SPOKANE VALLEY, WA – Key Tronic posted fiscal second quarter revenue of $134.5 million, up 5% year-over-year.

Revenue for the fiscal second quarter related to customer one-time reimbursements for tooling, equipment and other expenses increased approximately $10 million compared to the previous year.

Net income for the quarter ended Jan. 1 was $600,000, down 62.5% compared to the same period in fiscal year 2021.

For the first six months of fiscal 2022, total revenue was $267.2 million, growth of 6.2% year-over-year. Net income was $1.4 million, a decrease of 57.6%.

During the fiscal second quarter, the global supply chain, pandemic and transportation issues continued to disrupt production, including intermittent parts supply, factory downtime and overtime expenses. In addition, the company had a seasonal closure for two weeks at the end of December, and revenue attributed to customer reimbursements did not contribute to its gross margin. Legal costs related specifically to the SEC’s review of last year’s whistleblower complaint totaled approximately $700,000 during the quarter.

“We’re pleased with the successful ramp of new programs and our expanding customer base in the second quarter of fiscal 2022, despite the continued headwinds from the global supply chain and Covid-19 challenges,” said Craig Gates, president and CEO, Key Tronic. “During the second quarter of fiscal 2022, we continued to see the favorable trend of contract manufacturing returning to North America, with a significant increase in production across our US-based facilities.

“During the second quarter of fiscal year 2022, we won new programs involving industrial robots, lighting control, disinfection, food production and energy management systems. We also announced a significant new program win with one of the world’s leading power equipment companies, for which we expect to begin manufacturing in the first quarter of fiscal year 2023, and once fully ramped could contribute approximately $80 million in annual revenue.

“While we expect one of our largest customers to reduce demand in coming periods, those reductions will be more than offset by ramps from new customers. Nevertheless, the global supply chain and Covid-19 crises continue to present uncertainty and multiple business challenges, including industry-wide electronic component shortages, workforce disruptions and higher labor costs, which will adversely impact results.”

For the fiscal third quarter, Key Tronic expects revenue in the range of $130 million to $140 million. Despite growing customer demand and backlog, the company expects the ongoing disruptions from the global supply chain and Covid-19 issues will continue, significantly limiting production and adversely impacting operating efficiencies.

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