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Key Tronic (NASDAQ: KTCC) takes $28M tax hit as Q4 loss deepens

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(High)
Filing Sentiment
(Neutral)
Form Type
8-K

Rhea-AI Filing Summary

KEY TRONIC CORP (KTCC) reported fourth-quarter fiscal 2026 net sales of $102.0 million, up 14% sequentially from the prior quarter but below $110.5 million a year earlier. Growth was driven by strong demand across legacy and new programs, with Vietnam-based revenue more than doubling sequentially. Supply-chain financing issues delayed about $10 million of shipments and constrained production.

Gross margin improved to 7.8% from 6.2% a year ago, but operating margin was (3.6)%, hurt by an $8.4 million write-off of distressed customer receivables and related legal costs, partly offset by a $5.3 million insurance recovery. KTCC recorded a non-cash $28.4 million valuation allowance against deferred tax assets, driving a Q4 GAAP net loss of $34.3 million ($3.16 per share). Full-year 2026 net sales were $386.7 million versus $467.9 million in 2025, with a GAAP net loss of $47.8 million. On a non-GAAP basis, Q4 adjusted net loss narrowed to $2.9 million ($0.26 per share). The company completed the wind-down of China manufacturing, expects about $4.0 million in fiscal 2027 savings, and reported over $60 million in new program awards, but is not issuing Q1 2027 guidance and notes preliminary, unaudited figures.

Positive

  • Sequential revenue and margin improvement: Q4 net sales rose to $102.0 million, a 14% sequential increase, and gross margin improved to 7.8% from 6.2% a year earlier, reflecting benefits from cost-cutting and the restructured manufacturing footprint.
  • Restructuring benefits and new business: The company completed the wind-down of China manufacturing, expecting about $4.0 million in fiscal 2027 savings, and secured more than $60 million in new program awards across data center, construction, and industrial power management markets.

Negative

  • Sharp increase in GAAP losses: Q4 GAAP net loss widened to $34.3 million ($3.16 per share) versus $3.9 million a year ago, and full-year 2026 GAAP net loss expanded to $47.8 million from $8.3 million in 2025.
  • Significant non-cash tax charge and receivable write-offs: A non-cash $28.4 million valuation allowance against deferred tax assets and about $8.4 million of distressed customer receivable write-offs materially reduced earnings and shareholders’ equity.
  • Revenue decline and liquidity pressures: Full-year net sales fell to $386.7 million from $467.9 million, while supply-chain financing constraints delayed roughly $10 million of shipments and the company highlighted ongoing liquidity challenges, choosing not to provide Q1 fiscal 2027 guidance.

Insights

Analyzing...

Item 2.02 Results of Operations and Financial Condition Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01 Financial Statements and Exhibits Exhibits
Financial statements, pro forma financial information, or exhibit attachments filed with this report.
Q4 2026 net sales $102.0 million Quarter ended June 27, 2026; up from $89.6 million in the prior quarter
Full-year 2026 net sales $386.7 million Fiscal year 2026 vs $467.9 million in fiscal year 2025
Q4 2026 GAAP net loss $34.3 million Quarter ended June 27, 2026; $3.16 loss per share
Full-year 2026 GAAP net loss $47.8 million Fiscal year 2026; $4.41 loss per share
Q4 2026 adjusted net loss $2.9 million Non-GAAP; $0.26 loss per diluted share for the quarter
Expected China exit savings $4.0 million Anticipated savings in fiscal 2027 from wind-down of China manufacturing
Debt outstanding $106.2 million Current and long-term debt as of June 27, 2026
Shareholders’ equity $69.2 million Total shareholders’ equity as of June 27, 2026
valuation allowance financial
"The Company recorded a $28.4 million non-cash charge during the quarter to establish a valuation allowance"
A valuation allowance is a reserve set aside to reduce the value of certain assets on a company's financial records when there is uncertainty about whether they will generate the expected benefits. It acts like a caution sign, indicating that some assets might not be fully recoverable or worth their recorded amount. This matters to investors because it provides a more realistic picture of a company's financial health and potential risks.
non-GAAP financial measures financial
"we use certain non-GAAP financial measures; adjusted net loss, and adjusted net loss per share"
Non-GAAP financial measures are numbers companies use to show their financial performance that exclude certain expenses or income. They help investors see how the company might perform without one-time costs or other unusual items, giving a different perspective from official reports. However, since they can be adjusted, they don’t always tell the full story and should be looked at alongside standard financial figures.
adjusted gross margin financial
"Adjusted gross margin was 8.3% for the fourth quarter of fiscal year 2026"
Adjusted gross margin is a measure of how much profit a company makes from its sales after accounting for certain expenses or one-time costs, but before deducting other operating expenses. It helps investors see the company's core profitability more clearly by removing factors that might distort the usual profit picture, similar to a runner measuring their speed without considering obstacles or weather. This metric provides a clearer view of the company's ongoing financial health.
near-shoring technical
"executing its near-shoring and tariff mitigation strategies to reduce costs"
Near-shoring is the practice of moving production, services, or suppliers closer to a company’s primary market or headquarters instead of locating them in distant, low-cost countries. Like choosing a nearby supplier to avoid long delivery times, it can reduce shipping costs, shorten supply chains, lower geopolitical and disruption risk, and speed up product changes — all factors that can affect costs, margins, and the reliability of future earnings for investors.
tariff mitigation strategies financial
"executing its near-shoring and tariff mitigation strategies to reduce costs"
supply chain financing constraints financial
"Supply chain financing constraints delayed approximately $10 million of the Company's shipments"
Q4 net sales $102.0 million Up 14% sequentially; below $110.5 million in prior-year quarter
Q4 GAAP net loss $34.3 million Worse than $3.9 million GAAP net loss in prior-year quarter
Q4 adjusted net loss $2.9 million Improved from $3.8 million adjusted net loss in prior-year quarter
Full-year net sales $386.7 million Lower than $467.9 million in fiscal year 2025
Full-year GAAP net loss $47.8 million Larger than $8.3 million GAAP net loss in fiscal year 2025

FAQ

How did KTCC perform in the fourth quarter of fiscal 2026?
KTCC reported $102.0 million in Q4 fiscal 2026 net sales, up 14% sequentially but down from $110.5 million a year earlier. Gross margin improved to 7.8%, while GAAP net loss was $34.3 million or $3.16 per share, impacted by large charges.

What were KTCC’s full-year fiscal 2026 results?
For fiscal 2026, KTCC generated net sales of $386.7 million versus $467.9 million in 2025 and recorded a GAAP net loss of $47.8 million, or $4.41 per share, compared with a $8.3 million loss, or $0.77 per share, in fiscal 2025.

What major charges affected KTCC’s Q4 2026 results?
Q4 results included a non-cash $28.4 million valuation allowance against deferred tax assets and about $8.4 million of long-term receivable write-offs and related legal costs. These were partly offset by a $5.3 million insurance recovery related to roof replacement at a Mississippi facility.

How is KTCC’s restructuring expected to impact future results?
KTCC completed the wind-down of manufacturing in China and shifted more production to US and Vietnam facilities. The company anticipates this restructuring will save approximately $4.0 million in fiscal 2027 and improve competitiveness on new program opportunities.

What liquidity and supply-chain issues does KTCC report?
KTCC states that tightening credit availability and liquidity pressures across the global supply chain constrained production in Q4, delaying about $10 million of shipments. The company is working with customers and suppliers and evaluating additional capital sources to alleviate these constraints.

Is KTCC providing guidance for fiscal 2027?
KTCC is not issuing revenue or earnings guidance for the first quarter of fiscal 2027, citing uncertainty in the timing of new program ramps and broader macroeconomic uncertainty, even as it expects continued revenue growth and a return to profitability in fiscal 2027.

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false000071973300007197332026-08-272026-08-27


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) August 27, 2026
 
Key Tronic Corporation
(Exact name of registrant as specified in its charter)
 
Washington0-1155991-0849125
(State or other jurisdiction
of incorporation)		(Commission
File Number)		(IRS Employer
Identification No.)
4424 North Sullivan RoadSpokane Valley,Washington99216
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code (509) 928-8000
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provision (see General Instruction A.2. below):
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, no par value
KTCC
NASDAQ Global Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐


ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On August 27, 2026 , Key Tronic Corporation issued a press release announcing its financial results for the quarter ended June 27, 2026. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this Form 8-K including the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section and shall not be deemed incorporated by reference into any filing of Key Tronic Corporation under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as set forth by specific reference in such a filing.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d)Exhibits
Exhibit Number  Description
99.1  
Press Release Dated August 27, 2026
104Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document
SAFE HARBOR STATEMENT. Statements contained in the Exhibit to this report that state Key Tronic Corporation's or its management's expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Key Tronic Corporation's actual results could differ materially from those projected in such forward-looking statements. Factors that could affect those results include those mentioned in the Exhibit to this report and the documents that Key Tronic Corporation has filed with the Securities and Exchange Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
KEY TRONIC CORPORATION
(Registrant)
Date: August 27, 2026
By:/s/ Anthony G. Voorhees
Anthony G. Voorhees, Executive Vice President
of Administration, CFO and Treasurer
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Exhibit 99.1
FOR IMMEDIATE RELEASE
 
CONTACTS:Tony VoorheesMichael Newman
Chief Financial OfficerInvestor Relations
Key Tronic CorporationStreetConnect
(509)-927-5345(206) 729-3625
KEY TRONIC CORPORATION ANNOUNCES RESULTS
FOR THE FOURTH QUARTER AND YEAR END OF FISCAL 2026

Strong Sequential Quarterly Revenue Growth; Completed Restructuring of Global Manufacturing Footprint;
Improving Operating Efficiencies Drive Continued Program Wins
Spokane Valley, WA— August 27, 2026 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended June 27, 2026.

For the fourth quarter of fiscal year 2026, Key Tronic reported total revenue of $102.0 million, compared to $89.6 million in the prior quarter and $110.5 million in the same period of fiscal year 2025. The 14% sequential increase in revenue in the fourth quarter of fiscal year 2026 was driven by strong demand from both legacy and new programs. In particular, revenue from Key Tronic’s Vietnam-based production more than doubled sequentially, driven by medical device and consumer products programs.

While customer demand rebounded significantly in the fourth quarter of fiscal year 2026, Key Tronic's production was constrained by tightening credit availability and liquidity pressures across the global supply chain. These capital constraints have affected the entire EMS industry as suppliers, customers, and manufacturers navigate ongoing macroeconomic uncertainty. Supply chain financing constraints delayed approximately $10 million of the Company's shipments during the quarter. The Company is actively working with its customers and suppliers, while also evaluating additional sources of capital, to support growth and alleviate these temporary constraints in future periods. We believe our operational discipline, strengthened manufacturing footprint, and long-standing customer relationships have positioned us better than many of our competitors. As a result, we continue to win new business and gain market share in several target markets in new program awards in the fourth quarter of fiscal 2026.

For the full fiscal year 2026, total revenue was $386.7 million, compared to $467.9 million in the fiscal year 2025, largely reflecting reduced demand from certain legacy and end-of-life programs, as well as a variety of uncertainties in the global economy throughout the year. The Company has experienced an increase in new program wins and new sales funnel activity leading to expected revenue growth in coming quarters of fiscal 2027.

Gross margin was 7.8% in the fourth quarter of fiscal year 2026, up from 6.2% in the same period of fiscal year 2025. The Company’s gross margin improvements in the fourth quarter of fiscal year 2026, despite the adverse supply chain challenges, demonstrated the operating efficiencies gained from its cost-cutting initiatives over the past two years. Operating margin was (3.6)% in the fourth quarter of fiscal year 2026, down from (2.1)% in the same period of fiscal year 2025. The operating margin for the fourth quarter of fiscal 2026 was adversely affected by an $8.4 million write-off of long-term receivables and related legal costs incurred in pursuing recovery from longstanding customers experiencing financial distress and no longer generating program revenues. These adverse impacts were partially offset by a $5.3 million insurance recovery related to a roof replacement at the Company's Mississippi facility.

Adjusted gross margin was 8.3% for the fourth quarter of fiscal year 2026 up from 6.2% in the same period of fiscal year 2025 (see “Non-GAAP Financial Measures,” below for additional information about adjusted gross margin). These margin gains highlight the Company’s resilience and commitment to improving its operating efficiency. With revenue expected to continue to increase, Key Tronic anticipates continued margin growth in coming quarters.

Throughout fiscal year 2026, 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 fourth quarter, Key Tronic completed the wind-down of 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 anticipated to save approximately $4.0 million in fiscal 2027.



The Company’s net loss was $(34.3) million or $(3.16) per share for the fourth quarter of fiscal year 2026, compared to net loss of $(3.9) million or $(0.36) per share for the same period of fiscal year 2025. For the full fiscal year 2026, the net loss was $(47.8) million or $(4.41) per share, compared to $(8.3) million or $(0.77) per share for the full fiscal year 2025.

The Company recorded a $28.4 million non-cash charge during the quarter to establish a valuation allowance against certain deferred tax assets. The accounting adjustment was driven primarily by the cumulative loss of US taxable income over the last few years. While management remains confident in the Company's expected return to profitability and the future expected utilization of certain tax benefits, the valuation allowance was based on the relative weighting of historical results. The adjustment has no impact on cash flows, debt covenant compliance, or the Company's underlying operating performance. As described above, approximately $8.4 million of distressed customer related long term receivables were also written off during the quarter.

The adjusted net loss was $(2.9) million or $(0.26) per diluted share for the fourth quarter of fiscal year 2026, compared to adjusted net loss of $(3.8) million or $(0.35) per diluted share for the same period of fiscal year 2025. For the full fiscal year 2026, the adjusted net loss was $(3.7) million or $(0.34) per diluted share, compared to adjusted net loss of $(5.0) million or $(0.47) per diluted share for fiscal year 2025. See “Non-GAAP Financial Measures,” below for additional information about adjusted net income (loss) and adjusted net income (loss) per share.

"Over the past year, we have taken decisive actions to strengthen Key Tronic's competitive position and create a more efficient global manufacturing footprint,” said Brett Larsen, President and CEO. “We successfully exited manufacturing operations in China, right-sized our Mexico facility, and expanded production capacity in both the United States and Vietnam. These initiatives have improved our cost structure, enhanced supply chain flexibility, and enabled us to provide customers with attractive manufacturing options amid ongoing macroeconomic and geopolitical uncertainties. Approximately half of our manufacturing took place in our US and Vietnam facilities during the fourth quarter of fiscal 2026, and we have significant capacity available to support future growth.”

"Our strategic restructuring and cost reduction initiatives are translating directly into new business opportunities and market share gains. During the fourth quarter of fiscal 2026, we secured more than $60 million in new program awards in the data center, construction, and industrial power management markets. These wins reflect increasing customer recognition of Key Tronic's ability to deliver high-quality manufacturing solutions with a globally competitive cost structure. In an environment where liquidity and capital constraints are affecting much of the EMS industry, customers are increasingly seeking financially stable, operationally disciplined partners capable of supporting long-term growth. Many of these new programs feature innovative partnership models that provide a more balanced approach to ramp-up capital requirements, allowing customers to participate in the upfront investment while enabling Key Tronic to accelerate growth and improve returns on invested capital.”

“While we continue to face near-term liquidity challenges within the global supply chain, our backlog of customer demand has increased, and we expect recently awarded programs to ramp into production over the coming quarters. Supported by our stronger competitive position and growing pipeline of business opportunities, we expect continued revenue growth and a return to profitability in fiscal 2027."

The financial data presented for the fourth quarter and full year of fiscal 2026 should be considered preliminary and could be subject to change, as the Company’s independent auditor has not completed their audit 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 first quarter of fiscal year 2027.

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: 5639032). 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
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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 plans to address production constraints, including its ability to access additional capital, 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, future utilization of certain tax benefits, 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 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.

In addition, during this period, we have provided adjusted cost of sales, adjusted gross profit, and adjusted gross margin. These additions supplement adjusted net loss by mapping the portion of the identified adjustments utilized in the calculation of adjusted net 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 loss and adjusted cost of sales to the most directly comparable GAAP measure, which is GAAP net loss, and GAAP cost of sales, respectively, as well as the computation of adjusted gross profit, adjusted gross margin, and adjusted net loss per share, diluted.
3

KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
Three Months EndedTwelve Months Ended
June 27, 2026June 28, 2025June 27, 2026June 28, 2025
Net sales$102,027 $110,486 $386,667 $467,871 
Cost of sales94,087 103,675 362,730 431,444 
Gross profit7,940 6,811 23,937 36,427 
Research, development and engineering expenses2,263 2,246 8,011 9,163 
Selling, general and administrative expenses14,580 6,867 36,546 26,702 
Gain on insurance proceeds, net of losses(5,267)— (5,904)— 
Total operating expenses11,576 9,113 38,653 35,865 
Operating income (loss)(3,636)(2,302)(14,716)562 
Interest expense, net2,531 2,775 10,074 12,523 
Loss before income taxes(6,167)(5,077)(24,790)(11,961)
Income tax provision (benefit)28,176 (1,153)23,003 (3,643)
Net loss$(34,343)$(3,924)$(47,793)$(8,318)
Net loss per share — Basic$(3.16)$(0.36)$(4.41)$(0.77)
Weighted average shares outstanding — Basic10,859 10,762 10,837 10,762 
Net loss per share — Diluted$(3.16)$(0.36)$(4.41)$(0.77)
Weighted average shares outstanding — Diluted10,859 10,762 10,837 10,762 
4

KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
June 27, 2026June 28, 2025
ASSETS
Current assets:
Cash and cash equivalents$584 $1,384 
Trade receivables, net of credit losses of $4,659 and $3,479
83,650 96,142 
Contract assets, net of credit losses of $856 and $0
24,219 17,409 
Inventories, net95,844 97,321 
Other, net of credit losses of $0 and $1,463
19,462 21,917 
Total current assets223,759 234,173 
Property, plant and equipment, net28,854 27,727 
Operating lease right-of-use assets, net26,550 11,347 
Other assets:
Deferred income tax asset1,451 23,397 
Other, net of credit losses of $8,438 and $500
19,152 19,230 
Total other assets20,603 42,627 
Total assets$299,766 $315,874 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$75,961 $63,725 
Accrued compensation and vacation5,450 8,157 
Current portion of long-term debt7,162 6,215 
Other17,919 13,894 
Total current liabilities106,492 91,991 
Long-term liabilities:
Long-term debt, net 99,056 98,936 
Operating lease liabilities20,120 6,859 
Deferred income tax liability41 — 
Other long-term obligations4,874 954 
Total long-term liabilities124,091 106,749 
Total liabilities230,583 198,740 
Shareholders’ equity:
Common stock, no par value—shares authorized 25,000; issued and outstanding 10,859 and 10,762 shares, respectively48,135 47,502 
Retained earnings20,810 68,603 
Accumulated other comprehensive income238 1,029 
Total shareholders’ equity69,183 117,134 
Total liabilities and shareholders’ equity$299,766 $315,874 




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KEY TRONIC CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP to non-GAAP measures
(In thousands, except per share amounts)
(Unaudited)
Three Months EndedTwelve Months Ended
June 27, 2026June 28, 2025June 27, 2026June 28, 2025
GAAP net loss$(34,343)$(3,924)$(47,793)$(8,318)
Restructuring charges579 51 13,201 2,908 
Receivables allowance for distressed customers8,358 — 10,346 — 
Stock-based compensation expense165 109 633 218 
Gain on insurance proceeds, net of losses(5,267)— (5,904)— 
Write-off of unamortized loan fees— — — 1,012 
Write-off of deferred tax asset28,422 — 29,455 — 
Income tax effect of non-GAAP adjustments (1)(767)(32)(3,655)(828)
Adjusted net loss$(2,853)$(3,796)$(3,717)$(5,008)
Adjusted net loss per share — non-GAAP Diluted$(0.26)$(0.35)$(0.34)$(0.47)
Weighted average shares outstanding — Diluted10,859 10,762 10,837 10,762 
GAAP cost of sales$94,087 $103,675 $362,730 $431,444 
Restructuring charges521 51 9,251 2,908 
Adjusted cost of sales$93,566 $103,624 $353,479 $428,536 
Total gross profit adjustments $521 $51 $9,251 $2,908 
GAAP gross profit$7,940 $6,811 $23,937 $36,427 
Total gross profit adjustments 521 51 9,251 2,908 
Adjusted gross profit$8,461 $6,862 $33,188 $39,335 
GAAP net sales$102,027 $110,486 $386,667 $467,871 
Adjusted gross margin 8.3 %6.2 %8.6 %8.4 %
(1) Income tax effects are calculated using an effective tax rate of 20%, which approximates the statutory GAAP tax rate for the presented periods.
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