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 FIRST QUARTER RESULTS
Maintaining Profitability; Strengthening Balance Sheet; Winning New Business
Expect Growth in Second Half of Fiscal Year
Spokane Valley, WA — October 27, 2009 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended September 26, 2009.
For the first quarter of fiscal 2010, Key Tronic reported total revenue of $41.3 million, compared to $48.2 million in the same period of fiscal 2009. Net income for the first quarter of fiscal 2010 was $0.3 million or $0.03 per diluted share, compared to $0.4 million or $0.04 per diluted share for the same period of fiscal 2009. As of the end of the first quarter, the Company had paid down all debt. As previously announced during the first quarter, the Company entered into a credit agreement with Wells Fargo Bank, N.A., which provides a $20 million revolving credit facility available to fund working capital needs as the Company grows.
“In the first quarter of fiscal 2010, we continued to successfully meet the challenges of the global recession by reducing our costs while ramping up our new customer programs and further diversifying our customer portfolio across a wide range of industries,” said Craig Gates, President and Chief Executive Officer. “Despite the macro-economic uncertainty, we remain strongly positioned to win new business and currently expect to see growth in the second half of the year, driven by increased production levels of our new programs for both new and longstanding customers.
“Our strong financial position and 23 quarters of consecutive profitability continue to help us to win new programs even in this current recession. During the first quarter, we won new programs involving specialty printers and data storage systems. At the same time, we continue to focus on controlling operating expense, down 17% from the first quarter of fiscal 2009. We’ve also taken important steps to further strengthen the capabilities of our world-class facilities in Mexico, China and the US, as well as the efficiency of our supply chain and new product introduction processes.”
Business Outlook
For the second quarter of fiscal 2010, the Company expects revenue in the range of $38 million to $43 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 877-941-9205 or +1 480-629-9835. A 48-hour replay will be available by calling 800-406-7325 or +1 303 590 3030 (Access Code: 4167953). 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 2010. 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 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 OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| | | | | | |
| | | First Quarters Ended |
| | | September 26
2009 | | September 27
2008 |
Net sales | | $ | 41,309 | | $ | 48,237 |
Cost of sales | | | 38,634 | | | 44,830 |
| | | | | | |
Gross profit on sales | | | 2,675 | | | 3,407 |
| | |
Operating expenses: | | | | | | |
Research, development and engineering | | | 562 | | | 626 |
Selling, general and administrative | | | 1,736 | | | 2,137 |
| | | | | | |
| | | 2,298 | | | 2,763 |
| | |
Operating income | | | 377 | | | 644 |
| | |
Interest expense | | | 46 | | | 182 |
| | | | | | |
Income before income taxes | | | 331 | | | 462 |
| | |
Income tax provision | | | 36 | | | 54 |
| | | | | | |
Net income | | $ | 295 | | $ | 408 |
| | | | | | |
Earnings per share: | | | | | | |
| | |
Earnings per common share - basic | | $ | 0.03 | | $ | 0.04 |
Weighted average shares outstanding - basic | | | 10,066 | | | 10,040 |
| | |
Earnings per common share - diluted | | $ | 0.03 | | $ | 0.04 |
Weighted average shares outstanding - diluted | | | 10,082 | | | 10,212 |
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| | | | | | |
| | | September 26
2009 | | June 27
2009 |
ASSETS | | | | | | |
Current assets: | | | | | | |
Cash and cash equivalents | | $ | 1,832 | | $ | 729 |
Trade receivables | | | 25,276 | | | 24,867 |
Inventories | �� | | 30,101 | | | 32,291 |
Other | | | 2,638 | | | 3,168 |
| | | | | | |
Total current assets | | | 59,847 | | | 61,055 |
| | |
Property, plant and equipment - net | | | 11,166 | | | 11,199 |
| | |
Other assets: | | | | | | |
Restricted cash | | | — | | | 124 |
Deferred income tax asset | | | 4,576 | | | 4,611 |
Other | | | 720 | | | 766 |
| | | | | | |
Total other assets | | | 5,296 | | | 5,501 |
| | |
Total assets | | $ | 76,309 | | $ | 77,755 |
| | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | |
Current liabilities: | | | | | | |
Accounts payable | | $ | 20,195 | | $ | 18,703 |
Accrued compensation and vacation | | | 2,824 | | | 3,198 |
Current portion of other long term obligations | | | 284 | | | 359 |
Other | | | 1,721 | | | 1,351 |
| | | | | | |
Total current liabilities | | | 25,024 | | | 23,611 |
| | |
Long-term liabilities: | | | | | | |
Revolving loan | | | — | | | 2,412 |
Other long-term obligations | | | 596 | | | 618 |
| | | | | | |
Total long-term liabilities | | | 596 | | | 3,030 |
| | |
Shareholders’ equity: | | | | | | |
Common stock, no par value - share authorized 25,000; issued and outstanding 10,069 and 10,066 shares, respectively | | | 39,362 | | | 39,359 |
Retained earnings | | | 11,138 | | | 10,843 |
Accumulated other comprehensive income | | | 189 | | | 912 |
| | | | | | |
Total shareholders’ equity | | | 50,689 | | | 51,114 |
| | | | | | |
Total liabilities and shareholders’ equity | | $ | 76,309 | | $ | 77,755 |
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