Shares of Key Tronic Corporation KTCC have fallen 35.4% since reporting fourth-quarter fiscal 2026 results. This compares with the S&P 500 index’s 0.4% return over the same period. Over the past month, the stock has lost 42.7% compared with the S&P 500’s 0.7% decline.
Key Tronic reported fourth-quarter fiscal 2026 revenues of $102 million, down 7.7% from $110.5 million a year earlier. Revenues rose 14% sequentially. The company posted a GAAP net loss of $34.3 million, or $3.16 per share, compared with a net loss of $3.9 million, or 36 cents per share, in the year-ago quarter. On an adjusted basis, the net loss narrowed to $2.9 million, or 26 cents per share, from $3.8 million, or 35 cents per share, a year earlier. The gross margin improved to 7.8% from 6.2%, while the adjusted gross margin increased to 8.3% from 6.2%.
Key Tronic Corporation Price, Consensus and EPS Surprise
Key Tronic Corporation price-consensus-eps-surprise-chart | Key Tronic Corporation Quote
Other Key Business Metrics
The operating margin was negative 3.6% versus negative 2.1% a year earlier. Inventory ended fiscal 2026 at $95.8 million, down 2% year over year, while accounts receivable days sales outstanding improved to 75 days from 86 days. The current ratio declined to 2.1:1 from 2.6:1. The fourth-quarter capital expenditure was $2.7 million, bringing full-year spending to $6.4 million. Key Tronic also secured more than $60 million in program awards during the fiscal fourth quarter across data centers, construction and industrial power management.
Management Commentary
Management said that demand strengthened late in fiscal 2026, helped by both legacy customers and new programs. Vietnam-based revenues more than doubled sequentially, driven by medical device and consumer products programs. CEO Brett Larsen said that the company’s sales funnel had improved substantially from a year earlier as cost reductions and manufacturing changes increased customer visits, qualification activity and program wins.
Larsen added that Key Tronic expects revenues to rebound gradually and profitability to return in fiscal 2027. The company’s Arkansas operation is expected to deliver double-digit revenue growth in fiscal 2027 as new and existing programs ramp. Management also cited substantial available capacity in its U.S. and Vietnam facilities to support future wins.
Factors Influencing Headline Numbers
Quarterly revenues were constrained by tightening credit availability and liquidity pressures across the EMS supply chain, which delayed about $10 million of shipments. Management said that the delayed business was not lost revenue but shifted into future periods. Several notable items also distorted profitability.
Key Tronic recorded a $28.4-million non-cash valuation allowance against certain deferred tax assets and wrote off $8.4 million of long-term receivables tied to distressed customers, along with related legal costs. These pressures were partly offset by a $5.3-million insurance recovery connected with a roof replacement at its Mississippi facility. Cost-cutting initiatives over the past two years helped lift the gross margin despite lower year-over-year revenues and supply-chain constraints.
Guidance
Management expects revenue growth in coming quarters and a return to profitability during fiscal 2027. The recently awarded data-center program is expected to make a substantial revenue contribution in the second quarter. The construction program could contribute a couple of million dollars in the first six months of 2027, while the industrial power-management program is expected to be fully ramped by the third quarter or the early fourth quarter.
Other Developments
During the fiscal fourth quarter, Key Tronic completed the wind-down of manufacturing in China and shifted production toward its U.S. and Vietnam facilities. The company expects the China exit to generate $4 million in savings in fiscal 2027. Management also highlighted the broader restructuring of its manufacturing footprint, including a roughly 40% reduction in Mexico headcount over the past 27 months, increased automation there, and expanded capacity in the United States and Vietnam. These moves are intended to lower costs, improve tariff flexibility and support program growth.
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