Key Tronic shares rise on income report

Shares of Spokane Valley-based contract manufacturer Key Tronic Corp., buoyed by the company’s report of improved quarterly earnings, jumped more than 40 percent Wednesday after months of decline.

Key Tronic stock reached $3.67 during normal trading, up $1.07 from opening – the largest percentage gain for a Nasdaq stock on a day the market dropped a half-percentage point, according to the Wall Street Journal.

The company, which also has manufacturing operations in Mexico and China, is too small for analysts to track, a company executive said on a conference call Tuesday. Key Tronic announced net income of $1.2 million, or 11 cents per diluted share, for the quarter ending March 29 – a 57 percent increase from the same period last year.

It expects earnings of 10 cents to 15 cents per share next quarter.

Executives attributed the growth largely to new clients, which contributed more than $6.3 million of the company’s quarterly revenues of $51.5 million, said Chief Financial Officer Ron Klawitter. More than 10 “significant” new customer programs will be in production by the end of the year, from industrial tools to specialty display panels and security surveillance equipment, said CEO and President Jack Oehlke.

“While there is widespread uncertainty regarding the global economic environment, we continue to pursue and win new customers,” Oehlke said.

After peaking at $7 in August 2006, the company’s stock declined, rallying in mid-2007 before dropping further.

A conference call listener with a capital group called Key Tronic’s recent price of about $2.50 “ridiculous for a book value of over 4 bucks.”

“With growing revenues, growing profits and return on invested capital up around 14 percent, which is at the high end of industry averages, we feel that eventually we’ll be recognized,” Klawitter said. “We’re a small-cap company, nobody follows us … so it’s really difficult to get that kind of mindshare.”

In other market news, shares of Spokane-based Gold Reserve Inc. fell to $2.15 in after-hours trading, down from an opening of $3.68. The decline followed news that Venezuelan environmental officials plan to revoke a March permit allowing the company to begin construction of one of the country’s largest gold mines.