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Key Tronic Corporation, a provider of electronic manufacturing services (EMS), announced its results for the quarter and the year ended July 3, 2021.
For the fourth quarter of fiscal year 2021, Keytronic reported total revenue of $132.6 million, up 14% from $116.0 million in the same period of fiscal year 2020. For the full year of fiscal 2021, total revenue was $518.7 million, the highest annual revenue in the Company’s fifty-two year history, and up 15% from $449.5 million for fiscal year 2020. While demand has remained strong from both new and existing customers, revenue for the fourth quarter and for the full year of fiscal year 2021 was significantly constrained by issues related to the worldwide pandemic, the supply chain, and transportation and logistics.
Despite the adverse impact on revenue and expenses of the pandemic and global supply chain issues, the Company’s margins improved in fiscal year 2021. Operating income increased to $9.5 million during fiscal year 2021, up from $6.8 million in the same period of fiscal year 2020, or a 40% year-over-year increase. Gross margin was 8.1% and operating margin was 1.8%, up from a gross margin of 7.8% and an operating margin of 1.5%, for fiscal year 2020.
For the fourth quarter of fiscal year 2021, net income was $0.2 million or $0.02 per share, compared to $1.5 million or $0.14 per share for the same period of fiscal year 2020. Earnings for the fourth quarter of fiscal 2021 continued to be adversely impacted by supply chain and transportation and logistics issues causing both factory downtime and overtime expenses. Earnings for the fourth quarter of fiscal 2021 were also constrained by legal and other professional service expenses related to the previously disclosed internal investigation of approximately $1.0 million during quarter, and we expect some additional expenses to occur prospectively. Additionally, the Company recorded approximately $0.5 million in non-cash tax expense related to expired stock appreciation rights during the fourth quarter of fiscal year 2021. For the full year of fiscal 2021, net income was $4.3 million or $0.39 per share, compared to $4.8 million or $0.44 per share for fiscal year 2020.
The financial data presented for the fourth quarter and fiscal year 2021 should be considered preliminary and could be subject to change, as the Company’s independent auditor has not completed their audit.
“We’re pleased with the increasing customer demand during fiscal 2021 and our successful launch of major new programs,” said Craig Gates, President and Chief Executive Officer. “We are especially grateful for the dedication and resilience of Key Tronic employees during the past fiscal year – a year of record revenue and increased operating margins in spite of significant headwinds including the global pandemic, government shutdowns, unprecedented winter storms, worldwide component shortages, and transportation bottlenecks.”
“While production has been hindered by many unusual challenges, we continued to ramp up our new programs and we’re extremely encouraged by new program wins and our expanding customer base. During the fourth quarter of fiscal 2021, we won new programs involving consumer products, exercise equipment, and residential building products.”
“Moving into fiscal 2022, the COVID-19 crisis, component shortages and logistic delays continue to present multiple business challenges, but we continue to see the favorable trend of contract manufacturing returning to North America. With our recent investments in new capacity, we’re increasingly well-prepared for long-term growth.”
For the first quarter of fiscal year 2022, Keytronic expects to report revenue in the range of $125 million to $135 million, and earnings in the range of $0.07 to $0.12 per diluted share. These expected results assume an effective tax rate of 25% in the coming quarter. Despite growing customer demand and backlog, we expect that delays in the supply of key components for the Company’s business will continue to significantly limit production and adversely impact operating efficiencies.