Key Tronic Corporation Announces Results for the Fourth Quarter and Year End of Fiscal Year 2025

Core Insights - Key Tronic Corporation reported a decline in revenue for both the fourth quarter and full fiscal year 2025, attributed to reduced demand from longstanding customers and delays in new program launches due to tariff fluctuations [2][3] - The company is implementing cost reduction initiatives, including a significant workforce reduction, to align costs with current demand and enhance competitiveness [3][5] - Despite the challenges, Key Tronic anticipates long-term growth and profitability, supported by new manufacturing contracts and expansion of production capacity in the US and Vietnam [8][9] Financial Performance - For Q4 FY 2025, total revenue was $110.5 million, down from $126.6 million in Q4 FY 2024; for the full year, revenue decreased to $467.9 million from $566.9 million [2] - The net loss for Q4 FY 2025 was $(3.9) million or $(0.36) per share, compared to a net loss of $(2.0) million or $(0.18) per share in Q4 FY 2024; the full year net loss was $(8.3) million or $(0.77) per share, compared to $(2.8) million or $(0.26) per share in FY 2024 [6][7] - Cash flow from operations increased to $8.8 million in Q4 FY 2025 from $7.7 million in Q4 FY 2024, and for the full year, it rose to $18.9 million from $13.8 million [4] Operational Changes - The company reduced its workforce by approximately 300 jobs in Q4 FY 2025, totaling around 800 job cuts for the fiscal year, aimed at improving operational efficiency [3] - Key Tronic is expanding its manufacturing footprint with new facilities in the US and increased capacity in Vietnam to mitigate tariff impacts and enhance competitiveness [3][8] - The gross margin for Q4 FY 2025 was 6.2%, down from 7.2% in Q4 FY 2024, while the full year gross margin improved to 7.8% from 7.0% in FY 2024, reflecting operational efficiencies despite severance costs [5] Business Outlook - The company will not provide revenue or earnings guidance for Q1 FY 2026 due to uncertainties surrounding new program ramps and potential tariffs [10] - Key Tronic is optimistic about future growth, particularly with new contracts in various sectors, including pest control and medical technology, which are expected to contribute significantly to revenue in FY 2026 [9]