Kent Electronics Reports First Quarter Sales and Earnings
HOUSTON--(BUSINESS WIRE)--July 14, 1998--Kent Electronics Corporation (NYSE:KNT - news) reported net sales
and earnings for the first fiscal 1999 quarter ended June 27, 1998.
As anticipated, net sales for the first quarter amounted to $157.1 million, a sequential decline from net sales of $162.4 million
reported for the fourth quarter of fiscal 1998 and modestly above the $152.1 million in net sales reported for the first quarter
of the last fiscal year.
Net earnings for the fiscal 1999 first quarter were $4.1 million or, $.15 per diluted share, sequentially below fourth quarter
1998 net earnings of $6.9 million, or $.25 per diluted share. In last year's first fiscal quarter, the company earned $8.8 million,
or $.32 per diluted share.
Commenting on the first quarter results, Morrie K. Abramson, Chairman and Chief Executive Officer, stated, ''Revenues for
the period were in the mid-range of the guidance we provided in our fiscal 1998 fourth quarter and year-end results release
which was issued on May 5, 1998. Earnings per share, however, came in at the low end of the range. This is attributable to
lower gross margins in both our distribution and contract manufacturing businesses resulting from the well-documented
slowdowns in certain of the industries we serve.''
Gross margin for the first quarter of fiscal 1999 was 19.8% versus 21.1% for last fiscal year's fourth quarter and 22.9% for the
comparable quarter in fiscal year 1998. Gross margin was adversely affected by the under-utilization of the Company's
contract manufacturing facilities, the ramping-up of new contract manufacturing services, a less favorable product mix and
continued pricing pressures from key customers in the computer and semiconductor capital equipment industries.
Mr. Abramson, continued, ''We are fortunately making progress in further growing and diversifying our contract manufacturing
customer base and providing new services to existing customers. Since January, we have added 10 new customers, primarily
in the telecommunications and networking industries. However, the revenues and gross margin related to this new business was
not able to offset the more significant revenue reductions from our traditional contract manufacturing business. And, at the same
time, we experienced pricing pressures in our distribution businesses similar to those experienced by others in our industry.''
Looking ahead, the Company stated that it expects the current industry-wide conditions to continue for the next several
quarters. Second quarter earnings are expected to be somewhat below those of the first quarter, despite a projected increase
in sales. By contrast, third quarter sales and earnings should benefit from the ramp-up in business from new customers and are
therefore expected to exceed first and second quarter levels. The most significant sequential increase is expected to occur in
the fourth quarter of fiscal 1999.''
This press release contains forward-looking information based on certain assumptions and contingencies that involve risks and
uncertainties. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and relate to the Company's performance going forward. In making these forward-looking
statements, and in addition to the effects of current general industry and economic conditions and the risks relating to
forward-looking statements stated in the Company's annual report on Form 10-K for the fiscal year ended March 28, 1998,
the Company assumed that (i) contract manufacturing revenues from certain of its semiconductor capital equipment and
computer customers will be less than in the first fiscal quarter, (ii) revenues from new contract manufacturing customers and
growth in the Company's distribution businesses will not completely offset the reduction of revenues and gross profit from
traditional contract manufacturing customers, (iii) there will be continued pricing pressures from customers in the computer
industry which will cause gross margins to be lower than in the first fiscal quarter, and (iv) during the current fiscal year, the
Company will be able to increase revenues and net earnings by continuing to add to its customer base while expanding
capabilities with existing customers. There can be no assurance that the above mentioned anticipated revenues and earnings
will actually occur.
Kent Electronics is among the largest publicly traded specialty electronics distributors. Kent's contract manufacturing
subsidiary, K*TEC Electronics, is among the leading contract manufacturers in the United States. |
