Key Tronic(US:KTCC)2021-08-11 01:54Financial Data and Key Metrics Changes - For Q4 FY2021, the company reported revenue of approximately $132.6 million, up 14% from $116 million in the same period of FY2020 [4] - Total revenue for FY2021 was $518.7 million, the highest annual revenue in the company's history, up 15% from $449.5 million in FY2020 [4] - Net income for Q4 FY2021 was $200,000 or approximately $0.02 per share, compared to $1.5 million or $0.14 per share in Q4 FY2020 [5] - For FY2021, net income was $4.3 million or $0.39 per share, compared to $4.8 million or $0.44 per share in FY2020 [10] - Gross margin improved to 8.1% and operating margin to 1.8% for FY2021, up from 7.8% and 1.5% respectively in FY2020 [9] Business Line Data and Key Metrics Changes - The company faced significant revenue constraints due to worldwide supply chain issues, impacting both new and existing customer demand [5] - Operating income for FY2021 was $9.5 million, a 40% increase from the prior year [10] - The company incurred additional costs due to supply chain issues, including factory downtime and overtime expenses [6] Market Data and Key Metrics Changes - Trade receivables decreased by $2.6 million from the prior quarter, with days sales outstanding (DSOs) increasing to about 76 days [12] - The company maintained total working capital of $172 million and a current ratio of 2.4:1 [13] Company Strategy and Development Direction - The company plans to increase its credit facility to $120 million to enhance liquidity and manage potential risks [13] - Capital expenditures for FY2021 were about $10.6 million, with plans to invest in production equipment and efficiency improvements [14] - The company is focusing on winning new EMS programs and expanding its business, particularly in North America, due to increasing demand and supply chain challenges [21][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth despite ongoing supply chain disruptions and the COVID-19 crisis [17] - The company expects to report revenue of approximately $125 million to $135 million for Q1 FY2022, with significant uncertainty surrounding these estimates [15] - Management noted that demand remains strong, with potential revenue exceeding $160 million if all parts were available [55] Other Important Information - The company is cooperating with the SEC regarding an internal investigation, which has resulted in additional expenses [9] - The internal investigation cost the company in excess of $1.5 million for the year [65] Q&A Session Summary Question: Can you discuss the new program won in Q3 that led to adding square footage in Juarez? - The program involves moving business from China and is based on customer response time [34][35] Question: What is the revenue potential of the new program? - The Q3 program is expected to generate between $20 million and $50 million annually, while Q4 wins are between $5 million and $15 million [38] Question: What caused the change in revenue guidance for Q4? - The change was primarily due to component availability and new program ramps [42] Question: Is there a demand issue? - The company is experiencing the highest demand in its history, with no demand issues reported [54] Question: How much did the internal investigation cost? - The cost exceeded $1.5 million for the year [65] Question: How much of the $700 million demand was related to COVID products? - It is estimated that the demand would drop to around $600 million without COVID-related products [75] Question: What is the expected gross margin target? - The long-term goal is to achieve a gross margin above 9% [90]