Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported) August 15, 2023

Key Tronic Corporation

(Exact name of registrant as specified in its charter)



Washington		0-11559	91-0849125
(State or other jurisdiction of incorporation)		(Commission File Number)	(IRS Employer Identification No.)

4424 North Sullivan Road	Spokane Valley,	Washington	99216
(Address of principal executive offices)			(Zip Code)

Registrant's telephone number, including area code (509) 928-8000

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provision (see General Instruction A.2. below):


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, no par value	KTCC	NASDAQ Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).


Emerging growth company			☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On August 15, 2023, Key Tronic Corporation issued a press release announcing its financial results for the quarter ended July 1, 2023. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information in this Form 8-K including the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section and shall not be deemed incorporated by reference into any filing of Key Tronic Corporation under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as set forth by specific reference in such a filing.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d)Exhibits



Exhibit Number						Description
99.1						Press Release Dated August 15, 2023

104						Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document

SAFE HARBOR STATEMENT. Statements contained in the Exhibit to this report that state Key Tronic Corporation's or its management's expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Key Tronic Corporation's actual results could differ materially from those projected in such forward-looking statements. Factors that could affect those results include those mentioned in the Exhibit to this report and the documents that Key Tronic Corporation has filed with the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

KEY TRONIC CORPORATION

(Registrant)

Date: August 15, 2023

By:

/s/ Brett R. Larsen

Brett R. Larsen, Executive Vice President
of Administration, CFO and Treasurer

Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACTS:

Brett Larsen

Michael Newman

Chief Financial Officer

Investor Relations

Key Tronic Corporation

StreetConnect

(509) 927-5500

(206) 729-3625

KEY TRONIC CORPORATION ANNOUNCES RESULTS

FOR THE FOURTH QUARTER AND YEAR END OF FISCAL 2023

Record Annual Revenue Up 11%; Annual Earnings Up 53%; New Program Wins

Spokane Valley, WA— August 15, 2023 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter and the year ended July 1, 2023.

For the fourth quarter of fiscal year 2023, Keytronic reported total revenue of $162.6 million, up 29% from $126.2 million in the same period of fiscal year 2022. For the full year of fiscal 2023, total revenue was $588.1 million, a company record and up 11% from $531.8 million for fiscal year 2022. Revenue for the fiscal year 2023 included new program ramps, as well as increased demand from a number of longstanding customer programs.

For the fourth quarter of fiscal year 2023, the Company’s gross margin was 8.5% and operating margin was 2.6%, compared to a gross margin of 9.3% and an operating margin of 1.8% in the same period of fiscal year 2022. The gross margin in the fourth quarter of fiscal year 2023 was adversely impacted by the foreign currency strengthening of the Mexican Peso. Offsetting in part, the Company continued to see improvements in its asset utilization and gradual stabilization in the supply chain and labor markets.

For the fourth quarter of fiscal year 2023, net income was $1.1 million or $0.10 per share, up from $1.0 million or $0.09 per share for the same period of fiscal year 2022. For the full year of fiscal year 2023, net income was $5.2 million or $0.47 per share, up 53% from $3.4 million or $0.31 per share for fiscal year 2022.

“We’re pleased with our record annual revenue and strong earnings in fiscal 2023, driven by our successful ramp of new programs,” said Craig Gates, President and Chief Executive Officer. “Throughout the year, we continued to see the favorable trend of contract manufacturing returning to North America and a growing number of potential customers evaluating a migration of their China-based manufacturing to our facility in Vietnam. During the fourth quarter, we continued to expand our customer base and won new programs involving inventory control, clean energy and distribution monitoring equipment.”

We move into fiscal 2024 with a strong backlog and pipeline of potential new business, our inventory more in line with our revenue levels and continuing improvement in the global supply issues and lower labor turnover. However, we are also seeing some softening in demand from several large customers and one large customer is pausing production during the next quarter to resolve certain of their design issues. We also expect a strong Mexican Peso and relatively high interest expense to constrain our bottom line. Over the longer term, however, we’re well positioned for continued growth and increased profitability.”

The financial data presented for the fourth quarter and year end of fiscal year 2023 should be considered preliminary and could be subject to change, as the Company’s independent auditor has not completed their audit procedures.

Business Outlook

For the first quarter of fiscal 2024, Keytronic expects to report revenue in the range of $140 million to $150 million and earnings in the range of $0.05 to $0.15 per diluted share. These expected results assume an effective tax rate of 20% in the coming quarter.

Conference Call

Keytronic will host a conference call to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern) on August 15, 2023. A broadcast of the conference call will be available at www.keytronic.com under “Investor Relations” or by calling 888-394-8218 or +1-323-994-2093 (Access Code: 9400883). A replay will be available at www.keytronic.com under “Investor Relations”.

About Keytronic

Keytronic 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 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 Keytronic visit: www.keytronic.com.

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, or will, 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 during periods of fiscal year 2024, risks of manufacturing supply chain and operational disruptions and relating to the health of employees due to COVID-19 health pandemic, demand for certain products and the effectiveness of some of our programs, effects of recent tax reform and tariff measures and trade tensions, business from new customers and programs, improvement of supply chain delivery and impacts from legal proceedings and operational streamlining. 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, particularly during the COVID-19 health crisis; 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 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 including those related to COVID-19 response; and other factors, risks, and uncertainties detailed from time to time in the Company’s SEC filings.

KEYTRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended				Twelve Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Net sales	$	162,610	$	126,206	$	588,135	$	531,815
Cost of sales	148,712		114,446		540,663		488,601
Gross profit	13,898		11,760		47,472		43,214
Research, development and engineering expenses	2,573		2,348		9,735		9,821
Selling, general and administrative expenses	7,363		7,151		25,715		24,598

Gain on insurance proceeds, net of losses	(261)		—		(4,301)
Total operating expenses	9,675		9,499		31,149		34,419
Operating income	4,223		2,261		16,323		8,795
Interest expense, net	2,941		1,466		10,023		5,104
Income before income taxes	1,282		795		6,300		3,691
Income tax (benefit) provision	220		(173)		1,143		314
Net income	$	1,062	$	968	$	5,157	$	3,377
Net income per share — Basic	$	0.10	$	0.09	$	0.48	$	0.31
Weighted average shares outstanding — Basic	10,762		10,762		10,762		10,762
Net income per share — Diluted	$	0.10	$	0.09	$	0.47	$	0.31
Weighted average shares outstanding — Diluted	10,996		11,071		10,940		11,063

KEYTRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


	July 1, 2023		July 2, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	3,603	$	1,707
Trade receivables, net of allowance for doubtful accounts of $23 and $12	151,679		135,876
Contract assets	28,904		21,974
Inventories, net	138,941		155,741
Other	28,181		24,710
Total current assets	351,308		340,008
Property, plant and equipment, net	24,722		26,012
Operating lease right-of-use assets, net	16,202		16,731
Other assets:
Deferred income tax asset	12,254		10,055


Other	15,573		14,117
Total other assets	27,827		24,172
Total assets	$	420,059	$	406,923
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	118,009	$	121,393
Accrued compensation and vacation	13,351		11,836
Current portion of debt, net	7,098		7,402
Other	14,592		23,036
Total current liabilities	153,050		163,667
Long-term liabilities:
Term loans	3,477		5,716
Revolving loan	114,805		94,577
Operating lease liabilities	10,317		12,023
Deferred income tax liability	274		64
Other long-term obligations	7,520		5,998
Total long-term liabilities	136,393		118,378
Total liabilities	289,443		282,045
Shareholders’ equity:
Common stock, no par value—shares authorized 25,000; issued and outstanding 10,762 and 10,762 shares, respectively	47,727		47,474
Retained earnings	82,986		77,829
Accumulated other comprehensive income (loss)	(97)		(425)
Total shareholders’ equity	130,616		124,878
Total liabilities and shareholders’ equity	$	420,059	$	406,923

Cover Page	Aug. 15, 2023
Cover [Abstract]
Document Type	8-K
Document Period End Date	Aug. 15, 2023
Entity Registrant Name	Key Tronic Corp
Entity Incorporation, State or Country Code	WA
Entity File Number	0-11559
Entity Tax Identification Number	91-0849125
Entity Address, Address Line One	4424 North Sullivan Road
Entity Address, City or Town	Spokane Valley,
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	99216
City Area Code	509
Local Phone Number	928-8000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Amendment Flag	false
Entity Central Index Key	0000719733
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	KTCC
Security Exchange Name	NASDAQ