Kimball Electronics, Inc. Reports Second Quarter Fiscal Year 2016 Results
February 04 2016 - 7:16AM
Kimball Electronics, Inc. (Nasdaq:KE), a leading global electronic
manufacturing services provider of high-quality, durable electronic
products, today announced financial results for its second quarter
of fiscal year 2016 which ended December 31, 2015.
|
Three Months Ended |
|
Six Months Ended |
|
December 31, |
|
December 31, |
(Amounts in Thousands,
except EPS) |
2015 |
|
2014 |
|
2015 |
|
2014 |
Net Sales |
$ |
207,129 |
|
|
$ |
207,563 |
|
|
$ |
407,547 |
|
|
$ |
411,366 |
|
Operating Income |
$ |
6,933 |
|
|
$ |
8,697 |
|
|
$ |
13,854 |
|
|
$ |
16,484 |
|
Adjusted Operating
Income (non-GAAP) |
$ |
6,933 |
|
|
$ |
9,982 |
|
|
$ |
13,991 |
|
|
$ |
18,733 |
|
Operating Income % |
3.3 |
% |
|
4.2 |
% |
|
3.4 |
% |
|
4.0 |
% |
Adjusted Operating
Income (non-GAAP) % |
3.3 |
% |
|
4.8 |
% |
|
3.4 |
% |
|
4.6 |
% |
Net Income |
$ |
4,564 |
|
|
$ |
6,229 |
|
|
$ |
9,039 |
|
|
$ |
11,620 |
|
Adjusted Net Income
(non-GAAP) |
$ |
4,564 |
|
|
$ |
7,397 |
|
|
$ |
9,124 |
|
|
$ |
13,752 |
|
Diluted EPS |
$ |
0.16 |
|
|
$ |
0.21 |
|
|
$ |
0.31 |
|
|
$ |
0.40 |
|
Adjusted Diluted EPS
(non-GAAP) |
$ |
0.16 |
|
|
$ |
0.25 |
|
|
$ |
0.31 |
|
|
$ |
0.47 |
|
Donald D. Charron, Chairman and Chief Executive Officer, stated,
“On the top line, the firmer demand that we began to see at the end
of the first quarter continued for the most part into the second
quarter. We saw a double-digit increase both sequentially and
year-over-year in our China automotive sales which was partially
offset by softer overall demand in the U.S. while our Europe
markets remained relatively stable. We are making good
progress on the launches of a number of new business awards with
both existing and new customers and we are expecting sales from
these launches later this fiscal year. Our new business
opportunities pipeline remains healthy, and we continue to work
diligently to achieve our medium range goal of $1 billion in annual
sales by fiscal year 2018.”
Mr. Charron continued, “On the bottom line, this has been
another challenging quarter for us. We experienced higher
costs in a number of areas, including incremental costs related to
the Romania Greenfield start-up, foreign exchange headwinds, and
higher than expected healthcare costs in the U.S. We remain
committed to our 4% operating income goal and are responding with
the appropriate short-term actions while maintaining alignment with
our long-term strategic plan.”
Second Quarter Fiscal Year 2016 Overview:
- Net sales were flat compared to the prior year second
quarter. Revenue growth was adversely impacted by the exit of
Johnson Controls, Inc. and foreign currency movements.
- Excluding sales related to the exit of Johnson Controls, Inc.,
net sales would have increased by 4.2%.
- Net sales in constant currencies were up 4.1% compared to the
prior year quarter.
- Incremental costs associated with the start-up of the Company’s
new Romania facility reduced net income by $0.7 million in the
quarter.
- Spin-off expenses in the prior year second quarter were $1.3
million. No spin-off expenses were incurred in the current
year second quarter.
- Cash flow from operating activities was $16.8 million during
the quarter.
- Investments in capital expenditures were $8.2 million during
the quarter.
- $3.8 million was returned to Share Owners during the quarter in
the form of common stock repurchases associated with the $20
million stock repurchase program announced on October 22,
2015.
- Cash and cash equivalents were $60.5 million and borrowings
outstanding on credit facilities were $3.0 million at
December 31, 2015.
- Days sales outstanding, calculated as the average of monthly
trade accounts and notes receivable divided by one day’s average
net sales, was 58.6 days for the three months ended
December 31, 2015 compared to 59.5 days for the three months
ended December 31, 2014.
- Production days supply on hand, defined as the average of the
monthly gross inventory divided by an average day’s cost of sales,
was 62.1 days for the current year second quarter compared to 60.4
days for the same period last year.
Net Sales by Vertical Market:
|
Three Months Ended |
|
|
|
December 31, |
|
|
(Amounts in
Millions) |
2015 |
|
2014 |
|
Percent Change |
Automotive |
$ |
82.6 |
|
|
$ |
73.9 |
|
|
12 |
% |
Medical |
60.0 |
|
|
62.3 |
|
|
(4 |
)% |
Industrial |
42.8 |
|
|
49.9 |
|
|
(14 |
)% |
Public Safety |
15.9 |
|
|
16.9 |
|
|
(5 |
)% |
Other |
5.8 |
|
|
4.6 |
|
|
25 |
% |
Total Net Sales |
$ |
207.1 |
|
|
$ |
207.6 |
|
|
— |
% |
Forward-Looking StatementsCertain statements
contained within this release are considered forward-looking under
the Private Securities Litigation Reform Act of 1995 and are
subject to risks and uncertainties including, but not limited to,
our ability to fully realize the expected benefits of the completed
spin-off, the global economic conditions, significant volume
reductions from key contract customers, loss of key customers or
suppliers, financial stability of key customers and suppliers,
availability or cost of raw materials, and increased competitive
pricing pressures reflecting excess industry capacities.
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, 2015.
Non-GAAP Financial MeasuresThis press release
contains non-GAAP financial measures. A non-GAAP financial
measure is a numerical measure of a company’s financial performance
that excludes or includes amounts so as to be different than the
most directly comparable measure calculated and presented in
accordance with Generally Accepted Accounting Principles (GAAP) in
the United States in the statement of income, statement of
comprehensive income, balance sheet, statement of cash flows, or
statement of equity of the company. The non-GAAP financial
measures contained herein include an adjustment for spin-off
expenses. Reconciliations of the reported GAAP numbers to
these non-GAAP financial measures are included in the financial
highlights table below. Management believes it is useful for
investors to understand how its core operations performed without
the effects of the spin-off expenses. Excluding these amounts
allows investors to meaningfully trend, analyze, and benchmark the
performance of the Company’s core operations. Many of the
Company’s internal performance measures that management uses to
make certain operating decisions exclude these charges to enable
meaningful trending of core operating metrics.
Conference Call / Webcast |
|
|
|
Date: |
|
February 4, 2016 |
Time: |
|
10:00 AM Eastern
Time |
Dial-In #: |
|
800-992-4934
(International Calls - 937-502-2251) |
Conference ID: |
|
20443054 |
The live webcast of the conference call can be accessed at
investors.kimballelectronics.com. For those unable to
participate in the live webcast, the call will be archived at
investors.kimballelectronics.com.
About Kimball Electronics, Inc.Recognized with
a reputation for excellence, Kimball Electronics is committed to a
high performance culture that values personal and organizational
commitment to quality, reliability, value, speed, and ethical
behavior. Kimball Electronics employees know they are part of a
company culture that builds lasting relationships and global
success for customers while enabling employees to share in the
Company’s success through personal, professional, and financial
growth.
Kimball Electronics trades under the symbol “KE” on The NASDAQ
Stock Market. Kimball Electronics is a global contract
electronic manufacturing services (“EMS”) company that specializes
in durable electronics for the medical, automotive, industrial, and
public safety markets. Kimball Electronics is well recognized
by customers and industry trade publications for its excellent
quality, reliability, and innovative service. From its
manufacturing operations in the United States, Mexico, Thailand,
Poland, China, and Romania, Kimball Electronics provides
engineering, manufacturing, and supply chain services which utilize
common production and support capabilities to a variety of
industries globally. Kimball Electronics is headquartered in
Jasper, Indiana.
To learn more about Kimball Electronics, visit:
www.kimballelectronics.com.
Lasting relationships. Global
success.
Financial highlights for the second quarter ended
December 31, 2015 are as follows:
Condensed Consolidated Statements of Income |
|
|
|
|
|
|
(Unaudited) |
Three Months Ended |
(Amounts in
Thousands, except per share data) |
December 31, 2015 |
|
December 31, 2014 |
Net
Sales |
$ |
207,129 |
|
|
100.0 |
% |
|
$ |
207,563 |
|
|
100.0 |
% |
Cost of
Sales |
191,014 |
|
|
92.2 |
% |
|
189,705 |
|
|
91.4 |
% |
Gross
Profit |
16,115 |
|
|
7.8 |
% |
|
17,858 |
|
|
8.6 |
% |
Selling and
Administrative Expenses |
9,182 |
|
|
4.5 |
% |
|
9,161 |
|
|
4.4 |
% |
Operating
Income |
6,933 |
|
|
3.3 |
% |
|
8,697 |
|
|
4.2 |
% |
Other
Income (Expense), net |
(588 |
) |
|
(0.2 |
)% |
|
154 |
|
|
0.1 |
% |
Income
Before Taxes on Income |
6,345 |
|
|
3.1 |
% |
|
8,851 |
|
|
4.3 |
% |
Provision
for Income Taxes |
1,781 |
|
|
0.9 |
% |
|
2,622 |
|
|
1.3 |
% |
Net
Income |
$ |
4,564 |
|
|
2.2 |
% |
|
$ |
6,229 |
|
|
3.0 |
% |
|
|
|
|
|
|
|
|
Earnings
Per Share of Common Stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.16 |
|
|
|
|
$ |
0.21 |
|
|
|
Diluted |
$ |
0.16 |
|
|
|
|
$ |
0.21 |
|
|
|
|
|
|
|
|
|
|
|
Average
Number of Shares Outstanding: |
|
|
|
|
|
|
|
Basic |
29,228 |
|
|
|
|
29,162 |
|
|
|
Diluted |
29,278 |
|
|
|
|
29,294 |
|
|
|
|
|
|
(Unaudited) |
|
Six Months Ended |
(Amounts in Thousands,
except per share data) |
|
December 31, 2015 |
|
December 31, 2014 |
Net Sales |
|
$ |
407,547 |
|
|
100.0 |
% |
|
$ |
411,366 |
|
|
100.0 |
% |
Cost of Sales |
|
376,152 |
|
|
92.3 |
% |
|
375,605 |
|
|
91.3 |
% |
Gross Profit |
|
31,395 |
|
|
7.7 |
% |
|
35,761 |
|
|
8.7 |
% |
Selling and
Administrative Expenses |
|
17,541 |
|
|
4.3 |
% |
|
19,277 |
|
|
4.7 |
% |
Operating Income |
|
13,854 |
|
|
3.4 |
% |
|
16,484 |
|
|
4.0 |
% |
Other Income (Expense),
net |
|
(1,254 |
) |
|
(0.3 |
)% |
|
(343 |
) |
|
(0.1 |
)% |
Income Before Taxes on
Income |
|
12,600 |
|
|
3.1 |
% |
|
16,141 |
|
|
3.9 |
% |
Provision for Income
Taxes |
|
3,561 |
|
|
0.9 |
% |
|
4,521 |
|
|
1.1 |
% |
Net Income |
|
$ |
9,039 |
|
|
2.2 |
% |
|
$ |
11,620 |
|
|
2.8 |
% |
|
|
|
|
|
|
|
|
|
Earnings Per Share of
Common Stock: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.31 |
|
|
|
|
$ |
0.40 |
|
|
|
Diluted |
|
$ |
0.31 |
|
|
|
|
$ |
0.40 |
|
|
|
|
|
|
|
|
|
|
|
|
Average Number of
Shares Outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
29,260 |
|
|
|
|
29,153 |
|
|
|
Diluted |
|
29,350 |
|
|
|
|
29,317 |
|
|
|
Condensed
Consolidated Statements of Cash Flows |
|
|
Six Months Ended |
(Unaudited) |
|
|
December 31, |
(Amounts in
Thousands) |
|
|
2015 |
|
2014 |
Net Cash Flow provided
by Operating Activities |
|
|
$ |
16,319 |
|
|
$ |
3,541 |
|
Net Cash Flow used for
Investing Activities |
|
|
(19,262 |
) |
|
(16,589 |
) |
Net Cash Flow (used
for) provided by Financing Activities |
|
|
(1,193 |
) |
|
50,172 |
|
Effect of Exchange Rate
Change on Cash and Cash Equivalents |
|
|
(545 |
) |
|
(1,720 |
) |
Net (Decrease) Increase
in Cash and Cash Equivalents |
|
|
(4,681 |
) |
|
35,404 |
|
Cash and Cash
Equivalents at Beginning of Period |
|
|
65,180 |
|
|
26,260 |
|
Cash and Cash
Equivalents at End of Period |
|
|
$ |
60,499 |
|
|
$ |
61,664 |
|
|
|
(Unaudited) |
|
|
Condensed
Consolidated Balance Sheets |
|
December 31,
2015 |
|
June 30, 2015 |
(Amounts in
Thousands) |
|
|
ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$ |
60,499 |
|
|
$ |
65,180 |
|
Receivables, net |
|
134,451 |
|
|
139,892 |
|
Inventories |
|
127,876 |
|
|
125,198 |
|
Prepaid expenses and other current
assets |
|
23,716 |
|
|
23,922 |
|
Property and Equipment, net |
|
115,148 |
|
|
106,779 |
|
Goodwill |
|
2,564 |
|
|
2,564 |
|
Other Intangible Assets, net |
|
4,985 |
|
|
4,509 |
|
Other Assets |
|
14,724 |
|
|
15,213 |
|
Total Assets |
|
$ |
483,963 |
|
|
$ |
483,257 |
|
|
|
|
|
|
LIABILITIES AND
SHARE OWNERS’ EQUITY |
|
|
|
|
Accounts payable |
|
$ |
130,958 |
|
|
$ |
133,409 |
|
Borrowings under credit
facilities |
|
3,000 |
|
|
— |
|
Accrued expenses |
|
21,764 |
|
|
26,545 |
|
Other |
|
11,199 |
|
|
10,854 |
|
Share Owners’ Equity |
|
317,042 |
|
|
312,449 |
|
Total Liabilities and Share Owners’
Equity |
|
$ |
483,963 |
|
|
$ |
483,257 |
|
Reconciliation of Non-GAAP Financial Measures |
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
(Amounts in Thousands,
except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income excluding Spin-off Expenses |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
December 31, |
|
December 31, |
Kimball
Electronics, Inc. |
2015 |
|
2014 |
|
2015 |
|
2014 |
Operating Income, as
reported |
$ |
6,933 |
|
|
$ |
8,697 |
|
|
$ |
13,854 |
|
|
$ |
16,484 |
|
Add: Pre-tax Spin-off
Expenses |
— |
|
|
1,285 |
|
|
137 |
|
|
2,249 |
|
Adjusted Operating
Income |
$ |
6,933 |
|
|
$ |
9,982 |
|
|
$ |
13,991 |
|
|
$ |
18,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income excluding Spin-off Expenses |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
December 31, |
|
December 31, |
Kimball
Electronics, Inc. |
2015 |
|
2014 |
|
2015 |
|
2014 |
Net Income, as
reported |
$ |
4,564 |
|
|
$ |
6,229 |
|
|
$ |
9,039 |
|
|
$ |
11,620 |
|
Add: After-tax Spin-off
Expenses |
— |
|
|
1,168 |
|
|
85 |
|
|
2,132 |
|
Adjusted Net
Income |
$ |
4,564 |
|
|
$ |
7,397 |
|
|
$ |
9,124 |
|
|
$ |
13,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per Share excluding Spin-off
Expenses |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
December 31, |
|
December 31, |
Kimball
Electronics, Inc. |
2015 |
|
2014 |
|
2015 |
|
2014 |
Diluted Earnings per
Share, as reported |
$ |
0.16 |
|
|
$ |
0.21 |
|
|
$ |
0.31 |
|
|
$ |
0.40 |
|
Add: Impact of Spin-off
Expenses |
0.00 |
|
|
0.04 |
|
|
0.00 |
|
|
0.07 |
|
Adjusted Diluted
Earnings per Share |
$ |
0.16 |
|
|
$ |
0.25 |
|
|
$ |
0.31 |
|
|
$ |
0.47 |
|
CONTACT:
Adam W. Smith
Treasurer
Telephone 812.634.4000
E-mail: Investor.Relations@kimballelectronics.com
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