Increased Revenue and Earnings in Fourth Quarter;
Expecting Continued Growth in First Quarter of Fiscal 2016;
Continued New Customer Wins and Revenue Diversification
SPOKANE VALLEY, Wash., Aug. 18, 2015 (GLOBE NEWSWIRE) -- Key Tronic Corporation (Nasdaq:KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the three months and full year ended June 27, 2015. The Company's results were in-line with its previous guidance.
For the fourth quarter of fiscal year 2015, Key Tronic reported total revenue of $120.4 million, up 67% from $72.1 million in the same period of fiscal year 2014. Results for the fourth quarter of fiscal year 2015 included approximately $37 million in revenue from CDR Manufacturing, Inc. (dba Ayrshire Electronics), which was acquired on September 3, 2014.
For the full year of fiscal year 2015, total revenue was $434.0 million, up 42% from $305.4 million for fiscal year 2014. The Company continued to diversify its customer base, with the five largest customers in fiscal year 2015 representing 42% of its total revenue, compared to 62% in the prior year.
Net income for the fourth quarter of fiscal year 2015 was $2.3 million or $0.21 per diluted share, up from $1.4 million or $0.12 per diluted share for the same period of fiscal year 2014. Results for the fourth quarter of fiscal year 2015 included tax credits for research and development activities of approximately $0.5 million or $0.04 per diluted share. For the full year of fiscal year 2015, net income was $4.3 million or $0.38 per diluted share, compared to $7.6 million or $0.67 per diluted share for the same period of fiscal year 2014.
For the fourth quarter of fiscal year 2015, gross margin was 9% and operating margin was 3%, comparable to the same period of fiscal year 2014. For the full year of fiscal year 2015, gross margin was 8% and operating margin was 2%, compared to 9% and 3%, respectively, for fiscal year 2014. Over the longer term we expect our gross margin to gradually improve and move in the 9% to 10% range and expect increasing operating margin.
"During fiscal 2015, despite slowdowns by some longstanding customers, we made significant progress ramping up new programs, expanding our customer base and extending our worldwide capabilities," said Craig Gates, President and Chief Executive Officer. "The major event of the year was our acquisition and successful integration of Ayrshire Electronics, which significantly increased our combined annual revenue and more than doubled our number of customers, giving us a much stronger and more diverse foundation for growth.
"We're especially encouraged to see Ayrshire customers continue to award us with additional business because of our combined capabilities and global manufacturing footprint. At the same time, we have continued to penetrate into an even wider range of industries. In the fourth quarter, we won new programs involving home building products, material handling systems and lighting equipment.
"Entering fiscal 2016, as our new programs move into production and ramp up, we expect to see increasing revenue and earnings. Moreover, we continue to win new business, driven by the growing demand for our North American-based production, unique global structure, customer responsiveness, vertical integration and engineering capabilities. As we get the integration of the Ayrshire acquisition successfully behind us, we believe Key Tronic is increasingly well positioned to grow profitably, capture market share and capitalize on emerging opportunities."
Business Outlook
For the first quarter of fiscal year 2016, the Company expects to report revenue in the range of $122 million to $130 million, and earnings in the range of $0.17 to $0.24 per diluted share. The expected earnings range assumes an effective tax rate of 35%.
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 at www.keytronic.com under "Investor Relations" or by calling 888-359-3627 or +1-719-325-2464 (Access Code: 3323272). A replay will be available by calling 888-203-1112 or +1 719-457-0820 (Access Code: 3323272). 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 year 2016. 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 | Twelve Months Ended | |||
| June 27, 2015 | June 28, 2014 | June 27, 2015 | June 28, 2014 | |
| Net sales | $ 120,429 | $ 72,127 | $ 433,997 | $ 305,394 |
| Cost of sales | 110,037 | 65,452 | 400,692 | 278,540 |
| Gross profit | 10,392 | 6,675 | 33,305 | 26,854 |
| Research, development and engineering expenses | 1,641 | 1,406 | 5,784 | 5,586 |
| Selling, general and administrative expenses | 5,461 | 2,999 | 20,868 | 11,964 |
| Total operating expenses | 7,102 | 4,405 | 26,652 | 17,550 |
| Operating income | 3,290 | 2,270 | 6,653 | 9,304 |
| Interest expense, net | 443 | 31 | 1,353 | 81 |
| Income before income taxes | 2,847 | 2,239 | 5,300 | 9,223 |
| Income tax provision | 507 | 859 | 996 | 1,610 |
| Net income | $ 2,340 | $ 1,380 | $ 4,304 | $ 7,613 |
| Net income per share — Basic | $ 0.22 | $ 0.13 | $ 0.41 | $ 0.72 |
| Weighted average shares outstanding — Basic | 10,636 | 10,541 | 10,572 | 10,528 |
| Net income per share — Diluted | $ 0.21 | $ 0.12 | $ 0.38 | $ 0.67 |
| Weighted average shares outstanding — Diluted | 11,414 | 11,346 | 11,286 | 11,358 |
| KEY TRONIC CORPORATION AND SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (In thousands) | ||
| (Unaudited) | ||
| June 27, 2015 | June 28, 2014 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 372 | $ 5,803 |
| Trade receivables, net of allowance for doubtful accounts of $230 and $0 | 72,852 | 49,658 |
| Inventories | 91,594 | 55,634 |
| Deferred income tax asset | 6,643 | 935 |
| Other | 13,646 | 11,186 |
| Total current assets | 185,107 | 123,216 |
| Property, plant and equipment, net | 26,974 | 23,596 |
| Other assets: | ||
| Deferred income tax asset | 80 | 3,325 |
| Other | 1,621 | 2,712 |
| Goodwill | 9,957 | 1,740 |
| Other intangible assets, net | 7,055 | 2,071 |
| Total other assets | 18,713 | 9,848 |
| Total assets | $ 230,794 | $ 156,660 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 61,528 | $ 32,459 |
| Accrued compensation and vacation | 9,467 | 7,562 |
| Current portion of debt | 5,000 | 7,853 |
| Other | 10,794 | 4,293 |
| Total current liabilities | 86,789 | 52,167 |
| Long-term liabilities: | ||
| Term loan | 26,250 | — |
| Revolving loan | 11,631 | — |
| Deferred income tax liability | 501 | 270 |
| Other long-term obligations | 4,855 | 578 |
| Total long-term liabilities | 43,237 | 848 |
| Total liabilities | 130,026 | 53,015 |
| Shareholders' equity: | ||
| Common stock, no par value—shares authorized 25,000; issued and outstanding 10,706 and 10,547 shares, respectively | 44,136 | 44,151 |
| Retained earnings | 61,395 | 57,091 |
| Accumulated other comprehensive (loss) income | (4,763) | 2,403 |
| Total shareholders' equity | 100,768 | 103,645 |
| Total liabilities and shareholders' equity | $ 230,794 | $ 156,660 |