FY 2017 Second Quarter


New Customer Wins; Investing for Growth in Coming Quarters

Spokane Valley, WA– January 31, 2017 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended December 31, 2016.

For the second quarter of fiscal year 2017, Key Tronic reported total revenue of $118.5 million, up 2% from $116.4 million in the same period of fiscal year 2016. For the first six months of fiscal year 2017, total revenue was $235.7 million, compared to $242.6 million in the same period of fiscal year 2016.

Net income for the second quarter of fiscal year 2017 was $1.5 million or $0.14 per share, compared to $1.8 million or $0.16 per share for the second quarter of fiscal year 2016. For the first six months of fiscal year 2017, net income was $3.3 million or $0.30 per share, up 27% from $2.6 million or $0.23 per share for the same period of fiscal year 2016.

For the second quarter of fiscal year 2017, gross margin was 8.1% and operating margin was 2.1%, compared to 7.8% and 2.1%, respectively, in the same period of fiscal 2016.

“During the second quarter of fiscal 2017, our new programs continued to ramp, more than offsetting a modest slowdown in demand from a few longstanding customers, which is consistent with EMS industry-wide experience,” said Craig Gates, President and Chief Executive Officer. “At the same time, we captured significant new business from other EMS competitors, including established programs that will begin generating revenue before the end of fiscal 2017.”

“We recently won new programs involving inventory automation systems and commercial lighting. Moving into the third quarter, we continue to see a robust pipeline of potential new business and our new programs continue to ramp, effectively offsetting softening sales demand in some current programs. In preparation for future growth, we continue to invest in expanding our SMT, sheet metal and plastic molding capabilities.”

Business Outlook

For the third quarter of fiscal year 2017, the Company expects to report revenue in the range of $115 million to $120 million, and earnings in the range of $0.11 to $0.16 per diluted share. These expected results assume an effective tax rate of 20% in the quarter.

Conference Call

Key Tronic will host a conference call today to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern). A broadcast of the conference call will be available at www.keytronic.com under “Investor Relations” or by calling 888-224-1075 or +1-913-312-0977 (Access Code: 7228474).  A replay will be available by calling 888-203-1112 or +1-719-457-0820 (Access Code: 7228474).

About Key Tronic

Key Tronic is a leading contract manufacturer offering value-added design and manufacturing services from its facilities in the United States, Mexico and China. The Company provides its customers full engineering services, materials management, worldwide manufacturing facilities, assembly services, in-house testing, and worldwide distribution. Its customers include some of the world’s leading original equipment manufacturers. For more information about Key Tronic visit: www.keytronic.com.

Some of the statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages containing verbs such as aims, anticipates, believes, estimates, expects, hopes, intends, plans, predicts, projects or targets or nouns corresponding to such verbs. Forward-looking statements also include other passages that are primarily relevant to expected future events or that can only be fully evaluated by events that will occur in the future. Forward-looking statements in this release include, without limitation, the Company’s statements regarding its expectations with respect to quarterly revenue and earnings during fiscal year 2017. There are many factors, risks and uncertainties that could cause actual results to differ materially from those predicted or projected in forward-looking statements, including but not limited to the future of the global economic environment and its impact on our customers and suppliers, the availability of parts from the supply chain, the accuracy of customers’ forecasts; success of customers’ programs; timing of new programs; success of new-product introductions; acquisitions or divestitures of operations or facilities; technology advances; changes in pricing policies by the Company, its competitors, customers or suppliers; and the other risks and uncertainties detailed from time to time in the Company’s SEC filings.

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