SPOKANE VALLEY, WA – Key Tronic reported fiscal third quarter revenue of $111.5 million, up 3.2% year-over-year.

The EMS firm reported net income of $900,000 for the quarter ended Mar. 28, compared to a net loss of $12 million for the same period of fiscal 2019.

Excluding a goodwill and intangibles write-down, the company would have been breakeven for the fiscal third quarter.  

For the first nine months of fiscal 2020, revenue was $333.5 million, down 7% year-over-year. Net income was $3.3 million, compared to a net loss of $8.8 million for the same period last year.

The lower than anticipated revenue and earnings for the fiscal third quarter is primarily a result of disruptions to supply chains in China caused by the Covid-19 crisis, which delayed the arrival of key components. In addition, earnings were impacted by a write-down of $600,000 of receivables from a customer that was impacted by the pandemic.

“Due to the Covid-19 crisis, we have seen extreme shifts in demand from our customer base. Some customers have significantly increased their demand, including programs for home-consumer products, healthcare and home exercise equipment,” said Craig Gates, president and CEO. “Other customers, particularly those in the gaming industry, have seen large decreases in their demand. On balance, the effect of the pandemic on our customer’s demand was a net positive during the third quarter of fiscal 2020, and we won new programs involving personal safety equipment, consumer products, and home exercise equipment, one of which when fully ramped is anticipated to contribute $100 million in annual revenue and is beginning production in the next few weeks.

“Last week, we announced the temporary closure of our Juarez facilities, but we successfully resumed operations after petitioning the Mexican government to recognize the essential products we manufacture. Under US regulations, we are classified as an Essential Critical Infrastructure Employer, and our Juarez facilities manufacture essential products sold in Mexico. We are ramping operations back up in Mexico, while continuing to focus on protecting the health of all our employees by adhering to current health guidelines.

“Currently, our China facilities appear to be returning to full operation, and the supply chain disruptions have been abating. Our facilities in the US and Vietnam continue to operate normally, while we rigorously follow current health guidelines. We continue to invest in new capacity and remain optimistic about our long-term opportunities for growth. Nevertheless, uncertainty over the possibility of future temporary closures, predicting customer demand and costs, and predicting future supply chain disruptions during the rapidly changing Covid-19 environment makes it impossible to provide any specific guidance for the fourth quarter at this time.”

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