KEY TRONIC CORP
For the period ended Jun 27, 2026. Filed Sep 24, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Sep 24, 2026
KTCC$1.32+1.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2025-06-28; filed 2025-09-17.
0000719733-25-000086
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2026-06-27; filed 2026-09-24.
0000719733-26-000033
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 80 previous paragraphs and 91 current paragraphs.
47 unchanged; 28 reworded; 14 added; 5 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
We reported net sales of $386.7 million for fiscal year 2026, down 17.4 percent from $467.9 million for fiscal year 2025. The revenue reduction in fiscal year 2026 largely reflected reduced demand from certain legacy and end-of-life programs, as well as a variety of uncertainties in the global economy throughout the year. These uncertainties caused constraints of tightening credit availability and liquidity pressures across the global supply chain affecting the entire electronics manufacturing services industry.
Current report
Key Tronic expects long-term growth and profitability despite these challenges and revenue trends in fiscal year 2026. Over the past year, we have taken decisive actions as a result of these challenges to strengthen Key Tronic's competitive position and create a more efficient global manufacturing footprint. We successfully exited manufacturing operations in China, right-sized our Mexico facility, and expanded production capacity in both the United States and Vietnam.
Current report
Specifically in Vietnam, we completed a significant capacity expansion during fiscal 2026, doubling our manufacturing footprint to support anticipated growth in medical device and other high-value programs. Vietnam has emerged as an increasingly important part of our global manufacturing strategy, providing customers with a highly competitive combination of quality, cost, and regional supply chain.
Current report
We also opened our new technology and research and development center in Arkansas during the first quarter of fiscal 2026. This investment strengthens our ability to provide customers with enhanced engineering support, faster collaboration, and increased manufacturing flexibility through a U.S.-based solution. Customer interest in our Arkansas operations continues to grow, and we expect the facility to deliver double-digit revenue growth during fiscal 2027 as new programs ramp and existing customers expand their engagement with us.
Current report
These initiatives have improved our cost structure, enhanced supply chain flexibility, and enabled us to provide customers with attractive manufacturing options amid ongoing macroeconomic and geopolitical uncertainties.
Current report
These investments are a direct response to evolving customer requirements and position Key Tronic to capitalize on long-term industry trends toward supply chain diversification, tariff mitigation, and operational resilience. While clearly not immune to the economic challenges encountered during the past year, we believe our operational discipline, strengthened manufacturing footprint, and long-standing customer relationships have positioned us better than many of our competitors.
Current report
Operating income as a percentage of net sales for fiscal year 2026 was (3.8) percent compared to 0.1 percent for fiscal year 2025. These changes largely relate to the factors discussed above, including the $10.3 million of long-term receivable write-offs, offset partially by $5.9 million of gain on insurance related to storm damage at the Company's Mississippi facility.
Current report
Net sales decreased $81.2 million from the prior fiscal year. Approximately $80 million of this decrease related to a reduction in demand from certain existing and ongoing customers, while approximately $48 million relates to end-of-life programs that had final shipments of product, inventory, and any scrap recorded during 2026. These decreases were offset by approximately $38 million in new programs or programs that significantly ramped during the year.
Current report
Gross profit as a percentage of net sales was 6.2 percent in fiscal year 2026 and 7.8 percent in fiscal year 2025. During fiscal year 2026, the decrease largely related to the revenue reductions discussed above, as well as restructuring charges incurred during the year related to the wind-down of our China manufacturing operations and further workforce reductions at our Mexico facility. These decreases were offset by operational efficiencies gained from previous reductions in workforce initiatives over the past two years.
Current report
Our assessment of the realizability of deferred tax assets is a critical accounting estimate because it requires significant judgment regarding the amount and timing of future taxable income and the relative weight assigned to positive and negative evidence. Our largest U.S. deferred tax assets relate primarily to federal research and development tax credits, capitalized research and development expenditures, interest expense deduction carryforwards, net operating loss carryforwards and other deductible temporary differences. Realization of these assets requires taxable income of the appropriate character within the applicable carryforward periods. After considering the scheduled reversal of existing taxable temporary differences, realization of a significant portion of our net U.S. deferred tax assets depended on future U.S. taxable income. We did not have carryback availability or qualifying tax-planning strategies sufficient to support realization of the remaining deferred tax assets.
Current report
At June 28, 2025, our fiscal 2026 forecast for the U.S. tax-paying group at that time contemplated that losses would be concentrated in the first half of the year, followed by improved results and a return to operating profitability later in fiscal 2026. Actual results in the first and second quarters were below forecast, and the timing of anticipated new-program ramps continued to shift. At those interim reporting dates, however, management’s forecast continued to reflect improved operating results later in fiscal 2026 based on expected program ramps and operating cost reductions.
Current report
At March 28, 2026, a return to operating profitability in the fourth quarter remained a significant component of the forecast used in the realizability assessment. Based on the evidence then available, management concluded that the positive evidence remained sufficient to outweigh the negative evidence. During the fourth quarter, however, the profitability did not materialize due to supply chain constraints. These results provided additional objective negative evidence and reduced our ability to place sufficient weight on projections of future taxable income as positive evidence. We also ended fiscal 2026 with a U.S. loss before income taxes of approximately $26.5 million and a significant three-year cumulative U.S. loss position.
Current report
Based on the totality of evidence available at June 27, 2026, we concluded that it was no longer more likely than not that our net U.S. deferred tax assets would be realized. We therefore established a full valuation allowance of approximately $28.4 million against the U.S. tax-paying group deferred tax assets. The conclusion changed in the fourth quarter because the additional actual operating results and forecast shortfalls provided new objective evidence and changed the relative weight of the evidence supporting realizability.
Current report
The U.S. valuation allowance increased fiscal 2026 income tax expense by approximately $28.4 million and was the principal reason we recognized total income tax expense of approximately $23.0 million on a consolidated loss before income taxes of approximately $24.8 million. Our effective tax rate was approximately (92.8)% in fiscal 2026, compared with an income tax benefit of approximately $3.6 million in fiscal 2025. We will continue to evaluate the realizability of our deferred tax assets at each reporting date. The valuation allowance may be reduced in a future period if sufficient objectively verifiable positive evidence supports realization, such as sustained U.S. taxable income. Any such adjustment would be recognized in the period in which the evidence changes; this discussion should not be interpreted as indicating that a reversal is expected.
Removed paragraphs (5)
Previous report
We reported net sales of $467.9 million for fiscal year 2025, down 17.5 percent from $566.9 million for fiscal year 2024. The revenue in fiscal year 2025 was adversely impacted by the continued worldwide economic disruptions caused by the recent escalation and fluctuations in global tariffs, which caused business paralysis throughout much of the year and ultimately led to delays in new programs originally scheduled to ramp in the year. In addition, approximately $48 million of this decrease related to a reduction in scrap and component sales in fiscal year 2025, as certain large programs went end of life in 2024 and their final shipments of product, inventory, and any scrap were recorded at that time.
Previous report
Key Tronic expects long-term growth and profitability despite revenue trends in fiscal year 2025. In order to better align costs with current customer demand and boost automation, the Company cut approximately 300 more jobs during the fourth quarter of fiscal year 2025, for a total net headcount reduction during fiscal year 2025 of approximately 600. These measures have improved competitiveness for new program bids, which have increased recently. To support its near-shoring and tariff mitigation strategies, Key Tronic is also expanding its manufacturing footprint, with a new US facility and added capacity in Vietnam.
Previous report
Operating income as a percentage of net sales for fiscal year 2025 was 0.1 percent compared to 1.2 percent for fiscal year 2024. In addition to the factors discussed above, this decrease is primarily related to approximately $1.8 million in adjustments for estimated collections from customers during 2025.
Previous report
Net sales decreased $99.1 million from the prior fiscal year. Approximately $48 million of this decrease related to a reduction in scrap and component sales in fiscal year 2025, as certain large programs went end of life in 2024 and their final shipments of product, inventory, and any scrap were recorded at that time. Additionally, worldwide economic disruptions caused by the recent escalation and fluctuations in global tariffs led to disruptions throughout the year and ultimately led to delays in new programs originally scheduled to ramp in the year.
Previous report
Gross profit as a percentage of net sales was 7.8 percent in fiscal year 2025 and 7.0 percent in fiscal year 2024. During fiscal year 2025, the increase in gross margin was primarily driven by cost reductions and strategic headcount reductions implemented in prior quarters, partially offset by the related severance expenses.
Reworded paragraphs (28)
Previous wording
Key Tronic is a leading contract manufacturer offering value-added design and manufacturing services from its facilities in the United States, Mexico, China, and Vietnam. The Company provides its customers full engineering services, materials management, worldwide manufacturing facilities, assembly services, in-house testing, and worldwide distribution. Its customers include some of the world’s leading original equipment manufacturers. Our combined capabilities and vertical integration are proving to be a desirable offering to our expanded customer base.
Current wording
Key Tronic is a leading contract manufacturer offering value-added design and manufacturing services from its facilities in the United States, Mexico, and Vietnam with procurement support from its facility in China. The Company provides its customers full engineering services, materials management, worldwide manufacturing facilities, assembly services, in-house testing, and worldwide distribution. Its customers include some of the world’s leading original equipment manufacturers. Our combined capabilities and vertical integration are proving to be a desirable offering to our expanded customer base.
Previous wording
During the fourth quarter of fiscal year 2025, we continued to win new programs in pest control, personal protection, air purification, automotive, medical technology and utilities inspection equipment. We also announced a new manufacturing services contract with a large data processing OEM that will consign its material and components for new production in our Corinth, Mississippi manufacturing facility. We have never had a consigned program at this scale, which has the potential to ramp significantly during fiscal year 2026 and is estimated to eventually exceed $20 million in annual revenue.
Current wording
During fiscal year 2026, we won new programs in medical devices, industrial equipment, automotive, pest control, construction, data centers and power management. During the fourth quarter of fiscal 2026 alone, we secured more than $60 million in new program awards. We also continued to ramp the previously announced significant manufacturing services contract with a large data processing OEM that is consigning its material and components for production at our Corinth, Mississippi manufacturing facility.
Previous wording
For the first quarter of fiscal year 2026, we believe ongoing tariff-related concerns, global logistics problems, China-US political tensions and continued supply-chain concerns will continue to drive the favorable trend of contract manufacturing returning to North America, as well as to our expanding Vietnam facilities. We continue to see improvement across the metrics associated with business development, including an increase in the number of active quotes with prospective customers.
Current wording
For the first quarter of fiscal year 2027, we believe ongoing tariff-related concerns, global logistics problems, China-US political tensions and continued supply-chain concerns will continue to drive the favorable trend of contract manufacturing returning to North America, where we are well-positioned with our domestic and Mexico operations, as well as to our expanding Vietnam facilities. We continue to see improvement across the metrics associated with business development, including an increase in the number of active quotes with prospective customers.
Previous wording
The net loss for fiscal year 2025 was $(8.3) million or $(0.77) per share, compared to a net loss of $(2.8) million or $(0.26) per share for fiscal year 2024. The net loss in 2025 is primarily related to reductions in demand, severance expenses incurred, and adjustments for estimated collections from customers.
Current wording
The net loss for fiscal year 2026 was $(47.8) million or $(4.41) per share, compared to a net loss of $(8.3) million or $(0.77) per share for fiscal year 2025. The net loss in 2026 was primarily driven by a $28.4 million non-cash charge recorded during the quarter to establish a valuation allowance against certain deferred tax assets. The accounting adjustment was driven primarily by the cumulative loss of US taxable income over the last few years. While management remains confident in the Company's expected return to profitability and the future expected utilization of certain tax benefits, the valuation allowance was based on the relative weighting of historical results. The adjustment has no impact on cash flows, debt covenant compliance, or the Company's underlying operating performance. Additionally, approximately $10.3 million of distressed customer related long term receivables were also written off during the year.
Previous wording
Gross profit as a percentage of net sales was 7.8 percent in fiscal year 2025, up from 7.0 percent in 2024. During fiscal year 2025, the increase in gross margin is largely related to operational efficiencies gained from the reductions in workforce offset by the expenses incurred for the related severance. The level of gross margin is also impacted by product mix, timing of the startup of new programs, facility utilization, and pricing within the electronics industry and material costs, which can fluctuate significantly from quarter-to-quarter and year-to-year.
Current wording
Gross profit as a percentage of net sales was 6.2 percent in fiscal year 2026, down from 7.8 percent in 2025. During fiscal year 2026, the decrease in gross margin is largely related to the revenue reductions and restructuring charges incurred during the year offset by operational efficiencies gained from previous reductions in workforce initiatives over the past two years. The level of gross margin is also impacted by product mix, timing of the startup of new programs, facility utilization, and pricing within the electronics industry and material costs, which can fluctuate significantly from quarter-to-quarter and year-to-year.
Previous wording
We maintained a strong balance sheet with a current ratio of 2.5 and a debt-to-equity ratio of 0.90. Total cash provided by operating activities as defined on our cash flow statement was $18.9 million during fiscal year 2025, as we have continued to focus on optimizing inventory balances and reducing the days to collect accounts receivable. We believe we maintain sufficient liquidity for our expected future operations, dependent upon executing projected cash flows from operations and potentially adding additional credit capacities through refinancing current credit agreements or pursuing additional debt structures.
Current wording
We maintained a strong balance sheet with a current ratio of 2.1 and a debt-to-equity ratio of 1.54. Total cash provided by operating activities as defined on our cash flow statement was $4.4 million during fiscal year 2026, as we have continued to focus on optimizing inventory balances and reducing the days to collect accounts receivable. We believe we maintain sufficient liquidity for our expected future operations, dependent upon executing projected cash flows from operations and potentially adding additional credit capacities through refinancing current credit agreements or pursuing additional debt structures.
Previous wording
The following table sets forth for the periods indicated certain items of the consolidated statements of income expressed as a percentage of net sales. The financial information and discussion below should be read in conjunction with the consolidated financial statements and Footnotes contained in this Annual Report on Form 10-K.
Current wording
The following table sets forth for the periods indicated certain items of the consolidated statements of operations expressed as a percentage of net sales. The financial information and discussion below should be read in conjunction with the consolidated financial statements and Footnotes contained in this Annual Report on Form 10-K.
Previous wording
Sales to foreign locations represented 21.2 percent and 22.5 percent of our total net sales in fiscal years 2025 and 2024, respectively.
Current wording
Sales to foreign locations represented 13.9 percent and 21.2 percent of our total net sales in fiscal years 2026 and 2025, respectively.
Previous wording
Total cost of sales as a percentage of net sales was 92.2 percent in fiscal year 2025 and 93.0 percent in fiscal year 2024.
Current wording
Total cost of sales as a percentage of net sales was 93.8 percent in fiscal year 2026 and 92.2 percent in fiscal year 2025.
Previous wording
We record our inventories at net realizable value based on specific identification of inventory against current demand and recent usage. We also consider our customers' ability to pay for inventory and whether or not there is a lead-time assurance agreement for a specific program. The amounts charged to expense for these inventories were approximately $0.1 million and $0.3 million in fiscal years 2025 and 2024, respectively.
Current wording
We record our inventories at net realizable value based on specific identification of inventory against current demand and recent usage. We also consider our customers' ability to pay for inventory and whether or not there is a lead-time assurance agreement for a specific program. The amounts charged to expense for these inventories were approximately $3.3 million and $0.1 million in fiscal years 2026 and 2025, respectively.
Previous wording
We provide warranties on certain products we sell and estimate warranty costs based on historical experience and anticipated product returns. Warranty expense is related to workmanship claims. The amounts charged to expense are determined based on an estimate of warranty exposure. The net warranty expense was approximately $0.0 million and $0.3 million in fiscal years 2025 and 2024, respectively.
Current wording
We provide warranties on certain products we sell and estimate warranty costs based on historical experience and anticipated product returns. Warranty expense is related to workmanship claims. The amounts charged to expense are determined based on an estimate of warranty exposure. The net warranty expense was approximately $0.0 million and $0.0 million in fiscal years 2026 and 2025, respectively.
Previous wording
Research, development and engineering expenses (RD&E) consist principally of employee related costs, third-party development costs, program materials, depreciation, and allocated information technology and facilities costs. Total RD&E expenses were $9.2 million and $8.3 million in fiscal years 2025 and 2024, respectively. Total RD&E expenses as a percent of net sales was 2.0 percent in fiscal year 2025 and 1.5 percent in fiscal year 2024.
Current wording
Research, development and engineering expenses (RD&E) consist principally of employee related costs, third-party development costs, program materials, depreciation, and allocated information technology and facilities costs. Total RD&E expenses were $8.0 million and $9.2 million in fiscal years 2026 and 2025, respectively. Total RD&E expenses as a percent of net sales was 2.1 percent in fiscal year 2026 and 2.0 percent in fiscal year 2025.
Previous wording
Selling, general, and administrative expenses (SG&A) consist principally of salaries and benefits, advertising and marketing programs, sales commissions, travel expenses, provision for credit losses, facilities costs, and professional services. Total SG&A expenses were $26.7 million and $25.2 million in fiscal years 2025 and 2024, respectively. Total SG&A expenses as a percent of net sales were 5.7 percent and 4.4 percent in fiscal years 2025 and 2024, respectively. This increase is largely attributable to approximately $1.8 million in adjustments for estimated collections from customers.
Current wording
Selling, general, and administrative expenses (SG&A) consist principally of salaries and benefits, advertising and marketing programs, sales commissions, travel expenses, provision for credit losses, facilities costs, and professional services. Total SG&A expenses were $36.5 million and $26.7 million in fiscal years 2026 and 2025, respectively. Total SG&A expenses as a percent of net sales were 9.5 percent and 5.7 percent in fiscal years 2026 and 2025, respectively. This increase is largely attributable to an approximately $10.4 million increase in charges for estimated collections from customers.
Previous wording
We had net interest expense of $12.5 million and $11.9 million in fiscal years 2025 and 2024, respectively. This increase is largely attributable to the write-off in the second quarter of fiscal year 2025 of approximately $1.0 million of unamortized loan fees related to refinancing our debt, partially offset by a reduction in maturing equipment leases and a lower average revolving credit loan balance.
Current wording
We had net interest expense of $10.1 million and $12.5 million in fiscal years 2026 and 2025, respectively. This decrease is largely attributable to a reduction in maturing equipment leases and a lower average revolving credit loan balance.
Previous wording
We had income tax benefits of approximately $3.6 million during fiscal year 2025 and $2.4 million during fiscal year 2024. The income tax benefit recognized during both fiscal years 2025 and 2024 was primarily a function of U.S. and foreign taxes recognized at statutory rates, the net benefit associated with federal research and development tax credits, and the change in deferred tax liability related to future distributions from China in fiscal year 2025.
Current wording
We had income tax expense of approximately $23.0 million during fiscal year 2026 and benefits of approximately $3.6 million during fiscal year 2025. The income tax expense/benefit recognized during both fiscal years 2026 and 2025 was primarily a function of U.S. and foreign taxes recognized at statutory rates, the net benefit associated with federal research and development tax credits, the change in valuation allowances in the U.S. and China in fiscal year 2026, and the change in deferred tax liability related to future distributions from China in fiscal year 2025.
Previous wording
•Key Tronic Juarez, SA de CV owns five facilities and leases three facilities in Juarez, Mexico. These facilities include an SMT facility, an assembly and molding facility, a sheet metal fabrication facility, and assembly and warehouse facilities. This subsidiary primarily supports our U.S. operations.
Current wording
•Key Tronic Juarez, SA de CV owns five facilities and leases two facilities in Juarez, Mexico. These facilities include an SMT facility, an assembly and molding facility, a sheet metal fabrication facility, and assembly and warehouse facilities. This subsidiary primarily supports our U.S. operations.
Previous wording
•Key Tronic Computer Peripherals (Shanghai) Co., Ltd. leases one facility with SMT, assembly, global purchasing, and warehouse capabilities in Shanghai, China, which began operations in 1999. Its primary function is to provide contract manufacturing services.
Current wording
•Key Tronic Computer Peripherals (Shanghai) Co., Ltd. leases one facility with global purchasing capabilities in Shanghai, China, which began operations in 1999. Its primary function is to provide strategic sourcing in support of manufacturing operations at our other facilities.
Previous wording
Foreign sales (based on shipping instructions) from our worldwide operations, including domestic exports, were $99.3 million and $127.6 million in fiscal years 2025 and 2024, respectively. Products and manufacturing services provided by our subsidiary operations are often shipped to customers directly by the parent company.
Current wording
Foreign sales (based on shipping instructions) from our worldwide operations, including domestic exports, were $53.6 million and $99.3 million in fiscal years 2026 and 2025, respectively. Products and manufacturing services provided by our subsidiary operations are often shipped to customers directly by the parent company.
Previous wording
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Current wording
https://www.sec.gov/ix?doc=/Archives/edgar/data/0000719733/000071973325000086/ktcc-20250628.htm
Previous wording
Net cash provided by operating activities for fiscal year 2025 was $18.9 million compared to net cash provided by operating activities of $13.8 million in fiscal year 2024. The additional cash provided in fiscal year 2025 was due to a focus on collecting accounts receivable faster and working down inventory balances to be in line with current revenue levels.
Current wording
Net cash provided by operating activities for fiscal year 2026 was $4.4 million compared to net cash provided by operating activities of $18.9 million in fiscal year 2025. The decrease in cash provided in fiscal year 2026 was primarily due to decreasing revenue throughout the year.
Previous wording
The $13.8 million of net cash provided by operating activities during fiscal year 2024 was primarily related to $2.8 million of net loss adjusted for $11.0 million of depreciation and amortization, an $15.8 million decrease in accounts receivable, a $32.5 million decrease in inventory, an $8.7 million decrease in contract assets partially offset by a $36.5 million decrease in accounts payable, a $2.9 million decrease in accrued compensation and vacation, and an $8.1 million decrease in other liabilities.
Current wording
The $4.4 million of net cash provided by operating activities during fiscal year 2026 is primarily related to $47.8 million of net loss adjusted for $10.2 million of depreciation and amortization, $4.4 million of noncash lease amortization, $3.3 million of provision for inventories, $11.6 million of provision for credit losses, a $22.0 million provision for deferred taxes, a $11.5 million decrease in accounts receivable, and a $12.2 million increase in accounts payable partially offset by a $5.9 million gain on insurance proceeds (net of losses), a $5.8 million increase in other assets, a $2.7 million decrease in accrued compensation and vacation, a $1.8 million increase in inventory, a $0.5 million increase in contract assets, and an $8.0 million decrease in other liabilities.
Previous wording
The $18.9 million of net cash provided by operating activities during fiscal year 2025 is primarily related to $8.3 million of net loss adjusted for $9.6 million of depreciation and amortization, $32.4 million decrease in accounts receivable, a $7.7 million decrease in inventory, a $3.8 million decrease in contract assets, and a $1.6 million increase in accrued compensation and vacation partially offset by a $15.7 million decrease in accounts payable, a $10.5 million increase in other assets and a $3.6 million decrease in other liabilities.
Current wording
The $18.9 million of net cash provided by operating activities during fiscal year 2025 was primarily related to $8.3 million of net loss adjusted for $9.6 million of depreciation and amortization, an $32.4 million decrease in accounts receivable, a $7.7 million decrease in inventory, an $3.8 million decrease in contract assets, and a $1.6 million increase in accrued compensation and vacation partially offset by a $15.7 million decrease in accounts payable, a $10.5 million increase in other assets, and a $3.6 million decrease in other liabilities.
Previous wording
Cash flows used in investing activities were $4.2 million for fiscal year 2025 and $2.1 million in fiscal year 2024. Our primary use of cash in investing activities during fiscal years 2025 and 2024 was purchasing equipment to support production for new programs. During fiscal year 2024, there was a source of cash provided by investing activities from insurance claims paid for replacing equipment and facility repairs in our Arkansas facility related to a lightning strike and water damage.
Current wording
Cash flows used in investing activities were $4.0 million for fiscal year 2026 and $4.2 million in fiscal year 2025. Our primary use of cash in investing activities during fiscal years 2026 and 2025 was purchasing equipment to support production for new programs. During fiscal year 2026 there was a source of cash provided by investing activities from insurance claims related to storm damage at our Mississippi facility. During 2025, there was a source of cash provided by investing activities from insurance claims paid for replacing equipment and facility repairs in our Arkansas facility related to a lightning strike and water damage.
Previous wording
Cash flows used in financing activities were $18.1 million in fiscal year 2025 and $10.5 million in fiscal year 2024. Our primary financing activities during both fiscal year 2025 and fiscal year 2024 were borrowings and repayments under our asset-based revolving line of credit facility with Bank of Montreal, our Prior Credit Facility with Bank of America, and term loans. In fiscal year 2025, there was a significantly higher percentage of repayments against the borrowings on the revolving line of credit.
Current wording
Cash flows used in financing activities were $1.2 million in fiscal year 2026 and $18.1 million in fiscal year 2025. Our primary financing activities during both fiscal year 2026 and fiscal year 2025 were borrowings and repayments under our asset-based revolving line of credit facility with Bank of Montreal, our Prior Credit Facility with Bank of America, and term loans. In fiscal year 2026, there was a significantly lower percentage of repayments against the borrowings on the revolving line of credit.
Previous wording
Our cash requirements are affected by the level of current operations and new programs. We believe that projected cash from operations, funds available under the revolving credit facility and potential additional debt capacity will be sufficient to meet our working and fixed capital requirements for at least twelve months beyond issuance of our financial statements, and our current asset-based senior secured revolving credit facility does not mature until December 3, 2025. The Company further notes projected cash from operations is projected to improve in the coming quarters as supply chain availability will boost additional inventory turns and existing inventory is consumed by fulfilling customer backlog. As of June 28, 2025, we had approximately $1.4 million of cash held by foreign subsidiaries. If cash is to be repatriated in the future from these foreign subsidiaries, the Company would be subject to certain withholding taxes in the foreign jurisdictions. The total amount of tax payments required for the amount of foreign subsidiary cash on hand as of June 28, 2025 would approximate $14,000.
Current wording
Our cash requirements are affected by the level of current operations and new programs. We believe that projected cash from operations, funds available under the revolving credit facility and potential additional debt capacity will be sufficient to meet our working and fixed capital requirements for at least twelve months beyond issuance of our financial statements, and our current asset-based senior secured revolving credit facility does not mature until December 3, 2029. The Company further notes projected cash from operations is projected to improve in the coming quarters as supply chain availability will boost additional inventory turns and existing inventory is consumed by fulfilling customer backlog. As of June 27, 2026, we had approximately $0.2 million of cash held by foreign subsidiaries. If cash is to be repatriated in the future from these foreign subsidiaries, the
Previous wording
The Company also has approximately $26.4 million of foreign earnings that have not been repatriated to the U.S. of that amount, the Company estimates that $2.9 million is to be repatriated in the future, requiring foreign withholding taxes of $0.3 million that is currently accrued in our deferred tax liabilities. The remaining $23.5 million is considered to be permanently reinvested in Mexico and Vietnam. If these amounts were required to be repatriated, it would result in no foreign withholding taxes payable.
Current wording
The Company also has approximately $30.6 million of foreign earnings that have not been repatriated to the U.S. of that amount, the Company estimates that $0.9 million is to be repatriated in the future, requiring foreign withholding taxes of $0.1 million that is currently accrued in our deferred tax liabilities. The remaining $29.7 million is considered to be permanently reinvested in Mexico and Vietnam. If these amounts were required to be repatriated, it would result in no foreign withholding taxes payable.
Previous wording
The Company assesses whether control of the product or services promised under the contract is transferred to the customer at a point in time (shipment) or over time (as we manufacture the product). The Company is first required to evaluate whether its contracts meet the criteria for 'over-time' or 'point-in-time' recognition. The Company has determined that for the majority of its contracts the Company is manufacturing products for which there is no alternative use due to the unique nature of the customer-specific product, IP and other contract restrictions. Further, the Company has an enforceable right to payment including a reasonable profit for performance completed to date with respect to these contracts. As a result, revenue is recognized under these contracts 'over-time' based on the input cost-to-cost method as it better depicts the transfer of control. This input method is based on the ratio of costs incurred to date as compared to the total estimated costs at completion of the performance obligation. For all other contracts that do not meet these criteria, such as manufacturing contracts for which the terms do not provide an enforceable right to payment for performance completed to date, the Company recognizes revenue when it has transferred control of the related manufactured products which generally occurs upon shipment to the customer. Revenue from engineering services is recognized over time as costs related to the services are incurred, which approximates proportional performance of the service. This method is used because management considers it to be the best available measure of progress on the contracts. Revenue from scrap and excess inventory sales is recognized at the point-in-time of scrap at the customers direction, or, if applicable, shipment of the material to the customer.
Current wording
The Company assesses whether control of the product or services promised under the contract is transferred to the customer at a point in time (shipment) or over time (as we manufacture the product). The Company is first required to evaluate whether its contracts meet the criteria for 'over-time' or 'point-in-time' recognition. The Company has determined that for the majority of its contracts the Company is manufacturing products for which there is no alternative use due to the unique nature of the customer-specific product, IP and other contract restrictions. Further, the Company has an enforceable right to payment including a reasonable profit for performance completed to date with respect to these contracts. As a result, revenue is recognized under these contracts 'over-time' based on the input cost-to-cost method as it better depicts the transfer of control. This input method is based on the ratio of costs incurred to date as compared to the total estimated costs at completion of the performance obligation.
Previous wording
We value our accounts receivable net of an allowance for credit losses. As of June 28, 2025, the allowance for credit losses was approximately $3.5 million. As of June 29, 2024, the allowance for credit losses was approximately $2.9 million. This allowance is based on estimates of the portion of accounts receivable that may not be collected in the future, and the increase during fiscal year 2025 relates to ongoing revisions to this estimated amount. The estimates used are based on specific identification of potentially uncollectible accounts as well as a general calculation based on the company's collection history. Such accounts are identified using publicly available information in conjunction with evaluations of current payment activity. However, if any of our customers were to develop unexpected and immediate financial problems that would prevent payment of open invoices, we could incur additional and possibly material expenses that would negatively impact earnings.
Current wording
We value our accounts receivable, contract assets, and other costs recoverable from customers net of an allowance for credit losses. As of June 27, 2026, the allowance for credit losses was approximately $14.0 million. As of June 28, 2025, the allowance for credit losses was approximately $5.4 million. This allowance is based on estimates of the portion of these balances that may not be collected in the future, and the increase during fiscal year 2026 relates to ongoing revisions to this estimated amount. The estimates used are based on specific identification of potentially uncollectible accounts as well as a general calculation based on the company's collection history. Such accounts are identified using publicly available information in conjunction with evaluations of current payment activity. However, if any of our customers were to develop unexpected and immediate financial problems that would prevent payment of open invoices, we could incur additional and possibly material expenses that would negatively impact earnings.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Company would be subject to certain withholding taxes in the foreign jurisdictions. The total amount of tax payments required for the amount of foreign subsidiary cash on hand as of June 27, 2026 would approximate $11,000.
Current report — wording carried from elsewhere
For all other contracts that do not meet these criteria, such as manufacturing contracts for which the terms do not provide an enforceable right to payment for performance completed to date, the Company recognizes revenue when it has transferred control of the related manufactured products which generally occurs upon shipment to the customer. Revenue from engineering services is recognized over time as costs related to the services are incurred, which approximates proportional performance of the service. This method is used because management considers it to be the best available measure of progress on the contracts. Revenue from scrap and excess inventory sales is recognized at the point-in-time of scrap at the customers direction, or, if applicable, shipment of the material to the customer.