Key Tronic (KTCC) Q1 2026 earnings summary

Executive summary

• Q1 FY2026 revenue was $98.8 million, down from $131.6 million year-over-year, mainly due to reduced demand from key customers and delays in new program launches.

• Gross margin improved sequentially to 8.4% from 6.2% but declined from 10.1% year-over-year, impacted by lower revenue and a $1.6 million reserve for a customer bankruptcy.

• Net loss was $2.3 million ($0.21 per share) versus net income of $1.1 million ($0.10 per share) a year ago; adjusted net loss was $1.1 million ($0.10 per share).

• Strategic cost reductions, including restructuring in Juarez, and operational efficiencies are expected to strengthen margins as volumes recover.

• Positive operating cash flow of $7.6 million enabled a $12 million year-over-year debt reduction.

Financial highlights

• Revenue declined 25% year-over-year to $98.8 million due to customer demand reductions and program delays.

• Gross profit was $8.3 million (8.4% margin), down from $13.3 million (10.1% margin) year-over-year.

• Operating margin was -0.6% versus 3.4% a year ago.

• Adjusted net loss of $1.1 million compared to adjusted net income of $2.8 million last year.

• Cash flow from operations was $7.6 million, down from $9.9 million year-over-year.

Outlook and guidance

• No forward-looking guidance for Q2 FY2026 due to uncertainty in timing of new product ramps and macroeconomic factors.

• Revenue is expected to increase throughout FY2026, with further gross margin improvements anticipated.

• Anticipates revenue growth in coming quarters from new programs in the U.S., Mexico, and Vietnam.

• Return to profitability by fiscal year-end depends on ramping the consigned program, utility metering system, and additional Mexico revenue.

• Backlog as of September 27, 2025 was $139.9 million, expected to rise due to new program wins.