TechDogs-"Kimball Electronics Reports Q1 Results With Strong Start To The Fiscal Year; Company Updates Guidance For Fiscal 2024"

Manufacturing Technology

Kimball Electronics Reports Q1 Results With Strong Start To The Fiscal Year; Company Updates Guidance For Fiscal 2024

By Business Wire

Business Wire
Overall Rating
  • Net sales totaled $438.1 million, an 8% increase compared to the first quarter of fiscal 2023; foreign currency had a 1% favorable impact on net sales year-over-year.
  • Operating income of $19.5 million, or 4.4% of net sales, an improvement compared to $13.6 million, or 3.3% of net sales, in the same period last year.
  • Net income of $10.8 million, or $0.43 per diluted share, an improvement compared to $9.5 million, or $0.38 per diluted share, in the first quarter of fiscal 2023.

JASPER, Ind.--(BUSINESS WIRE)--Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the first quarter of fiscal 2024.

Three Months Ended

September 30,

(Amounts in Thousands, except EPS)

2023

2022

Net Sales

$

438,081

$

405,889

Operating Income

$

19,490

$

13,571

Operating Income %

4.4

%

3.3

%

Net Income

$

10,754

$

9,509

Diluted EPS

$

0.43

$

0.38

Richard D. Phillips, Chief Executive Officer, stated, “I am very pleased with our results for the first quarter, particularly in light of the current macro environment. Q1 was a strong start to the fiscal year with record first quarter sales and operating income, year-over-year margin expansion, and 13% growth in net income. While these results were in-line with our expectations, we have been evaluating the impact of recent short-term market disruptions, including the UAW strike, global economic conditions, and geopolitical events, and have updated our guidance for the full year of fiscal 2024 to reflect softening demand in the end market verticals we serve.”

Mr. Phillips continued, “Longer-term, we continue to be encouraged by the growth opportunities in these markets, supported by favorable industry megatrends. With a strong funnel of new business, our capital allocation strategy is focused on organic growth, which will likely include additional global expansions in the future, combined with investments in automation and efficiency. We are winning together, the Kimball way, and I am excited about what lies ahead for our Company.”

The Company ended the first quarter of fiscal 2024 with cash and cash equivalents of $56.6 million and borrowings outstanding on credit facilities of $296.7 million, including $235.0 million classified as long term, and $90.5 million of borrowing capacity available. Cash flow generated from operating activities in the first quarter of fiscal 2024 was $12.8 million, and capital expenditures were $11.3 million.

Net Sales by Vertical Market for Q1 Fiscal 2024:

Three Months Ended

September 30,

(Amounts in Millions)

2023

*

2022

*

Percent Change

Automotive (1)

$

212.5

49

%

$

188.2

46

%

13

%

Medical (1)

102.4

23

%

116.0

29

%

(12

)%

Industrial (1)

123.2

28

%

101.7

25

%

21

%

Total Net Sales

$

438.1

$

405.9

8

%

* 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, smart metering, and public safety

Net sales for fiscal year 2024 are now expected to be flat with the prior year, compared to the previous estimate of a 4% to 7% increase. Operating income is also estimated to be in line with fiscal 2023, compared to the previous guidance range of 4.7% to 5.2% of net sales. The outlook for capital expenditures did not change with a range of $70 to $80 million.

Forward-Looking Statements

Certain statements contained within this release are considered forward-looking, including our fiscal year 2024 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, 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 multifaceted manufacturing solutions provider of electronics and diversified contract manufacturing services to customers around the world. From our operations in the United States, China, India, Japan, Mexico, Poland, Romania, Thailand, and Vietnam, 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.

Conference Call / Webcast

Date:

November 7, 2023

Time:

10:00 AM Eastern Time

Live Webcast:

investors.kimballelectronics.com/events-and-presentations/events

Dial-In #:

404-975-4839 (other locations - 833-470-1428)

Conference ID:

408670

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 first quarter ended September 30, 2023 are as follows:

Condensed Consolidated Statements of Income

(Unaudited)

Three Months Ended

(Amounts in Thousands, except Per Share Data)

September 30, 2023

September 30, 2022

Net Sales

$

438,081

100.0

%

$

405,889

100.0

%

Cost of Sales

402,539

91.9

%

376,568

92.8

%

Gross Profit

35,542

8.1

%

29,321

7.2

%

Selling and Administrative Expenses

16,052

3.7

%

15,750

3.9

%

Operating Income

19,490

4.4

%

13,571

3.3

%

Interest Income

299

0.1

%

17

%

Interest Expense

(5,447

)

(1.2

)%

(1,920

)

(0.5

)%

Non-Operating Income (Expense), net

(1,131

)

(0.3

)%

500

0.2

%

Other Income (Expense), net

(6,279

)

(1.4

)%

(1,403

)

(0.3

)%

Income Before Taxes on Income

13,211

3.0

%

12,168

3.0

%

Provision for Income Taxes

2,457

0.5

%

2,659

0.7

%

Net Income

$

10,754

2.5

%

$

9,509

2.3

%

Earnings Per Share of Common Stock:

Basic

$

0.43

$

0.38

Diluted

$

0.43

$

0.38

Average Number of Shares Outstanding:

Basic

25,041

24,826

Diluted

25,238

24,955

Condensed Consolidated Statements of Cash Flows

Three Months Ended

(Unaudited)

September 30,

(Amounts in Thousands)

2023

2022

Net Cash Flow provided by (used for) Operating Activities

$

12,801

$

(60,194

)

Net Cash Flow used for Investing Activities

(11,302

)

(19,320

)

Net Cash Flow provided by Financing Activities

13,985

50,769

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

(549

)

(1,391

)

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

14,935

(30,136

)

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

43,864

49,851

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

$

58,799

$

19,715

(Unaudited)

Condensed Consolidated Balance Sheets

September 30,
2023

June 30,
2023

(Amounts in Thousands)

ASSETS

Cash and cash equivalents

$

56,581

$

42,955

Receivables, net

259,419

308,167

Contract assets

87,675

78,798

Inventories

482,229

450,319

Prepaid expenses and other current assets

45,141

49,188

Property and Equipment, net

268,645

267,684

Goodwill

12,011

12,011

Other Intangible Assets, net

11,603

12,335

Other Assets

39,862

38,262

Total Assets

$

1,263,166

$

1,259,719

LIABILITIES AND SHARE OWNERS EQUITY

Current portion of borrowings under credit facilities

$

61,680

$

46,454

Accounts payable

308,912

322,274

Advances from customers

41,467

33,905

Accrued expenses

66,272

72,515

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

18,318

19,718

Share Owners’ Equity

528,262

523,994

Total Liabilities and Share Owners’ Equity

$

1,263,166

$

1,259,719

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

(Amounts in Thousands, except Per Share Data)

Three Months Ended

September 30,

2023

2022

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

8

%

39

%

Foreign Currency Exchange Impact

1

%

(5

)%

Constant Currency Growth

7

%

44

%

Operating Income, as reported

$

19,490

$

13,571

SERP

(177

)

(235

)

Adjusted Operating Income

$

19,313

$

13,336

Twelve Months Ended

September 30,

2023

2022

Operating Income

$

93,648

$

61,340

SERP

759

(1,711

)

Legal Recovery

(212

)

Adjusted Operating Income (non-GAAP)

$

94,195

$

59,629

Tax Effect

22,913

16,356

After-tax Adjusted Operating Income

$

71,282

$

43,273

Average Invested Capital (1)

$

738,096

$

544,711

ROIC

9.7

%

7.9

%

(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.


Contacts

Andrew D. Regrut
Vice President, Investor Relations
812.827.4151
Investor.Relations@kimballelectronics.com

First published on Tue, Nov 7, 2023

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