false000071973300007197332024-11-052024-11-05


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) November 5, 2024
 
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 November 5, 2024 , Key Tronic Corporation issued a press release announcing its financial results for the quarter ended September 28, 2024. 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.
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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: November 5, 2024   
  By: /s/ Anthony G. Voorhees
   Anthony G. Voorhees, Executive Vice President
of Administration, CFO and Treasurer
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Exhibit 99.1
FOR IMMEDIATE RELEASE
 
CONTACTS: Tony VoorheesMichael Newman
 Chief Financial OfficerInvestor Relations
 Key Tronic CorporationStreetConnect
 (509)-927-5345(206) 729-3625
KEY TRONIC CORPORATION ANNOUNCES RESULTS
FOR THE FIRST QUARTER OF FISCAL YEAR 2025

New Program Wins and Improving Gross Margins
Spokane Valley, WA— November 5, 2024 — 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 www.keytronic.com 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 www.keytronic.com under “Investor Relations”. A replay will be available at www.keytronic.com 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: 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, 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 STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
 Three Months Ended
 September 28, 2024September 30, 2023
Net sales$131,558 $150,112 
Cost of sales118,255 139,250 
Gross profit13,303 10,862 
Research, development and engineering expenses2,289 2,241 
Selling, general and administrative expenses6,570 5,784 
Gain on insurance proceeds, net of losses— (431)
Total operating expenses8,859 7,594 
Operating income4,444 3,268 
Interest expense, net3,263 3,011 
Income before income taxes1,181 257 
Income tax (benefit) provision57 (78)
Net income$1,124 $335 
Net income per share — Basic$0.10 $0.03 
Weighted average shares outstanding — Basic10,762 10,762 
Net income per share — Diluted$0.10 $0.03 
Weighted average shares outstanding — Diluted10,762 11,003 
3

KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
September 28, 2024June 29, 2024
ASSETS
Current assets:
Cash and cash equivalents$6,555 $4,752 
Trade receivables, net of credit losses of $3,129 and $2,918133,984 132,559 
Contract assets23,626 21,250 
Inventories, net95,845 105,099 
Other, net of credit losses of $1,642 and $1,679
28,273 24,739 
Total current assets288,283 288,399 
Property, plant and equipment, net27,910 28,806 
Operating lease right-of-use assets, net14,612 15,416 
Other assets:
Deferred income tax asset18,394 17,376 
Other6,735 5,346 
Total other assets25,129 22,722 
Total assets$355,934 $355,343 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$83,768 $79,394 
Accrued compensation and vacation6,870 6,510 
Current portion of long-term debt3,057 3,123 
Other18,450 15,149 
Total current liabilities112,145 104,176 
Long-term liabilities:
Long-term debt, net 109,675 116,383 
Operating lease liabilities9,573 10,312 
Deferred income tax liability74 263 
Other long-term obligations124 219 
Total long-term liabilities119,446 127,177 
Total liabilities231,591 231,353 
Shareholders’ equity:
Common stock, no par value—shares authorized 25,000; issued and outstanding 10,762 and 10,762 shares, respectively47,351 47,284 
Retained earnings78,045 76,921 
Accumulated other comprehensive income (loss)(1,053)(215)
Total shareholders’ equity124,343 123,990 
Total liabilities and shareholders’ equity$355,934 $355,343 




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KEY TRONIC CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP to non-GAAP measures
(In thousands, except per share amounts)
(Unaudited)
 Three Months Ended
 September 28, 2024September 30, 2023
GAAP net income $1,124 $335 
Gain on insurance proceeds (net of losses)— (431)
Stock-based compensation expense67 59 
Income tax effect of non-GAAP adjustments (1)
(13)74 
Adjusted net income: $1,178 $37 
Adjusted net income per share — non-GAAP Diluted$0.11 $0.00 
Weighted average shares outstanding — Diluted10,762 11,003 
(1) Income tax effects are calculated using an effective tax rate of 20%, which approximates the statutory GAAP tax rate for the presented periods.
5
v3.24.3
Cover Page
Nov. 05, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Nov. 05, 2024
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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