Key Tronic Corporation Announces Results for the Third Quarter of Fiscal Year 2026
Rhea-AI Summary
Key Tronic (Nasdaq: KTCC) reported third-quarter fiscal 2026 revenue of $89.6M versus $112.0M a year earlier; year-to-date revenue was $284.6M versus $357.4M. The company cited lower legacy demand, an end-of-life program transition and Winter Storm Fern closures. Gross margin rose to 8.0%; adjusted gross margin was 8.5%. Net loss was $(2.6)M (Q3) and $(13.5)M year-to-date. Key Tronic is completing a China wind-down, expects ~$1.2M quarterly savings after completion, reduced debt by ~$14.3M year-over-year, and will not issue Q4 guidance due to timing and macro uncertainty.
Positive
- Adjusted gross margin of 8.5% in Q3
- China wind-down expected to save $1.2M per quarter after completion
- Debt reduced by approximately $14.3M year-over-year
Negative
- Q3 revenue declined to $89.6M from $112.0M (≈20% decrease)
- Year-to-date revenue fell to $284.6M from $357.4M
- Net loss widened to $(13.5)M year-to-date
- Temporary site closures and facility damage from Winter Storm Fern impacted Q3 results
- Company will not provide Q4 revenue or earnings guidance due to uncertainty
News Market Reaction – KTCC
In the May 6 session, KTCC gained 10.69%, reflecting a significant positive market reaction. Argus tracked a peak move of +8.9% during that session. Our momentum scanner triggered 7 alerts that day, indicating moderate trading interest and price volatility. Trading volume was very high at 4.7x the daily average, suggesting strong buying interest.
Data tracked by StockTitan Argus on the day of publication.
Key Figures
Previous Earnings Reports
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| Feb 03 | Q2 2026 earnings | Negative | +0.0% | Weaker Q2 sales, wider loss, large China and Mexico restructuring charges. |
| Nov 04 | Q1 2026 earnings | Negative | -13.2% | Revenue drop, swing to loss, margin pressure despite sequential improvement. |
| Oct 20 | Q1 call date | Neutral | +1.2% | Announcement of timing for Q1 FY2026 results and conference call. |
| Aug 27 | Q4/FY2025 earnings | Negative | -4.4% | Revenue declines, FY2025 net loss, major workforce reductions and restructuring. |
| Aug 07 | Q4 call date | Neutral | -3.8% | Scheduling of Q4 and FY2025 results release and annual meeting date. |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Earnings-related headlines have often been followed by negative or muted reactions, with an average move of about -4.02% and several selloffs on weak results.
Recent history shows a pattern of declining revenue and recurring losses with ongoing restructuring. Q4 FY2025 results highlighted revenue falling to $467.9M and a net loss of $8.3M, prompting job cuts and footprint shifts to the US and Vietnam. Q1 and Q2 FY2026 earnings continued to show year-over-year sales declines and net losses, but also improving gross margins and operating cash generation. Today’s Q3 FY2026 release extends that theme of weaker sales but incremental margin progress and ongoing geographic realignment.
Key Terms
non-gaap financial measures financial
adjusted gross margin financial
adjusted net loss financial
tariff mitigation technical
AI-generated analysis. How Rhea-AI works. Not financial advice.
Improved Operating Efficiency; Continued Program Wins and Expected Revenue Growth
SPOKANE VALLEY, Wash., May 05, 2026 (GLOBE NEWSWIRE) -- Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended March 28, 2026.
For the third quarter of fiscal year 2026, Key Tronic reported total revenue of
Key Tronic achieved notable progress in the third quarter of fiscal year 2026, successfully strengthening its margins even as revenue was
The Company continued to prepare for anticipated long-term growth by executing its near-shoring and tariff mitigation strategies to reduce costs while maintaining the diversity and flexibility of its key locations and capabilities. Key Tronic believes that these cost reductions have enabled the Company to become more competitive on recent quoting opportunities. During the quarter, Key Tronic continued to wind down its manufacturing operations in China, shifting more production to the Company’s expanding facilities in the US and Vietnam. The wind-down of manufacturing in China is expected to be completed by the end of the current fiscal year and anticipated to save approximately
Year-to-date cash flow provided by operations for the first nine months of fiscal year 2026 was approximately
The net loss was
The adjusted net loss was
“Despite reduced demand from certain longstanding customers and the shutdowns caused by Winter Storm Fern in the third quarter, we’re encouraged by the improvements in our operating efficiencies, and by the gradual rebound in demand from several longstanding customers and the continued growth of new programs that we’re seeing in the fourth quarter,” said Brett Larsen, President and CEO. “We continue to provide our customers with options to better manage macroeconomic uncertainties and enhance our potential for profitable long-term growth, as we cease manufacturing operations in China, continue to right-size our Mexico facility and build out new production capacity in the US and Vietnam. We continue to expect approximately half of our manufacturing to take place in our US and Vietnam facilities during the fourth quarter of fiscal 2026.”
“During the third quarter of fiscal 2026, we won new programs in automotive technology, industrial tooling, pest control and industrial power management. Our improved operating efficiency has also made us more competitive, increasing our sales pipeline, particularly in such steady growth sectors as utilities and data center equipment. Our production backlog of customer demand has increased and we continue to expect our revenue to gradually begin to rebound and see a return to profitability in the fourth quarter of fiscal 2026.”
The financial data presented for the third quarter of fiscal 2026 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 and continued macroeconomic uncertainty, Key Tronic will not be issuing revenue or earnings guidance for the fourth 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 800-330-6710 or +1-213-279-1505 (Access Code: 8278065). 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, sourcing and manufacturing services from its facilities in the United States, Mexico, 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 shift its focus in China and build out production capacity in the US and Vietnam and the timing of completion of those facilities, cost savings from headcount reduction and the wind-down of manufacturing operations in China, demand for certain products and the effectiveness of some of its programs, business from customers and programs, new program launches, impacts from operational streamlining and efficiencies, including reductions in inventories, and impacts of repairs to its facilities from winter storm damage. 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 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 income (loss), and adjusted net income (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.
In addition, during this period, we have provided adjusted cost of sales, adjusted gross profit, and adjusted gross margin. These additions supplement adjusted net income (loss) by mapping the portion of the identified adjustments utilized in the calculation of adjusted net income (loss) to relevant financial statement line items for re-calculation of the adjusted metrics presented. We have provided these additional 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.
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 income (loss) and adjusted cost of sales to the most directly comparable GAAP measure, which is GAAP net income (loss), and GAAP cost of sales, respectively, as well as the computation of adjusted gross profit, adjusted gross margin, and adjusted net income (loss) per share, diluted.
| KEY TRONIC CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| March 28, 2026 | March 29, 2025 | March 28, 2026 | March 29, 2025 | ||||||||||||
| Net sales | $ | 89,571 | $ | 111,974 | $ | 284,640 | $ | 357,385 | |||||||
| Cost of sales | 82,388 | 103,367 | 268,643 | 327,769 | |||||||||||
| Gross profit | 7,183 | 8,607 | 15,997 | 29,616 | |||||||||||
| Research, development and engineering expenses | 1,825 | 2,308 | 5,748 | 6,917 | |||||||||||
| Selling, general and administrative expenses | 6,233 | 6,758 | 21,966 | 19,835 | |||||||||||
| Gain on insurance proceeds, net of losses | (637 | ) | — | (637 | ) | — | |||||||||
| Total operating expenses | 7,421 | 9,066 | 27,077 | 26,752 | |||||||||||
| Operating income (loss) | (238 | ) | (459 | ) | (11,080 | ) | 2,864 | ||||||||
| Interest expense, net | 2,396 | 2,581 | 7,543 | 9,748 | |||||||||||
| Loss before income taxes | (2,634 | ) | (3,040 | ) | (18,623 | ) | (6,884 | ) | |||||||
| Income tax benefit | (9 | ) | (2,436 | ) | (5,173 | ) | (2,490 | ) | |||||||
| Net loss | $ | (2,625 | ) | $ | (604 | ) | $ | (13,450 | ) | $ | (4,394 | ) | |||
| Net loss per share — Basic | $ | (0.24 | ) | $ | (0.06 | ) | $ | (1.24 | ) | $ | (0.41 | ) | |||
| Weighted average shares outstanding — Basic | 10,859 | 10,762 | 10,830 | 10,762 | |||||||||||
| Net loss per share — Diluted | $ | (0.24 | ) | $ | (0.06 | ) | $ | (1.24 | ) | $ | (0.41 | ) | |||
| Weighted average shares outstanding — Diluted | 10,859 | 10,762 | 10,830 | 10,762 | |||||||||||
| KEY TRONIC CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) | ||||||||
| March 28, 2026 | June 28, 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 431 | $ | 1,384 | ||||
| Trade receivables, net of credit losses of | 84,611 | 96,142 | ||||||
| Contract assets, net of credit losses of | 23,254 | 17,409 | ||||||
| Inventories, net | 85,798 | 97,321 | ||||||
| Other, net of credit losses of | 13,885 | 21,917 | ||||||
| Total current assets | 207,979 | 234,173 | ||||||
| Property, plant and equipment, net | 29,406 | 27,727 | ||||||
| Operating lease right-of-use assets, net | 27,810 | 11,347 | ||||||
| Other assets: | ||||||||
| Deferred income tax asset | 29,309 | 23,397 | ||||||
| Other, net of credit losses of | 28,359 | 19,230 | ||||||
| Total other assets | 57,668 | 42,627 | ||||||
| Total assets | $ | 322,863 | $ | 315,874 | ||||
| LIABILITIES AND SHAREHOLDERS’EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 65,840 | $ | 63,725 | ||||
| Accrued compensation and vacation | 5,928 | 8,157 | ||||||
| Current portion of long-term debt | 7,257 | 6,215 | ||||||
| Other | 22,048 | 13,894 | ||||||
| Total current liabilities | 101,073 | 91,991 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt, net | 92,038 | 98,936 | ||||||
| Operating lease liabilities | 21,154 | 6,859 | ||||||
| Deferred income tax liability | 10 | — | ||||||
| Other long-term obligations | 5,500 | 954 | ||||||
| Total long-term liabilities | 118,702 | 106,749 | ||||||
| Total liabilities | 219,775 | 198,740 | ||||||
| Shareholders’ equity: | ||||||||
| Common stock, no par value—shares authorized 25,000; issued and outstanding 10,859 and 10,762 shares, respectively | 47,970 | 47,502 | ||||||
| Retained earnings | 55,153 | 68,603 | ||||||
| Accumulated other comprehensive income | (35 | ) | 1,029 | |||||
| Total shareholders’ equity | 103,088 | 117,134 | ||||||
| Total liabilities and shareholders’ equity | $ | 322,863 | $ | 315,874 | ||||
| KEY TRONIC CORPORATION AND SUBSIDIARIES Reconciliation of GAAP to non-GAAP measures (In thousands, except per share amounts) (Unaudited) | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| March 28, 2026 | March 29, 2025 | March 28, 2026 | March 29, 2025 | ||||||||||||
| GAAP net loss | $ | (2,625 | ) | (604 | ) | $ | (13,450 | ) | (4,394 | ) | |||||
| Severance expenses | 215 | 818 | 5,720 | 2,857 | |||||||||||
| China manufacturing wind-down | 235 | — | 6,403 | — | |||||||||||
| Stock-based compensation expense | (31 | ) | 26 | 468 | 109 | ||||||||||
| Gain on insurance proceeds, net of losses | (637 | ) | — | (637 | ) | — | |||||||||
| Write-off of unamortized loan fees | — | — | — | 1,012 | |||||||||||
| Income tax effect of non-GAAP adjustments (1) | 44 | (169 | ) | (2,391 | ) | (796 | ) | ||||||||
| Adjusted net income (loss) | $ | (2,799 | ) | $ | 71 | $ | (3,887 | ) | $ | (1,212 | ) | ||||
| Adjusted net income (loss) per share — non-GAAP Diluted | $ | (0.26 | ) | $ | 0.01 | $ | (0.36 | ) | $ | (0.11 | ) | ||||
| Weighted average shares outstanding — Diluted | 10,859 | 10,775 | 10,830 | 10,762 | |||||||||||
| GAAP cost of sales | $ | 82,388 | $ | 103,367 | $ | 268,643 | $ | 327,769 | |||||||
| Severance expenses | 215 | 818 | 5,720 | 2,857 | |||||||||||
| China manufacturing wind-down | 235 | — | 3,010 | — | |||||||||||
| Adjusted cost of sales | $ | 81,938 | $ | 102,549 | $ | 259,913 | $ | 324,912 | |||||||
| Total gross profit adjustments | $ | 450 | $ | 818 | $ | 8,730 | $ | 2,857 | |||||||
| GAAP gross profit | $ | 7,183 | $ | 8,607 | $ | 15,997 | $ | 29,616 | |||||||
| Total gross profit adjustments | 450 | 818 | 8,730 | 2,857 | |||||||||||
| Adjusted gross profit | $ | 7,633 | $ | 9,425 | $ | 24,727 | $ | 32,473 | |||||||
| GAAP net sales | $ | 89,571 | $ | 111,974 | $ | 284,640 | $ | 357,385 | |||||||
| Adjusted gross margin | 8.5 | % | 8.4 | % | 8.7 | % | 9.1 | % | |||||||
| (1) Income tax effects are calculated using an effective tax rate of | |||||||||||||||
| CONTACTS: | Tony Voorhees | Michael Newman | ||
| Chief Financial Officer | Investor Relations | |||
| Key Tronic Corporation | StreetConnect | |||
| (509)-927-5345 | (206) 729-3625 |
