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
SECOND QUARTER RESULTS
Quarterly Revenue Up 57% Year-over-Year Drives Increased Earnings
Spokane, WA— January 31, 2005 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended January 1, 2005.
For the second quarter of fiscal 2005, Key Tronic reported total revenue of $51.2 million, up 57% from $32.6 million for the second quarter of fiscal 2004, and up 5% from $48.8 million in the previous quarter. For the first six months of fiscal 2005, total revenue was $100.0 million, up 49% from $67.2 million in the same period of fiscal 2004.
Net income for the second quarter of fiscal 2005 was $490,000 or $0.05 per share, up from a net loss of $287,000 or ($0.03) per share for the second quarter of fiscal 2004, and up from net income of $266,000 or $0.03 per share for the previous quarter. For the first six months of fiscal 2005, net income was $756,000 or $0.08 per share, up from a net loss of $267,000 or ($0.03) per share for the same period of fiscal 2004
“We are pleased with our continued revenue and earnings growth in the second quarter,” said Jack Oehlke, President and Chief Executive Officer. “Our growth was primarily driven by increased production on programs for established customers involving gaming technology and specialty printer accessories and components. During the quarter, we added to our printed circuit board capacity to address the needs of those customers.”
“While we see a seasonal slow down in a few existing programs, we have a new consumer product program getting underway in the third quarter and we expect our new program with a medical technology customer to begin production in the fourth quarter. As a result, we anticipate that our performance in the second half of fiscal 2005 will be roughly comparable to the first half, as we continue to control our costs, retain our high-quality customer service and competitiveness, and maintain our profitability. Over the longer term, the trend towards outsourced EMS continues to look very positive and we are well-positioned to capitalize on that opportunity.”
In the third quarter of fiscal 2005, the Company expects revenue to be approximately flat to down 5% in the second quarter and earnings in the range of $0.02 to $0.05 per share.
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 atwww.keytronic.com under “Investor Relations” or by calling 800-218-0204 or +1 303-262-2131. A 48-hour replay will be available by calling 800-405-2236 or +1 303-590-3000 (Reservation No. 11020367). 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, China and Ireland. 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 2005. 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 accuracy of customers’ forecasts; success of customers’ programs; timing of new programs; success of new-product introductions; 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 OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
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| | | Second Quarters Ended
| | | Six Months Ended
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| | | January 1
2005
| | | December 27
2003
| | | January 1
2005
| | | December 27
2003
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Net sales | | $ | 51,226 | | | $ | 32,567 | | | $ | 100,000 | | | $ | 67,219 | |
Cost of sales | | | 47,235 | | | | 29,895 | | | | 92,461 | | | | 61,192 | |
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Gross profit on sales | | | 3,991 | | | | 2,672 | | | | 7,539 | | | | 6,027 | |
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Operating expenses: | | | | | | | | | | | | | | | | |
Research, development and engineering | | | 708 | | | | 589 | | | | 1,413 | | | | 1,288 | |
Selling | | | 528 | | | | 278 | | | | 1,022 | | | | 725 | |
General and administrative | | | 1,848 | | | | 1,730 | | | | 3,516 | | | | 3,495 | |
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Total operating expenses | | | 3,084 | | | | 2,597 | | | | 5,951 | | | | 5,508 | |
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Operating income | | | 907 | | | | 75 | | | | 1,588 | | | | 519 | |
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Interest expense | | | 308 | | | | 265 | | | | 607 | | | | 522 | |
Other (income) expense | | | (11 | ) | | | (13 | ) | | | (13 | ) | | | (19 | ) |
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Income (loss) before income taxes | | | 610 | | | | (177 | ) | | | 994 | | | | 16 | |
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Income tax provision | | | 120 | | | | 110 | | | | 238 | | | | 283 | |
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Net income (loss) | | $ | 490 | | | $ | (287 | ) | | $ | 756 | | | $ | (267 | ) |
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Earnings (loss) per share: | | | | | | | | | | | | | | | | |
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Earnings (loss) per common share - basic and diluted | | $ | 0.05 | | | $ | (0.03 | ) | | $ | 0.08 | | | $ | (0.03 | ) |
Weighted average shares O/S - basic | | | 9,681 | | | | 9,673 | | | | 9,679 | | | | 9,673 | |
Weighted average shares O/S - diluted | | | 9,966 | | | | 9,673 | | | | 9,942 | | | | 9,673 | |
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
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| | | January 1
2005
| | | July 3
2004
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ASSETS | | | | | | | | |
Current Assets: | | | | | | | | |
Cash and cash equivalents | | $ | 1,093 | | | $ | 600 | |
Trade receivables - net | | | 26,937 | | | | 24,439 | |
Inventories | | | 30,387 | | | | 27,848 | |
Other | | | 2,454 | | | | 1,833 | |
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Total current assets | | | 60,871 | | | | 54,720 | |
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Property, plant and equipment, net | | | 10,445 | | | | 11,131 | |
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Other Assets: | | | | | | | | |
Restricted cash | | | 1,013 | | | | 705 | |
Other - net | | | 595 | | | | 617 | |
Goodwill - net | | | 765 | | | | 765 | |
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Total other assets | | | 2,373 | | | | 2,087 | |
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Total Assets | | $ | 73,689 | | | $ | 67,938 | |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
Current Liabilities: | | | | | | | | |
Current portion of long term obligations | | $ | 422 | | | $ | 606 | |
Accounts payable | | | 26,011 | | | | 24,354 | |
Accrued compensation and vacation | | | 3,682 | | | | 4,015 | |
Litigation settlement | | | 1,795 | | | | 925 | |
Other | | | 1,854 | | | | 1,352 | |
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Total current liabilities | | | 33,764 | | | | 31,252 | |
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Long-Term Liabilities: | | | | | | | | |
Revolving loan | | | 14,930 | | | | 10,851 | |
Litigation settlement | | | — | | | | 1,536 | |
Other | | | 991 | | | | 1,065 | |
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Total long-term liabilities | | | 15,921 | | | | 13,452 | |
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Shareholders’ Equity: | | | | | | | | |
Common stock, no par value, authorized 25,000 shares; issued and outstanding 9,681 and 9,676 shares | | | 38,411 | | | | 38,397 | |
Retained deficit | | | (14,407 | ) | | | (15,163 | ) |
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Total shareholders’ equity | | | 24,004 | | | | 23,234 | |
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Total Liabilities and Shareholders’ Equity | | $ | 73,689 | | | $ | 67,938 | |
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