Spokane, WA—August 22, 2006 -- Key Tronic Corporation
(Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today
announced its results for the quarter and year ended July 1, 2006.
For the fourth quarter of fiscal 2006, Key Tronic reported total revenue
of $52.5 million, compared to $45.6 million for the previous quarter and $53.2
million for the fourth quarter of fiscal 2005. For the full year of fiscal 2006,
total revenue was $187.7 million, compared to $202.9 for fiscal 2005.
After experiencing slower demand from some of its traditional customers
at the beginning of fiscal 2006, the Company saw those customers drive stronger
than expected sequential revenue growth in the fourth quarter.
Net income for the fourth quarter of fiscal 2006 was $7.1 million or
$0.71 per diluted share, up from $917,000 or $0.09 per diluted share in the
previous quarter and $2.8 million or $0.28 per diluted share for the fourth
quarter of fiscal 2005. For the full year of fiscal 2006, net income was $9.8
million or $0.97 per diluted share, up from $4.4 million or $0.44 per diluted
share for fiscal 2005.
Given its consistent profitability in recent years, the Company decided
to recognize approximately one-fourth of its deferred tax asset for net
operating loss carryforwards (NOLs), in accordance with the accounting
guidelines of FAS 109. The result
was an income tax benefit of approximately $5.0 million or $0.50 per diluted
share in the fourth quarter of fiscal 2006.
Results for the same period of fiscal 2005 included a gain on life
insurance proceeds of approximately $1.1 million or $0.11 per diluted share.
For fiscal year 2006, the Company’s gross margin was 9.2%, up from
8.1% for the prior fiscal year. The
increase reflects improved production efficiencies.
“During the year, we improved our operating efficiencies and
profitability, won new business and finished with strong growth in the fourth
quarter,” said Jack Oehlke, President and Chief Executive Officer.
“We have become much more competitive in our pursuit of new business
and the new programs we won during fiscal 2006 will contribute revenue in fiscal
2007. In preparation for
anticipated growth, we are continuing to expand our production capacity and
support infrastructure in Mexico, China and the US.”
“We believe Key Tronic is increasingly well-positioned to continue to
grow profitably and expand its customer base.
Moreover, our solid financial performance in recent periods and stronger
balance sheet have made it possible for us to consider exploring acquisitions
that would be accretive to revenue and earnings, and could open new market
opportunities.”
Business
Outlook
In the first
quarter of fiscal 2007, the Company expects revenue in the range of $50 million
to $53 million. It also anticipates
a charge of approximately $0.5 million related to due diligence and related
expenses incurred in connection with a potential acquisition that the Company
decided not to complete. As a
result, earnings in the first quarter of fiscal 2007 are expected to be in the
range of $0.12 to $0.16 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 +1 303-262-2137. A 48-hour replay
will be available by calling 800-405-2236 or +1 303-590-3000 (Reservation No.
11062653). 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 filing.
