SPOKANE VALLEY, WA -- Key Tronic reported fiscal second-quarter revenue grew 2% to $116.4 million.

For the three months ended Dec. 26, the EMS company said net income was $1.8 million, up 12.5% year-over-year. The results include $675,000 in US R&D tax incentives. Sequential improvement in operating efficiencies led to second-quarter gross and operating margin of 7.8% and 2.1%, up from 7.1% and 1.4%, respectively, in the prior quarter.

“We’re pleased to see sequential profit growth, as our new programs continue to ramp and more than offset the reduced demand from a certain customer that has significantly impacted our results in recent quarters,” said Craig Gates, president and chief executive, in a statement. “We continue to see a robust pipeline of potential new business and recently won four new programs, involving industrial equipment, consumer products and lighting devices.

“In the second half of fiscal year 2016, we expect that the ramp of new programs will continue to outpace the previously discussed decline of a longstanding customer. Even as we onboard several new customers and programs, we anticipate that we will continue to see gradually improving operating efficiencies in coming periods.”

Key Tronic expects fiscal third quarter revenue of $117 million to $122 million.

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