Key Tronic Corporation Announces Preliminary Results for the Third Quarter of Fiscal Year 2021
SPOKANE VALLEY, Wash.– Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its preliminary results for the quarter ended April 3, 2021.
Customer demand has remained strong and new and existing customers have increased their backlog. While component supply issues limited our production, the third quarter was the best quarter in our history for customer demand, which exceeded $150 million.
The lower than anticipated earnings for the third quarter of fiscal 2021 are primarily a result of tightening worldwide supply chain and transportation and logistics issues which delayed the arrival of key components, causing both factory downtime and overtime expenses. In addition, earnings in the third quarter of 2021 were impacted by legal expenses related to the previously disclosed internal investigation discussed below, a temporary four-day closure of our Mexico facilities during a late winter storm that caused power disruptions in the region, and continued but lessening expenses related to COVID-19.
For the fourth quarter of fiscal 2021, Key Tronic expects to report revenue in the range of $130 million to $140 million with earnings in the range of $0.10 to $0.20 per share. These estimates assume continued recovery from the COVID-19 crisis, no worsening of key components supply for the Company’s business, and additional legal and internal review expenses during the quarter. Customer demand remains very strong and we believe could again exceed $150 million if component supply meets demand.
The financial data presented for the third quarter of fiscal 2021 is preliminary and subject to completion of the Company’s quarterly close and review procedures and completion of the internal investigation, as discussed below. Further, the Company’s independent auditor has not completed its review.
As previously disclosed, the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) is conducting an internal investigation related to a notification from an employee regarding irregularities of the classification of inventory at a production facility. The investigation is ongoing, and the Audit Committee continues to work diligently with independent counsel and advisors to complete the investigation as soon as possible. As a result, the Company has not yet filed its Quarterly Report on Form 10-Q for the quarter ended December 26, 2020 and does not believe it will file its Quarterly Report on Form 10-Q for the quarter ended April 3, 2021 on a timely basis, and the second and third quarters of fiscal 2021 remain open from an accounting perspective. The Company’s financial results and guidance may be subject to change based on the outcome of the internal investigation, subsequent accounting review or potentially other reasons.
The Company expects that it will finalize its financial statements and review procedures for the second and third quarters of fiscal 2021 and file the related Quarterly Reports as soon as practicable after the conclusion of the internal investigation.
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, 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 Key Tronic visit: www.keytronic.com.