160
Total liabilities and shareholders' equity    $136,308         $135,130

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