Key Tronic (KTCC) risk factors, 2026 10-K

RISKS RELATED TO OUR BUSINESS AND STRATEGY

1. 01Our operations may be subject to certain risks27% rewritten
2. 02Our operations in certain foreign locations receive favorable income tax treatment in the form of tax credits or other incentives. In the event that such tax incentives are not extended, are repealed, or we no longer qualify for such programs, our taxes may increase, which would reduce our net income
3. 03We may experience fluctuations in quarterly results of operations41% rewritten
4. 04short product lifecycles. Therefore, our business, operating results and financial condition are dependent in a significant way on our ability to obtain orders from new customers and new product programs from existing customersnew
5. 05We are exposed to general economic conditions, which could have a material adverse impact on our business, operating results and financial condition26% rewritten
6. 06The ongoing wind-down of our China-based manufacturing operations may adversely affect our business, results of operations and financial conditionnew
7. 07Current and future U.S. trade policy could adversely affect our business and results of operations31% rewritten
8. 08The majority of our sales come from a small number of customers, and a decline in sales to any of these customers could adversely affect our business
9. 09Our inability to enforce contracts with, or the bankruptcy or insolvency of, any of our principal customers could adversely affect our business
10. 10We depend on a limited number of suppliers for certain components that are critical to our manufacturing processes. A shortage of these components or an increase in their price could interrupt our operations and result in a significant change in our results of operations
11. 11We operate in a highly competitive industry; if we are not able to compete effectively in the contract manufacturing industry, our business could be adversely affected
12. 12Fluctuations in foreign currency exchange rates have increased and could continue to increase our operating costs
13. 13Our success will continue to depend to a significant extent on our key personnel and our ability to execute our management succession plans
14. 14Start-up costs and inefficiencies related to new or transferred programs can adversely affect our operating results and such costs may not be recoverable if such new programs or transferred programs are canceled or do not meet expected sales volumes
15. 15Customers may change production timing and demand schedules which makes it difficult for us to schedule production and capital expenditures and to maximize the efficiency of our manufacturing capacity
16. 16Compliance or the failure to comply with current and future environmental and health laws or regulations could cause us significant expense
17. 17If our manufacturing processes and services do not comply with applicable statutory and regulatory requirements, or if we manufacture products containing design or manufacturing defects, demand for our services may decline and we may be subject to liability claims
18. 18If we do not manage our growth effectively, our profitability could decline
19. 19Energy price increases may negatively impact our results of operations40% rewritten

TECHNOLOGY RISKS

1. 20Our operations are subject to cyberattacks that have had and could have a material adverse effect on our business
2. 21Disruptions to our information systems, including losses of data or outages, could adversely affect our operations
3. 22If we are unable to maintain our technological and manufacturing process expertise, our business could be adversely affected

RISKS RELATED TO CAPITAL AND FINANCING

1. 23Our failure to comply with the covenants in our credit arrangements could materially and adversely affect our financial condition
2. 24There is no assurance that we will be able to retain, renew, or refinance our credit arrangements in the future or to maintain sufficient collateral to support our borrowing capacity
3. 25Adverse changes in the interest rates of our borrowings could adversely affect our financial condition
4. 26Cash and cash equivalents are exposed to concentrations of credit risk
5. 27Our stock price is volatile

RISKS RELATED TO OUR CONTROLS AND PROCEDURES

1. 28If we fail to maintain proper and effective internal controls, our business and financial condition could be materially adversely impacted72% rewritten
2. 29Our internal control over financial reporting and disclosure controls and procedures were effective as of June 28, 2025 and June 27, 2026 but there is no assurance that similar material weaknesses could arise from future changes in systems, personnel, or processesnew
3. 30Due to inherent limitations, there can be no assurance that our system of disclosure and internal controls and procedures will be successful in preventing all errors, theft and fraud, or in informing management of all material information in a timely manner

LEGAL AND ACCOUNTING RISKS

1. 31We restated certain of our prior consolidated financial statements in our 2024 Annual Report on Form 10-K, which resulted in unanticipated costs and may lead to additional risks and uncertainties, including loss of investor confidence, regulatory action or litigation
2. 32Legal proceedings and government investigations could affect our financial condition or results of operationsnew
3. 33Changes in securities laws and regulations will increase our costs and risk of noncompliance
4. 34Changes in financial accounting standards may affect our reported financial condition or results of operations as well as increase costs related to implementation of new standards and modifications to internal controls

GENERAL RISKS

1. 35Our levels of insurance coverage may not be sufficient for potential damages, claims or losses
2. 36We may encounter complications with acquisitions, which could potentially harm our business