SPOKANE VALLEY, WA -- Key Tronic today announced fiscal first quarter revenue of $123.2 million, up 17% from a year ago on new customer program ramps and increased demand from existing customers.

Net income was $1.7 million, up $100,000 from last year.

The electronics manufacturing services said labor shortages at its facilities in Juarez due to Covid-19 and associated public health measures constrained revenue during the period. During the period ended Sept. 26, the company took about $1.4 million in Covid-related expenses for increased compensation in Juarez to reduce employee turnover, plus preventative measures and equipment for employees at all its facilities in the US, Mexico, China and Vietnam.

The pandemic’s adverse impact on revenue and expenses also reduced margins during the period. Gross margin was 8.1% and operating margin was 2.3%, compared to gross margin of 8.8% and an operating margin of 2.4% a year ago.

“We’re pleased with the successful launch of new programs, rebounding customer demand and our strong revenue growth in the first quarter of fiscal 2021,” said Craig Gates, president and chief executive, Key Tronic. “We are ramping recent program wins and, while some of our legacy customers continued to have reduced demand due to the pandemic and related economic slowdown, several have increased demand during the first quarter of fiscal 2021, including programs for healthcare, industrial controls, and telecommunications. During the quarter, we won new programs involving audio and video editing systems, indoor air quality, utility meters, warehouse management, and automation technologies.”

“Moving into the second quarter of fiscal 2021, the Covid-19 crisis continues to present macroeconomic uncertainty and multiple business challenges, but we continue to see the favorable trend of contract manufacturing returning to North America. We remain focused on protecting the health of all of our employees by adhering to current health guidelines, as well as increasing retention of available employees. We expect continued strong revenue growth in the second quarter and continue to invest in new capacity to prepare for long-term growth.”

For its fiscal second quarter Key Tronic expects to report revenue of approximately $125 million to $135 million. The company’s facilities in the US, Mexico, China and Vietnam are currently operating, but the company warned of uncertainty due to the possibility of future temporary closures, customer demand and costs, and future supply chain disruptions.

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