Key Tronic Posts $7.5M Loss as Supply-Chain Financing Constraints Delay Shipments

Key Tronic Corporation posted a wider fiscal first-quarter loss as supply-chain financing constraints delayed about $18 million in shipments and production costs squeezed gross margin at its U.S. and Mexico facilities.

The electronics manufacturing services provider lost $7.501 million, or $0.69 per basic and diluted share, in the quarter ended Sept. 26. The comparable quarter produced a $2.255 million loss and a per-share loss of $0.21. Revenue was nearly flat, slipping to $98.676 million from $98.750 million.

Gross margin narrowed to 2.5% from 8.4% a year earlier. Production delays, higher material costs, excess labor and operating inefficiencies at facilities in Mexico and the United States weighed on the result.

About $6 million in inventory sales contributed no margin. Key Tronic also recorded $4.7 million in manufacturing cost variances as part of its cost of goods sold under U.S. accounting rules for inventory valuation. Those costs added to the pressure on profitability even as quarterly revenue changed little.

Backlog reached $245.9 million, up 76% from the year-earlier quarter. Orders in the backlog are generally expected to ship within about 12 months, although the total is not necessarily an indication of future sales.

Key Tronic will not provide revenue or earnings guidance for its fiscal 2027 second quarter. The company pointed to uncertainty around new program ramps, broader economic conditions and capital constraints.