Key Tronic (KTCC) 8-K Key Tronic Corporation Announces Third Quarter Results

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 Revenue Up 33% and Net Income Up 86%

Spokane Valley, WA— May 1, 2012 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended March 31, 2012.

For the third quarter of fiscal 2012, Key Tronic reported total revenue of $95.5 million, up 51% from $63.4 million in the same period of fiscal 2011. For the first nine months of fiscal 2012, total revenue was $249.7 million, up 33% from $187.8 million in the same period of fiscal 2011.

Net income for the third quarter of fiscal 2012 was $3.4 million or $0.32 per diluted share, up from $0.7 million or $0.07 per diluted share for the same period of fiscal 2011. For the first nine months of fiscal 2012, net income was $7.8 million or $0.74 per diluted share, up 86% from $4.2 million or $0.40 per diluted share for the same period of fiscal 2011.

“We’re very pleased with our strong growth in revenue and earnings for the third quarter of fiscal 2012, driven primarily by the rapid production ramp up for new customer programs,” said Craig Gates, President and Chief Executive Officer, “During the quarter, we achieved record quarterly revenue and continued to increase our operating efficiencies. Our gross margin and operating margin were approximately 9% and 5%, respectively. We also continued to diversify our future revenue base by winning new programs involving transportation management, medical and consumer electronic devices.

“In coming periods, we expect to continue capturing market share, driven by our unique combination of world-class engineering and global logistics, and by growing recognition of the cost and logistical advantages of our expanding production capabilities in Mexico. As we grow our business, we remain focused on maintaining outstanding customer service, carefully managing our operating expenses and maximizing our return on invested capital.”

Business Outlook

For the fourth quarter of fiscal 2012, the Company expects to report revenue in the range of $93 million to $98 million, and earnings in the range of $0.31 to $0.37 per diluted share, excluding any tax benefits that may be recognized in the period. The expected earnings range assumes an effective tax rate of 30%.

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 877-941-0844 or +1-480-629-9835. A 48-hour replay will be available by calling 800-406-7325 or +1 303 590 3030 (Access Code: 4522733). 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 2012. 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 availability of parts from the supply chain, 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 INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended				Nine Months Ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
Net sales	$	95,527	$	63,424	$	249,742	$	187,802
Cost of sales		86,803		59,195		229,145		172,157
Gross profit on sales		8,724		4,229		20,597		15,645
Operating expenses:
Research, development and engineering		1,153		919		3,266		2,794
Selling, general and administrative		2,879		2,373		8,229		7,575
Total operating expenses		4,032		3,292		11,495		10,369
Operating income		4,692		937		9,102		5,276
Interest expense		130		172		357		319
Income before income taxes		4,562		765		8,745		4,957
Income tax (benefit) provision		1,168		41		930		758
Net income	$	3,394	$	724	$	7,815	$	4,199
Earnings per share:
Earnings per common share - basic	$	0.32	$	0.07	$	0.75	$	0.41
Weighted average shares outstanding - basic		10,447		10,353		10,437		10,332
Earnings per common share - diluted	$	0.32	$	0.07	$	0.74	$	0.40
Weighted average shares outstanding - diluted		10,762		10,436		10,517		10,420

KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	March 31, 2012			July 2, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	488		$	1,232
Trade receivables		59,694			40,350
Inventories		53,893			41,554
Deferred income tax asset		3,965			3,900
Other		4,892			4,549
Total current assets		122,932			91,585
Property, plant and equipment - net		16,862			14,917
Other assets:
Deferred income tax asset		10,418			4,219
Other		934			1,643
Total other assets		11,352			5,862
Total assets	$	151,146		$	112,364
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	40,972		$	26,149
Accrued compensation and vacation		5,353			4,436
Current portion of other long-term obligations		718			761
Other		2,565			1,932
Total current liabilities		49,608			33,278
Long-term liabilities:
Revolving loan		16,228			6,000
Deferred income tax liability		4,847			1,542
Other long-term obligations		5,807			3,521
Total long-term liabilities		26,882			11,063
Shareholders’ equity:
Common stock, no par value ( in thousands) - shares authorized 25,000; issued and outstanding 10,453 and 10,399 shares, respectively		41,622			41,014
Retained earnings		33,084			25,269
Accumulated other comprehensive (loss) income		(50	)		1,740
Total shareholders’ equity		74,656			68,023
Total liabilities and shareholders’ equity	$	151,146		$	112,364