Keytronic Q2 Revenue Drops on Lower Demand, Parts Shortages
SPOKANE VALLEY, WA — Key Tronic reported fiscal second revenue of $113.9 million, down from $147.8 million the same period of 2024.
The electronics manufacturing services provider cited unexpected shortages for specific components managed by a large customer, lower-than-expected production during the holiday season, and reduced demand from certain customers which together lowered revenue by approximately $15 million from initial guidance for the quarter ended Dec. 28.
The net loss was $4.9 million, compared to net income of $1.1 million.
For the first six months of fiscal year 2025, total revenue was $245.4 million, compared to $298 million in the same period of fiscal 2024.
Gross margins were 6.8% and operating margins were -1% in the quarter, compared to 8% and 2.7%, respectively, in the same period of 2024. The decline in margins for the second quarter of fiscal year 2025 primarily reflects the reduction of revenue. As previously announced, interest expense also included approximately $1.0 million in write-offs of unamortized loan fees related to refinancing the Company’s debt with a new lender.
The adjusted net loss was $4.1 million versus adjusted net income of $1.1 million.
“As we announced today, we’re planning to significantly increase production capacity in Arkansas and Vietnam in order to continue to benefit from the growing customer demand for rebalancing their contract manufacturing. We believe these initiatives should help mitigate the adverse impact and uncertainties surrounding the recently announced tariffs on goods manufactured in China and Mexico,” said Brett Larsen, president and CEO.
“We are disappointed with the unexpected decline in revenue in the second quarter, however, we expect our revenue and earnings to improve in the third quarter as strategic initiatives undertaken in previous quarters come to fruition. We’re actively streamlining our international and domestic operations, with further headcount reductions to enhance efficiency, building on similar actions a year ago. We’re also pleased to see our inventory levels being more in line with current revenue levels and expect that these strategic changes will improve our overall profitability in the longer term.”
“At the same time, we continued to win new programs, such as aerospace systems and an energy resiliency technology program, which was recently announced. Once fully ramped, the latter program could generate annual revenue for us in excess of $60 million. We also closed on a long-term debt refinancing agreement during the quarter that expands available capital for growth. We believe Key Tronic remains well positioned for increased growth and profitability in coming periods.”
Due to uncertainty in the economic and political environments related to the impact of recently announced potential tariffs, Key Tronic did not issue revenue or earnings guidance for its fiscal third quarter.
