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

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

Continued New Customer Wins and Revenue Diversification; Expecting Sequential
Growth in Fourth Quarter

SPOKANE VALLEY, Wash., April 29, 2014 (GLOBE NEWSWIRE) -- Key Tronic
Corporation (Nasdaq:KTCC), a provider of electronic manufacturing services
(EMS), today announced its results for the three months ended March 29, 2014.
The Company's actual results were in line with its previous guidance.

For the third quarter of fiscal year 2014, Key Tronic reported total revenue
of $77.0 million, compared to $84.3 million in the same period of fiscal year
2013. For the first nine months of fiscal year 2014, total revenue was $233.3
million, compared to $276.4 million in the same period of fiscal year 2013.

Net income for the third quarter of fiscal year 2014 was $1.4 million or $0.13
per diluted share, compared to $2.9 million or $0.26 per diluted share for the
same period of fiscal year 2013. For the first nine months of fiscal year
2014, net income was $6.2 million or $0.57 per diluted share, compared to
$10.2 million or $0.94 per diluted share for the same period of fiscal year
2013.

For the third quarter of fiscal year 2014, gross margin was 9% and operating
margin was 3%, compared to 9% and 4%, respectively, in the same period of
fiscal year 2013.

"During the third quarter of fiscal year 2014, many of our new programs
continued to ramp up," said Craig Gates, President and Chief Executive
Officer. "We expect to see sequential growth during the fourth quarter of
fiscal year 2014, as growing revenue from new customers and new programs
should offset and then exceed the demand reductions in recent periods by our
two largest customers."

"Overall, we continue to enjoy strong customer loyalty, with many of our
customers rewarding us with nearly a decade or more of uninterrupted business.
At the end of the third quarter of fiscal year 2014, we were generating
revenue from 192 separate programs compared to 177 programs at the end of the
third quarter of fiscal year 2013. At the same time, we continued to diversify
our future revenue base during the third quarter by winning two new programs
from new customers involving consumer products and fitness equipment."

"Our pipeline of potential new business is also increasingly robust, involving
programs with greater long-term revenue potential and higher quality
requirements. Our increased competitiveness in the EMS marketplace is being
driven by the growing recognition of the advantages of Mexico-based production
for North America consumption over China-based production, as well as by the
growing number of opportunities where we can capitalize on the continued
expansion of our new sheet metal fabrications capabilities in concert with our
plastic molding, printed circuit, and product assembly capabilities."

Business Outlook

For the fourth quarter of fiscal year 2014, the Company expects to report
revenue in the range of $78 million to $85 million, and earnings in the range
of $0.17 to $0.23 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 www.keytronic.com under "Investor Relations" or by calling
800-762-8779 or +1-480-629-9645. A 48-hour replay will be available by calling
800-406-7325 or +1 303 590 3030 (Access Code: 4676348). 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 year 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  Nine Months Ended
                                    March 29, March 30, March 29,  March 30,
                                     2014      2013      2014       2013
Net sales                            $77,043 $84,343 $233,267 $276,418
Cost of sales                        70,436    76,483    213,088    249,587
Gross profit                         6,607     7,860     20,179     26,831
Research, development and            1,414     1,329     4,181      3,804
engineering expenses
Selling, general and administrative  2,985     2,938     8,964      8,406
expenses
Total operating expenses             4,399     4,267     13,145     12,210
Operating income                     2,208     3,593     7,034      14,621
Interest expense, net                12        38        50         246
Income before income taxes           2,196     3,555     6,984      14,375
Income tax provision                 782       692       751        4,189
Net income                           $1,414  $2,863  $6,233   $10,186
Net income per share — Basic         $0.13   $0.27   $0.59    $0.97
Weighted average shares outstanding  10,533    10,489    10,523     10,488
— Basic
Net income per share — Diluted       $0.13   $0.26   $0.57    $0.94
Weighted average shares outstanding  10,926    10,931    10,920     10,888
— Diluted


KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                               
                                                 March 29, 2014 June 29, 2013
ASSETS                                                          
Current assets:                                                 
Cash and cash equivalents                         $2,241       $10,819
Trade receivables, net of allowances of $37 and   52,637         47,009
$40, respectively
Inventories                                       46,086         44,664
Deferred income tax asset                         1,516          1,767
Other                                             9,464          7,508
Total current assets                              111,944        111,767
Property, plant and equipment—net                 21,188         17,911
Other assets:                                                   
Deferred income tax asset                         3,052          3,179
Other                                             1,914          2,273
Goodwill                                          1,740          —
Other intangibles                                 2,138          —
Total other assets                                8,844          5,452
Total assets                                      $141,976     $135,130
LIABILITIES AND SHAREHOLDERS' EQUITY                            
Current liabilities:                                            
Accounts payable                                  $28,540      $26,400
Accrued compensation and vacation                 6,297          7,413
Current portion of other long-term obligations    —              576
Other                                             5,021          3,551
Total current liabilities                         39,858         37,940
Long-term liabilities:                                          
Deferred income tax liability                     —              1,585
Other long-term obligations                       564            1,445
Total long-term liabilities                       564            3,030
Total liabilities                                 40,422         40,970
Shareholders' equity:                                           
Common stock, no par value—shares authorized
25,000; issued and outstanding 10,533 and 10,502  44,015         43,369
shares, respectively
Retained earnings                                 55,711         49,478
Accumulated other comprehensive income            1,828          1,313
Total shareholders' equity                        101,554        94,160
Total liabilities and shareholders' equity        $141,976     $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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