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| 8-K - FORM 8-K - KEY TRONIC CORP | d293921d8k.htm |
 NASDAQ:
KTCC Trust. Commitment. Results.
Exhibit 99.1 |
 Craig D.
Gates President and CEO
Trust. Commitment. Results. |
 Leading
provider of Electronic Manufacturing Services (EMS)
with unique combination of
global capabilities and customer responsiveness
Trust. Commitment. Results. |
 Safe Harbor
Statement This presentation may contain forward-looking statements within the meaning
of the federal securities laws and are subject to the safe harbor under those laws.
These forward-looking statements can be identified by the use of words such as
"expect", believe", "anticipate", "will", "may",
"should", "plan" and similar expressions. Forward-looking statements include
statements
made
as
to
future
revenue
and
earnings,
trends
in
the
EMS
industry,
existing
and
potential new customer relationships and competition. These forward-looking statements
involve risks and uncertainties that could cause actual results to differ materially from
those contemplated by the statements. These risks and uncertainties include, but
are not limited to the
challenge
of
effectively
managing
operations
in
an
uncertain
economic
environment
to
prepare
for
growth
in
coming
periods;
the
accuracy
of
customers'
forecasts;
success
of
customers' programs; timing of new programs; changes in pricing policies by the Company, its
competitors or customers; the dependence on a small number of large customers and the
other risks described under "Management's Discussion and Analysis of Financial
Condition and Results of Operations -
Risks and Uncertainties That Could Affect Future Results" in the
Company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and
current reports on Form 8-K, filed with the SEC. Any forward-looking
statements in this presentation
are
based
on
the
Company's
current
expectations
and
the
Company
assumes
no
obligation to update these forward-looking statements.
Trust. Commitment. Results. |
 Outsourcing
market expected to continue to grow Strong competitive position:
-
Unique combination of global capabilities and customer responsiveness
-
Increasing demand for EMS services in North America and Asia
-
Unique degree of vertical integration
Expanding customer portfolio across diverse industries
Strong revenue and earnings growth
Financial performance exceeds industry average
Strong balance sheet
Key Investment Highlights
Trust. Commitment. Results. |
 Electronic
Manufacturing Services Market $0
$50
$100
$150
$200
$250
$300
2011
2012
2013
2014
2015
2016
In Billions
Source: IDC, 2012
Trust. Commitment. Results. |
 EMS Provider
Tiers Tier I: Over $2 billion in annual revenue
Tier II: $400 million to $2 billion in annual revenue
Tier III: $100 million to $400 million in annual revenue
Trust. Commitment. Results. |
 Integrated
Global Operations: US Spokane, Washington
-
Corporate headquarters
-
Command and Control
-
Centralized program management,
production control, quality control,
material management
-
Tooling and prototyping
-
Low volume PCA and box build
El Paso, Texas
-
Product distribution
Trust. Commitment. Results. |
 Integrated
Global Operations: Mexico Juarez, Mexico
-
Volume PCA, box build and
plastic molding
-
Repair operations
-
500,000 square feet
-
Contiguous campus of five
facilities
-
Long term presence since 1984
Trust. Commitment. Results. |
 Integrated
Global Operations: China Shanghai, China
-
International material
sourcing organization
-
High-volume PCA and box
build
-
130,000 square feet
-
Presence since 1999
Trust. Commitment. Results. |
 Worldwide
Production Mix Trust. Commitment. Results.
Shanghai China
20%
Spokane USA
2%
Juarez
Mexico
78% |
 USA-based
Management
Operations
Materials
Production
Control
Quality
Control
Engineering
USA-Based Production
Prototyping
Low Volume
Mexico-based Production
Low to high volume
China-based Production
High volume
USA-Based Purchasing
Parts
China-Based Purchasing
Parts
Leveraging Global Capacities
Trust. Commitment. Results. |
 Virtual Tier
I Capabilities International sourcing yields close to Tier I material pricing
Chinese and Mexican production yields Tier I conversion costs
One Stop Shopping:
-
Strong production and process design capabilities
-
Multiple production technologies and vertical Integration
-
Scalability as volume grows: Spokane
Juarez
China
Trust. Commitment. Results. |
 Tier III
Responsiveness USA-based centralized operations management
Customer interface in English
Experienced program management for low/mid/high volume programs
Experienced management of offshore facilities
Trust. Commitment. Results. |
 Tier I
COST
COST
Tier II
Tier III
RESPONSIVENESS
RESPONSIVENESS
Rapid
Rapid
Slow
Slow
Low
Low
High
High
Cost/Service Comparison For $5 to $80 Million Program
Trust. Commitment. Results. |
 Target
Accounts Program with $5 million to $80 million in annual revenue
Involves at least two production technologies:
-
Plastic injection molding
-
Electrical assembly
-
Full box build
Complex product assembly at account maturity
Customer places high value on responsiveness
Customer seeking long-term relationship
Trust. Commitment. Results. |
 Profitable
and Diverse Customer Programs Trust. Commitment.
Results. |
 …From
Wide-Ranging Industries Consumer plastic products
Consumer electronics
Medical devices
Specialty printers
Gaming
Telecommunications
Automotive
Educational equipment
Electric transportation
Computer accessories
Industrial tools
Industrial controls
Networking equipment
Scientific instruments
Data storage
Financial Transaction
Military equipment
Irrigation equipment
Trust. Commitment. Results. |
 Number of
Customers Generating Revenue Trust. Commitment.
Results. |
 Number of
Programs Generating Revenue Trust. Commitment.
Results. |
 Historic
Transition to EMS * Projected Q3 Results
Trust. Commitment. Results. |
 Growth
Strategy Continue to emphasize unique combination
of Tier I capabilities and Tier III responsiveness
Continue to invest in volume driven capacity
Continue to leverage materials and parts procurement
Continue to diversify customer portfolio across many industries
Expand into more high-value-added, multi-production technology programs
Trust. Commitment. Results. |
 Financials
Ronald F. Klawitter
Chief Financial Officer and Treasurer
Trust. Commitment. Results. |
 Core
Operating Objectives Grow faster than EMS industry
Maintain strong operating margins and profitability
Maintain strong balance sheet
ROIC that exceeds cost of capital
Trust. Commitment. Results. |
 Quarterly
Revenue Trust. Commitment. Results.
|
 Annual
Revenue * Based on annualized projection through Q3
Trust. Commitment. Results. |
 Financial
Model 8.2%
4.8%
3.4%
Q2-FY12
8.9%
6.1%
2.8%
Q2-FY11
7.2%
4.9%
2.3%
Q1-FY12
Gross Margin
Operating Expenses
Operating Margin
9% -
10%
3% -
4%
5% -
7%
Target
Expecting gradual improvement with long term growth
Trust. Commitment. Results. |
 Annual
Earnings * Based on annualized projection through Q3
Trust. Commitment. Results. |
 Operating
Margin Percentage Trust. Commitment. Results.
|
 Key Balance
Sheet Ratios Trust. Commitment. Results.
|
 Return on
Invested Capital Trust. Commitment. Results.
|
 Outsourcing
market expected to continue to grow Strong competitive position:
-
Unique combination of global capabilities and customer responsiveness
-
Increasing demand for EMS services in North America and Asia
-
Unique degree of vertical integration
Expanding customer portfolio across diverse industries
Strong revenue and earnings growth
Financial performance exceeds industry average
Strong balance sheet
Key Investment Highlights
Trust. Commitment. Results. |