(MENAFN- GlobeNewsWire - Nasdaq) New Program Wins and Improving Gross MarginsSPOKANE VALLEY, Wash., Nov. 05, 2024 (GLOBE NEWSWIRE) -- Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended September 28, 2024.
For the first quarter of fiscal year 2025, Key Tronic reported total revenue of $131.6 million, compared to $150.1 million in the same period of fiscal year 2024. Revenue in the first quarter of fiscal year 2025 was adversely impacted by customer-driven design and qualification delays of three programs that we believe impacted revenue by approximately $9 million. These delays have since been resolved on two of these programs and shipments have resumed in the second quarter. Production in Key Tronic's Mexico facilities in the first quarter of fiscal year 2025 increased by approximately 10% sequentially from the prior quarter.
The Company saw significant improvement in its production efficiencies compared to the first quarter of fiscal year 2024, primarily as a result of recent headcount reductions, continued improvements in the supply chain and a favorable decline in the exchange rate of the Mexican Peso. Gross margins were 10.1% and operating margins were 3.4% in the first quarter of fiscal year 2025, up from 7.2% and 2.2%, respectively, in the same period of fiscal year 2024.
Net income was $1.1 million or $0.10 per share for the first quarter of fiscal year 2025, compared to net income of $0.3 million or $0.03 per share for the same period of fiscal year 2024. Adjusted net income was $1.2 million or $0.11 per share for the first quarter of fiscal year 2025, compared to $0.0 million or $0.00 per share for the same period of fiscal year 2024. See“Non-GAAP Financial Measures,” below for additional information about adjusted net income and adjusted net income per share.
“While we did not meet revenue expectations in our first quarter of fiscal 2025 due to unavoidable delays for a few programs, we are pleased to see our improved operating efficiencies, margins, and liquidity,” said Brett Larsen, President and CEO.“The recent workforce reductions in Mexico, trimming of non-profitable programs, and making a concerted effort to improve working capital are starting to pay off. We also continued to reduce our inventories, which are now much more in line with our revenue levels. Over the longer term, we expect that these strategic changes will improve our overall profitability.”
“During the first quarter, we also continued to win new business, including new programs in manufacturing equipment, vehicle lighting, and commercial pest control. We believe we are well positioned for increased growth and profitability in coming periods.”
The financial data presented for the first quarter of fiscal 2025 should be considered preliminary and could be subject to change, as the Company's independent auditor has not completed their review procedures.
Business Outlook
For the second quarter of fiscal 2025, Key Tronic expects to report revenue in the range of $130 million to $140 million and earnings in the range $0.05 to $0.15 per diluted share. These expected results assume an effective tax rate of 20% in the coming quarter.
Conference Call
Key Tronic will host a conference call to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern) today. A broadcast of the conference call will be available at under“Investor Relations” or by calling 888-394-8218 or +1-313-209-4906 (Access Code: 7268667). The Company will also reference accompanying slides that can be viewed with the webcast at under“Investor Relations”. A replay will be available at under“Investor Relations”.
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, China and Vietnam. The Company provides its customers with 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:
Forward-Looking Statements
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, but are not limited to those including such words as aims, anticipates, believes, continues, estimates, expects, hopes, intends, plans, predicts, projects, targets, will, or would, similar verbs, or nouns corresponding to such verbs, which may be forward looking. Forward-looking statements also include other passages that are relevant to expected future events, performances, and actions 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 financial conditions and results, including revenue and earnings, cost savings from headcount reduction and the Mexican Peso exchange rate, demand for certain products and the effectiveness of some of its programs, business from customers and programs, and impacts from operational streamlining and efficiencies. 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 components from the supply chain; the availability of a healthy workforce; the accuracy of suppliers' and customers' forecasts; development and success of customers' programs and products; timing and effectiveness of ramping of new programs; success of new-product introductions; the risk of legal proceedings or governmental investigations relating to the previously reported financial statement restatements and related material weaknesses, the May 2024 cybersecurity incident and the subject of the internal investigation by the Company's Audit Committee and related or other unrelated matters; acquisitions or divestitures of operations or facilities; technology advances; changes in pricing policies by the Company, its competitors, customers or suppliers; impact of new governmental legislation and regulation, including tax reform, tariffs and related activities, such trade negotiations and other risks; and other factors, risks, and uncertainties detailed from time to time in the Company's SEC filings.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States (GAAP), we use certain non-GAAP financial measures, adjusted net income and adjusted net income per share, diluted. We provide these non-GAAP financial measures because we believe they provide greater transparency related to our core operations and represent supplemental information used by management in its financial and operational decision making. We exclude (or include) certain items in our non-GAAP financial measures as we believe the net result is a measure of our core business. We believe this facilitates operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain income and expense items that would not otherwise be apparent on a GAAP basis. Non-GAAP performance measures should be considered in addition to, and not as a substitute for, results prepared in accordance with GAAP. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Our non-GAAP financial measures may be different from those reported by other companies. See the table below entitled“Reconciliation of GAAP to non-GAAP measures” for reconciliations of adjusted net income to the most directly comparable GAAP measure, which is GAAP net income, and the computation of adjusted net income per share, diluted.
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KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited) |
| |
| | | September 28, 2024 | | June 29, 2024 |
| ASSETS | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 6,555 | | | $ | 4,752 | |
| Trade receivables, net of credit losses of $3,129 and $2,918 | | | 133,984 | | | | 132,559 | |
| Contract assets | | | 23,626 | | | | 21,250 | |
| Inventories, net | | | 95,845 | | | | 105,099 | |
| Other, net of credit losses of $1,642 and $1,679 | | | 28,273 | | | | 24,739 | |
| Total current assets | | | 288,283 | | | | 288,399 | |
| Property, plant and equipment, net | | | 27,910 | | | | 28,806 | |
| Operating lease right-of-use assets, net | | | 14,612 | | | | 15,416 | |
| Other assets: | | | | |
| Deferred income tax asset | | | 18,394 | | | | 17,376 | |
| Other | | | 6,735 | | | | 5,346 | |
| Total other assets | | | 25,129 | | | | 22,722 | |
| Total assets | | $ | 355,934 | | | $ | 355,343 | |
| LIABILITIES AND SHAREHOLDERS ' EQUITY | | | | |
| Current liabilities: | | | | |
| Accounts payable | | $ | 83,768 | | | $ | 79,394 | |
| Accrued compensation and vacation | | | 6,870 | | | | 6,510 | |
| Current portion of long-term debt | | | 3,057 | | | | 3,123 | |
| Other | | | 18,450 | | | | 15,149 | |
| Total current liabilities | | | 112,145 | | | | 104,176 | |
| Long-term liabilities: | | | | |
| Long-term debt, net | | | 109,675 | | | | 116,383 | |
| Operating lease liabilities | | | 9,573 | | | | 10,312 | |
| Deferred income tax liability | | | 74 | | | | 263 | |
| Other long-term obligations | | | 124 | | | | 219 | |
| Total long-term liabilities | | | 119,446 | | | | 127,177 | |
| Total liabilities | | | 231,591 | | | | 231,353 | |
| Shareholders' equity: | | | | |
| Common stock, no par value-shares authorized 25,000; issued and outstanding 10,762 and 10,762 shares, respectively | | | 47,351 | | | | 47,284 | |
| Retained earnings | | | 78,045 | | | | 76,921 | |
| Accumulated other comprehensive income (loss) | | | (1,053 | ) | | | (215 | ) |
| Total shareholders' equity | | | 124,343 | | | | 123,990 | |
| Total liabilities and shareholders' equity | | $ | 355,934 | | | $ | 355,343 | |
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