KTCC

This article first appeared on GuruFocus. Revenue (Q4 FY2026): $102 million, up 14% sequentially from $89.6 million in Q3 FY2026, but down from $110.5 million in Q4 FY2025. Revenue (Full Year FY2026): $386.7 million, compared to $467.9 million in FY2025. Gross Margin (Q4 FY2026): 7.8%, up from 6.2% in Q4 FY2025. Adjusted Gross Margin (Q4 FY2026): 8.3%, up from 6.2% in Q4 FY2025. Operating Margin (Q4 FY2026): -3.6%, down from -2.1% in Q4 FY2025, impacted by an $8.4 million write-off of long-term receivables and a $5.3 million insurance recovery benefit. Net Loss (Q4 FY2026): $34.3 million, or $3.16 per share, compared to a net loss of $3.9 million, or $0.36 per share, in Q4 FY2025. Includes a $28.4 million non-cash valuation allowance charge against deferred tax assets. Net Loss (Full Year FY2026): $47.8 million, or $4.41 per share, compared to a net loss of $8.3 million, or $0.77 per share, in FY2025. Adjusted Net Loss (Q4 FY2026): $2.9 million, or $0.26 per diluted share, compared to an adjusted net loss of $3.8 million, or $0.35 per diluted share, in Q4 FY2025. Adjusted Net Loss (Full Year FY2026): $3.7 million, or $0.34 per diluted share, compared to an adjusted net loss of $5 million, or $0.47 per diluted share, in FY2025. Inventory: Down $1.5 million, or 2%, year over year. Current Ratio: 2.1:1, compared to 2.6:1 a year ago. Accounts Receivable DSOs: 75 days, compared to 86 days a year ago. Capital Expenditures (Q4 FY2026): $2.7 million; total for the full year was approximately $6.4 million. New Program Awards (Q4 FY2026): Over $60 million in new program awards. Delayed Shipments: Approximately $10 million of shipments delayed due to supply chain financing constraints. Vietnam Revenue: More than doubled sequentially in Q4 FY2026, driven by medical device and consumer products programs. China Wind-Down Savings: Expected to save approximately $4 million in fiscal 2027. Warning! GuruFocus has detected 9 Warning Signs with KTCC. Is KTCC fairly valued? Test your thesis with our free DCF calculator. Release Date: August 27, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Key Tronic Corp (NASDAQ:KTCC) reported a 14% sequential increase in revenue in Q4 FY2026, driven by strong demand from both legacy and new programs. The company secured over $60 million in new program awards during Q4 FY2026, including a substantial data center program expected to generate $40-45 million annually. Gross margin improved to 7.8% in Q4 FY2026, up from 6.2% in the same period of fiscal 2025, reflecting operating efficiencies from cost-cutting initiatives. The wind-down of China manufacturing operations is expected to save approximately $4 million in fiscal 2027, and the company has expanded capacity in the U.S. and Vietnam. Revenue from Vietnam-based production more than doubled sequentially in Q4 FY2026, driven by medical device and consumer products programs, and the company expects continued growth in this region. Key Tronic Corp (NASDAQ:KTCC) reported a net loss of $34.3 million in Q4 FY2026, compared to a net loss of $3.9 million in the same period of fiscal 2025, largely due to a $28.4 million non-cash valuation allowance against deferred tax assets. The company wrote off $8.4 million of long-term receivables from distressed customers, negatively impacting operating margin. Supply chain financing constraints forced the company to delay approximately $10 million of shipments during the quarter, and liquidity pressures continue to affect the entire EMS industry. Full-year fiscal 2026 revenue declined to $386.7 million from $467.9 million in fiscal 2025, reflecting reduced demand from certain legacy and end-of-life programs. The company is not providing forward-looking guidance for Q1 FY2027 due to uncertainty in the timing of new product ramps and continued macroeconomic uncertainty. Q: Can you provide additional details on the $60 million in new business wins in the fourth quarter, including the size and timing of each win?A: Brett Larsen (President and CEO) detailed three major wins: a data center program with an existing customer for the Mexico facility, expected to generate $40 million-$45 million per year in production, with substantial revenue contribution in Q2 of fiscal 2027; a construction support product from the design and engineering group, a $5 million-$10 million opportunity starting in Spokane and migrating to Arkansas, with a couple of million dollars in the first six months of fiscal 2027; and a new industrial power management customer, a $15 million program to be built in Arkansas, fully ramped by Q3 or early Q4 of fiscal 2027. Q: How does the current sales pipeline compare to a year ago, and what is driving the increased activity?A: Brett Larsen (President and CEO) stated that the sales funnel has improved drastically from a year ago, driven by a more competitive cost structure. The company is seeing a mix of new programs, such as the construction equipment market entrant, and is gaining market share from competitors. This is resulting in more customer visits, qualifications, and a ramp in actual program wins. Q: Can you explain the innovative partnership model you are introducing and why it is gaining traction with customers?A: Brett Larsen (President and CEO) explained that due to tightening capital structures and supply chain constraints, the company is working with customers, many of whom have ample capital, to share the upfront working capital load. This may involve customers front-ending working capital or providing tooling and production equipment. The model, which was tested with a consignment program in Mississippi, is being applied to new opportunities to alleviate liquidity constraints and accelerate growth. Q: What additional sources of capital are you evaluating to support growth, and what assets are available?A: Brett Larsen (President and CEO) and Anthony Voorhees (CFO) indicated that the company is working with customers to share capital loads and evaluating financing activities using unencumbered assets. All foreign assets are unencumbered and available as collateral for debt structures. Most domestic assets are tied up with the current lending group, but there is ample opportunity to benefit from foreign assets. Q: Can you provide more color on the supply chain financing constraints that delayed approximately $10 million of shipments?A: Brett Larsen (President and CEO) explained that suppliers are reducing the number of days they extend payables and demanding advance payments, particularly for custom parts from Asia. This tightening in the capital-intensive EMS industry has pressured the company's ability to procure parts on time. The delayed shipments are not lost revenue but will shift into future quarters, and the company is seeking creative capital-sharing arrangements with strategic customers to meet increased demand. Q: How is the Mississippi consignment customer performing, and have the previous ramp and supply chain delays been resolved?A: Brett Larsen (President and CEO) stated that the Mississippi customer is no longer facing supply chain or ramp delays; instead, market demand for the product has softened in recent months. Despite this, the consignment model proved successful for the facility with excess capacity, and the company will likely pursue similar opportunities with customers that have robust supply chain capabilities. Q: Are you signing clients that are qualitatively different, or are you still focused on design-led customers?A: Brett Larsen (President and CEO) noted that the company now targets a broader range of customers. While design and engineering services remain a differentiator, the company is also taking existing product streams from competitors and gaining market share. With a more robust sales funnel, the company can be more selective, ensuring long-term fit with customers. Q: Was the data center customer win a result of taking market share from another EMS provider?A: Brett Larsen (President and CEO) confirmed that the data center customer is experiencing increased demand and has multiple sources. Key Tronic is seeing an increase in its market share of the business with this existing customer. Q: Is the $4 million in savings from exiting China manufacturing versus the fiscal 2026 run rate, and were there any China-related costs in the June quarter?A: Brett Larsen (President and CEO) clarified that the $4 million savings represents the run rate for the first three quarters of fiscal 2026, as the China wind-down began in late Q3 and took a quarter to complete. Anthony Voorhees (CFO) added that there were minimal China-related costs in the June quarter, with a few more expected as the company finalizes the exit, including red tape and facility restoration costs. China production revenue in Q4 was minimal, around $1 million-$2 million, with manufacturing completed in May. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was significantly impacted by a $28.4 million non-cash valuation allowance against deferred tax assets and an $8.4 million write-off of long-term receivables from distressed customers. Management successfully completed the wind-down of China manufacturing operations, shifting production to the U.S. and Vietnam to mitigate geopolitical risks and tariff pressures. A 14% sequential revenue increase in Q4 was driven by a rebound in demand, particularly in Vietnam where production more than doubled due to medical and consumer programs. Production was constrained by approximately $10 million in delayed shipments caused by tightening credit availability and reduced payment terms from global suppliers. Operational efficiencies gained from a 40% headcount reduction and increased automation in Mexico helped improve adjusted gross margins to 8.3%. The company is increasingly utilizing a vertically integrated model, including in-house plastic molding and metal fabrication, to reduce supply chain complexity for customers. Management expects a return to revenue growth and profitability in fiscal 2027, supported by a $60 million new program award win in Q4 2026. The exit from China is projected to generate approximately $4 million in annualized cost savings starting in fiscal 2027. The Arkansas technology center is forecasted to deliver double-digit revenue growth as new construction and power management programs ramp up. Key Tronic is evaluating additional sources of capital, including leveraging unencumbered foreign assets, to alleviate liquidity constraints and support growth. Management is not providing specific Q1 2027 guidance due to the uncertain timing of new product ramps and continued macroeconomic volatility. Recorded an $8.4 million write-off for distressed customers who are no longer contributing revenue, reflecting broader industry liquidity pressures. Established a $28.4 million valuation allowance against deferred tax assets due to cumulative U.S. taxable losses over the last four years. Completed the transition of production from China to Vietnam while maintaining a focused sourcing organization in China for local procurement. Benefited from a $5.3 million insurance recovery related to a roof replacement at the Mississippi facility, partially offsetting operating losses. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. The wins include a $40-$45 million data center program in Mexico, a $5-$10 million construction product, and a $15 million industrial power management program. Substantial revenue contribution from the data center win is expected in Q2 2027, with the power management program fully ramping by Q3 or Q4 2027. Management is negotiating with capital-rich customers to front-end working capital, tooling, or equipment costs in exchange for potential discounts. This strategy aims to mitigate the 'front-end loaded' capital requirements typical of contract manufacturing ramps while navigating tightened lending environments. Suppliers are reducing payment days and, in some cases, requiring advance payments for custom parts in Asia, which constrained Q4 production. Management noted that while demand is strong, they are currently 'liquidity constrained' in their ability to procure parts on time to meet all customer demand. The consignment model in Mississippi has proven successful for managing capital, though the specific customer there has seen some softening in market demand recently. Key Tronic intends to pursue similar consignment opportunities with other customers who have robust internal supply chain capabilities.

Strong Sequential Quarterly Revenue Growth; Completed Restructuring of Global Manufacturing Footprint; Improving Operating Efficiencies Drive Continued Program Wins SPOKANE VALLEY, Wash., Aug. 27, 2026 (GLOBE NEWSWIRE) -- Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended June 27, 2026. For the fourth quarter of fiscal year 2026, Key Tronic reported total revenue of $102.0 million, compared to $89.6 million in the prior quarter and $110.5 million in the same period of fiscal year 2025. The 14% sequential increase in revenue in the fourth quarter of fiscal year 2026 was driven by strong demand from both legacy and new programs. In particular, revenue from Key Tronic’s Vietnam-based production more than doubled sequentially, driven by medical device and consumer products programs. While customer demand rebounded significantly in the fourth quarter of fiscal year 2026, Key Tronic's production was constrained by tightening credit availability and liquidity pressures across the global supply chain. These capital constraints have affected the entire EMS industry as suppliers, customers, and manufacturers navigate ongoing macroeconomic uncertainty. Supply chain financing constraints delayed approximately $10 million of the Company's shipments during the quarter. The Company is actively working with its customers and suppliers, while also evaluating additional sources of capital, to support growth and alleviate these temporary constraints in future periods. We believe our operational discipline, strengthened manufacturing footprint, and long-standing customer relationships have positioned us better than many of our competitors. As a result, we continue to win new business and gain market share in several target markets in new program awards in the fourth quarter of fiscal 2026. For the full fiscal year 2026, total revenue was $386.7 million, compared to $467.9 million in the fiscal year 2025, largely reflecting reduced demand from certain legacy and end-of-life programs, as well as a variety of uncertainties in the global economy throughout the year. The Company has experienced an increase in new program wins and new sales funnel activity leading to expected revenue growth in coming quarters of fiscal 2027. Gross margin was 7.8% in the fourth quarter of fiscal year 2026, up from 6.2% in the same period of fiscal year 2025. The Company’s gross margin improvements in the fourth quarter of fiscal year 2026, despite the adverse supply chain challenges, demonstrated the operating efficiencies gained from its cost-cutting initiatives over the past two years. Operating margin was (3.6)% in the fourth quarter of fiscal year 2026, down from (2.1)% in the same period of fiscal year 2025. The operating margin for the fourth quarter of fiscal 2026 was adversely affected by an $8.4 million write-off of long-term receivables and related legal costs incurred in pursuing recovery from longstanding customers experiencing financial distress and no longer generating program revenues. These adverse impacts were partially offset by a $5.3 million insurance recovery related to a roof replacement at the Company's Mississippi facility. Adjusted gross margin was 8.3% for the fourth quarter of fiscal year 2026 up from 6.2% in the same period of fiscal year 2025 (see “Non-GAAP Financial Measures,” below for additional information about adjusted gross margin). These margin gains highlight the Company’s resilience and commitment to improving its operating efficiency. With revenue expected to continue to increase, Key Tronic anticipates continued margin growth in coming quarters. Throughout fiscal year 2026, the Company continued to prepare for anticipated long-term growth by executing its near-shoring and tariff mitigation strategies to reduce costs while maintaining the diversity and flexibility of its key locations and capabilities. Key Tronic believes that these cost reductions have enabled the Company to become more competitive on recent quoting opportunities. During the fourth quarter, Key Tronic completed the wind-down of its manufacturing operations in China, shifting more production to the Company’s expanding facilities in the US and Vietnam. The wind-down of manufacturing in China is anticipated to save approximately $4.0 million in fiscal 2027. The Company’s net loss was $(34.3) million or $(3.16) per share for the fourth quarter of fiscal year 2026, compared to net loss of $(3.9) million or $(0.36) per share for the same period of fiscal year 2025. For the full fiscal year 2026, the net loss was $(47.8) million or $(4.41) per share, compared to $(8.3) million or $(0.77) per share for the full fiscal year 2025. The Company recorded a $28.4 million non-cash charge during the quarter to establish a valuation allowance against certain deferred tax assets. The accounting adjustment was driven primarily by the cumulative loss of US taxable income over the last few years. While management remains confident in the Company's expected return to profitability and the future expected utilization of certain tax benefits, the valuation allowance was based on the relative weighting of historical results. The adjustment has no impact on cash flows, debt covenant compliance, or the Company's underlying operating performance. As described above, approximately $8.4 million of distressed customer related long term receivables were also written off during the quarter. The adjusted net loss was $(2.9) million or $(0.26) per diluted share for the fourth quarter of fiscal year 2026, compared to adjusted net loss of $(3.8) million or $(0.35) per diluted share for the same period of fiscal year 2025. For the full fiscal year 2026, the adjusted net loss was $(3.7) million or $(0.34) per diluted share, compared to adjusted net loss of $(5.0) million or $(0.47) per diluted share for fiscal year 2025. See “Non-GAAP Financial Measures,” below for additional information about adjusted net income (loss) and adjusted net income (loss) per share. "Over the past year, we have taken decisive actions to strengthen Key Tronic's competitive position and create a more efficient global manufacturing footprint,” said Brett Larsen, President and CEO. “We successfully exited manufacturing operations in China, right-sized our Mexico facility, and expanded production capacity in both the United States and Vietnam. These initiatives have improved our cost structure, enhanced supply chain flexibility, and enabled us to provide customers with attractive manufacturing options amid ongoing macroeconomic and geopolitical uncertainties. Approximately half of our manufacturing took place in our US and Vietnam facilities during the fourth quarter of fiscal 2026, and we have significant capacity available to support future growth.” "Our strategic restructuring and cost reduction initiatives are translating directly into new business opportunities and market share gains. During the fourth quarter of fiscal 2026, we secured more than $60 million in new program awards in the data center, construction, and industrial power management markets. These wins reflect increasing customer recognition of Key Tronic's ability to deliver high-quality manufacturing solutions with a globally competitive cost structure. In an environment where liquidity and capital constraints are affecting much of the EMS industry, customers are increasingly seeking financially stable, operationally disciplined partners capable of supporting long-term growth. Many of these new programs feature innovative partnership models that provide a more balanced approach to ramp-up capital requirements, allowing customers to participate in the upfront investment while enabling Key Tronic to accelerate growth and improve returns on invested capital.” “While we continue to face near-term liquidity challenges within the global supply chain, our backlog of customer demand has increased, and we expect recently awarded programs to ramp into production over the coming quarters. Supported by our stronger competitive position and growing pipeline of business opportunities, we expect continued revenue growth and a return to profitability in fiscal 2027." The financial data presented for the fourth quarter and full year of fiscal 2026 should be considered preliminary and could be subject to change, as the Company’s independent auditor has not completed their audit procedures. Business Outlook Due to uncertainty in the timing of new program ramps and continued macroeconomic uncertainty, Key Tronic will not be issuing revenue or earnings guidance for the first quarter of fiscal year 2027. Conference Call Key Tronic will host a conference call to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern) today. A broadcast of the conference call will be available at www.keytronic.com under “Investor Relations” or by calling 800-330-6710 or +1-213-279-1505 (Access Code: 5639032). The Company will also reference accompanying slides that can be viewed with the webcast at www.keytronic.com under “Investor Relations”. A replay will be available at www.keytronic.com under “Investor Relations”. About Key Tronic Key Tronic is a leading contract manufacturer offering value-added design, sourcing and manufacturing services from its facilities in the United States, Mexico, and Vietnam. The Company provides its customers with full engineering services, materials management, worldwide manufacturing facilities, assembly services, in-house testing, and worldwide distribution. Its customers include some of the world’s leading original equipment manufacturers. For more information about Key Tronic visit: www.keytronic.com Forward-Looking Statements Some of the statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to those including such words as aims, anticipates, believes, continues, estimates, expects, hopes, intends, plans, predicts, projects, targets, will, or would, similar verbs, or nouns corresponding to such verbs, which may be forward looking. Forward-looking statements also include other passages that are relevant to expected future events, performances, and actions or that can only be fully evaluated by events that will occur in the future. Forward-looking statements in this release include, without limitation, the Company’s statements regarding its expectations with respect to financial conditions and results, including revenue, earnings, and margins, the Company’s plans to address production constraints, including its ability to access additional capital, the Company’s ability to shift its focus in China and build out production capacity in the US and Vietnam and the timing of completion of those facilities, cost savings from headcount reduction and the wind-down of manufacturing operations in China, demand for certain products and the effectiveness of some of its programs, business from customers and programs, new program launches, impacts from operational streamlining and efficiencies, including reductions in inventories, future utilization of certain tax benefits, and impacts of repairs to its facilities from winter storm damage. There are many factors, risks and uncertainties that could cause actual results to differ materially from those predicted or projected in forward-looking statements, including but not limited to: the future of the global economic environment and its impact on our customers and suppliers; the impact of new governmental legislation and regulation, including tax reform, tariffs and related activities, such as trade negotiations and other risks; the success and timing of our expansion plans; the availability of components from the supply chain; the availability of a healthy workforce; the accuracy of suppliers’ and customers’ forecasts; development and success of customers’ programs and products; timing and effectiveness of ramping of new programs; success of new-product introductions; the risk of legal proceedings relating to the previously reported financial statement restatements and related material weaknesses, the May 2024 cybersecurity incident and the subject of the internal investigation by the Company’s Audit Committee and related or other unrelated matters; acquisitions or divestitures of operations or facilities; technology advances; changes in pricing policies by the Company, its competitors, customers or suppliers; and other factors, risks, and uncertainties detailed from time to time in the Company’s SEC filings. Non-GAAP Financial Measures To supplement our consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States (GAAP), we use certain non-GAAP financial measures; adjusted net loss, and adjusted net loss per share, diluted. We provide these non-GAAP financial measures because we believe they provide greater transparency related to our core operations and represent supplemental information used by management in its financial and operational decision making. We exclude (or include) certain items in our non-GAAP financial measures as we believe the net result is a measure of our core business. We believe this facilitates operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain income and expense items that would not otherwise be apparent on a GAAP basis. In addition, during this period, we have provided adjusted cost of sales, adjusted gross profit, and adjusted gross margin. These additions supplement adjusted net loss by mapping the portion of the identified adjustments utilized in the calculation of adjusted net loss to relevant financial statement line items for re-calculation of the adjusted metrics presented. We have provided these additional non-GAAP financial measures because we believe they provide greater transparency related to our core operations and represent supplemental information used by management in its financial and operational decision making. Non-GAAP performance measures should be considered in addition to, and not as a substitute for, results prepared in accordance with GAAP. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Our non-GAAP financial measures may be different from those reported by other companies. See the table below entitled “Reconciliation of GAAP to non-GAAP measures” for reconciliations of adjusted net loss and adjusted cost of sales to the most directly comparable GAAP measure, which is GAAP net loss, and GAAP cost of sales, respectively, as well as the computation of adjusted gross profit, adjusted gross margin, and adjusted net loss per share, diluted.

Image source: The Motley Fool. Tuesday, May 5, 2026 at 5 p.m. ET President and Chief Executive Officer — Anthony L. Voorhees Chief Financial Officer — Brett R. Larsen Anthony Voorhees: For the third quarter of fiscal year 2026, we reported total revenue of $89.6 million, compared to $112.0 million in the same period of fiscal year 2025. Year-over-year revenue for the third quarter of fiscal year 2026 continued to be adversely impacted by reduced demand from a legacy customer and an end-of-life program. Additionally, we also faced temporary challenges during the quarter related to winter storm Fern in the Southern U.S., customer design delays on a new program with a legacy customer, and delays in receiving allocated components on a separate new program. For the first 9 months of fiscal year 2026, our total revenue was $284.6 million, compared to $357.4 million in the same period of fiscal year 2025. Despite these short-term impacts, we are already seeing activity improve, with demand returning from several legacy customers and multiple new programs continue to launch and ramp, driving expected revenue growth for the fourth quarter. Importantly, even with lower revenue in the third quarter of fiscal year 2026, we delivered an improvement in gross margin compared to the prior year period. This demonstrates the operating efficiencies gained from our cost-cutting initiatives during the past 2 years. Gross margin was 8.0% and operating margin was negative 0.3% in the third quarter of fiscal year 2026, up from 7.7% and negative 0.4%, respectively, in the same period of fiscal year 2025. Excluding the charges related to the China closure, which we will discuss in a moment, the adjusted gross margin was 8.5% for the third quarter of fiscal year 2026, up from 8.4% in the same period of fiscal year 2025. These results demonstrate that our business today is structurally more efficient and better positioned to generate margin as volume returns. In line with our long-term strategic plan, we continue to prepare for anticipated long-term growth by executing our nearshoring and tariff mitigation strategies to reduce costs while maintaining the diversity and flexibility of our key locations and capabilities. During the quarter, we continued to wind down manufacturing operations in China, shifting more production to our expanding facilities in the U.S. and Vietnam. The China winddown is expected to be completed by the end of the current fiscal year and anticipated to save approximately $1.2 million per quarter following completion. As top line growth returns, we anticipate margins to be strengthened by the improvements in our operating efficiencies and the positive impact of our strategic cost-savings initiatives. We also believe the recent cost-savings initiatives have made us more competitive when quoting new program opportunities. As production volumes increase and our operational adjustments take full effect, we expect to see greater leverage on fixed costs, enhanced productivity, and a more streamlined supply chain, all contributing to stronger financial performance. The reduction in revenue had a significant impact on our bottom line. The net loss was $2.6 million, or $0.24 per share, for the third quarter of fiscal year 2026, compared to a net loss of $0.6 million, or $0.06 per share, for the same period of fiscal year 2025. For the first 9 months of fiscal year 2026, the net loss was $13.5 million, or $1.24 per share, compared to net loss of $4.4 million, or $0.41 per share, for the same period of fiscal year 2025. Our adjusted net loss was $2.8 million, or $0.26 per share, for the third quarter of fiscal year 2026, compared to adjusted net income of $0.1 million, or $0.01 per share, for the same period of fiscal year 2025. For the first 9 months of fiscal year 2026, our adjusted net loss was $3.9 million, or $0.36 per share, compared to adjusted net loss of $1.2 million, or $0.11 per share, for the same period of fiscal year 2025. Our focus on operating discipline continues to support a strong balance sheet. Our inventory for the third quarter of fiscal 2026 is down $13.5 million, or 14.0% from a year ago. Our current ratio was 2.1: 1 compared to 2.7:1 from a year ago. At the same time, accounts receivable DSOs were at 85 days, compared to 92 days a year ago, reflecting stronger collection on receivables. Year-to-date cash flow provided by operations for the first 9 months of fiscal year 2026 was approximately $10.0 million, as compared to $10.1 million for the same period of fiscal year 2025. Our continuing ability to generate cash from operations has allowed us to reduce debt year-over-year by approximately $14.3 million and helps position us well as demand accelerates and new programs ramp. Capital expenditures in the third quarter were minimal, while year-to-date total capital expenditures through the third quarter were approximately $3.7 million. We expect CapEx for the full year to be around $5 million to $8 million, largely spent on new innovative production equipment and automation. While we're keeping a careful eye on capital expenditures, we plan to continue to invest selectively in our production equipment, SMT equipment, and plastic molding capabilities, utilize leasing facilities, and make efficiency improvements to prepare for growth and add capacity. As we move further into fiscal 2026, we continue to face a lot of global economic uncertainties and volatile trade policies. Nevertheless, we are increasingly encouraged by the demand trends we're seeing as we enter the fourth quarter. Activity with several longstanding customers is improving, new programs are ramping, and our expanded U.S. and Vietnam capacity is generating increased customer interest. Our improved operating efficiency makes us more competitive, resulting in a stronger pipeline of potential new business, and we remain focused on further improving our profitability. Our production backlog has grown, and we believe that we are increasingly well positioned to win new programs and profitably expand our business. Due to the uncertainty of timing of new product ramps in light of continued macroeconomic uncertainty, we are not providing forward-looking guidance in the fourth quarter of fiscal year 2026. That's it for me. Brett? Brett Larsen: Thanks, Tony. Despite reduced demand from certain longstanding customers and the delays in production caused by winter storm Fern in the third quarter, we're encouraged by the improvements in our operating efficiencies and by the gradual rebound in demand from several longstanding customers and the continued growth of new programs that we're seeing in the fourth quarter. We continue to provide our customers with options to better manage macroeconomic uncertainties and enhance our potential for profitable long-term growth as we cease manufacturing operations in China, continue to right-size our Mexico facility, and build out new production capacity in the U.S. and Vietnam. Our improved operating efficiency has made us more competitive, and we expect our revenue to gradually begin to rebound and see a return to profitability in the fourth quarter of fiscal 2026. As part of our long-term strategy and in recognition of the continuing geopolitical tensions, tariff uncertainties, and increasing costs associated with China-based production, we are winding down our facilities there and transferring programs to Vietnam. We anticipate savings generated from the shutdown to approximate $1.2 million per quarter once fully executed. As part of our global sourcing strategy, we will, however, continue to operate in China with a small team focused on sourcing critical components locally. Over the past 24 months, we have also reduced our total head count by approximately 42% in Mexico and have begun transferring some programs from Mexico to the U.S. and Vietnam. Our Mexico facility continues to offer a unique solution for tariff mitigation under the existing USMCA tariff agreement. Given the sustained trend of continued wage increases in Mexico, we have streamlined our operations, increased efficiencies, and invested in automation to be more cost-competitive in the market. Due to the successful cost reduction and streamlining production processes, we have recently seen an increase in the quoting volume and probability of landing new programs manufactured in our Mexican facilities. We've also seen an influx of new customer visits and audits of our Juarez campus as of late that demonstrates we are competitive for a growing variety of quoting opportunities. Our improved cost structure in Mexico is anticipated to lead to new programs and growth over the longer term. We are very excited about the recent investments made in the U.S. and Vietnam to build out capacity and new capabilities to meet evolving customer demand. You will recall that we opened our new technology and resource and development location in Arkansas during the first quarter of fiscal 2026. Our U.S.-based production provides customers with outstanding flexibility, engineering support, and ease of communications. We expect double-digit growth in our facility in Arkansas during the upcoming fiscal year. You will also recall that we have recently doubled our manufacturing capacity in Vietnam that now has the capability to support anticipated future medical device manufacturing. Our Vietnam-based production offers the high-quality, low-cost choice that was associated with China in the past. In coming years, we expect our Vietnam facility to play a major role in our growth. We anticipate that these new facilities in the U.S. and Vietnam will enable us to benefit from customer demand for rebalancing their contract manufacturing and mitigate the severe impact and uncertainty surrounding the tariffs on goods and critical components. By the end of fiscal 2026, we expect approximately half of our manufacturing to take place in our U.S. and Vietnam facilities. These initiatives reflect the longstanding customer trends, both to nearshore as well as derisk the potential adverse impact of tariff increases and geopolitical tensions. During the third quarter of fiscal 2026, we won new programs in automotive technology, industrial tooling, pest control, and industrial power management. Our improved operating efficiency has also made us more competitive, increasing our sales pipeline, particularly in such steady growth sectors as utilities and data center equipment. Despite the many uncertainties and disruptions in global markets, our strong pipeline of potential new business underscores the continued trend towards onshoring and dual sourcing of contract manufacturing. In light of the significant transitions and streamlining initiatives we've made in the past 2 years, it's worth reviewing our key competitive advantages going forward. The combination of our flexible global footprint and our expansive design capabilities continues to be extremely effective in capturing new business. First, we've enhanced our cost and tariff efficiency and the flexibility of our global manufacturing footprint. We expect that global tariff wars and geopolitical tensions will continue to drive OEMs to reexamine their traditional outsource strategies. Over time, the decision to onshore production is becoming more widely accepted as a smart, long-term strategy. Second, many of our manufacturing program wins are predicated upon Key Tronic's deep and broad design services. And once we have completed the design and ramped it into production, we believe our knowledge of a program-specific design challenges make that business extremely sticky. We anticipate a continued increase in the number and capability of our design engineers in coming quarters. Third, we continue to invest in vertical integration and manufacturing process knowledge, including a wide range of plastic molding, injection blow, gas assist, multishot, as well as PCB assembly, metal forming, painting and coating, complex high-volume automated assembly, and the design, construction, and operation of complicated test equipment. We believe this expertise will increasingly set us apart from our competitors of a similar size. While the global market uncertainties have created some delays to new product launches for us, our suppliers and our customers, we believe geopolitical tensions and heightened concerns about tariffs and supply chains will continue to drive the favorable trend of contract manufacturing returning to North America as well as to our expanding Vietnam facilities. We're expecting revenue growth in the coming quarters from new programs launching in the U.S., Mexico, and Vietnam. Significant improvements in our operating efficiencies are creating a stronger pipeline of potential new business. Over the long term, we remain very encouraged by our cost reductions made over the past 2 years to become more market-competitive, our increasing cash flow generated from operations, enhanced global manufacturing footprint, and the innovations of our design engineering. All these initiatives have increased our potential for profitable growth. This concludes the formal portion of our presentation. Tony and I will now be pleased to answer your questions. Operator: [Operator Instructions] And we will take our first question from Matt Dhane with Tieton Capital Management. Matthew Dhane: I did want to ask, you referenced you had 4 wins in your press release. Just wanted to get a sense of the size of each of those wins, as well as where they're going to be -- where the manufacturing is going to be taking place, and then also expected timing of the ramps of those. Brett Larsen: You bet. Happy to do that, Matt. So I think the first one, that automotive technology, that's about a $3 million to $5 million program that's slated to start in Juarez in fiscal '27. My expectation is we'll probably start ramping that in the second quarter. Next is the industrial tooling. This one is a bit unique. It was a design program that we started here in Spokane. Now they're wanting us to actually start building some low-volume production. So we're actually going to do that in our downstairs facility here in Spokane temporarily while we ramp that. Currently, it has about an order of about $3 million, but we're expecting that to grow. Ramp on that is immediate. Third is pest control. That's a $2.5 million opportunity incremental to some other business of an existing customer down in Juarez, Mexico. And then the last -- fourth is the industrial power management. That's an $8 million to $10 million opportunity that will start towards the end of the calendar quarter, so again, second quarter of fiscal '27 in our Springdale, Arkansas facility. Matthew Dhane: One other question I did have. So obviously, tariffs has been a key conversation point here for a while. You talked about your pipeline building. What role is tariffs playing today in conversations with prospective customers? And yes, just help me understand all that, if you could. Brett Larsen: Yes. There's quite a bit of moving parts -- continue to be moving parts with -- related to tariffs. I think we're well situated now that we have an increased capacity to build product in Vietnam. The fact that USMCA is still in -- still a mitigation opportunity as well in Mexico and those that want to nearshore in the U.S. So I think we're seeing a hesitancy to make a decision or to award us a program. Some of that hesitancy is coming to close, and we're actually seeing the actual awarded opportunities begin to pile up. So I think this hesitancy and uncertainty for so long of awarding a program and elongating that sales cycle now begins to -- I think, people are becoming okay with the fact that there's going to be continued uncertainty, and we're actually seeing stocking levels decrease in certain key new opportunities and legacy customers. So I think it's a change in the market of, 'I'll wait and see what tariffs do,' to now, 'it's a complete, open -- continued changing in and out because of the required response -- or the required stockouts and reducing inventories, they're going to need to make a decision. And so, I'm making that in light of the uncertainty. That's a long-winded answer to, I think we anticipate some wins that we've been waiting for, for quite some time. Operator: [Operator Instructions] And we will take our next question from George Melas with MKH Management. George Melas: Nice to hear a consistent story about increased capability -- in the number and capability of design engineers. Can you elaborate a little bit on that? And is that still very much -- is design complexity very much one of the focus of your sales opportunities? Brett Larsen: Yes. As we spoke before, George, part of our strategy is to continue to grow that design capability. So we're continuing to recruit and hire new design engineers. We have found it incredibly important for us to continue down that path. If you get into a customer relationship where you're providing design capabilities to them, not only is that business very sticky, you're also helping them design the product to be a good fit to your own production equipment and capabilities within your own factory. So we're going to continue down that road. What's kind of fun to see is this is the first design project that we're actually building within our Spokane facility with the engineers themselves. This is a little new to us. We've done this many years back. But my expectation is that this may become a bit more of the norm, as we take over the design responsibility to bring a new product to market. And maybe they use our engineers to put the first series or set of products together. George Melas: That sounds good. Can you also give us a bit of an update on the data processing customer in Mississippi? I think that's a potentially very, very significant project, but I think it was always expected to ramp rather slowly or progressively. Can you update us on that? Brett Larsen: You bet, George. So that customer down in Mississippi continues to be flat quarter-over-quarter, so quarter 2 to quarter 3 is flat. Our hope is that, that will continue to ramp over time. But to date, it's been relatively flat over the last 2 quarters. There's not any real growth that we see in Q4, but maybe in fiscal '27. That's the consign program, I think, that we spoke about at length a couple of quarters ago. But it still continues to be a very good program for us. It's just -- it's been fairly flat last 2 quarters. George Melas: And at what level it is now in terms of what you think it could be? Is it at 1/4 of its potential? Or how would you characterize it compared to what the potential expectation is? Brett Larsen: That's a difficult one to quantify. I think we're probably 50% of what our initial expectation was. But I think this is very market sensitive and based off of where we're at today, again, that's a tough one. I wish I had a crystal ball, George, but we're definitely not where we thought its capacity was, but it's a complete unknown at this point. Anthony Voorhees: And I'd just add to that, George, that this customer has a number of SKUs that we could build. And we've actually built a few different SKUs for them already. So we're ready to take on more when it becomes available to us. Brett Larsen: Yes. The relationship is just very market sensitive. George Melas: And maybe just one clarification. You guys mentioned in your prepared remarks that you can see a return to profitability in the fourth quarter. So basically, it means next quarter. Brett Larsen: Yes. George Melas: What kind of revenue level do you need in order to hit that target? Brett Larsen: Yes, I don't know that we're yet giving guidance. Tony mentioned that there still is quite a bit of uncertainty in some ramps and the things that are going on. So I don't know that we want to quantify our revenue. Our expectation is definitely that there's going to be revenue growth Q4 sequentially from Q3. And we still feel strongly that we'll be in the black bottom line. In future quarters, we'll readdress that. But at this point, I'd rather not give guidance. George Melas: Okay. And then just a quick question. In the last quarter, you mentioned potential savings from China from stopping the -- closing the manufacturing operations there. And you also mentioned $1.5 million of savings related to the reduction in force in Mexico. Is that something that you've started to benefit from that has started to hit the bottom line? Or do we really see that in the fourth quarter or in fiscal '27? Anthony Voorhees: Yes. Thanks, George, for that question. So in China, specifically, we have completed our manufacturing operations there. So now we have a bit additional work to do just to get other materials and equipment out of China that we want to send to one of our other locations or sell it. So we do have a bit of work to do there. We completed that production in April, so just not that long ago. So we should start to see those employees severanced now, and we'll start to see improvements related to the $1.2 million that we mentioned in the script, probably in later this quarter. Brett Larsen: Yes. So I think the full $1.2 million won't be until Q1. But there is some incremental savings in this quarter, Q4, that we will see. Anthony Voorhees: And with regard to the Juarez, Mexico question, we have completed that severance. We are seeing some revenue growth down there in our Mexico operations. So we didn't complete 100% of that severance, as we will need some of those employees as we're seeing some revenue growth there in that facility. Operator: [Operator Instructions] And at this time, we have no further questions. I would now like to turn the call back to Brett Larsen. Brett Larsen: Thank you again for participating in today's conference call. Tony and I look forward to speaking to you again next quarter. Thank you. Operator: This does conclude today's call. Thank you for your participation. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Key Tronic (KTCC) Q3 2026 Earnings Transcript was originally published by The Motley Fool

Improved Operating Efficiency; Continued Program Wins and Expected Revenue Growth SPOKANE VALLEY, Wash., May 05, 2026 (GLOBE NEWSWIRE) -- Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended March 28, 2026. For the third quarter of fiscal year 2026, Key Tronic reported total revenue of $89.6 million, compared to $112.0 million in the same period of fiscal year 2025. Year-over-year decreases in revenue were largely attributable to lower demand from a legacy customer and an end-of-life program transition. Revenue for the third quarter of fiscal year 2026 was also adversely impacted by Winter Storm Fern in the South which caused temporary site closures due to facility damage that the Company expects will be largely covered by insurance. For the first nine months of fiscal year 2026, total revenue was $284.6 million, compared to $357.4 million in the same period of fiscal year 2025, largely reflecting reduced demand from certain legacy and end-of-life programs, as well as continued uncertainties in the global economy throughout the year. The Company is expecting revenue growth on increased demand from legacy customers and new program launches in its fourth quarter of 2026. Key Tronic achieved notable progress in the third quarter of fiscal year 2026, successfully strengthening its margins even as revenue was $22.4 million lower than in the same period of the last fiscal year. This marks a clear testament to the effectiveness of the Company’s cost-cutting strategies over the past two years, leading to greater operational efficiency. Gross margin improved to 8.0% and operating margin improved to (0.3)% in the third quarter of fiscal year 2026, up from 7.7% and (0.4)%, respectively, in the same period of fiscal year 2025. Adjusted gross margin improved to 8.5% for the third quarter of fiscal year 2026 up from 8.4% in the same period of fiscal year 2025 (see “Non-GAAP Financial Measures,” below for additional information about adjusted gross margin). These margin gains highlight the Company’s resilience and commitment to improvement, and with revenue expected to rebound, Key Tronic anticipates continued strong margin growth in the coming quarters. The Company continued to prepare for anticipated long-term growth by executing its near-shoring and tariff mitigation strategies to reduce costs while maintaining the diversity and flexibility of its key locations and capabilities. Key Tronic believes that these cost reductions have enabled the Company to become more competitive on recent quoting opportunities. During the quarter, Key Tronic continued to wind down its manufacturing operations in China, shifting more production to the Company’s expanding facilities in the US and Vietnam. The wind-down of manufacturing in China is expected to be completed by the end of the current fiscal year and anticipated to save approximately $1.2 million per quarter following completion. Year-to-date cash flow provided by operations for the first nine months of fiscal year 2026 was approximately $10.0 million, as compared to $10.1 million for the same period of fiscal year 2025. The Company’s continuing ability to generate cash from operations has allowed it to reduce its debt year-over-year by approximately $14.3 million. The net loss was $(2.6) million or $(0.24) per share for the third quarter of fiscal year 2026, compared to net loss of $(0.6) million or $(0.06) per share for the same period of fiscal year 2025. For the first nine months of fiscal year 2026, the net loss was $(13.5) million or $(1.24) per share, compared to $(4.4) million or $(0.41) per share for the same period of fiscal year 2025. The adjusted net loss was $(2.8) million or $(0.26) per diluted share for the third quarter of fiscal year 2026, compared to adjusted net income of $0.1 million or $0.01 per diluted share for the same period of fiscal year 2025. For the first nine months of fiscal year 2026, the adjusted net loss was $(3.9) million or $(0.36) per diluted share, compared to adjusted net loss of $(1.2) million or $(0.11) per diluted share for the same period of fiscal year 2025. See “Non-GAAP Financial Measures,” below for additional information about adjusted net income (loss) and adjusted net income (loss) per share. “Despite reduced demand from certain longstanding customers and the shutdowns caused by Winter Storm Fern in the third quarter, we’re encouraged by the improvements in our operating efficiencies, and by the gradual rebound in demand from several longstanding customers and the continued growth of new programs that we’re seeing in the fourth quarter,” said Brett Larsen, President and CEO. “We continue to provide our customers with options to better manage macroeconomic uncertainties and enhance our potential for profitable long-term growth, as we cease manufacturing operations in China, continue to right-size our Mexico facility and build out new production capacity in the US and Vietnam. We continue to expect approximately half of our manufacturing to take place in our US and Vietnam facilities during the fourth quarter of fiscal 2026.” “During the third quarter of fiscal 2026, we won new programs in automotive technology, industrial tooling, pest control and industrial power management. Our improved operating efficiency has also made us more competitive, increasing our sales pipeline, particularly in such steady growth sectors as utilities and data center equipment. Our production backlog of customer demand has increased and we continue to expect our revenue to gradually begin to rebound and see a return to profitability in the fourth quarter of fiscal 2026.” The financial data presented for the third quarter of fiscal 2026 should be considered preliminary and could be subject to change, as the Company’s independent auditor has not completed their review procedures. Business Outlook Due to uncertainty in the timing of new program ramps and continued macroeconomic uncertainty, Key Tronic will not be issuing revenue or earnings guidance for the fourth quarter of fiscal year 2026. Conference Call Key Tronic will host a conference call to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern) today. A broadcast of the conference call will be available at www.keytronic.com under “Investor Relations” or by calling 800-330-6710 or +1-213-279-1505 (Access Code: 8278065). The Company will also reference accompanying slides that can be viewed with the webcast at www.keytronic.com under “Investor Relations”. A replay will be available at www.keytronic.com under “Investor Relations”. About Key Tronic Key Tronic is a leading contract manufacturer offering value-added design, sourcing and manufacturing services from its facilities in the United States, Mexico, and Vietnam. The Company provides its customers with full engineering services, materials management, worldwide manufacturing facilities, assembly services, in-house testing, and worldwide distribution. Its customers include some of the world’s leading original equipment manufacturers. For more information about Key Tronic visit: www.keytronic.com Forward-Looking Statements Some of the statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to those including such words as aims, anticipates, believes, continues, estimates, expects, hopes, intends, plans, predicts, projects, targets, will, or would, similar verbs, or nouns corresponding to such verbs, which may be forward looking. Forward-looking statements also include other passages that are relevant to expected future events, performances, and actions or that can only be fully evaluated by events that will occur in the future. Forward-looking statements in this release include, without limitation, the Company’s statements regarding its expectations with respect to financial conditions and results, including revenue, earnings, and margins, the Company’s ability to shift its focus in China and build out production capacity in the US and Vietnam and the timing of completion of those facilities, cost savings from headcount reduction and the wind-down of manufacturing operations in China, demand for certain products and the effectiveness of some of its programs, business from customers and programs, new program launches, impacts from operational streamlining and efficiencies, including reductions in inventories, and impacts of repairs to its facilities from winter storm damage. There are many factors, risks and uncertainties that could cause actual results to differ materially from those predicted or projected in forward-looking statements, including but not limited to: the future of the global economic environment and its impact on our customers and suppliers; the impact of new governmental legislation and regulation, including tax reform, tariffs and related activities, such as trade negotiations and other risks; the success and timing of our expansion plans; the availability of components from the supply chain; the availability of a healthy workforce; the accuracy of suppliers’ and customers’ forecasts; development and success of customers’ programs and products; timing and effectiveness of ramping of new programs; success of new-product introductions; the risk of legal proceedings relating to the previously reported financial statement restatements and related material weaknesses, the May 2024 cybersecurity incident and the subject of the internal investigation by the Company’s Audit Committee and related or other unrelated matters; acquisitions or divestitures of operations or facilities; technology advances; changes in pricing policies by the Company, its competitors, customers or suppliers; and other factors, risks, and uncertainties detailed from time to time in the Company’s SEC filings. Non-GAAP Financial Measures To supplement our consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States (GAAP), we use certain non-GAAP financial measures; adjusted net income (loss), and adjusted net income (loss) per share, diluted. We provide these non-GAAP financial measures because we believe they provide greater transparency related to our core operations and represent supplemental information used by management in its financial and operational decision making. We exclude (or include) certain items in our non-GAAP financial measures as we believe the net result is a measure of our core business. We believe this facilitates operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain income and expense items that would not otherwise be apparent on a GAAP basis. In addition, during this period, we have provided adjusted cost of sales, adjusted gross profit, and adjusted gross margin. These additions supplement adjusted net income (loss) by mapping the portion of the identified adjustments utilized in the calculation of adjusted net income (loss) to relevant financial statement line items for re-calculation of the adjusted metrics presented. We have provided these additional non-GAAP financial measures because we believe they provide greater transparency related to our core operations and represent supplemental information used by management in its financial and operational decision making. Non-GAAP performance measures should be considered in addition to, and not as a substitute for, results prepared in accordance with GAAP. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Our non-GAAP financial measures may be different from those reported by other companies. See the table below entitled “Reconciliation of GAAP to non-GAAP measures” for reconciliations of adjusted net income (loss) and adjusted cost of sales to the most directly comparable GAAP measure, which is GAAP net income (loss), and GAAP cost of sales, respectively, as well as the computation of adjusted gross profit, adjusted gross margin, and adjusted net income (loss) per share, diluted.

This article first appeared on GuruFocus. Release Date: February 03, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Key Tronic Corp (NASDAQ:KTCC) reported a significant reduction in inventory by $12.3 million, reflecting improved inventory management. The company successfully reduced its debt by approximately $13.4 million year over year, showcasing effective cash flow management. Key Tronic Corp (NASDAQ:KTCC) has initiated strategic cost-saving measures, including the wind down of its China-based facility, expected to save $1.2 million per quarter. The company has seen an increase in quoting volume and potential new business opportunities, particularly in its Mexico facilities. Key Tronic Corp (NASDAQ:KTCC) is investing in new production equipment and automation, which is expected to enhance operational efficiency and support future growth. Total revenue for the second quarter of fiscal 2026 decreased to $96.3 million from $113.9 million in the same period of fiscal 2025. The company reported a net loss of $8.6 million for the second quarter of fiscal 2026, compared to a net loss of $4.9 million in the same period of fiscal 2025. Gross margin significantly declined to 0.6% in the second quarter of fiscal 2026, impacted by charges related to strategic initiatives. Key Tronic Corp (NASDAQ:KTCC) faced reduced demand from a long-standing customer and the transition of an end-of-life program, adversely affecting revenue. The company is not providing forward-looking guidance for the third quarter of fiscal 2026 due to continued macroeconomic uncertainties. Warning! GuruFocus has detected 5 Warning Signs with KTCC. Is KTCC fairly valued? Test your thesis with our free DCF calculator. Q: Can you provide more details on the increased demand from existing customers and what is driving it? A: The increased demand is primarily from 22 specific long-standing customers. This is due to product maturation and the need for a refresh of certain designs, which had a significant impact on our quarterly revenue. However, this was offset by new program ramps. (Respondent: Unidentified_3) Q: Can you give a rough size estimate and timing for the three new programs you won, and where they will be manufactured? A: The automotive program will be manufactured in Mexico and could reach up to $5 million. The pest control program will be in the US and Vietnam, potentially reaching $2 million. The industrial equipment program will be in the US, with an estimated size of $2 to $5 million. (Respondent: Unidentified_3) Q: Can you elaborate on your tariff mitigation strategies? A: Our strategy involves having a lower-cost Asian facility in Vietnam to replace our China facility, offering US-made options, and utilizing Mexico under the USMCA agreement. We help customers find the best solution based on labor requirements, component sourcing, and total cost. (Respondent: Unidentified_3) Q: What factors contributed to the sequential drop in adjusted gross margin? A: The drop was due to transferring programs to a new facility, losing production time during holidays, and some mix changes in programs. We need to drive sales volume to utilize excess capacity and improve margins. (Respondent: Unidentified_3 and Unidentified_2) Q: How do you plan to achieve net income break-even by the end of the fiscal year? A: We anticipate achieving break-even through the continued ramp of the consignment program in Mississippi, which will improve both revenue and gross margin percentage. (Respondent: Unidentified_3) For the complete transcript of the earnings call, please refer to the full earnings call transcript.