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The filing reports net sales of $113.9 million for the second quarter of fiscal year 2025, a decrease from $147.8 million in the same period of fiscal year 2024. The decline is attributed to unexpected component shortages and reduced demand from certain customers.
Gross profit for the quarter was 6.8% of net sales, compared to 8.0% in the same quarter of the previous year. The decrease in gross margin is primarily due to a reduction in net sales without corresponding decreases in fixed manufacturing costs.
Research, development, and engineering expenses were reported at $2.3 million for the quarter, representing 2.0% of net sales, up from 1.2% in the same period last year.
Selling, general, and administrative expenses increased to $6.5 million, or 5.7% of net sales, from $6.1 million, or 4.1% of net sales, in the same quarter of the previous year.
The company reported a net loss of $4.9 million for the quarter, compared to a net income of $1.1 million in the previous year. The loss is attributed to reduced demand and the write-off of unamortized deferred loan fees.
Key Tronic Corporation completed financing of its asset-based revolving credit facility with a new maturity date of December 3, 2029, expecting to lower cash interest expenses.
The company maintains a strong balance sheet with a current ratio of 2.8 and a debt-to-equity ratio of 0.9 as of December 28, 2024.
Cash provided by operating activities was $11.5 million for the six months ended December 28, 2024. The company believes it has sufficient liquidity for future operations with $75.6 million in borrowings under its credit facility and $18.1 million available for future borrowings.
Key Tronic continues to focus on restructuring its Juarez facility to focus on higher volume manufacturing, which has resulted in significant headcount reductions starting in the third quarter of fiscal year 2024.