Investors Overview

Key Tronic Corporation (Nasdaq: KTCC) is a leader in electronic manufacturing services (EMS). The Company provides engineering services, materials management, world-class manufacturing and assembly services, in-house testing and worldwide distribution from its facilities in the United States, Mexico and China. 

Key Tronic’s core strengths include innovative design and engineering expertise in electronics, mechanical engineering and precision plastics combined with high-quality, low-cost production and assembly on a global basis.  Its customers comprise some of the leading original equipment manufacturers. 

For the first quarter of fiscal 2009, Key Tronic reported total revenue of $48.2 million, up 8% from $44.6 million in the same period of fiscal 2008.  Net income for the first quarter of fiscal 2009 was $0.4 million or $0.04 per diluted share, up from $0.2 million or $0.02 diluted share for the same period of fiscal 2008.

For the first quarter of fiscal 2009, the Company saw an increased contribution from a growing number of new customer programs, offsetting the anticipated decline from some of its existing customers.  Moving into the second quarter, the global economic situation is creating uncertainty and slowdowns among some of its customers.  While most of its promising new customer programs continue to move into production and ramp up, some have reduced their forecasts for coming periods.  Revenue from new programs is now expected to grow at a slower rate than previously anticipated. 

In response, Key Tronic's flexible business model allows it to take immediate steps to reduce operating expenses. The Company continues to believe that its sustained investment in our world-class facilities provides it with strong competitive advantages.  Over the longer term, the Company expects to continue to successfully win new business and further diversify its customer portfolio across a wide range of industries.

Pursuing the EMS Market

Key Tronic’s strategic goal is to become a leader in the EMS market. Industry trends towards outsourced manufacturing continue to be very positive. Electronic Trend Publication estimates that the worldwide EMS market will grow from approximately $195 billion in 2006 to approximately $244 billion in 2008.

Key Tronic's ability to offer an exceptional range of capabilities, competitive pricing, global logistics and responsive customer service continues to help it win new business.  With many of its current customers, Key Tronic is involved with a number of different programs. Some programs represent small annual revenue streams and some have multi-million-dollar potential.    In general, the Company cannot discuss any specifics of these programs because of signed confidentiality agreements with its customers.

Growing Product Portfolio

Key Tronic plans to continue to aggressively pursue new EMS business in a wide range of industries, expanding its portfolio of EMS customers and profitably increasing the number and size of the programs with each customer.  Key Tronic's current customer programs include consumer electronics and plastics, specialty printers and sub-assemblies, household products, gaming devices, telecommunication satellite units, multimedia touch panels, digital control panels, computer accessories, medical devices, exercise equipment, educational toys, industrial tools, networking equipment, scientific instruments, security surveillance devices and other kinds of engineered devices.

Product and Process Engineering

Staffed with engineers from a variety of disciplines, Key Tronic has exceptional design and engineering capabilities. The Company helps its clients improve both the product design and the manufacturing processes associated with that product to lower costs and increase quality.  While the development cycle for EMS projects is approximately 12 to 18 months, the customer absorbs much of the product development costs.

Low Cost/High-Quality Manufacturing

World leaders in a variety of industries are beginning to recognize the unique capabilities and discipline that Key Tronic has developed over years spent in the super-competitive keyboard industry.  What sets Key Tronic apart is its innovative design and engineering expertise combined with high-quality, low-cost production and assembly.  The Company can offer expertise in specialized manufacturing, precision plastic molding and tooling, liquid injection molding, electronic and electro-mechanical design and assembly, liquid crystal display and membrane technologies.  

By outsourcing their manufacturing to Key Tronic, current customers are accessing deep manufacturing expertise and capacity, thereby reducing their capital investment while gaining production volume flexibility plus assurance of quality.  Key Tronic’s state-of-the-art facilities are ISO 9000 and FDA certified.

In response to global competition, the Company has made continuous reductions in product cost by improving its manufacturing processes and extending its global operations.  The Company has made a sustained effort to reduce material costs and shift production to more efficient, high-quality manufacturing facilities in Mexico and China. 

Worldwide Capabilities

Key Tronic offers its customers worldwide procurement, distribution and logistics.  In recent periods, the Company has continued to expand the core capabilities of its facilities in both Mexico and China.  Key Tronic also operates facilities in Washington State and Texas.  This combination of facilities enables the Company to offer exceptional service levels and remain very cost competitive, and give its customers tremendous logistical and material procurement flexibility.