Breaking Down Key Tronic Corporation (KTCC) Financial Health: Key Insights for Investors

You're looking at Key Tronic Corporation (KTCC) and, honestly, the headline numbers for the 2025 fiscal year can be jarring. The company reported a total revenue of just $467.9 million, an 18% drop from the prior year, which translated into a significant GAAP net loss of $(8.3) million, or $(0.77) per share, mostly due to decreased demand from a couple of big, long-standing customers and global tariff uncertainty. But, to be fair, a deeper dive shows a classic turnaround narrative in progress: management is defintely focused on the balance sheet, generating $18.9 million in positive cash flow from operations and successfully cutting long-term debt to $98.9 million by year-end, which is a clear signal of operational discipline. The real question is whether their strategic manufacturing expansion into Arkansas and Vietnam, plus a new consigned materials contract expected to exceed $20 million in annual revenue, can reverse the top-line slide fast enough.

Revenue Analysis

You need a clear picture of where Key Tronic Corporation (KTCC) makes its money, especially after a tough year. The direct takeaway is that while the company's core electronic manufacturing services (EMS) business remains strong, fiscal year 2025 saw a sharp revenue contraction, but there's a strategic pivot underway that will actually lower reported revenue in the near-term while aiming to boost profitability.

For the full fiscal year 2025, Key Tronic Corporation reported total revenue of $467.9 million, a significant drop from the $566.9 million recorded in the prior fiscal year. Here's the quick math: that's a year-over-year revenue decline of approximately 17.5%. This is a serious headwind, and it stemmed from two main issues: reduced demand from a couple of large, long-standing customers and new program delays due to global tariff uncertainty.

The company's revenue stream is essentially a single segment-Electronic Manufacturing Services (EMS)-which involves everything from integrated electronic and mechanical engineering to final product assembly for Original Equipment Manufacturers (OEMs). But you can break down the geographical concentration, and honestly, that's where the risk is most visible.

• Primary Revenue Source: Integrated EMS solutions (engineering, molding, assembly).
• FY 2025 Total Revenue: $467.9 million.
• YoY Revenue Growth: Down 17.5%.

When you look at the geographic contribution, the reliance on the US market is defintely a factor. In FY 2025, the US segment contributed $369.6 million to the top line. That means the US segment alone accounted for about 79% of Key Tronic Corporation's total revenue. The rest comes from its international operations in places like Mexico, China, and Vietnam, which are key to their near-shoring strategy.

Here is the geographical breakdown of the revenue stream:

The most significant change in the revenue stream isn't just the drop; it's the shift in how revenue will be reported moving forward. Key Tronic Corporation is ramping up a new consigned materials program with a potential annual revenue of over $20 million. This is a big deal because under a consigned model, the customer owns and provides the raw materials. So, while the gross margin (profitability) should improve, the reported revenue will be lower than a traditional turnkey program because the multi-million dollar cost of materials is not included in the revenue line. This is a strategic move to improve cash flow and reduce inventory risk, but it will create a confusing revenue comparison for analysts in the coming quarters. You need to look past the top-line number. For more on the company's fiscal health, check out Breaking Down Key Tronic Corporation (KTCC) Financial Health: Key Insights for Investors.

Profitability Metrics

You want to know if Key Tronic Corporation (KTCC) is making money, and the short answer for fiscal year 2025 is: not at the bottom line. The company's full-year profitability shows a classic squeeze: a decent gross margin improvement offset by operational costs and one-time adjustments, ultimately leading to a net loss. It's a story of operational efficiency gains fighting a tough market and specific financial hits.

As a seasoned analyst, I look at three core margins to tell the full story-Gross, Operating, and Net. For KTCC's fiscal year 2025, which ended June 28, 2025, the numbers reveal where the pressure points are.

Here's the quick math: KTCC reported a full fiscal year 2025 net loss of $(8.3) million on total revenue of $467.9 million, which translates to a negative net profit margin of about -1.77%. That's a defintely tough number, especially when you compare it to the industry's trailing twelve months (TTM) net profit margin of 5.91%. The EMS (Electronic Manufacturing Services) sector is generally low-margin, but the gap here is stark, suggesting KTCC is carrying a heavier cost structure or facing much lower pricing power than its peers.

Margin Trends and Operational Efficiency

The trend analysis shows a mixed bag of results, which is where the operational story gets interesting. The Gross Margin actually improved to 7.8% in FY2025 from 7.0% in FY2024. This means the cost of goods sold (COGS) relative to revenue got better, largely due to operational efficiencies gained from workforce reductions and cost-cutting initiatives. That's a positive sign for internal cost management.

But, still, that improvement didn't flow through to the operating or net lines. The Operating Margin plummeted to just 0.1% for the full fiscal year 2025, a steep drop from 1.2% in FY2024. The main culprit? A $1.8 million credit loss adjustment, plus $2.9 million in severance expenses for the full year as the company cut approximately 800 jobs to align costs with reduced customer demand. These are real costs that hit the operating line hard.

• Gross Margin improved; operational costs were better managed.
• Operating Margin fell due to one-time charges.
• Net Loss widened significantly year-over-year.
• Cash flow from operations increased to $18.9 million in FY2025, up from $13.8 million in FY2024.

The widening net loss, from $(2.8) million in FY2024 to $(8.3) million in FY2025, shows the heavy impact of reduced revenue-down to $467.9 million from $566.9 million-and those one-off expenses. The company is actively working to mitigate global tariff implications and optimize pricing through its international and domestic manufacturing footprint, which you can read more about in their Mission Statement, Vision, & Core Values of Key Tronic Corporation (KTCC). The focus on cash flow, which was positive at $18.9 million, is a crucial counterpoint; they are generating cash from the business, even with the net loss, which helps reduce debt.

Debt vs. Equity Structure

You need to know how Key Tronic Corporation (KTCC) funds its operations, and the short answer is: they rely heavily on debt financing, especially when compared to the industry average. The company's Debt-to-Equity (D/E) ratio for the fiscal year ending June 30, 2025, stood at 0.91. This is a significant figure, especially when you consider the Electronic Manufacturing Services (EMS) industry average is closer to 0.09. It tells you that for every dollar of shareholder equity, Key Tronic Corporation has about 91 cents of debt, which is a much higher level of financial leverage than its peers.

Here's the quick math on the balance sheet for the 2025 fiscal year. The company's total debt was approximately US$105.2 million at the end of June 2025. This debt load is offset by total shareholders' equity of about $112.010 million. The debt is primarily long-term, which is typical for a capital-intensive manufacturing business, but the sheer size of the debt relative to equity is the key takeaway for investors.

• Total Debt (FY 2025): Approximately $105.2 million.
• Long-Term Debt: Approximately $99.89 million, showing the bulk of the financing is structured over a longer horizon.
• Short-Term Debt: A calculated $5.31 million, representing the portion due within one year.

The company has been actively managing this debt. They reduced their total debt year-over-year by approximately $12.0 million as of the first quarter of fiscal year 2026, which is a defintely a positive sign of operational cash flow being directed to the balance sheet. This focus on debt reduction, driven by $18.9 million in cash flow from operations for the full fiscal year 2025, shows a commitment to de-risking the balance sheet.

In terms of recent activity, Key Tronic Corporation completed a significant debt refinancing in the second quarter of fiscal year 2025. This was a strategic move to secure an asset-based financing agreement that provides up to $115 million of available credit, with $76 million borrowed at the end of that quarter. This new facility is expected to lower interest expense and provide greater financial flexibility, which is crucial for a company with a high debt-to-equity ratio.

What this estimate hides is the underlying risk profile. While Key Tronic Corporation does not have a public credit rating from major agencies, the financial metrics suggest a high-risk profile. The net debt-to-EBITDA ratio sits at a very high 10.2, and the interest coverage is weak, with Earnings Before Interest and Tax (EBIT) covering interest expense only 0.045 times. This means the company's operating profit barely covers its interest payments, which is a major factor for lenders and is why the debt reduction focus is so important. For a deeper dive into who is buying into this risk, you can check out Exploring Key Tronic Corporation (KTCC) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You need to know if Key Tronic Corporation (KTCC) can cover its near-term obligations, and the quick answer is yes, but the quality of that coverage is what matters. The company's liquidity position is strong, anchored by a Current Ratio of over 2.5, but the quick ratio shows a heavy reliance on inventory, which is common in manufacturing but still a point of focus for investors.

For the full fiscal year 2025 (ending June 28, 2025), Key Tronic Corporation's balance sheet showed $234.17 million in Total Current Assets against $91.99 million in Total Current Liabilities. This gives us a Current Ratio of 2.55 (Current Assets / Current Liabilities), which is defintely a healthy sign of short-term financial strength. A ratio above 2.0 is generally considered robust for an electronics manufacturing services (EMS) provider because it means the company has more than twice the assets it needs to cover its debts coming due in the next year.

However, the Quick Ratio (or Acid-Test Ratio), which strips out inventory, tells a slightly different story. With $97.32 million in Inventory, the Quick Ratio comes in at approximately 1.49 (Current Assets minus Inventory, divided by Current Liabilities). This is still above the crucial 1.0 threshold, meaning the company can cover its current liabilities without selling any inventory, but it highlights that a significant portion of their liquidity is tied up in raw materials and finished goods. Inventory management is key here. Mission Statement, Vision, & Core Values of Key Tronic Corporation (KTCC).

Here's the quick math on working capital and core liquidity:

The company's Working Capital (Current Assets minus Current Liabilities) is a substantial $142.18 million, and the change in working capital provided a cash inflow of $15.8 million for the fiscal year 2025. [cite: 4 in step 1] This positive trend in working capital change, driven partly by strategic inventory reduction initiatives, is a clear strength, freeing up cash for other uses.

Cash Flow: Where the Money Moves

Looking at the cash flow statement, Key Tronic Corporation's ability to generate cash from its core business is a major positive, especially considering the net loss of $(8.3) million for the year. [cite: 9 in step 2] For the full fiscal year 2025, Cash Flow from Operating Activities (CFO) was a healthy $18.9 million, up significantly from $13.8 million in the prior year. [cite: 9, 11 in step 2]

• Operating Cash Flow (CFO): $18.9 million. This positive cash generation is a key strength, allowing the company to fund its operations and reduce debt despite a net loss. [cite: 9, 11 in step 2]
• Investing Cash Flow (CFI): $(4.2) million. This negative figure reflects capital expenditures (CapEx) of $(4.09) million, which is mostly spent on new production equipment and automation to support near-shoring strategies in the US and Vietnam. [cite: 4 in step 1, 10 in step 1]
• Financing Cash Flow (CFF): $(18.1) million. This large outflow is primarily due to the company actively reducing its debt. [cite: 4 in step 1] Key Tronic Corporation has been able to reduce its debt year-over-year by approximately $12.0 million, a clear sign of management prioritizing balance sheet health. [cite: 8 in step 2, 14 in step 2]

The overall picture is one of adequate liquidity and a strong focus on de-risking the balance sheet. The cash generated from operations is effectively being used to invest in the business (CapEx) and, more importantly, to pay down debt, which is a smart move given the current interest rate environment and a recent history of net losses.

Valuation Analysis

You're looking at Key Tronic Corporation (KTCC) and asking the core question: is this stock a bargain or a value trap? The short answer is that the market currently views Key Tronic Corporation as deeply discounted based on its assets, but the lack of profitability in fiscal year 2025 makes it a high-risk proposition for a turnaround play. The valuation metrics are definitely screaming cheap, but you must look past the simple numbers.

The stock closed recently at approximately $2.61 (as of November 20, 2025), which is a steep drop from its 52-week high of $6.08. Here's the quick math: the stock price has fallen over 57% from its high in the last year, reflecting significant investor concern over the company's fiscal performance. This steep decline is a clear signal of market skepticism, even as the company's cash flow from operations improved to $18.9 million for the full fiscal year 2025.

Key Valuation Ratios: A Deep Discount

When you break down the core multiples, Key Tronic Corporation looks incredibly inexpensive, but this is largely due to its recent struggles with profitability. The Price-to-Earnings (P/E) ratio is not applicable (N/A) because the company reported a net loss of $(8.3) million, or a loss of $(0.77) per share, for the full fiscal year 2025. You can't value a loss-making company on P/E.

What really stands out is the Price-to-Book (P/B) ratio, which sits at a low 0.28. This means the stock is trading for less than one-third of its book value (assets minus liabilities), suggesting the market believes the company's assets are worth far less than they are stated on the balance sheet, or that future earnings power is severely impaired. For context, a P/B below 1.0 is often seen as deeply undervalued.

The Enterprise Value-to-EBITDA (EV/EBITDA) ratio is another key metric, as it ignores the capital structure and non-cash expenses (like depreciation). Key Tronic Corporation's latest twelve months (LTM) EV/EBITDA is approximately 8.6x. While this is lower than its five-year average of 10.8x, it's not an extreme outlier, suggesting the market is valuing the company's operating cash flow at a relatively normal multiple for a company facing headwinds.

Analyst Consensus and Near-Term Outlook

The analyst community is divided, which is common for a stock in a turnaround situation. One model suggests the stock is 'Modestly Undervalued' with a fair value (GF Value) around $3.20, while other technical indicators point to a 'Sell' signal due to the wide and falling trend. Honestly, the consensus is mixed, leaning toward a neutral outlook in the mid-term, but the technical picture is bearish.

The company is not a dividend stock; its dividend yield is N/A, and the payout ratio is 0.00%. This is fine, as all cash is being reinvested or used to reduce debt, which is crucial right now. You should treat Key Tronic Corporation as a pure growth or turnaround speculation, not an income play.

The key risk is that the revenue for fiscal year 2025 fell to $467.9 million from $566.9 million in FY 2024, and Q1 2026 revenue continued to decrease, so the pressure is on management to execute on new contracts and operational efficiencies. If you want to dive deeper into who is holding the bag, you can check out Exploring Key Tronic Corporation (KTCC) Investor Profile: Who's Buying and Why?

Risk Factors

You're looking at Key Tronic Corporation (KTCC) and seeing a stock that's taking a hit, and you want to know if the underlying business risks are manageable. Honestly, they are facing a classic mix of external market pressures and internal operational challenges, which led to a full fiscal year 2025 revenue decline of 18% to $467.9 million. That's a big drop, but the company is taking clear, aggressive steps to counter it.

The biggest external risk is the ongoing global trade uncertainty, specifically the potential for new or fluctuating tariffs. This isn't just a cost issue; it's a strategic one. Uncertainty has significantly delayed new program ramps, which directly impacts their top-line growth. Plus, the Electronics Manufacturing Services (EMS) industry is intensely competitive, forcing Key Tronic Corporation (KTCC) to constantly optimize its cost structure just to stay in the game.

Here's the quick math on their financial and operational risks from the fiscal 2025 filings:

• Customer Concentration: A customer bankruptcy in the first quarter of fiscal year 2026 forced a $1.6 million provision for inventory and receivables write-offs. That's a sharp reminder of the risk when a few large customers drive a significant portion of your revenue.
• Supply Chain Volatility: Unexpected component shortages in Q2 fiscal year 2025 lowered revenue by roughly $15 million, showing that global supply chain (the availability of components from the supply chain) issues are still a real threat, not just a headline.
• Financial Leverage: The company still carries a high debt-to-equity ratio, reported around 90.09% as of Q3 fiscal year 2025, which limits financial flexibility in a downturn.

To be fair, Key Tronic Corporation (KTCC) isn't just sitting still. They've mapped out clear mitigation strategies to address these risks head-on. They are definitely realistic about the environment.

The company's strategic response centers on a 'near-shoring' and diversification play to manage tariff risk and improve margins. They are actively expanding their manufacturing footprint in the US, including a new facility in Springdale, Arkansas, and adding capacity in Vietnam. This gives customers options to manage their own tariff exposure, which is smart business. Also, they cut approximately 800 jobs in fiscal year 2025 to better align costs with current demand and boost automation, which is already showing up in improved operational efficiencies.

What this estimate hides is the execution risk. The long-term payoff from the new US and Vietnam facilities depends entirely on the successful and timely ramp-up of new programs, especially in high-growth areas like aerospace systems and energy resiliency technology. The good news is they are generating cash: cash flow provided by operations for the full fiscal year 2025 was a positive $18.9 million, which helped reduce debt by about $12 million year-over-year. That's a defintely positive sign of operational discipline in a tough year.

For a deeper dive into the company's full financial picture, you can check out the full post at Breaking Down Key Tronic Corporation (KTCC) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking at Key Tronic Corporation (KTCC) because you see the pain points of fiscal year 2025-revenue fell to $467.9 million and the net loss widened to $8.3 million-but you want to know what the rebound looks like. Honestly, the company has spent 2025 laying the groundwork for a significant operational pivot that should drive future growth, focusing on geographical flexibility and cost-structure improvements.

The core of their future strategy is simple: move production closer to the customer and get leaner. They are aggressively pursuing a near-shoring strategy, expanding their manufacturing footprint in the US and Vietnam to mitigate tariff risks and supply chain headaches. This is a smart, clear action.

Strategic Initiatives Driving Near-Term Revenue

Key Tronic Corporation (KTCC) is betting on its expanded global footprint and a streamlined cost structure to capture new business. They cut approximately 800 jobs in fiscal year 2025 to better align costs with demand, which helped push the gross margin up to 7.8% for the year. Plus, their cash flow from operations actually improved to $18.9 million in FY 2025.

The most concrete near-term revenue driver is a new manufacturing services contract with a large data processing original equipment manufacturer (OEM). This is a major win, as it's a consigned program-meaning the OEM provides the materials-and it's expected to eventually exceed $20 million in annual revenue.

• Win new programs in medical technology and industrial equipment.
• Expand US capacity with new facilities in Springdale, Arkansas, and Corinth, Mississippi.
• Increase capacity in Vietnam to provide a China-alternative option.
• Expect approximately half of manufacturing to be US/Vietnam-based by end of fiscal 2026.

Competitive Edge and Growth Sectors

The company's competitive advantage isn't just about cheap labor anymore; it's about flexibility and technical depth. Their international and domestic manufacturing footprint-spanning the US, Mexico, China, and Vietnam-offers customers a true hedge against geopolitical and tariff fluctuations. This is a key differentiator in the electronic manufacturing services (EMS) space.

What this estimate hides is the time it takes for new programs to fully ramp up. Still, the new business pipeline is strong, with recent wins across diverse sectors that reduce reliance on any single market. You defintely want to watch how fast these new contracts translate into production.

The ability to offer a comprehensive solution, from 'deep and broad design services' to flexible manufacturing locations, makes Key Tronic Corporation (KTCC)'s business 'extremely sticky' once a program is ramped. This is the long-term moat. For a deeper dive into the company's long-term vision, you can check out the Mission Statement, Vision, & Core Values of Key Tronic Corporation (KTCC).

Next step: Track the ramp-up of the data processing OEM contract in Q1 and Q2 of fiscal year 2026; that's the clearest indicator of their execution on these strategic initiatives.