In This Article:
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Revenue: $131.6 million for Q1 FY25, down from $150.1 million in Q1 FY24.
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Gross Margin: 10.1% in Q1 FY25, up from 7.2% in Q1 FY24.
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Operating Margin: 3.4% in Q1 FY25, up from 2.2% in Q1 FY24.
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Net Income: $1.1 million or $0.10 per share for Q1 FY25, compared to $0.3 million or $0.03 per share in Q1 FY24.
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Adjusted Net Income: $1.2 million or $0.11 per share for Q1 FY25, compared to break-even in Q1 FY24.
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Inventory Reduction: Reduced by approximately $31 million or 24% from a year ago.
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Total Liabilities Reduction: Reduced by $29.7 million or 11% from a year ago.
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Current Ratio: 2.6:1, compared to 2.4:1 a year ago.
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Accounts Receivable DSOs: 92 days, compared to 88 days a year ago.
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Capital Expenditures: $0.4 million for Q1 FY25; expected $8 million to $10 million for the full year.
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Revenue Guidance for Q2 FY25: Expected to be in the range of $130 million to $140 million.
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Net Income Guidance for Q2 FY25: Expected to be in the range of $0.05 to $0.15 per diluted share.
Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Key Tronic Corp (NASDAQ:KTCC) reported improved operating efficiencies and margins, with gross margin increasing to 10.1% and operating margin to 3.4% in Q1 FY25, compared to 7.2% and 2.2% respectively in the same period of FY24.
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The company successfully reduced inventory by approximately $31 million or 24% year-over-year, aligning inventory levels more closely with current revenue.
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Production in Mexico increased by approximately 10% sequentially from the prior quarter, despite production delays and lower-than-anticipated revenue.
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Key Tronic Corp (NASDAQ:KTCC) continues to expand its customer base, winning new programs in manufacturing production equipment, vehicle lighting, and commercial pest control.
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The company is strategically investing in its Vietnam facility, expecting it to play a major role in future growth, with plans to increase capacity and capability.
Negative Points
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Total revenue for Q1 FY25 was $131.6 million, down from $150.1 million in the same period of FY24, impacted by customer-driven design and qualification delays.
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Accounts receivable days sales outstanding (DSOs) increased to 92 days from 88 days a year ago, reflecting reductions in net sales at higher rates than reductions in receivables.
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The company experienced a write-down of approximately $0.8 million in capitalized variances during Q1 FY25, which is expected to continue for another quarter or two.
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Despite improvements, Key Tronic Corp (NASDAQ:KTCC) still faces a high level of debt and interest expenses, which are impacting profitability.
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The company anticipates continued wage increases in Mexico, which could affect cost competitiveness if not managed effectively.