Spokane, WA— January 30, 2007 -- Key Tronic Corporation
(Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today
announced its results for the quarter ended December 30, 2006.
The second quarter of fiscal 2007 included a one-time charge of $940,000
for inventory and receivables reserves related to a specific customer
unexpectedly declaring bankruptcy in December.
At this time, the Company does not know if it can collect some or all of
the outstanding receivables associated with this customer.
The charge had an adverse impact on the Company’s gross margins and
operating expenses, and reduced its net income by approximately $0.09 per
diluted share. As a result, net
income for the second quarter of fiscal 2007 was $0.3 million or $0.03 per
diluted share, compared to $1.0 million or $0.10 per diluted share for the
second quarter of fiscal 2006. For the first six months of fiscal 2007, net income was $1.7
million or $0.17 per diluted share, comparable to the same period in fiscal
2006.
“During the second quarter of 2007, our new customer programs began to
contribute to our revenue, but not enough to offset reduced demand from certain
existing customers,” said Jack Oehlke, President and Chief Executive Officer.
“In particular, the unanticipated bankruptcy of one customer had a negative
impact on our profitability. In the third quarter, we expect to see a seasonal
slowdown among some of our consumer products customers, but the revenue
contribution from our new programs should nearly double from the second
quarter.”
“We continue to pursue promising new opportunities with both existing
and new customers, and continue to prepare for future growth.
We are establishing a new SMT production facility at our Spokane Valley
headquarters in order to provide for low-volume and highly specialized PCB
assembly for programs that require domestic sourcing. In addition, we recently
announced the pending sale of our facility in Las Cruces, New Mexico, which we
have not utilized since June 2005. The
buyer is currently conducting its due diligence and we plan to close the
transaction by the end of the third quarter.”
Business
Outlook
In the third
quarter of fiscal 2007, the Company expects lower seasonal demand from certain
existing customers, partially offset by increased revenue from new programs.
As a result, revenue is anticipated to be in the range of $42 million to
$47 million. Earnings in the third
quarter of fiscal 2007 are expected to be in the range of $0.01 to $0.05 per
share.
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 800-218-0713 or +1 303-262-2130. A
48-hour replay will be available by calling 800-405-2236 or +1 303-590-3000
(Reservation No. 11078678). 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 2007.
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 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.
