Kimball Electronics Reports Q3 Results; Company Announces Renewed Strategic Focus, Including Expected Divestiture of the Automation, Test & Measurement Business
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240507684308/en/
-
Excluding these items, adjusted net income in the third quarter of fiscal 2024 totaled
$8.4 million , or$0.34 per diluted share, and adjusted operating income equaled$17.0 million , or 4.0% of net sales.
-
Cash flow from operating activities in the quarter was
$42.6 million driven by inventory reductions.
- Company sharpens strategic focus on EMS operations and aligns cost structure to short-term demand trends.
- Guidance for adjusted operating income in fiscal 2024 reiterated, while the estimate for net sales was updated, in response to the challenging operating environment, and capital expenditures strategically reduced.
- Resumption of share repurchases approved by the Board of Directors.
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
||||||||||||
(Amounts in Thousands, except EPS) |
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
|
$ |
425,036 |
|
|
$ |
484,703 |
|
|
$ |
1,284,352 |
|
|
$ |
1,327,288 |
|
Operating Income |
$ |
(6,431 |
) |
|
$ |
25,220 |
|
|
$ |
29,669 |
|
|
$ |
56,280 |
|
Adjusted Operating Income (non-GAAP) (1) |
$ |
16,960 |
|
|
$ |
25,573 |
|
|
$ |
53,367 |
|
|
$ |
56,738 |
|
Operating Income % |
|
(1.5 |
)% |
|
|
5.2 |
% |
|
|
2.3 |
% |
|
|
4.2 |
% |
Adjusted Operating Income (non-GAAP) % |
|
4.0 |
% |
|
|
5.3 |
% |
|
|
4.2 |
% |
|
|
4.3 |
% |
Net Income (Loss) |
$ |
(6,076 |
) |
|
$ |
16,400 |
|
|
$ |
12,968 |
|
|
$ |
36,629 |
|
Adjusted Net Income (non-GAAP) (1) |
$ |
8,441 |
|
|
$ |
16,400 |
|
|
$ |
27,485 |
|
|
$ |
36,908 |
|
Diluted EPS |
$ |
(0.24 |
) |
|
$ |
0.65 |
|
|
$ |
0.51 |
|
|
$ |
1.46 |
|
Adjusted Diluted EPS (non-GAAP) (1) |
$ |
0.34 |
|
|
$ |
0.65 |
|
|
$ |
1.09 |
|
|
$ |
1.47 |
|
(1) A reconciliation of GAAP and non-GAAP financial measures is included below. |
Commenting on today’s announcement,
The Company ended the third quarter of fiscal 2024 with cash and cash equivalents of
|
Three Months Ended |
|
|
|
Nine Months Ended |
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||
(Amounts in Millions) |
2024 |
|
* |
|
2023 |
|
* |
|
Percent
|
|
2024 |
|
* |
|
2023 |
|
* |
|
Percent
|
||||||||||||||
Automotive (1) |
$ |
202.0 |
|
47 |
% |
|
$ |
221.9 |
|
46 |
% |
|
(9 |
)% |
|
$ |
614.7 |
|
48 |
% |
|
$ |
615.3 |
|
46 |
% |
|
— |
% |
||||
Medical (1) |
|
113.0 |
|
|
27 |
% |
|
|
135.5 |
|
|
28 |
% |
|
(17 |
)% |
|
|
323.5 |
|
|
25 |
% |
|
|
377.1 |
|
|
29 |
% |
|
(14 |
)% |
Industrial (1) |
|
110.0 |
|
|
26 |
% |
|
|
127.3 |
|
|
26 |
% |
|
(14 |
)% |
|
|
346.2 |
|
|
27 |
% |
|
|
334.9 |
|
|
25 |
% |
|
3 |
% |
Total |
$ |
425.0 |
|
|
|
|
$ |
484.7 |
|
|
|
|
(12 |
)% |
|
$ |
1,284.4 |
|
|
|
|
$ |
1,327.3 |
|
|
|
|
(3 |
)% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
* As a percent of Total |
|||||||||||||||||||||||||||||||||
(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 |
Guidance for Fiscal Year 2024
The Company reiterated its guidance for adjusted operating income in fiscal year 2024 of 4.2% to 4.6% of net sales. In response to the current economic environment, net sales are now expected to decline 4% to 6%, compared to the previous estimate of a 2% to 4% decrease. Capital expenditures are estimated to be in the range of
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
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
To learn more about
Conference Call / Webcast |
||
|
|
|
Date: |
|
|
Time: |
|
|
Live Webcast: |
|
investors.kimballelectronics.com/events-and-presentations/events |
Dial-In #: |
|
404-975-4839 (other locations - 833-470-1428) |
Conference ID: |
|
889032 |
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
Condensed Consolidated Statements of Income |
|||||||||||||
(Unaudited) |
Three Months Ended |
||||||||||||
(Amounts in Thousands, except Per Share Data) |
|
|
|
||||||||||
|
$ |
425,036 |
|
|
100.0 |
% |
|
$ |
484,703 |
|
|
100.0 |
% |
Cost of Sales |
|
391,492 |
|
|
92.1 |
% |
|
|
441,731 |
|
|
91.1 |
% |
Gross Profit |
|
33,544 |
|
|
7.9 |
% |
|
|
42,972 |
|
|
8.9 |
% |
Selling and Administrative Expenses |
|
16,861 |
|
|
3.9 |
% |
|
|
17,752 |
|
|
3.7 |
% |
Other General Expense (Income) |
|
(892 |
) |
|
(0.2 |
)% |
|
|
— |
|
|
— |
% |
Restructuring Expense |
|
1,622 |
|
|
0.4 |
% |
|
|
— |
|
|
— |
% |
Goodwill Impairment |
|
5,820 |
|
|
1.4 |
% |
|
|
— |
|
|
— |
% |
Asset Impairment |
|
16,564 |
|
|
3.9 |
% |
|
|
— |
|
|
— |
% |
Operating Income (Loss) |
|
(6,431 |
) |
|
(1.5 |
)% |
|
|
25,220 |
|
|
5.2 |
% |
Interest Income |
|
83 |
|
|
— |
% |
|
|
45 |
|
|
— |
% |
Interest Expense |
|
(5,875 |
) |
|
(1.4 |
)% |
|
|
(4,822 |
) |
|
(1.0 |
)% |
Non-Operating Income (Expense), net |
|
(530 |
) |
|
(0.1 |
)% |
|
|
1,433 |
|
|
0.3 |
% |
Other Income (Expense), net |
|
(6,322 |
) |
|
(1.5 |
)% |
|
|
(3,344 |
) |
|
(0.7 |
)% |
Income Before Taxes on Income |
|
(12,753 |
) |
|
(3.0 |
)% |
|
|
21,876 |
|
|
4.5 |
% |
Provision for Income Taxes |
|
(6,677 |
) |
|
(1.6 |
)% |
|
|
5,476 |
|
|
1.1 |
% |
Net Income (Loss) |
$ |
(6,076 |
) |
|
(1.4 |
)% |
|
$ |
16,400 |
|
|
3.4 |
% |
|
|
|
|
|
|
|
|
||||||
Earnings Per Share of Common Stock: |
|
|
|
|
|
|
|
||||||
Basic |
$ |
(0.24 |
) |
|
|
|
$ |
0.66 |
|
|
|
||
Diluted |
$ |
(0.24 |
) |
|
|
|
$ |
0.65 |
|
|
|
||
Average Number of Shares Outstanding: |
|
|
|
|
|
|
|
||||||
Basic |
|
25,118 |
|
|
|
|
|
24,898 |
|
|
|
||
Diluted |
|
25,118 |
|
|
|
|
|
25,067 |
|
|
|
|
|
|
|
|
|
|
|
||||||
(Unaudited) |
Nine Months Ended |
||||||||||||
(Amounts in Thousands, except Per Share Data) |
|
|
|
||||||||||
|
$ |
1,284,352 |
|
|
100.0 |
% |
|
$ |
1,327,288 |
|
|
100.0 |
% |
Cost of Sales |
|
1,180,833 |
|
|
91.9 |
% |
|
|
1,220,804 |
|
|
92.0 |
% |
Gross Profit |
|
103,519 |
|
|
8.1 |
% |
|
|
106,484 |
|
|
8.0 |
% |
Selling and Administrative Expenses |
|
50,736 |
|
|
4.0 |
% |
|
|
50,204 |
|
|
3.8 |
% |
Other General Expense (Income) |
|
(892 |
) |
|
(0.1 |
)% |
|
|
— |
|
|
— |
% |
Restructuring Expense |
|
1,622 |
|
|
0.1 |
% |
|
|
— |
|
|
— |
% |
Goodwill Impairment |
|
5,820 |
|
|
0.5 |
% |
|
|
— |
|
|
— |
% |
Asset Impairment |
|
16,564 |
|
|
1.3 |
% |
|
|
— |
|
|
— |
% |
Operating Income |
|
29,669 |
|
|
2.3 |
% |
|
|
56,280 |
|
|
4.2 |
% |
Interest Income |
|
483 |
|
|
— |
% |
|
|
88 |
|
|
— |
% |
Interest Expense |
|
(17,459 |
) |
|
(1.4 |
)% |
|
|
(10,790 |
) |
|
(0.8 |
)% |
Non-Operating Income (Expense), net |
|
(959 |
) |
|
— |
% |
|
|
2,659 |
|
|
0.2 |
% |
Other Income (Expense), net |
|
(17,935 |
) |
|
(1.4 |
)% |
|
|
(8,043 |
) |
|
(0.6 |
)% |
Income Before Taxes on Income |
|
11,734 |
|
|
0.9 |
% |
|
|
48,237 |
|
|
3.6 |
% |
Provision for Income Taxes |
|
(1,234 |
) |
|
(0.1 |
)% |
|
|
11,608 |
|
|
0.8 |
% |
Net Income |
$ |
12,968 |
|
|
1.0 |
% |
|
$ |
36,629 |
|
|
2.8 |
% |
|
|
|
|
|
|
|
|
||||||
Earnings Per Share of Common Stock: |
|
|
|
|
|
|
|
||||||
Basic |
$ |
0.52 |
|
|
|
|
$ |
1.47 |
|
|
|
||
Diluted |
$ |
0.51 |
|
|
|
|
$ |
1.46 |
|
|
|
||
|
|
|
|
|
|
|
|
||||||
Average Number of Shares Outstanding: |
|
|
|
|
|
|
|
||||||
Basic |
|
25,084 |
|
|
|
|
|
24,868 |
|
|
|
||
Diluted |
|
25,263 |
|
|
|
|
|
25,031 |
|
|
|
Condensed Consolidated Statements of Cash Flows |
Nine Months Ended |
||||||
(Unaudited) |
|
||||||
(Amounts in Thousands) |
2024 |
|
2023 |
||||
|
$ |
24,717 |
|
|
$ |
(57,885 |
) |
|
|
(37,702 |
) |
|
|
(66,497 |
) |
|
|
36,571 |
|
|
|
107,148 |
|
Effect of Exchange Rate Change on Cash, Cash Equivalents, and Restricted Cash |
|
(113 |
) |
|
|
(294 |
) |
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash |
|
23,473 |
|
|
|
(17,528 |
) |
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period |
|
43,864 |
|
|
|
49,851 |
|
Cash, Cash Equivalents, and Restricted Cash at End of Period |
$ |
67,337 |
|
|
$ |
32,323 |
|
|
(Unaudited) |
|
|
||||
Condensed Consolidated Balance Sheets |
|
|
|
||||
(Amounts in Thousands) |
|||||||
ASSETS |
|
|
|
||||
Cash and cash equivalents |
$ |
65,208 |
|
$ |
42,955 |
||
Receivables, net |
|
277,894 |
|
|
|
308,167 |
|
Contract assets |
|
76,073 |
|
|
|
78,798 |
|
Inventories |
|
396,199 |
|
|
|
450,319 |
|
Prepaid expenses and other current assets |
|
43,018 |
|
|
|
49,188 |
|
Assets held for sale |
|
29,619 |
|
|
|
— |
|
Property and Equipment, net |
|
273,823 |
|
|
|
267,684 |
|
|
|
6,191 |
|
|
|
12,011 |
|
Other Intangible Assets, net |
|
3,197 |
|
|
|
12,335 |
|
Other Assets |
|
89,606 |
|
|
|
38,262 |
|
Total Assets |
$ |
1,260,828 |
|
|
$ |
1,259,719 |
|
|
|
|
|
||||
LIABILITIES AND SHARE OWNERS’ EQUITY |
|
|
|
||||
Current portion of borrowings under credit facilities |
$ |
84,618 |
|
|
$ |
46,454 |
|
Accounts payable |
|
248,174 |
|
|
|
322,274 |
|
Advances from customers |
|
36,099 |
|
|
|
33,905 |
|
Accrued expenses |
|
59,621 |
|
|
|
72,515 |
|
Liabilities held for sale |
|
9,369 |
|
|
|
— |
|
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 |
|
45,631 |
|
|
|
19,718 |
|
Share Owners’ Equity |
|
539,061 |
|
|
|
523,994 |
|
Total Liabilities and Share Owners’ Equity |
$ |
1,260,828 |
|
|
$ |
1,259,719 |
|
Other Financial Metrics |
|||||||||||||||
(Unaudited) |
|||||||||||||||
(Amounts in Millions, except CCD) |
|||||||||||||||
|
At or For the |
|
|
|
|
||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
||||||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Depreciation and Amortization |
$ |
10.5 |
|
$ |
8.2 |
|
$ |
28.5 |
|
$ |
23.8 |
||||
Stock-Based Compensation |
$ |
1.8 |
|
|
$ |
2.0 |
|
|
$ |
5.4 |
|
|
$ |
5.4 |
|
Cash Conversion Days (CCD) (1) |
|
110 |
|
|
|
92 |
|
|
|
|
|
||||
Open Orders (2) |
$ |
831 |
|
|
$ |
882 |
|
|
|
|
|
(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 & Measurement |
|||||||||||||||
(Unaudited) |
|||||||||||||||
(Amounts in Millions) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
||||||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
|
$ |
8.1 |
|
|
$ |
16.8 |
|
$ |
30.9 |
|
|
$ |
40.6 |
||
Operating Income (Loss) (1) |
$ |
(25.4 |
) |
|
$ |
1.6 |
|
|
$ |
(24.3 |
) |
|
$ |
0.1 |
|
(1) |
Includes goodwill impairment of |
Reconciliation of Non-GAAP Financial Measures |
|||||||||||||||
(Unaudited) |
|||||||||||||||
(Amounts in Thousands, except Per Share Data) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
||||||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Net Sales Growth (vs. same period in prior year) |
|
(12 |
)% |
|
|
32 |
% |
|
|
(3 |
)% |
|
|
36 |
% |
Foreign Currency Exchange Impact |
|
— |
% |
|
|
(2 |
)% |
|
|
— |
% |
|
|
(4 |
)% |
Constant Currency Growth |
|
(12 |
)% |
|
|
34 |
% |
|
|
(3 |
)% |
|
|
40 |
% |
|
|
|
|
|
|
|
|
||||||||
Selling and Administrative Expenses, as reported |
$ |
16,861 |
|
|
$ |
17,752 |
|
|
$ |
50,736 |
|
|
$ |
50,204 |
|
SERP |
|
(277 |
) |
|
|
(353 |
) |
|
|
(584 |
) |
|
|
(458 |
) |
Adjusted Selling and Administrative Expenses |
$ |
16,584 |
|
|
$ |
17,399 |
|
|
$ |
50,152 |
|
|
$ |
49,746 |
|
|
|
|
|
|
|
|
|
||||||||
Operating Income (Loss), as reported |
$ |
(6,431 |
) |
|
$ |
25,220 |
|
|
$ |
29,669 |
|
|
$ |
56,280 |
|
SERP |
|
277 |
|
|
|
353 |
|
|
|
584 |
|
|
|
458 |
|
Legal Settlements (Recovery) |
|
(892 |
) |
|
|
— |
|
|
|
(892 |
) |
|
|
— |
|
Restructuring Expense |
|
1,622 |
|
|
|
— |
|
|
|
1,622 |
|
|
|
— |
|
Goodwill Impairment |
|
5,820 |
|
|
|
— |
|
|
|
5,820 |
|
|
|
— |
|
Asset Impairment |
|
16,564 |
|
|
|
— |
|
|
|
16,564 |
|
|
|
— |
|
Adjusted Operating Income |
$ |
16,960 |
|
|
$ |
25,573 |
|
|
$ |
53,367 |
|
|
$ |
56,738 |
|
|
|
|
|
|
|
|
|
||||||||
Net Income (Loss), as reported |
$ |
(6,076 |
) |
|
$ |
16,400 |
|
|
$ |
12,968 |
|
|
$ |
36,629 |
|
Adjustments After Measurement Period on GES Acquisition |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
279 |
|
Legal Settlements (Recovery), After-Tax |
|
(676 |
) |
|
|
— |
|
|
|
(676 |
) |
|
|
— |
|
Restructuring Expense, After-Tax |
|
1,230 |
|
|
|
— |
|
|
|
1,230 |
|
|
|
— |
|
Goodwill Impairment, After-Tax |
|
4,414 |
|
|
|
— |
|
|
|
4,414 |
|
|
|
— |
|
Asset Impairment, After-Tax |
|
9,549 |
|
|
|
— |
|
|
|
9,549 |
|
|
|
— |
|
Adjusted Net Income |
$ |
8,441 |
|
|
$ |
16,400 |
|
|
$ |
27,485 |
|
|
$ |
36,908 |
|
|
|
|
|
|
|
|
|
||||||||
Diluted Earnings per Share, as reported |
$ |
(0.24 |
) |
|
$ |
0.65 |
|
|
$ |
0.51 |
|
|
$ |
1.46 |
|
Adjustments After Measurement Period on GES Acquisition |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
Legal Settlements (Recovery) |
|
(0.03 |
) |
|
|
— |
|
|
|
(0.03 |
) |
|
|
— |
|
Restructuring Expense |
|
0.05 |
|
|
|
— |
|
|
|
0.05 |
|
|
|
— |
|
Goodwill Impairment |
|
0.18 |
|
|
|
— |
|
|
|
0.18 |
|
|
|
— |
|
Asset Impairment |
|
0.38 |
|
|
|
— |
|
|
|
0.38 |
|
|
|
— |
|
Adjusted Diluted Earnings per Share |
$ |
0.34 |
|
|
$ |
0.65 |
|
|
$ |
1.09 |
|
|
$ |
1.47 |
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Twelve Months Ended |
||||||||||||
|
|
|
|
||||||||||||
|
|
|
|
|
|
2024 |
|
|
|
2023 |
|
||||
Operating Income |
|
|
|
|
$ |
61,118 |
|
|
$ |
76,858 |
|
||||
Goodwill Impairment |
|
|
|
|
|
5,820 |
|
|
|
— |
|
||||
SERP |
|
|
|
|
|
827 |
|
|
|
(701 |
) |
||||
Legal Recovery |
|
|
|
|
|
(1,104 |
) |
|
|
— |
|
||||
Restructuring Expense |
|
|
|
|
|
1,622 |
|
|
|
— |
|
||||
Asset Impairment |
|
|
|
|
|
16,564 |
|
|
|
— |
|
||||
Adjusted Operating Income (non-GAAP) |
|
|
|
|
$ |
84,847 |
|
|
$ |
76,157 |
|
||||
Tax Effect |
|
|
|
|
|
19,947 |
|
|
|
20,375 |
|
||||
After-tax Adjusted Operating Income |
|
|
|
|
$ |
64,900 |
|
|
$ |
55,782 |
|
||||
|
|
|
|
|
$ |
783,059 |
|
|
$ |
659,911 |
|
||||
ROIC |
|
|
|
|
|
8.3 |
% |
|
|
8.5 |
% |
(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/20240507684308/en/
Vice President, Investor Relations
812.827.4151
Investor.Relations@kimballelectronics.com
Source: