Key Tronic Corp (KTCC) (Q4 2026) Earnings Call Highlights: Revenue Surges 14% Sequentially, ...

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Key Tronic Corp (KTCC) (Q4 2026) Earnings Call Highlights: Revenue Surges 14% Sequentially, ... GuruFocus News Fri, August 28, 2026 at 11:00 PM EDT 7 min read KTCC This article first appeared on GuruFocus . Revenue (Q4 FY2026): $102 million, up 14% sequentially from $89.6 million in Q3 FY2026, but down from $110.5 million in Q4 FY2025. Revenue (Full Year FY2026): $386.7 million, compared to $467.9 million in FY2025. Gross Margin (Q4 FY2026): 7.8%, up from 6.2% in Q4 FY2025. Adjusted Gross Margin (Q4 FY2026): 8.3%, up from 6.2% in Q4 FY2025. Operating Margin (Q4 FY2026): -3.6%, down from -2.1% in Q4 FY2025, impacted by an $8.4 million write-off of long-term receivables and a $5.3 million insurance recovery benefit. Net Loss (Q4 FY2026): $34.3 million, or $3.16 per share, compared to a net loss of $3.9 million, or $0.36 per share, in Q4 FY2025. Includes a $28.4 million non-cash valuation allowance charge against deferred tax assets. Net Loss (Full Year FY2026): $47.8 million, or $4.41 per share, compared to a net loss of $8.3 million, or $0.77 per share, in FY2025. Adjusted Net Loss (Q4 FY2026): $2.9 million, or $0.26 per diluted share, compared to an adjusted net loss of $3.8 million, or $0.35 per diluted share, in Q4 FY2025. Adjusted Net Loss (Full Year FY2026): $3.7 million, or $0.34 per diluted share, compared to an adjusted net loss of $5 million, or $0.47 per diluted share, in FY2025. Inventory: Down $1.5 million, or 2%, year over year. Current Ratio: 2.1:1, compared to 2.6:1 a year ago. Accounts Receivable DSOs: 75 days, compared to 86 days a year ago. Capital Expenditures (Q4 FY2026): $2.7 million; total for the full year was approximately $6.4 million. New Program Awards (Q4 FY2026): Over $60 million in new program awards. Delayed Shipments: Approximately $10 million of shipments delayed due to supply chain financing constraints. Vietnam Revenue: More than doubled sequentially in Q4 FY2026, driven by medical device and consumer products programs. China Wind-Down Savings: Expected to save approximately $4 million in fiscal 2027. Warning! GuruFocus has detected 9 Warning Signs with KTCC. Is KTCC fairly valued? Test your thesis with our free DCF calculator. For the complete transcript of the earnings call, please refer to the full earnings call transcript . Key Tronic Corp ( NASDAQ:KTCC ) reported a 14% sequential increase in revenue in Q4 FY2026, driven by strong demand from both legacy and new programs. The company secured over $60 million in new program awards during Q4 FY2026, including a substantial data center program expected to generate $40-45 million annually. Gross margin improved to 7.8% in Q4 FY2026, up from 6.2% in the same period of fiscal 2025, reflecting operating efficiencies from cost-cutting initiatives. The wind-down of China manufacturing operations is expected to save approximately $4 million in fiscal 2027, and the company has expanded capacity in the U.S. and Vietnam. Revenue from Vietnam-based production more than doubled sequentially in Q4 FY2026, driven by medical device and consumer products programs, and the company expects continued growth in this region. Key Tronic Corp ( NASDAQ:KTCC ) reported a net loss of $34.3 million in Q4 FY2026, compared to a net loss of $3.9 million in the same period of fiscal 2025, largely due to a $28.4 million non-cash valuation allowance against deferred tax assets. The company wrote off $8.4 million of long-term receivables from distressed customers, negatively impacting operating margin. Supply chain financing constraints forced the company to delay approximately $10 million of shipments during the quarter, and liquidity pressures continue to affect the entire EMS industry. Full-year fiscal 2026 revenue declined to $386.7 million from $467.9 million in fiscal 2025, reflecting reduced demand from certain legacy and end-of-life programs. The company is not providing forward-looking guidance for Q1 FY2027 due to uncertainty in the timing of new product ramps and continued macroeconomic uncertainty. Q : Can you provide additional details on the $60 million in new business wins in the fourth quarter, including the size and timing of each win? A : Brett Larsen (President and CEO) detailed three major wins: a data center program with an existing customer for the Mexico facility, expected to generate $40 million-$45 million per year in production, with substantial revenue contribution in Q2 of fiscal 2027; a construction support product from the design and engineering group, a $5 million-$10 million opportunity starting in Spokane and migrating to Arkansas, with a couple of million dollars in the first six months of fiscal 2027; and a new industrial power management customer, a $15 million program to be built in Arkansas, fully ramped by Q3 or early Q4 of fiscal 2027. Q : How does the current sales pipeline compare to a year ago, and what is driving the increased activity? A : Brett Larsen (President and CEO) stated that the sales funnel has improved drastically from a year ago, driven by a more competitive cost structure. The company is seeing a mix of new programs, such as the construction equipment market entrant, and is gaining market share from competitors. This is resulting in more customer visits, qualifications, and a ramp in actual program wins. Q : Can you explain the innovative partnership model you are introducing and why it is gaining traction with customers? A : Brett Larsen (President and CEO) explained that due to tightening capital structures and supply chain constraints, the company is working with customers, many of whom have ample capital, to share the upfront working capital load. This may involve customers front-ending working capital or providing tooling and production equipment. The model, which was tested with a consignment program in Mississippi, is being applied to new opportunities to alleviate liquidity constraints and accelerate growth. Q : What additional sources of capital are you evaluating to support growth, and what assets are available? A : Brett Larsen (President and CEO) and Anthony Voorhees (CFO) indicated that the company is working with customers to share capital loads and evaluating financing activities using unencumbered assets. All foreign assets are unencumbered and available as collateral for debt structures. Most domestic assets are tied up with the current lending group, but there is ample opportunity to benefit from foreign assets. Q : Can you provide more color on the supply chain financing constraints that delayed approximately $10 million of shipments? A : Brett Larsen (President and CEO) explained that suppliers are reducing the number of days they extend payables and demanding advance payments, particularly for custom parts from Asia. This tightening in the capital-intensive EMS industry has pressured the company's ability to procure parts on time. The delayed shipments are not lost revenue but will shift into future quarters, and the company is seeking creative capital-sharing arrangements with strategic customers to meet increased demand. Q : How is the Mississippi consignment customer performing, and have the previous ramp and supply chain delays been resolved? A : Brett Larsen (President and CEO) stated that the Mississippi customer is no longer facing supply chain or ramp delays; instead, market demand for the product has softened in recent months. Despite this, the consignment model proved successful for the facility with excess capacity, and the company will likely pursue similar opportunities with customers that have robust supply chain capabilities. Q : Are you signing clients that are qualitatively different, or are you still focused on design-led customers? A : Brett Larsen (President and CEO) noted that the company now targets a broader range of customers. While design and engineering services remain a differentiator, the company is also taking existing product streams from competitors and gaining market share. With a more robust sales funnel, the company can be more selective, ensuring long-term fit with customers. Q : Was the data center customer win a result of taking market share from another EMS provider? A : Brett Larsen (President and CEO) confirmed that the data center customer is experiencing increased demand and has multiple sources. Key Tronic is seeing an increase in its market share of the business with this existing customer. Q : Is the $4 million in savings from exiting China manufacturing versus the fiscal 2026 run rate, and were there any China-related costs in the June quarter? A : Brett Larsen (President and CEO) clarified that the $4 million savings represents the run rate for the first three quarters of fiscal 2026, as the China wind-down began in late Q3 and took a quarter to complete. Anthony Voorhees (CFO) added that there were minimal China-related costs in the June quarter, with a few more expected as the company finalizes the exit, including red tape and facility restoration costs. China production revenue in Q4 was minimal, around $1 million-$2 million, with manufacturing completed in May.

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