Key Tronic(US:KTCC)2022-02-02 01:01Financial Data and Key Metrics Changes - For Q2 fiscal 2022, total revenue was $134.5 million, an increase from $128.3 million in the same period of fiscal 2021, representing a growth of approximately 1.7% [6] - Net income for Q2 fiscal 2022 was $0.6 million or $0.05 per share, down from $1.6 million or $0.14 per share in Q2 fiscal 2021 [10] - Gross margin decreased to 7.3% from 8.3% year-over-year, and operating margin fell to 1.2% from 2.1% [9] Business Line Data and Key Metrics Changes - Revenue related to customer reimbursements for tooling and equipment increased by approximately $10 million compared to the previous year [7] - The company experienced a decrease in inventory turns due to supply chain-related production delays [11] Market Data and Key Metrics Changes - The company faced ongoing global supply chain disruptions, including parts supply issues and increased transportation costs, which have significantly impacted production [8][22] - Labor costs and shortages of production staff were also noted as challenges affecting operations [22] Company Strategy and Development Direction - The company plans to invest selectively in production equipment and efficiency improvements to prepare for growth [15] - Key Tronic aims to capitalize on the increasing demand for North American production as companies seek to diversify their supply chains away from Asia [26][27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth prospects, citing a growing backlog and increased customer demand [18][19] - However, they acknowledged that supply chain disruptions and pandemic-related challenges continue to pose risks [18][29] Other Important Information - Legal costs related to the SEC's review of a whistleblower complaint totaled approximately $0.7 million during the quarter [9] - The company expects Q3 fiscal 2022 revenue to be between $130 million and $140 million, with earnings of approximately $0.05 to $0.10 per diluted share [16] Q&A Session Summary Question: Can you characterize the size of the new programs won? - The new programs range from $5 million to $15 million per year, with one significant program expected to contribute approximately $80 million in annual revenue [34][36] Question: How has the supply chain situation changed over the last quarter? - The supply chain situation has stabilized, but lead times remain long, and there are still surprises regarding shipment delays [39] Question: What is the anticipated revenue growth from U.S. facilities? - U.S. facilities are expected to see a 35% increase in annual revenue due to new business wins and increased production [25][50] Question: What is the expected CapEx for the fiscal year? - The company expects total capital expenditures to be around $6 million for the fiscal year, down from previous forecasts [14][100] Question: How are customer reimbursements for tooling and equipment viewed? - Customer reimbursements are seen as a favorable indicator of future production, as they indicate serious commitment from customers [69][72]