The following is a summary of the Key Tronic Corporation (KTCC) Q2 2024 Earnings Call Transcript:

Financial Performance:

• Key Tronic reported an 18% growth in Q2 2024 revenues to $154.4 million due to increased production and a $8.1 million inventory sale from a discontinued program.

• The gross margin percentage increased to 8.1% with an operating margin of 2.7% due to an improved product mix and operational efficiency.

• Net income was up fractionally from the previous year at $1.1 million or $0.10 per share.

• Profitability was impacted by increased labor costs and higher interest rates on credit lines.

• Inventory and contract assets were reduced by approximately $48.3 million from the previous year.

Business Progress:

• The firm sees estimated revenues between $135 million and $145 million for the third quarter of fiscal 2024.

• Expecting a net income within the range of break-even to $0.15 per diluted share.

• It anticipates a severance expense due to headcount reductions in Mexico.

• Measures are being taken to combat future supply chain disruptions and investing in production equipment.

• The firm is optimistic about winning new contracts and expanding its business profitably long-term.

• It captured new projects in security products, medical devices, and military aerospace.

• Benefits were seen due to shifting manufacturing trends from China, and the offering of diverse design services.

• Potential growth and profitability challenges include rising wages, higher interest rates, and a strong peso.

• Key Tronic announced a leadership succession plan, with Brett set to take over as President and CEO.

More details: Key Tronic IR

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