Key Tronic(US:KTCC)2019-08-07 12:01Financial 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]