Key Technology Beats on Earnings
Key Technology, Inc.’s (KTEC) fourth-quarter 2013 earnings decreased 4.5% year over year to 21 cents per share from 22 cents in the year-ago quarter. The results however, surpassed the Zacks Consensus Estimate of 10 cents.
Total revenue climbed 54% year over year to $42 million, beating the Zacks Consensus Estimate of $37 million.
Cost and Margins
Cost of sales increased 14% year over year to $90.7 million. Gross profit went up 51% to $13.4 million from $8.9 million in the year ago quarter. Gross margin contracted 60 basis points (bps) year over year to 32%.
Total operating expenses increased to $11.5 million from $7.4 million in the year-ago quarter. Key Technology reported an income from operations of $2 million, up 32% from the year-ago quarter’s income of $1.5 million.
Key Technology ended the fourth quarter with a backlog of $25.2 million compared with $30.8 million at the end of the prior-year quarter, due to narrowing of large customer orders. During the quarter, the company was awarded new orders worth $25.2 million, down from $33.7 million in the prior-year quarter.
Fiscal 2013 Performance
Key Technology posted earnings of 69 cents per share for fiscal 2013, surging around nine-fold year over year from the year ago quarter’s earnings of 8 cents. This was driven by introduction of the first integrated Key/Visys sorting solution, the Visys acquisition and EVK/Insort licensing agreements. Earnings were ahead of the Zacks Consensus Estimate of 58 cents.
Revenues for the full-year improved 19% year over year to roughly $136.8 million from $115.2 million, the highest in the history of the company. It also surpassed the Zacks Consensus Estimate of $132 million.
Financial Updates
Cash and cash equivalents were $17.6 million as of Sep 30, 2013 versus $23.7 million as of Sep 30, 2012. Long-term debt of the company rose to $5.6 million as of Sep 30, 2013 from $4.8 million as of Sep 30, 2012.
The Visys acquisition has favorably impacted Key Technology. It helped attract new customers for its enhanced products and solutions and improved its technology and applications expertise. In addition, the potential benefits of the recently initiated partnership with EVK and Insort, leveraging the Chemical Imaging Technology (CIT), are generating a high level of interest from the customers. Furthermore, this partnership is expected to realize value in 2014.
The company will offer new products, provide leading solutions and services to support opportunities in core markets and pursue new market adjacencies in 2014. However, lower fourth-quarter backlog and anticipated shipment schedule, will impact results of operations. This will be significantly lower in the first quarter of fiscal 2014 compared with the first quarter of fiscal 2013.
Walla Walla, Wash.-based Key Technology, Inc. designs, manufactures, sells and services process automation systems in the United States and other countries. Key Technology currently carries a Zacks Rank #3 (Hold).
Among Key Technology’s peers Hyster-Yale Materials Handling, Inc. (HY) reported a 5.4% decline in its third-quarter 2013 earnings to $1.40 per share. The year-over-year decrease was led by higher income tax expense. The results also missed the Zacks Consensus Estimate of $1.48.
Adjusted earnings of Columbus McKinnon Corporation (CMCO) fell 14% year over year to 36 cents per share in the second quarter of fiscal 2014 (ended Sep 30, 2013). The results were ahead of the Zacks Consensus Estimate of 31 cents.
Another competitor, Gorman-Rupp Co. (GRC) reported third-quarter 2013 adjusted earnings of 40 cents per share, up 25% year over year. Earnings surpassed the Zacks Consensus Estimate of 38 cents.
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