Core Viewpoint - Key Tronic Corporation's second-quarter fiscal 2025 results indicate a challenging operating environment, with significant revenue declines and losses, but management is implementing strategic measures to improve profitability and position the company for future growth [16]. Financial Performance Overview - Key Tronic reported a loss of 46 cents per share in Q2 fiscal 2025, compared to earnings of 10 cents per share in the same period last year [2]. - Total revenues for the quarter were $113.9 million, down 22.9% from $147.8 million in the prior-year quarter [2]. Factors Influencing Results - The revenue decline was attributed to component shortages, reduced production during the holiday season, and declining demand from certain customers, collectively lowering revenues by approximately $15 million from initial expectations [3][12]. - Inventory levels decreased by $23 million or 19% year over year, reflecting efforts to optimize inventory amid improved component availability [4]. Key Business Metrics - Gross margin fell to 6.8% from 8% year over year, while operating margin was -1% compared to 2.7% in Q2 fiscal 2024, primarily due to lower revenue levels and fixed cost absorption [4]. - Total operating expenses increased to $8.8 million from $7.8 million in the prior-year quarter, driven by higher research and development costs [5]. Cash & Debt Position - As of December 28, 2024, cash and cash equivalents were $4.2 million, down from $4.8 million as of June 29, 2024, reflecting lower operational cash flow amid declining revenues [7]. - Long-term debt decreased to $106 million from $116.4 million following the refinancing under a new $115-million asset-based financing agreement, which provides increased financial flexibility [8]. Strategic Initiatives & Outlook - Management is focusing on streamlining operations, reducing headcount, and aligning inventory levels with current demand, with optimism about improving profitability as these initiatives take effect [9]. - Key Tronic plans to expand production capacity in Arkansas and Vietnam to address growing customer demand and mitigate tariff risks, with significant capacity increases expected by mid-2025 [10][11]. - New contracts secured in aerospace systems and energy resiliency technologies are anticipated to generate annual revenues exceeding $60 million once fully ramped by late 2025 [13]. Other Developments - The company has opted not to issue revenue or earnings guidance for Q3 fiscal 2025 due to uncertainties related to newly announced tariffs and potential shifts in customer demand [14]. - The refinancing of long-term debt is expected to lower interest expenses and support growth initiatives [15].

Core Points - Key Tronic Corporation plans to expand production capacity in Arkansas and Vietnam to meet growing customer demand and mitigate the impact of tariffs on goods manufactured in China and Mexico [1][3] - The company has signed a new lease in Arkansas to increase its manufacturing footprint by June 2025 and plans to double its manufacturing capacity in Vietnam by September 2025 with significant capital investment [2][3] - The expansion reflects a trend towards nearshoring production away from China, providing customers with flexibility and high-quality, low-cost manufacturing options [3] Company Overview - Key Tronic is a leading design engineering and contract manufacturer, offering services from facilities in the United States, Mexico, China, and Vietnam [4] - The company provides full engineering services, materials management, assembly services, in-house testing, and worldwide distribution to some of the world's leading original equipment manufacturers [4]

New Program Wins; Cost Reduction Initiatives; Expansion Plans in US and VietnamSPOKANE VALLEY, Wash., Feb. 04, 2025 (GLOBE NEWSWIRE) -- Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended December 28, 2024. These results are in line with the updated guidance provided on January 24, 2025. For the second quarter of fiscal year 2025, Key Tronic reported total revenue of $113.9 million, compared to $147.8 million in the ...

Program expected to have a materially significant impact on revenue and profitSPOKANE VALLEY, Wash., Jan. 24, 2025 (GLOBE NEWSWIRE) -- Key Tronic Corporation (Nasdaq KTCC), a world class provider of manufacturing and design engineering services, today announced that it expects to begin manufacturing in the second half of 2025 for a market revolutionizing, innovative energy resilience technology provider. Key Tronic has been awarded the manufacturing of an industry leading, innovative energy resiliency prod ...

SPOKANE VALLEY, Wash., Jan. 24, 2025 (GLOBE NEWSWIRE) -- Key Tronic Corporation (Nasdaq: KTCC), announced today that it plans to report its results for the second quarter of fiscal 2025 after market close on February 4, 2025. Key Tronic will host a conference call to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern) on February 4, 2025. A broadcast of the conference call will be available at www.keytronic.com under “Investor Relations” or by calling 888-394-8218 or +1-313-209-4906 (Access C ...

Financial Performance - Key Tronic anticipates Q2 FY2025 revenue of approximately $114 million, below previous guidance, primarily due to unexpected component shortages, lower holiday production, and reduced customer demand, resulting in a $15 million revenue shortfall [2] - The company expects a net loss of $0.40-$0.48 per share for Q2 FY2025, also below previous guidance [2] - For Q3 FY2025, Key Tronic forecasts revenue between $115 million and $130 million, with earnings per diluted share ranging from $0.00 to $0.15 [4] Operational Challenges and Adjustments - The company is streamlining international and domestic operations, including further headcount reductions to enhance efficiency, building on similar actions from Q3 FY2024 [3] - Key Tronic has reduced inventories to align with current revenue levels [3] - The company expects to report approximately $1.0 million in write-offs of unamortized loan fees related to debt refinancing [2] Strategic Initiatives and Growth Opportunities - Key Tronic expects revenue and earnings recovery in Q3 FY2025 as strategic initiatives from previous quarters come to fruition [3] - The company continues to win new programs in aerospace systems and energy resiliency technology products [3] Company Overview - Key Tronic is a leading contract manufacturer offering value-added design and manufacturing services from facilities in the United States, Mexico, China, and Vietnam [6] - The company provides full engineering services, materials management, worldwide manufacturing facilities, assembly services, in-house testing, and worldwide distribution [6] - Key Tronic's customers include some of the world's leading original equipment manufacturers [6]

FORM 8-K CURRENT REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported) January 24, 2025 Key Tronic Corporation (Exact name of registrant as specified in its charter) Washington 0-11559 91-0849125 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.) 4424 North Sullivan Road Spokane Valley, Washington 99216 (Address ...

Financing Arrangement - Key Tronic Corporation has entered into a new financing arrangement with the Bank of Montreal and Callodine Commercial Finance, extending and increasing access to working capital through December 2029, with up to $143 million available [1] - The new credit agreements replace the previous asset-based line of credit with Bank of America, which was set to expire in December 2025 [1] - The company expects to write off approximately $0.9 million in unamortized capitalized loan fees in connection with these agreements [1] Management Commentary - The Chief Financial Officer, Tony Voorhees, expressed excitement about the updated financing arrangements, indicating that it significantly enhances access to working capital and addresses liquidity for long-term growth plans [2] - The new facilities are anticipated to lower interest expenses and provide greater financial flexibility moving forward [2] Company Overview - Key Tronic is a leading contract manufacturer offering value-added design and manufacturing services from facilities in the United States, Mexico, China, and Vietnam [2] - The company provides full engineering services, materials management, worldwide manufacturing facilities, assembly services, in-house testing, and worldwide distribution to its customers, which include some of the world's leading original equipment manufacturers [2]

Key Tronic Corporation (KTCC) reported results for the first quarter of fiscal 2025, showcasing strong performance in several key areas. Despite a decline in total revenues, the company achieved notable improvements in profitability, driven by operational efficiencies and cost reductions. Key Tronic’s efforts to streamline operations and enhance production processes appear to be paying off, as evidenced by significant year-over-year gains in key financial metrics.The company is poised to benefit from the re ...

Financial Data and Key Metrics Changes - Total revenue for Q1 FY 2025 was $131.6 million, down from $150.1 million in Q1 FY 2024, impacted by customer-driven design and qualification delays amounting to approximately $9 million [6][10] - Gross margin improved to 10.1% from 7.2% year-over-year, while operating margins decreased to 3.4% from 22.2% [8] - Net income increased to $1.1 million or $0.10 per share compared to $0.3 million or $0.03 per share in the same period last year [10] - Inventory was reduced by approximately $31 million or 24% year-over-year, reflecting efforts to align inventory levels with current revenue [11] Business Line Data and Key Metrics Changes - Production in Mexico facilities increased by approximately 10% sequentially from the prior quarter, despite lower-than-anticipated revenue [7] - The company experienced significant improvements in operating efficiencies due to headcount reductions and favorable currency fluctuations [7][18] Market Data and Key Metrics Changes - The weakening of the Mexican peso positively impacted reported margins, contributing to improved profitability [18] - The company noted a strong pipeline of potential new business, particularly in manufacturing production equipment and vehicle lighting, indicating a trend towards onshoring and dual sourcing [19][20] Company Strategy and Development Direction - The company is focused on improving its balance sheet and operational efficiencies while strategically investing in production capabilities in Vietnam and the U.S. [14][16] - There is a sustained trend of wage increases in Mexico, prompting the company to rightsizing operations to remain cost-competitive [21] - The company aims to leverage its vertical manufacturing capabilities in Mexico to attract customers looking to nearshore their production processes [22] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding demand recovery, with expectations for a slight uptick in production in the upcoming quarters [49] - The company anticipates continued improvements in operating efficiencies and a strong pipeline of potential new business, despite temporary disruptions in Q1 FY 2025 [28] Other Important Information - Total capital expenditures for Q1 FY 2025 were about $0.4 million, with expectations for the full year to be approximately $8 million to $10 million [14] - The company is actively looking to refinance some of its debt to improve liquidity and reduce interest expenses [55] Q&A Session Summary Question: What is the size of the three wins noted in the press release? - The first two wins are around $5 million each, and the third is just under that amount [30] Question: Can you provide more details on the circumstances of the three delayed programs? - The delays had a $9 million impact, with two programs resuming production in October and the third expected to ramp up by February or March [32][33] Question: Why is the guidance for the second fiscal quarter not higher despite the resumption of production? - The lower guidance is due to typical seasonal production slowdowns during the holidays, affecting overall shipments [48] Question: How does the company plan to improve its balance sheet? - The company aims to continue driving improvements in working capital and is looking to refinance some of its debt [55] Question: Is the capitalized variance expected to be of similar magnitude in the next quarter? - Yes, it is expected to be around $1 million [56] Question: What is the status of the large power generation customer with design issues? - The company is still in discussions with the customer, who may request more products in the next season [57] Question: Is the gross margin sustainable assuming the peso remains stable? - Management believes the gross margin can remain healthy, targeting a range of 9% to 10% [62]