Key Tronic Corporation's Fiscal Year 2025 Financial Review
Key Tronic Corporation Reports Fiscal Year 2025 Results
Key Tronic Corporation (NASDAQ: KTCC), a prominent provider of electronic manufacturing services (EMS), released its financial performance details for the fiscal year ending June 28, 2025.
Fourth Quarter Revenue Overview
In the fourth quarter, Key Tronic reported total revenue of $110.5 million. This figure reflects a decline from $126.6 million achieved during the same quarter of the previous year. For the complete fiscal year 2025, total revenue dropped to $467.9 million from $566.9 million recorded in fiscal year 2024. The downturn was primarily due to diminished demand from long-standing customers and delays in new program launches, exacerbated by uncertainties in global tariffs.
Cost-Cutting Measures and Job Reductions
In response to the challenged revenue environment, Key Tronic executed strategic cost reductions, leading to the elimination of approximately 300 jobs in the fourth quarter, culminating in an annual total of about 800 job cuts for fiscal year 2025. These workforce reductions are aimed at enhancing competitiveness for future bids and adjusting operations to meet current market demand.
Cash Flow Performance
Despite the revenue decline, cash flow from operations for Q4 was $8.8 million, up from $7.7 million during the same quarter of fiscal year 2024. Throughout fiscal year 2025, cash flow reached $18.9 million compared to $13.8 million for the previous year, marking a significant improvement that allowed the company to reduce its debt levels.
Gross Margins and Operating Income
Gross margin for Q4 stood at 6.2%, a decrease from 7.2% in Q4 of the prior year. For the full fiscal year, gross margin averaged at 7.8%, up from 7.0% the previous year, largely due to efficiencies driven by headcount reductions, despite incurring $2.9 million in severance costs. Operating margin for fiscal year 2025 was notably low at 0.1%, down from 1.2% in the previous fiscal year, attributed primarily to credit loss adjustments.
Net Loss Overview
The company reported a net loss of $(3.9) million or $(0.36) per share for Q4, compared to $(2.0) million or $(0.18) per share for Q4 of fiscal year 2024. For the entire fiscal year 2025, net loss amounted to $(8.3) million, or $(0.77) per share, versus a loss of $(2.8) million or $(0.26) per share the prior year. The increased losses stemmed from declining revenues, higher severance expenses, and credit loss adjustments of $1.1 million and $1.8 million respectively.
Adjusted Loss Calculations
In terms of adjusted figures, the net loss was $3.8 million or $(0.35) per share for Q4 2025, improving slightly from an adjusted loss of $(0.7) million or $(0.06) per share in Q4 of the previous year.
Business Outlook and Future Growth
Looking forward, Key Tronic remains optimistic about its long-term prospects despite the current challenges. The company plans to enhance its manufacturing capabilities, particularly in the United States and Vietnam, to better align with its customers' needs and tariff mitigation strategies.
New Manufacturing Contracts
In Q4, Key Tronic successfully secured contracts across various sectors, including pest control, automotive, and medical technology. Notably, a substantial new contract with a major data processing OEM promises significant revenue potential, potentially exceeding $20 million on an annual basis.
Conference Call and Future Guidance
Key Tronic will host a conference call to discuss these results in detail. Management has opted not to provide specific revenue or earnings guidance for Q1 of fiscal year 2026 due to uncertainties surrounding the timing of new program launches and tariff implications.
About Key Tronic Corporation
Key Tronic is recognized as a leader in contract manufacturing, delivering comprehensive design and manufacturing solutions from its operational hubs in the United States, Mexico, China, and Vietnam. The company is committed to providing its clients with engineering services, materials management, manufacturing facilities, assembly, in-house testing, and global distribution.
Frequently Asked Questions
1. What were Key Tronic's total revenue figures for Q4 of fiscal year 2025?
Key Tronic reported total revenue of $110.5 million for the fourth quarter of fiscal year 2025.
2. How many jobs did Key Tronic cut during fiscal year 2025?
The company cut approximately 800 jobs throughout fiscal year 2025 to align costs with demand.
3. What was the adjusted net loss for Key Tronic in Q4 fiscal year 2025?
The adjusted net loss for Q4 of fiscal year 2025 was $(3.8) million or $(0.35) per share.
4. What strategies is Key Tronic implementing for growth?
Key Tronic is focusing on expanding manufacturing capabilities in the US and Vietnam and securing new contracts across various sectors.
5. Will Key Tronic provide revenue guidance for the upcoming fiscal year?
No, Key Tronic will not provide specific revenue guidance for the first quarter of fiscal 2026 due to ongoing uncertainties in the market.
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