In This Article:
Release Date: May 06, 2025
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 an improvement in gross margins to 7.7% in Q3 2025 from 5.7% in the same period of fiscal 2024, reflecting successful cost-cutting measures.
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The company reduced inventory by approximately $16 million or 14% from the same time a year ago, aligning inventory levels with current revenue.
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Key Tronic Corp (NASDAQ:KTCC) reduced total liabilities by $34.3 million or 14% from a year ago, indicating effective debt management.
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Operating cash flows increased to $10.1 million for the first nine months of fiscal 2025, up from $6.1 million for the same period in fiscal 2024.
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The company is expanding production capacity in Arkansas and Vietnam, which is expected to enhance flexibility and meet customer demand for rebalancing contract manufacturing.
Negative Points
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Total revenue for Q3 2025 decreased to $112 million from $142.4 million in the same period of fiscal 2024, impacted by global economic disruptions and tariff fluctuations.
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Net loss for the first nine months of fiscal 2025 was $4.4 million, significantly higher than the $0.8 million loss in the same period of fiscal 2024.
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The company faces significant uncertainties regarding costs and margin performance due to tariffs on China, Mexico, and Vietnam.
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Accounts receivable days sales outstanding (DSO) increased to 92 days from 85 days a year ago, reflecting slower collections.
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Key Tronic Corp (NASDAQ:KTCC) did not provide revenue or earnings guidance for Q4 2025 due to economic and political uncertainties.
Q & A Highlights
Q: Can you provide details on the five new business wins and their anticipated financial impact? A: The first is a $12 million telecommunications program in Mexico, expected to ramp up by Q2 fiscal 2026. The second is a $6 million pest control device project in Vietnam. The third is a $7 million energy program in Arkansas, currently in the design stage. The fourth is a $2 to $5 million consumer product in Arkansas. The fifth is a $1 million design contract, potentially growing to $5 to $15 million once in production. Brett Larson, CEO.
Q: How does working with Fortune 500 companies impact your business strategy? A: Working with Fortune 500 companies opens doors to additional opportunities within their divisions and sister companies, provided we perform well. This can lead to more business and program wins. Brett Larson, CEO.