JASPER, Ind.--(BUSINESS WIRE)--Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the fourth quarter and fiscal year ended June 30, 2024.
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.
Conference Call / Webcast | |||
Date: | August 14, 2024 | ||
Time: | 10:00 AM Eastern Time | ||
Live Webcast: | investors.kimballelectronics.com/events-and-presentations/events | ||
Dial-In #: | 877-407-8293 (or 201-689-8349) | ||
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. | |
Contacts
Andrew D. Regrut
Treasurer and Investor Relations Officer
812.827.4151
Investor.Relations@kimballelectronics.com
