Key Tronic (KTCC) Q2 2025 earnings summary

Executive summary

• Q2 FY25 revenue was $113.9M, down from $147.8M year-over-year, due to component shortages, holiday production slowdowns, and reduced customer demand, impacting revenue by ~$15M.

• Net loss for Q2 FY25 was $4.9M ($0.46/share) versus net income of $1.1M ($0.10/share) in Q2 FY24; adjusted net loss was $4.1M ($0.38/share).

• Gross margin fell to 6.8% from 8.0% year-over-year, mainly due to lower sales without corresponding reductions in fixed costs.

• Company is expanding production capacity in Arkansas and Vietnam to address customer demand shifts and mitigate tariff risks.

• New program wins in aerospace and energy resiliency, with one program expected to generate over $60M annually once fully ramped.

Financial highlights

• Q2 FY25 revenue: $113.9M, down 23% year-over-year; six-month revenue: $245.4M vs. $298M prior year.

• Gross margin: 6.8% (Q2 FY25) vs. 8% (Q2 FY24); operating margin: -1% vs. 2.7%.

• Net loss: $4.9M ($0.46/share) in Q2 FY25 vs. net income $1.1M ($0.10/share) in Q2 FY24.

• Adjusted net loss: $4.1M ($0.38/share) in Q2 FY25 vs. adjusted net income $1.1M ($0.10/share) in Q2 FY24.

• CapEx for Q2 FY25 was $800K; full-year CapEx expected at $8M–$10M, focused on Arkansas and Vietnam expansions.

Outlook and guidance

• Management expects revenue and earnings to improve in Q3 FY25 as strategic initiatives and new programs ramp.

• No Q3 FY25 revenue or earnings guidance due to tariff and demand uncertainties.

• Margins expected to improve with higher revenue, operational efficiencies, and cost-saving initiatives.

• Backlog at December 28, 2024 was $162.5M, down from $264.1M last year, but expected to rise due to recent program wins.

• Projected cash from operations and available credit expected to cover working and fixed capital needs for at least 12 months.