Key Tronic reported a strong sequential rebound in fiscal fourth-quarter revenue as its Vietnam manufacturing operation accelerated, although tightening supply-chain financing prevented the company from shipping approximately $10 million of additional customer orders.
Fourth-quarter revenue reached $102 million, up 14% sequentially from $89.6 million.
Revenue remained below the $110.5 million generated a year earlier, but demand strengthened across both existing and new programs.
Revenue generated from Key Tronic’s Vietnam-based manufacturing operation more than doubled sequentially, driven by medical-device and consumer-products programs.
The company’s ability to convert that demand into revenue was constrained by tightening credit availability across the global electronics manufacturing supply chain.
Key Tronic said financing constraints delayed approximately $10 million of shipments during the quarter.
Management is working with customers and suppliers and evaluating additional capital sources to support higher production levels.
Gross margin improved to 7.8% from 6.2% a year earlier, an expansion of 160 basis points.
Adjusted gross margin reached 8.3%.
GAAP results were heavily affected by several unusual items. Key Tronic recorded an $8.4 million write-off of distressed customer receivables and related legal costs, partially offset by a $5.3 million insurance recovery.
The company also recorded a $28.4 million non-cash valuation allowance against deferred tax assets, helping drive the quarterly net loss to $34.3 million. Adjusted net loss was much lower at $2.9 million, compared with $3.8 million a year earlier.
Key Tronic has completed its exit from manufacturing in China, which management expects to save approximately $4 million during fiscal 2027.
Roughly half of fourth-quarter manufacturing occurred in the U.S. and Vietnam.
The restructuring also appears to be contributing to new customer wins. Key Tronic secured more than $60 million of new program awards during the quarter across data centers, construction and industrial power-management markets.
KEY QUOTE:
“Our strategic restructuring and cost reduction initiatives are translating directly into new business opportunities and market share gains.”
Brett Larsen, President and CEO of Key Tronic
