KE Kimball Electronics Inc

Fourth Quarter Fiscal 2023 Highlights

• Net sales totaled $496.1 million, a 33% increase compared to Q4 fiscal 2022, and completing a fiscal year with top-line growth of 35%.
• Operating income of $31.4 million, or 6.3% of net sales, a record high for the Company. For fiscal year 2023, operating income was 4.8% of net sales.
• Net income of $19.2 million, or $0.76 per diluted share. In fiscal year 2023, the Company earned $2.22 per diluted share, a 79% increase compared to the prior year.
• Cash flow generated from operating activities of $44.1 million in Q4.
• Company provides guidance for fiscal 2024 with expected top-line growth of 4%-7% and operating income in the range of 4.7%-5.2% of net sales.

Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the fourth quarter and fiscal year ended June 30, 2023.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230816530676/en/

 

Three Months Ended

 

Fiscal Year Ended

 

June 30,

 

June 30,

(Amounts in Thousands, except EPS)

2023

 

2022

 

2023

 

2022

Net Sales

$

496,141

 

 

$

373,497

 

 

$

1,823,429

 

 

$

1,349,535

 

Operating Income

$

31,449

 

 

$

20,578

 

 

$

87,729

 

 

$

52,549

 

Adjusted Operating Income (non-GAAP) (1)

$

31,480

 

 

$

19,419

 

 

$

88,218

 

 

$

49,602

 

Operating Income %

 

6.3

%

 

 

5.5

%

 

 

4.8

%

 

 

3.9

%

Adjusted Operating Income (non-GAAP) %

 

6.3

%

 

 

5.2

%

 

 

4.8

%

 

 

3.7

%

Net Income

$

19,202

 

 

$

9,938

 

 

$

55,831

 

 

$

31,253

 

Adjusted Net Income (non-GAAP) (1)

$

19,041

 

 

$

9,938

 

 

$

55,949

 

 

$

30,203

 

Diluted EPS

$

0.76

 

 

$

0.40

 

 

$

2.22

 

 

$

1.24

 

Adjusted Diluted EPS (non-GAAP) (1)

$

0.76

 

 

$

0.40

 

 

$

2.23

 

 

$

1.20

 

(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 the results we reported for the fourth quarter and fiscal year 2023. Q4 was our sixth consecutive quarter with record sales, and operating income and EPS were at all-time highs for the Company. The strong finish to the fiscal year drove net sales above the guidance we provided in May, and contributed to better than expected cash flow generation in the quarter. This performance was achieved with the highest levels of teamwork from our global organization, and many others in the value chain. I would like to thank our employees, our customers and our vendor partners for their passion, commitment, and support.”

Mr. Phillips continued, “In total, fiscal 2023 was an excellent year for Kimball Electronics, highlighted by record top-line growth, margin expansion, a 79% increase in net income, and improved return on invested capital. Each of our three vertical end markets reported strong results, with the sales volume to 48% of our customers reaching all-time highs. The team supported new product introductions at a rate four times above the historic norm, and we continued to leverage our facility expansions in Thailand and Mexico, while navigating a challenging macro environment. While we continue to see a strong pipeline for future growth, fiscal 2024 is tempered by slower sales with a large medical customer. Longer term we are excited by the prospects of our funnel of new business, and the relationship with this customer in particular.”

Fiscal Year 2023 Highlights:

• Net sales for fiscal year 2023 totaled $1,823.4 million, representing constant currency growth of 38% year-over-year when excluding the impact of foreign currency, which had a 3% unfavorable impact on net sales.
• Operating income of $87.7 million, or 4.8% of net sales, an improvement compared to $52.5 million, or 3.9% of net sales, in fiscal 2022.
• Net income of $55.8 million, or $2.22 per diluted share, a significant increase compared to net income of $31.3 million, or $1.24 per diluted share, in fiscal 2022.
• Capital expenditures of $90.7 million, supporting facility expansions in Thailand, Mexico, and Poland.
• Return on invested capital of 9.4%, a 220-basis point improvement compared to fiscal 2022; ROIC is a non-GAAP financial measure, see reconciliation of non-GAAP financial measures.

The Company ended fiscal 2023 with cash and cash equivalents of $43.0 million and borrowings outstanding on credit facilities of $281.5 million, including $235 million classified as long term, and $106.1 million of borrowing capacity available.

Net Sales by Vertical Market for Fiscal 2023:

 

Three Months Ended

 

 

 

Fiscal Year Ended

 

 

 

June 30,

 

 

 

June 30,

 

 

(Amounts in Millions)

2023

 

*

 

2022

 

*

 

Percent Change

 

2023

 

*

 

2022

 

*

 

Percent Change

Automotive

$

219.6

 

44

%

 

$

152.4

 

41

%

 

44

%

 

$

820.1

 

45

%

 

$

582.2

 

43

%

 

41

%

Medical

 

120.5

 

24

%

 

 

114.0

 

30

%

 

6

%

 

 

494.0

 

27

%

 

 

391.7

 

29

%

 

26

%

Industrial (1)

 

141.8

 

29

%

 

 

102.4

 

28

%

 

38

%

 

 

474.6

 

26

%

 

 

358.2

 

27

%

 

33

%

Other

 

14.2

 

3

%

 

 

4.7

 

1

%

 

202

%

 

 

34.7

 

2

%

 

 

17.4

 

1

%

 

99

%

Total Net Sales

$

496.1

 

 

 

$

373.5

 

 

 

33

%

 

$

1,823.4

 

 

 

$

1,349.5

 

 

 

35

%

 

 

 

 

 

 

 

 

 

 

 

* 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

Fiscal Year 2024 Guidance:

• Net sales in the range of $1.9 - $1.95 billion, a 4% - 7% increase year-over-year.
• Operating income in the range of 4.7% - 5.2% of net sales.
• Capital expenditures of $70 - $80 million.

Commenting on today’s announcement, Jana T. Croom, Chief Financial Officer, stated, “Our outlook for fiscal 2024 reflects a capital allocation strategy focused on organic growth. We have a solid funnel of new business opportunities and additional capacity from our recent facility expansions, which I’m pleased to announce now includes Poland. We will be ramping-up operations in Poznan throughout the fiscal year. In addition, inventory should normalize as global supply chain disruptions continue to ease, and the resulting cash flow generated will be directed toward reducing our leverage ratio.”

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 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 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:

 

August 17, 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:

 

941287

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, 2023 are as follows:

Condensed Consolidated Statements of Income

 

 

 

 

 

 

(Unaudited)

Three Months Ended

(Amounts in Thousands, except Per Share Data)

June 30, 2023

 

June 30, 2022

Net Sales

$

496,141

 

 

100.0

%

 

$

373,497

 

 

100.0

%

Cost of Sales

 

446,460

 

 

90.0

%

 

 

339,276

 

 

90.8

%

Gross Profit

 

49,681

 

 

10.0

%

 

 

34,221

 

 

9.2

%

Selling and Administrative Expenses

 

18,444

 

 

3.7

%

 

 

13,643

 

 

3.7

%

Other General Expense (Income)

 

(212

)

 

—

%

 

 

—

 

 

—

%

Operating Income

 

31,449

 

 

6.3

%

 

 

20,578

 

 

5.5

%

Interest Income

 

65

 

 

—

%

 

 

15

 

 

—

%

Interest Expense

 

(5,473

)

 

(1.1

)%

 

 

(1,118

)

 

(0.3

)%

Non-Operating Income (Expense), net

 

466

 

 

0.1

%

 

 

(4,154

)

 

(1.1

)%

Other Income (Expense), net

 

(4,942

)

 

(1.0

)%

 

 

(5,257

)

 

(1.4

)%

Income Before Taxes on Income

 

26,507

 

 

5.3

%

 

 

15,321

 

 

4.1

%

Provision for Income Taxes

 

7,305

 

 

1.4

%

 

 

5,383

 

 

1.4

%

Net Income

$

19,202

 

 

3.9

%

 

$

9,938

 

 

2.7

%

 

 

 

 

 

 

 

 

Earnings Per Share of Common Stock:

 

 

 

 

 

 

 

Basic

$

0.77

 

 

 

 

$

0.40

 

 

 

Diluted

$

0.76

 

 

 

 

$

0.40

 

 

 

Average Number of Shares Outstanding:

 

 

 

 

 

 

 

Basic

 

25,009

 

 

 

 

 

24,885

 

 

 

Diluted

 

25,161

 

 

 

 

 

24,989

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

Fiscal Year Ended

(Amounts in Thousands, except Per Share Data)

June 30, 2023

 

June 30, 2022

Net Sales

$

1,823,429

 

 

100.0

%

 

$

1,349,535

 

 

100.0

%

Cost of Sales

 

1,667,264

 

 

91.4

%

 

 

1,244,933

 

 

92.2

%

Gross Profit

 

156,165

 

 

8.6

%

 

 

104,602

 

 

7.8

%

Selling and Administrative Expenses

 

68,648

 

 

3.8

%

 

 

53,437

 

 

4.0

%

Other General Expense (Income)

 

(212

)

 

—

%

 

 

(1,384

)

 

(0.1

)%

Operating Income

 

87,729

 

 

4.8

%

 

 

52,549

 

 

3.9

%

Interest Income

 

153

 

 

—

%

 

 

81

 

 

—

%

Interest Expense

 

(16,263

)

 

(0.9

)%

 

 

(2,655

)

 

(0.2

)%

Non-Operating Income (Expense), net

 

3,125

 

 

0.2

%

 

 

(6,244

)

 

(0.5

)%

Other Income (Expense), net

 

(12,985

)

 

(0.7

)%

 

 

(8,818

)

 

(0.7

)%

Income Before Taxes on Income

 

74,744

 

 

4.1

%

 

 

43,731

 

 

3.2

%

Provision for Income Taxes

 

18,913

 

 

1.0

%

 

 

12,478

 

 

0.9

%

Net Income

$

55,831

 

 

3.1

%

 

$

31,253

 

 

2.3

%

 

 

 

 

 

 

 

 

Earnings Per Share of Common Stock:

 

 

 

 

 

 

 

Basic

$

2.24

 

 

 

 

$

1.24

 

 

 

Diluted

$

2.22

 

 

 

 

$

1.24

 

 

 

Average Number of Shares Outstanding:

 

 

 

 

 

 

 

Basic

 

24,904

 

 

 

 

 

25,115

 

 

 

Diluted

 

25,076

 

 

 

 

 

25,221

 

 

 

Condensed Consolidated Statements of Cash Flows

Fiscal Year Ended

(Unaudited)

June 30,

(Amounts in Thousands)

2023

 

2022

Net Cash Flow used for Operating Activities

$

(13,804

)

 

$

(83,178

)

Net Cash Flow used for Investing Activities

 

(90,467

)

 

 

(74,798

)

Net Cash Flow provided by Financing Activities

 

99,179

 

 

 

103,741

 

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

 

(895

)

 

 

(2,356

)

Net Decrease in Cash, Cash Equivalents, and Restricted Cash

 

(5,987

)

 

 

(56,591

)

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

 

49,851

 

 

 

106,442

 

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

$

43,864

 

 

$

49,851

 

 

(Unaudited)

 

 

Condensed Consolidated Balance Sheets

June 30, 2023

 

June 30, 2022

(Amounts in Thousands)

ASSETS

 

 

 

Cash and cash equivalents

$

42,955

 

$

49,851

Receivables, net

 

308,167

 

 

222,857

Contract assets

 

78,798

 

 

64,080

Inventories

 

450,319

 

 

395,630

Prepaid expenses and other current assets

 

49,188

 

 

28,665

Property and Equipment, net

 

267,684

 

 

206,835

Goodwill

 

12,011

 

 

12,011

Other Intangible Assets, net

 

12,335

 

 

14,707

Other Assets

 

38,262

 

 

41,131

Total Assets

$

1,259,719

 

$

1,035,767

 

 

 

 

LIABILITIES AND SHARE OWNERS’ EQUITY

 

 

 

Current portion of borrowings under credit facilities

$

46,454

 

$

35,580

Accounts payable

 

322,274

 

 

300,224

Advances from customers (1)

 

33,905

 

 

25,942

Accrued expenses

 

72,515

 

 

46,996

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

 

19,718

 

 

20,242

Share Owners’ Equity

 

523,994

 

 

453,971

Total Liabilities and Share Owners’ Equity

$

1,259,719

 

$

1,035,767

(1)

Beginning in fiscal year 2023, the Company changed its presentation that such inventory-related payments from customers are classified as Advances from customers on the Condensed Consolidated Balance Sheets. Prior year periods have been recast to conform to the current year presentation.

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

 

 

 

 

 

 

 

(Amounts in Thousands, except Per Share Data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Fiscal Year Ended

 

June 30,

 

June 30,

 

2023

 

2022

 

2023

 

2022

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

 

33

%

 

 

13

%

 

 

35

%

 

 

4

%

Foreign Currency Exchange Impact

 

—

%

 

 

(3

)%

 

 

(3

)%

 

 

(1

)%

Constant Currency Growth

 

33

%

 

 

16

%

 

 

38

%

 

 

5

%

 

 

 

 

 

 

 

 

Operating Income, as reported

$

31,449

 

 

$

20,578

 

 

$

87,729

 

 

$

52,549

 

SERP

 

243

 

 

 

(1,159

)

 

 

701

 

 

 

(1,563

)

Legal Settlements (Recovery)

 

(212

)

 

 

—

 

 

 

(212

)

 

 

(1,384

)

Adjusted Operating Income

$

31,480

 

 

$

19,419

 

 

$

88,218

 

 

$

49,602

 

 

 

 

 

 

 

 

 

Net Income, as reported

$

19,202

 

 

$

9,938

 

 

$

55,831

 

 

$

31,253

 

Adjustments After Measurement Period on GES Acquisition

 

—

 

 

 

—

 

 

 

279

 

 

 

—

 

Legal Settlements (Recovery), After-Tax

 

(161

)

 

 

—

 

 

 

(161

)

 

 

(1,050

)

Adjusted Net Income

$

19,041

 

 

$

9,938

 

 

$

55,949

 

 

$

30,203

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share, as reported

$

0.76

 

 

$

0.40

 

 

$

2.22

 

 

$

1.24

 

Adjustments After Measurement Period on GES Acquisition

 

—

 

 

 

—

 

 

 

0.01

 

 

 

—

 

Legal Settlements (Recovery)

 

—

 

 

 

—

 

 

 

—

 

 

 

(0.04

)

Adjusted Diluted Earnings per Share

$

0.76

 

 

$

0.40

 

 

$

2.23

 

 

$

1.20

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

$

87,729

 

 

$

52,549

 

SERP

 

 

 

 

 

701

 

 

 

(1,563

)

Legal Recovery

 

 

 

 

 

(212

)

 

 

(1,384

)

Adjusted Operating Income (non-GAAP)

 

 

 

 

$

88,218

 

 

$

49,602

 

Tax Effect

 

 

 

 

 

22,235

 

 

 

14,417

 

After-tax Adjusted Operating Income

 

 

 

 

$

65,983

 

 

$

35,185

 

Average Invested Capital (1)

 

 

 

 

$

701,364

 

 

$

491,252

 

ROIC

 

 

 

 

 

9.4

%

 

 

7.2

%

(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/20230816530676/en/

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