Key Tronic Corporation (NASDAQ:KTCC) Q1 2024 Earnings Call Transcript

Bill Dezellem: And they’re paying for those parts?

Craig Gates: Yes.

Bill Dezellem: Great. May I ask one more question completely unrelated to this. You made reference to the strength in the pipeline of business for the Vietnam facility. Would you talk around that a little more? And is the actual number of programs potentially moving to Vietnam from China higher than it was three months ago?

Craig Gates: No. It’s actually the potential programs moving from the States to Vietnam and skipping Mexico.

Bill Dezellem: So talk a little bit more about that and kind of your comment, I think, that you see Vietnam as part of the future growth of the company.

Craig Gates: Yes. So Vietnam is less expensive than China and less expensive than Mexico. And Mexico continues to legislate higher and higher wages. And as they do that, more customers that were looking solely at Mexico as a way out of China are now willing to look at Vietnam and India. We haven’t made a decision on India as of yet, but Vietnam is pretty close to India pricing and are ahead of the various supply chain issues that you see in India. So we have a number of big opportunities cooking for Vietnam. Vietnam got stalled out during COVID and is restarting in terms of business acquisition. So this is on the front end of it. But we’re predicting that a year from now, there’ll be a couple or three big wins to increase the size of what’s going on in Vietnam for us.

Bill Dezellem: And these would be new customers to you, Craig?

Craig Gates: Yes.

Bill Dezellem: And how about business moving from China to Vietnam, what are you seeing there?

Craig Gates: Our business or business in total?

Bill Dezellem: Business in total?

Craig Gates: We don’t see as much as that as you would think because people tend to think of it’s all Asia. We need to get out of Asia.

Bill Dezellem: Interesting. Okay. Thank you both for the time today.

Operator: And that does conclude the question-and-answer session. I’ll now hand the call back over to Mr. Craig Gates.

Craig Gates: Okay. Thank you, everybody, for participating in our conference call today. Brett and I look forward to speaking to you again next quarter.

Operator: Well, thank you. And that does conclude today’s conference. We do thank you for your participation, and have an excellent day.