Key Tronic To End China Manufacturing Operations; Co To Shift Focus To Sourcing And Procurement; To Save ~$1.2M Per Quarter; Does Not Expect To Experience Any Material Adverse Revenue Impacts As A Result

On December 19, 2025, Key Tronic Corporation ("the Company") committed to a plan to modify its China-based operations. The Company will end its manufacturing operations in its China-based facility and instead intends to refocus operations in China on sourcing and procurement activities intended to support its remaining global locations (the "Plan"). The Company will continue to manufacture certain of its existing and future demand at one of its other manufacturing facilities, and does not expect to experience any material adverse revenue impacts as a result. The additional capacity created in the Company's Vietnam-based facility in the last year is expected to sufficiently support the majority of the relocated demand.

 

The Plan is designed to better align the Company's organizational structure and resources with its strategic initiatives, including filling its capacity recently created in Vietnam, and is also expected to reduce the Company's risk related to future geopolitical tensions. The Plan is expected to be completed by the Company's fourth fiscal quarter of 2026, and it is anticipated to save approximately $1.2 million per quarter following completion.

 

In connection with this Plan, the Company expects to pay out approximately $1.1 million in severance-related expenses and approximately $0.2 million related to previously accrued compensation. The Company also expects to incur non-cash expenses with respect to the Plan related to the transfer, disposal, and write-off of certain existing inventory, fixed assets, deferred taxes, and other assets totaling approximately $4.8 million to $5.8 million.