KEY TRONIC CORP SEC 10-K Report

Key Tronic Corporation, a leading provider of manufacturing services for outsourced Original Equipment Manufacturing (OEM) products, has released its Form 10-K report for the fiscal year 2025. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces in the competitive contract manufacturing industry.

Financial Highlights

Key Tronic Corp reported the following key financial metrics for the fiscal year 2025:

• Net Sales: $467.9 million, a decrease of 17.5% from $566.9 million in fiscal year 2024, primarily due to economic disruptions and program delays.
• Gross Profit: $36.4 million, representing 7.8% of net sales, up from 7.0% in 2024, driven by operational efficiencies and workforce reductions.
• Operating Income: $0.6 million, or 0.1% of net sales, compared to $6.8 million, or 1.2% of net sales in 2024, impacted by adjustments for estimated collections.
• Net Loss: $(8.3) million, compared to a net loss of $(2.8) million in 2024, primarily due to reduced demand and severance expenses.
• Net Loss Per Share: $(0.77), compared to $(0.26) in 2024, reflecting the increased net loss.

Business Highlights

Key Tronic Corp's business performance for the fiscal year 2025 included the following highlights:

• Revenue Segments: The company provides a mix of manufacturing services for outsourced OEM products, including product design, surface mount technologies, precision plastic molding, sheet metal fabrication, and full product assembly. The industrial sector accounted for 52% of revenue in 2025, up from 46% in 2024, while the consumer sector decreased to 38% from 45%.
• Geographical Performance: Sales to foreign locations represented 21.2% of total net sales in fiscal year 2025, slightly down from 22.5% in 2024. The company operates manufacturing facilities in the United States, Mexico, China, and Vietnam, providing a global manufacturing solution.
• New Product Launches: During the fourth quarter of fiscal year 2025, the company won new programs in pest control, personal protection, air purification, automotive, medical technology, and utilities inspection equipment.
• New Production Launches: The company announced a new manufacturing services contract with a large data processing OEM for production in its Corinth, Mississippi facility. Additionally, there are plans to significantly increase production capacity in the Arkansas and Vietnam facilities to meet growing customer demand.
• Future Outlook: The company expects long-term growth and profitability despite recent revenue trends. It is expanding its manufacturing footprint with a new US facility and added capacity in Vietnam to support near-shoring and tariff mitigation strategies. The company anticipates that ongoing tariff-related concerns and global logistics issues will continue to drive contract manufacturing back to North America and Vietnam.

Strategic Initiatives

Key Tronic Corp has undertaken several strategic initiatives to ensure long-term growth and financial stability:

• Expansion and Diversification: The company is expanding its manufacturing footprint to support near-shoring and tariff mitigation strategies, including a new US facility and added capacity in Vietnam. It is also focusing on diversifying its customer base by adding new programs and customers across various industries such as pest control, personal protection, and medical technology.
• Capital Management: The company entered into a new asset-based senior secured revolving credit facility of up to $115 million, maturing on December 3, 2029, to replace its prior credit facility. It also secured a $28 million term loan with Callodine Commercial Finance, LLC, requiring quarterly repayments. The company has been actively managing its debt, with a total outstanding debt of $107.6 million as of June 28, 2025, and has reduced its long-term debt from $116.4 million to $98.9 million. Additionally, the company has maintained a strong balance sheet with a current ratio of 2.5 and a debt-to-equity ratio of 0.90.
• Future Outlook: Key Tronic expects long-term growth and profitability despite recent revenue declines. The company anticipates generating cash from operations as revenue increases in the first half of fiscal year 2026. It plans to continue leveraging its credit facilities and exploring additional financing options to meet working and fixed capital requirements. The company also expects the favorable trend of contract manufacturing returning to North America and Vietnam to continue, driven by ongoing tariff-related concerns and global logistics issues.

Challenges and Risks

Key Tronic Corp faces several challenges and risks in its operations:

• Operational Risks: The company operates facilities in Mexico, China, Vietnam, and the U.S., which are subject to risks such as staffing difficulties, political instability, tariffs, regulatory changes, and natural disasters. The company also faces risks related to cash liquidity, export duties, and compliance with foreign laws.
• Market Risks: The company is exposed to fluctuations in demand, particularly from its concentrated customer base. Economic conditions, trade policies, and inflation can adversely impact demand and costs.
• Regulatory Risks: Changes in U.S. trade policy and tariffs could affect the company's operations and costs. Environmental and health regulations may also impose additional costs.
• Technology Risks: The company is subject to cyberattacks, which have previously impacted its financial condition. The company must maintain technological expertise to remain competitive.
• Financial Risks: The company has restrictive covenants in its credit arrangements and may face challenges in securing financing. Interest rate changes could also impact financial results.
• Legal and Accounting Risks: The company has faced internal control weaknesses and restated financial statements, which could lead to regulatory action or litigation.

SEC Filing: KEY TRONIC CORP [ KTCC ] - 10-K - Sep. 16, 2025