KEY TRONIc : announces second quarter results

KEY TRONIC CORPORATION ANNOUNCESRESULTS

for the SECOND QUARTEr of fiscal 2016

Sequential Profit Growth; Continued New Customer Wins;

Expecting Continued Sequential Increase in Revenue in Third Quarter

Spokane Valley, WA- October 27, 2014 -- Key Tronic Corporation(Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the three months ended December 26, 2015.

For the second quarter of fiscal year 2016, Key Tronic reported total revenue of $116.4 million, up 2% from $114.3 million in the same period of fiscal year 2015. For the first six months of fiscal year 2016, total revenue was $242.6 million, up 21% from $200.7 million in the same period of fiscal year 2015.

As expected, the Company saw sequential improvement in operating efficiencies. For the second quarter of fiscal year 2016, gross margin was 7.8% and operating margin was 2.1%, up from 7.1% and 1.4%, respectively, in the prior quarter.

Net income for the second quarter of fiscal year 2016 was $1.8 million or $0.16 per share, up from $1.6 million or $0.14 per share for the second quarter of fiscal year 2015. The results for the second quarter of fiscal year 2016 include $675,000 or $0.06 per share of tax credits related to recently approved research and development federal tax incentives. For the first six months of fiscal year 2016, net income was $2.6 million or $0.23 per share, up from $103,000 or $0.01 per share for the same period of fiscal year 2015.

'We're pleased to see sequential profit growth, as our new programs continue to ramp and more than offset the reduced demand from a certain customer that has significantly impacted our results in recent quarters,' said Craig Gates, President and Chief Executive Officer. 'We continue to see a robust pipeline of potential new business and recently won four new programs, involving industrial equipment, consumer products and lighting devices.'

'In the second half of fiscal year 2016, we expect that the ramp of new programs will continue to outpace the previously discussed decline of a longstanding customer. Even as we onboard several new customers and programs, we anticipate that we will continue to see gradually improving operating efficiencies in coming periods.'

Business Outlook

For the third quarter of fiscal year 2016, the Company expects to report revenue in the range of $117 million to $122 million, and earnings in the range of $0.12 to $0.17 per diluted share. These expected results assume an effective tax rate of 30%.

Conference Call

Key Tronic will host a conference call today to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern). A broadcast of the conference call will be available at www.keytronic.com under 'Investor Relations' or by calling 888-427-9419 or [phone] (Access Code: 431302). A replay will be available by calling 888-203-1112 or [phone] (Access Code: 431302). A replay will also be available on the Company's Web site.

About Key Tronic

Key Tronic is a leading contract manufacturer offering value-added design and manufacturing services from its facilities in the United States, Mexico and China. The Company provides its customers full engineering services, materials management, worldwide manufacturing facilities, assembly services, in-house testing, and worldwide distribution. Its customers include some of the world's leading original equipment manufacturers. For more information about Key Tronic visit: www.keytronic.com.

Some of the statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages containing verbs such as aims, anticipates, believes, estimates, expects, hopes, intends, plans, predicts, projects or targets or nouns corresponding to such verbs. Forward-looking statements also include other passages that are primarily relevant to expected future events or that can only be fully evaluated by events that will occur in the future. Forward-looking statements in this release include, without limitation, the Company's statements regarding its expectations with respect to quarterly revenue and earnings during fiscal year 2016. There are many factors, risks and uncertainties that could cause actual results to differ materially from those predicted or projected in forward-looking statements, including but not limited to the future of the global economic environment and its impact on our customers and suppliers, the availability of parts from the supply chain, the accuracy of customers' forecasts; success of customers' programs; timing of new programs; success of new-product introductions; acquisitions or divestitures of operations or facilities; technology advances; changes in pricing policies by the Company, its competitors, customers or suppliers; and the other risks and uncertainties detailed from time to time in the Company's SEC filings.