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1. Company Snapshot

1.a. Company Description

Key Tronic Corporation provides contract manufacturing services to original equipment manufacturers in the United States and internationally.The company offers integrated electronic and mechanical engineering, assembly, sourcing and procurement, logistics, and new product testing services.Its services include product design; surface mount technologies and pin through hole capability for printed circuit board assembly; tool making; precision plastic molding; sheet metal fabrication and painting; liquid injection molding; complex assembly; automated tape winding; prototype design; and full product assembly services.


The company also manufactures and sells keyboards and other input devices.It markets its products and services primarily through field sales people and distributors.Key Tronic Corporation was incorporated in 1969 and is headquartered in Spokane Valley, Washington.

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1.b. Last Insights on KTCC

Key Tronic Corporation's recent performance was driven by strategic expansions and cost-saving initiatives. The company's new manufacturing facility in Springdale, Arkansas, celebrated its grand opening, marking a significant milestone in its growth strategy. Additionally, cost cuts, new contracts, and the U.S.-Vietnam expansion are expected to boost long-term growth outlook. The company's Q4 2025 earnings call highlighted its efforts to address weaker demand and tariff pressures. A focus on electronic manufacturing services (EMS) and efforts to enhance operational efficiency are underway.

1.c. Company Highlights

2. Key Tronic's Q1 FY2026 Earnings: Revenue Decline, Margin Pressure

Key Tronic reported total revenue of $98.8 million for the first quarter of fiscal 2026, down from $131.6 million in the same period of fiscal year 2025, primarily due to reduced demand from a long-standing customer and delays in new program launches. The company's gross margin was 8.4%, up from 6.2% in the previous quarter, but down from 10.1% in the same period of fiscal year 2025, largely due to inventory and accounts receivable reserves of $1.6 million related to a customer bankruptcy. The company reported a net loss of $2.3 million or $0.21 per share, compared to net income of $1.1 million or $0.10 per share in the same period of fiscal year 2025. Adjusted net loss was $1.1 million or $0.10 per share.

Publication Date: Nov -24

📋 Highlights
  • Revenue Decline:: Q1 revenue fell 28.8% YoY to $98.8M due to reduced demand from a major customer and delayed new program launches.
  • Gross Margin Pressure:: Gross margin dropped to 8.4% (vs. 10.1% YoY) from $1.6M in inventory and receivables reserves tied to a customer bankruptcy.
  • Net Loss Widened:: Net loss of $2.3M ($0.21/share) vs. $1.1M profit in Q1 FY2025, driven by margin compression and one-time charges.
  • Consignment Program Growth:: New $20M+ annual revenue contract in Mississippi, equivalent to a $60M regular program, supports return to profitability.
  • Balance Sheet Improvements:: $16M sequential reduction in accounts receivable and $7.6M operating cash flow highlight liquidity strength despite challenges.

Operational Highlights

The company has been investing in new production capacity in the U.S. and Vietnam, and has rightsized its Mexico facility. A new technology and research and development location was opened in Arkansas, and the company's Vietnam facility has doubled its manufacturing capacity. The company won new programs in medical technology and industrial equipment, and started a manufacturing services contract with a data processing OEM that will consign its materials to Key Tronic's Corinth, Mississippi facility, expected to grow to over $20 million in annual revenue.

Cash Flow and Capital Expenditures

The company's cash flow provided by operations was approximately $7.6 million, and total capital expenditures were about $3.2 million. The company expects to continue investing selectively in production equipment, SMT equipment, and plastic molding capabilities. Despite global market uncertainties, the company has a strong pipeline of potential new business and expects revenue growth in the coming quarters from new programs launching in the U.S., Mexico, and Vietnam.

Guidance and Outlook

The company does not expect meaningful changes in revenue in Q2 versus Q1. However, the company expects to return to profitability by the end of the fiscal year, driven by the ramp-up of its consignment materials program with a large customer, a utility provided metering system, and additional revenue in Mexico. The company's balance sheet shows a reduction in accounts receivable of $16 million sequentially, driven by favorable collections and write-offs.

Valuation Metrics

With a P/E Ratio of -2.42, P/B Ratio of 0.25, and P/S Ratio of 0.07, the market appears to have factored in the company's current challenges. The EV/EBITDA ratio of 69.89 suggests that the market is pricing in significant improvement in the company's profitability. The company's actual EPS of -$0.21 was in line with estimates, indicating that the market had anticipated the challenges.

3. NewsRoom

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Key Tronic Shares Decline 12% After Reporting Weak Q1 Earnings

Nov -06

Source: zacks.com

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Key Tronic Corporation (KTCC) Q1 2026 Earnings Call Transcript

Nov -05

Source: seekingalpha.com

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Key Tronic Corporation Announces Results for The First Quarter of Fiscal Year 2026

Nov -04

Source: globenewswire.com

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Key Tronic Corporation Announces First Quarter Reporting Date

Oct -20

Source: globenewswire.com

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Key Tronic Celebrates Grand Opening of New Manufacturing Facility in Springdale, Arkansas

Aug -28

Source: globenewswire.com

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KTCC Gains 5.3% Despite Posting Wider Q4 Loss Amid Tariff Pressures

Aug -28

Source: zacks.com

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Key Tronic Corporation (KTCC) Q4 2025 Earnings Call Transcript

Aug -28

Source: seekingalpha.com

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Key Tronic Corporation Announces Results for the Fourth Quarter and Year End of Fiscal Year 2025

Aug -27

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (13.00%)

6. Segments

Contract Manufacturing Sales and Services

Expected Growth: 13%

Key Tronic Corporation's 13% growth in Contract Manufacturing Sales and Services is driven by increasing demand for electronic manufacturing services, particularly in the industrial, aerospace, and medical device industries. Additionally, the company's strategic acquisitions, expanded production capacity, and cost-saving initiatives have contributed to its growth.

7. Detailed Products

Electronic Manufacturing Services (EMS)

Key Tronic Corporation provides electronic manufacturing services, including printed circuit board assembly, cable assembly, and full-box build services.

PCBA (Printed Circuit Board Assembly)

Key Tronic offers PCBA services, including surface mount technology, through-hole technology, and mixed technology.

Cable Assembly

Key Tronic provides custom cable assembly services, including wire harnesses, coaxial cables, and fiber optic cables.

Full-Box Build

Key Tronic offers full-box build services, including assembly, testing, and packaging of complete products.

Product Design and Engineering

Key Tronic provides product design and engineering services, including design for manufacturability and design for testability.

Supply Chain Management

Key Tronic offers supply chain management services, including procurement, inventory management, and logistics.

8. Key Tronic Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Key Tronic Corporation is medium due to the availability of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers for Key Tronic Corporation is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Key Tronic Corporation is medium due to the presence of multiple suppliers in the market.

Threat Of New Entrants

The threat of new entrants for Key Tronic Corporation is high due to the low barriers to entry in the industry.

Intensity Of Rivalry

The intensity of rivalry for Key Tronic Corporation is high due to the presence of multiple competitors in the market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 50.95%
Debt Cost 9.02%
Equity Weight 49.05%
Equity Cost 11.24%
WACC 10.11%
Leverage 103.89%

11. Quality Control: Key Tronic Corporation passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Stratasys

A-Score: 4.3/10

Value: 8.6

Growth: 2.3

Quality: 3.5

Yield: 0.0

Momentum: 8.5

Volatility: 3.0

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Rigetti Computing

A-Score: 4.3/10

Value: 6.0

Growth: 4.9

Quality: 4.4

Yield: 0.0

Momentum: 10.0

Volatility: 0.3

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Corsair Gaming

A-Score: 4.0/10

Value: 6.5

Growth: 2.7

Quality: 4.5

Yield: 0.0

Momentum: 7.5

Volatility: 3.0

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Fathom Digital

A-Score: 3.9/10

Value: 8.1

Growth: 4.9

Quality: 4.8

Yield: 0.0

Momentum: 5.0

Volatility: 0.7

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Red Cat Holdings

A-Score: 3.7/10

Value: 6.0

Growth: 2.8

Quality: 3.3

Yield: 0.0

Momentum: 10.0

Volatility: 0.3

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Key Tronic

A-Score: 3.2/10

Value: 8.0

Growth: 3.9

Quality: 2.1

Yield: 0.0

Momentum: 1.0

Volatility: 4.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

2.54$

Current Price

2.54$

Potential

-0.00%

Expected Cash-Flows