- Net sales in the third quarter of fiscal 2023 totaled $484.7
million, an all-time quarterly high and up 32% year-over-year;
foreign currency had a 2% unfavorable impact on net sales compared
to the third quarter of fiscal 2022
- Operating income of $25.2 million, or 5.2% of net sales,
compared to $20.3 million, or 5.5% of net sales, in the same period
last year
- Adjusted operating income of $25.6 million, or 5.3% of net
sales, compared to $19.6 million, or 5.3% of net sales, in the same
period last year
- Net income of $16.4 million, or $0.65 per diluted share,
compared to net income of $13.6 million, or $0.54 per diluted
share, in the third quarter of fiscal 2022
Kimball Electronics, Inc. (Nasdaq: KE) today announced financial
results for the third quarter ended March 31, 2023.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20230504005856/en/
Three Months Ended
Nine Months Ended
March 31,
March 31,
(Amounts in Thousands, except EPS)
2023
2022
2023
2022
Net Sales
$
484,703
$
368,057
$
1,327,288
$
976,038
Operating Income
$
25,220
$
20,277
$
56,280
$
31,971
Adjusted Operating Income (non-GAAP)
(1)
$
25,573
$
19,558
$
56,738
$
30,183
Operating Income %
5.2
%
5.5
%
4.2
%
3.3
%
Adjusted Operating Income (non-GAAP) %
5.3
%
5.3
%
4.3
%
3.1
%
Net Income
$
16,400
$
13,638
$
36,629
$
21,315
Adjusted Net Income (non-GAAP) (1)
$
16,400
$
13,638
$
36,908
$
20,265
Diluted EPS
$
0.65
$
0.54
$
1.46
$
0.84
Adjusted Diluted EPS (non-GAAP) (1)
$
0.65
$
0.54
$
1.47
$
0.80
(1) A reconciliation of GAAP and non-GAAP
financial measures is included below.
Richard D. Phillips, Chief Executive Officer, stated, “I am very
pleased with my first quarter as CEO of Kimball Electronics, and
the opportunity to share strong results for Q3. The Company has
been on a path of unprecedented growth, and for the fifth
consecutive quarter, revenue reached an all-time record high.
Throughout this journey, operating margin has improved as we
ramp-up new and existing programs, and leverage our recent facility
expansions in Thailand and Mexico. While the macro environment
remains challenging, we are forecasting a solid finish in the
fourth quarter, and we are updating our outlook for fiscal year
2023, with sales expected at the high-end and adjusted operating
margin in the mid-to-low end of our guidance range.”
Mr. Phillips continued, “We also have been updating our
Strategic Plan, which includes a review of the positioning, and
growth opportunities, within the vertical markets we support. The
learnings from this review are encouraging and the path to $2
billion in annual revenue is within our sights. After a fast-paced
onboarding, I’m even more excited about our future.”
As a reminder, the Company’s guidance for fiscal year 2023
includes net sales in the range of $1.7 - $1.8 billion, a 26% - 33%
increase compared to the prior year; adjusted operating income in
the range of 4.6% - 5.2% of net sales; and capital expenditures of
$80 - $100 million.
Third Quarter Fiscal 2023 Overview
- Cash flow from operating activities of $14.0 million during the
third quarter of fiscal 2023
- Cash conversion days (“CCD”) for the quarter ended March 31,
2023 were 92 days, down from 97 days in the second quarter of
fiscal year 2023; CCD is calculated as the sum of days sales
outstanding plus contract asset days plus production days supply on
hand less accounts payable days and advances from customers
days
- Investments in capital expenditures were $24.7 million during
the quarter
- Cash and cash equivalents of $30.4 million and borrowings
outstanding on credit facilities of $289.4 million at March 31,
2023, including $235.0 million classified as long term, and $98.1
million borrowing capacity available
Net Sales by Vertical Market for Q3 Fiscal 2023:
Three Months Ended
Nine Months Ended
March 31,
March 31,
(Amounts in Millions)
2023
*
2022
*
Percent Change
2023
*
2022
*
Percent Change
Automotive
$
216.0
45%
$
161.5
44%
34%
$
600.5
45%
$
429.8
44%
40%
Medical
134.0
28%
102.9
28%
30%
373.5
28%
277.7
29%
34%
Industrial (1)
126.9
26%
98.2
27%
29%
332.8
25%
255.8
26%
30%
Other
7.8
1%
5.5
1%
42%
20.5
2%
12.7
1%
61%
Total Net Sales
$
484.7
$
368.1
32%
$
1,327.3
$
976.0
36%
* As a percent of Total Net Sales
(1) Beginning in fiscal year 2023, Public
Safety was combined with Industrial; 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
Forward-Looking
Statements
Certain statements contained within this release are considered
forward-looking, including our fiscal year 2023 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 including the COVID-19 pandemic,
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, 2022.
Non-GAAP Financial
Measures
This press release contains non-GAAP financial measures. The
non-GAAP financial measures contained herein include 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:
May 5, 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:
308984
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 third quarter and year-to-date
period ended March 31, 2023 are as follows:
Condensed Consolidated Statements of
Income
(Unaudited)
Three Months Ended
(Amounts in Thousands, except Per Share
Data)
March 31, 2023
March 31, 2022
Net Sales
$
484,703
100.0
%
$
368,057
100.0
%
Cost of Sales
441,731
91.1
%
334,113
90.8
%
Gross Profit
42,972
8.9
%
33,944
9.2
%
Selling and Administrative Expenses
17,752
3.7
%
13,667
3.7
%
Operating Income
25,220
5.2
%
20,277
5.5
%
Other Income (Expense), net
(3,344
)
(0.7
)%
(2,103
)
(0.6
)%
Income Before Taxes on Income
21,876
4.5
%
18,174
4.9
%
Provision for Income Taxes
5,476
1.1
%
4,536
1.2
%
Net Income
$
16,400
3.4
%
$
13,638
3.7
%
Earnings Per Share of Common Stock:
Basic
$
0.66
$
0.54
Diluted
$
0.65
$
0.54
Average Number of Shares Outstanding:
Basic
24,898
25,175
Diluted
25,067
25,272
(Unaudited)
Nine Months Ended
(Amounts in Thousands, except Per Share
Data)
March 31, 2023
March 31, 2022
Net Sales
$
1,327,288
100.0
%
$
976,038
100.0
%
Cost of Sales
1,220,804
92.0
%
905,657
92.8
%
Gross Profit
106,484
8.0
%
70,381
7.2
%
Selling and Administrative Expenses
50,204
3.8
%
39,794
4.0
%
Other General Expense (Income)
—
—
%
(1,384
)
(0.1
)%
Operating Income
56,280
4.2
%
31,971
3.3
%
Other Income (Expense), net
(8,043
)
(0.6
)%
(3,561
)
(0.4
)%
Income Before Taxes on Income
48,237
3.6
%
28,410
2.9
%
Provision for Income Taxes
11,608
0.8
%
7,095
0.7
%
Net Income
$
36,629
2.8
%
$
21,315
2.2
%
Earnings Per Share of Common Stock:
Basic
$
1.47
$
0.84
Diluted
$
1.46
$
0.84
Average Number of Shares Outstanding:
Basic
24,868
25,192
Diluted
25,031
25,291
Condensed Consolidated Statements of
Cash Flows
Nine Months Ended
(Unaudited)
March 31,
(Amounts in Thousands)
2023
2022
Net Cash Flow used for Operating
Activities
$
(57,885
)
$
(84,665
)
Net Cash Flow used for Investing
Activities
(66,497
)
(50,023
)
Net Cash Flow provided by Financing
Activities
107,148
64,856
Effect of Exchange Rate Change on Cash and
Cash Equivalents
(294
)
(1,007
)
Net Decrease in Cash, Cash Equivalents,
and Restricted Cash
(17,528
)
(70,839
)
Cash, Cash Equivalents, and Restricted
Cash at Beginning of Period
49,851
106,442
Cash, Cash Equivalents, and Restricted
Cash at End of Period
$
32,323
$
35,603
(Unaudited)
Condensed Consolidated Balance
Sheets
March 31, 2023
June 30, 2022
(Amounts in Thousands)
ASSETS
Cash and cash equivalents
$
30,445
$
49,851
Receivables, net
299,329
222,857
Contract assets
75,690
64,080
Inventories
488,170
395,630
Prepaid expenses and other current
assets
54,053
28,665
Property and Equipment, net
258,058
206,835
Goodwill
12,011
12,011
Other Intangible Assets, net
13,210
14,707
Other Assets
37,975
41,131
Total Assets
$
1,268,941
$
1,035,767
LIABILITIES AND SHARE OWNERS’
EQUITY
Current portion of borrowings under credit
facilities
$
54,420
$
35,580
Accounts payable
361,547
308,617
Accrued expenses
89,961
64,545
Long-term debt under credit facilities,
less current portion
235,000
145,000
Long-term income taxes payable
5,859
7,812
Other long-term liabilities
18,968
20,242
Share Owners’ Equity
503,186
453,971
Total Liabilities and Share Owners’
Equity
$
1,268,941
$
1,035,767
Reconciliation of Non-GAAP Financial
Measures
(Unaudited)
(Amounts in Thousands, except Per Share
Data)
Three Months Ended
Nine Months Ended
March 31,
March 31,
2023
2022
2023
2022
Operating Income, as reported
$
25,220
$
20,277
$
56,280
$
31,971
SERP
353
(719
)
458
(404
)
Legal Settlements (Recovery)
—
—
—
(1,384
)
Adjusted Operating Income
$
25,573
$
19,558
$
56,738
$
30,183
Net Income, as reported
$
16,400
$
13,638
$
36,629
$
21,315
Adjustments After Measurement Period on
GES Acquisition
—
—
279
—
Legal Settlements (Recovery),
After-Tax
—
—
—
(1,050
)
Adjusted Net Income
$
16,400
$
13,638
$
36,908
$
20,265
Diluted Earnings per Share, as
reported
$
0.65
$
0.54
$
1.46
$
0.84
Adjustments After Measurement Period on
GES Acquisition
—
—
0.01
—
Legal Settlements (Recovery)
—
—
—
(0.04
)
Adjusted Diluted Earnings per Share
$
0.65
$
0.54
$
1.47
$
0.80
Twelve Months Ended
March 31,
2023
2022
Operating Income
$
76,858
$
49,050
SERP
(701
)
144
Legal Recovery
—
(1,039
)
Adjusted Operating Income (non-GAAP)
$
76,157
$
48,155
Tax Effect
20,375
10,774
After-tax Adjusted Operating Income
$
55,782
$
37,381
Average Invested Capital (1)
$
659,911
$
453,479
ROIC
8.5
%
8.2
%
(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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230504005856/en/
Andrew D. Regrut Vice President, Investor Relations 812.827.4151
Investor.Relations@kimballelectronics.com
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