10-Q · May 8, 2026
Key Tronic Corporation reported a 20% year-over-year decline in revenue in Q3 FY 2026, falling to $89.6 million compared to $112 million in the same quarter of the previous year, and a net loss of $2.6 million. Despite…
Earnings analysis · 10-K
KTCC earnings analysis
Filed September 24, 2026 · Our reading of the company's report
The latest report
Key Tronic is repositioning its contract-manufacturing footprint toward the U.S., Mexico and Vietnam, supported by more than $60 million of fourth-quarter program awards, a $204.1 million backlog and expected…
Read full summary
Key Tronic is repositioning its contract-manufacturing footprint toward the U.S., Mexico and Vietnam, supported by more than $60 million of fourth-quarter program awards, a $204.1 million backlog and expected double-digit fiscal 2027 growth at Arkansas. However, fiscal 2026 revenue declined 17.4% to $386.7 million, gross margin fell to 6.2%, operating margin turned negative at 3.8%, and GAAP EPS was negative $4.41. The $28.4 million tax valuation allowance, $10.3 million of distressed-customer write-offs, limited borrowing availability and covenant exposure make the near-term outlook high risk despite the strategic footprint improvements.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $-4.41
What stood out
-
New awards and backlog support future growth
Management won new programs in medical devices, industrial equipment, automotive, pest control, construction, data centers and power management; fourth-quarter awards exceeded $60 million. Backlog increased to approximately $204.1 million from $159.1 million year over year.
-
Footprint repositioned toward growth
The company expanded its Vietnam manufacturing footprint to twice its prior size, increased Arkansas capacity, opened an Arkansas technology and R&D center, and substantially completed its China manufacturing exit. Management expects the Arkansas facility to deliver double-digit revenue growth in fiscal 2027.
-
Vertically integrated global platform
Key Tronic differentiates through vertical integration, engineering, molding, sheet-metal fabrication, PCB and complete-product assembly, sourcing, logistics and testing. It serves customers from facilities in the U.S., Mexico and Vietnam, with China retained for procurement.
-
Underlying loss improved after adjustments
Despite the loss, adjusted net loss improved to $3.7 million, or $0.34 per diluted share, from $5.0 million, or $0.47, in fiscal 2025 after excluding restructuring, distressed-customer receivable, tax and other specified items.
-
Investment continued while interest costs fell
Capital expenditures were $6.4 million in fiscal 2026, primarily for equipment supporting new programs, while cash used in investing activities was $4.0 million. Net interest expense declined to $10.1 million from $12.5 million.
-
Liquidity remains available but constrained
The company maintained a current ratio of 2.1 and reported $4.4 million of operating cash flow. Its asset-based revolving facility matures in December 2029 and provided approximately $16.5 million of gross borrowing capacity at year-end, subject to covenant restrictions.
What to watch
-
Demand decline and program concentration
Fiscal 2026 revenue fell 17.4% to $386.7 million from $467.9 million, while operating margin declined to negative 3.8% from positive 0.1%. Approximately $80 million of the decline came from lower demand and $48 million from end-of-life programs, partly offset by $38 million of new or ramping programs.
-
Profitability and tax-asset realizability
A full valuation allowance of approximately $28.4 million was recorded against U.S. deferred tax assets after fiscal 2026 ended with a U.S. loss before tax of approximately $26.5 million and a significant three-year cumulative U.S. loss position. The allowance drove much of the $47.8 million GAAP net loss and could persist until sustained U.S. taxable income provides objective positive evidence.
-
Tight liquidity and covenant risk
Liquidity and financing remain sensitive to execution: year-end gross borrowing capacity was approximately $16.5 million and was further limited by a $13 million availability block. The company had $108.3 million of total debt, had previously breached certain covenants, and was not in compliance with local Mexico debt covenants, although Banorte elected not to accelerate the loans.
-
Customer credit and concentration exposure
Customer credit quality deteriorated materially: approximately $10.3 million of distressed-customer long-term receivables were written off during fiscal 2026, and the allowance for credit losses increased to approximately $14.0 million from $5.4 million. The five largest customers represented 39% of fiscal 2026 net sales, while Customer A represented 14%.
Management's outlook
No formal revenue or EPS guidance is provided. Management expects Arkansas revenue to deliver double-digit growth in fiscal 2027, expects cash from operations to improve as revenue increases, and anticipates continued contract-manufacturing demand from supply-chain diversification, tariff mitigation, and operational-resilience trends.
Earlier filings 4
10-Q · May 13, 2025
Key Tronic reported quarterly revenue of $111,974,000 (down from $142,427,000 a year earlier) and a GAAP net loss of $604,000 (EPS $(0.06)) for the three months ended March 29, 2025. Gross margin expanded to 7.7% vs…
10-Q · February 7, 2025
Key Tronic reported a revenue decline to $113.853M for the quarter ended December 28, 2024 and a net loss of $4.914M (diluted EPS $(0.46)), driven by lower sales and margin compression. Management secured new financing…
10-K · October 15, 2024
Key Tronic positions itself as a vertically integrated, multinational contract manufacturer with engineering and tooling capabilities across the United States, Mexico, China and Vietnam, and emphasizes growing new…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.