What changed in this filing

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Item 1. Financial Statements

2025-11-07 compared with 2025-05-13 · 165 added, 155 removed, 418 unchanged (43% of the section changed)

3 unchanged sentences

(Unaudited, in thousands)

March 29, 2025 June 29, 2024

September 27, 2025 June 28, 2025

Current assets:

2 unchanged sentences

80,065 96,142

Contract assets 19,032 21,250

Contract assets, net of credit losses of $ 1,380 and $ 0

22,263 17,409

Inventories 97,572 97,321

4 unchanged sentences

Operating lease right-of-use assets, net 25,996 11,347

Other assets:

Other long-term assets:

Deferred income tax asset 24,715 23,397

Other, net of credit losses of $ 500 and $ 500

23,325 19,230

Total other assets 48,040 42,627

27 unchanged sentences

(Unaudited, in thousands, except per share amounts)

Three Months Ended Nine Months Ended

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

Three Months Ended

September 27, 2025 September 28, 2024

Net sales $ 98,750 $ 131,558

3 unchanged sentences

Selling, general and administrative expenses 6,759 6,570

Gain on insurance proceeds, net of losses — — — ( 431 )

Total operating expenses 8,838 8,859

1 unchanged sentence

Interest expense, net 2,776 3,263

Loss before income taxes ( 3,040 ) ( 3,375 ) ( 6,884 ) ( 2,131 )

Income tax benefit ( 2,436 ) ( 1,154 ) ( 2,490 ) ( 1,329 )

Net loss $ ( 604 ) $ ( 2,221 ) $ ( 4,394 ) $ ( 802 )

Net loss per share — Basic $ ( 0.06 ) $ ( 0.21 ) $ ( 0.41 ) $ ( 0.07 )

Income (loss) before income taxes ( 3,360 ) 1,181

Income tax (benefit) provision ( 1,105 ) 57

Net income (loss) $ ( 2,255 ) $ 1,124

Net income (loss) per share — Basic $ ( 0.21 ) $ 0.10

Weighted average shares outstanding —Basic 10,771 10,762

Net loss per share — Diluted $ ( 0.06 ) $ ( 0.21 ) $ ( 0.41 ) $ ( 0.07 )

Net income (loss) per share — Diluted $ ( 0.21 ) $ 0.10

Weighted average shares outstanding — Diluted 10,771 10,762

3 unchanged sentences

(Unaudited, in thousands)

Three Months Ended Nine Months Ended

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

Three Months Ended

September 27, 2025 September 28, 2024

Comprehensive income (loss):

Net loss $ ( 604 ) $ ( 2,221 ) $ ( 4,394 ) $ ( 802 )

Net income (loss) $ ( 2,255 ) $ 1,124

Other comprehensive income (loss):

Unrealized gain (loss) on hedging instruments, net of tax 686 ( 191 ) ( 110 ) 97

Unrealized loss on hedging instruments, net of tax ( 300 ) ( 838 )

Comprehensive income (loss) $ ( 2,555 ) $ 286

Other comprehensive income (loss) for the three months ended March 29, 2025 and March 30, 2024, is reflected net of tax expense (benefit) of approximately $ 0.2 million and $( 0.1 ) million, respectively.

Other comprehensive (loss) for the nine months ended March 29, 2025 and March 30, 2024, is reflected net of tax expense (benefit) of approximately $ 0.0 million and $ 0.0 million, respectively.

Other comprehensive income (loss) for the three months ended September 27, 2025 and September 28, 2024, is reflected net of tax expense (benefit) of approximately $( 0.1 ) million and $( 0.3 ) million, respectively.

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(Unaudited, in thousands)

Nine Months Ended

March 29, 2025 March 30, 2024

Three Months Ended

September 27, 2025 September 28, 2024

Operating activities:

Net loss $ ( 4,394 ) $ ( 802 )

Adjustments to reconcile net loss to cash provided by operating activities:

Net income (loss) $ ( 2,255 ) $ 1,124

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Depreciation and amortization 2,481 3,011

Amortization of interest rate swap — 97

Amortization of deferred loan costs 144 138

Noncash lease expense 531 1,094

Inventory adjustments to net realizable value 1,224 296

Provision for warranty — 16

Provision for credit losses 837 212

Loss (gain) on disposal of assets 2 ( 32 )

Gain on insurance proceeds, net of losses — ( 431 )

Loss on disposal of assets — 8

Share-based compensation expense 221 67

Deferred income taxes ( 1,314 ) ( 1,207 )

Noncash accrued compensation benefit — ( 3,907 )

Changes in operating assets and liabilities:

9 unchanged sentences

Purchase of property and equipment ( 3,182 ) ( 377 )

Proceeds from insurance — 2,365

Cash used in investing activities ( 3,182 ) ( 377 )

14 unchanged sentences

Recognition of operating lease liabilities and right-of-use assets $ 17,711 $ —

Recognition of financing lease liabilities and right-of-use assets $ 2,311 $ —

Derecognition of operating lease liabilities and right of use assets $ ( 2,531 ) $ —

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(Unaudited, in thousands)

Three Months Ended Nine Months Ended

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

Three Months Ended

September 27, 2025 September 28, 2024

Total shareholders’ equity, beginning balances $ 117,134 $ 123,990

1 unchanged sentence

Beginning balances 10,762 10,762

Restricted stock awards released 97 —

Ending balances 10,859 10,762

1 unchanged sentence

Beginning balances $ 47,502 $ 47,284

Share-based compensation 26 52 109 163

Share-based compensation expense 221 67

Ending balances 47,723 47,351

1 unchanged sentence

Beginning balances $ 68,603 $ 76,921

Net loss ( 604 ) ( 2,221 ) $ ( 4,394 ) ( 802 )

Net income (loss) ( 2,255 ) 1,124

Ending balances 66,348 78,045

16 unchanged sentences

The Company’s reporting period is a 52/53 week fiscal year ending on the Saturday closest to June 30.

The three month and nine month periods ended March 29, 2025 and March 30, 2024, were both 13 week periods.

The three month period ended September 27, 2025 and September 28, 2024, were both 13 week periods.

Fiscal year 2026 will end on June 27, 2026, which is a 52 week year.

2 unchanged sentences

Historically, due to the timing between the procurement of raw materials, production cycle and payment from our customers, we have financed operations and met our capital expenditure requirements primarily through cash flows provided by operations and borrowings under our credit facilities.

We generated cash from operations of $ 10.1 million and $ 6.1 million, respectively, during the nine-month periods ended March 29, 2025, and March 30, 2024, respectively, and have positive working capital of $ 160.0 million as of March 29, 2025.

Based on current projections, we anticipate continuing to generate cash from operations as revenue is expected to remain flat during the fourth quarter of fiscal year 2025 along with further anticipated cost savings from ongoing restructurings.

We generated cash from operations of $ 7.6 million and $ 9.9 million, respectively, during the three-month periods ended September 27, 2025, and September 28, 2024, respectively, and have positive working capital of $ 127.2 million as of September 27, 2025.

Based on current projections, we anticipate continuing to generate cash from operations as revenue is expected to increase throughout fiscal year 2026 along with further gross margin improvements.

On December 3, 2024, we entered into an asset-based credit agreement with BMO Bank, N.A that provides for an asset-based senior secured revolving credit facility of up to $ 115 million, maturing on December 3, 2029.

On December 3, 2024, we also entered into a $ 28 million term loan credit agreement with Callodine Commercial Finance, LLC.

As of March 29, 2025, approximately $ 20.4 million was available under the asset-based senior secured revolving credit facility.

As of September 27, 2025, approximately $ 20.9 million was available under the asset-based senior secured revolving credit facility.

In addition, MXN 39 million ($ 2.1 million USD) was available under the line of credit with Banorte Financial Group.

6 unchanged sentences

Allowance for Credit Losses

The Company evaluates the collectability of accounts receivable and records an allowance for credit losses, which reduces the receivables to an amount that management reasonably estimates will be collected.

A specific allowance is recorded against receivables considered to be impaired based on the Company’s knowledge of the financial condition of the customer, and a general allowance is calculated and applied to remaining receivables based on the Company's historical collection experience and forecasted collection ability.

The Company evaluates the collectability of accounts receivable, contract assets, and other recoverable costs and records an allowance for credit losses, which reduces these assets to an amount that management reasonably estimates will be collected.

A specific allowance is recorded against receivables considered to be impaired based on the Company’s knowledge of the financial condition of the customer, and a general allowance is calculated and applied to remaining assets based on the Company's historical collection experience.

In determining the amount of the allowance, the Company considers several factors including the aging of the receivables, the current business environment and historical experience.

6 unchanged sentences

classification affecting the pattern and classification of expense recognition in the consolidated statements of operations.

For further information, please refer to Footnote “Leases” of the “Notes to Consolidated Financial Statements.”

For further information, please refer to Note 11.

“Leases” of the “Notes to Consolidated Financial Statements.”

Revenue Recognition

The first step for revenue recognition is to identify the contract with a customer.

The first step in its process for revenue recognition is to identify the contract with a customer.

A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations.

A contract can be written, oral, or implied.

The Company generally enters into manufacturing service agreements (“MSA”) with its customers that outline the terms of the business relationship between the customer and the Company.

The Company generally enters into manufacturing service agreements (“MSA”) with its customers that outlines the terms of the business relationship between the customer and the Company.

This includes matters such as warranty, indemnification, transfer of title and risk of loss, liability for excess and obsolete inventory, pricing, payment terms, etc.

55 unchanged sentences

The ASU requires entities to disclose more detailed information relating to their reconciliation of statutory tax rate to effective tax rate, income taxes paid by jurisdiction, pretax income (or loss) from continuing operations, and income tax expense (or benefit).

The ASU applies to the Company’s annual reporting period beginning in fiscal year 2026.

The Company does not anticipate early adoption of the new disclosure standards.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires public entities to disclose information about their reportable segments' oversight and significant expenses on an interim and annual basis.

The ASU is effective for the annual reporting period beginning in fiscal year 2025 and for interim periods beginning in fiscal year 2026.

The ASU applies to the Company’s annual reporting period beginning in fiscal year 2026, and the Company is currently assessing the impact of the disclosure requirement on its consolidated financial statements.

On September 18, 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software.

This update was made to modernize the accounting for software costs.

The ASU is effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods.

Early adoption is permitted.

The Company is currently evaluating the guidance and its impact to the financial statements.

Inventories as of March 29, 2025 are $ 99.3 million compared to $ 105.1 million as of June 29, 2024.

Inventories as of September 27, 2025 are $ 97.6 million compared to $ 97.3 million as of June 28, 2025.

The components of inventories consist of the following (in thousands):

March 29, 2025 June 29, 2024

September 27, 2025 June 28, 2025

(in thousands)

3 unchanged sentences

Long-Term Debt

Maturity Date Interest Rate March 29, 2025 June 29, 2024

Maturity Date Interest Rate September 27, 2025 June 28, 2025

(in thousands)

2 unchanged sentences

Foreign line of credit (3) December 11, 2026 10.8 % 3,332 3,253

Domestic term loans - Balboa (4) September 19, 2030 6 % to 8 %

Domestic term loan - Balboa (4) September 19, 2029 6 % to 8 %

Foreign term loan - Banorte (5) April 24, 2026 5.5 % 700 1,000

Domestic term loan - Bank of America (6) August 14, 2025 4.9 % — 1,277

Domestic term loan - Avtech 8 (6) December 31, 2028 13.6 % 720 278

Domestic term loan - Avtech 9 (7) June 30, 2028 11.7 % 4,680 4,996

Total debt 103,136 107,629

2 unchanged sentences

Long-term debt, net $ 94,797 $ 98,936

(1) On December 3, 2024, Key Tronic Corporation (the "Company") entered into an asset-based credit agreement (the "Credit Agreement") among the Company, certain domestic subsidiaries (as co-borrowers or guarantors), BMO Bank, N.A (the "Bank"), as administrative agent and swing line lender, BMO Capital Markets as arranger and book runner, and certain financial institutions, as lenders.

(1) On December 3, 2024, the Company entered into an asset-based credit agreement (the "Credit Agreement") among the Company, certain domestic subsidiaries (as co-borrowers or guarantors), BMO Bank, N.A (the "Bank"), as administrative agent and swing line lender, BMO Capital Markets as arranger and book runner, and certain financial institutions, as lenders.

The Credit Agreement provides for an asset-based senior secured revolving credit facility (the "Credit Facility") of up to $ 115 million, maturing on December 3, 2029.

2 unchanged sentences

and (ii) each Base Rate Loan, Swing Line Loan or other Obligation shall bear interest at a rate per annum equal to the Base Rate (subject to a floor of 1.00 %) plus an applicable margin of 1.50 % to 2.00 %, depending on the availability of borrowing amounts under the Credit Agreement.

As of March 29, 2025, the applicable margin was 2.75 % for SOFR Loans and 1.75 % for Base Rate Loans.

As of September 27, 2025, the applicable margin was 2.75 % for SOFR Loans and 1.75 % for Base Rate Loans.

If there is an event of default under the Credit Agreement, all loans and other obligations may bear interest at a rate of an additional 2.00 % on the otherwise applicable interest rates.

5 unchanged sentences

Proceeds from the Credit Facility and the Term Loan discussed below were used to pay-off the Company's prior loan and security agreement, as amended, with Bank of America, N.A.

(with the related credit facility, the "Prior Credit Facility") in the amount of $ 99.7 million, as well as its outstanding equipment term loan, and financing costs related to the Credit Agreement.

in the amount of $ 99.7 million, as well as its outstanding equipment term loan, and financing costs related to the Credit Agreement.

The Term Loan, may also be used to pay-off certain other existing debt, to issue letters of credit, and for other business purposes, including working capital needs.

As of March 29, 2025, the Company had an outstanding balance under the asset-based revolving credit facility of $ 79.5 million, $ 0.3 million in outstanding letters of credit and $ 20.4 million available for future borrowings.

As of September 27, 2025, the Company had an outstanding balance under the asset-based revolving credit facility of $ 64.5 million, $ 0.4 million in outstanding letters of credit and $ 20.9 million available for future borrowings.

On August 14, 2020, the Company entered into a loan agreement with Bank of America (“Loan Agreement”).

1 unchanged sentence

The interest rate as of December 2, 2024 at the time of pay-off was approximately 9.2 %.

As of June 29, 2024, the Company had an outstanding balance under the Prior Credit Facility of $ 107.1 million, $ 0.3 million in outstanding letters of credit and $ 12.9 million available for future borrowings.

As of June 28, 2025, the Company had an outstanding balance under the Credit Facility of $ 67.9 million, $ 0.3 million in outstanding letters of credit and $ 25.0 million available for future borrowings.

(2) On December 3, 2024, the Company entered into a $ 28 million term loan (the "Term Loan") credit agreement among the Company, certain domestic subsidiaries (as co-borrowers or guarantors), Callodine Commercial Finance, LLC (“Callodine”), as administrative agent, and certain financial institutions, as term loan lenders.

8 unchanged sentences

The agreement provides for a three-year secured line of credit up to MXN 100 million, subject to the Company’s borrowing base, maturing on December 11, 2026.

The credit facility bears interest at Iterbancario de Equilibrio Interest Rate plus 2.75 %, and as of March 29, 2025, was 12.7 %.

As of March 29, 2025, the Company had an outstanding balance under the revolving credit facility of MXN 80 million ($ 3.96 million USD) and MXN 20 million ($ 0.96 million USD) available for future borrowings.

The credit facility bears interest at Iterbancario de Equilibrio Interest Rate plus 2.75 %, and as of September 27, 2025, was 11 %.

As of September 27, 2025, the Company had an outstanding balance under the revolving credit facility of MXN 61 million ($ 3.3 million USD) and MXN 39 million ($ 2.1 million USD) available for future borrowings.

(4) On September 19, 2023, the Company entered into a $ 1.1 million equipment financing agreement with Ameris Bank dba Balboa Capital ("Balboa Capital").

3 unchanged sentences

Under this loan agreement, equal monthly payments of $ 100,000 commenced on May 24, 2021 and will continue through the maturity of the equipment financing facility on April 24, 2026.

(6) On August 14, 2020, the Company entered into a $ 5.0 million equipment financing facility with Bank of America relating to the Company’s existing U.S.

manufacturing equipment that accrued interest at 4.85 % and was set to mature on August 14, 2025.

Under this loan agreement, equal monthly payments of approximately $ 94,000 commenced on September 14, 2020 and continued through the pay-off of the Prior Credit Facility on December 4, 2024.

Debt maturities as of March 29, 2025 for the next five years are as follows (in thousands):

(6) On May 1, 2025, the Company entered into a $ 4.0 million equipment financing facility related to new manufacturing equipment that bears interest at 13.56 % and matures on October 31, 2028.

Under this loan agreement, equal quarterly payments of $ 383,679 will commence when the full amount of the facility is drawn and will continue through the maturity of the equipment financing facility on October 31, 2028.

(7) On March 6, 2025, the Company entered into a $ 5.0 million equipment financing facility related to the Company’s existing manufacturing equipment that bears interest at 11.71 % and matures on June 30, 2028.

Under this loan agreement, equal quarterly payments of $ 464,361 commenced on July 15, 2025 and will continue through the maturity of the equipment financing facility on June 30, 2028.

Debt maturities as of September 27, 2025 for the next five years are as follows (in thousands):

Fiscal Years Ending Amount

2029 - Thereafter 97,810

2026 (1) $ 4,632

Total debt 103,136

1 unchanged sentence

Long-term debt, net of debt issuance costs $ 100,769

(1) Represents scheduled payments for the remaining three-month period ending June 28, 2025.

The Company must comply with certain financial covenants, including earnings before interest, taxes, depreciation, amortization and other adjustments, availability and, if triggered, a fixed charge coverage ratio.

The credit agreement requires the Company to grant certain inspection rights to Bank of Montreal, limit or restrict the Company’s cash management;

(1) Represents scheduled payments for the remaining nine-month period ending June 27, 2026.

The Company must comply with certain financial covenants, including average and daily availability and, if triggered, earnings before interest, taxes, depreciation, amortization and other adjustments and a fixed charge coverage ratio covenant will apply.

The Credit Agreement requires the Company to grant certain inspection rights to BMO Bank, N.A., limit or restrict the Company’s cash management;

limit or restrict the ability of the Company to incur additional liens, make acquisitions or investments, incur additional indebtedness, engage in mergers, consolidations, liquidations, dissolutions, or dispositions, pay dividends or other restricted payments, prepay certain indebtedness, engage in transactions with affiliates, and use proceeds.

As of March 29, 2025, the Company was not in compliance with all financial covenants.

On May 13, 2025, the Company executed a first amendment and limited waiver to the Term Loan which waived an existing event of default as of that date.

Also on May 13, 2025, the Company executed a first amendment and limited waiver to the Credit Agreement which waived an existing event of cross-default as of that date.

As of September 27, 2025, the Company was in compliance with all applicable financial covenants.

The Company expects to repatriate a portion of its foreign earnings based on net sales growth driving additional capital requirements domestically, cash requirements for potential acquisitions and to implement certain tax strategies.

3 unchanged sentences

However, withholding taxes in China may still apply to any such future repatriations.

Management has not changed its indefinite investment assertions with regard to the portion of accumulated earnings and profits in China that may be repatriated in the future.

Accordingly, management estimates that future repatriations of cash from China may result in approximately $ 0.2 million of withholding tax.

2 unchanged sentences

Withholding taxes would not apply to future repatriations from Mexico or Vietnam.

The Company has available approximately $ 10.9 million of gross federal research and development tax credits as of March 29, 2025 expiring in various fiscal years from 2033 to 2045.

The Company has available approximately $ 11.2 million of gross federal research and development tax credits as of September 27, 2025 expiring in various fiscal years from 2033 to 2046.

ASC 740 requires the Company to recognize in its financial statements uncertainties in tax positions taken that may not be sustained upon examination by the taxing authorities.

Accordingly, as of March 29, 2025, the Company has recorded $ 2.9 million of unrecognized tax benefits associated with these federal tax credits, resulting in a net deferred tax benefit of approximately $ 8.0 million.

The Company evaluated tax law changes and regulatory guidance issued through the prior fiscal year.

Such changes and regulations include guidance relating to foreign tax credits and consolidated NOL carryback claims.

The Company evaluated the ongoing impact of these law and regulatory changes, and determined that they did not have a material impact on its provision for income taxes.

On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law.

The Inflation Reduction Act of 2022 includes a new book minimum tax on certain large corporations and an excise tax on corporate stock buybacks, among other provisions.

The Company has evaluated the impacts of this Act, and at this time the Company does not believe they will have a material impact on our consolidated financial position, results of operations, or cash flows.

Accordingly, as of September 27, 2025, the Company has recorded $ 2.9 million of unrecognized tax benefits associated with these federal tax credits, resulting in a net deferred tax benefit of approximately $ 8.3 million.

Management has reviewed all deferred tax assets for purposes of determining whether a valuation allowance may be required.

A valuation allowance against deferred tax assets is required if it is more likely than not that some of the deferred tax assets will not be realized.

In spite of the Company’s current cumulative loss position before nonrecurring items such as cyber losses and restructuring costs, based upon the Company’s historical profitability and forecasted income, management determined that it is more likely than not that the deferred tax assets will be realized.

The Company’s largest deferred tax assets are federal research and development tax credits, deferred research and development expenses, and interest expense deduction carryforwards.

Company forecasts show that the credits will be utilized within the expiration period.

Deferred research and development expenses are deductible in fiscal year 2026 under the One Big Beautiful Bill Act.

Interest expense deduction carryforwards, which never expire and carry forward indefinitely, are projected to be utilized in future periods as profitability increases and interest expense decreases.

Profitability is forecasted in the coming years due to the nonrecurrence of significant expense items in recent years such as cyber losses and restructuring costs, the future cost benefits associated with the restructuring costs, and significant income and increased margins from multiple new customers.

The Company has closely monitored the realizability of deferred tax assets, tracking book income, permanent differences, and nonrecurring items while projecting future utilization of deferred tax assets, and will continue to do so as future actual results are compared to forecasted results.

The Company evaluated tax law changes and regulatory guidance issued through the fiscal quarter.

After the end of fiscal year 2025, on July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which includes several tax related provisions that will impact the Company beginning in fiscal year 2026.

The Company expects these tax law changes may mitigate federal income taxes payable, but it is not expected to materially impact the Company’s overall tax position and effective tax rate in fiscal year 2026 or beyond.

On January 27, 2021, the Company received official notice from the Vietnamese tax authorities, confirming tax benefits awarded (the “tax holiday”) related to the Company’s principal product line in Vietnam.

The tax rate related to this product line will be zero percent for four years beginning with fiscal year 2021, then five percent for nine years, then ten percent for one year (as opposed to the normal twenty percent each year).

The Company’s Advance Pricing Agreement for intercompany transfer pricing has expired, and our Mexico subsidiary is now subject to the Mexico safe harbor transfer pricing regulations.

As a result, we expect our current tax liability in Mexico to increase.

Overall, we do not expect the application of the safe harbor transfer pricing regulations to have a material impact on our consolidated tax position.

Earnings Per Share

The following table presents a reconciliation of the denominator in the basic and diluted EPS calculation and the number of antidilutive common share awards that were not included in the diluted earnings per share calculation.

Basic earnings per share (“EPS”) is calculated by dividing net loss (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period.

Diluted EPS is computed by including both the weighted-average number of shares outstanding and any dilutive common share equivalents in the denominator.

The following table presents a reconciliation of the denominator and the number of antidilutive common share awards that were not included in the diluted earnings per share calculation.

These antidilutive securities occur when equity awards outstanding have an option price greater than the average market price for the period:

Three Months Ended Nine Months Ended

Three Months Ended

(in thousands, except per share information)

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

Net loss $ ( 604 ) $ ( 2,221 ) $ ( 4,394 ) $ ( 802 )

September 27, 2025 September 28, 2024

Net income (loss) $ ( 2,255 ) $ 1,124

Weighted average shares outstanding—basic 10,771 10,762

6 unchanged sentences

The Company’s 2024 Incentive Plan provides for equity and liability awards to employees and non-employee directors with service and performance vesting conditions in the form of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, stock awards, stock units, performance shares, performance units, and other stock-based or cash-based awards.

At March 29, 2025, 1,595,362 shares were available for grant.

At September 27, 2025, 1,045,674 shares were available for grant.

Compensation cost is recognized on a straight-line basis over the requisite employee service period, which is generally the vesting period, and is recorded as employee compensation expense in cost of goods sold, research, development and engineering, and selling, general and administrative expenses.

11 unchanged sentences

Price Weighted

Balance, July 1, 2023 626,250 — $ 6.41 2.2

Outstanding, June 30, 2024 387,500 $ — $ 5.78 1.8

SARs forfeited ( 136,250 ) $ 7.17

SARs expired ( 115,000 ) $ 4.93

Balance, March 30, 2024 387,500 $ — $ 5.78 1.8

Balance, June 30, 2024 387,500 — $ 5.78 1.8

Outstanding, September 28, 2024 136,250 $ — $ 5.10 2.8

Outstanding, June 28, 2025 136,250 — $ 5.10 2.1

SARs forfeited ( 136,250 ) $ 5.10

SARs expired ( 115,000 ) 4.93

Balance, March 29, 2025 136,250 $ — $ 5.10 2.3

Exercisable at March 29, 2025 — — — —

Outstanding, September 27, 2025 — $ — $ — —

Exercisable, September 27, 2025 — $ — $ — —

The Black-Scholes option valuation model is used by the Company for estimating the fair value of SARs.

1 unchanged sentence

Changes in these assumptions can materially affect the fair value estimates.

There were no SARs granted during the three or nine months ended March 29, 2025 and March 30, 2024.

There were no SARs granted during the three months ended September 27, 2025 and September 28, 2024.

Share-based compensation expense is recognized only for those awards that are expected to vest, with forfeitures estimated at the date of grant based on the Company’s historical experience and future expectations.

This forfeiture rate will be revised, if necessary, in subsequent periods if actual forfeitures differ from the amount estimated.

No SARs expense was recognized during the three months ended March 29, 2025 and $ 52,000 was recognized during the three months ended March 30, 2024.

Total SARs expense recognized during the nine months ended March 29, 2025 and March 30, 2024 was approximately $( 139,000 ) and $ 164,000 , respectively

There were no SARs exercised during the three or nine month periods ended March 29, 2025 or March 30, 2024.

As of March 29, 2025, there is no unrecognized compensation expense for SARs awards due to unachieved performance.

No SARs expense was recognized during the three months ended September 27, 2025 and $ 19,000 was recognized during the three months ended September 28, 2024.

There were no SARs exercised during the three month periods ended September 27, 2025 or September 28, 2024.

Restricted Stock Units

5 unchanged sentences

The fair value of restricted stock units is the market close price on the date of grant.

During the three months ended March 29, 2025, the Company did not grant any restricted stock units.

Total restricted stock unit expense recognized during the three and nine months ended March 29, 2025 was approximately $ 26,000 and $ 250,000 , respectively.

During the nine months ended March 29, 2025, the Company granted 329,457 restricted stock units at a weighted average grant date fair value of $ 4.52 per share, none of which were granted during the third quarter.

As of March 29, 2025, total unrecognized compensation expense on restricted stock units was $ 1.0 million, which is expected to be recognized over a weighted average period of approximately 2.2 years.

The following table is a summary of restricted stock unit activity:

Number of Restricted Stock Units Weighted Average Grant Date Fair Value Aggregate Intrinsic Value (in

Outstanding, June 30, 2024 —

Granted 324,819 $ 4.51

Outstanding, September 28, 2024 324,819

Outstanding, June 29, 2025 281,577 $ 4.52

Granted 550,461 $ 2.79

Released ( 97,398 ) $ 4.52 $ 285

Forfeited — —

Outstanding, September 27, 2025 734,640 $ 3.22

Vested but not released, September 27,2025 —

Total restricted stock unit expense recognized during the three months ended September 27, 2025 and September 28, 2024 was approximately $ 221,000 and $ 48,000 .

As of September 27, 2025 total unrecognized compensation expense on restricted stock units was $ 2.2 million, which is expected to be recognized over a weighted average period of approximately 2.4 years.

Commitments and Contingencies

5 unchanged sentences

The determination of such allowances requires the Company to make estimates of product return rates and expected costs to repair or to replace the products under warranty.

If actual return rates and/or repair and replacement costs differ significantly from management’s estimates, adjustments to recognize additional cost of sales may be required in future periods.

The Company’s warranty reserve was approximately $ 26,000 as of March 29, 2025 and $ 164,000 as of June 29, 2024.

Gain from Insurance Recoveries, Net of Losses

Gain from insurance recoveries, net of losses, relate to losses incurred from storm damage to the Company’s Arkansas facility on July 29, 2022, as the result of a lightning strike and were recorded throughout fiscal year 2024 and fiscal year 2023.

The Company recorded no gain during the three or nine months ended March 29, 2025.

The Company recorded no gain during the three months ended March 30, 2024 and $ 0.4 million for the nine months ended March 30, 2024.

If actual return rates and/or repair and replacement costs differ significantly from management’s estimates, adjustments to recognize additional cost of sales may be required in future

The Company’s warranty reserve was approximately $ 25,300 as of September 27, 2025 and $ 26,000 as of June 28, 2025.

Derivative Financial Instruments

As part of our risk management strategy, we use derivative instruments to hedge Mexican peso and certain interest rate exposures.

As of March 29, 2025, the Company had outstanding foreign currency forward contracts with a total notional amount of $ 20.9 million through the end of the third quarter of fiscal year 2025.

During the three months ended March 29, 2025, the Company did not enter into foreign currency forward contracts and settled $ 8.1 million of contracts.

During the same period of the previous year, the Company did not enter into foreign currency forward contracts and settled $ 3.4 million of contracts.

During the nine months ended March 29, 2025, the Company entered into $ 29.0 million of foreign currency forward contracts and settled $ 20.6 million of such contracts.

During the same periods of the previous year, the Company entered into $ 6.5 million of foreign currency forward contracts and settled $ 6.5 million of contracts.

A significant portion of our operations are in foreign locations, which results in transactions occurring in currencies other than the U.S.

As a part of our risk management strategy, we use Mexican Peso forward contracts to hedge foreign currency fluctuations for a portion of our Mexican Peso denominated expenses.

As of September 27, 2025, the Company had outstanding foreign currency forward contracts with a total notional amount of $ 6.4 million through the end of the second quarter of fiscal year 2026.

During the three months ended September 27, 2025, the Company did not enter into foreign currency forward contracts and settled $ 6.5 million of contracts.

During the same period of the previous year, the Company entered into $ 16.1 million of foreign currency forward contracts and settled $ 6.6 million of contracts.

Changes in the fair value of the forward contracts are recognized as a component of OCI and will be recognized in cost of sales when the hedged item affects earnings.

The amount of net losses expected to be reclassified into earnings in the next 3 months is $ 0.7 million.

On November 6, 2019, the Company entered into an interest rate swap contract with an effective date of November 6, 2019 and a termination date of November 1, 2023, related to the borrowings outstanding under the line of credit with Wells Fargo Bank.

This interest rate swap contract was terminated on August 14, 2020 when the Company entered into the Loan Agreement with Bank of America.

On the date of termination this interest rate swap was in a liability position of $ 776,500 , which has been amortized to interest expense over the original term of the swap.

The following table summarizes the fair value of the derivative instruments in the Consolidated Balance Sheets as of March 29, 2025 and June 29, 2024 (in thousands):

Derivatives designated as hedging instruments under Subtopic 815-20 Balance Sheet Location March 29, 2025 June 29, 2024

The following table summarizes the fair value of the derivative instruments in the Consolidated Balance Sheets as of September 27, 2025 and June 28, 2025 (in thousands):

Derivatives designated as hedging instruments under Subtopic 815-20 Balance Sheet Location September 27, 2025 June 28, 2025

Foreign currency forward contracts Other current assets $ 942 $ 1,330

Foreign currency forward contracts Other current liabilities $ 516 $ 277

The following tables summarize the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Operations for the three months ended March 29, 2025 and March 30, 2024, respectively (in thousands):

Derivatives Designated as Hedging Instruments Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) AOCI Balance

December 28, 2024 Effective

AOCI Effective Portion

Reclassified From

Income AOCI Balance

March 29, 2025

Forward contracts Cost of sales $ 1,011 $ ( 1,274 ) $ 588 $ 325

Total $ 1,011 $ ( 1,274 ) $ 588 $ 325

Derivatives Designated as Hedging Instruments Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) AOCI Balance

December 31, 2023 Effective

AOCI Effective Portion

Reclassified From

Income AOCI Balance

March 30, 2024

Forward contracts Cost of sales $ 191 $ ( 191 ) $ — $ —

Total $ 191 $ ( 191 ) $ — $ —

The following tables summarize the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Operations for the nine months ended March 29, 2025 and March 30, 2024, respectively (in thousands):

The following tables summarize the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Operations for the three months ended September 27, 2025 and September 28, 2024, respectively (in thousands):

Derivatives Designated as Hedging Instruments Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) AOCI Balance

3 unchanged sentences

Income AOCI Balance

March 29, 2025

September 27, 2025

Forward contracts Cost of sales $ ( 1,029 ) $ 1,099 $ ( 799 ) $ ( 729 )

1 unchanged sentence

Derivatives Designated as Hedging Instruments Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) AOCI Balance

July 1, 2023 Effective

June 30, 2024 Effective

AOCI Effective Portion

1 unchanged sentence

Income AOCI Balance

March 30, 2024

September 28, 2024

Forward contracts Cost of sales $ 215 $ 540 $ 298 $ 1,053

Interest rate swap Interest expense ( 97 ) — 97 —

Total $ 215 $ 540 $ 298 $ 1,053

As of March 29, 2025, the Company does not have any foreign exchange contracts with credit-risk-related contingent features.

As of September 27, 2025, the Company does not have any foreign exchange contracts with credit-risk-related contingent features.

The Company is subject to the risk of fluctuating interest rates from our lines of credit and foreign currency risk resulting from our China and Vietnam operations.

27 unchanged sentences

therefore, the primary performance obligation in the majority of our contracts is the delivery of a specific good through the purchase order submitted by our customer.

The Company elected not to disclose information about remaining performance obligations as they are part of contracts that have expected durations of one year or less.

The Company elected not to disclose information about remaining performance obligations for current contract assets as they are part of contracts that have expected durations of one year or less.

The Company has elected to expense costs to obtain contracts as incurred as these costs are immaterial to the financial statements.

During the first nine months of fiscal year 2025, no revenues were recognized from performance obligations satisfied or partially satisfied in previous periods.

During the first three months of fiscal year 2026, no revenues were recognized from performance obligations satisfied or partially satisfied in previous periods.

Contract Balances

A contract asset is recognized when the Company has recognized revenue, but has not issued an invoice for payment.

Contract assets are classified separately on the condensed consolidated balance sheet and transferred to receivables when the right to payment becomes unconditional.

The following table summarizes the activity in the Company’s contract assets during the nine months ended March 29, 2025 (in thousands):

Current contract assets are classified separately on the condensed consolidated balance sheet and transferred to receivables when the right to payment becomes unconditional.

The following table summarizes the activity in the Company’s contract assets during the three months ended September 27, 2025 (in thousands):

Contract Assets

2 unchanged sentences

Amounts collected or invoiced ( 90,230 )

Ending balance, March 29, 2025

Ending balance, September 27, 2025

The Company also has long term contract assets of approximately $ 10.4 million at September 27, 2025, and June 28, 2025, classified under Other long-term assets in the condensed consolidated balance sheet.

No revenue was recognized, and no amounts were collected or invoiced related to these balances during the period.

The remaining performance obligations related to these amounts are tied to the manufacturing of electronic products.

Disaggregation of Revenue

The following table presents the Company’s revenue disaggregated for the three and nine months ended March 29, 2025 and March 30, 2024 (in thousands):

Recognition Three Months Ended Nine Months Ended

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

The following table presents the Company’s revenue disaggregated for the three and three months ended September 27, 2025 and September 28, 2024 (in thousands):

Recognition Three Months Ended

September 27, 2025 September 28, 2024

Over-Time $ 95,084 $ 122,582

4 unchanged sentences

Management has considered the likelihood of exercising each extension option included and estimated the duration of the extension option, for those leases management determined to be reasonably certain, in calculating the lease term for measurement of the right of use asset and liability.

For operating leases, management assumed a discount rate of 4.10 %.

For operating leases, discount rates assumed range from 4.0 % to 9.5 % .

The weighted average discount rate is disclosed in the tables below.

The components of lease cost for the three months and nine months ended March 29, 2025 and March 30, 2024 were (in thousands):

Three Months Ended Nine Months Ended

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

The components of lease cost for the three months and nine months ended September 27, 2025 and September 28, 2024 were (in thousands):

Three Months Ended

September 27, 2025 September 28, 2024

Lease cost Classification

7 unchanged sentences

Total lease cost $ 2,027 $ 2,883

Amounts reported in the Consolidated Balance Sheet as of March 29, 2025 and June 29, 2024 were (in thousands, except weighted average lease term and discount rate):

March 29, 2025 June 29, 2024

Amounts reported in the Consolidated Balance Sheet as of September 27, 2025 and June 28, 2025 were (in thousands, except weighted average lease term and discount rate):

September 27, 2025 June 28, 2025

Operating Leases:

15 unchanged sentences

(2) The total finance lease right of use assets of $ 5.2 million is classified under Other Long-term Assets.

The current portion of the total finance lease liabilities of $ 0.7 million is classified under Current portion of debt, net , resulting in no balance in Other Long-term Liabilities section of the condensed consolidated balance sheet.

Future lease payments under non-cancellable leases as of March 29, 2025 are as follows (in thousands):

The current portion of the total finance lease liabilities of $ 1.8 million is classified under Current portion of debt, net , resulting in $ 2.3 million classified in Other Long-term Liabilities section of the condensed consolidated balance sheet.

Future lease payments under non-cancellable leases as of September 27, 2025 are as follows (in thousands):

Fiscal Years Ending Operating Leases Finance Leases

1 unchanged sentence

2027 5,004 1,403

2028 4,922 1,636

Thereafter 13,872 —

2 unchanged sentences

Total lease liabilities $ 25,996 $ 4,051

(1) Represents estimated lease payments for the remaining three-month period ending June 28, 2025.

As of March 29, 2025, we have additional operating leases for commercial properties that have not yet commenced with future lease payments of approximately $ 22 million.

(1) Represents estimated lease payments for the remaining nine-month period ending June 27, 2026.

As of September 27, 2025, we have finance leases for commercial properties and equipment that have not yet commenced with future lease payments of approximately $ 5.1 million.

Segment Information

Operating segments are defined in ASC Topic 280, Segment Reporting as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance.

The Company’s chief operating decision maker is its Chief Executive Officer.

As of September 27, 2025, the Company operates and internally manages a single operating segment, Electronics Manufacturing Services, as this is the only discrete financial information that is regularly reviewed by the chief operating decision maker.

This segment provides integrated electronic and mechanical engineering, assembly, sourcing and procurement, logistics, and new product testing for our customers.

The chief operating decision maker assesses performance and determines resource allocation for the Company’s single reportable segment based on consolidated net income/loss and total assets/liabilities.

The accounting policies of the single reportable segment are the same as those described in the summary of significant accounting policies.

Significant segment measures include gross profit which is primarily composed of materials spend and labor costs, which are further presented below.

Significant Segment Measures

In accordance with the adoption of ASU 2023-07 in 2025, the Company determined that significant segment measures included gross profit which is primarily composed of materials and labor costs as follows (in thousands):

Three Months Ended

September 27, 2025 September 28, 2024

Materials $ 53,958 $ 78,067

Labor costs 26,449 28,853

Other 10,089 11,335

Total Cost of sales $ 90,496 $ 118,255

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements