Key Tronic is a Spokane-based electronics manufacturing services contractor that just finished a two-year teardown of its old Asia-heavy footprint, and the fourth-quarter rebound tests whether that rebuild can earn a return before working capital runs out. Sequential revenue rose to $102 million as both legacy and new programs recovered. Full-year sales still fell to $387 million because end-of-life programs and a few distressed customers fell away. The equity is no longer pricing a going-concern collapse so much as a stalled conversion of awards into cash. The debate is whether Mexico, Arkansas, and Vietnam volume actually absorbs overhead, or whether supplier credit keeps the plants from shipping what customers already want.
The China manufacturing wind-down finished in the quarter, and management points to about $4 million of annualized savings once that overhead is gone. Vietnam output more than doubled sequentially on medical and consumer work, which is the first clean evidence that the replacement footprint is taking volume. Against that, suppliers tightened terms and delayed roughly $10 million of shipments that customers still wanted. A write-off of $8 million on distressed long-term receivables showed that some of the old book was not collectible. The operating story is no longer demand. It is whether a thin-margin assembler can finance growth when vendors want cash up front.
Gross margin improved even as volume stayed below last year, which is the cost-out showing up rather than a price cycle. New program awards in the quarter exceeded $60 million, led by a Mexico data-center build for an existing customer. Management withheld first-quarter guidance and is evaluating extra capital against unencumbered foreign assets. The next several quarters resolve a single question: do those awards ship at a margin that covers interest, or does the credit constraint turn a recovery into another inventory and receivable problem?