SPOKANE VALLEY, WA -- Key Tronic's fiscal first-quarter revenue rose 46% and the EMS firm swung to a net profit as it fully absorbed the acquisition of Ayrshire.

For the three months ended Sept. 26, the EMS company had sales of $126.2 million, including $35 million in revenue from the acquisition of Ayrshire. The fiscal 2015 results included $11 million worth of sales form Ayshire.

Net income for period was $800,000, up from a loss of $1.5 million last year. 

As previously announced, the company had approximately $2 million of unanticipated expenses and erosion of gross margin related to a single longstanding customer that requested a significant and immediate increase in production volumes for a new program at the start of the quarter only to abruptly cancel those orders.

For the quarter gross margin was 7.1% and operating margin was 1.4%, compared to 4.9% and -2%, respectively, a year ago.

“While the sudden and unanticipated impact from the unusual volatility in demand of a certain customer in the first quarter was disappointing, our new programs continue to ramp and we continue to diversify our customer base,” said Craig Gates, president and chief executive . “In the quarter, our top five customers represented 47% of our total revenue compared to 50% a year ago and 64% two years ago. We also continued to see a healthy pipeline of potential new business, winning new programs involving telecommunications and security equipment.

“In the second and third quarters, we expect the decline from the same longstanding customer to continue to impact our growth. By the fourth quarter, we expect the lost revenue from this program to be more than offset by new revenue from the continued ramp of new programs. At the same time, we anticipate increased operating efficiencies and profitability in coming periods.”

For the second quarter of fiscal year 2016, the company expects revenue in the range of $115 million to $120 million.

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