Exhibit 99.1
Key Technology Announces Sales Increase of 22% for the First Quarter;
Net Earnings Grow 128%; Product Mix Impacts Gross Margin
WALLA WALLA, Wash.--(BUSINESS WIRE)--Jan. 29, 2004--Key
Technology, Inc. (Nasdaq:KTEC) today announced sales and operating
results for the first quarter of 2004 ended December 31, 2003.
Sales for the three-month period ended December 31, 2003, totaled
$18.7 million, compared to $15.4 million recorded in the same quarter
last year. Net earnings for the quarter increased to $505,000, or
$0.10 per diluted share, compared with net earnings of $221,000, or
$0.04 per diluted share, in the same period one year ago.
Gross profit for the first quarter of fiscal 2004 was $7.1
million, compared to $6.3 million in the corresponding period last
year. As a percentage of sales, gross profit was 37.6%, compared to
41.0% in the first quarter of fiscal 2003. The overall decline in
gross margin percent for the first quarter was principally due to the
product mix, which included a lower percent of higher margin optical
systems compared to last year. Margin performance in the process
systems and aftermarket portions of the Company's business was strong.
Operating expenses for the quarter ended December 31, 2003, were
$6.4 million, or 33.9% of sales, compared to $5.8 million, or 37.7% of
sales, in the same quarter last year. As discussed in previous
announcements, the Company has increased its investment in marketing
and product management as part of a strategy to grow revenues and
expand into new market segments, contributing to higher sales and
marketing expenses for the quarter. In addition, as a result of
increased sales volume and a higher volume of equipment sold through
independent sales representatives, the Company experienced higher
commission expense for the quarter.
New orders received during the first quarter were $18.0 million,
compared to $18.8 million for the corresponding quarter last year. At
the close of the December 31, 2003, quarter, the Company's backlog was
$19.5 million, compared to $18.6 million at the close of the same
period one year ago. Orders from international customers during the
first quarter were strong and totaled approximately 49% of the total
orders for the December 2003 quarter, compared with 34% for the
prior-year quarter.
Kirk Morton, President and CEO, commented, "We are pleased that
our backlog has increased compared to the year-ago level, and that the
inspection systems component of our backlog is substantial." He
continued, "Order activity during the quarter was typical of our
seasonal pattern. Order placement from the tobacco sector was up
substantially and orders in our aftermarket business increased nearly
50% over the prior year. Offsetting these improvements was a decline
in orders from the food industry for inspection systems compared to a
year ago."
Conference Call
The Company's conference call for the December quarter can be
heard live on the Internet at 1:30 p.m. Pacific Time on Thursday,
January 29th. To access the call, go to www.keyww.com/investor.cfm at
least fifteen minutes prior to the call to download and install any
necessary audio software.
About Key Technology
Key Technology, Inc., headquartered in Walla Walla, Washington, is
a worldwide leader in the design and manufacture of process automation
systems for the food processing and industrial markets. The Company's
products integrate electro-optical inspection and sorting, specialized
conveying and product preparation equipment, which allow processors to
improve quality, increase yield and reduce cost. Key has manufacturing
facilities in Washington, Oregon and the Netherlands, and worldwide
sales and service coverage.
This release contains forward-looking statements within the
meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These statements are based on
management's current expectations or beliefs and are subject to a
number of factors and uncertainties that could cause actual results to
differ materially from those described in the forward-looking
statements. The forward-looking statements in this release address
future financial and operating results.
The following factors, among others, could cause actual results to
differ materially from those described in the forward-looking
statements:
-- the effect of adverse economic conditions in markets served by
the Company and the financial capacity of customers to
purchase capital equipment;
-- the ability to successfully complete and introduce new
products to the market;
-- the ability of new products to compete successfully in either
existing or new markets;
-- the effect of increased competition and advances in technology
on our product pricing and customer capital spending;
-- risks involved in expanding international operations and
sales; and
-- risks associated with adverse fluctuations in foreign currency
exchange rates.
For a detailed discussion of these and other cautionary
statements, please refer to the Company's filings with the Securities
and Exchange Commission, particularly Exhibit 99.1 "Forward-Looking
Statement Risk and Uncertainty Factors" to the Company's Annual Report
on Form 10-K for the fiscal year ended September 30, 2003, and the
Risk Factors section of the Company's Registration Statement on Form
S-4, Post-Effective Amendment No. 3, filed August 17, 2001.
Note: News releases and other information on Key Technology, Inc.
can be accessed at www.key.net on the Internet.
Key Technology, Inc. and Subsidiaries
Statement of Selected Operating Information
(Unaudited, in thousands, except per-share data)
Three Months
Ended Dec. 31,
-------------------
2003 2002
-------------------
Net sales $18,743 $15,395
Gross profit 7,056 6,305
Operating expenses
Selling and marketing 3,321 2,681
Research and development 1,137 1,209
General and administrative 1,571 1,586
Amortization of intangibles 331 331
-------- --------
Total operating expenses 6,360 5,807
Earnings from operations 696 498
Earnings before income taxes 770 335
Net earnings 505 221
Net earnings per common share
- basic $ 0.10 $ 0.05
- diluted(1) $ 0.10 $ 0.04
Weighted average common
and common equivalent
shares outstanding
- basic 4,816 4,767
- diluted(1) 5,188 4,983
(1) The weighted average diluted shares includes only common stock
equivalents that are not anti-dilutive to reported EPS.
Options to purchase 160,300 shares of common stock and 34,882
common shares from assumed conversion of warrants for the
quarter ended December 31, 2003, and 641,433 and 60,285,
respectively, for the quarter ended December 31, 2002, were
not included in the computation of diluted EPS because the
options were anti-dilutive under the treasury-stock method.
Key Technology, Inc. and Subsidiaries
Selected Balance Sheet Information
(Unaudited, in thousands)
Dec. 31, Sept. 30,
2003 2003
-------- --------
(in thousands)
Cash and cash equivalents $ 7,398 $ 6,442
Trade accounts receivable, net 9,210 9,479
Inventories 13,680 13,968
Total current assets 33,328 32,886
Property, plant and equipment, net 5,362 5,503
Goodwill and other intangibles, net 10,908 11,239
Total assets 51,058 51,215
Current portion of long-term debt and short-term
borrowings 1,097 1,066
Total current liabilities 14,268 15,660
Long-term debt, less current portion 3,038 3,249
Mandatorily redeemable preferred stock and warrants 1,836 1,882
Shareholders' equity 31,716 30,219
CONTACT: Key Technology, Inc., Walla Walla
Phyllis Best, 509-529-2161