Keytronic Corporation, a leading provider of electronic manufacturing services, has reported lower than expected earnings for the first quarter of fiscal 2024. The company expects to report revenue of approximately $147.7 million, in line with expectations, but earnings of approximately $0.02 per share, which falls below expectations.
The lower earnings are primarily attributed to unforeseen severance costs of $0.6 million, or approximately $0.04 to $0.05 per diluted share, resulting from a reduction in the company’s workforce. Over 100 employees were laid off in Mexico and the US as a response to softening demand for various programs. This workforce reduction is expected to yield annual savings of more than $5 million. Although there are expectations of increased demand from Mexico-based customers in the second half of fiscal year 2024, the production for a previously announced program with a leading power equipment company is now anticipated to resume in fiscal 2025, rather than 2024, due to a redesigned product.
Keytronic also continues to face challenges due to the strength of the Mexican Peso and high interest expense. However, there has been some gradual improvement in gross margins. The company has been successful in securing significant new programs and has been striving to align its inventories with current revenue levels.
For the second quarter of fiscal 2024, Keytronic projects revenue between $135 million and $145 million, with earnings ranging from $0.05 to $0.10 per diluted share.
It should be noted that the revenue and earnings estimates for the first and second quarters, as well as the finalization of financial results for the first quarter, are subject to the completion of the company’s quarterly close and review procedures, which are still ongoing. Keytronic plans to release its complete results and host an earnings conference call for the first quarter of fiscal 2024 on October 31, 2023.
Keytronic Corporation, known for its value-added design and manufacturing services, operates facilities in the United States, Mexico, China, and Vietnam. The company offers full engineering services, materials management, assembly services, in-house testing, and worldwide distribution. Keytronic serves as a contract manufacturer for some of the world’s leading original equipment manufacturers.
For more information about Keytronic and its services, please visit www.keytronic.com.
