Key Tronic Corporation announces the results of the third
SPOKANE VALLEY, Washington, July 6, 2021 (GLOBE NEWSWIRE) – Key Tronic Corporation (Nasdaq: KTCC), an electronic manufacturing services (EMS) provider, today announced its results for the quarter ended April 3, 2021. The release of third quarter results for fiscal 2021 has been delayed until that the audit committee of the board of directors of the company Directors have completed the internal investigation previously announced.
For the third quarter of fiscal 2021, Key Tronic reported revenue of approximately $ 134.6 million, up 21% from $ 111.5 million in the same period of Fiscal year 2020. Customer demand remained strong and new and existing customers increased their backlog. In the third quarter, customer demand exceeded $ 150 million; the highest in the company’s history. For the first nine months of fiscal 2021, total revenue was $ 386.1 million, up 16% from $ 333.5 million for the same period of the fiscal year 2020.
At the same time, the results for the third quarter of fiscal 2021 were constrained by the following: a tightening of the global supply chain and transport and logistics issues which delayed the arrival of key components; causing both plant downtime and overtime expense; legal fees related to the previously disclosed internal investigation of approximately $ 0.7 million; a four-day shutdown of our facilities in Mexico during a late-winter storm that caused power outages in the region; and continuation but decrease in expenses related to COVID-19.
For the third quarter of fiscal 2021, net income was $ 0.9 million or $ 0.08 per share, comparable to the same period of fiscal 2020. Profit lower than forecast for the third quarter of fiscal 2021 is mainly due to a tax adjustment to federal research and development credits of $ 0.4 million. For the first nine months of fiscal 2021, net income was $ 4.2 million or $ 0.38 per share, compared to $ 3.3 million or $ 0.30 per share for the same period of fiscal year 2020.
During the third quarter, the Company secured a customer program to create consumer products that can generate up to $ 30 million in annual revenue or more when it reaches full production. This new program is expected to begin production in the second half of fiscal 2022, and is another example of a customer relocating an existing program to manage logistics risk. The production process is highly automated and involves a high level of partnership with the customer to build the production equipment in the coming months. In support of the new program, Key Tronic has extended its facility footprint at its Juarez, Mexico campus by leasing an additional 145,000 square foot adjoining building.
“We are delighted with the successful launch of new programs and the rebound and growing demand from our customers in fiscal 2021,” said Craig Gates, President and CEO. “We are currently rolling out a number of new programs and, although production has been hampered by a limited supply of key components, we are extremely encouraged by the new customers and the new programs won. “
“As fiscal 2022 approaches, the COVID-19 crisis, component shortages and logistical delays continue to present macroeconomic challenges as well as multiple business challenges, but we continue to see the favorable trend for the return of contract manufacturing in North America. We are excited to expand our operations in Mexico with new program pricing, and also to see our national sites benefit from client offshoring initiatives. We anticipate continued strong revenue growth over the next few quarters and continue to invest in new capabilities to prepare for long-term growth. “
For the fourth quarter of fiscal 2021, Key Tronic expects to generate revenues of between $ 120 million and $ 125 million, as delays in the supply of key components for the Company’s operations continue to significantly limit production. Due to the additional legal and internal review costs associated with the internal investigation, we expect earnings for the fourth quarter of fiscal 2021 to be lower than the range of previous forecasts provided on May 4, 2021, but the forecast put up to date for profits not available at this time. We plan to release final fourth quarter results in the coming weeks.
Due to the delay in reporting third quarter fiscal 2021 results, the Company plans to hold a conference call in August to discuss its third and fourth quarter fiscal 2021 results.
About Key Tronic
Key Tronic is a leading contract manufacturer providing value-added design and manufacturing services from facilities in the United States, Mexico, China and Vietnam. The Company provides its customers with comprehensive engineering services, materials management, worldwide manufacturing facilities, assembly services, in-house testing and global distribution. Its customers include some of the world’s leading original equipment manufacturers. For more information on Key Tronic, visit: www.keytronic.com.
Some of the statements contained in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, those containing terms such as objective, anticipate, believe, continue , could, estimate, expect, hope, intend, plan, predict, project, target or want, similar verbs or nouns corresponding to these verbs, which can be prospective. Forward-looking statements also include other passages which are relevant to expected future events, performance and actions or which can only be fully assessed by events which will occur in the future. Forward-looking statements contained in this press release include, without limitation, statements by the Company regarding its expectations regarding financial condition and results, including revenues, profits, legal and internal review costs and other costs during the fourth quarter of fiscal 2021; expenses related to the COVID-19 pandemic and estimated recovery from it; demand from new and existing customers; and the sourcing of key components and other supply chain, transportation and logistics issues. 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: risks associated with internal investigation by the audit committee, including legal and internal review costs, the risk of legal proceedings or government investigations relating to the subject of the internal investigation or related matters; the future of the global economic environment and its impact on our customers and suppliers, especially during the COVID-19 health crisis; the availability of supply chain components; the availability of a healthy workforce; the accuracy of supplier and customer forecasts; the development and success of client programs and products; the timing and effectiveness of the ramp-up of new programs; the success of new product launches; acquisitions or disposals of activities or facilities; technological advances ; changes in pricing policies by the Company, its competitors, customers or suppliers; the impact of new government laws and regulations, including tax reform, tariffs and related activities, these trade negotiations and other risks, including those related to the response to COVID-19; and other factors, risks and uncertainties detailed from time to time in the Company’s filings with the SEC.
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(In thousands, except amounts per share)
|Three months ended||Nine months ended|
|April 3, 2021||March 28, 2020||April 3, 2021||March 28, 2020|
|Cost of sales||123,504||102,207||354 336||306,819|
|Gross profit||11,096||9,248||31 733||26,643|
|Research, development and engineering costs||2,655||1,749||7,292||5.129|
|Selling, general and administrative expenses||5,865||5,735||16,349||15,713|
|Total operating expenses||8,520||7 484||23 641||20,842|
|Interest expense, net||1,020||754||2,549||1 988|
|Income before taxes||1,556||1,010||5 543||3,813|
|Provision for income tax||689||100||1,377||527|
|Net earnings per share – Basic||$||0.08||$||0.08||$||0.39||$||0.31|
|Weighted Average Shares Outstanding – Basic||10 760||10 760||10 760||10 760|
|Net earnings per share – Diluted||$||0.08||$||0.08||$||0.38||$||0.30|
|Weighted Average Shares Outstanding – Diluted||11,429||10 885||11,040||10 813|
KEY TRONIC CORPORATION AND SUBSIDIARIES
|April 3, 2021||June 27, 2020|
|Cash and cash equivalents||$||1,281||$||553|
|Trade receivables, net of allowance for doubtful accounts of $ 247 and $ 609||112 914||86 123|
|Contract assets||19,435||23 753|
|Total current assets||283,776||242 764|
|Net tangible assets||36 622||31 764|
|Operating lease right of use assets, net||16,869||17,568|
|Deferred tax asset||8 258||10 178|
|Total other assets||9,673||12 765|
|LIABILITIES AND SHAREHOLDERS‘ EQUITY|
|Current liabilities :|
|Accounts payable||$||83,133||$||80 204|
|Cumulative compensation and vacation||9 361||10,428|
|Current share of net debt||1706||7,508|
|Total current liabilities||112,310||112,219|
|Operating lease debts||11 761||12,624|
|Deferred tax liability||153||234|
|Other long-term obligations||1,046||875|
|Total long-term liabilities||111 170||77,085|
|Common shares, without par value – authorized shares 25,000; 10,761 and 10,760 shares issued and outstanding, respectively||47 121||46,946|
|Retained earnings||74,277||70 111|
|Accumulated other comprehensive income||2,062||(1,500||)|
|Total liabilities and equity||$||346,940||$||304,861|
Key Tronic Corporation