Key Tronic 2025 Q4 Earnings Misses Targets with Net Loss Widening 97.7%

Key Tronic reported weaker-than-expected results for its 2025 Q4 earnings, marked by a significant revenue decline and a more than doubled net loss. The company’s financial performance fell short of expectations, and no new guidance was provided for future periods. The management highlighted strategic moves amid challenging market conditions.

Revenue
Key Tronic's total revenue for Q4 2025 declined by 12.7% to $110.49 million, compared to $126.56 million in the same period of the previous year. This continued a year-over-year trend of contraction, with the company noting that end-of-life program impacts and demand challenges, including tariff disruptions, played a role in the drop.

Earnings/Net Income
The company's financial losses widened significantly, with a net loss of $-3.92 million in Q4 2025, a 97.7% increase from $-1.99 million in Q4 2024. On a per-share basis, the loss expanded to $0.36, up from $0.18 in the prior year. This marked a substantial deterioration in profitability, despite the company’s efforts to improve gross margins through operational efficiencies.

Price Action
The stock of Key Tronic saw mixed price movements in the wake of the earnings report. During the most recent trading day, shares fell 4.44%, but gained 3.30% over the last full week and surged 23.74% month-to-date, showing some investor optimism despite the earnings underperformance.

Post Earnings Price Action Review
Following the earnings release, Key Tronic's shares experienced a short-term dip, aligning with the disappointing results. However, a stronger rebound in the following weeks indicated some investor confidence in the company’s long-term strategic direction, particularly its near-shoring and operational improvements. Analysts and investors are likely weighing the CEO's outlook on capacity expansions and new program wins when assessing the stock's potential.

CEO Commentary
CEO Gary R. Fiala attributed the revenue challenges to external factors such as tariff-related disruptions and end-of-life programs, while acknowledging the company’s difficult operating environment. He noted that operational efficiencies and workforce streamlining had helped improve gross margins to 7.8%, emphasizing strategic capacity expansions in Arkansas and Vietnam as critical to supporting near-shoring trends and attracting new business. Fiala also highlighted a significant $20 million+ annual revenue contract in Mississippi and expressed commitment to strengthening internal controls and cash flow management for long-term resilience.

Guidance
The company did not provide specific quantitative guidance for future performance during the Q4 2025 earnings call. Instead, it emphasized ongoing focus on capacity expansion, working capital management, and near-shoring opportunities to drive future growth. The CEO also noted the potential positive impact of the One Big Beautiful Bill Act (OBBBA) in FY26, which is expected to improve financial reporting and cash flow for domestic R&D activities.

Additional News
In addition to the earnings report, Key Tronic announced a significant $20 million+ annual revenue contract in Mississippi, validating its near-shoring strategy and capacity expansion efforts. The company also noted a 36% decline in its order backlog to $159.1 million, signaling reduced near-term revenue visibility. Customer concentration remained a concern, with the five largest customers accounting for 48% of FY25 net sales. On a positive note, operating cash flow improved by 37% to $18.9 million in FY25, reflecting better working capital management. The company also remediated material weaknesses in internal controls over financial reporting. Additionally, the enactment of the One Big Beautiful Bill Act (OBBBA) is expected to eliminate the capitalization requirement for R&D expenses, potentially boosting future cash flow and profitability for domestic R&D activities.