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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