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

Rhea-AI Summary

Key Tronic Corporation (Nasdaq: KTCC) reported challenging financial results for Q4 and fiscal year 2025. Revenue declined to $110.5 million in Q4 (vs $126.6M in Q4 2024) and $467.9 million for FY2025 (vs $566.9M in FY2024). The company posted a net loss of $(3.9) million in Q4 and $(8.3) million for the full year.

To address challenges, Key Tronic implemented significant restructuring, including cutting 800 jobs during FY2025. The company is expanding its manufacturing footprint with new facilities in the US and Vietnam, aiming to have 50% of manufacturing in these locations by FY2026 end. Despite current headwinds, management secured new programs including a significant consigned manufacturing contract potentially exceeding $20 million in annual revenue.

Positive

• Operating cash flow improved to $18.9M in FY2025 from $13.8M in FY2024
• Full-year gross margin increased to 7.8% from 7.0% year-over-year
• Secured new manufacturing contract with potential $20M+ annual revenue
• Strategic expansion in US and Vietnam facilities to mitigate tariff impacts

Negative

• Revenue declined 17.5% to $467.9M in FY2025 from $566.9M in FY2024
• Net loss widened to $(8.3M) in FY2025 from $(2.8M) in FY2024
• Operating margin decreased to 0.1% from 1.2% year-over-year
• Workforce reduction of approximately 800 employees during FY2025
• $1.8M in credit loss adjustments impacting operating margin

Insights

Financial Analyst

Key Tronic's fiscal 2025 shows significant revenue decline, workforce reduction, and net losses amid tariff disruptions and demand challenges.

Key Tronic's Q4 and full-year results reveal a company navigating substantial headwinds. Revenue declined 12.7% in Q4 to $110.5 million (vs. $126.6 million in Q4 FY2024) and fell 17.5% for the full year to $467.9 million (from $566.9 million). The primary culprits were reduced demand from two longstanding customers and delays in new program launches due to tariff uncertainties.

The company's aggressive cost-cutting measures are particularly notable. Management eliminated approximately 300 jobs in Q4 alone, bringing total workforce reduction to about 800 for fiscal 2025. While these cuts increased short-term expenses with $0.1 million in Q4 severance costs ($2.9 million for full-year), they improved full-year gross margin to 7.8% from 7.0% in FY2024.

However, profitability metrics tell a concerning story. Operating margin collapsed to just 0.1% for FY2025 (down from 1.2%), reflecting $1.8 million in credit loss adjustments. Net losses widened significantly to $3.9 million or $0.36 per share in Q4 (vs. $2.0 million or $0.18 per share in Q4 FY2024) and $8.3 million or $0.77 per share for the full year (vs. $2.8 million or $0.26 per share).

The one bright spot is improved operational cash flow, which increased to $8.8 million in Q4 (vs. $7.7 million) and $18.9 million for the full year (vs. $13.8 million), allowing debt reduction despite revenue challenges.

The company's strategic pivot is evident in its geographic manufacturing diversification, expanding US and Vietnam capacity while right-sizing Mexican operations to mitigate tariff risks. New customer wins across various sectors and a significant consigned manufacturing contract with a data processing OEM (potentially exceeding $20 million in annual revenue) suggest potential recovery paths, though management's reluctance to provide Q1 FY2026 guidance indicates persistent near-term uncertainty.

Cost Reduction Initiatives; Tariff Disruptions; Reduced Demand

SPOKANE VALLEY, Wash., Aug. 27, 2025 (GLOBE NEWSWIRE) -- Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended June 28, 2025.

For the fourth quarter of fiscal year 2025, Key Tronic reported total revenue of $110.5 million, compared to $126.6 million in the same period of fiscal year 2024. For the full fiscal year 2025, total revenue was $467.9 million, compared to $566.9 million for the full fiscal year 2024. The revenue for the fourth quarter and full fiscal year 2025 was adversely impacted by reduced demand from two longstanding customers and delays to new program launches as customers stalled orders due to the recent escalation and fluctuations in global tariffs.

Key Tronic expects long-term growth and profitability despite revenue trends in fiscal year 2025. In order to better align costs with current customer demand and boost automation, the Company cut approximately 300 jobs during the fourth quarter of fiscal year 2025, for a total headcount reduction during fiscal year 2025 of approximately 800. These measures have improved competitiveness for new program bids, which have increased recently. To support its near-shoring and tariff mitigation strategies, Key Tronic is also expanding its manufacturing footprint, with a new US facility and added capacity in Vietnam.

Total cash flow provided by operations for the fourth quarter of fiscal year 2025 was $8.8 million compared to $7.7 million for the same period of fiscal year 2024. For the full fiscal year 2025, cash flow provided by operations was $18.9 million compared to $13.8 million for full fiscal year 2024. The increase in cash from operations has allowed the Company to continue to reduce its debt during the fiscal year.

Gross margin was 6.2% in the fourth quarter of fiscal year 2025, compared to 7.2% in the same period of fiscal year 2024. This decrease is largely related to reduced revenue during the period and severance expenses of $0.1 million for the fourth quarter of fiscal year 2025. For the full fiscal year, gross margin was 7.8% compared to 7.0% for the full fiscal year 2024. The year-over-year increase in gross margin is largely related to operational efficiencies gained from the reductions in workforce offset by $2.9 million of severance expenses for the full fiscal year 2025. The Company’s gross margin is expected to improve further with expected revenue increases during the upcoming fiscal year 2026. Operating margin for the full fiscal year 2025 was 0.1%, down from 1.2% for the full fiscal year 2024, reflecting $1.8 million in credit loss adjustments.

The net loss was $(3.9) million or $(0.36) per share for the fourth quarter of fiscal year 2025, compared to a net loss of $(2.0) million or $(0.18) per share for the same period of fiscal year 2024. For the full fiscal year 2025, the net loss was $(8.3) million or $(0.77) per share, compared to a net loss of $(2.8) million or $(0.26) per share for full fiscal year 2024. The increase in net losses for the fourth quarter and full year of fiscal 2025 primarily related to the large reductions in revenue and increased severance expense, as well as the $1.1 million and $1.8 million in adjustments for estimated collections from customers for those respective periods.

The adjusted net loss was $(3.8) million or $(0.35) per share for the fourth quarter of fiscal year 2025, compared to adjusted net loss of $(0.7) million or $(0.06) per share for the same period of fiscal year 2024. The adjusted net loss was $(5.0) million or $(0.47) per share for the full fiscal year 2025, compared to $(0.2) million or $(0.02) per share for the full fiscal year 2024. See “Non-GAAP Financial Measures,” below for additional information about adjusted net loss and adjusted net loss per share.

“During fiscal 2025, the unprecedented uncertainty in tariffs significantly delayed new program ramps from many of our customers,” said Brett Larsen, President and CEO. “To provide our customers with options to manage current tariffs and future tariff changes, we’re continuing to build out new production capacity in the US and Vietnam and right-size our Mexico facility to remain cost competitive. These enhancements are expected to be fully operational in the first half of fiscal 2026 and enable us to benefit from our customers’ rebalancing their contract manufacturing to these locations. By the end of fiscal 2026, we expect approximately half of our manufacturing to take place in our US and Vietnam facilities.”

“During the fourth quarter of fiscal 2025, we continued to win new programs in pest control, personal protection, air purification, automotive, medical technology and utilities inspection equipment. We’re also excited to announce a new manufacturing services contract with a large data processing OEM that will consign its material and components for new production in our Corinth, Mississippi manufacturing facility. We have never had a consigned program at this scale, which has the potential to ramp significantly during fiscal year 2026 and is estimated to eventually exceed $20 million in annual revenue.”

“At the same time, we have continued to streamline our international and domestic operations, with further headcount reductions to reduce costs and enhance efficiency, building on similar initiatives throughout the year and enabling us to remain cost competitive. We believe Key Tronic remains well positioned for increased growth and profitability over the longer term.”

The financial data presented for the fourth quarter and full year of fiscal 2025 should be considered preliminary and could be subject to change, as the Company’s independent auditor has not completed their review procedures.

Business Outlook

Due to uncertainty in the timing of new program ramps in light of the continued uncertainty of potential tariffs, Key Tronic will not be issuing revenue or earnings guidance for the first quarter of fiscal year 2026.

Conference Call

Key Tronic will host a conference call to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern) today. 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 Code: 9022820). The Company will also reference accompanying slides that can be viewed with the webcast at www.keytronic.com under “Investor Relations”. A replay will be available at www.keytronic.com under “Investor Relations”.

About Key Tronic

Key Tronic is a leading contract manufacturer offering value-added design and manufacturing services from its facilities in the United States, Mexico, China and Vietnam. The Company provides its customers with full engineering services, materials management, worldwide manufacturing facilities, assembly services, in-house testing, and worldwide distribution. Its customers include some of the world’s leading original equipment manufacturers. For more information about Key Tronic visit: www.keytronic.com

Forward-Looking Statements

Some of the statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to those including such words as aims, anticipates, believes, continues, estimates, expects, hopes, intends, plans, predicts, projects, targets, will, or would, similar verbs, or nouns corresponding to such verbs, which may be forward looking. Forward-looking statements also include other passages that are relevant to expected future events, performances, and actions or that can only be fully evaluated by events that will occur in the future. Forward-looking statements in this release include, without limitation, the Company’s statements regarding its expectations with respect to financial conditions and results, including revenue, earnings, and margins, the Company’s ability to build out production capacity in the US and Vietnam and the timing of completion of those facilities, cost savings from headcount reduction, demand for certain products and the effectiveness of some of its programs, business from customers and programs, and impacts from operational streamlining and efficiencies, including reductions in inventories. There are many factors, risks and uncertainties that could cause actual results to differ materially from those predicted or projected in forward-looking statements, including but not limited to: the future of the global economic environment and its impact on our customers and suppliers; the impact of new governmental legislation and regulation, including tax reform, tariffs and related activities, such as trade negotiations and other risks; the success and timing of our expansion plans; the availability of components from the supply chain; the availability of a healthy workforce; the accuracy of suppliers’ and customers’ forecasts; development and success of customers’ programs and products; timing and effectiveness of ramping of new programs; success of new-product introductions; the risk of legal proceedings or governmental investigations relating to the previously reported financial statement restatements and related material weaknesses, the May 2024 cybersecurity incident and the subject of the internal investigation by the Company’s Audit Committee and related or other unrelated matters; acquisitions or divestitures of operations or facilities; technology advances; changes in pricing policies by the Company, its competitors, customers or suppliers; and other factors, risks, and uncertainties detailed from time to time in the Company’s SEC filings.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States (GAAP), we use certain non-GAAP financial measures, adjusted net loss and adjusted net loss per share, diluted. We provide these non-GAAP financial measures because we believe they provide greater transparency related to our core operations and represent supplemental information used by management in its financial and operational decision making. We exclude (or include) certain items in our non-GAAP financial measures as we believe the net result is a measure of our core business. We believe this facilitates operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain income and expense items that would not otherwise be apparent on a GAAP basis. Non-GAAP performance measures should be considered in addition to, and not as a substitute for, results prepared in accordance with GAAP. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Our non-GAAP financial measures may be different from those reported by other companies. See the table below entitled “Reconciliation of GAAP to non-GAAP measures” for reconciliations of adjusted net loss to the most directly comparable GAAP measure, which is GAAP net loss, and the computation of adjusted net loss per share, diluted.

KEY TRONIC CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)
	Three Months Ended								Twelve Months Ended
	June 28, 2025				June 29, 2024				June 28, 2025				June 29, 2024
Net sales	$	110,486			$	126,556			$	467,871			$	566,942
Cost of sales		103,675				117,384				431,444				527,063
Gross profit		6,811				9,172				36,427				39,879
Research, development and engineering expenses		2,246				2,100				9,163				8,333
Selling, general and administrative expenses		6,867				6,956				26,702				25,219
Gain on insurance proceeds, net of losses		—				—				—				(431	)
Total operating expenses		9,113				9,056				35,865				33,121
Operating income (loss)		(2,302	)			116				562				6,758
Interest expense, net		2,775				3,173				12,523				11,945
Loss before income taxes		(5,077	)			(3,057	)			(11,961	)			(5,187	)
Income tax benefit		(1,153	)			(1,071	)			(3,643	)			(2,400	)
Net Loss	$	(3,924	)		$	(1,986	)		$	(8,318	)		$	(2,787	)
Net loss per share — Basic	$	(0.36	)		$	(0.18	)		$	(0.77	)		$	(0.26	)
Weighted average shares outstanding — Basic		10,762				10,762				10,762				10,762
Net loss per share — Diluted	$	(0.36	)		$	(0.18	)		$	(0.77	)		$	(0.26	)
Weighted average shares outstanding — Diluted		10,762				10,762				10,762				10,762

KEY TRONIC CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
		June 28, 2025			June 29, 2024
ASSETS
Current assets:
Cash and cash equivalents		$	1,384		$	4,752
Trade receivables, net of credit losses of $3,479 and $2,918			96,142			132,559
Contract assets			17,409			21,250
Inventories, net			97,321			105,099
Other, net of credit losses of $1,463 and $1,679			21,917			24,739
Total current assets			234,173			288,399
Property, plant and equipment, net			27,727			28,806
Operating lease right-of-use assets, net			11,347			15,416
Other assets:
Deferred income tax asset			23,397			17,376
Other, net of credit losses of $500 and $0			19,230			5,346
Total other assets			42,627			22,722
Total assets		$	315,874		$	355,343
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	63,725		$	79,394
Accrued compensation and vacation			8,157			6,510
Current portion of long-term debt			6,215			3,123
Other			13,894			15,149
Total current liabilities			91,991			104,176
Long-term liabilities:
Long-term debt, net			98,936			116,383
Operating lease liabilities			6,859			10,312
Deferred income tax liability			—			263
Other long-term obligations			954			219
Total long-term liabilities			106,749			127,177
Total liabilities			198,740			231,353
Shareholders’ equity:
Common stock, no par value—shares authorized 25,000; issued and outstanding 10,762 and 10,762 shares, respectively			47,502			47,284
Retained earnings			68,603			76,921
Accumulated other comprehensive income (loss)			1,029			(215	)
Total shareholders’ equity			117,134			123,990
Total liabilities and shareholders’ equity		$	315,874		$	355,343

KEY TRONIC CORPORATION AND SUBSIDIARIES Reconciliation of GAAP to non-GAAP measures (In thousands, except per share amounts) (Unaudited)
	Three Months Ended								Twelve Months Ended
	June 28, 2025				June 29, 2024				June 28, 2025				June 29, 2024
GAAP net loss	$	(3,924	)		$	(1,986	)		$	(8,318	)		$	(2,787	)
Cybersecurity expenses		—				2,340				—				2,340
Severance expenses		51				(108	)			2,908				1,743
Gain on insurance proceeds (net of losses)		—				—				—				(431	)
Stock-based compensation expense		109				(607	)			218				(444	)
Write-off of unamortized loan fees		—				—				1,012				—
Income tax effect of non-GAAP adjustments (1)		(32	)			(325	)			(828	)			(642	)
Adjusted net loss:	$	(3,796	)		$	(686	)		$	(5,008	)		$	(221	)
Adjusted net loss per share — non-GAAP Diluted	$	(0.35	)		$	(0.06	)		$	(0.47	)		$	(0.02	)
Weighted average shares outstanding — Diluted		10,762				10,762				10,762				10,762
(1) Income tax effects are calculated using an effective tax rate of 20%, which approximates the statutory GAAP tax rate for the presented periods.

 

CONTACTS:		Tony Voorhees		Michael Newman
		Chief Financial Officer		Investor Relations
		Key Tronic Corporation		StreetConnect
		(509)-927-5345		(206) 729-3625

 

FAQ

What were Key Tronic's (KTCC) Q4 2025 earnings results?

Key Tronic reported Q4 2025 revenue of $110.5 million and a net loss of $(3.9) million or $(0.36) per share, compared to a net loss of $(2.0) million or $(0.18) per share in Q4 2024.

How many jobs did Key Tronic cut in fiscal year 2025?

Key Tronic cut approximately 800 total jobs during fiscal year 2025, with about 300 of those cuts occurring in the fourth quarter.

What is Key Tronic's manufacturing expansion strategy for 2026?

Key Tronic plans to have approximately 50% of its manufacturing take place in US and Vietnam facilities by the end of fiscal 2026, expanding these locations to address tariff concerns.

What new significant contract did Key Tronic secure for FY2026?

Key Tronic secured a new consigned manufacturing contract with a large data processing OEM, expected to exceed $20 million in annual revenue and will be manufactured in their Corinth, Mississippi facility.

How did Key Tronic's full-year 2025 revenue compare to 2024?

Key Tronic's full-year revenue for FY2025 was $467.9 million, representing a significant decrease from $566.9 million in FY2024.

What was Key Tronic's operating cash flow for fiscal year 2025?

Key Tronic's operating cash flow for FY2025 was $18.9 million, an improvement from $13.8 million in FY2024.