Key Tronic predicts record annual sales Spokane company racks up 53 percent growth in revenue, strong earnings in quarter
By Richard Ripley
Of the Journal of Business
Key Tronic Corp., of Spokane, says it expects to achieve record revenue in its 2011 fiscal year after announcing its highest-ever quarterly revenue in its fiscal first quarter, ended Oct. 2.
The company, an electronic manufacturing services concern with facilities in the U.S., Mexico, and China, also says it's continuing to maintain strong operating efficiencies, with a gross margin of 9 percent in the quarter, up from 6 percent in the year-earlier quarter.
Craig Gates, Key Tronic's president and CEO, says the company's strong growth in quarterly revenue and earnings were driven by production ramp-ups of new products for new and longstanding customers.
"We achieved the highest quarterly revenue in Key Tronic's history and continued to significantly increase our profitability over the same quarter of the prior year, despite approximately $3.5 million in production delays due to continued industrywide shortages in the global supply chain," Gates says.
For its first quarter, Key Tronic reported net income of $1.7 million, or 17 cents a diluted share, compared with $300,000, or 3 cents a diluted share, in the year-earlier period.
Revenue, meanwhile, shot up to $63.3 million from $41.3 million, for a jump of 53 percent.
"During the first quarter of fiscal 2011, we continued to diversify our revenue base by winning new (manufacturing) programs involving electric motor controller components and innovative display devices," Gates says. "We anticipate strong growth in the second half of fiscal 2011 and expect record revenue for the year."
The company's engineering and global logistics capabilities and cost-effective production position it well to continue to capture market share and capitalize on opportunities, he says. The company said it expects to report record revenue again for its second quarter in the range of $61 million to $64 million, with earnings in the range of 17 cents to 20 cents a diluted share.
For all of fiscal 2011, it projects revenue of $270 million to $280 million and earnings of 75 cents to 80 cents a diluted share, it says.
It cautions, however, that its forecasts might be hurt by continuing shortages of parts in the supply chain.
It says that according to a report in Manufacturing Market Insider, the electronic manufacturing services market should grow by 7 percent to 12 percent annually in the coming years after declining by about 15 percent during 2009 because of the recession.
Last Friday, the company's stock traded at $6.41 a share, near its 52-week high of $6.86 a share. Its 52-week low was $2.25.
The company says it also provides materials management, manufacturing, and assembly services, in-house testing, and worldwide distribution from its facilities.