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 _________________________________ ...

Financial Data and Key Metrics Changes - For Q4 FY2019, total revenue was $105.6 million, down from $117 million in the same period of FY2018, reflecting a decrease of approximately 12% [5][6] - Full-year revenue for FY2019 increased by 4% to $464 million compared to $446 million in FY2018 [7][8] - Gross margin for Q4 FY2019 was 7.9%, slightly down from 8% in Q4 FY2018, attributed to decreased revenue [8] - Net income for Q4 FY2019 was $800,000 or $0.08 per share, compared to a loss of $2.2 million or $0.20 per share in Q4 FY2018 [9] - Full-year net loss for FY2019 was $8 million or $0.74 per share, including a goodwill impairment of $12.5 million [10][12] Business Line Data and Key Metrics Changes - The company faced disruptions in Q4 FY2019 due to supply chain issues and customer-driven design changes, impacting revenue [6][17] - Despite challenges, the company maintained profitability and reduced workforce by over 10%, helping to stabilize gross margins [9][49] Market Data and Key Metrics Changes - The evolving tariff situation with China and Mexico has created mixed impacts on the company, with some customers transitioning production to Mexico and Vietnam [18][20] - Increased interest from prospective customers has been noted, particularly for production in Mexico and Vietnam due to tariff concerns [20][21] Company Strategy and Development Direction - The company is focusing on expanding its customer base and has added over 20 new customers, contributing more than $60 million in revenue to the FY2020 plan [22][32] - Strategic investments in production facilities and equipment are aimed at improving operational efficiencies and reducing costs [24][14] - The company is well-positioned to capture new EMS programs and expand its business in North America, particularly in light of competitors shedding smaller accounts [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for revenue growth in Q1 FY2020, expecting to resolve previous disruptions and ramp up new customer programs [15][27] - The company anticipates a revenue range of $115 million to $120 million for Q1 FY2020, with earnings projected between $0.12 to $0.17 per diluted share [15][16] - Management acknowledged the challenges posed by tariffs but noted that they could create opportunities for growth as customers seek alternatives to China [27][62] Other Important Information - The company plans to invest approximately $10 million in capital expenditures during FY2020 to enhance production capabilities [14] - Inventory levels increased by about 5% sequentially from Q3 FY2019, but decreased by $9.9 million or 9% year-over-year [13] Q&A Session Summary Question: Can you repeat the number of new customers and revenue for FY2020? - Management confirmed more than 20 new customers and over $60 million in new revenue for FY2020 [32] Question: What is the dollar amount of the new wins announced this quarter? - Each new win is between $5 million and $20 million, with details provided on specific projects [32][33] Question: How are prospective customers interacting with the new Vietnam facility? - The facility has attracted interest from existing customers and new prospects, enhancing the sales process [35] Question: What impact did U.S.-Mexico tariff tensions have on Q4? - A customer paused a project due to tariff uncertainties, resulting in lost revenue for Q4 [40] Question: What is the current backlog? - The backlog was not disclosed, but management noted an increase in demand and revenue expectations [54] Question: What is the capacity utilization in Vietnam and Mexico? - Vietnam is approximately 85% loaded, while various facilities in Mexico have different utilization rates [56][59] Question: What is the expected revenue from new customers? - The estimated full maturity revenue from new customers is around $110 million [80] Question: What is the impact of the 10% tariff on business? - The company has been successful in passing on unavoidable tariffs to customers [110]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________ FORM 10-Q ____________________________________________________________ x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 30, 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 ______________________ ...

Key Tronic Corp (NASDAQ:KTCC) Q3 2019 Earnings Conference Call April 30, 2019 5:00 PM ET Company Participants Brett Larsen - EVP, Administration, CFO & Treasurer Craig Gates - President, CEO & Director Conference Call Participants William Dezellem - Tieton Capital Management Drew Thelen - Crimson Advisors George Melas - MKH Management Company Operator Good day, and welcome to the Key Tronic Third Quarter Fiscal 2019 Conference Call. Today's conference is being recorded. At this time, I would like to turn th ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________ FORM 10-Q ____________________________________________________________ x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED DECEMBER 29, 2018 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 _____________________________ ...

Financial Data and Key Metrics Changes - For Q2 fiscal year 2019, total revenue was reported at $123 million, representing a 10% increase from the same period in fiscal year 2018 [5] - For the first six months of fiscal year 2019, total revenue reached $250.5 million, up 13% from the same period in fiscal year 2018 [6] - Gross margin improved to 8.0% and operating margin to 2.1%, compared to 7.9% and 1.5% respectively in the same period of fiscal 2018 [7] - Net income for Q2 fiscal year 2019 was $1.6 million, or $0.15 per share, compared to a loss of $200,000, or a loss of $0.02 per share for the same period in fiscal year 2018 [12] Business Line Data and Key Metrics Changes - The increase in revenue was primarily driven by the ramping of new customer programs, despite ongoing industry-wide shortages in key electronic components [6][19] - The company is investing in new production equipment and improved facilities to enhance productivity and reduce costs [9][11] Market Data and Key Metrics Changes - The company experienced a reduction in inventory by approximately $18.7 million, a 16.9% decrease during fiscal year 2019 [13] - Trade receivables increased by $14.8 million year-over-year, with days sales outstanding (DSOs) at about 53 days [14] Company Strategy and Development Direction - The company is focusing on diversifying its global manufacturing base and reducing production costs through investments in new facilities, including a new production facility in Vietnam [11][27] - The evolving tariffs situation is seen as an opportunity to attract new customers to its Mexican-based production [25][26] - The company aims to enhance its competitive position by leveraging its vertical integration and multicountry footprint [31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing strong revenue and earnings growth, along with new capital investments [18][32] - The company anticipates gradual improvements in gross margin as new customer programs ramp up and component shortages are alleviated [9][32] - Management acknowledged the impact of a large customer forecasting reduced demand due to inventory adjustments, but expects recovery in the fourth quarter [16][68] Other Important Information - The company plans to have approximately $10 million in total capital expenditures during fiscal year 2019, with significant investments in production facilities and equipment [15] - The new facility in Vietnam is expected to be operational by July 2019 and will significantly reduce production costs [28] Q&A Session Summary Question: What is the size of the new customer wins? - The new customer wins range from $5 million to $15 million per year in annual revenue [36] Question: What are the implications for the second-half CapEx? - Approximately $4 million has been spent in the first half, with the majority of CapEx going towards Minnesota space and setting up in Vietnam [48] Question: How does the cost in Vietnam compare to China? - Vietnam is expected to be 10% less expensive than China on average, excluding tariffs [55] Question: What is the impact of component shortages on revenue? - The impact of component shortages is estimated to be about $5 million to $10 million this time around [115] Question: What is the expected ramp-up of new customer programs? - A reasonable estimate for the contribution of new programs is between $3 million to $5 million on a sequential basis [118]