Key Tronic (KTCC) Q4 2024 earnings summary

Executive summary

• Fiscal 2024 began with strong revenue growth but was impacted by severe weather and a cybersecurity incident, disrupting production for about six weeks in the second half of the year.

• Q4 FY24 revenue was $125.7M, down from $162.6M year-over-year; full-year revenue was $559.4M, down from $588.1M.

• Workforce reductions in Mexico are expected to save over $10 million annually, with most savings realized in Q4 and fiscal 2025.

• Adjusted net income for Q4 FY24 was $1.1M ($0.10/share), up from $1.0M ($0.09/share) year-over-year; full-year adjusted net income was $3.4M ($0.31/share), up from $2.2M ($0.20/share).

• New program wins across diverse industries and geographies, with a strong pipeline for future growth.

Financial highlights

• Q4 2024 revenue was $125.7M, down from $162.6M in Q4 2023; full-year revenue was $559.4M, down from $588.1M in 2023.

• Q4 gross margin improved to 9% (from 8.5% YoY), operating margin was 2.2% (down from 2.6%).

• Q4 net income was breakeven ($0.00/share), compared to $1.1M ($0.10/share) last year; full-year net loss was $0.8M ($0.07/share), versus $5.2M net income ($0.47/share) in 2023.

• Adjusted Q4 net income was $1.1M ($0.10/share), up from $1M ($0.09/share) YoY; full-year adjusted net income was $3.4M ($0.31/share), up from $2.2M ($0.20/share).

• Inventory reduced by $29M (21%) YoY; total liabilities reduced by $56.1M YoY.

Outlook and guidance

• Q1 2025 revenue expected between $140M-$150M, with net income guidance of $0.10-$0.20 per diluted share, assuming a 20% tax rate.

• Most unfulfilled Q4 FY24 orders from the cyber incident are expected to be fulfilled in FY25.

• Anticipates continued cost savings from workforce reductions in Mexico, estimated at over $10M annually.

• Expects continued growth in U.S. and Vietnam production, with new programs ramping and cost efficiencies improving.

• Sees gradual rebound in Mexico production and increased utilization of US and Vietnam facilities.