Key Tronic Releases 4Q and FY 2019 Results

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Key Tronic Corp., a provider of electronic manufacturing services (EMS), has announced its results for the quarter and the year ended June 29, 2019. These results are in line with the preliminary results announced on July 24, 2019.

For the fourth quarter of fiscal year 2019, Key Tronic reported total revenue of $105.6 million, compared to $117.0 million in the same period of fiscal year 2018. For fiscal year 2019, total revenue was $464.0 million, up 4% from $446.3 million in fiscal year 2018.

For the fourth quarter of fiscal year 2019, the Company had net income of $0.8 million or $0.08 per share, compared to net loss of $(2.2) million or $(0.20) per share for the same period of fiscal year 2018. For fiscal year 2019, net loss was $(8.0) million or $(0.74) per share, which includes an impairment of goodwill and intangibles of $12.5 million reported during the third quarter of fiscal 2019. This is compared to a net loss of $1.3 million or $(0.12) per share for fiscal year 2018.

For the fourth quarter of fiscal year 2019, gross margin was 7.9% and operating margin was 1.3%, compared to 8.0% and (2.1)%, respectively, in the same period of fiscal 2018.

"Despite the many unexpected challenges during the second half of fiscal 2019, we managed to increase our revenue for the fiscal year by 4% over fiscal year 2018 and to ramp up most of our new programs," said Craig Gates, President and Chief Executive Officer. "In the fourth quarter of fiscal year 2019, we saw a disruption in deliveries of a critical component from a supplier in China; delays in the ramp of a new program due to customer-driven design changes; and temporary reductions in customer demand due to concerns over tariffs and trade tension between the US and Mexico. Moving into the first quarter of fiscal 2020, the disruption and delays experienced in the fourth quarter have been largely resolved and we expect revenue to increase."

"During the fourth quarter, we continued to win significant new business from EMS competitors and from existing customers, including new programs involving smart security, architectural LED lighting, power meters and smart grid, and wireless power solutions. We also continue to invest in new equipment and processes to be more productive in our Mexico and Vietnam facilities, and we’re expanding and enhancing our profitable US facilities. We’re optimistic about our opportunities for growth in fiscal 2020 and beyond."

Business Outlook

For the first quarter of fiscal year 2020, the Company expects to report revenue in the range of $115 million to $120 million, and earnings in the range of $0.12 to $0.17 per diluted share. These expected results assume an effective tax rate of 20% in the quarter.