Key Tronic(US:KTCC)2026-02-03 21:01Financial Performance - Key Tronic reported total revenue of $96.3 million for Q2 FY2026, down 15.5% from $113.9 million in Q2 FY2025[2] - The net loss for Q2 FY2026 was $(8.6) million or $(0.79) per share, compared to a net loss of $(4.9) million or $(0.46) per share in Q2 FY2025[7] - For the first six months of FY2026, total revenue was $195.1 million, down from $245.4 million in the same period of FY2025[2] - GAAP net loss for the three months ended December 27, 2025, was $8,570 thousand, compared to a loss of $4,914 thousand for the same period in 2024[25] - Adjusted net income for the three months ended December 27, 2025, was $21 thousand, a significant improvement from a loss of $4,082 thousand in the prior year[25] Margins and Costs - Gross margin decreased to 0.6% in Q2 FY2026 from 6.8% in Q2 FY2025, while adjusted gross margin improved to 7.9% from 6.8%[6] - Adjusted gross margin improved to 7.9% for the three months ended December 27, 2025, compared to 6.8% in the same period last year[25] - GAAP cost of sales for the three months ended December 27, 2025, was $95,759 thousand, down from $106,147 thousand, a decrease of 9.5%[25] Cash Flow and Assets - Total cash flow from operations was approximately $6.3 million in Q2 FY2026, significantly up from $1.5 million in Q2 FY2025[5] - Total assets increased to $325,267 thousand from $315,874 thousand, reflecting a growth of 1.24%[23] - Cash and cash equivalents decreased to $788 thousand from $1,384 thousand, a decline of 43%[23] Liabilities and Equity - Total current liabilities rose to $102,105 thousand, up from $91,991 thousand, marking an increase of 11.5%[23] - Long-term debt decreased to $90,168 thousand from $98,936 thousand, a reduction of 8.9%[23] - Total shareholders' equity decreased to $106,174 thousand from $117,134 thousand, a decline of 9.4%[23] Operational Changes - Key Tronic initiated a wind-down of its manufacturing operations in China, expected to save approximately $1.2 million per quarter post-completion[3] - Workforce reductions in Mexico are anticipated to provide an additional $1.5 million in quarterly savings starting in Q3 FY2026[4] - The company has reduced its total headcount by approximately 40% in Mexico over the past 18 months[9] Future Outlook - Key Tronic will not issue revenue or earnings guidance for Q3 FY2026 due to macroeconomic uncertainties[10] - The company expects to see revenue gradually rebound and a return to profitability by the end of FY2026[9] - The company incurred severance expenses of $4,293 thousand in the three months ended December 27, 2025, compared to $12 thousand in the same period last year[25]