Exhibit 99.1
FOR IMMEDIATE RELEASE
| | | | |
| CONTACTS: | | Ron Klawitter | | Michael Newman |
| | Chief Financial Officer | | Investor Relations |
| | Key Tronic Corporation | | StreetConnect |
| | (509) 927-5295 | | (206) 729-3625 |
KEY TRONIC CORPORATION ANNOUNCES
THIRD QUARTER RESULTS
Year-to-Date Earnings Up 64%; Several New Customer Wins
Spokane, WA—May 2, 2006 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended April 1, 2006.
For the third quarter of fiscal 2006, Key Tronic reported total revenue of $45.6 million, compared to $45.4 million for the previous quarter and $49.7 million for the third quarter of fiscal 2005. For the first nine months of fiscal 2006, total revenue was $135.2 million, compared to $149.7 million in the same period of fiscal 2005.
Net income for the third quarter of fiscal 2006 was $917,000 or $0.09 per diluted share, compared to $1.0 million or $0.10 per diluted share in the previous quarter and $852,000 or $0.09 per share for the third quarter of fiscal 2005. For the first nine months of fiscal 2006, net income was $2.6 million or $0.26 per diluted share, up 64% from $1.6 million or $0.16 per share for the same period of fiscal 2005.
“We had another solid quarter with strong operating efficiencies and continued year-over-year earnings growth, despite the challenge of helping our customers meet the new European Directive on the restriction of the use of hazardous substances in electrical and electronic equipment (RoHS),” said Jack Oehlke, President and Chief Executive Officer. “During the third quarter, we won new business for programs involving industrial tools, networking equipment, specialty printers, scientific instruments and security surveillance devices which we expect to contribute revenue in the next fiscal year. In coming periods, we anticipate that most of the RoHS conversion effort will be behind us and believe Key Tronic is well-positioned to continue to grow profitably and win new business.”
In the fourth quarter of fiscal 2006, the Company expects revenue in the range of $46 million to $50 million and earnings between $0.07 and $0.12 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 at www.keytronic.com under “Investor Relations” or by calling 800-366-7417 or +1 303-262-2125. A 48-hour replay will be available by calling 800-405-2236 or +1 303-590-3000 (Reservation No. 11057943). 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 2006. 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 EARNINGS
(In thousands, except per share amounts)
(Unaudited)
| | | | | | | | | | | | | | |
| | | Third Quarters Ended | | | Nine Months Ended | |
| | | April 1
2006 | | April 2
2005 | | | April 1
2006 | | April 2
2005 | |
Net sales | | $ | 45,567 | | $ | 49,726 | | | $ | 135,177 | | $ | 149,726 | |
Cost of sales | | | 41,590 | | | 45,676 | | | $ | 123,248 | | | 138,137 | |
| | | | | | | | | | | | | | |
Gross profit on sales | | | 3,977 | | | 4,050 | | | | 11,929 | | | 11,589 | |
Operating expenses: | | | | | | | | | | | | | | |
Research, development and engineering | | | 698 | | | 713 | | | | 2,030 | | | 2,126 | |
Selling | | | 529 | | | 556 | | | | 1,587 | | | 1,578 | |
General and administrative | | | 1,559 | | | 1,724 | | | | 4,865 | | | 5,240 | |
| | | | | | | | | | | | | | |
Total operating expenses | | | 2,786 | | | 2,993 | | | | 8,482 | | | 8,944 | |
Operating income | | | 1,191 | | | 1,057 | | | | 3,447 | | | 2,645 | |
Interest expense | | | 274 | | | 296 | | | | 810 | | | 903 | |
Other (income) expense | | | — | | | — | | | | — | | | (13 | ) |
| | | | | | | | | | | | | | |
Income before income taxes | | | 917 | | | 761 | | | | 2,637 | | | 1,755 | |
Income tax provision (benefit) | | | — | | | (91 | ) | | | — | | | 147 | |
| | | | | | | | | | | | | | |
Net income | | $ | 917 | | $ | 852 | | | $ | 2,637 | | $ | 1,608 | |
| | | | | | | | | | | | | | |
Earnings per share: | | | | | | | | | | | | | | |
Earnings per common share - basic | | $ | 0.09 | | $ | 0.09 | | | $ | 0.27 | | $ | 0.17 | |
Weighted average shares O/S - basic | | | 9,705 | | | 9,687 | | | | 9,701 | | | 9,682 | |
Earnings per common share - diluted | | $ | 0.09 | | $ | 0.09 | | | $ | 0.26 | | $ | 0.16 | |
Weighted average shares O/S - diluted | | | 10,064 | | | 9,901 | | | | 10,074 | | | 9,922 | |
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| | | | | | | | |
| | | April 1
2006 | | | July 2
2005 | |
ASSETS | | | | | | | | |
Current Assets: | | | | | | | | |
Cash and cash equivalents | | $ | 1,791 | | | $ | 1,463 | |
Trade receivables - net | | | 23,373 | | | | 24,191 | |
Inventories | | | 30,419 | | | | 29,712 | |
Other | | | 3,520 | | | | 3,482 | |
| | | | | | | | |
Total current assets | | | 59,103 | | | | 58,848 | |
Property, plant and equipment, net | | | 10,103 | | | | 10,011 | |
Other Assets: | | | | | | | | |
Restricted cash | | | 946 | | | | 1,158 | |
Real estate | | | 1,693 | | | | 1,693 | |
Other - net | | | 847 | | | | 426 | |
Goodwill | | | 765 | | | | 765 | |
| | | | | | | | |
Total other assets | | | 4,251 | | | | 4,042 | |
Total Assets | | $ | 73,457 | | | $ | 72,901 | |
| | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
Current Liabilities: | | | | | | | | |
Accounts payable | | $ | 22,001 | | | $ | 25,475 | |
Accrued compensation and vacation | | | 3,687 | | | | 5,241 | |
Current portion of long term obligations | | | 689 | | | | 735 | |
Litigation settlement | | | — | | | | 812 | |
Other | | | 3,602 | | | | 3,579 | |
| | | | | | | | |
Total current liabilities | | | 29,979 | | | | 35,842 | |
Long-Term Liabilities: | | | | | | | | |
Revolving loan | | | 11,366 | | | | 7,412 | |
Other | | | 1,772 | | | | 2,008 | |
| | | | | | | | |
Total long-term liabilities | | | 13,138 | | | | 9,420 | |
Shareholders’ Equity: | | | | | | | | |
Common stock, no par value, authorized 25,000 shares; issued and outstanding 9,709 and 9,694 shares | | | 38,489 | | | | 38,426 | |
Retained deficit | | | (8,149 | ) | | | (10,787 | ) |
| | | | | | | | |
Total shareholders’ equity | | | 30,340 | | | | 27,639 | |
| | | | | | | | |
Total Liabilities and Shareholders’ Equity | | $ | 73,457 | | | $ | 72,901 | |
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