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
Revenue Up 14% From Previous Quarter
Growth Driven by Demand from New and Established Customers
Spokane Valley, WA— January 31, 2008 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended December 29, 2007.
For the second quarter of fiscal 2008, Key Tronic reported total revenue of $50.8 million, up 14% from $44.6 million in the previous quarter and up 2% from $49.8 million in the same period of fiscal 2007. For the first six months of fiscal 2008, total revenue was $95.4 million, compared to $105.3 million in the same period of fiscal 2007.
Net income for the second quarter of fiscal 2008 was $1.6 million or $0.16 per diluted share, up from $0.3 million or $0.03 per diluted share for the same period of fiscal 2007. The results for the second quarter of fiscal 2008 included a gain of approximately $951,000 or $0.09 per diluted share, representing the balance of payments from the Company’s previously announced sale of its former facility in Las Cruces, New Mexico. For the first six months of fiscal 2008, net income was $1.8 million or $0.18 per diluted share, compared to $1.8 million or $0.17 per diluted share for the same period of fiscal 2007.
“We are pleased with our strong sequential growth in revenue and earnings in the second quarter, driven by increased demand from both new and established customer programs,” said Jack Oehlke, President and Chief Executive Officer. “Accelerated customer demand in December caused our revenue to actually exceed expectations. Though we succeeded in fulfilling our customers’ needs, our gross margins were adversely impacted due to overtime and expedite costs. In the second half of fiscal 2008, we expect increased revenue and earnings, as well as some improvement in our gross margins.”
“We expect over 10 new customer programs to be generating revenue by the end of the fiscal year. Our more diversified customer portfolio, spanning a wide range of industries, represents the cornerstone of our long-term strategic plan. We are pleased with our progress and excited about our potential for profitable growth.”
Business Outlook
For the third quarter of fiscal 2008, the Company expects revenue in the range of $49 million to $51 million, with earnings in the range of $0.05 to $0.08 per share.
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 atwww.keytronic.com under “Investor Relations” or by calling 800-218-8862 or +1 303-262-2140. A 48-hour replay will be available by calling 800-405-2236 or +1 303-590-3000 (Reservation No. 11105040). 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 2008. 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; 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 EARNINGS
(In thousands, except per share amounts)
(Unaudited)
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| | | Second Quarters Ended | | Six Months Ended |
| | | December 29
2007 | | | December 30
2006 | | December 29
2007 | | | December 30
2006 |
Net sales | | $ | 50,824 | | | $ | 49,829 | | $ | 95,374 | | | $ | 105,341 |
Cost of sales | | | 47,317 | | | | 45,628 | | $ | 88,805 | | | | 95,846 |
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Gross profit on sales | | | 3,507 | | | | 4,201 | | | 6,569 | | | | 9,495 |
Operating expenses: | | | | | | | | | | | | | | |
Research, development and engineering | | | 641 | | | | 865 | | | 1,318 | | | | 1,758 |
Selling | | | 365 | | | | 463 | | | 695 | | | | 983 |
General and administrative | | | 1,507 | | | | 2,126 | | | 3,075 | | | | 4,190 |
Gain on sale of real estate | | | (951 | ) | | | — | | | (951 | ) | | | — |
| | | | | | | | | | | | | | |
Total operating expenses | | | 1,562 | | | | 3,454 | | | 4,137 | | | | 6,931 |
Operating income | | | 1,945 | | | | 747 | | | 2,432 | | | | 2,564 |
| | | | |
Interest expense | | | 241 | | | | 381 | | | 510 | | | | 714 |
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Income before income taxes | | | 1,704 | | | | 366 | | | 1,922 | | | | 1,850 |
Income tax provision | | | 68 | | | | 21 | | | 103 | | | | 86 |
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Net income | | $ | 1,636 | | | $ | 345 | | $ | 1,819 | | | $ | 1,764 |
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Earnings per share: | | | | | | | | | | | | | | |
Earnings per common share - basic | | $ | 0.16 | | | $ | 0.03 | | $ | 0.18 | | | $ | 0.18 |
Weighted average shares O/S - basic | | | 10,013 | | | | 9,915 | | | 9,971 | | | | 9,878 |
Earnings per common share - diluted | | $ | 0.16 | | | $ | 0.03 | | $ | 0.18 | | | $ | 0.17 |
Weighted average shares O/S - diluted | | | 10,341 | | | | 10,390 | | | 10,321 | | | | 10,414 |
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| | | | | | |
| | | December 29
2007 | | June 30
2007 |
ASSETS | | | | | | |
Current Assets: | | | | | | |
Cash and cash equivalents | | $ | 1,837 | | $ | 3,386 |
Trade receivables - net | | | 32,948 | | | 30,383 |
Inventories | | | 33,790 | | | 32,346 |
Other | | | 6,748 | | | 6,532 |
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Total current assets | | | 75,323 | | | 72,647 |
Property, plant and equipment, net | | | 11,158 | | | 11,248 |
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Other Assets: | | | | | | |
Restricted cash | | | 119 | | | 509 |
Deferred income tax asset - net | | | 3,500 | | | 3,500 |
Other - net | | | 683 | | | 719 |
Goodwill | | | 765 | | | 765 |
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Total other assets | | | 5,067 | | | 5,493 |
Total Assets | | $ | 91,548 | | $ | 89,388 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | |
Current Liabilities: | | | | | | |
Accounts payable | | $ | 27,889 | | $ | 24,104 |
Accrued compensation and vacation | | | 2,862 | | | 3,713 |
Current portion of long term obligations | | | 458 | | | 344 |
Other | | | 2,045 | | | 3,264 |
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Total current liabilities | | | 33,254 | | | 31,425 |
Long-Term Liabilities: | | | | | | |
Revolving loan | | | 11,908 | | | 13,081 |
Other | | | 1,070 | | | 1,638 |
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Total long-term liabilities | | | 12,978 | | | 14,719 |
Shareholders’ Equity: | | | | | | |
Common stock, no par value, authorized
25,000 shares; issued and outstanding
10,024 and 9,921 shares | | | 39,301 | | | 39,048 |
Retained earnings | | | 6,015 | | | 4,196 |
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Total shareholders’ equity | | | 45,316 | | | 43,244 |
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Total Liabilities and Shareholders’ Equity | | $ | 91,548 | | $ | 89,388 |
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