SPOKANE VALLEY, WA -- Key Tronic reported first quarter fiscal 2014 net income of $1.7 million, down 54% from a year ago on lower volumes. The electronic manufacturing services provider said revenue for the three months ended Sept. 28 were $78 million, down 20% year-over-year.

For the quarter, gross margin was 8.5% and operating margin was 3.2%, compared to 9.7% and 5.8%, respectively, a year ago.

"As expected, our revenue and earnings were impacted by a significant reduction in orders from some of our large, longstanding customers in the first quarter of fiscal year 2014," said Craig Gates, president and chief executive. "While our new programs typically take over 18 months to begin contributing revenue, we saw the continued ramp up of these new programs and increasing revenue diversification. As a result, we expect to see strong sequential growth during the second half of fiscal year 2014, as growing revenue from several new customers should offset and then exceed the revenue reductions in recent periods by certain large customers."

At the quarter's end, the EMS company had 189 programs across 57 customers, up from 168 programs and 51 customers a year ago. The largest customer made up about 23% of the firm's total revenue, while the top three customers contributed 61%. By the end of the current fiscal year, Key Tronic expects its largest customer will make up about 15% of the company's total revenue and the top three customers about 41% of total revenue.

Key Tronic expects fiscal second quarter revenue of $75 million to $80 million.

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