SPOKANE VALLEY, WA – Keytronic expects to report revenue of approximately $117 million for the fiscal second quarter ended Dec. 28, on the low end of previous guidance.

The lower than anticipated earnings are primarily a result of increased factory spending in the company’s Juarez metal fabrication departments. This spending was necessitated by both new and existing customers exiting their manufacturing arrangements in China and ramping their production in Juarez.

While the financial effect on Keytronic was significant, the long-term relationship with these customers was strengthened by the performance of the Juarez facility under extreme pressure, the firm says.

Additionally, Keytronic incurred unfavorable foreign currency losses related to its unhedged portion of Mexican labor expenses due to a strengthening peso over the quarter.

Moving into the fiscal third quarter, the metals issues have diminished, and the firm’s sees significant earnings potential. For the fiscal third quarter, Keytronic expects to report revenue in the range of $117 million to $121 million.

The company plans to report its complete results for the fiscal second quarter on Feb. 4.