false000071973300007197332023-08-152023-08-15


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 0-1155991-0849125
(State or other jurisdiction
of incorporation)		 (Commission
File Number)		(IRS Employer
Identification No.)
4424 North Sullivan RoadSpokane Valley,Washington99216
(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  
104Cover 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.
2

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
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Exhibit 99.1
FOR IMMEDIATE RELEASE
 
CONTACTS: Brett LarsenMichael Newman
 Chief Financial OfficerInvestor Relations
 Key Tronic CorporationStreetConnect
 (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.
2

KEYTRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
 
 Three Months EndedTwelve Months Ended
 July 1, 2023July 2, 2022July 1, 2023July 2, 2022
Net sales$162,610 $126,206 $588,135 $531,815 
Cost of sales148,712 114,446 540,663 488,601 
Gross profit13,898 11,760 47,472 43,214 
Research, development and engineering expenses2,573 2,348 9,735 9,821 
Selling, general and administrative expenses7,363 7,151 25,715 24,598 
Gain on insurance proceeds, net of losses(261)— (4,301)
Total operating expenses9,675 9,499 31,149 34,419 
Operating income4,223 2,261 16,323 8,795 
Interest expense, net2,941 1,466 10,023 5,104 
Income before income taxes1,282 795 6,300 3,691 
Income tax (benefit) provision220 (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 — Basic10,762 10,762 10,762 10,762 
Net income per share — Diluted$0.10 $0.09 $0.47 $0.31 
Weighted average shares outstanding — Diluted10,996 11,071 10,940 11,063 
3

KEYTRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
July 1, 2023July 2, 2022
ASSETS
Current assets:
Cash and cash equivalents$3,603 $1,707 
Trade receivables, net of allowance for doubtful accounts of $23 and $12151,679 135,876 
Contract assets28,904 21,974 
Inventories, net138,941 155,741 
Other28,181 24,710 
Total current assets351,308 340,008 
Property, plant and equipment, net24,722 26,012 
Operating lease right-of-use assets, net
16,202 16,731 
Other assets:
Deferred income tax asset12,254 10,055 
Other15,573 14,117 
Total other assets27,827 24,172 
Total assets$420,059 $406,923 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$118,009 $121,393 
Accrued compensation and vacation13,351 11,836 
Current portion of debt, net7,098 7,402 
Other14,592 23,036 
Total current liabilities153,050 163,667 
Long-term liabilities:
Term loans3,477 5,716 
Revolving loan114,805 94,577 
Operating lease liabilities10,317 12,023 
Deferred income tax liability274 64 
Other long-term obligations7,520 5,998 
Total long-term liabilities136,393 118,378 
Total liabilities289,443 282,045 
Shareholders’ equity:
Common stock, no par value—shares authorized 25,000; issued and outstanding 10,762 and 10,762 shares, respectively47,727 47,474 
Retained earnings82,986 77,829 
Accumulated other comprehensive income (loss)(97)(425)
Total shareholders’ equity130,616 124,878 
Total liabilities and shareholders’ equity$420,059 $406,923 
4
v3.23.2
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
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