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Key Tronic Corporation (NASDAQ:KTCC), a provider of electronic manufacturing services (EMS), today announced its preliminary results for the three months ended March 30, 2024.
For the third quarter of fiscal 2024, Key Tronic expects to report revenue of approximately $140 million, in line with revenue expectations, and a net loss of approximately ($0.18) to ($0.23) per share, which is below expectations.
The lower than expected earnings are primarily a result of severance costs of approximately $3.7 million, or $0.27 per diluted share, as the Company reduced its workforce by over 450 employees in Mexico. Moreover, the severance costs were incurred late in the third quarter, which limited the previously planned payroll expense reductions anticipated in the third quarter. The workforce reduction reflects softening demand for a number of different programs with high labor content and is expected to save more than $10 million annually.
Key Tronic expects production levels from Mexico-based facilities to recover in coming quarters due to recently won programs. The Company does not anticipate needing to increase its net headcount in coming periods, which would reflect significant improvements to operating efficiencies.
During the third quarter of fiscal 2024, Key Tronic's facilities in Mississippi and Arkansas were also offline for approximately two weeks due to severe winter weather events, resulting in unanticipated lost production capacity incurring a loss of contribution margin of approximately $1 million or $0.07 per diluted share. The Company also continued to be adversely impacted by the strengthening of the Mexican Peso by approximately 5% , increasing expenses by approximately $1.5 million or $0.11 per diluted share.
Posted In: KTCC
