Key Technology Inc. (KTEC, Financial) filed Annual Report for the period ended 2011-09-30.
Key Technology Inc. has a market cap of $73.7 million; its shares were traded at around $13.81 with a P/E ratio of 51.2 and P/S ratio of 0.6.
Automated inspection systems sales were up 2%, process systems sales were down 2%, and parts and service sales increased 1% in fiscal 2011 compared to the prior fiscal year. Orders for automated inspection systems decreased 12%, process system orders increased 8%, and parts and service orders decreased 1% in fiscal 2011 compared to the prior fiscal year. The primary market forces driving demand for our products are: increased global concerns about food safety and security, the inability of food and pharmaceutical processors to obtain cost effective labor, increased demand by food processors for fully integrated turn-key solutions from a single supplier, and the Company s continued expansion into international markets. Export and international sales for the fiscal years ended September 30, 2011, 2010 and 2009 accounted for 41%, 50% and 43% of net sales in each year, respectively.
Valuation of inventories. Inventories are stated at the lower of cost or market. The Company s inventory includes purchased raw materials, manufactured components, purchased components, service and repair parts, work in process, finished goods and demonstration equipment. Write downs for excess and obsolete inventories are made after periodic evaluation of historical sales, current economic trends, forecasted sales, estimated product lifecycles and estimated inventory levels. The factors that contribute to inventory valuation risks are the Company s purchasing practices, electronic component obsolescence, accuracy of sales and production forecasts, introduction of new products, product lifecycles and the associated product support. The Company actively manages its exposure to inventory valuation risks by maintaining low safety stocks and minimum purchase lots, utilizing just in time purchasing practices, managing product end-of-life issues brought on by aging components or new product introductions, and by utilizing inventory minimization strategies such as vendor-managed inventories. The Company believes that the accounting estimate related to valuation of inventories is a “critical accounting estimate” because it is susceptible to changes from period-to-period due to the requirement for management to make estimates relative to each of the underlying factors ranging from purchasing to sales to production to after-sale support. At September 30, 2011, cumulative inventory adjustments to lower of cost or market totaled $1.9 million compared to $1.8 million as of September 30, 2010. Amounts charged to expense to record inventory at lower of cost or market for fiscal 2011 and 2010 were $1.3 million and $580,000, respectively. Actual charges to the cumulative inventory adjustments upon disposition or sale of inventory were $1.1 million and $0.9 million for fiscal 2011 and 2010, respectively. If actual demand, market conditions or product lifecycles are adversely different from those estimated by management, inventory adjustments to lower market values would result in a reduction to the carrying value of inventory, an increase in inventory write-offs, and a decrease to gross margins.
Net sales for the year ended September 30, 2011 were $116.3 million, a 0.5% increase from the $115.8 million reported for fiscal 2010. Sales in the Company s automated inspection systems product line increased by 2% to $53.0 million in fiscal 2011, accounting for 46% of total revenues, compared to $52.0 million in fiscal 2010, or 45% of total revenues. Sales increased from the prior year in ADR, Tegra and Upgrade systems sales partially offset by a reduction in sales in the other automated inspection product lines. Process systems sales in fiscal 2011 were $40.7 million, a 2% decrease from the $41.3 million reported for fiscal 2010. A decrease in process system sales in Europe was partially offset by an increase in process equipment sales in other geographic regions. Sales of process systems accounted for 35% of total revenues in fiscal 2011 compared to 36% in fiscal 2010. Parts and service sales increased from the prior year by $140,000 or 1% to $22.7 million, compared to $22.5 million in fiscal 2010. Parts and service sales represented 19% of sales in both fiscal 2011 and fiscal 2010. Net sales for the first quarter of fiscal 2012 are expected to be similar to the net sales recorded in the fourth quarter of fiscal 2011 and, consistent with historical patterns, net sales are expected to improve during the remainder of fiscal 2012.
Net sales for the year ended September 30, 2010 were $115.8 million, a 10% increase from the $105.4 million reported for fiscal 2009. Sales in the Company s automated inspection systems product line increased by 8% to $52.0 million in fiscal 2010, accounting for 45% of total revenues, compared to $48.2 million in fiscal 2009, also 45% of total revenues. Sales increased from the prior year in almost all automated inspection product lines except for upgrade system sales. Process systems sales in fiscal 2010 were $41.3 million, a 13% increase from the $36.5 million reported for fiscal 2009. Sales of process systems accounted for 36% of total revenues in fiscal 2010 compared to 35% in fiscal 2009. Parts and service sales increased from the prior year by $1.8 million or 9% to $22.5 million, and represented 19% of sales in fiscal 2010 compared to $20.7 million or 20% of sales in fiscal 2009.
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Key Technology Inc. has a market cap of $73.7 million; its shares were traded at around $13.81 with a P/E ratio of 51.2 and P/S ratio of 0.6.
Highlight of Business Operations:
Sales increased slightly to $116.3 million for the year ended September 30, 2011 compared with $115.8 million for fiscal 2010, while orders decreased 3.5% in fiscal 2011 from fiscal 2010. The Company reported net earnings for fiscal 2011 of $1.5 million, or $0.27 per diluted share, compared with net earnings of $3.6 million, or $0.69 per diluted share, for fiscal 2010. Net earnings decreased in fiscal 2011 compared to fiscal 2010 as a result of a $2.4 million decrease in gross profit, as well as slightly higher operating expenses of $35.3 million, or 30.4% of net sales, compared to $34.9 million, or 30.1% of net sales for fiscal 2010. Gross profits and operating expenses in fiscal 2011 were both partially adversely affected by a $1.1 million pre-tax charge recorded in the fourth quarter related to the restructuring of the Company s global operations. The decline in gross margins to 32.5% in fiscal 2011 from 34.7% in fiscal 2010 was also due to higher than expected customer support costs and price competition. The small increase in operating expenses in fiscal 2011 compared to fiscal 2010 related to increased R&D project spending, higher sales and marketing expense including personnel and facility related costs, and higher trade show and promotional costs, mostly offset by lower amortization expenses and lower general and administrative spending. Other expenses were $542,000 in fiscal year 2011 compared to $172,000 in fiscal year 2010. During fiscal 2010, the Company recorded a $475,000 gain related to partial collection of its note receivable from the fiscal 2007 sale of its interest in the InspX joint venture which reduced other expenses significantly in fiscal 2010.Automated inspection systems sales were up 2%, process systems sales were down 2%, and parts and service sales increased 1% in fiscal 2011 compared to the prior fiscal year. Orders for automated inspection systems decreased 12%, process system orders increased 8%, and parts and service orders decreased 1% in fiscal 2011 compared to the prior fiscal year. The primary market forces driving demand for our products are: increased global concerns about food safety and security, the inability of food and pharmaceutical processors to obtain cost effective labor, increased demand by food processors for fully integrated turn-key solutions from a single supplier, and the Company s continued expansion into international markets. Export and international sales for the fiscal years ended September 30, 2011, 2010 and 2009 accounted for 41%, 50% and 43% of net sales in each year, respectively.
Valuation of inventories. Inventories are stated at the lower of cost or market. The Company s inventory includes purchased raw materials, manufactured components, purchased components, service and repair parts, work in process, finished goods and demonstration equipment. Write downs for excess and obsolete inventories are made after periodic evaluation of historical sales, current economic trends, forecasted sales, estimated product lifecycles and estimated inventory levels. The factors that contribute to inventory valuation risks are the Company s purchasing practices, electronic component obsolescence, accuracy of sales and production forecasts, introduction of new products, product lifecycles and the associated product support. The Company actively manages its exposure to inventory valuation risks by maintaining low safety stocks and minimum purchase lots, utilizing just in time purchasing practices, managing product end-of-life issues brought on by aging components or new product introductions, and by utilizing inventory minimization strategies such as vendor-managed inventories. The Company believes that the accounting estimate related to valuation of inventories is a “critical accounting estimate” because it is susceptible to changes from period-to-period due to the requirement for management to make estimates relative to each of the underlying factors ranging from purchasing to sales to production to after-sale support. At September 30, 2011, cumulative inventory adjustments to lower of cost or market totaled $1.9 million compared to $1.8 million as of September 30, 2010. Amounts charged to expense to record inventory at lower of cost or market for fiscal 2011 and 2010 were $1.3 million and $580,000, respectively. Actual charges to the cumulative inventory adjustments upon disposition or sale of inventory were $1.1 million and $0.9 million for fiscal 2011 and 2010, respectively. If actual demand, market conditions or product lifecycles are adversely different from those estimated by management, inventory adjustments to lower market values would result in a reduction to the carrying value of inventory, an increase in inventory write-offs, and a decrease to gross margins.
Net sales for the year ended September 30, 2011 were $116.3 million, a 0.5% increase from the $115.8 million reported for fiscal 2010. Sales in the Company s automated inspection systems product line increased by 2% to $53.0 million in fiscal 2011, accounting for 46% of total revenues, compared to $52.0 million in fiscal 2010, or 45% of total revenues. Sales increased from the prior year in ADR, Tegra and Upgrade systems sales partially offset by a reduction in sales in the other automated inspection product lines. Process systems sales in fiscal 2011 were $40.7 million, a 2% decrease from the $41.3 million reported for fiscal 2010. A decrease in process system sales in Europe was partially offset by an increase in process equipment sales in other geographic regions. Sales of process systems accounted for 35% of total revenues in fiscal 2011 compared to 36% in fiscal 2010. Parts and service sales increased from the prior year by $140,000 or 1% to $22.7 million, compared to $22.5 million in fiscal 2010. Parts and service sales represented 19% of sales in both fiscal 2011 and fiscal 2010. Net sales for the first quarter of fiscal 2012 are expected to be similar to the net sales recorded in the fourth quarter of fiscal 2011 and, consistent with historical patterns, net sales are expected to improve during the remainder of fiscal 2012.
Net sales for the year ended September 30, 2010 were $115.8 million, a 10% increase from the $105.4 million reported for fiscal 2009. Sales in the Company s automated inspection systems product line increased by 8% to $52.0 million in fiscal 2010, accounting for 45% of total revenues, compared to $48.2 million in fiscal 2009, also 45% of total revenues. Sales increased from the prior year in almost all automated inspection product lines except for upgrade system sales. Process systems sales in fiscal 2010 were $41.3 million, a 13% increase from the $36.5 million reported for fiscal 2009. Sales of process systems accounted for 36% of total revenues in fiscal 2010 compared to 35% in fiscal 2009. Parts and service sales increased from the prior year by $1.8 million or 9% to $22.5 million, and represented 19% of sales in fiscal 2010 compared to $20.7 million or 20% of sales in fiscal 2009.
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