SPOKANE VALLEY, WA -- Key Tronic reported fiscal fourth-quarter net income slipped 37% from last year to $2.4 million for the period ended June 29. The electronics manufacturing services company said revenue fell 12.5% to $84.6 million.

Gross margin fell one point to 9%, and operating margin declined one point to 4%. It was the 38th straight quarter of profitability for the company.

For its full fiscal year, revenue was $361 million, up 4% from fiscal 2012, while net income climbed 8% to $12.6 million. Gross margin and operating margin each climbed one point to 10% and 5%, respectively.

On July 1, the company completed its previously announced acquisition of Sabre Manufacturing, a sheet metal fabrication company, for approximately $6 million in cash.

"For fiscal 2013, despite a challenging second half, we achieved record annual revenue and earnings," said Craig Gates, president and chief executive. "After strong year-over-year growth in the first half of fiscal 2013, our revenue in the second half was primarily impacted by the anticipated slowdown from a large customer. At the same time, we saw the continued ramp up of our new programs, while maintaining strong operating efficiencies and significantly strengthening our balance sheet.

"We continue to see a robust pipeline of potential new business and have further diversified our future revenue base during the fourth quarter by winning new customer programs involving automotive, RFID, power supply and off road vehicle equipment. At the end of the fourth quarter of fiscal 2013, we were generating revenue from 183 separate programs and had 56 distinct customers, up from 165 programs and 48 customers a year ago.

For its first quarter of fiscal 2014, Key Tronic expects revenues of $73 million to $78 million.

"We are currently seeing a reduction in orders from another large customer and a few of our new programs are not ramping up as rapidly as anticipated," Gates said. "Nevertheless, most of our new customer programs continue to steadily ramp up and we expect to see renewed sequential growth during the second quarter. Moreover, our recent acquisition of Sabre is already paying off. It is accretive to our earnings, winning us new business and generating strong interest in our expanded capabilities across our combined customer base."

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