Key Technology Announces Fiscal 2017 Second Quarter Financial Results

Key Technology Announces Fiscal 2017 Second Quarter Financial Results

  * Largest quarter-end backlog in Company history
  * Continued improved gross margins and operating results
  * Significant $9 million in orders from major global potato processor

WALLA WALLA, Wash., April  27, 2017 (GLOBE NEWSWIRE)  -- Key Technology,  Inc. 
(NASDAQ:KTEC) announced today sales and operating results for its fiscal  2017 
second quarter, ended March 31, 2017.

Second Quarter Overview
Net sales for the three months ended March 31, 2017 totaled $27.4 million,
compared to $28.5 million recorded in the corresponding quarter last year. 
The Company reported a net loss for the quarter of $216,000, or $0.03 per
diluted share, compared to a net loss of $550,000, or $0.09 per diluted share,
in the same period a year ago.

The gross profit for the second quarter of fiscal 2017 was $9.1 million,
compared to $8.5 million in the corresponding period last year.  As a
percentage of net sales, gross profit was 33.2% and 29.7% in the second
quarter of fiscal 2017 and 2016, respectively.  Operating expenses for the
quarter ended March 31, 2017 were $9.2 million, or 33.5% of net sales,
compared to $9.1 million, or 31.9% of net sales, in the same quarter last
year.

Six Month Year-to-Date Overview
Net sales for the six months ended March 31, 2017 were $54.7 million, compared
with $53.3 million for the comparable period in fiscal 2016.  The Company
reported a net loss for the fiscal 2017 six-month period of $200,000, or $0.03
per diluted share, compared to a net loss of $2.2 million, or $0.36 per
diluted share, for the corresponding six-month period in fiscal 2016.

For the six-month period ended March 31, 2017, gross profit was $18.3 million,
compared to $15.4 million for the same six-month period of fiscal 2016, or
33.5% and 29.0% of net sales, respectively.  Operating expenses for the
six-month period ended March 31, 2017 were $18.3 million, or 33.4% of net
sales, compared to $18.5 million, or 34.7% of net sales, for the corresponding
period of fiscal 2016.

Jack Ehren, President and CEO stated, “For the 2017 second fiscal quarter and
year-to-date, we achieved significantly higher gross margins and improved
operating results compared to the same periods in the prior fiscal year, with
very similar net sales levels.  Net sales for the second quarter of fiscal
2017 were slightly lower than our expectations resulting from shipments and
installations that, due to customer-requested schedule changes, were delayed
until after the end of the second quarter.”

Orders and Backlog
Key's backlog at the end of the second quarter of fiscal 2017 was $54.4
million, compared to $38.0 million one year ago.  New orders received during
the second quarter were $35.8 million, compared to $29.2 million in the
corresponding period last year.  New orders for the six months ended March 31,
2017 were $68.3 million, compared to $60.3 million for the corresponding
period in fiscal 2016.

Ehren commented, “Our orders were the second highest of any second quarter
order level, and we have now delivered eight consecutive quarters of
year-over-year quarterly order growth.  Our ending backlog of $54.4 million,
up 43% over the prior year’s second quarter ending backlog, is the largest
quarter-end backlog in our Company’s history.”

Ehren further commented, “We have continued to build on the prior fiscal
year’s record order levels in the EMEIA region, with second quarter and
year-to-date EMEIA orders in Euro’s increasing by 70% and 61%, respectively,
over the same periods in the prior fiscal year. The last three quarters have
been our largest three individual EMEIA bookings quarters ever.  The second
quarter again included a number of strategic wins for our new VERYX platform
and other Key solutions in both North America and EMEIA, including significant
orders associated with a large plant expansion in EMEIA by a major global
potato processor.  Additional large orders for this same expansion project
were received in our 2017 third fiscal quarter, resulting in total orders for
this project of approximately $9 million.”

Conclusion
Ehren concluded, “Our record backlog at the end of the second fiscal quarter
positions Key well for the second half of fiscal 2017.  We anticipate that net
sales in the third quarter of fiscal 2017 will be significantly higher than
the net sales recorded in the third quarter of fiscal 2016.  In addition, we
continue to see significant opportunities for our industry-leading solutions
in all of our core markets globally.  We continue to focus on the execution of
our long-term strategy and the generation of attractive returns for the
Company and our shareholders.”

Conference Call
The Company's conference call related to the fiscal 2017 second quarter can be
heard live on the Internet at 2:00 p.m. Pacific Time on Thursday, April 27,
2017. 

To access the call and audio webcast:

Phone --    Q&A participation:
            Toll-Free: 877-341-5668
            International: 224-357-2205
             
Internet -- Audio webcast:
            http://edge.media-server.com/m/p/k5mpgvyq
             
Replay --   Available through Thursday, May 11, 2017
            http://edge.media-server.com/m/p/k5mpgvyq
             

About Key Technology
Key Technology (NASDAQ:KTEC) is a global leader in the design and manufacture
of process automation systems including digital sorters, conveyors, and
processing equipment. Applying processing knowledge and application expertise,
Key helps customers in the food processing and other industries improve
quality, increase yield, and reduce cost. An ISO-9001 certified company, Key
manufactures its products at its headquarters in Walla Walla, Washington, USA;
and in Beusichem, the Netherlands; Hasselt, Belgium; and Redmond, Oregon, USA.
Key offers customer demonstration and testing services at five locations
including Walla Walla, Beusichem, and Hasselt as well as Sacramento,
California, USA and Melbourne, Australia; and maintains a sales and service
office in Santiago de Queretaro, Mexico.

Forward-Looking Statements
Certain statements in this press release may be forward-looking statements for
purposes of the Private Securities Litigation Reform Act of 1995.  These
statements may relate to expected results of operations or gross margins;
expected trends in sales, orders, earnings and other financial measures;
projected expenses, including general and administrative expenses; national
and international economic conditions; the effect of foreign exchange
fluctuations; or other future occurrences.  Actual results could differ
materially from those anticipated in the forward-looking statements as a
result of a variety of economic, competitive, governmental, and other risks
and uncertainties.  These risks and uncertainties include, among other
things:  factors that could increase our cost of operations and reduce gross
margins and profitability, including expanding into new markets, undertaking
complex projects and applications, increasing research and development
expenses, and offering increasingly integrated products; acquisitions that may
harm our operating results; failure of our existing and new products to
compete successfully, which could result in the loss of market share and a
decrease in our sales and profits; significant investments in unsuccessful
research and development efforts; industry consolidation increasing
competition in the food processing equipment industry; advances in technology
by competitors adversely affecting our sales and profitability; the failure of
our independent sales representatives to perform as expected, thereby harming
our net sales; our dependence on certain suppliers leaving us temporarily
without adequate access to raw materials or products; and increased or
unanticipated costs associated with product warranties adversely affecting our
profitability.  These and other risk factors are discussed in our filings with
the Securities and Exchange Commission, including in Item 1A, "Risk Factors,"
of our Annual Report on Form 10-K for the fiscal year ended September 30,
2016.  We undertake no obligation to update or revise any forward-looking
statements in this press release as a result of subsequent developments,
except as may be required by law.

    News releases and other information about Key Technology, Inc. can be
                           accessed at www.key.net.

                         (Financial Tables to Follow)

 
 
Key Technology, Inc. and Subsidiaries
Statement of Selected Operating Information
(Unaudited, in thousands, except per share data)
                                                                     
                     Three Months Ended March 31,   Six Months Ended March 31,
                     2017             2016          2017            2016
                                                                     
Net sales            $  27,355        $  28,510     $  54,718       $ 53,313  
Cost of sales        18,272           20,041        36,405          37,864    
Gross profit         9,083            8,469         18,313          15,449    
Operating expenses:                                                  
Sales and marketing  4,506            4,089         8,824           8,159     
Research and         2,527            2,913         5,021           5,192     
development
General and          1,919            1,795         4,011           4,480     
administrative
Amortization of      215              303           442             652       
intangibles
Total operating      9,167            9,100         18,298          18,483    
expenses
Gain (loss) on
disposition of       1                (10       )   3               (2       )
assets
Loss from operations (83        )     (641      )   18              (3,036   )
Other income         (244       )     (192      )   (322       )    (530     )
(expense)
Loss before income   (327       )     (833      )   (304       )    (3,566   )
taxes
Income tax benefit   (111       )     (283      )   (104       )    (1,318   )
Net loss             $  (216    )     $  (550   )   $  (200    )    $ (2,248 )
Net loss per share                                                   
- basic              $  (0.03   )     $  (0.09  )   $  (0.03   )    $ (0.36  )
- diluted            $  (0.03   )     $  (0.09  )   $  (0.03   )    $ (0.36  )
                                                                     
Shares used in per
share calculations - 6,442            6,297         6,408           6,279     
basic
Shares used in per
share calculations - 6,442            6,297         6,408           6,279     
diluted

 
Key Technology, Inc. and Subsidiaries
Balance Sheet Information
(Unaudited, in thousands)
                                                             
                                           March 31, 2017   September 30, 2016
Cash and cash equivalents                  $  8,532         $    10,491     
Trade accounts receivable, net             14,901           14,024          
Inventories                                40,356           30,687          
Deferred income taxes                      3,892            3,934           
Prepaid expenses and other assets          4,553            3,285           
  Total current assets                     72,234           62,421          
Property, plant and equipment, net         13,119           13,789          
Deferred income taxes                      3,232            3,001           
Goodwill                                   9,875            10,277          
Investment in Proditec                     1,127            1,127           
Intangibles and other assets, net          4,612            5,369           
  Total assets                             $  104,199       $    95,984     
                                                             
Accounts payable                           $  10,318        $    7,381      
Accrued payroll liabilities and            5,344            4,932           
commissions
Customers' deposits                        15,484           9,139           
Accrued customer support and warranty      1,990            2,197           
costs
Customer purchase plans                    884              1,124           
Current portion of long-term debt          467              587             
Other accrued liabilities                  1,142            956             
  Total current liabilities                35,629           26,316          
Long-term debt                             4,358            4,565           
Deferred income taxes                      1,508            1,761           
Other long-term liabilities                267              348             
Shareholders' equity:                                        
Common stock                               34,512           34,237          
Retained earnings and other shareholders'  27,925           28,757          
equity
  Total shareholders' equity               62,437           62,994          
     Total liabilities and shareholder's   $  104,199       $    95,984     
equity

Contact
Jeff Siegal
Senior Vice President and CFO
Key Technology, Inc.
150 Avery Street
Walla Walla, WA  99362
Tel: +1 509-394-3300
Email: jsiegal@key.net
URL: www.key.net

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