Exhibit 99.1
FOR IMMEDIATE RELEASE
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| CONTACTS: | | Ron Klawitter | | Michael Newman |
| | | Chief Financial Officer | | Investor Relations |
| | | Key Tronic Corporation | | StreetConnect |
| | | (509) 927-5295 | | (206) 729-3625 |
KEY TRONIC CORPORATION ANNOUNCES RESULTS
FOR THE SECOND QUARTER OF FISCAL YEAR 2015
Recent Acquisition Contributing to Growth, New Customer Wins and Revenue Diversification;
Expect Continued Improvements in Operating Efficiencies and Profitability
Spokane Valley, WA— January 27, 2015 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the three months ended December 27, 2014. The Company's results were in-line with its previous guidance.
For the second quarter of fiscal year 2015, Key Tronic reported total revenue of $114.3 million, up 46% from $78.3 million in the same period of fiscal year 2014. Results for the second quarter of fiscal year 2015 include approximately $39 million in revenue from CDR Manufacturing, Inc. (dba Ayrshire Electronics), which was acquired on September 3, 2014. For the first six months of fiscal year 2015, total revenue was $200.7 million, compared to $156.2 million in the same period of fiscal year 2014.
As expected, the Company had a strong sequential improvement in operating efficiencies. For the second quarter of fiscal year 2015, gross margin was 8% and operating margin was 2%, up from 5% and (2%), respectively, in the first quarter of fiscal year 2015.
Net income for the second quarter of fiscal year 2015 was $1.6 million or $0.14 per share, which included a R&D tax benefit of approximately $0.02 per share. This compares to net income of $3.1 million or $0.27 per share for the second quarter of fiscal year 2014, which included a benefit of $1.5 million or $0.13 per share due to a change in Mexican tax law. For the first six months of fiscal year 2015, net income was $103,000 or $0.01 per share, compared to $4.8 million or $0.43 per share for the same period of fiscal year 2014.
“We’re pleased to see our recent acquisition of Ayrshire continue to make significant contributions to our progress by expanding our capabilities, revenue and customer base,” said Craig Gates, President and Chief Executive Officer. “At the end of the second quarter of fiscal year 2015, we were generating revenue from 164 distinct customers, up from 57 customers a year ago.”
“At the same time, we continue to see a robust pipeline of potential new business and have further diversified our future revenue base during the second quarter by winning new customer programs involving consumer products, commercial printers and gaming equipment. Moreover, Ayrshire customers continue to award us with additional business because of our combined capabilities and global logistics. Moving into the third quarter of fiscal year 2015, we expect to see increased operating efficiencies and profitability, as our new programs continue to grow and our product mix and margins return to normal patterns.”
Business Outlook
For the third quarter of fiscal year 2015, the Company expects to report revenue in the range of $108 million to $116 million, and earnings in the range of $0.13 to $0.18 per diluted share. These expected results assume an effective tax rate of 35%.
Conference Call
Key Tronic will host a conference call today to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern). A broadcast of the conference call will be available at www.keytronic.com under “Investor Relations” or by calling 888-576-4398 or +1-719-325-2432 (Access Code: 6875821). A replay will be available by calling 888-203-1112 or +1 719-457-0820 (Access Code: 6875821). A replay will also be available on the Company’s Web site.
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 and China. 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 all passages containing verbs such as aims, anticipates, believes, estimates, expects, hopes, intends, plans, predicts, projects or targets or nouns corresponding to such verbs. Forward-looking statements also include other passages that are primarily relevant to expected future events 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 quarterly revenue and earnings during fiscal year 2015. 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, the availability of parts from the supply chain, the accuracy of customers' forecasts; success of customers' programs; timing 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; and the other risks and uncertainties detailed from time to time in the Company's SEC filings.
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
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| | Three Months Ended | | Six Months Ended |
| | December 27, 2014 | | December 28, 2013 | | December 27, 2014 | | December 28, 2013 |
| Net sales | $ | 114,311 |
| | $ | 78,250 |
| | $ | 200,653 |
| | $ | 156,224 |
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| Cost of sales | 105,072 |
| | 71,300 |
| | 187,176 |
| | 142,652 |
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| Gross profit | 9,239 |
| | 6,950 |
| | 13,477 |
| | 13,572 |
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| Research, development and engineering expenses | 1,297 |
| | 1,421 |
| | 2,633 |
| | 2,767 |
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| Selling, general and administrative expenses | 5,425 |
| | 3,163 |
| | 10,032 |
| | 5,979 |
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| Total operating expenses | 6,722 |
| | 4,584 |
| | 12,665 |
| | 8,746 |
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| Operating income | 2,517 |
| | 2,366 |
| | 812 |
| | 4,826 |
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| Interest expense, net | 404 |
| | 16 |
| | 593 |
| | 38 |
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| Income before income taxes | 2,113 |
| | 2,350 |
| | 219 |
| | 4,788 |
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| Income tax provision (benefit) | 487 |
| | (764 | ) | | 116 |
| | (31 | ) |
| Net income | $ | 1,626 |
| | $ | 3,114 |
| | $ | 103 |
| | $ | 4,819 |
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| Net income per share — Basic | $ | 0.15 |
| | $ | 0.30 |
| | $ | 0.01 |
| | $ | 0.46 |
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| Weighted average shares outstanding — Basic | 10,552 |
| | 10,530 |
| | 10,550 |
| | 10,519 |
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| Net income per share — Diluted | $ | 0.14 |
| | $ | 0.27 |
| | $ | 0.01 |
| | $ | 0.43 |
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| Weighted average shares outstanding — Diluted | 11,471 |
| | 11,354 |
| | 11,442 |
| | 11,330 |
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KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
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| | | December 27, 2014 | | June 28, 2014 |
| ASSETS | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 201 |
| | $ | 5,803 |
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| Trade receivables, net | | 68,511 |
| | 49,658 |
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| Inventories | | 71,365 |
| | 55,634 |
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| Deferred income tax asset | | 5,711 |
| | 935 |
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| Other | | 13,576 |
| | 11,186 |
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| Total current assets | | 159,364 |
| | 123,216 |
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| Property, plant and equipment, net | | 29,984 |
| | 23,596 |
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| Other assets: | | | | |
| Deferred income tax asset | | 2,460 |
| | 3,325 |
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| Goodwill | | 9,957 |
| | 1,740 |
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| Other intangible assets | | 7,620 |
| | 2,071 |
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| Other | | 1,247 |
| | 2,712 |
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| Total other assets | | 21,284 |
| | 9,848 |
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| Total assets | | $ | 210,632 |
| | $ | 156,660 |
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| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | |
| Current liabilities: | | | | |
| Accounts payable | | $ | 42,945 |
| | $ | 32,459 |
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| Accrued compensation and vacation | | 7,429 |
| | 7,562 |
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| Current portion of debt | | 5,000 |
| | 7,853 |
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| Other | | 8,539 |
| | 4,293 |
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| Total current liabilities | | 63,913 |
| | 52,167 |
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| Long-term liabilities: | | | | |
| Term loan - long term | | 28,750 |
| | — |
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| Revolving loan | | 11,992 |
| | — |
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| Deferred income tax liability | | 3,706 |
| | 270 |
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| Other long-term obligations | | 3,462 |
| | 578 |
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| Total long-term liabilities | | 47,910 |
| | 848 |
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| Total liabilities | | 111,823 |
| | 53,015 |
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| Shareholders' equity: | | | | |
| Common stock, no par value—shares authorized 25,000; issued and outstanding 10,552 and 10,547 shares, respectively | | 44,562 |
| | 44,151 |
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| Retained earnings | | 57,194 |
| | 57,091 |
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| Accumulated other comprehensive (loss) income | | (2,947 | ) | | 2,403 |
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| Total shareholders' equity | | 98,809 |
| | 103,645 |
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| Total liabilities and shareholders’ equity | | $ | 210,632 |
| | $ | 156,660 |
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