KTCC - Earnings call transcript Q2 2019

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Operator

Good day, everyone, and welcome to Key Tronic Second Quarter Fiscal 2019 Conference Call. Today’s call is being recorded. At this time, I would like to turn the call over to Mr. Brett Larsen. Please, go ahead.

Brett Larsen

everyone. afternoon, Good Chief Larsen, of Tronic. Key I’m Financial Brett Officer everyone us today I would our joining thank to like for for investor call.

in and Joining Gates, here our headquarters Valley me is our President Chief Officer. Executive Spokane Craig

would differ I are this Please statements may remember financial or of regarding might the we events only or events always, you the results that like As call, other or performance. statements predictions. during projections Actual that make materially. future such course remind forward-looking future to company’s

information, with more the XX-Q, other and statistical factors specifically discuss For note latest may you risk our Please on operations. regarding the information latest X-Ks. our that outlined review will that historical documents this XX-K, financial company in and we business quarterly quarterly our the and the XX-Qs – has XXs filed SEC, call

in of quarter on be press today’s release is and website. will results our the information Today, our Some recorded call XXXX. available of December released XX, for this this included version a ended we second

For fiscal $XXX same year of reported revenue from total XX% up million, of of second fiscal year period quarter XXXX, XXXX. we the the

six first revenue $XXX.X XX% fiscal of new in increase year. up XXXX a year months XXXX, fiscal was was year up period customer our result past from ramping majority from total – of same the the of of million, the programs fiscal the The For XXXX. revenue during during

key affect in while shortages quarters, adversely productivity. our industry-wide However, and to from electronic revenue components, improving previous overall continued

the improved last when was and resulted gross operating fiscal increase fiscal quarter was second our quarter. X.X%, X.X%, same year’s X.X% margins from in XXXX. of margin of revenue The the up to For period in X.X% compared second margin respectively, in XXXX, and year

regular facility revenue in changes. recent from loss due Mexico However, to new to with a Arkansas was increase productivity offsetting the incremental – high associated and utility relocating profit our growth regulatory operations partially costs

new facilities. within as programs customer electronic margin further improves gross shortages in improving are gradually see components our ramp, – program productivity to expect We will and reduced

a We labor a while are providing global for enhancing new additional investing equipment facility facility examples production central new to relocating improved Minnesota for in in production and costs, and future adding over energy our Arkansas; better new to facility growth space a growth; Vietnam and reduce in in include: preparing new production leasing footprint. investing production finally, contiguous quarters. equipment; facilities the additional establishing Recent and coming and equipment and in

costs, in investments and diversify these hedge provide or base against expect trade potential additional wars. We and our will reduce production global significantly an manufacturing uncertainty others any lingering future

growing our a bottom improving margins had on impact and positive revenue line. Our

net loss quarter share or For the per year XXXX, of $XXX,XXX, XXXX. share, $X.X the for compared million, per of we income $X.XX of loss or to fiscal year a period $X.XX a same second had fiscal of

first of of fiscal net the share same per up months from share, or $X.X the fiscal for $X.XX six million, income or For per was period XXXX. $X.XX year $XXX,XXX, year XXXX,

balance the to Turning sheet.

continued the ramp approximately new a XX.X% million, shortages, year XXXX. in still $XX.X due component fiscal decrease to continue shipments of to to strong by Despite were reduction inventory and maintain position. able a our programs We during financial delays we

million XXXX during quarter in million. reflects of capital when factored to of XX pleased and in about were of approximately ago the expenditures up to reduction Trade levels. quarter very We the with at $XX.X receivables inventory $X $X.X in receivables second are were come in This from increase revenue second see million line year quarter sales a net were levels end a same revenue Total an gradually our last fiscal more quarter days. the DSOs compared and year. the

and plastic Vietnam. as – We approximately metal our in million total invest our well in to Minnesota improvements in in as continue have We molding expenditures facilities, $XX to facilities capital and XXXX. and capabilities, sheet plan fiscal production of equipment Arkansas, SMT during

Moving the few programs more new into expect to we quarter over and and production. ramp following the fiscal our of continuing XXXX quarters, third into move customer of

of is forecasting China. demand during quarter, our with one production inventories they the demand less However, for large third their customers product longstanding as balance their bring in also into

have million. recover We quarter. expect consideration, fourth factors the range fiscal this customer’s expect the XXXX the revenue in quarter compared we quarter that in to when of into million the to these will demand $XXX Taking relatively of flat third second to $XXX

expand $X.XX anticipate our we it growth earnings third by also That’s of quarter we is overall per continue earnings rate we’re tax in the well-positioned fiscal Craig? year, of the XX%. and prospects future diluted assumes growth. an summary, and company by believe range health that in are investments and financial our the win over $X.XX capital revenue the effective business new for profitably we the for of this The strong, longer-term. to new EMS encouraged and For of to me. XXXX, programs In This share. to

Craig Gates

Brett. Thanks, Okay.

programs inventory lead For a supply with growing shortages in revenue adjustments chain improved driving key have we continued fiscal and for revenues, our of levels to the quarter components, improved second brought line times margins of have increased number levels. for more profitability. across the made industry-wide XXXX, continue our new and Despite ramp necessary

During that from Wi-Fi, a including in safety. Technologies, the continued and leader of second patent programs, home and technology SkyBell the doorbell global benefited quarter, neighborhood’s video improves we new ramp

customer to base we discussed growth. long-term relationship previously, is As important contribute expand new this profitable to projected and our

our new services and to involving equipment, cleaning competitors including customers, significant industrial business, we existing While and win express continue new EMS competitive, from systems. monitoring delivery programs also remains both industrial marketplace very

a situation in our tariffs Moreover, delays customers our our the At Certainly lowers pressure to site, any product potential a inventory diversified Key time, one for slowdown in resulting to the problem Our increased USA. same Shanghai broader and back has tariffs more Tronic. adversely of industry-wide and continued delivery, ramifications by are in customer for by base the in any imported shortages key significantly components, for customer. impacted future the productivity impact be evolving costs. the complex

of Furthermore, to however, our to on made out dramatically many domestic sites customers, new our be facilitated of the the some move and our the risk For a back production as believe tariff customers. much respond centralized Mexican-based tariffs appealing time sites reduces potential in we their allow China of with to our more rapidly site, production thus, North business American to can the landscape. as by changing Shanghai leeway and have or This seamlessly a current associated were to control. command and transition

for total sites customers, the correctly the American from On bound new have North This products as in inquiries increasingly for Mexico extremely is production Our U.S. we’re balance, into competitive and well-positioned the customers. North become the request overseas they subject increasing tariffs. pushing for production, American-based analyze cost returning of U.S. prospective quotes to and for tide resulted both

second signed of Nang, intent foot lease XX,XXX the we Vietnam. letter square new to a facility During a quarter, in Da

expect production and Vietnam We reduce will augment footprint our Asian significantly operations costs. in that commencing

located miles an The an of new lingering or Da additional facility We port. a strategically in government-sponsored industrial hedge trade China. international export uncertainty established inside will in be expect with park future Nang, war an within to Vietnam five a facility against provide this zone

operational be Vietnam July facility by expect to of We XXXX.

calls, U.S.-built strong efficient to we from in We a we for value facilities. growing our continue As discussed that see highly believe our a production and facilities. this domestic recent significant results reflects domestic appetite products having

both strong real are very expenses, competitors investments our While With centric making very we North and we America. and programs, electronics Mexico metal sheet in respect sheet SMT, we integrated in capabilities carefully in managing few molding to see are and our U.S. facilities, growth the in metal plastic

growth expected lower manufacturing We’re investments each to which also less of makes future and efficient. of production our new costs equipment more facilities, existing labor-intensive enable business. planned production These more deploying our and innovative in efficient with are

EMS our Our business multicountry competitors to the new other boosted vertical our continues of comparison level to our integration, of sites steady our of and manufacturing footprint pipeline excellence unmatched in size. of be opportunities

OEMs in U.S. and an Mexico, Vietnam. we offer uniquely uncertain with integration our to are vertical geopolitical face China, increasingly mitigation and in soon the located risk facilities As landscape, equipped manufacturing

face be profitable more to industry revenue chain continue and supply In we our to shortages, and growth in in we U.S. equipment new to in preparation, expect Vietnam. facilities, continue establish processes plan our new productive and earnings. expand highly we to enhance Although our Mexico capabilities invest in and facilities

This growth will questions. for fiscal to in beyond. our and of the be XXXX and We’re I presentation. formal the your answer Brett pleased portion concludes optimistic now opportunities about

Operator

We’ll Instructions] with Thank Dezellem first take you. Tieton question our from [Operator Bill Capital.

Bill Dezellem

afternoon. Good

us announced. what you circumstances surrounding let’s wins What the And a of through group have of with As three you wins? would usual, the those of And wins? of with size those? or those Why that the walk each start questions. is were I each

Craig Gates

Okay.

go $XX they million revenue. from year So in $X annual per million to

Bill Dezellem

Thank you.

Craig Gates

acquired See first seven, one on must for years calling been we’ve eight – be now. is

Brett Larsen

Yes.

Bill Dezellem

this just as press listed have that it equipment right. Is in the Craig, taking so I that release? And cleaning industrial the you’re

Craig Gates

got You it.

Bill Dezellem

Okay. Thank you.

Craig Gates

that us. sites. much to a visit, I that calling is want the first we with next is how one basically domestic the a them our number the is with that we in fact is negotiate, out And should time. and that year-long talk, the program we’ve sky other talked Yes. And the on won. small That to for larger quote, factors is don’t kind been to site. make know the our business and RFQ, than combine bit them quite then out business win. hopefully, a local say of long drawn for then one to fell pretty sure, a of of about more typical they one The of The than that manufacturing design more available piece piece about for move to continue start third more decide relatively to team general a and due I us

pretty it’s world. of those gamut our in So much three

Bill Dezellem

those, timing production? what before they would And begin that the you is anticipate with each of

Craig Gates

towards They’re towards of going end the would QX of probably, all which be our to – three are of start June. end them QX, the

Bill Dezellem

And not the faster these months. XX me to a the you little of I Why have each bit tip to this seems faster trained are XX was just what timeframe correctly? trained or typical than understand of

Craig Gates

seeing feel sea with speed XX perhaps think, to But down like correctly. these it’s hoping see. a trained to I’m we’re XX, beginning change our were to I’m case, which but the in come might the eight move I on. XX we’ll maybe You to

Bill Dezellem

all what that you And change sea do about? is believe

Craig Gates

don’t really know. I

what think where Eyes, Google to is, everybody it less of it’s China. – I go to the, think, everything we the used thought less and I to China call, to fact, due in due to had

as to that’s I customers they And and so there you see. tell our were can’t run that’s other on going. where my than a was long guess we within argument really what

Bill Dezellem

mentioned in And let’s the What Great, year. the for Brett, you second-half to So implications first-half? you thank the what you. had are $XX for shift then the CapEx? did million do CapEx.

Brett Larsen

front light in don’t we’re I We in. have have that six today. of fairly $X right started me, number million, months but out I here approximately believe

So our shop the to the Minnesota forward over equipment, and extra up space two next our setting along get be of quarters. majority CapEx production going will in Vietnam additional with some

Bill Dezellem

this settled call you. one customer Vietnam. the announced location, us And first the I initial to all you kind now much the Vietnam on public location, again, share last that you’ve thought customer since conference the detail And Vietnam, the Indonesia, reaction was that And you – then this you India, domain? this would process? then, and so facility you is Since guess plant with what the can? alluded Thank reaction, discuss as or far Great. brought mentioning what think, that I of on into initial you’ve was the since

Craig Gates

overall customer extremely has positive. reaction The been

go of right number a plant Vietnam the as one customer wants Vietnam in as our to first that plant, an as will profitability facility and enough our nice have want of move plant our this they’re Shanghai part about even largest as now be We it tour to The people sits really empty our self-sustaining on building. they large that who goes. far make is customers

almost the we already in since in set interested basically the we situation model. out actually for easy we of have is Vietnam do started. have change do is facility, The come, which Vietnam are – a which and to customers pretty can if All is all our So for have to centralized the – create spreadsheet we quote the operation. you’re us of already really nice something quotes that new existing when – build to getting one once a up, get we trying they will block

Bill Dezellem

interrupted… sorry, [Multiple to relative Speakers], I’m I And

Craig Gates

ahead. Go

Bill Dezellem

…please go ahead.

Craig Gates

answered no, or don’t all remember not. your No, if questions I I

please. ahead, go So

Bill Dezellem

follow-on, extra compare China, correct? I did. you XX% And No, to at tariff in how the But tariff Chinese additional the does Vietnam cost the that excluding would then component? we this cost point, in to to the guess, add – the cost, is an

Craig Gates

Yes, we products for China. that most of in make the

it compare to XX% So than average. if you the going be remove tariffs average. looks on China were baseline, is Vietnam less expensive than more on and gotten to China has Shanghai just like expensive

what So Vietnam to in to China. Vietnam, and facility Southern more really we or to continued And horns what running into at for ago, see the of deeper of has a cost than years, of didn’t into a that’s if XX% China. been and more a move number of did move compare Vietnam. comparing looked we compared bit to it of a because and expect We But of all folks to ago. current each years expect last little bit made China Shanghai the this four three, in a had want other. Shanghai already were as actually for cost would kind the And that’s dilemma done quite they mature, us because even up to had our increase efficient differential how on we groundwork since speedy years out we we’ve other

persist, tariff. a Key fantastic it’s think the good tariffs good for no we or move. a tariff So it’s If It move. a is move Tronic

Bill Dezellem

And…

Craig Gates

we’re also idea. be your an accept eggs is willingness that of What having a generalized to all – is perhaps China, production there that, to that seems more wise of seeing in not not

number terrified are how call So realize Tariff we we wakeup a we fragile has the us supply customers us. we coming away. say, This to tariffs of if us chain don’t a go have and been for our and is. care

moving Vietnam the to So investigate with you Mexico, states. we to both would like and maybe

we’ve So who I we’ve of people years what are mode, preaching a would kind for been a in got lot wakeup to of of number now. say,

Bill Dezellem

tariff a you it just do the and that go indication soon the if could like things some at back simply then And away that, all as were? card And go to as it does this reaction tariffs? of to I’ll way get a goes will be feel away situation – chicken-level

Craig Gates

been our lot not. question saying of still Yes, by that’s why I to care call anticipated wakeup for chain. go your the we a them people, don’t We has that say, who this diversify tariffs supply a if or away need

Bill Dezellem

you. All right. Thank

Craig Gates

Yes.

Bill Dezellem

is And question then versus Vietnam. transportation less Shanghai, to that facility The into Vietnam that one your cost was incorporated from that other shipping XX% answer expensive? or relative cost

Craig Gates

Yes.

Brett Larsen

Yes.

Bill Dezellem

– And go ahead. Great, then thank you.

Craig Gates

found or looked ago. We has the improved infrastructure we that significantly three within since them four at Vietnam years

Bill Dezellem

noticed that In a the short time you’ve of period, difference?

Craig Gates

Absolutely.

Bill Dezellem

talk of that Great, bit through you Would the And in longtime more quarter. you some reference lastly, one detail, did that thank please? you. then adjustments is making March customers a your in

Craig Gates

impacted has the China. their economic in market, a consumer demand and a by been product situation Well,

So levels, demand to their lower one-time run on they drop from inventory let’s in decided a at say, so hopefully level, us. pullback their a

Bill Dezellem

so simply And adjustment? basically, inventory an it’s

Craig Gates

we that things get so. in hope Yes, hope worse China. We don’t

Bill Dezellem

Right.

directly, that’s And but activity have you’re tariffs not so directly? if here? do economic the then to I Chinese referring this not China doesn’t the tariffs to impacted have China maybe, anything mean, what with

Bill Dezellem

second order effect. Right. I’d call it a

Bill Dezellem

Thank great. Yes, you, both.

Craig Gates

Yes, thanks.

Operator

go to with Hughes capital. Instructions] next [Operator We’ll SGF Mike

Michael Hughes

taking Good and afternoon, questions. for thanks my

that’s December with what from normal this flat this Chinese on is seasonality into kind modestly. Just to And year you’re revenue last a down March issue. guiding a of question. the like first, even the customer looks normally quarter It follow-up from perspective

how you a June So give March you in And just come the business quantify going of any that’s that given be to customer much the in kind the of headwind quarter can quarter? confidence back that you has to will June? into visibility

Craig Gates

is get to behind The is it. here’s with them, guarantee customer from we given ever no all which we think us what happen has going

our don’t I statement I what normalized the to demand guess, believe we’re flat figure impact on in that are the revenue that our revenue impacted reason going QX. new on more coming our give that’s that growth, is to back So the is level. we’re a programs want to or basing extra come they – actually of because our in dollar will It’s the QX. you

are we that’s business it with the So able as chunk loss their and inventory they ramping. of to so speak, to fix replace of absorb, this new business

Michael Hughes

this question question a programs on have some competitive a you normal occasion, asked end-of-life business, meaning, assume and losses. years few wasn’t The attrition clear answer. then ago Okay. just have I the And of on and was was you the I

So if how how right quarter basis? the new in business would have a winning would that business, that on revenue, much much decline annual you core roughly million by you weren’t $XXX your now, an

Craig Gates

Yes.

So I answer I the one years understand and question why really hard you should answer. to because it’s didn’t understand a say, last the two ago,

business so look individual could just XX-year Our even back it And an then events is made It a only be up. be by over wouldn’t and period it everything answer be the go what at that way lumpy up I is to to expect. trying and would and average. would average

years to longer on is XX on in about a a or look there’s that that And bring look the to ahead to the move smaller our see there bought been horizon nearing can they revenue. basis aging natural or events some be OEM, whatever. just bought we our can guess go like end-of-life relationships a turns that are in months due was because And competitive We danger it. much customer I can going we that shaking order out is a to or known CM that have then larger by percentage a no product things, normal management that know want we see And over on So customer sour on of depend a our out year we customer and on large of look the a and churn impact we’re where is in and revenue and to able trusted when we’re who business ahead We’ve we and or year certain boots, have of there a know we ahead in, profound situation. been to losing of that’s realize that see impacts the other happen. they in CM. that the

average interest, go So call out our quarterly those the of year. terrifying that we understand with to see don’t over got the to on I’ll and the an error backfill it you is either what’s try can a massive now, that going two tell of I provider, of the out, and that at look to the average But any changes or back to and this give scrambling average categories you looking and before next we’re of at it’s bucket. in of years that distribution XX happen depending prevent. have in an the bottom you right those leakage try

Michael Hughes

helpful. That then your helpful, and be current average is even more about Okay. your comment the – would visibility really XX-year second

year-end $X call, million. million at size was drive So XX had driving major is, what new said you I’m to wins going $XX call, the on average the and you the to – August

on And you’re $XXX use are that’s we over saying more some the program, going of to time. quickly million So that $XX in past. if those you’re revenue programs in layer million ramping than per that

that quarter? Chinese point that’s this stuff going programs figure off June like September issues? are out trying new maybe sounds inflection running I’m It So customer those overwhelm we where that’s maybe to the or hit to when and

Craig Gates

think happened. it’s I Well, already

to the was to that there’s XX% already business inflection point, that passed some take If we growth… you back to that’s And the be nice due accounting – the of changes, want return $X I to out coming been going don’t to ago on. growth today, the you look over year think leaving where new combination call we’ve if I the business even if dying still think, and there’s and there’s you growth. already it million

Michael Hughes

Right.

Craig Gates

quarters. But …on I point. what’s an every that we’ve to basis annualized inflection happen. knows God going passed think

Anyway, to years, one lost fair, for in we I us the be shrinkage everything at should them. still it’s know replaced, you’ve massive customer their been one can taken now that yet? the can’t? occurs If growth of basically we – and say And major three not leakage lost able natural should around the I that or we That’s name you customer be to. replace take you that’s layer bucket. after the bottom years on out that

that’s long So I a to answer question. guess, your

going to I the looks funnel… to think, hit we’ve already me like to certainly accelerate continue our point. It it’s inflection

Brett Larsen

Yes.

Craig Gates

…of I’ve way drain of the the up new business it. than funnel better in shape is from dollars bottom to the seen the much ever top all down where

Michael Hughes

Okay. And on… then

Craig Gates

And that’s…

Michael Hughes

ahead. go Sorry,

Craig Gates

…go ahead.

Michael Hughes

No, no…

Craig Gates

I’m that, of of of good going say yes, due all which, but a our control. number all which which are of factors, that’s in to a chunk to – not

tailwinds. beginning up added layered dramatically six So has the added on months. much last our We’ve the fully the last the cost then former even year We’ve situation Ayrshire People we’ve Tronic, is than integrated six over sales that’s abilities and of before over a quoting of, before. going we’ve couple out done the tariffs Key existing to nice in top last got that. more team our we’ve more to months. been that the to into One the And is acquired of China dramatically understand

inflection, are increase like of make there point of all slope pushing have that not the curve continue right to that of are So only the crossed the seem we number a direction things also. in should it the

Michael Hughes

Okay.

that said to as that say to a be was Was where you continue And would it is $X you in the number? or prior on SkyBell quarterly number now call that think million the I revenue. last ramp? at call, willing

Craig Gates

to of be I building was, quarter sharing we SkyBell. And first are our with think, I’m our That them. supposed not revenue sure,

I’m probably in and to, time, first So I trouble. did the if I’m not going

Brett Larsen

quarter. that It is first since substantially growing

Michael Hughes

this still as significantly, Is that it plateaued is point? opportunity there or at of business to kind an grow

Brett Larsen

near nowhere plateau. it’s No, a

Michael Hughes

And like in And respects, rectify that was that business components sounds situation. right? some the exposed issue, you least, especially to it at

will that more ramp now? business So quickly

Craig Gates

We a We could many if hold parts. today we are component selling be the we twice by to as manage still limited probably could availability. as are get

we have need continue SkyBell’s capabilities ratcheting We commitments SkyBell’s customers manufacturing up to situation. a Key to of us are they So be from commitments for to make that parts. and volume we kind want it’s convinced to parts. parts and real in the increased before have order by customers deal to the Tronic – go can for actually get to

in rationing – upward number steep customers working a So we’re there kind we’re customer working to one wings. are SkyBell of only basically making curve. we’re today with along are pretty on here changes the are doorbell the fully number currently and of a a integrate with But There what design who in for is SkyBell’s products.

still So has mainly limited by seeing parts lot we’re got potential more availability. a today what than this

Michael Hughes

questions. China China. we or tariffs. The guess, is now be then negative customers Chinese-based to that there presumably the with less them quick going going two aren’t And take to side important a if large it exposed way to is Vietnam, backfill to I That Vietnam from you’re under have or flip customers plant to profitable, customer absorption in other to is very and move move the strategically. Okay. seems a naturally,

So just how in going address are you China? issue to that

Craig Gates

have to and of being to And trying to of part hope if and to to we’ll to the scale. backfill. the life we going that’s scale we’re with scale. backfill, CM ability have can’t have you have Well, as But we’re you

So do we option. we will if our and that’s only

Michael Hughes

not, then committed the question had building And on concern I if pressures Foxconn so, this not it happen they’ve in looking at If was to you their at there that is point capacity wage Vietnam. presence? located? you’re or about sure Vietnam. from area any was I’m Do last read, Okay. but know in

Craig Gates

seen we know in a there. don’t it’s first, our concerned haven’t in of but area, an were at I bit little issue came but we any or they kind if in as

of technical is going I And… So management I far any our piece in don’t be can in the can our particularly data with road Vietnam we’re that be I that, staff. either. me, to majority expect confident issue efforts share One was And and hiring risk biggest and workforce to that the that’s Vietnam of down in not pretty enough an the issue. the

Michael Hughes

great. Okay,

Craig Gates

– yes, matters, I if in many can’t greenfields the get as overcome of if done what you’ve bit, you’re kind are as many that a people, really done have big as you people the little you’ve trouble. rest its good …if all

my So to start go you encouraging you Vietnam until so really was never and know biggest folks. concern and that about trying out it’s hire far. But looking very

Michael Hughes

think Are to Oh, June March think made me costs related start-up either one promise. of in Vietnam? last you’ve and should question, any we quarters I that about there following the quarter or quarter or

Craig Gates

baked those of all our into projections. got We’ve

Michael Hughes

in out just to June? think build just trying my model, So increase could build I the I’m how Would start-up to trying cost I’m the EPS?

Brett Larsen

some first part get shattering production nothing invest course, we’re of until expenses of escalating year in be amount fiscal the first into quarter. there in It’s during quarter. our going that Vietnam, into to to we first or will have next our But the

Michael Hughes

couple dollars a was That a of thousand hundred quarter?

Brett Larsen

is. it what about That’s

Michael Hughes

you much. very Okay. Thank

Craig Gates

You bet.

Operator

MKH Instructions] [Operator go Melas next We’ll to George Management. with

George Melas

guys, Hi, good afternoon.

Craig Gates

George. Hi,

Brett Larsen

Good afternoon, George.

George Melas

I’m just trying I’m to my find questions, sorry.

there? quarter, about bit $XX still may that by shortage a pent-up about understand and the talked some us $XX declined? or has impacted of quarter, but what you pent-up in for Is feel as color I like just of or that pent-up know that revenue the not Last demand. be to we give is, matter And maybe demand SkyBell but do now, the million you demand the a how components Okay. that situation, example, can with little case it’s the hard still very million,

Craig Gates

$X were $XX Yes, to about take around. SkyBell a to million out time million it, this situation if it’s we impact the of probably

George Melas

do thing have And that’s whether or go back we before? we then one-time Okay. just the had what a you it’s sense to if demand just and pent-up

Craig Gates

I I of don’t had a and that parts, have to what we more increase it it’s settled back – to your how believe would we got what to question. a the would know meant. one-time have know those think you steady it well, I But is be if I don’t then a answer case state.

George Melas

great. Okay,

Okay. I’m maybe them Bill same earlier, to I going and answer can differently. Mike to try asked slightly you but that question the mean, ask,

over honest at the million If that mean, contribution Would churn June of new not look the that million, sequential $X dynamic? the does that looking And you ramp just June a at programs, sequentially quarter-over-quarter way ramp? lumpiness But different basis? of a I’m to be or new look the the $X things. And over of these that, that by that’s $X a customers, should September. understanding that million, – exclude add at March how should I and customers on

Craig Gates

I that’s slow ones are to million somewhere that because are extra. ramping between some $X $X But averaged guess fast. a that’s the and quarter and really reasonable a going some out, ones ones big I all are think know going big

$X reasonable a that we way here, million what’s it and be won’t. quarters And put that so would to happen, on But $X right million that’s everything able the too to chart to and going guys now. line quarter, number it the it’s I a like see to you happens a say but

George Melas

Okay.

Craig Gates

SkyBell. …excluding

George Melas

I then talked about? between that million revenue of SkyBell, sort customers – $XX XX because year last and that with ask how million Excluding I new $X would to that Mike were okay, going was in those does reconcile

Craig Gates

Yes. part started the that in the quote about the we relates we particular number one. number And that the or to quote that we we business Do to do size the Bill do all is, time we’ve relates as to just of SKU that to that’s and ramp? with debates have products get the the to family the quote number having that discussed we of of that customer we’ve the begun overall that that relates ramp, been nomenclature

George Melas

Okay.

Craig Gates

win So we’re the confused be you to hard ought to And is what actually tell guys. always you number right a piece it’s bit we on the doing. business, what’s of give when to

George Melas

Which do instance? give right. for number Right, to tend you

Craig Gates

middle. tend to the the towards of high-end We go

overall the a size So give you business little be. give that they’ve we SKU, and to belief us going bit of told don’t just the is the in family the maybe you we

George Melas

actually Got a it, I question have Brett. for okay.

cost. utility Mexican the about talked You

I bump Are we basis there costs, utility a worse? now Mexico think quarter, in $XXX,XXX. a the or steady-state it last in of did cost roughly on was get

Craig Gates

we a to mitigated that, is know cost think, in. going themselves coming have We competition when kick that’s got the actually gone that I down contracting realize they that think we’ve But as by bit, don’t little

Brett Larsen

release. did get what we actually during were but where we of to bit reduction of targeting month through was see contract, us there nor So different doesn’t December, a a we’re back the a rate

George Melas

great. Okay,

me. Okay, that’s you. Thank it for

Craig Gates

you. Thank

Operator

And over any the no would call questions to turn with or in I to like Craig remarks. queue, further the closing additional Gates for

Craig Gates

I forward today’s Thanks, Brett and have speaking to right. Thanks with for call. day. good a in and All again, look next conference participating you quarter.

Operator

conclude for does conference. your thank today’s This you We participation.

You may now disconnect.

Key Tronic (KTCC) 29 Jan 192019 Q2 Earnings call transcript