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Key Tronic Corp., a provider of electronic manufacturing services (EMS), has released its results for the quarter ended March 30, 2019. The results were in line with the guidance provided in the company's announcement of preliminary results on April 10, 2019.
For the third quarter of fiscal year 2019, Key Tronic reported total revenue of $108 million, compared to $108.4 million in the same period of fiscal year 2018. For the first nine months of fiscal year 2019, total revenue was $358.5 million, up 9% from $329.3 million in the same period of fiscal year 2018.
As previously reported, Key Tronic's revenue in the third quarter of fiscal 2019 was adversely impacted by reduced orders from two large, longstanding customers. One of these customers needed to lower its inventory in the third quarter, but expects a rebound in demand in the fourth quarter; the other large customer is managing inventory as it is transitioning its production from Key Tronic's China facilities to Key Tronic's Mexico facilities. In addition, there were unanticipated delays in the launch of production for two new customers in the third quarter.
Due to its strategic investments in increased operational efficiencies in recent periods, the company reduced its workforce by approximately 10%, resulting in a severance charge of $1.1 million in the third quarter of 2019. Due to accounting requirements, Key Tronic also wrote down its goodwill and intangibles by approximately $12.5 million in the third quarter of 2019.
For the third quarter of fiscal year 2019, Key Tronic had a net loss of approximately $12 million, compared to net income of $0.6 million for the same period of fiscal year 2018. For the first nine months of fiscal year 2019, the net loss was $8.8 million, compared to net income of $0.9 million for the same period of fiscal year 2018.
"While we were significantly impacted by the unanticipated decline in demand from two large customers, we expect both of these new programs to rebound and contribute significant revenue in the fourth quarter," said Craig Gates, President and Chief Executive Officer. "At the same time, our new programs continue to ramp and we continue to win significant new business from both EMS competitors and from existing customers, including four new programs involving consumer kitchen tools, emergency medical equipment, paper dispensing products, and outdoor LED lighting.
"We expect to report growth in revenue for the fourth quarter and for the year. Moreover, our investments in increased efficiencies in recent periods have allowed us to streamline our operations, lowering manufacturing and operating expenses by approximately $3 million annually."
For the fourth quarter of fiscal year 2019, Key Tronic expects to report revenue in the range of $112 million to $117 million, and earnings in the range of $0.10 to $0.15 per diluted share. These expected results assume an effective tax rate of 20% in the quarter.