Key Tronic Corporation (Nasdaq: KTCC), a provider
of electronic manufacturing services (EMS), today announced its
results for the quarter and the year ended July 3, 2021.
For the fourth quarter of fiscal year 2021, Keytronic reported
total revenue of $132.6 million, up 14% from $116.0 million in the
same period of fiscal year 2020. For the full year of fiscal 2021,
total revenue was $518.7 million, the highest annual revenue in the
Company’s fifty-two year history, and up 15% from $449.5 million
for fiscal year 2020. While demand has remained strong from both
new and existing customers, revenue for the fourth quarter and for
the full year of fiscal year 2021 was significantly constrained by
issues related to the worldwide pandemic, the supply chain, and
transportation and logistics.
Despite the adverse impact on revenue and expenses of the
pandemic and global supply chain issues, the Company’s margins
improved in fiscal year 2021. Operating income increased to
$9.5 million during fiscal year 2021, up from
$6.8 million in the same period of fiscal year 2020, or a 40%
year-over-year increase. Gross margin was 8.1% and operating margin
was 1.8%, up from a gross margin of 7.8% and an operating margin of
1.5%, for fiscal year 2020.
For the fourth quarter of fiscal year 2021, net income was $0.2
million or $0.02 per share, compared to $1.5 million or $0.14 per
share for the same period of fiscal year 2020. Earnings for the
fourth quarter of fiscal 2021 continued to be adversely impacted by
supply chain and transportation and logistics issues causing both
factory downtime and overtime expenses. Earnings for the fourth
quarter of fiscal 2021 were also constrained by legal and other
professional service expenses related to the previously disclosed
internal investigation of approximately $1.0 million during
quarter, and we expect some additional expenses to occur
prospectively. Additionally, the Company recorded approximately
$0.5 million in non-cash tax expense related to expired stock
appreciation rights during the fourth quarter of fiscal year 2021.
For the full year of fiscal 2021, net income was $4.3 million or
$0.39 per share, compared to $4.8 million or $0.44 per share for
fiscal year 2020.
The financial data presented for the fourth quarter and fiscal
year 2021 should be considered preliminary and could be subject to
change, as the Company’s independent auditor has not completed
their audit.
“We’re pleased with the increasing customer demand during fiscal
2021 and our successful launch of major new programs,” said Craig
Gates, President and Chief Executive Officer. “We are especially
grateful for the dedication and resilience of Key Tronic employees
during the past fiscal year – a year of record revenue and
increased operating margins in spite of significant headwinds
including the global pandemic, government shutdowns, unprecedented
winter storms, worldwide component shortages, and transportation
bottlenecks.”
“While production has been hindered by many unusual challenges,
we continued to ramp up our new programs and we’re extremely
encouraged by new program wins and our expanding customer
base. During the fourth quarter of fiscal 2021, we won
new programs involving consumer products, exercise equipment, and
residential building products.”
“Moving into fiscal 2022, the COVID-19 crisis, component
shortages and logistic delays continue to present multiple business
challenges, but we continue to see the favorable trend of contract
manufacturing returning to North America. With our recent
investments in new capacity, we’re increasingly well-prepared for
long term growth.”
Business Outlook
For the first quarter of fiscal year 2022, Keytronic expects to
report revenue in the range of $125 million to $135 million, and
earnings in the range of $0.07 to $0.12 per diluted share. These
expected results assume an effective tax rate of 25% in the coming
quarter. Despite growing customer demand and backlog, we expect
that delays in the supply of key components for the Company’s
business will continue to significantly limit production and
adversely impact operating efficiencies.
Conference Call
Keytronic 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 800-367-2403 or +1-334-777-6978
(Access Code: 6622202). A replay will be available by calling
888-203-1112 or +1-719-457-0820 (Access Code: 6622202).
About Keytronic
Keytronic 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 Keytronic visit: www.keytronic.com.
Forward-Looking StatementsSome 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 words as aims, anticipates, believes,
continues, 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 2022, 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; the risk of legal proceedings or
governmental investigations relating to the subject of the internal
investigation by the Company’s Audit Committee and related or other
unrelated matters; 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.
KEYTRONIC CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(In
thousands, except per share amounts)(Unaudited)
|
Three Months Ended |
|
Twelve Months Ended |
|
July 3, 2021 |
|
June 27, 2020 |
|
July 3, 2021 |
|
June 27, 2020 |
Net sales |
$ |
132,629 |
|
|
$ |
116,018 |
|
|
$ |
518,698 |
|
|
$ |
449,480 |
|
Cost of sales |
122,323 |
|
|
107,412 |
|
|
476,659 |
|
|
414,231 |
|
Gross profit |
10,306 |
|
|
8,606 |
|
|
42,039 |
|
|
35,249 |
|
Research, development and
engineering expenses |
2,498 |
|
|
2,262 |
|
|
9,790 |
|
|
7,391 |
|
Selling, general and
administrative expenses |
6,374 |
|
|
5,317 |
|
|
22,723 |
|
|
21,030 |
|
Total operating expenses |
8,872 |
|
|
7,579 |
|
|
32,513 |
|
|
28,421 |
|
Operating income |
1,434 |
|
|
1,027 |
|
|
9,526 |
|
|
6,828 |
|
Interest expense, net |
1,064 |
|
|
521 |
|
|
3,613 |
|
|
2,509 |
|
Income before income taxes |
370 |
|
|
506 |
|
|
5,913 |
|
|
4,319 |
|
Income tax (benefit)
provision |
195 |
|
|
(966 |
) |
|
1,572 |
|
|
(439 |
) |
Net income |
$ |
175 |
|
|
$ |
1,472 |
|
|
$ |
4,341 |
|
|
$ |
4,758 |
|
Net income per share — Basic |
$ |
0.02 |
|
|
$ |
0.14 |
|
|
$ |
0.40 |
|
|
$ |
0.44 |
|
Weighted average shares outstanding — Basic |
10,762 |
|
|
10,760 |
|
|
10,760 |
|
|
10,760 |
|
Net income per share — Diluted |
$ |
0.02 |
|
|
$ |
0.14 |
|
|
$ |
0.39 |
|
|
$ |
0.44 |
|
Weighted average shares outstanding — Diluted |
11,169 |
|
|
10,832 |
|
|
11,046 |
|
|
10,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
KEYTRONIC CORPORATION AND
SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In
thousands)(Unaudited)
|
July 3, 2021 |
|
June 27, 2020 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
3,473 |
|
|
$ |
553 |
|
Trade receivables, net of allowance for doubtful accounts of $275
and $609 |
110,324 |
|
|
86,123 |
|
Contract assets |
24,781 |
|
|
23,753 |
|
Inventories, net |
137,329 |
|
|
115,020 |
|
Other |
23,345 |
|
|
17,315 |
|
Total current assets |
299,252 |
|
|
242,764 |
|
Property, plant and equipment,
net |
35,735 |
|
|
31,764 |
|
Operating lease right-of-use
assets, net |
15,745 |
|
|
17,568 |
|
Other assets: |
|
|
|
Deferred income tax asset |
9,812 |
|
|
10,178 |
|
Other |
1,458 |
|
|
2,587 |
|
Total other assets |
11,270 |
|
|
12,765 |
|
Total assets |
$ |
362,002 |
|
|
$ |
304,861 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
92,823 |
|
|
$ |
80,204 |
|
Accrued compensation and vacation |
11,471 |
|
|
10,428 |
|
Current portion of debt, net |
1,506 |
|
|
7,508 |
|
Other |
21,141 |
|
|
14,079 |
|
Total current liabilities |
126,941 |
|
|
112,219 |
|
Long-term liabilities: |
|
|
|
Term loans |
8,543 |
|
|
3,258 |
|
Revolving loan |
90,362 |
|
|
60,094 |
|
Operating lease liabilities |
10,555 |
|
|
12,624 |
|
Deferred income tax liability |
— |
|
|
234 |
|
Other long-term obligations |
2,434 |
|
|
875 |
|
Total long-term liabilities |
111,894 |
|
|
77,085 |
|
Total liabilities |
238,835 |
|
|
189,304 |
|
Shareholders’ equity: |
|
|
|
Common stock, no par value—shares authorized 25,000; issued and
outstanding 10,762 and 10,760 shares, respectively |
47,181 |
|
|
46,946 |
|
Retained earnings |
73,914 |
|
|
70,111 |
|
Accumulated other comprehensive income (loss) |
2,072 |
|
|
(1,500 |
) |
Total shareholders’ equity |
123,167 |
|
|
115,557 |
|
Total liabilities and
shareholders’ equity |
$ |
362,002 |
|
|
$ |
304,861 |
|
|
|
|
|
|
|
|
|
CONTACTS: |
Brett Larsen |
Michael Newman |
|
Chief Financial Officer |
Investor Relations |
|
Key Tronic Corporation |
StreetConnect |
|
(509) 927-5500 |
(206) 729-3625 |
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