Key Tronic Corporation reported total revenue of $96.3 million for the second quarter of fiscal year 2026, down from $113.9 million in the same period last year. The decrease was due to reduced demand, end of life program transitions, and delays in new program launches, impacted by global uncertainties and trade policies.
To mitigate costs and prepare for long-term growth, Key Tronic is winding down manufacturing operations in China and focusing on sourcing and procurement activities. This strategic shift is expected to save approximately $1.2 million per quarter and shift more production to US and Vietnam facilities.
The workforce in Mexico was also reduced to save an additional approximate $1.5 million per quarter, starting gradually in the third quarter. These strategic initiatives resulted in charges of approximately $10.5 million for severance, inventory write-offs, and related expenses in the second quarter of fiscal year 2026.
Despite the challenges, Key Tronic generated approximately $6.3 million in cash flow from operations in the second quarter of fiscal year 2026, allowing for a reduction of approximately $13.4 million in debt year-over-year. However, closure of the China facility and workforce reductions in Mexico impacted margins negatively.
Key Tronic reported a net loss of $(8.6) million for the second quarter of fiscal year 2026, compared to a net loss of $(4.9) million in the same period last year. Adjusted net income was $0.0 million for the quarter. The Company continues to focus on right-sizing operations and building new production capacity in the US and Vietnam.
CEO Brett Larsen emphasized the Company’s focus on managing uncertainties and achieving profitable long-term growth. Key Tronic expects revenue to gradually rebound, operating efficiencies to improve, and a return to profitability by the end of fiscal year 2026. The Company is excited about recent investments in US and Vietnam facilities to meet customer demand.
Read more at GlobeNewswire: Key Tronic Corporation Announces Results for the Second