Key Tronic Corporation Awarded Major New Contract with Energy Resilience Technology Provider
Rhea-AI Summary
Key Tronic (Nasdaq: KTCC) has secured a significant manufacturing contract with an energy resilience technology provider. The company will begin manufacturing an innovative energy resiliency product in the second half of 2025, with production taking place at facilities in Juarez, Mexico and Arkansas. The program is expected to generate annual revenue exceeding $60 million once fully ramped.
The partnership aims to accelerate new product introduction and enhance product availability to meet anticipated high demand. Key Tronic's President and CEO Brett Larsen highlighted that this strategic relationship represents an expansion of their customer base and is expected to contribute to profitable long-term growth. The product is designed to improve asset management and public safety through increased operational vigilance.
Positive
- Expected annual revenue exceeding $60 million from new contract
- Manufacturing expansion into energy resilience sector
- Strategic diversification of customer base
- Production across multiple facilities (Mexico and Arkansas)
- Anticipated contribution to profitable long-term growth
Negative
- Production ramp-up not starting until late 2025
- Revenue impact dependent on successful product launch and market adoption
Insights
This contract represents a transformative opportunity for Key Tronic, with the potential
The timing of the ramp-up in late 2025 provides adequate preparation time for production line configuration and workforce training. The strategic value extends beyond mere revenue - this positions KTCC in the rapidly growing energy resilience sector, which is seeing increased demand driven by grid stability concerns and renewable energy integration challenges.
Several key factors make this particularly noteworthy:
- The contract's size relative to KTCC's current market cap suggests significant potential for value creation
- Multi-facility production approach indicates substantial volume expectations
- The customer's emphasis on accelerating product introduction suggests potential first-mover advantages in their market segment
- Reference to "public safety" and "increased vigilance" hints at critical infrastructure applications, potentially leading to stable, long-term demand
Manufacturing execution will be critical, particularly managing the simultaneous ramp-up across two facilities. The emphasis on design expertise alongside manufacturing suggests higher-value engagement beyond pure contract manufacturing, potentially supporting better margins.
The energy resilience technology sector is experiencing unprecedented growth, driven by multiple catalysts including grid modernization initiatives, renewable energy integration challenges and increasing frequency of extreme weather events. This contract positions KTCC to capture value in this expanding market.
The description of a "market revolutionizing" product, combined with references to asset management and public safety, suggests sophisticated grid monitoring or control technology. This timing aligns with several market trends:
- Increasing investment in grid modernization and resilience
- Growing demand for advanced energy management solutions
- Rising focus on critical infrastructure protection
- Regulatory push for grid reliability and security
The customer's reference to "overwhelming demand" indicates strong market validation and suggests potential for contract expansion beyond the initial
Program expected to have a materially significant impact on revenue and profit
SPOKANE 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 product. Initial production will ramp in late 2025 at the Key Tronic manufacturing campuses in Juarez, Mexico and Arkansas. Once fully ramped, Key Tronic believes the yearly revenue could exceed
“We are looking forward to the design and manufacturing expertise of Key Tronic to help accelerate introduction of new products, as well as enhance our ability to increase product availability to fulfill the anticipated overwhelming demand,” said the CEO of Key Tronic’s new customer.
“We are very excited to be working with a recognized, emerging leader in the energy resiliency industry,” said Brett Larsen, President and CEO of Key Tronic. “The product has the potential to assist in better asset management and public safety by ensuring increased vigilance across all operations. Our new customer is a highly respected company and we are thrilled to be involved with a product that can assist in the greater good. This important new strategic relationship represents an expansion of our customer base and we expect it will contribute to profitable long term growth.”
About Key Tronic
Key Tronic is a leading design engineering and contract manufacturer offering value-added design and manufacturing services from its facilities in the United States, Mexico, China and Vietnam. Key Tronic provides its customers 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, including Key Tronic’s opportunities and its partnership, the potential success of Key Tronic and the customer, and related revenues. Forward-looking statements include all passages containing verbs such as aims, anticipates, believes, estimates, expects, hopes, intends, plans, predicts, projects or targets or nouns corresponding to such verbs. Forward-looking statements also include other passages that are primarily relevant to expected future events or revenue or that can only be fully evaluated by events that will occur in the future. 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 success and timing of ramping; availability and timing and receipt of critical parts or components; demand from customers and sales channels; the future of the global economic environment and its impact on our customers and suppliers; the availability of a healthy workforce; the accuracy of suppliers’ and customers’ forecasts; development and success of customers’ programs and products; 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; impact of new governmental legislation and regulation, including tax reform, tariffs and related activities, such trade negotiations and other risks; and other factors, risks, and uncertainties detailed from time to time in the Company’s SEC filings.
| CONTACTS: | Anthony G. Voorhees | Michael Newman | |
| Chief Financial Officer | Investor Relations | ||
| Key Tronic Corporation | StreetConnect | ||
| (509) 927-5345 | (206) 729-3625 |
FAQ
What is the expected annual revenue from KTCC's new energy resilience contract?
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