Key Tronic Stock Earnings Reports

Key Tronic reported Q1 FY2026 revenue of $98.8M, down from $131.6M year-over-year, primarily due to reduced demand from a long-standing customer and delays in new program launches amid macro and tariff uncertainties. Gross margin improved sequentially to 8.4% (vs. 6.2% prior quarter) but was below last year (10.1%) after inventory and A/R reserves (~$1.6M) tied to a customer bankruptcy and severance costs. Net loss was $2.3M ($0.21/share); adjusted net loss was $1.1M ($0.10/share). The company generated ~$7.6M of operating cash flow, reduced total liabilities by ~$21.8M year-over-year, and lowered debt by about $12M. Inventory remains roughly flat; AR days improved to 81. Key strategic actions: ramping a consigned-materials manufacturing services contract (initial QTR revenue ~ $1M with potential to exceed $20M annually if successful), expanding U.S. capacity (new Arkansas tech/R&D site) and doubling Vietnam capacity (including medical device capability), and rightsizing/automation investments in Mexico. CapEx expected ~ $8M for FY2026 (production equipment, automation). Management is not providing Q2 guidance due to timing uncertainty of new program ramps but expects to return to profitability later in the year if the consigned program, a utility-related ramp and additional Mexico business materialize. Overall, the company is focused on cost savings, operational efficiencies, onshoring/nearshoring demand, and winning new design-led programs.