SPOKANE VALLEY, WA – Key Tronic reported fiscal third quarter revenue of approximately $134.6 million, up 21% year-over-year.

Customer demand has remained strong, and new and existing customers have increased their backlog, the firm says. In the quarter ended Apr. 3, customer demand exceeded $150 million, the highest in the company’s history.

Net income for the period was $900,000, flat with the same period last year. The lower than anticipated earnings were primarily a result of a tax true-up of federal research and development credits of $400,000.

Results for the fiscal third quarter were constrained by the following: a tightening worldwide supply chain and transportation and logistics issues, which delayed the arrival of components, causing both factory downtime and overtime expenses; legal expenses related to the previously disclosed internal investigation of approximately $700,000; a four-day closure of the firm’s Mexico facilities during a late winter storm that caused power disruptions in the region; and continued but lessening expenses related to Covid-19.

During the fiscal third quarter, the company was awarded a customer program to build consumer products that could provide up to $30 million or more in annual revenue when it reaches full production. This new program is expected to commence production in the latter half of fiscal 2022. In support of the new program, Key Tronic expanded its Juarez campus by leasing an additional contiguous building of 145,000 sq. ft.

For the first nine months of fiscal year 2021, total revenue was $386.1 million, up 16% compared to the same period last year. Net income was $4.2 million, up 27.3% year-over-year.

“We’re pleased with the successful launch of new programs, and our rebounding and increasing customer demand in fiscal 2021,” said Craig Gates, president and CEO, Key Tronic. “We are currently ramping a number of new programs, and, while production has been hindered by limited supply of key components, we are extremely encouraged by both new customer and new program wins.

“Moving into fiscal 2022, the Covid-19 crisis, component shortages and logistic delays continue to present macroeconomic along with multiple business challenges, but we continue to see the favorable trend of contract manufacturing returning to North America. We are excited to expand our Mexico operations with new program awards, and also to see our domestic sites benefiting from customers’ onshoring initiatives. We expect continued strong revenue growth in the coming quarters and continue to invest in new capacity to prepare for long-term growth.”

For the fiscal fourth quarter, Key Tronic expects revenue in the range of $120 million to $125 million, as delays in the supply of key components for the company’s business continue to significantly limit production. As a result of additional legal and internal review costs associated with the internal investigation, the company expects earnings below the previous guidance range provided on May 4, but updated guidance for earnings is not available at this time.

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