8-K

EFFECTIVE AUGUST 1, 2017

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported) August 1, 2017

Key Tronic Corporation

(Exact name of registrant as specified in its charter)

Washington	0-11559	91-0849125
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
4424 North Sullivan Road, Spokane Valley, Washington		99216
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code (509) 928-8000

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provision (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On August 1, 2017, Key Tronic Corporation issued a press release announcing its financial results for the quarter ended July 1, 2017. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information in this Form 8-K including the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section and shall not be deemed incorporated by reference into any filing of Key Tronic Corporation under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as set forth by specific reference in such a filing.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

Exhibit Number	Description
99.1	Press Release Dated August 1, 2017

SAFE HARBOR STATEMENT. Statements contained in the Exhibit to this report that state Key Tronic Corporation's or its management's expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Key Tronic Corporation's actual results could differ materially from those projected in such forward-looking statements. Factors that could affect those results include those mentioned in the documents that Key Tronic Corporation has filed with the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	KEY TRONIC CORPORATION (Registrant)
Date: August 1, 2017
	By:	/s/ Brett R. Larsen
		Brett R. Larsen, Executive Vice President of Administration, CFO and Treasurer

EXHIBIT INDEX

EXHIBIT NUMBER	DESCRIPTION
99.1	Press Release Dated August 1, 2017

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACTS:	Brett Larsen	Michael Newman
	Chief Financial Officer	Investor Relations
	Key Tronic Corporation	StreetConnect
	(509) 927-5500	(206) 729-3625

KEY TRONIC CORPORATION ANNOUNCES RESULTS

FOR THE FOURTH QUARTER AND YEAR END OF FISCAL YEAR 2017

Continuing to Win New Business from Competitors and Ramping Up New Programs;

Expecting return to growth in second half of fiscal 2018

Spokane Valley, WA— August 1, 2017 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter and year ended July 1, 2017.

For the fourth quarter of fiscal year 2017, Key Tronic reported total revenue of $118.5 million, compared to $123.9 million in the same period of fiscal year 2016. For fiscal year 2017, total revenue was $467.8 million, compared to $485.0 million for fiscal year 2016.

Net income for the fourth quarter of fiscal year 2017 was $1.3 million or $0.12 per share, compared to $2.1 million or $0.20 per share for the same period of fiscal year 2016. For fiscal year 2017, net income was $5.6 million or $0.51 per share, compared to $6.5 million or $0.58 per share for fiscal year 2016.

For the fourth quarter of fiscal year 2017, gross margin was 8.3% and operating margin was 2.0%, compared to 8.7% and 2.8%, respectively, in the same period of fiscal year 2016. The results for the fourth quarter of fiscal 2017 include approximately $3.2 million in revenue for shipped excess inventory for a prior customer at cost, which had no contribution to margins.

“During fiscal 2017, our revenue and margins were impacted by declining demand from some longstanding customers, which was not yet offset by the continued ramp up in revenue from our new programs,” said Craig Gates, President and Chief Executive Officer. “While the EMS business is very competitive, we continued to win new business during the year, including two new programs involving gaming and seismic monitoring devices awarded in the fourth quarter, bringing the total number of significant program wins to nine for the fiscal year.”

“Throughout fiscal 2017, we made significant investments in improving our customer support organization and expanding our SMT, sheet metal and plastic molding capabilities in preparation for future growth. Moving into fiscal 2018, we continue to see a strong pipeline of potential new business and our new programs continue to ramp. We believe we’re well positioned to see growth in revenue and increasing profitability in the second half of fiscal 2018.”

Business Outlook

For the first quarter of fiscal year 2018, the Company expects to report revenue in the range of $110 million to $115 million, and earnings in the range of $0.10 to $0.15 per diluted share. These expected results assume an effective tax rate of 25% 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 888-378-4439 or +1-323-794-2130 (Access Code: 3803457). A replay will be available by calling 888-203-1112 or +1 719-457-0820 (Access Code: 3803457). A replay will also be available on the Company’s Web site.

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 2018. 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.

KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended				Twelve Months Ended
	July 1, 2017		July 2, 2016		July 1, 2017		July 2, 2016
Net sales	$	118,544	$	123,905	$	467,797	$	484,965
Cost of sales	108,704		113,064		429,497		446,140
Gross profit	9,840		10,841		38,300		38,825
Research, development and engineering expenses	1,637		1,701		6,393		6,397
Selling, general and administrative expenses	5,845		5,664		22,363		22,012
Total operating expenses	7,482		7,365		28,756		28,409
Operating income	2,358		3,476		9,544		10,416
Interest expense, net	581		591		2,288		2,265
Income before income taxes	1,777		2,885		7,256		8,151
Income tax provision	441		739		1,639		1,618
Net income	$	1,336	$	2,146	$	5,617	$	6,533
Net income per share — Basic	$	0.12	$	0.20	$	0.52	$	0.61
Weighted average shares outstanding — Basic	10,760		10,714		10,756		10,710
Net income per share — Diluted	$	0.12	$	0.20	$	0.51	$	0.58
Weighted average shares outstanding — Diluted	10,856		10,966		10,917		11,278

KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	July 1, 2017			July 2, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	373		$	1,018
Trade receivables, net of allowance for doubtful accounts of $84 and $135	65,193			61,678
Inventories	101,590			107,006
Other	11,037			11,757
Total current assets	178,193			181,459
Property, plant and equipment, net	30,496			27,925
Other assets:
Deferred income tax asset	6,981			8,982
Goodwill	9,957			9,957
Other intangible assets	4,800			5,928
Other	2,413			1,673
Total other assets	24,151			26,540
Total assets	$	232,840		$	235,924
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	53,078		$	58,967
Accrued compensation and vacation	10,005			9,571
Current portion of debt	5,841			5,000
Other	8,829			10,572
Total current liabilities	77,753			84,110
Long-term liabilities:
Term loans	18,773			21,250
Revolving loan	18,335			18,073
Other long-term obligations	1,412			6,909
Total long-term liabilities	38,520			46,232
Total liabilities	116,273			130,342
Shareholders’ equity:
Common stock, no par value—shares authorized 25,000; issued and outstanding 10,760 and 10,725 shares, respectively	45,797			45,227
Retained earnings	73,545			67,928
Accumulated other comprehensive loss	(2,775		)	(7,573		)
Total shareholders’ equity	116,567			105,582
Total liabilities and shareholders’ equity	$	232,840		$	235,924