Key Tronic Corporation (Nasdaq: KTCC), a provider
of electronic manufacturing services (EMS), today announced its
results for the quarter and the year ended July 2, 2022.
For the fourth quarter of fiscal year 2022, Keytronic reported
total revenue of $126.2 million, compared to $132.6 million in the
same period of fiscal year 2021. For the full year of fiscal 2022,
total revenue was $531.8 million, up 3% from $518.7 million for
fiscal year 2021. During fiscal year 2022, the Company added
significant new programs and its backlog for orders reached
historic highs. At the same time, constraints in the global supply
chain and transportation issues continued to limit production
throughout the year.
During the fourth quarter of fiscal year 2022, the results were
impacted by intermittent parts supply and factory downtime. The
Company’s facilities in Shanghai, China were closed for most of the
fourth quarter due to a government mandated COVID shutdown. While
the reopening of the Company’s China facility took longer than
anticipated, operations have since resumed. Legal costs related
specifically to the SEC’s review of last year’s whistleblower
complaint totaled approximately $0.08 per diluted share during the
quarter, though we estimate legal costs to decrease in coming
periods.
For the fourth quarter of fiscal year 2022, the Company’s gross
margin was 9.3% and operating margin was 1.8%, compared to a gross
margin of 7.8% and an operating margin of 1.1% in the same period
of fiscal year 2021. The increased margins primarily reflect an
increase in sales pricing to recoup higher materials and labor
costs incurred by the Company throughout the fiscal year. While the
fourth quarter was a significant improvement of gross margin,
margins are expected to return to historical levels in coming
quarters.
For the fourth quarter of fiscal year 2022, net income was $1.0
million or $0.09 per share, up from $0.2 million or $0.02 per share
for the same period of fiscal year 2021. For the full year of
fiscal year 2022, net income was $3.4 million or $0.31 per share,
compared to $4.3 million or $0.39 per share for fiscal year
2021.
“Despite the continued headwinds from the global supply chain
challenges during fiscal 2022, we still managed to grow our
business, driven by the successful ramp of new programs and our
expanding customer base,” said Craig Gates, President and Chief
Executive Officer. “During the fourth quarter of fiscal year 2022,
we won new programs involving audio products, GPS devices, utility
meters, personal safety devices, and innovative internet
solutions.”
“Moving into fiscal 2023, the global supply chain and COVID-19
crises continue to present uncertainty and multiple business
challenges. At the same time, global logistics problems and
heightened assurance of supply concerns continue to drive the
favorable trend of contract manufacturing returning to North
America.”
“In fiscal 2023, we expect to ramp a number of new programs,
including the previously announced program with a leading power
equipment company in our Mexico facility during the second quarter.
We believe we are well positioned to benefit from the growing
demand for North American onshoring and see the potential for
significant growth in fiscal 2023 and beyond.”
The financial data presented for the fourth quarter and year end
of fiscal year 2022 should be considered preliminary and could be
subject to change, as the Company’s independent auditor has not
completed their audit.
Business Outlook
For the first quarter of fiscal year 2023, Keytronic expects to
report revenue in the range of $125 million to $135 million, and
earnings in the range of $0.05 to $0.10 per diluted share. Despite
growing customer demand and backlog, the Company expects that the
ongoing disruptions from the global supply chain and COVID-19
issues will continue to significantly limit production and
adversely impact operating efficiencies, particularly for our
China-based facilities. These expected results assume an effective
tax rate of 25% in the coming quarter.
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 888-394-8218 or +1-323-794-2588
(Access Code: 6758956). A replay will be available by calling
888-203-1112 or +1-719-457-0820 (Access Code: 6758956).
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 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, 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 2023, 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 2, 2022 |
|
July 3, 2021 |
|
July 2, 2022 |
|
July 3, 2021 |
Net sales |
$ |
126,206 |
|
|
$ |
132,629 |
|
|
$ |
531,815 |
|
|
$ |
518,698 |
|
Cost of sales |
|
114,446 |
|
|
|
122,323 |
|
|
|
488,601 |
|
|
|
476,659 |
|
Gross profit |
|
11,760 |
|
|
|
10,306 |
|
|
|
43,214 |
|
|
|
42,039 |
|
Research, development and
engineering expenses |
|
2,348 |
|
|
|
2,498 |
|
|
|
9,821 |
|
|
|
9,790 |
|
Selling, general and
administrative expenses |
|
7,151 |
|
|
|
6,374 |
|
|
|
24,598 |
|
|
|
22,723 |
|
Total operating expenses |
|
9,499 |
|
|
|
8,872 |
|
|
|
34,419 |
|
|
|
32,513 |
|
Operating income |
|
2,261 |
|
|
|
1,434 |
|
|
|
8,795 |
|
|
|
9,526 |
|
Interest expense, net |
|
1,466 |
|
|
|
1,064 |
|
|
|
5,104 |
|
|
|
3,613 |
|
Income before income taxes |
|
795 |
|
|
|
370 |
|
|
|
3,691 |
|
|
|
5,913 |
|
Income tax (benefit)
provision |
|
(173 |
) |
|
|
195 |
|
|
|
314 |
|
|
|
1,572 |
|
Net income |
$ |
968 |
|
|
$ |
175 |
|
|
$ |
3,377 |
|
|
$ |
4,341 |
|
Net income per share — Basic |
$ |
0.09 |
|
|
$ |
0.02 |
|
|
$ |
0.31 |
|
|
$ |
0.40 |
|
Weighted average shares outstanding — Basic |
|
10,762 |
|
|
|
10,762 |
|
|
|
10,762 |
|
|
|
10,760 |
|
Net income per share — Diluted |
$ |
0.09 |
|
|
$ |
0.02 |
|
|
$ |
0.31 |
|
|
$ |
0.39 |
|
Weighted average shares outstanding — Diluted |
|
11,071 |
|
|
|
11,169 |
|
|
|
11,063 |
|
|
|
11,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KEYTRONIC CORPORATION AND
SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In
thousands)(Unaudited)
|
|
July 2, 2022 |
|
July 3, 2021 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
1,707 |
|
|
$ |
3,473 |
|
Trade receivables, net of allowance for doubtful accounts of $12
and $275 |
|
|
135,876 |
|
|
|
110,324 |
|
Contract assets |
|
|
21,974 |
|
|
|
24,781 |
|
Inventories, net |
|
|
155,741 |
|
|
|
137,329 |
|
Other |
|
|
24,710 |
|
|
|
23,345 |
|
Total current assets |
|
|
340,008 |
|
|
|
299,252 |
|
Property, plant and equipment,
net |
|
|
26,012 |
|
|
|
35,735 |
|
Operating lease right-of-use
assets, net |
|
|
16,731 |
|
|
|
15,745 |
|
Other assets: |
|
|
|
|
Deferred income tax asset |
|
|
10,055 |
|
|
|
9,656 |
|
Other |
|
|
14,117 |
|
|
|
1,458 |
|
Total other assets |
|
|
24,172 |
|
|
|
11,114 |
|
Total assets |
|
$ |
406,923 |
|
|
$ |
361,846 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
121,393 |
|
|
$ |
92,823 |
|
Accrued compensation and vacation |
|
|
11,836 |
|
|
|
11,471 |
|
Current portion of debt, net |
|
|
7,402 |
|
|
|
2,143 |
|
Other |
|
|
23,036 |
|
|
|
20,268 |
|
Total current liabilities |
|
|
163,667 |
|
|
|
126,705 |
|
Long-term liabilities: |
|
|
|
|
Term loans |
|
|
5,716 |
|
|
|
7,906 |
|
Revolving loan |
|
|
94,577 |
|
|
|
90,362 |
|
Operating lease liabilities |
|
|
12,023 |
|
|
|
11,428 |
|
Deferred income tax liability |
|
|
64 |
|
|
|
— |
|
Other long-term obligations |
|
|
5,998 |
|
|
|
1,740 |
|
Total long-term liabilities |
|
|
118,378 |
|
|
|
111,436 |
|
Total liabilities |
|
|
282,045 |
|
|
|
238,141 |
|
Shareholders’ equity: |
|
|
|
|
Common stock, no par value—shares authorized 25,000; issued and
outstanding 10,762 and 10,762 shares, respectively |
|
|
47,474 |
|
|
|
47,181 |
|
Retained earnings |
|
|
77,829 |
|
|
|
74,452 |
|
Accumulated other comprehensive income (loss) |
|
|
(425 |
) |
|
|
2,072 |
|
Total shareholders’ equity |
|
|
124,878 |
|
|
|
123,705 |
|
Total liabilities and
shareholders’ equity |
|
$ |
406,923 |
|
|
$ |
361,846 |
|
|
|
|
|
|
|
|
|
|
CONTACTS: |
|
Brett LarsenChief Financial OfficerKey Tronic Corporation(509)
927-5500 |
|
Michael NewmanInvestor RelationsStreetConnect(206) 729-3625 |
|
|
|
|
|
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