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Key Technology Announces Fiscal 2017 Financial Results

WALLA WALLA, Wash., Nov. 16, 2017 (GLOBE NEWSWIRE) -- Key Technology, Inc. (KTEC) announced today sales and operating results for fiscal 2017 and the fourth quarter ended September 30, 2017.

Fiscal 2017 Overview
Net sales for fiscal 2017 were $139.9 million, an increase of $19.9 million, or 17%, compared to the $120.0 million reported for fiscal 2016.  The Company reported net earnings for fiscal 2017 of $4.0 million, or $0.63 per diluted share, compared to a net loss of $0.7 million, or $0.11 per diluted share, for fiscal 2016.

For the 2017 fiscal year, gross profit was $47.2 million, compared to $36.0 million for fiscal 2016, or 33.7% and 30.0%, respectively, of net sales.

Operating expenses for the year ended September 30, 2017 were $40.1 million, or 28.7% of net sales, compared to $36.2 million, or 30.2% of net sales, for fiscal 2016.

Fourth Quarter Overview
Net sales for the three months ended September 30, 2017 were $40.5 million, an increase of $10.0 million, or 32.8%, compared to the $30.5 million reported for the same quarter last year.  The Company reported net earnings for the fourth quarter of $1.2 million, or $0.18 per diluted share, compared with net earnings of $0.5 million, or $0.08 per diluted share, in the same period a year ago.

Gross profit for the fourth quarter of fiscal 2017 was $13.1 million, compared to $9.9 million in the corresponding period last year, or 32.4% compared to 32.6%, respectively, of net sales.

Operating expenses for the quarter ended September 30, 2017 were $11.0 million, or 27.2% of net sales, compared to $8.8 million, or 29.0% of net sales, in the same quarter last year.

Orders and Backlog
Orders received for the fiscal year ended September 30, 2017 were $142.3 million, compared to $128.7 million in fiscal 2016.  New orders received during the fourth quarter of fiscal 2017 were $32.1 million, compared to $36.5 million in the same period last year which included a record level in the EMEIA region.  As of September 30, 2017, the Company's backlog was $43.9 million, compared to $40.4 million at September 30, 2016. 

Jack Ehren, President and Chief Executive Officer, commented, "Our record annual net sales and orders in fiscal 2017, and our solid increase in gross margins and net earnings, demonstrate that we are continuing to make strong progress toward the execution of our long-term global strategy.  Our new VERYX platform is steadily becoming a more significant portion of our overall Automated Inspection Systems orders and net sales.  Our record year-end backlog for fiscal 2017, as well as our strong funnel of opportunities in all of our core markets globally, positions Key well entering into fiscal 2018."

Ehren further commented, “An important component of our overall strategy is to grow our EMEIA and North America businesses, and our on-going investments in these regions are generating real returns.  EMEIA annual orders have continued to achieve significant record levels.  Annual EMEIA orders, in euros, have almost doubled over the last three years. North America was our largest order-contributing region in the fourth quarter and for fiscal 2017.  For the fourth quarter, orders in North America included a significant order associated with a new plant expansion by a major global potato processor.  A large portion of this order was for Key’s new VERYX optical sorting platform.  Additional significant orders for this project are anticipated to be received in the first quarter of fiscal 2018.  Also, subsequent to year-end we received a major order for multiple plants from a major vegetable processor in North America for our new VERYX systems."

Conclusion
Ehren concluded, "Our entire company is energized by the increasing global momentum we are achieving as we execute on our vision. We continue to be focused and dedicated in our transformational journey to drive technology leadership and to develop strong customer partnerships globally. We are fully committed to helping our customers achieve their goals and objectives, which in turn enables Key to generate attractive returns for our Company and our shareholders."

Conference Call
The Company's conference call related to the fiscal 2017 year-end and fourth quarter results can be heard live on the Internet at 2:00 p.m. Pacific Time on Thursday, November 16, 2017.

To access the audio webcast:
Phone - Q&A participation:
Toll-Free: 877-341-5668
International: 224-357-2205
Conference ID:  98040408

Internet - Audio webcast:  http://edge.media-server.com/m6/p/htgusam4 

Replay - Available through Monday, December 11, 2017
Audio replay:  http://edge.media-server.com/m6/p/htgusam4 

About Key Technology
Key Technology (KTEC) is a global leader in the design and manufacture of automation systems including digital sorters, conveyors, and other processing equipment. Applying processing knowledge and application expertise, Key helps customers in the food processing and other industries improve quality, increase yield, and reduce cost. An ISO-9001 certified company, Key manufactures its products at its headquarters in Walla Walla, Washington, USA; in Beusichem, the Netherlands; Hasselt, Belgium; and Redmond, Oregon, USA. Key offers customer demonstration and testing services at five locations including Walla Walla, Beusichem, and Hasselt as well as Sacramento, California, USA and Melbourne, Australia; and maintains a sales and service office in Santiago de Queretaro, Mexico.

Forward-Looking Statements
Certain statements in this press release may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995.  These statements may relate to expected results of operations or gross margins; expected trends in sales, orders, earnings and other financial measures; projected expenses, including general and administrative expenses; national and international economic conditions; the effect of foreign exchange fluctuations; or other future occurrences.  Actual results could differ materially from those anticipated in the forward-looking statements as a result of a variety of economic, competitive, and governmental risks and uncertainties.  These risks and uncertainties include, among other things:  factors that could increase our cost of operations and reduce gross margins and profitability, including expanding into new markets, undertaking complex projects and applications, increasing research and development expenses, and offering increasingly integrated products; acquisitions that may harm our operating results; failure of our existing and new products to compete successfully, which could result in the loss of market share and a decrease in our sales and profits; significant investments in unsuccessful research and development efforts; industry consolidation increasing competition in the food processing equipment industry; advances in technology by competitors adversely affecting our sales and profitability; the failure of our independent sales representatives to perform as expected, thereby harming our net sales; our dependence on certain suppliers leaving us temporarily without adequate access to raw materials or products; and increased or unanticipated costs associated with product warranties adversely affecting our profitability.  These and other risk factors are discussed in our filings with the Securities and Exchange Commission, including in Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended September 30, 2016.  We undertake no obligation to update or revise any forward-looking statements in this press release as a result of subsequent developments, except as may be required by law.

Contact Information:
Jeff Siegal
Senior Vice President and Chief Financial Officer
Key Technology, Inc.
150 Avery Street
Walla Walla, WA 99362 USA
Tel: 509-394-3300
Email: jsiegal@key.net
URL: www.key.net

News releases and other information about Key Technology, Inc. can be
accessed at www.key.net.

 
Key Technology, Inc. and Subsidiaries
Statement of Selected Operating Information
(Unaudited, in thousands, except per share data)
               
  Year
Ended September 30,
  Three Months
Ended September 30,
  2017   2016   2017   2016
               
Net sales $ 139,914     $ 120,040     $ 40,545     $ 30,520  
Cost of sales 92,729     83,994     27,407     20,577  
Gross profit 47,185     36,046     13,138     9,943  
Operating expenses:              
Sales and marketing 19,421     16,389     5,315     4,096  
Research and development 11,497     10,615     3,205     2,704  
General and administrative 8,347     8,070     2,296     1,809  
Amortization of intangibles 864     1,121     217     234  
Total operating expenses 40,129     36,195     11,033     8,843  
Gain (loss) on disposition of assets (3 )   (1 )   1     (11 )
Income (loss) from operations 7,053     (150 )   2,106     1,089  
Other income (expense) (884 )   (1,004 )   (237 )   (245 )
Earnings (loss) before income taxes 6,169     (1,154 )   1,869     844  
Income tax expense (benefit) 2,137     (457 )   675     329  
Net earnings (loss) $ 4,032     $ (697 )   $ 1,194     $ 515  
Net earnings (loss) per share              
- basic $ 0.63     $ (0.11 )   $ 0.18     $ 0.08  
- diluted $ 0.63     $ (0.11 )   $ 0.18     $ 0.08  
               
Shares used in per share calculation - basic 6,447     6,332     6,487     6,403  
Shares used in per share calculation - diluted 6,447     6,332     6,487     6,403  
                       


 
Key Technology, Inc. and Subsidiaries
Balance Sheet Information
(Unaudited, in thousands)
         
    September 30, 2017   September 30, 2016
Cash and cash equivalents   $ 9,337     $ 10,491  
Trade accounts receivable, net   20,177     14,024  
Inventories   38,588     30,687  
Deferred income taxes   4,770     3,934  
Income tax receivable   1,127     59  
Prepaid expenses and other assets   3,312     3,226  
Total current assets   77,311     62,421  
Property, plant and equipment, net   12,911     13,789  
Deferred income taxes   1,299     3,001  
Intangibles and other assets, net   4,457     5,149  
Investment in Proditec   1,127     1,127  
Goodwill   10,616     10,277  
Other Assets   117     220  
Total assets   $ 107,838     $ 95,984  
         
Accounts payable   $ 10,490     $ 7,381  
Accrued payroll liabilities and commissions   7,714     4,932  
Customers' deposits   8,085     9,139  
Accrued customer support and warranty costs   2,276     2,197  
Income tax payable   1,357      
Current portion of long-term debt   4,566     587  
Customer purchase plans   1,039     1,124  
Other accrued liabilities   1,923     956  
Total current liabilities   37,450     26,316  
Long-term debt       4,565  
Deferred income taxes   1,514     1,761  
Other long-term liabilities   222     348  
Shareholders' equity:        
Common stock   34,959     34,237  
Retained earnings   34,580     30,548  
Accumulated other comprehensive income (loss)   (887 )   (1,791 )
Total shareholders' equity   68,652     62,994  
Total liabilities and shareholder's equity   $ 107,838     $ 95,984