8-K

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) May 2, 2023

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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, no par value	KTCC	NASDAQ Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.	¨

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On May 2, 2023, Key Tronic Corporation issued a press release announcing its financial results for the quarter ended April 1, 2023. 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 May 2, 2023
104	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document

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 Exhibit to this report and the documents that Key Tronic Corporation has filed with the Securities and Exchange Commission.

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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: May 2, 2023
	By:	/s/ Brett R. Larsen
		Brett R. Larsen, Executive Vice President of Administration, CFO and Treasurer

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EX-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 THIRD QUARTER OF FISCAL YEAR 2023

Record Revenue During the Quarter and Earnings Up 100%; New Program Wins

Spokane Valley, WA— May 2, 2023 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended April 1, 2023.

For the third quarter of fiscal year 2023, Keytronic reported total revenue of $164.6 million, up 19% from $138.4 million in the same period of fiscal year 2022. As expected, the significant increase in revenue for the third quarter of fiscal year 2023 included production for a large program with a leading power equipment company, as well as increased demand from a number of other customers. For the first nine months of fiscal year 2023, total revenue was $425.5 million, up 5% from $405.6 million in the same period of fiscal year 2022.

For the third quarter of fiscal year 2023, the Company’s gross margin was 8.7% and operating margin was 3.1%, up from a gross margin of 8.3% and an operating margin of 2.0% in the same period of fiscal year 2022. The gross margin in the third quarter of fiscal year 2023 benefited from increased revenue levels and some stabilization in the supply chain and labor market, but it was adversely impacted by foreign currency fluctuations, specifically the strengthening of the Mexican Peso relative to the US Dollar.

For the third quarter of fiscal year 2023, net income was $2.0 million or $0.18 per share, up 100% from $1.0 million or $0.09 per share for the same period of fiscal year 2022. For the first nine months of fiscal year 2023, net income was $4.1 million or $0.38 per share, up 73% from $2.4 million or $0.22 per share for the same period of fiscal year 2022.

“We’re pleased with the significant growth in our revenue and earnings in the third quarter of fiscal 2023, driven by our successful ramp of new programs, including major contributions from the large power equipment program,” said Craig Gates, President and Chief Executive Officer. “We continue to our expand our customer base and won new programs involving security equipment, video and pinball machines, mining safety and productivity products, and telecommunications devices.”

“During the third quarter of fiscal year 2023, we continued to see the favorable trend of contract manufacturing returning to North America and a growing number of potential customers evaluating a migration of their China-based manufacturing to our facility in Vietnam. We move into the fourth quarter with significant backlog levels and a strong pipeline of potential new business, and we’re seeing improvement in the global supply issues and lower labor turnover, which severely limited our production in prior periods.”

The financial data presented for the third quarter of fiscal year 2023 should be considered preliminary and could be subject to change, as the Company’s independent auditor has not completed their review procedures.

Business Outlook

For the fourth quarter of fiscal 2023, Keytronic expects to report revenue in the range of $150 million to $160 million and earnings in the range of $0.10 to $0.20 per diluted share. These expected results assume an effective tax rate of 20% in the coming quarter.

Conference Call

Keytronic will host a conference call to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern) today. A broadcast of the conference call will be available at www.keytronic.com under “Investor Relations” or by calling 888-394-8218 or +1-323-994-2093 (Access Code: 9727885). A replay will be available at www.keytronic.com under “Investor Relations”.

About Keytronic

Keytronic is a leading contract manufacturer offering value-added design and manufacturing services from its facilities in the United States, Mexico, China and Vietnam. 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 Keytronic visit: www.keytronic.com.

Forward-Looking Statements

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, but are not limited to those including such words as aims, anticipates, believes, continues, estimates, expects, hopes, intends, plans, predicts, projects, targets, or will, similar verbs, or nouns corresponding to such verbs, which may be forward looking. Forward-looking statements also include other passages that are relevant to expected future events, performances, and actions 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 financial conditions and results, including revenue and earnings during periods of fiscal year 2023, risks of manufacturing supply chain and operational disruptions, demand for certain products and the effectiveness of some of our programs, business from new customers and programs, improvement of supply chain delivery and impacts from operational streamlining. 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 components from the supply chain; the availability of a healthy workforce; the accuracy of suppliers’ and customers’ forecasts; development and success of customers’ programs and products; timing and effectiveness of ramping of new programs; success of new-product introductions; the risk of legal proceedings or governmental investigations relating to the subject of the internal investigation by the Company’s Audit Committee and related or other unrelated matters; acquisitions or divestitures of operations or facilities; technology advances; changes in pricing policies by the Company, its competitors, customers or suppliers; impact of new governmental legislation and regulation, including tax reform, tariffs and related activities, such trade negotiations and other risks; and other factors, risks, and uncertainties detailed from time to time in the Company’s SEC filings.

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KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended				Nine Months Ended
	April 1, 2023		April 2, 2022		April 1, 2023		April 2, 2022
Net sales	$	164,553	$	138,391	$	425,524	$	405,609
Cost of sales	150,277		126,883		391,950		374,155
Gross profit	14,276		11,508		33,574		31,454
Research, development and engineering expenses	2,580		2,526		7,162		7,473
Selling, general and administrative expenses	6,961		6,193		18,353		17,447
Gain on insurance proceeds, net of losses	(396)				(4,040)
Total operating expenses	9,145		8,719		21,475		24,920
Operating income	5,131		2,789		12,099		6,534
Interest expense, net	2,688		1,551		7,081		3,638
Income before income taxes	2,443		1,238		5,018		2,896
Income tax provision	467		231		924		487
Net income	$	1,976	$	1,007	$	4,094	$	2,409
Net income per share — Basic	$	0.18	$	0.09	$	0.38	$	0.22
Weighted average shares outstanding — Basic	10,762		10,762		10,762		10,762
Net income per share — Diluted	$	0.18	$	0.09	$	0.38	$	0.22
Weighted average shares outstanding — Diluted	10,865		11,062		10,892		11,059

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KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	April 1, 2023		July 2, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	37	$	1,707
Trade receivables, net of allowance for doubtful accounts of $44 and $275	151,927		135,876
Contract assets	29,899		21,974
Inventories, net	154,315		155,741
Other	24,095		24,710
Total current assets	360,273		340,008
Property, plant and equipment, net	27,147		26,012
Operating lease right-of-use assets, net	17,471		16,731
Other assets:
Deferred income tax asset	11,801		10,055
Other	15,006		14,117
Total other assets	26,807		24,172
Total assets	$	431,698	$	406,923
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	132,050	$	121,393
Accrued compensation and vacation	10,646		11,836
Current portion of debt, net	5,780		7,402
Other	12,774		23,036
Total current liabilities	161,250		163,667
Long-term liabilities:
Term loans	3,958		5,716
Revolving loan	116,254		94,577
Operating lease liabilities	12,081		12,023
Deferred income tax liability	175		64
Other long-term obligations	8,560		5,998
Total long-term liabilities	141,028		118,378
Total liabilities	302,278		282,045
Shareholders’ equity:
Common stock, no par value—shares authorized 25,000; issued and outstanding 10,762 and 10,762 shares, respectively	47,651		47,474
Retained earnings	81,924		77,829
Accumulated other comprehensive income (loss)	(155)		(425)
Total shareholders’ equity	129,420		124,878
Total liabilities and shareholders’ equity	$	431,698	$	406,923

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XML

Cover Page Cover Page	May 02, 2023
Cover Page [Abstract]
Document Type	8-K
Document Period End Date	May 02, 2023
Entity Registrant Name	Key Tronic Corp
Entity Incorporation, State or Country Code	WA
Entity File Number	0-11559
Entity Tax Identification Number	91-0849125
Entity Address, Address Line One	4424 North Sullivan Road
Entity Address, City or Town	Spokane Valley,
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	99216
City Area Code	509
Local Phone Number	928-8000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	KTCC
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Amendment Flag	false
Entity Central Index Key	0000719733