Key Tronics contract sales grow steadily
Custom work now accounts for half of overall income of Spokane keyboard makerJanuary 27th, 2000
Key Tronic Corp., the Spokane-based manufacturer of computer keyboards and other advanced-input and engineered devices, says revenue generated by its non-keyboard contract design and manufacturing (CDM) business now accounts for almost half of the companys total revenue.
By the end of its current fiscal year on June 30, Key Tronic expects revenue from its CDM business to have accounted for about two-thirds of its total annual revenue, says Ron Klawitter, Key Tronics chief financial officer.
In CDM, Key Tronic designs and manufactures productsrequested specially by other companiesthat are outside of its usual production runs.
Klawitter says the companys CDM business has been growing steadily for the past nine months. Revenue from such work shot up 104 percent, to $19.6 million, in the second quarter of fiscal 2000, ended Jan. 1, compared with $9.6 million in the year-earlier period, the company says. In the second quarter, CDM sales made up more than 47 percent of Key Tronics total revenue.
Klawitter attributes the growth of the CDM business to the companys greater focus on that area and a growing awareness among large companies of the benefits of outsourcing design and manufacturing work.
More companies are beginning to recognize Key Tronics exceptional contract design and manufacturing expertise, particularly for products that combine precision plastics, low-cost quality assembly, and engineering, says Jack Oehlke, Key Tronics president and CEO.
Key Tronic currently has about six CDM projects in its engineering pipeline, Klawitter says. As projects move from design to manufacturing, they likely will be produced at Key Tronics plants in Mexico or China, he says.
Our strong growth in CDM revenue is very encouraging, Oehlke says. While we were disappointed with the severe slowdown in the worldwide distribution channels for keyboards, these results reinforce the fact that building a broader portfolio of CDM products is the right strategic path for revenue growth and profitability.
Meanwhile, Key Tronic reported a net loss of $1.8 million for the second quarter, compared with net income of $860,000, or 9 cents a share, in the year-earlier period.