Key Tronic Corporation (NASDAQ:KTCC) Q1 2021 Earnings Conference Call October 27, 2020 5:00 PM ET Company Participants Craig Gates - President and Chief Executive Officer Brett Larsen - Chief Financial Officer Conference Call Participants Bill Dezellem - Tieton Capital Management Operator Good day and welcome to the Q1 Fiscal 2021 Key Tronic Corporation Conference Call. This conference is being recorded. At this time, I would like to hand things over to Brett Larsen. Please go ahead, sir. Brett Larsen Good ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________ FORM 10-K ____________________________________________________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 27, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PERIOD FROM TO Commission File Number 0-11559 _________________________________ ...

Key Tronic Corporation (NASDAQ:KTCC) Q4 2020 Earnings Conference Call August 4, 2020 5:00 PM ET Company Participants Craig Gates - President and Chief Executive Officer Brett Larsen - Chief Financial Officer Conference Call Participants Bill Dezellem - Tieton Orin Hirschman - AIG Investment Partners Sheldon Grodsky - Grodsky Associates Mike Hughes - SGF Capita George Melas - MKH Management Operator Good day and welcome to the Key Tronic Q4 Fiscal 2020 Conference Call. Today’s conference is being recorded. A ...

Financial Performance - Total revenue for the third quarter of fiscal year 2020 was $111.5 million, a 3.2% increase from $108.0 million in the same period of fiscal year 2019[103][122]. - Gross profit as a percentage of net sales increased to 8.3% for the third quarter of fiscal year 2020, up from 6.3% in the same quarter of the prior fiscal year, primarily due to increased revenue and streamlining efforts[106][123]. - Operating income for the third quarter of fiscal year 2020 was 1.6% of net sales, compared to a loss of (11.6)% in the same quarter of fiscal year 2019, with a significant improvement attributed to increased revenues[107][121]. - Net income for the third quarter of fiscal year 2020 was $0.9 million or $0.08 per share, compared to a net loss of $(12.0) million or $(1.11) per share in the same quarter of fiscal year 2019[108][121]. - Net sales for the nine months ended March 28, 2020, were $333.5 million, a decrease of 7.0% compared to $358.5 million for the same period in 2019, primarily due to supply chain disruptions caused by COVID-19[132]. - Gross profit margin increased to 8.0% for the nine months ended March 28, 2020, up from 7.3% in the prior year, attributed to streamlining efforts in the Company's facilities[133]. - Operating income for the nine months ended March 28, 2020, was $5.8 million, compared to a loss of $7.4 million in the same period of 2019, reflecting a $13.2 million improvement[131]. Expenses - Research, development, and engineering expenses were $1.7 million, or 1.6% of net sales, for the three months ended March 28, 2020, compared to $1.4 million, or 1.3% of net sales, for the same period in the prior year[126]. - Selling, general, and administrative expenses were $5.7 million, or 5.1% of net sales, for the three months ended March 28, 2020, compared to $5.5 million, or 5.1% of net sales, for the same period in the prior year[127]. - Total research, development, and engineering expenses were $5.1 million for the nine months ended March 28, 2020, compared to $5.0 million in the prior year, maintaining 1.5% of net sales[135]. - Total selling, general and administrative expenses were $15.7 million for the nine months ended March 28, 2020, slightly down from $16.2 million in the prior year, with SG&A as a percentage of net sales increasing to 4.7%[136]. - Interest expense decreased to $2.0 million for the nine months ended March 28, 2020, from $2.1 million in the same period of 2019, reflecting a decrease in the average balance outstanding on the line of credit[137]. Customer and Market Dynamics - The concentration of net sales from the top three customers decreased to 34.7% in the third quarter of fiscal year 2020 from 39.1% in the same period of the prior fiscal year[104]. - The company has seen shifts in demand due to COVID-19, with increased demand for home-consumer products and healthcare equipment, while demand from the gaming industry has decreased significantly[111]. - The order backlog as of March 28, 2020, was approximately $208.1 million, up from $151.5 million on March 30, 2019, driven by increased demand for home-consumer products and healthcare[140]. Financial Position - The company maintains a strong balance sheet with a current ratio of 2.3 and a debt to equity ratio of 0.6 as of March 28, 2020[115]. - Net cash used in operating activities for the nine months ended March 28, 2020, was $32.1 million, compared to net cash provided of $3.4 million in the same period of the prior year[141]. - Cash provided by financing activities was $33.6 million during the nine months ended March 28, 2020, compared to cash used of $2.5 million in the same period of the previous fiscal year[147]. - The company has $57.2 million in borrowings under its revolving credit facility, $11.7 million on its term loan, and $1.1 million on its equipment term loan as of March 28, 2020[189]. - The company has $43.0 million in foreign currency forward contracts to hedge against exchange rate fluctuations, with a fair value of $(2.4) million as of March 28, 2020[190]. Risks and Challenges - The company is experiencing fluctuations in operating results due to changes in customer demand, which can lead to unexpected increases in inventory or accounts receivable[153]. - A significant portion of sales is concentrated among a small number of customers, and a decline in orders from these customers could adversely affect the business[158]. - The company relies on a limited number of suppliers for critical components, and shortages or price increases could disrupt operations and negatively impact financial results[160]. - Economic conditions, including inflation and recession, could adversely impact customer demand and, consequently, the company's sales[156]. - The company faces risks related to currency exchange fluctuations, particularly with operations in Mexico and China, which could increase operating costs[167]. - Start-up costs and inefficiencies associated with new programs may adversely affect operating results if these programs do not meet expected sales volumes[171]. - The company is exposed to interest rate risk under its revolving line of credit and term loan, which could adversely affect financial condition if rates change significantly[174]. - Compliance with environmental regulations is critical, as failure to comply could result in significant expenses and operational disruptions[175]. - The company has implemented health and safety measures in response to COVID-19 to protect employees and comply with regulations[176]. - The stock price is subject to volatility, influenced by factors such as quarterly operating results and broader market conditions[177]. - The company faces potential liability claims if manufacturing processes do not comply with regulatory requirements, which could lead to reduced customer orders and damage to business reputation[180]. - Increased energy prices could raise raw material and transportation costs, potentially impacting profitability if product prices cannot be adjusted accordingly[181]. - The company is involved in various legal proceedings that may require significant financial resources to address, potentially affecting financial conditions and operations[183]. - Insurance coverage may not be sufficient for potential damages or claims, which could negatively impact net income if significant losses occur[184]. - Compliance with the Sarbanes-Oxley and Dodd-Frank Acts has increased legal, financial, and accounting costs, with ongoing costs expected indefinitely[185]. - Acquisitions may require additional equity or debt financing, potentially diluting existing shareholders or affecting credit ratings[186]. - Integration of acquired businesses may face complications, diverting management's attention and potentially increasing expenses[187]. - Changes in financial accounting standards could significantly affect reported financial results and increase implementation costs[188].

Key Tronic Corporation (NASDAQ:KTCC) Q3 2020 Results Conference Call April 28, 2020 5:00 PM ET Company Participants Brett Larsen - CFO Craig Gates - President and CEO Conference Call Participants Bill Dezellem - Tieton Capital Mike Hughes - SGF Capital Bill Dezellem - Tieton Capital Mike Hughes - SGF Capital Operator Good day and welcome to the Third Quarter Fiscal Year 2020 Key Tronic Corporation Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over t ...

Financial Performance - Total revenue for the second quarter of fiscal year 2020 was $116.7 million, a decrease of 5.1% compared to $123.0 million in the same period of fiscal year 2019[92][109]. - Gross profit as a percentage of net sales was 7.0% for the second quarter of fiscal year 2020, down from 8.0% in the same quarter of the prior fiscal year, primarily due to increased factory spending[95][110]. - Operating income as a percentage of net sales decreased to 1.3% in the second quarter of fiscal year 2020 from 2.1% in the same quarter of fiscal year 2019[96]. - Net income for the second quarter of fiscal year 2020 was $0.8 million, or $0.08 per share, compared to $1.6 million, or $0.15 per share, in the same quarter of fiscal year 2019[97]. - Net sales for the six months ended December 28, 2019 were $222.0 million, a decrease of 11.4% from $250.5 million for the same period in 2018, primarily due to production delays caused by increased demand for sheet metals[119]. - Operating income for the six months ended December 28, 2019 was $4.0 million, down from $5.2 million in the same period of 2018, reflecting a decrease of 22%[119]. Expenses and Costs - Research, development, and engineering expenses were $1.7 million for the three months ended December 28, 2019, consistent with 1.5% of net sales[113]. - Selling, general, and administrative expenses decreased to $4.9 million, or 4.2% of net sales, for the three months ended December 28, 2019, down from 4.4% in the same period of the prior year[114]. - Interest expense decreased to $0.5 million for the three months ended December 28, 2019, compared to $0.7 million in the same period of the prior year[115]. - Total operating expenses decreased to $13.4 million, representing 6.0% of net sales, compared to $14.2 million or 5.7% of net sales in the prior year[123]. - Gross profit margin for the six months ended December 28, 2019 was 7.8%, slightly up from 7.7% in the prior year, with a decrease in overhead costs partially offset by increased material costs[120]. Cash Flow and Financing - Total cash used in operating activities for the six months ended December 28, 2019, was $8.4 million, with $32.0 million in borrowings on a $55.0 million revolving line of credit[101]. - Net cash used in operating activities was $8.4 million for the six months ended December 28, 2019, compared to $5.1 million in the prior year, primarily due to increased inventory and accounts receivable[128][129]. - Cash used in investing activities increased to $2.0 million for the six months ended December 28, 2019, up from $0.3 million in the same period of 2018, mainly for equipment purchases[132]. - Cash provided by financing activities was $10.3 million for the six months ended December 28, 2019, compared to $5.2 million in the same period of the previous fiscal year, driven by borrowings under the revolving line of credit[134]. - The company had approximately $22.6 million available under the revolving line of credit facility as of December 28, 2019, an increase from $20.2 million available the previous year[135]. - The company has $32.0 million in borrowings under its revolving credit facility, $13.3 million on its term loan, and $1.3 million on its equipment term loan as of December 28, 2019[178]. Market and Operational Risks - The concentration of net sales from the top three customers increased to 37.0% in the second quarter of fiscal year 2020 from 36.6% in the same period of the prior fiscal year[93]. - The company is dependent on a limited number of suppliers for critical components, which may lead to operational interruptions if shortages or price increases occur[147]. - Recent supply shortages in electronic components have been exacerbated by the coronavirus outbreak in China, potentially causing production delays[148]. - The company operates in a highly competitive EMS industry, where competitors may offer lower prices, impacting margins and market share[149]. - The company faces risks related to political and economic instability in manufacturing locations, which could affect shipping and production capabilities[152]. - Fluctuations in foreign currency exchange rates, particularly with the Mexican peso and Chinese renminbi, could increase operating costs[155]. - The company relies on key personnel for success, and the loss of such employees could adversely affect operations and financial condition[156]. - Start-up costs and inefficiencies related to new programs may negatively impact gross margins and operating results if these programs do not meet expected sales volumes[158]. - Changes in customer production timing and demand schedules complicate production scheduling and resource allocation, potentially leading to excess inventory[159]. - Increased energy prices could raise raw material and transportation costs, impacting profitability if product prices cannot be adjusted accordingly[168]. Regulatory and Compliance Issues - Compliance with the Sarbanes-Oxley Act and Dodd-Frank Act has increased legal, financial, and accounting costs, with expectations of continued cost increases indefinitely[173]. - Current and future acquisitions may require additional equity or debt financing, potentially diluting existing shareholders or affecting credit ratings[174]. - Integration of acquired businesses may face complications, including management distraction and significant restructuring charges, impacting return on invested capital[175]. - Changes in financial accounting standards may adversely affect reported financial results and increase implementation costs[176]. - The company has $25.8 million in foreign currency forward contracts to hedge against fluctuations, with a fair value of $3.1 million as of December 28, 2019[179].

Key Tronic Corporation (NASDAQ:KTCC) Q2 2020 Earnings Conference Call February 4, 2020 5:00 PM ET Company Participants Brett Larsen - CFO Craig Gates - President and CEO Conference Call Participants William Dezellem - Tieton Capital Michael Hughes - SGF Capital George Melas - MKH Management Operator Good day and welcome to the Q2 Fiscal 2020 Key Tronic Corporation Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brett Larsen. Please go ahead, s ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PERIOD FROM TO . Commission File Number 0-11559 ____________________________________________________________ Washington, D.C. 20549 ____________________________________________________________ KEY TRONIC CORPORATION (Exact name of registrant as specified in its charter) ____________________________________________________________ Washington 91-0849125 FORM 10 ...

Financial Data and Key Metrics Changes - For Q1 fiscal 2020, total revenue was reported at $105.3 million, flat sequentially compared to $106 million in the prior quarter, but down from $127.5 million in Q1 fiscal 2019 [6] - Gross margin improved to 8.8% from 7.5% in the same period of fiscal 2019, while operating margin increased to 2.4% from 2% [8] - Net income for the quarter was $1.6 million or $0.14 per share, comparable to the same period of fiscal 2019 [8] Business Line Data and Key Metrics Changes - The company faced production delays due to increased demand for sheet metals, which impacted revenue despite strong demand from customers [7] - Inventory levels increased by approximately 17% sequentially due to production delays [9] - Capital expenditures for Q1 fiscal 2020 were approximately $3.1 million, with a plan for $10 million in total capital expenditures for fiscal 2020 [10][11] Market Data and Key Metrics Changes - The company expects revenue for Q2 fiscal 2020 to be in the range of $117 million to $122 million, indicating a recovery from the previous quarter [12] - The new Vietnam facility began production in September, with expectations of some drag on gross margin due to ongoing investments [13] Company Strategy and Development Direction - The company is focusing on expanding its production capabilities in North America and Vietnam, driven by customer transitions from China due to tariff concerns [16][18] - The company is well-positioned to capture new EMS programs and expand its business profitably over the long term [14][24] - Investments in facilities and innovative manufacturing equipment have improved efficiencies and reduced labor intensity [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth despite the revenue shortfall in Q1, citing strong financial health and a robust pipeline of new business opportunities [14][25] - The ongoing tariff situation has created both challenges and opportunities, with customers increasingly looking to transition production to the company's facilities in North America and Vietnam [15][19] Other Important Information - The company reported a decrease in trade receivables by $2.2 million year-over-year, with days sales outstanding (DSOs) at about 55 days [10] - The company is experiencing a competitive marketplace but continues to win significant new business from both existing and new customers [20] Q&A Session Summary Question: What is the value of the new wins in terms of annual revenues? - Management indicated that the first two wins should exceed $10 million each, while the second two are around $5 million each [28] Question: When did the company realize the revenue shortfall? - Management noted that it is difficult to pinpoint the exact moment, as revenue realization often occurs at the end of the quarter [44] Question: How much of the revenue shortfall was lost versus pushed to the right? - Management estimated that two-thirds of the shortfall was pushed to the right and one-third was lost [50] Question: Were any customers lost due to the revenue shortfall? - Management confirmed that no customers were lost; the shortfall was due to their sales not meeting expectations [54] Question: What is the outlook for the new Vietnam facility? - Management expects the Vietnam facility to be a drag on earnings for the next two to three quarters before becoming profitable [65] Question: How many customers were impacted by the revenue shortfall? - Three customers were impacted, with one being a new customer transitioning from China [88][90]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________ FORM 10-K ____________________________________________________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 29, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PERIOD FROM TO Commission File Number 0-11559 _________________________________ ...