SOURCE: Key Technology, Inc.

November 13, 2008 16:10 ET

Key Technology Announces Record Fiscal 2008 Results

WALLA WALLA, WA--(Marketwire - November 13, 2008) - Key Technology, Inc. (NASDAQ: KTEC) today announced sales and operating results for the year ended September 30, 2008.

Net sales for fiscal 2008 were $134.1 million, a 24.7% increase over the $107.5 million reported for fiscal 2007. The Company reported record net earnings for the year of $7.5 million, or $1.35 per diluted share, compared with $7.4 million, or $1.37 per diluted share, for fiscal 2007, which included a $750,000 gain, or $0.14 per share, from the 2007 sale of the Company's 50% interest in its InspX joint venture.

David Camp, President and Chief Executive Officer, commented, "2008 has been a banner year for Key Technology with a 24.7% revenue increase over 2007, major R&D and sales investments for the future of the Company, and an increase of $1.7 million in income from operations from 2007 to 2008. The improved performance is a clear reflection of the continuing value that Key's customers place on the solutions that we provide to our global markets."

Key Technology also announced results for its 2008 fourth quarter. Net sales for the three-month period ended September 30, 2008 were an all-time quarterly record at $40.2 million, and were 26.6% greater than the $31.7 million reported for the same quarter last year. Net earnings for the fourth quarter were $2.2 million or $0.40 per diluted share, compared with $2.3 million or $0.42 per diluted share, in the same period a year ago.

Camp continued, "Despite our record sales level in the fourth quarter, net earnings for the quarter were slightly lower than in the comparable quarter of the prior year due to increased operating expenses and unfavorable changes in foreign currency exchange rates."

For the twelve-month period, gross profit was $53.2 million compared to $41.4 million for the same period of fiscal 2007, or 39.7% and 38.5% as a percentage of net sales, respectively. Gross profit for the fourth quarter of fiscal 2008 was $15.4 million compared to $11.9 million in the corresponding period last year, or 38.3% compared to 37.5%, respectively, of net sales.

Operating expenses for the year ended September 30, 2008 were $43.0 million, or 32.0% of net sales, compared to $32.8 million, or 30.5% of net sales, for fiscal 2007. Operating expenses for the quarter ended September 30, 2008 were $11.8 million, or 29.2% of net sales, compared to $9.0 million, or 28.5% of net sales, in the same quarter last year.

Camp also commented, "The increase in gross margin percentage is the result of larger production volume and tight operational cost control. As we have previously disclosed, over the last year, we have had planned increases in 2008 in operating expenses related to our ERP implementation, and in R&D expenses to generate new products. We also incurred increased sales expenses primarily due to a shift in the percentage of total sales attributable to sales generation from external sales representatives."

Orders received for the fiscal year ended September 30, 2008 were a record $136.9 million compared to $115.3 million in fiscal year 2007. New orders received during the fiscal 2008 fourth quarter were $31.8 million, compared to $26.0 million in the same period last year. At the close of the September 2008 quarter, the Company's backlog was a fourth-quarter record of $33.8 million compared to $30.9 million at the close of the corresponding period one year ago, an increase of 9.3%.

The Company's cash position continued to strengthen and increased to $36.3 million at the end of our fiscal year. Cash flow provided by operations was $13.1 million for fiscal 2008 and $6.4 million in the fourth fiscal quarter. Subsequent to the end of the fiscal year, the Company exercised its purchase option and purchased its Avery Street headquarters facility and grounds for approximately $6.5 million, thereby reducing occupancy costs. The Company intends to pursue long-term financing for the property and expects to finalize financing by the end of the first quarter of the Company's fiscal 2009.

Camp concluded, "The current financial and liquidity crisis has captured the attention of everyone. However, Key is committed to continuing the development and delivery of new and valuable solutions to our customers because we recognize that in the current economic environment, our customers will commit resources only to suppliers that allow them to cut costs and increase profitability through increased productivity and quality."

In addition, the Company announced that its Board of Directors increased the number of shares of common stock that can be repurchased under the Company's previously announced stock repurchase program back to the originally-authorized 500,000 total shares, an addition of approximately 88,000 shares.

Conference Call

The Company's conference call review of the fourth quarter can be heard via live webcast at 2:00 p.m. Pacific Time on Thursday, November 13, 2008. To access the call, go to http://www.key.net/investors/investor-events/default.html at least fifteen minutes prior to the call to download and install any necessary audio software.

About Key Technology

Key Technology, Inc., headquartered in Walla Walla, Washington, is a worldwide leader in the design and manufacture of process automation systems for the food processing and industrial markets. The Company's products integrate electro-optical inspection and sorting, specialized conveying and product preparation equipment, which allow processors to improve quality, increase yield and reduce cost. Key has manufacturing facilities in Washington, Oregon, and the Netherlands, and worldwide sales and service coverage.

This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The forward-looking statements in this release address future financial and operating results.

The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements:

--  adverse economic conditions, particularly in the food processing
    industry, either globally or regionally, may adversely affect the Company's
    revenues;
--  competition and advances in technology may adversely affect sales and
    prices;
--  failure of the Company's new products to compete successfully in
    either existing or new markets;
--  the limited availability and possible cost fluctuations of materials
    used in the Company's products could adversely affect the Company's gross
    profits;
--  the inability of the Company to protect its intellectual property,
    especially as the Company expands geographically, may adversely affect the
    Company's competitive advantage; and
--  intellectual property-related litigation expenses and other costs
    resulting from infringement claims asserted against the Company by third
    parties may adversely affect the Company's results of operations and its
    customer relations.
    

For a detailed discussion of these and other cautionary statements, please refer to the Company's filings with the Securities and Exchange Commission, particularly Item 1A, "Risk Factors," of the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2007.

Note: 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      Three Months Ended
                                       September 30,       September 30,
                                    ------------------- ------------------
                                      2008      2007      2008     2007
                                    --------- --------- -------- ---------

Net sales                           $ 134,086 $ 107,540 $ 40,202 $  31,747

Cost of sales                          80,893    66,099   24,810    19,841
                                    --------- --------- -------- ---------

Gross profit                           53,193    41,441   15,392    11,906

Operating expenses

  Selling and marketing                21,373    17,191    5,646     4,617

  Research and development              8,744     5,520    2,786     1,502

  General and administrative           11,528     8,821    2,996     2,588

  Amortization of intangibles           1,307     1,307      327       327
                                    --------- --------- -------- ---------

Total operating expenses               42,952    32,839   11,755     9,035
                                    --------- --------- -------- ---------

Gain on sale of assets                     81        23       37         3
                                    --------- --------- -------- ---------

Earnings from operations               10,322     8,625    3,674     2,874

Gain on sale of investment in joint
 venture                                  ---       750      ---       ---

Other Income (expense)                    666     1,211     (400)      352
                                    --------- --------- -------- ---------

Earnings before income taxes           10,988    10,586    3,274     3,226

Income tax expense                      3,515     3,176    1,047       929
                                    --------- --------- -------- ---------

Net earnings                            7,473     7,410    2,227     2,297

Net earnings per common share
  - basic                           $    1.38 $    1.41 $   0.41 $    0.43

  - diluted                         $    1.35 $    1.37 $   0.40 $    0.42

Shares used in per share
 calculations - basic                   5,430     5,265    5,470     5,319

Shares used in per share
 calculations - diluted                 5,517     5,407    5,554     5,499





                     Key Technology, Inc. and Subsidiaries
                      Selected Balance Sheet Information
                          (Unaudited, in thousands)


                                              September 30,  September 30,
                                                  2008           2007
                                              -------------  -------------
                                                     (in thousands)

Cash and cash equivalents                     $      36,322  $      27,880

Trade accounts receivable, net                       13,577         14,020

Inventories                                          21,915         18,753

Total current assets                                 76,027         64,727

Property, plant and equipment, net                    8,705          4,671

Goodwill and other intangibles, net                   4,790          6,097

Total assets                                         89,625         75,497

Total current liabilities                            28,496         23,781

Shareholders' equity                          $      60,368  $      50,393

Contact Information

  • CONTACT:
    Jack Ehren
    Chief Financial Officer
    Key Technology, Inc.
    (509) 529-2161