Key Tronic (NASDAQ:KTCC) reported fourth-quarter fiscal 2026 revenue of $102 million, up 14% sequentially from $89.6 million but below $110.5 million in the prior-year period, as demand improved across legacy and new programs. The company said revenue from its Vietnam operations more than doubled from the previous quarter, driven by medical-device and consumer-product programs.
For the full fiscal year, revenue declined to $386.7 million from $467.9 million in fiscal 2025. Chief Financial Officer Tony Voorhees attributed the annual decline largely to weaker demand during the first three quarters from certain legacy and end-of-life programs, along with uncertain global economic conditions.
Losses Included Tax and Receivables Charges
Key Tronic posted a fourth-quarter net loss of $34.3 million, or $3.16 per share, compared with a loss of $3.9 million, or $0.36 per share, a year earlier. The result included a $28.4 million non-cash charge to establish a valuation allowance against certain deferred tax assets, primarily reflecting cumulative losses in U.S. taxable income over the prior four years.
Voorhees said the tax-related adjustment had no impact on cash flow, debt-covenant compliance or the company’s underlying operating performance. The quarter also included an $8.4 million write-off of long-term receivables tied to distressed customers that are no longer contributing program revenue, as well as related legal costs. Those items were partly offset by a $5.3 million insurance recovery connected with a roof replacement at its Mississippi facility.
Fourth-quarter gross margin rose to 7.8% from 6.2% a year earlier, while adjusted gross margin increased to 8.3% from 6.2%. Management said the improvement reflected efficiencies from cost-cutting initiatives undertaken over the past two years. Operating margin was negative 3.6%, compared with negative 2.1% in the prior-year quarter.
For fiscal 2026, Key Tronic recorded a net loss of $47.8 million, or $4.41 per share, compared with a loss of $8.3 million, or $0.77 per share, in fiscal 2025.
China Exit and Manufacturing Footprint Changes
The company completed the wind-down of its China manufacturing operations during the quarter, transferring production to expanding U.S. and Vietnam facilities. President and Chief Executive Officer Brett Larsen said the company expects the move to generate about $4 million in annualized savings during fiscal 2027. Key Tronic will retain a sourcing organization in China for local procurement and component access.
Larsen said the company also reduced headcount at its Mexico operations by about 40% over the past 27 months, while streamlining processes and increasing automation. He said the Juarez campus remains a tariff-mitigation option under the U.S.-Mexico-Canada Agreement and has received increased customer visits and qualification audits.
About half of Key Tronic’s manufacturing activity in the fourth quarter came from U.S. and Vietnam facilities, which management said have substantial available capacity. The company expects its Arkansas technology and research-and-development center to deliver double-digit revenue growth in fiscal 2027 as new programs ramp.
New Awards Include Data Center, Construction and Power Programs
Key Tronic secured more than $60 million in new program awards during the fourth quarter across medical devices, industrial equipment, automotive, pest control, construction, data centers and power management.
During the question-and-answer session, Larsen provided details on three awards:
- A data-center program for an existing customer is expected to add $40 million to $45 million annually to Mexico production, with substantial revenue contribution anticipated in the second quarter of fiscal 2027.
- A construction-support product developed through Key Tronic’s design and engineering group is expected to represent a $5 million to $10 million opportunity. Production is set to begin in Spokane before moving to Arkansas, with a few million dollars of revenue anticipated in the first half of fiscal 2027.
- A new industrial power-management customer is expected to produce in Arkansas and represent about $15 million in revenue when fully ramped. Larsen said the program could be fully ramped by the third or early fourth quarter of fiscal 2027.
Larsen said the data-center opportunity reflects both increased demand from the customer and Key Tronic’s expanding share of that customer’s business. He added that the company’s sales funnel had improved “drastically” from a year earlier as its lower cost structure has increased customer engagement, qualification activity and program wins.
Liquidity Remains a Constraint
Management said suppliers have reduced payment terms and, in some cases, require advance payments for custom parts, creating added pressure in the capital-intensive electronics manufacturing services industry. Larsen said Key Tronic is working with customers on models that could include customer-provided working capital, tooling or production equipment during program ramps.
The company is also evaluating financing options involving foreign assets, which management described as unencumbered. Its year-end inventory was down 2% from a year earlier, while accounts-receivable days sales outstanding improved to 75 days from 86 days. The current ratio was 2.1-to-1, compared with 2.6-to-1 a year earlier.
Key Tronic did not provide first-quarter fiscal 2027 guidance, citing uncertainty around the timing of new product ramps and continued macroeconomic uncertainty. Still, management said it expects revenue growth in coming quarters from legacy customers and new programs in the U.S., Mexico and Vietnam, and expects a return to profitability in fiscal 2027.
About Key Tronic (NASDAQ:KTCC)
Key Tronic Corporation (NASDAQ: KTCC) is a global electronics manufacturer headquartered in Spokane, Washington. The company specializes in the design, development and production of human-machine interfaces and input devices, with a core legacy in keyboard technology. Over more than five decades, Key Tronic has expanded its capabilities beyond keyboards to encompass a broad range of electronic assemblies for OEMs across computing, industrial, medical and consumer markets.
Key Tronic’s product portfolio includes membrane and mechanical keyboards, touch panels, silicone keypads and custom input solutions tailored to customer specifications.
-logo-1200x675.jpg){kind=logo}