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Kimball Electronics Reports Q4 Results; Company Provides Guidance for Fiscal 2025

Posted on by Vaseline
Kimball Electronics Reports Q4 Results; Company Provides Guidance for Fiscal 2025

 

Three Months Ended

 

Fiscal Year Ended

 

June 30,

 

June 30,

(Amounts in Thousands, except EPS)

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net Sales

$

430,158

 

 

$

496,141

 

 

$

1,714,510

 

 

$

1,823,429

 

Operating Income (1)

$

19,608

 

 

$

31,449

 

 

$

49,277

 

 

$

87,729

 

Adjusted Operating Income (non-GAAP) (2)

$

20,944

 

 

$

31,480

 

 

$

74,311

 

 

$

88,218

 

Operating Income %

 

4.6

%

 

 

6.3

%

 

 

2.9

%

 

 

4.8

%

Adjusted Operating Income (non-GAAP) %

 

4.9

%

 

 

6.3

%

 

 

4.3

%

 

 

4.8

%

Net Income (1)

$

7,543

 

 

$

19,202

 

 

$

20,511

 

 

$

55,831

 

Adjusted Net Income (non-GAAP) (2)

$

8,361

 

 

$

19,041

 

 

$

35,846

 

 

$

55,949

 

Diluted EPS (1)

$

0.30

 

 

$

0.76

 

 

$

0.81

 

 

$

2.22

 

Adjusted Diluted EPS (non-GAAP) (2)

$

0.33

 

 

$

0.76

 

 

$

1.42

 

 

$

2.23

 

(1)

Results (GAAP) in the June 30, 2024 three months and fiscal year periods include asset and goodwill impairment related to the divestiture of the Automation, Test and Measurement
business.

(2)

A reconciliation of GAAP and non-GAAP financial measures is included below. 

 

Commenting on today’s announcement, Richard D. Phillips, Chief Executive Officer, stated, “Q4 was another quarter focused on ‘controlling what we can control’. The operating environment for the EMS
industry remains challenged and many contract manufacturing organizations, Kimball included, have adjusted expectations on continued weakness in end market demand. In the verticals we serve, the
pull back has been more significant than originally anticipated, and we continue to appropriately adjust our cost structure to maintain competitiveness with stable operating margins, improve
working capital management with lower inventory levels, and generate positive cash flow.”

Mr. Phillips continued, “Earlier this month, we announced the completion of the divestiture of the Automation, Test and Measurement business. Closure on the sale represents a significant milestone
for our Company, and another important step toward sharpening our strategic focus and returning to profitable growth and stronger performance. Proceeds from the sale, combined with actions taken to
navigate the current environment, have strengthened our balance sheet with increased liquidity and financial flexibility. In addition, recent new program wins, which will start to impact fiscal
2026, make us excited for the future.”

The Company ended the fourth quarter of fiscal 2024 with cash and cash equivalents of $78.0 million and borrowings outstanding on credit facilities of $294.8 million, including $235.0 million
classified as long term, and $142.1 million of borrowing capacity available. Capital expenditures were $9.1 million in the fourth quarter, and the Company invested $3 million to repurchase 136,000
shares of common stock.

Fiscal Year 2024 Highlights:

  • Net sales totaled $1,714.5 million, the second highest year in the history of the Company
  • Adjusted operating income of $74.3 million, or 4.3% of net sales
  • Inventory reductions of $112 million, or 25%, year-over-year
  • Cash flow generated from operating activities of $73 million

Net Sales by Vertical Market for Q4 and Full Year Fiscal 2024: 

 

 

Three Months Ended

 

 

 

Fiscal Year Ended

 

 

 

June 30,

 

 

 

June 30,

 

 

(Amounts in Millions)

2024

 

*

 

2023

 

*

 

Percent

Change

 

2024

 

*

 

2023

 

*

 

Percent

Change

Automotive (1)

$

211.7

 

49

%

 

$

228.5

 

46

%

 

(7

)%

 

$

826.4

 

48

%

 

$

843.8

 

46

%

 

(2

)%

Medical (1)

 

102.2

 

24

%

 

 

123.6

 

25

%

 

(17

)%

 

 

425.7

 

25

%

 

 

500.7

 

28

%

 

(15

)%

Industrial (1)

 

116.3

 

27

%

 

 

144.0

 

29

%

 

(19

)%

 

 

462.4

 

27

%

 

 

478.9

 

26

%

 

(3

)%

Total Net Sales

$

430.2

 

 

 

$

496.1

 

 

 

(13

)%

 

$

1,714.5

 

 

 

$

1,823.4

 

 

 

(6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* As a percent of Total Net Sales

(1) Beginning in fiscal year 2024, miscellaneous sales previously reported in Other are now reported in the respective three end market verticals; all prior periods have been recast to
conform to current period presentation

 

– Automotive includes electronic power steering, body controls, automated driver assist systems, and electronic braking systems

– Medical includes sleep therapy and respiratory care, image guided therapy, in vitro diagnostics, drug delivery, AED, and patient monitoring

– Industrial includes climate controls, automation controls, optical inspection, and public safety

Jana T. Croom, Chief Financial Officer, commented, “Fiscal 2024 was hard fought with a challenging operating environment combined with divesting the AT&M business, which was not a small
undertaking for our Company. I would like to thank the entire Kimball team for their efforts involved in closing the transaction and ensuring a smooth transition. Looking to fiscal 2025, we expect
macro headwinds to persist. We will balance these pressures with cost controls, a capital allocation strategy focused on longer-term growth, lasting customer relationships, and opportunistic share
repurchases.”

Fiscal Year 2025 Guidance

  • Net sales in the range of $1.440 – $1.540 billion, an 8% to 14% decline year-over-year when excluding net sales from Automation, Test and Measurement. (a)
  • Adjusted operating income of 4.0% – 4.5% of net sales. (b)
  • Capital expenditures of $40 – $50 million.

(a)

A reconciliation of net sales excluding Automation, Test and Measurement is included in the Non-GAAP Reconciliations section.

(b)

Fiscal year 2025 guidance reflects a change in our adjusted operating income calculation beginning in fiscal year 2025, which will exclude stock compensation expense, currently included in
adjusted operating income. This change better aligns our presentation with others in our industry. Fiscal year 2024, under this new calculation, by comparison, would have been 4.8%. A
reconciliation of GAAP and non-GAAP financial measures is included below.

 

Forward-Looking Statements
 Certain statements contained within this release are considered forward-looking, including our guidance, under the Private
Securities Litigation Reform Act of 1995. The statements may be identified by the use of words such as “expect,” “should,” “goal,” “predict,” “will,” “future,” “optimistic,” “confident,” and
“believe.” Undue reliance should not be placed on these forward-looking statements. These statements are based on current expectations of future events and thus are inherently subject to
uncertainty. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. These
forward-looking statements are subject to risks and uncertainties including, without limitation, global economic conditions, geopolitical environment and conflicts such as the war in Ukraine,
global health emergencies, availability or cost of raw materials and components, foreign exchange rate fluctuations, and our ability to convert new business opportunities into customers and
revenue. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of the company are contained in its Annual Report on Form 10-K for the
year ended June 30, 2023.

Non-GAAP Financial Measures
 This press release contains non-GAAP financial measures. The non-GAAP financial measures contained herein include constant
currency growth, net sales excluding Automation, Test & Measurement, adjusted selling and administrative expenses, adjusted operating income, adjusted net income, adjusted diluted EPS, and
ROIC. Reconciliations of the reported GAAP numbers to these non-GAAP financial measures are included in the Reconciliation of Non-GAAP Financial Measures section below. Management believes these
measures are useful and allow investors to meaningfully trend, analyze, and benchmark the performance of the company’s core operations. The company’s non-GAAP financial measures are not necessarily
comparable to non-GAAP information used by other companies.

About Kimball Electronics, Inc.
 Kimball Electronics is a global, multifaceted manufacturing solutions provider of electronics and diversified contract
manufacturing services to customers around the world. From our operations in the United States, China, Mexico, Poland, Romania, and Thailand, our teams are proud to provide manufacturing services
for a variety of industries. Recognized for a reputation of excellence, we are committed to a high-performance culture that values personal and organizational commitment to quality, reliability,
value, speed, and ethical behavior. Kimball Electronics, Inc. (Nasdaq: KE) is headquartered in Jasper, Indiana.

To learn more about Kimball Electronics, visit www.kimballelectronics.com.

For those unable to participate in the live webcast, the call will be archived at investors.kimballelectronics.com.

Lasting relationships. Global success.

 
 
 

Financial highlights for the fourth quarter and fiscal year ended June 30, 2024 are as follows: 

 

Condensed Consolidated Statements of Income

(Unaudited)

Three Months Ended

(Amounts in Thousands, except Per Share Data)

June 30, 2024

 

June 30, 2023

Net Sales

$

430,158

 

 

100.0

%

 

$

496,141

 

 

100.0

%

Cost of Sales

 

393,420

 

 

91.5

%

 

 

446,460

 

 

90.0

%

Gross Profit

 

36,738

 

 

8.5

%

 

 

49,681

 

 

10.0

%

Selling and Administrative Expenses

 

15,890

 

 

3.6

%

 

 

18,444

 

 

3.7

%

Other General Expense (Income)

 

—

 

 

—

%

 

 

(212

)

 

—

%

Restructuring Expense

 

764

 

 

0.2

%

 

 

—

 

 

—

%

Asset Impairment

 

476

 

 

0.1

%

 

 

—

 

 

—

%

Operating Income

 

19,608

 

 

4.6

%

 

 

31,449

 

 

6.3

%

Interest Income

 

155

 

 

—

%

 

 

65

 

 

—

%

Interest Expense

 

(5,380

)

 

(1.3

)%

 

 

(5,473

)

 

(1.1

)%

Non-Operating Income (Expense), net

 

(918

)

 

(0.2

)%

 

 

466

 

 

0.1

%

Other Income (Expense), net

 

(6,143

)

 

(1.5

)%

 

 

(4,942

)

 

(1.0

)%

Income Before Taxes on Income

 

13,465

 

 

3.1

%

 

 

26,507

 

 

5.3

%

Provision for Income Taxes

 

5,922

 

 

1.3

%

 

 

7,305

 

 

1.4

%

Net Income

$

7,543

 

 

1.8

%

 

$

19,202

 

 

3.9

%

 

 

 

 

 

 

 

 

Earnings Per Share of Common Stock:

 

 

 

 

 

 

 

Basic

$

0.30

 

 

 

 

$

0.77

 

 

 

Diluted

$

0.30

 

 

 

 

$

0.76

 

 

 

Average Number of Shares Outstanding:

 

 

 

 

 

 

 

Basic

 

25,064

 

 

 

 

 

25,009

 

 

 

Diluted

 

25,246

 

 

 

 

 

25,161

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

Fiscal Year Ended

(Amounts in Thousands, except Per Share Data)

June 30, 2024

 

June 30, 2023

Net Sales

$

1,714,510

 

 

100.0

%

 

$

1,823,429

 

 

100.0

%

Cost of Sales

 

1,574,253

 

 

91.8

%

 

 

1,667,264

 

 

91.4

%

Gross Profit

 

140,257

 

 

8.2

%

 

 

156,165

 

 

8.6

%

Selling and Administrative Expenses

 

66,626

 

 

4.0

%

 

 

68,648

 

 

3.8

%

Other General Expense (Income)

 

(892

)

 

(0.1

)%

 

 

(212

)

 

—

%

Restructuring Expense

 

2,386

 

 

0.1

%

 

 

—

 

 

—

%

Goodwill Impairment

 

5,820

 

 

0.3

%

 

 

—

 

 

—

%

Asset Impairment

 

17,040

 

 

1.0

%

 

 

—

 

 

—

%

Operating Income

 

49,277

 

 

2.9

%

 

 

87,729

 

 

4.8

%

Interest Income

 

638

 

 

—

%

 

 

153

 

 

—

%

Interest Expense

 

(22,839

)

 

(1.3

)%

 

 

(16,263

)

 

(0.9

)%

Non-Operating Income (Expense), net

 

(1,877

)

 

(0.1

)%

 

 

3,125

 

 

0.2

%

Other Income (Expense), net

 

(24,078

)

 

(1.4

)%

 

 

(12,985

)

 

(0.7

)%

Income Before Taxes on Income

 

25,199

 

 

1.5

%

 

 

74,744

 

 

4.1

%

Provision for Income Taxes

 

4,688

 

 

0.3

%

 

 

18,913

 

 

1.0

%

Net Income

$

20,511

 

 

1.2

%

 

$

55,831

 

 

3.1

%

 

 

 

 

 

 

 

 

Earnings Per Share of Common Stock:

 

 

 

 

 

 

 

Basic

$

0.82

 

 

 

 

$

2.24

 

 

 

Diluted

$

0.81

 

 

 

 

$

2.22

 

 

 

 

 

 

 

 

 

 

 

Average Number of Shares Outstanding:

 

 

 

 

 

 

 

Basic

 

25,079

 

 

 

 

 

24,904

 

 

 

Diluted

 

25,278

 

 

 

 

 

25,076

 

 

 

 
 
 
 
Condensed Consolidated Statements of Cash Flows

Fiscal Year Ended

(Unaudited)

June 30,

(Amounts in Thousands)

 

2024

 

 

 

2023

 

Net Cash Flow provided by (used for) Operating Activities

$

73,217

 

 

$

(13,804

)

Net Cash Flow used for Investing Activities

 

(46,521

)

 

 

(90,467

)

Net Cash Flow provided by Financing Activities

 

8,974

 

 

 

99,179

 

Effect of Exchange Rate Change on Cash, Cash Equivalents, and Restricted Cash

 

(755

)

 

 

(895

)

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash

 

34,915

 

 

 

(5,987

)

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period

 

43,864

 

 

 

49,851

 

Cash, Cash Equivalents, and Restricted Cash at End of Period

$

78,779

 

 

$

43,864

 

 
 
 

(Unaudited)

 

 

Condensed Consolidated Balance Sheets

June 30,

2024

 

June 30,

2023

(Amounts in Thousands)

ASSETS

 

 

 

Cash and cash equivalents

$

77,965

 

$

42,955

Receivables, net

 

282,336

 

 

308,167

Contract assets

 

76,320

 

 

78,798

Inventories

 

338,116

 

 

450,319

Prepaid expenses and other current assets

 

44,682

 

 

49,188

Assets held for sale

 

27,587

 

 

—

Property and Equipment, net

 

269,659

 

 

267,684

Goodwill

 

6,191

 

 

12,011

Other Intangible Assets, net

 

2,994

 

 

12,335

Other Assets, net

 

82,069

 

 

38,262

Total Assets

$

1,207,919

 

$

1,259,719

 

 

 

 

LIABILITIES AND SHARE OWNERS’ EQUITY

 

 

 

Current portion of borrowings under credit facilities

$

59,837

 

$

46,454

Accounts payable

 

213,551

 

 

322,274

Advances from customers

 

30,151

 

 

33,905

Accrued expenses

 

63,189

 

 

72,515

Liabilities held for sale

 

8,594

 

 

—

Long-term debt under credit facilities, less current portion

 

235,000

 

 

235,000

Long-term income taxes payable

 

3,255

 

 

5,859

Other long-term liabilities

 

53,881

 

 

19,718

Share Owners’ Equity

 

540,461

 

 

523,994

Total Liabilities and Share Owners’ Equity

$

1,207,919

 

$

1,259,719

 
 
 
 

Other Financial Metrics

(Unaudited)

(Amounts in Millions, except CCD)

 

At or For the

 

 

 

 

 

Three Months Ended

 

Fiscal Year Ended

 

June 30,

 

June 30,

 

2024

 

2023

 

2024

 

2023

Depreciation and Amortization

$

9.5

 

$

8.6

 

$

38.0

 

$

32.4

Stock-Based Compensation

$

1.8

 

$

1.6

 

$

7.2

 

$

6.9

Cash Conversion Days (CCD) (1)

 

100

 

 

94

 

 

 

 

Open Orders (2)

$

714

 

$

798

 

 

 

 

(1)

Cash Conversion Days (“CCD”) are calculated as the sum of Days Sales Outstanding plus Contract Asset Days plus Production Days Supply on Hand less Accounts Payable Days and less Advances
from Customers Days. CCD, or a similar metric, is used in our industry and by our management to measure the efficiency of managing working capital.

(2)

Open Orders are the aggregate sales price of production pursuant to unfulfilled customer orders.

 
 
 

Select Financial Results of Automation, Test and Measurement

(Unaudited)

(Amounts in Millions)

 

Three Months Ended

 

Fiscal Year Ended

 

June 30,

 

June 30,

 

2024

 

2023

 

2024

 

2023

Net Sales

$

14.8

 

$

28.0

 

$

45.7

 

 

$

68.6

Operating Income (Loss) (1)

$

2.0

 

$

6.6

 

$

(22.2

)

 

$

6.7

(1)

Includes asset impairment of $0.5 million for the three months ended June 30, 2024 and goodwill impairment of $5.8 million and asset impairment of $17.0 million for the fiscal year ended
June 30, 2024. Also includes allocated corporate overhead expenses.

 
 
 
 

Reconciliation of Non-GAAP Financial Measures

(Unaudited, Amounts in Thousands, except Per Share Data)

 

Three Months Ended

 

Fiscal Year Ended

 

June 30,

 

June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net Sales Growth (vs. same period in prior year)

 

(13

)%

 

 

33

%

 

 

(6

)%

 

 

35

%

Foreign Currency Exchange Impact

 

—

%

 

 

—

%

 

 

—

%

 

 

(3

)%

Constant Currency Growth

 

(13

)%

 

 

33

%

 

 

(6

)%

 

 

38

%

 

 

 

 

 

 

 

 

Net Sales, as reported

$

430,158

 

 

$

496,141

 

 

$

1,714,510

 

 

$

1,823,429

 

Net Sales from Automation, Test & Measurement

 

14,771

 

 

 

28,031

 

 

 

45,674

 

 

 

68,608

 

Net Sales excluding Automation, Test & Measurement

$

415,387

 

 

$

468,110

 

 

$

1,668,836

 

 

$

1,754,821

 

 

 

 

 

 

 

 

 

Selling and Administrative Expenses, as reported

$

15,890

 

 

$

18,444

 

 

$

66,626

 

 

$

68,648

 

SERP

 

(96

)

 

 

(243

)

 

 

(680

)

 

 

(701

)

Adjusted Selling and Administrative Expenses

$

15,794

 

 

$

18,201

 

 

$

65,946

 

 

$

67,947

 

 

 

 

 

 

 

 

 

Operating Income (Loss), as reported

$

19,608

 

 

$

31,449

 

 

$

49,277

 

 

$

87,729

 

SERP

 

96

 

 

 

243

 

 

 

680

 

 

 

701

 

Legal Settlements (Recovery)

 

—

 

 

 

(212

)

 

 

(892

)

 

 

(212

)

Restructuring Expense

 

764

 

 

 

—

 

 

 

2,386

 

 

 

—

 

Goodwill Impairment

 

—

 

 

 

—

 

 

 

5,820

 

 

 

—

 

Asset Impairment

 

476

 

 

 

—

 

 

 

17,040

 

 

 

—

 

Adjusted Operating Income

$

20,944

 

 

$

31,480

 

 

$

74,311

 

 

$

88,218

 

Adjusted Operating Income %

 

 

 

 

 

4.3

%

 

 

4.8

%

Stock Compensation Expense

 

 

 

 

 

7,185

 

 

 

6,914

 

Adjusted Operating Income – FY25 Guidance Comparison

 

 

 

 

$

81,496

 

 

$

95,132

 

Adjusted Operating Income % – FY25 Guidance Comparison

 

 

 

 

 

4.8

%

 

 

5.2

%

 

 

 

 

 

 

 

 

Net Income (Loss), as reported

$

7,543

 

 

$

19,202

 

 

$

20,511

 

 

$

55,831

 

Adjustments After Measurement Period on GES Acquisition

 

—

 

 

 

—

 

 

 

—

 

 

 

279

 

Legal Settlements (Recovery), After-Tax

 

—

 

 

 

(161

)

 

 

(676

)

 

 

(161

)

Restructuring Expense, After-Tax

 

580

 

 

 

—

 

 

 

1,810

 

 

 

—

 

Goodwill Impairment, After-Tax

 

—

 

 

 

—

 

 

 

4,414

 

 

 

—

 

Asset Impairment, After-Tax

 

238

 

 

 

—

 

 

 

9,787

 

 

 

—

 

Adjusted Net Income

$

8,361

 

 

$

19,041

 

 

$

35,846

 

 

$

55,949

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share, as reported

$

0.30

 

 

$

0.76

 

 

$

0.81

 

 

$

2.22

 

Adjustments After Measurement Period on GES Acquisition

 

—

 

 

 

—

 

 

 

—

 

 

 

0.01

 

Legal Settlements (Recovery)

 

—

 

 

 

—

 

 

 

(0.03

)

 

 

—

 

Restructuring Expense

 

0.02

 

 

 

—

 

 

 

0.07

 

 

 

—

 

Goodwill Impairment

 

—

 

 

 

—

 

 

 

0.18

 

 

 

—

 

Asset Impairment

 

0.01

 

 

 

—

 

 

 

0.39

 

 

 

—

 

Adjusted Diluted Earnings per Share

$

0.33

 

 

$

0.76

 

 

$

1.42

 

 

$

2.23

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year Ended

 

 

 

June 30,

 

 

 

 

 

 

2024

 

 

 

2023

 

Operating Income

 

 

 

 

$

49,277

 

 

$

87,729

 

Goodwill Impairment

 

 

 

 

 

5,820

 

 

 

—

 

SERP

 

 

 

 

 

680

 

 

 

701

 

Legal Recovery

 

 

 

 

 

(892

)

 

 

(212

)

Restructuring Expense

 

 

 

 

 

2,386

 

 

 

—

 

Asset Impairment

 

 

 

 

 

17,040

 

 

 

—

 

Adjusted Operating Income (non-GAAP)

 

 

 

 

$

74,311

 

 

$

88,218

 

Tax Effect

 

 

 

 

 

16,332

 

 

 

22,235

 

After-tax Adjusted Operating Income

 

 

 

 

$

57,979

 

 

$

65,983

 

Average Invested Capital (1)

 

 

 

 

$

782,093

 

 

$

701,364

 

ROIC

 

 

 

 

 

7.4

%

 

 

9.4

%

(1)

Average invested capital is computed using Share Owners’ equity plus current and non-current debt less cash and cash equivalents averaged for the last five quarters.

 
 

 

The Kimball Electronics Stock at the time of publication of the news with a raise of +2,20 % to 20,44USD on Nasdaq stock exchange (13. August 2024, 23:20 Uhr).

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