Key Tronic Earnings Strengthen Improved Sales, Profits Reflect Company’s Turnaround

Key Tronic Corp. continued its momentum in a strong yearlong recovery during the fourth quarter of fiscal 1995.

The company Tuesday announced net income of $1.85 million, or 18 cents per share, on sales of $60 million. That compares with a loss of $1.1 million, or 13 cents per share, on sales of $42.7 million during the fourth quarter of fiscal 1994.

For the year, Key Tronic earned $4.4 million, or 43 cents per share, on sales of $207.5 million. That compares with a 1994 loss of $1 million, or 13 cents per share, on sales of $159.5 million.

Without an accounting change related to income taxes, the 1994 results would have been a loss of $9.8 million, or $1.19 a share.

The strength of the company’s turnaround is reflected in its increases in sales for the quarter and the year. Fiscal 1995 saw a 30 percent gain in sales over fiscal 1994. And sales in the fourth quarter represented a 41 percent increase over the fourth quarter of fiscal 1994.

Company officials said the sales increases reflect sharply increased orders for its keyboards from original-equipment computer manufacturers. (Key Tronic landed major contracts with IBM and Microsoft, among other companies, in the past year.)

“The turnaround phase of Key Tronic’s rebuilding is largely completed,” Stanley Hiller, the company’s chief executive officer, said in a news release announcing the earnings.

Hiller, a corporate turnaround expert who came to Key Tronic in 1992, said the company is positioned to take advantage of increasing opportunities in the information processing market.

A key part of Hiller’s recovery program for Key Tronic was to dismantle the company’s vertically integrated structure, and to hire outside manufacturers who could produce components of Key Tronic’s keyboards more cheaply. He also acquired a manufacturing plant in Juarez, Mexico, and transferred several product lines there from Spokane County.

But Tuesday Hiller pointed out that those shifts and cutbacks have ultimately allowed Key Tronic to grow again.

“While we are out-sourcing to improve flexibility,” Hiller said, Key Tronic’s own facilities in the United States, Mexico and Europe are all expanding because of the greater acceptance of products and services.

“This turnaround was not a downsizing process. Instead, it was, and continues to be, a marshaling of core strengths with the objective of market-share growth.”

Following a pattern he has followed in a succession of successful corporate turnarounds over the past 25 years, Hiller announced last month that he will begin to reduce his role in the company. He will step down as CEO this fall, and take over the chairmanship of the company’s board.

, DataTimes