Key Tronic Corporation (Nasdaq: KTCC), a provider
of electronic manufacturing services (EMS), today announced its
results for the quarter ended September 26, 2020.
For the first quarter of fiscal year 2021, Key Tronic reported
total revenue of $123.2 million, up 17% from $105.3 million in the
same period of fiscal year 2020. The increase in revenue was due to
the successful ramp of new customer programs and increased demand
from existing customers. However, partially offsetting the increase
in revenue during the first quarter of fiscal year 2021, the
Company’s revenue was constrained by labor shortages at its
facilities in Juarez due to the COVID-19 pandemic and associated
public health measures.
During the first quarter of fiscal year 2021, the Company
incurred additional costs caused by the COVID-19 crisis totaling
approximately $1.4 million or $0.10 per share. These expenses are
related to increased compensation at the Company’s Juarez facility
in order to reduce turnover of available employees, as well as
preventative measures and equipment for employees at all of its
facilities in the US, Mexico, China and Vietnam.
The pandemic’s adverse impact on revenue and expenses also
reduced the Company’s margins. For the first quarter of fiscal year
2021, gross margin was 8.1% and operating margin was 2.3%, compared
to gross margin of 8.8% and an operating margin of 2.4%, in the
same period of fiscal 2020. For the first quarter of fiscal year
2021, net income was $1.7 million or $0.16 per share, compared to
$1.6 million or $0.14 per share for the same period of fiscal year
2020.
“We’re pleased with the successful launch of new programs,
rebounding customer demand and our strong revenue growth in the
first quarter of fiscal 2021,” said Craig Gates, President and
Chief Executive Officer. “We are ramping recent program wins and,
while some of our legacy customers continued to have reduced demand
due to the pandemic and related economic slowdown, several have
increased demand during the first quarter of fiscal 2021, including
programs for healthcare, industrial controls, and
telecommunications. During the first quarter of fiscal 2021, we won
new programs involving audio and video editing systems, indoor air
quality, utility meters, warehouse management, and automation
technologies.”
“Moving into the second quarter of fiscal 2021, the COVID-19
crisis continues to present macroeconomic uncertainty and multiple
business challenges, but we continue to see the favorable trend of
contract manufacturing returning to North America. We remain
focused on protecting the health of all of our employees by
adhering to current health guidelines, as well as increasing
retention of available employees. We expect continued strong
revenue growth in the second quarter and continue to invest in new
capacity to prepare for long-term growth.”
Business Outlook
For the second quarter of fiscal year 2021, Key Tronic expects
to report revenue of approximately $125 million to $135 million,
and earnings of approximately $0.15 to $0.25 per diluted share.
These expected results assume an effective tax rate of 25% in the
coming quarter. Key Tronic is working closely with its customers,
key suppliers and employees to minimize the impact of the continued
global pandemic. While the Company’s facilities in the US, Mexico,
China and Vietnam are currently operating and rigorously following
current health guidelines, uncertainty as to the possibility of
future temporary closures, customer demand and costs, and future
supply chain disruptions during the rapidly changing COVID-19
environment could significantly impact operations in coming
periods. Due to the heightened risks associated with the above, we
may issue updated guidance during the upcoming quarter.
Conference Call
Key Tronic will host a conference call to discuss its financial
results at 2:00 PM Pacific (5:00 PM Eastern) today. A broadcast of
the conference call will be available at www.keytronic.com under
“Investor Relations” or by calling 866-248-8441 or +1-323-289-6576
(Access Code: 6871537). A replay will be available by calling
888-203-1112 or +1-719-457-0820 (Access Code: 6871537).
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, China and Vietnam. 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, but are not
limited to those including such word as aims, anticipates,
believes, estimates, expects, hopes, intends, plans, predicts,
projects, targets, or will, similar verbs, or nouns corresponding
to such verbs, which may be forward looking. Forward-looking
statements also include other passages that are relevant to
expected future events, performances, and actions 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 financial conditions and results, including revenue
and earnings during periods of fiscal year 2021, risks of
manufacturing supply chain and operational disruptions and relating
to the health of employees due to COVID-19 health pandemic, demand
for certain products and the effectiveness of some of our programs,
effects of recent tax reform and tariff measures and trade
tensions, business from new customers and programs, improvement of
supply chain delivery and impacts from legal proceedings and
operational streamlining. 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,
particularly during the COVID-19 health crisis; the availability of
components from the supply chain; the availability of a healthy
workforce; the accuracy of suppliers’ and customers’ forecasts;
development and success of customers’ programs and products; timing
and effectiveness of ramping 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;
impact of new governmental legislation and regulation, including
tax reform, tariffs and related activities, such trade negotiations
and other risks including those related to COVID-19 response; and
other factors, risks, and uncertainties detailed from time to time
in the Company’s SEC filings.
KEY TRONIC CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(In
thousands, except per share amounts)(Unaudited)
|
Three Months Ended |
|
September 26, 2020 |
|
September 28, 2019 |
Net sales |
$ |
123,207 |
|
|
$ |
105,285 |
|
Cost of sales |
113,192 |
|
|
96,012 |
|
Gross profit |
10,015 |
|
|
9,273 |
|
Research, development and
engineering expenses |
2,245 |
|
|
1,660 |
|
Selling, general and
administrative expenses |
4,974 |
|
|
5,074 |
|
Total operating expenses |
7,219 |
|
|
6,734 |
|
Operating income |
2,796 |
|
|
2,539 |
|
Interest expense, net |
681 |
|
|
710 |
|
Income before income taxes |
2,115 |
|
|
1,829 |
|
Income tax provision |
396 |
|
|
277 |
|
Net income |
$ |
1,719 |
|
|
$ |
1,552 |
|
Net income per share — Basic |
$ |
0.16 |
|
|
$ |
0.14 |
|
Weighted average shares outstanding — Basic |
10,760 |
|
|
10,760 |
|
Net income per share — Diluted |
$ |
0.16 |
|
|
$ |
0.14 |
|
Weighted average shares outstanding — Diluted |
11,040 |
|
|
10,805 |
|
|
|
|
|
|
|
KEY TRONIC CORPORATION AND
SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In
thousands)(Unaudited)
|
September 26, 2020 |
|
June 27, 2020 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
1,471 |
|
|
$ |
553 |
|
Trade receivables, net of allowance for doubtful accounts of $609
and $609 |
91,563 |
|
|
86,123 |
|
Contract assets |
24,458 |
|
|
23,753 |
|
Inventories, net |
119,791 |
|
|
115,020 |
|
Other |
18,782 |
|
|
17,315 |
|
Total current assets |
256,065 |
|
|
242,764 |
|
Property, plant and equipment,
net |
33,316 |
|
|
31,764 |
|
Operating lease right-of-use
assets, net |
16,370 |
|
|
17,568 |
|
Other assets: |
|
|
|
Deferred income tax asset |
9,632 |
|
|
10,178 |
|
Other |
2,429 |
|
|
2,587 |
|
Total other assets |
12,061 |
|
|
12,765 |
|
Total assets |
$ |
317,812 |
|
|
$ |
304,861 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
79,146 |
|
|
$ |
80,204 |
|
Accrued compensation and vacation |
7,641 |
|
|
10,428 |
|
Current portion of debt, net |
906 |
|
|
7,508 |
|
Other |
13,957 |
|
|
14,079 |
|
Total current liabilities |
101,650 |
|
|
112,219 |
|
Long-term liabilities: |
|
|
|
Term loans |
4,021 |
|
|
3,258 |
|
Revolving loan |
79,539 |
|
|
60,094 |
|
Operating lease liabilities |
11,502 |
|
|
12,624 |
|
Deferred income tax liability |
232 |
|
|
234 |
|
Other long-term obligations |
1,386 |
|
|
875 |
|
Total long-term liabilities |
96,680 |
|
|
77,085 |
|
Total liabilities |
198,330 |
|
|
189,304 |
|
Shareholders’ equity: |
|
|
|
Common stock, no par value—shares authorized 25,000; issued and
outstanding 10,760 and 10,760 shares, respectively |
47,009 |
|
|
46,946 |
|
Retained earnings |
71,830 |
|
|
70,111 |
|
Accumulated other comprehensive income (loss) |
643 |
|
|
(1,500 |
) |
Total shareholders’ equity |
119,482 |
|
|
115,557 |
|
Total liabilities and
shareholders’ equity |
$ |
317,812 |
|
|
$ |
304,861 |
|
|
|
|
|
|
|
|
|
CONTACTS:
Brett LarsenChief Financial OfficerKey Tronic Corporation(509)
927-5500
Michael NewmanInvestor RelationsStreetConnect(206) 729-3625
KeyTronic (NASDAQ:KTCC)
Historical Stock Chart
From Apr 2024 to May 2024
KeyTronic (NASDAQ:KTCC)
Historical Stock Chart
From May 2023 to May 2024