Key Tronic Corporation (Nasdaq: KTCC), a provider
of electronic manufacturing services (EMS), today announced its
results for the quarter ended October 2, 2021.
For the first quarter of fiscal year 2022, Keytronic reported
revenue of approximately $132.8 million, up 8% from $123.2 million
in the same period of fiscal year 2021. While demand has remained
strong from both new and existing customers, revenue for the first
quarter of fiscal year 2022 continued to be significantly
constrained by challenges related to the global materials supply
chain, transportation, logistics and the pandemic.
The global supply chain, pandemic and transportation issues
continued to disrupt production during the quarter. Intermittent
parts supply required both factory downtime and overtime expenses,
which had an adverse impact on the Company’s margins and earnings.
In the first quarter of fiscal year 2022, gross margin was 7.6% and
operating margin was 1.6%, compared to a gross margin of 8.1% and
an operating margin of 2.3%, for the same period of fiscal year
2021.
For the first quarter of fiscal year 2022, net income was $0.8
million or $0.07 per share, compared to $1.7 million or $0.16 per
share for the same period of fiscal year 2021. Earnings for the
first quarter of fiscal 2022 were also impacted by legal and other
professional service expenses related to the previously disclosed
internal investigation of approximately $0.4 million during the
quarter.
The financial data presented for the first quarter of fiscal
year 2022 should be considered preliminary and could be subject to
change, as the Company’s independent auditor has not completed
their review.
“We’re pleased with the strong customer demand during the first
quarter of fiscal 2022 and our successful launch of major new
programs in spite of continued headwinds from worldwide component
shortages, transportation bottlenecks and the global pandemic,”
said Craig Gates, President and Chief Executive Officer. “During
the first quarter of fiscal 2022, we won new programs involving
industrial testing equipment, medical diagnostic products, and
pharmaceutical water treatment.”
“Moving further into fiscal 2022, component shortages, logistic
delays and the COVID-19 crisis 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 in both North America and Vietnam,
we’re well-prepared for long term growth when supply chains
improve.”
Business Outlook
For the second 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 $0.03 to $0.08 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) on November 2, 2021. 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: 4740716). A replay
will be available by calling 888-203-1112 or +1-719-457-0820
(Access Code: 4740716).
About Key Tronic
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 Statements
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 words as aims, anticipates,
believes, continues, could, 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 press release include,
without limitation, the Company’s statements regarding its
expectations with respect to financial conditions and results,
including revenue, earnings, legal and internal review expenses and
further costs during fiscal 2022; expenses related to, and
estimated recovery from, the COVID-19 health pandemic; demand from
new and existing customers; and key components supply and other
supply chain and transportation and logistics issues. 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: risks
relating to the internal investigation by the Audit Committee,
including legal and internal review costs, the risk of legal
proceedings or government investigations relating to the subject of
the internal investigation and related or unrelated matters; 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 |
|
October 2, 2021 |
|
September 26, 2020 |
Net sales |
$ |
132,762 |
|
|
$ |
123,207 |
|
Cost of sales |
122,624 |
|
|
113,192 |
|
Gross profit |
10,138 |
|
|
10,015 |
|
Research, development and
engineering expenses |
2,449 |
|
|
2,245 |
|
Selling, general and
administrative expenses |
5,595 |
|
|
4,974 |
|
Total operating expenses |
8,044 |
|
|
7,219 |
|
Operating income |
2,094 |
|
|
2,796 |
|
Interest expense, net |
992 |
|
|
681 |
|
Income before income taxes |
1,102 |
|
|
2,115 |
|
Income tax provision |
287 |
|
|
396 |
|
Net income |
$ |
815 |
|
|
$ |
1,719 |
|
Net income per share — Basic |
$ |
0.08 |
|
|
$ |
0.16 |
|
Weighted average shares outstanding — Basic |
10,762 |
|
|
10,760 |
|
Net income per share — Diluted |
$ |
0.07 |
|
|
$ |
0.16 |
|
Weighted average shares outstanding — Diluted |
11,052 |
|
|
11,040 |
|
|
|
|
|
|
|
KEY TRONIC CORPORATION AND
SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In
thousands)(Unaudited)
|
|
October 2, 2021 |
|
July 3, 2021 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
1,544 |
|
|
$ |
3,473 |
|
Trade receivables, net of allowance for doubtful accounts of $303
and $275 |
|
126,453 |
|
|
110,324 |
|
Contract assets |
|
23,651 |
|
|
24,781 |
|
Inventories, net |
|
143,131 |
|
|
137,329 |
|
Other |
|
30,957 |
|
|
23,345 |
|
Total current assets |
|
325,736 |
|
|
299,252 |
|
Property, plant and equipment,
net |
|
31,198 |
|
|
35,735 |
|
Operating lease right-of-use
assets, net |
|
18,994 |
|
|
15,745 |
|
Other assets: |
|
|
|
|
Deferred income tax asset |
|
10,252 |
|
|
9,656 |
|
Other |
|
5,151 |
|
|
1,458 |
|
Total other assets |
|
15,403 |
|
|
11,114 |
|
Total assets |
|
$ |
391,331 |
|
|
$ |
361,846 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
111,659 |
|
|
$ |
92,823 |
|
Accrued compensation and vacation |
|
8,476 |
|
|
11,471 |
|
Current portion of debt, net |
|
3,951 |
|
|
2,143 |
|
Other |
|
17,938 |
|
|
20,268 |
|
Total current liabilities |
|
142,024 |
|
|
126,705 |
|
Long-term liabilities: |
|
|
|
|
Term loans |
|
7,463 |
|
|
7,906 |
|
Revolving loan |
|
100,760 |
|
|
90,362 |
|
Operating lease liabilities |
|
13,727 |
|
|
11,428 |
|
Other long-term obligations |
|
4,300 |
|
|
1,740 |
|
Total long-term liabilities |
|
126,250 |
|
|
111,436 |
|
Total liabilities |
|
268,274 |
|
|
238,141 |
|
Shareholders’ equity: |
|
|
|
|
Common stock, no par value—shares authorized 25,000; issued and
outstanding 10,762 and 10,762 shares, respectively |
|
47,249 |
|
|
47,181 |
|
Retained earnings |
|
75,267 |
|
|
74,452 |
|
Accumulated other comprehensive income |
|
541 |
|
|
2,072 |
|
Total shareholders’ equity |
|
123,057 |
|
|
123,705 |
|
Total liabilities and
shareholders’ equity |
|
$ |
391,331 |
|
|
$ |
361,846 |
|
|
|
|
|
|
CONTACTS: |
|
Brett Larsen |
|
Michael Newman |
|
|
Chief Financial Officer |
|
Investor Relations |
|
|
Key Tronic Corporation |
|
StreetConnect |
|
|
(509) 927-5500 |
|
(206) 729-3625 |
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