Key Tronic (KTCC) Q3 2026 earnings summary

Executive summary

• Third quarter FY2026 revenue was $89.6 million, down from $112 million year-over-year, mainly due to reduced demand from a legacy customer, end-of-life programs, and temporary disruptions such as Winter Storm Fern.

• Gross margin improved to 8% (adjusted 8.5%), reflecting operating efficiencies from cost-cutting and strategic initiatives.

• Net loss for Q3 FY2026 was $2.6 million ($0.24/share), compared to $0.6 million ($0.06/share) loss in Q3 FY2025; adjusted net loss was $2.8 million ($0.26/share).

• Manufacturing operations in China are being wound down, with production shifting to the U.S. and Vietnam, expected to save $1.2 million per quarter post-completion.

• Order backlog increased to $159.5 million as of March 28, 2026, up from $138.1 million a year earlier, driven by new program wins.

Financial highlights

• Nine-month FY2026 revenue was $284.6 million, down from $357.4 million year-over-year.

• Q3 FY2026 gross profit was $7.2 million (8.0% margin), up from 7.7% in Q3 FY2025; adjusted gross margin was 8.5% (up from 8.4%).

• Operating margin improved to -0.3% from -0.4% year-over-year.

• Year-to-date cash flow from operations was $10 million, nearly flat year-over-year, enabling a $14.3 million reduction in debt.

• Q3 FY2026 net loss: $(2.6) million; nine months net loss: $(13.5) million.

Outlook and guidance

• Sequential revenue growth and margin improvements expected in Q4 FY2026, with a return to profitability anticipated as demand rebounds and new programs ramp up.

• No formal forward-looking guidance provided due to macroeconomic uncertainty and timing of new product ramps.

• Backlog expected to increase further due to recent sizable program wins.

• Anticipated double-digit growth in Arkansas facility and major role for Vietnam in future growth.