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Shares of Key Tronic Corporation KTCC have lost 6.6% since reporting results for the third quarter of fiscal 2025. This compares to the S&P 500 index’s 0.1% decline over the same time frame. Over the past month, the stock has gained 0.4% compared with the S&P 500’s 6.6% growth.
Revenue & Earnings Overview
For the third quarter of fiscal 2025, Key Tronic reported total revenues of $112 million, a 21.3% decrease from $142.4 million in the prior-year quarter. The decline was primarily attributed to global tariff volatility, which drove up costs, disrupted production and dampened customer demand.
The gross margin improved year over year to 7.7% from 5.7%, benefiting from ongoing cost-cutting efforts and workforce reductions. The operating margin was flat at -0.4%.
The company posted a net loss of $0.6 million or 6 cents per share, an improvement from the $2.2 million or 21 cents per share loss reported a year ago. The adjusted net loss narrowed to $0.6 million or 5 cent per share from $2.2 million or 20 cents per share in the year-ago quarter.
Key Tronic Corporation Price, Consensus and EPS Surprise
Key Tronic Corporation price-consensus-eps-surprise-chart | Key Tronic Corporation Quote
Operational Performance & Business Metrics
Despite the revenue contraction, Key Tronic generated $10.1 million in operating cash flow in the first nine months of fiscal 2025, up from $6.1 million in the same period last year. Inventory levels declined 14% or $16 million year over year, aligning more closely with current revenue levels. The company also reduced total liabilities 14% or $34.3 million from the same quarter last year.
Capital expenditure was approximately $3 million in the first nine months of fiscal 2025, with expectations for the year between $6 million and $8 million. These investments are largely tied to capacity expansions in Arkansas and Vietnam, which are intended to provide greater geographic flexibility amid tariff uncertainty.
Management Commentary
CEO Brett Larsen and CFO Tony Voorhees emphasized that global tariff volatility, particularly regarding China components, created “hesitancy and business paralysis” among customers. However, the company remains optimistic about long-term growth. Management pointed to the streamlining of operations in Mexico, where wage inflation prompted structural changes, and to ongoing cost reductions across other facilities.
Key Tronic is capitalizing on business wins. The company secured five notable contracts in the quarter, including a $12-million telecommunications program in Mexico, a $6-million pest-control device contract in Vietnam, a $7-million energy project in Arkansas, and a consumer product valued between $2 million and $5 million. Additionally, a $1-million design contract with production potential up to $15 million underscores the strategic role of the company's design capabilities in driving growth.