George Melas-Kyriazi's questions to KEY TRONIC (KTCC) leadership • Q4 2025
Question
George Melas-Kyriazi of MKH Management Company asked about the significant drop in accounts receivable and DSO, the potential size and profitability of the new consigned materials contract, the growth outlook for Mexico operations, and the forecast for gross margins in fiscal 2026.
Answer
CFO Tony Voorhees stated the accounts receivable reduction was mainly due to lower quarterly revenue. CEO Brett Larsen added that improved collections, not factoring, were key, and noted a $1.1 million reserve for bad debt was taken in the quarter. Larsen explained the new $20 million consigned materials contract is highly profitable, equivalent to an $80-$100 million turnkey program, and is expected to reach its full run rate by the end of fiscal 2026. He anticipates growth in Mexico due to improved cost competitiveness and sees incremental gross margins on new revenue reaching 15% to 20%.