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
FOURTH QUARTER AND YEAR-END RESULTS
Fourth Quarter Revenue Up 17% Year-over-Year; Strong Gross Margins
Highest Revenue Since Executing EMS Strategy;
Continued Expansion and Diversification of Customer Base
Spokane Valley, WA— August 19, 2008 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the fourth quarter and year ended June 28, 2008.
For the fourth quarter of fiscal 2008, Key Tronic reported total revenue of $57.3 million, up 17% from $49.2 million in the same period of fiscal 2007. For fiscal 2008, total revenue was $204.1 million, up from $201.7 million for fiscal 2007.
Net income for the fourth quarter of fiscal 2008 was $2.6 million or $0.25 per diluted share, compared to $2.7 million or $0.26 per diluted share for the same period of fiscal 2007. Results for the fourth quarter of fiscal 2007 included the benefit of approximately $1.5 million or $0.14 per diluted share from the sale of a facility. For fiscal 2008, net income was $5.6 million or $0.54 per diluted share, up 7% from $5.2 million or $0.51 per diluted share for fiscal 2007.
“We are pleased with our performance for the fourth quarter and for the year,” said Jack Oehlke, President and Chief Executive Officer. “Our year-over-year revenue growth was driven by increased demand from new customer programs, which continue to ramp up. For the fourth quarter and for the year, we achieved the highest revenue since implementing our EMS strategy. In the fourth quarter, we saw very strong year-over-year revenue growth and the strongest gross margins we’ve seen in many years.
“During the fourth quarter, we continued to diversify our customer portfolio across a wide range of industries, winning new customers involved in telecommunications, industrial equipment, fuel cell technology and consumer products. During the year, we had 8 new customers contributing about 13% of our total revenue. In fiscal 2009, we expect 10 additional new customers to come on line. Together, we expect these 18 new customers to contribute approximately 40% of our revenue in fiscal 2009, offsetting the anticipated decline in demand from some of our existing customers.
“While the industry confronts the challenging economic environment, our sustained investment in our world-class facilities in Mexico provides us with strong competitive advantages in a time of rising labor, fuel and transportation costs. We believe Key Tronic is increasingly well-positioned to pursue and win new opportunities for profitable growth in fiscal 2009 and beyond.”
Business Outlook
For the first quarter of fiscal 2009, the Company expects revenue in the range of $45 million to $48 million, with earnings in the range of $0.02 to $0.05 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 800-218-0204 or +1 303-262-2137. A 48-hour replay will be available by calling 800-405-2236 or +1 303-590-3000 (Reservation No. 11116514). 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 2009. 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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| | | Fourth Quarters Ended | | | Twelve Months Ended | |
| | | June 28
2008 | | June 30
2007 | | | June 28
2008 | | | June 30
2007 | |
Net sales | | $ | 57,287 | | $ | 49,159 | | | $ | 204,122 | | | $ | 201,712 | |
Cost of sales | | | 51,263 | | | 44,704 | | | | 187,302 | | | | 184,042 | |
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Gross profit on sales | | | 6,024 | | | 4,455 | | | | 16,820 | | | | 17,670 | |
Operating expenses: | | | | | | | | | | | | | | | |
Research, development and engineering | | | 679 | | | 695 | | | | 2,676 | | | | 3,162 | |
Selling | | | 549 | | | 437 | | | | 1,650 | | | | 1,776 | |
General and administrative | | | 1,861 | | | 1,616 | | | | 6,611 | | | | 7,387 | |
Gain on sale of real estate | | | — | | | (1,465 | ) | | | (951 | ) | | | (1,465 | ) |
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Total operating expenses | | | 3,089 | | | 1,283 | | | | 9,986 | | | | 10,860 | |
Operating income | | | 2,935 | | | 3,172 | | | | 6,834 | | | | 6,810 | |
Interest expense | | | 225 | | | 309 | | | | 989 | | | | 1,374 | |
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Income before income taxes | | | 2,710 | | | 2,863 | | | | 5,845 | | | | 5,436 | |
Income tax provision | | | 112 | | | 139 | | | | 261 | | | | 206 | |
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Net income | | $ | 2,598 | | $ | 2,724 | | | $ | 5,584 | | | $ | 5,230 | |
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Earnings per share: | | | | | | | | | | | | | | | |
Earnings per common share - basic | | $ | 0.26 | | $ | 0.27 | | | $ | 0.56 | | | $ | 0.53 | |
Weighted average shares O/S - basic | | | 10,024 | | | 9,920 | | | | 9,997 | | | | 9,898 | |
Earnings per common share - diluted | | $ | 0.25 | | $ | 0.26 | | | $ | 0.54 | | | $ | 0.51 | |
Weighted average shares O/S - diluted | | | 10,187 | | | 10,302 | | | | 10,267 | | | | 10,342 | |
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| | | | | | |
| | | June 28
2008 | | June 30
2007 |
ASSETS | | | | | | |
Current Assets: | | | | | | |
Cash and cash equivalents | | $ | 2,879 | | $ | 3,386 |
Trade receivables - net | | | 36,018 | | | 30,383 |
Inventories | | | 37,927 | | | 32,346 |
Other | | | 4,893 | | | 6,532 |
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Total current assets | | | 81,717 | | | 72,647 |
Property, plant and equipment, net | | | 10,798 | | | 11,248 |
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Other Assets: | | | | | | |
Restricted cash | | | 39 | | | 509 |
Deferred income tax asset - net | | | 4,210 | | | 3,500 |
Other - net | | | 815 | | | 719 |
Goodwill | | | 765 | | | 765 |
| | | | | | |
Total other assets | | | 5,829 | | | 5,493 |
Total Assets | | $ | 98,344 | | $ | 89,388 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | |
Current Liabilities: | | | | | | |
Accounts payable | | $ | 29,497 | | $ | 24,104 |
Accrued compensation and vacation | | | 4,388 | | | 3,713 |
Current portion of long term obligations | | | 470 | | | 344 |
Other | | | 1,667 | | | 3,264 |
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Total current liabilities | | | 36,022 | | | 31,425 |
Long-Term Liabilities: | | | | | | |
Revolving loan | | | 12,348 | | | 13,081 |
Other | | | 893 | | | 1,638 |
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Total long-term liabilities | | | 13,241 | | | 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 | | | 9,780 | | | 4,196 |
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Total shareholders’ equity | | | 49,081 | | | 43,244 |
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Total Liabilities and Shareholders’ Equity | | $ | 98,344 | | $ | 89,388 |
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