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) August 9, 2022

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 August 9, 2022, Key Tronic Corporation issued a press release announcing its financial results for the quarter ended July 2, 2022. 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 9, 2022
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.

2

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 9, 2022
	By:	/s/ Brett R. Larsen
		Brett R. Larsen, Executive Vice President of Administration, CFO and Treasurer

3

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 2022

Strong Customer Demand for North American Production and New Program Wins

Spokane Valley, WA— August 9, 2022 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter and the year ended July 2, 2022.

For the fourth quarter of fiscal year 2022, Keytronic reported total revenue of $126.2 million, compared to $132.6 million in the same period of fiscal year 2021. For the full year of fiscal 2022, total revenue was $531.8 million, up 3% from $518.7 million for fiscal year 2021. During fiscal year 2022, the Company added significant new programs and its backlog for orders reached historic highs. At the same time, constraints in the global supply chain and transportation issues continued to limit production throughout the year.

During the fourth quarter of fiscal year 2022, the results were impacted by intermittent parts supply and factory downtime. The Company’s facilities in Shanghai, China were closed for most of the fourth quarter due to a government mandated COVID shutdown.While the reopening of the Company’s China facility took longer than anticipated, operations have since resumed. Legal costs related specifically to the SEC’s review of last year’s whistleblower complaint totaled approximately $0.08 per diluted share during the quarter, though we estimate legal costs to decrease in coming periods.

For the fourth quarter of fiscal year 2022, the Company’s gross margin was 9.3% and operating margin was 1.8%, compared to a gross margin of 7.8% and an operating margin of 1.1% in the same period of fiscal year 2021. The increased margins primarily reflect an increase in sales pricing to recoup higher materials and labor costs incurred by the Company throughout the fiscal year. While the fourth quarter was a significant improvement of gross margin, margins are expected to return to historical levels in coming quarters.

For the fourth quarter of fiscal year 2022, net income was $1.0 million or $0.09 per share, up from $0.2 million or $0.02 per share for the same period of fiscal year 2021. For the full year of fiscal year 2022, net income was $3.4 million or $0.31 per share, compared to $4.3 million or $0.39 per share for fiscal year 2021.

“Despite the continued headwinds from the global supply chain challenges during fiscal 2022, we still managed to grow our business, driven by the successful ramp of new programs and our expanding customer base,” said Craig Gates, President and Chief Executive Officer. “During the fourth quarter of fiscal year 2022, we won new programs involving audio products, GPS devices, utility meters, personal safety devices, and innovative internet solutions.”

“Moving into fiscal 2023, the global supply chain and COVID-19 crises continue to present uncertainty and multiple business challenges. At the same time, global logistics problems and heightened assurance of supply concerns continue to drive the favorable trend of contract manufacturing returning to North America.”

“In fiscal 2023, we expect to ramp a number of new programs, including the previously announced program with a leading power equipment company in our Mexico facility during the second quarter. We believe we are well positioned to benefit from the growing demand for North American onshoring and see the potential for significant growth in fiscal 2023 and beyond.”

The financial data presented for the fourth quarter and year end of fiscal year 2022 should be considered preliminary and could be subject to change, as the Company’s independent auditor has not completed their audit.

Business Outlook

For the first quarter of fiscal year 2023, Keytronic expects to report revenue in the range of $125 million to $135 million, and earnings in the range of $0.05 to $0.10 per diluted share. Despite growing customer demand and backlog, the Company expects that the ongoing disruptions from the global supply chain and COVID-19 issues will continue to significantly limit production and adversely impact operating efficiencies, particularly for our China-based facilities. These expected results assume an effective tax rate of 25% 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 +1-323-794-2588 (Access Code: 6758956). A replay will be available by calling 888-203-1112 or +1-719-457-0820 (Access Code: 6758956).

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 and relating to the health of employees due to COVID-19 health pandemic, demand for certain products and the effectiveness of some of our programs, effects of recent tax reform and tariff measures and trade tensions, business from new customers and programs, improvement of supply chain delivery and impacts from legal proceedings and 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, particularly during the COVID-19 health crisis; 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 including those related to COVID-19 response; and other factors, risks, and uncertainties detailed from time to time in the Company’s SEC filings.

2

KEYTRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended				Twelve Months Ended
	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Net sales	$	126,206	$	132,629	$	531,815	$	518,698
Cost of sales	114,446		122,323		488,601		476,659
Gross profit	11,760		10,306		43,214		42,039
Research, development and engineering expenses	2,348		2,498		9,821		9,790
Selling, general and administrative expenses	7,151		6,374		24,598		22,723
Total operating expenses	9,499		8,872		34,419		32,513
Operating income	2,261		1,434		8,795		9,526
Interest expense, net	1,466		1,064		5,104		3,613
Income before income taxes	795		370		3,691		5,913
Income tax (benefit) provision	(173)		195		314		1,572
Net income	$	968	$	175	$	3,377	$	4,341
Net income per share — Basic	$	0.09	$	0.02	$	0.31	$	0.40
Weighted average shares outstanding — Basic	10,762		10,762		10,762		10,760
Net income per share — Diluted	$	0.09	$	0.02	$	0.31	$	0.39
Weighted average shares outstanding — Diluted	11,071		11,169		11,063		11,046

3

KEYTRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	July 2, 2022		July 3, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	1,707	$	3,473
Trade receivables, net of allowance for doubtful accounts of $12 and $275	135,876		110,324
Contract assets	21,974		24,781
Inventories, net	155,741		137,329
Other	24,710		23,345
Total current assets	340,008		299,252
Property, plant and equipment, net	26,012		35,735
Operating lease right-of-use assets, net	16,731		15,745
Other assets:
Deferred income tax asset	10,055		9,656
Other	14,117		1,458
Total other assets	24,172		11,114
Total assets	$	406,923	$	361,846
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	121,393	$	92,823
Accrued compensation and vacation	11,836		11,471
Current portion of debt, net	7,402		2,143
Other	23,036		20,268
Total current liabilities	163,667		126,705
Long-term liabilities:
Term loans	5,716		7,906
Revolving loan	94,577		90,362
Operating lease liabilities	12,023		11,428
Deferred income tax liability	64		—
Other long-term obligations	5,998		1,740
Total long-term liabilities	118,378		111,436
Total liabilities	282,045		238,141
Shareholders’ equity:
Common stock, no par value—shares authorized 25,000; issued and outstanding 10,762 and 10,762 shares, respectively	47,474		47,181
Retained earnings	77,829		74,452
Accumulated other comprehensive income (loss)	(425)		2,072
Total shareholders’ equity	124,878		123,705
Total liabilities and shareholders’ equity	$	406,923	$	361,846

4

XML

Cover Page	Aug. 09, 2022	Aug. 04, 2020
Cover [Abstract]
Document Type	8-K
Document Period End Date	Aug. 09, 2022
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
Entity Emerging Growth Company	false
Amendment Flag	false
Entity Central Index Key	0000719733
Title of 12(b) Security		Common Stock, no par value
Trading Symbol		KTCC
Security Exchange Name		NASDAQ