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Revenue: $98.8 million for Q1 fiscal 2026, down from $131.6 million in Q1 fiscal 2025.

Gross Margin: 8.4% in Q1 fiscal 2026, compared to 6.2% in the previous quarter and 10.1% in Q1 fiscal 2025.

Operating Margin: Negative 0.6% for Q1 fiscal 2026, down from 3.4% in Q1 fiscal 2025.

Net Loss: $2.3 million or $0.21 per share for Q1 fiscal 2026, compared to net income of $1.1 million or $0.10 per share in Q1 fiscal 2025.

Adjusted Net Loss: $1.1 million or $0.10 per share for Q1 fiscal 2026, compared to adjusted net income of $2.8 million or $0.26 per share in Q1 fiscal 2025.

Cash Flow from Operations: $7.6 million for Q1 fiscal 2026, compared to $9.9 million in Q1 fiscal 2025.

Total Liabilities Reduction: Reduced by $21.8 million or 9% from a year ago.

Accounts Receivable DSOs: 81 days in Q1 fiscal 2026, down from 92 days a year ago.

Capital Expenditures: $3.2 million in Q1 fiscal 2026, with full-year CapEx expected to be around $8 million.

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Release Date: November 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Key Tronic Corp (NASDAQ:KTCC) reported an improvement in gross margin to 8.4% in Q1 fiscal 2026, up from 6.2% in the previous quarter, indicating operational efficiencies.

The company successfully reduced total liabilities by $21.8 million or 9% from a year ago, showcasing effective financial management.

Key Tronic Corp (NASDAQ:KTCC) has doubled its manufacturing capacity in Vietnam, positioning itself to support future medical device manufacturing and capitalize on low-cost production.

The company has a strong pipeline of potential new business, with new programs gradually ramping up, particularly in the US and Vietnam.

Key Tronic Corp (NASDAQ:KTCC) has made significant enhancements to its materials resource planning algorithms, improving its ability to manage inventory and respond to supply chain disruptions.

Total revenue for Q1 fiscal 2026 was $98.8 million, a significant decrease from $131.6 million in the same period of fiscal 2025, primarily due to reduced demand from a long-standing customer and delays in new program launches.

The company reported a net loss of $2.3 million or $0.21 per share for Q1 fiscal 2026, compared to a net income of $1.1 million or $0.10 per share in the same period of fiscal 2025.

Operating margin for Q1 fiscal 2026 was negative 0.6%, down from 3.4% in the same period of fiscal 2025, reflecting challenges in maintaining profitability.

Key Tronic Corp (NASDAQ:KTCC) faced a $1.6 million impact due to a customer bankruptcy, affecting inventory and accounts receivable reserves.

The company is experiencing delays in new program ramps due to global economic uncertainties and tariff implications, impacting revenue growth.

Q: What was the size of the new program wins this quarter? A: Brett Larsen, President and CEO, stated that there was one medical program worth approximately $5 million and two industrial programs combined worth around $6 million.

Q: Will the medical production capabilities in Vietnam be utilized for the new medical program? A: Brett Larsen confirmed that the intent is to start production for some medical devices in Vietnam later this fiscal year, with certification already received and customer approval given.

Q: How is the consigned materials program progressing, and what are its revenue expectations? A: Brett Larsen mentioned that the program started with just over $1 million in revenue in the first quarter and is expected to grow sequentially, potentially exceeding $20 million annually.

Q: What are the factors that could influence the success of the consigned materials program? A: Brett Larsen explained that the success largely depends on the customer's ability to manage their supply chain and provide components timely, as Key Tronic is not responsible for purchasing materials in this model.

Q: How is the Vietnam facility contributing to the company's operations? A: Brett Larsen stated that the Vietnam facility serves both the North American and Asian markets, with approximately two-thirds of production going to Asia and one-third to North America.

Q: What impact did the customer bankruptcy have on the financials? A: Brett Larsen noted that the bankruptcy of a three- to four-year customer relationship resulted in a $1.6 million write-off, affecting both inventory and receivables.

Q: How did the gross margin perform this quarter, and what factors contributed to it? A: Brett Larsen highlighted that the adjusted gross margin was approximately 10.2%, aided by cost reductions and significant non-recurring engineering (NRE) revenue.

Q: What are the expectations for returning to profitability by the end of the fiscal year? A: Brett Larsen indicated that achieving profitability will depend on ramping the consigned program, the utility metering system, and additional revenue from Mexico.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.