Kimball Electronics, Inc. Reports Third Quarter Fiscal Year 2016 Results
May 04 2016 - 4:15PM
Kimball Electronics, Inc. (Nasdaq:KE), a leading global electronic
manufacturing services provider of high-quality, durable electronic
products, today announced financial results for its third quarter
of fiscal year 2016 which ended March 31, 2016.
|
Three Months Ended |
|
Nine Months Ended |
|
March 31, |
|
March 31, |
(Amounts in Thousands,
except EPS) |
2016 |
|
2015 |
|
2016 |
|
2015 |
Net Sales |
$ |
214,111 |
|
|
$ |
206,858 |
|
|
$ |
621,658 |
|
|
$ |
618,224 |
|
Operating Income |
$ |
7,078 |
|
|
$ |
10,821 |
|
|
$ |
20,932 |
|
|
$ |
27,305 |
|
Adjusted Operating
Income (non-GAAP) |
$ |
7,078 |
|
|
$ |
11,142 |
|
|
$ |
21,069 |
|
|
$ |
29,876 |
|
Operating Income % |
3.3 |
% |
|
5.2 |
% |
|
3.4 |
% |
|
4.4 |
% |
Adjusted Operating
Income (non-GAAP) % |
3.3 |
% |
|
5.4 |
% |
|
3.4 |
% |
|
4.8 |
% |
Net Income |
$ |
7,477 |
|
|
$ |
7,191 |
|
|
$ |
16,516 |
|
|
$ |
18,811 |
|
Adjusted Net Income
(non-GAAP) |
$ |
7,477 |
|
|
$ |
7,469 |
|
|
$ |
16,601 |
|
|
$ |
21,221 |
|
Diluted EPS |
$ |
0.26 |
|
|
$ |
0.25 |
|
|
$ |
0.57 |
|
|
$ |
0.64 |
|
Adjusted Diluted EPS
(non-GAAP) |
$ |
0.26 |
|
|
$ |
0.25 |
|
|
$ |
0.57 |
|
|
$ |
0.72 |
|
Donald D. Charron, Chairman and Chief Executive Officer, stated,
“We continued to see firmer demand throughout our fiscal third
quarter as three of our four end market verticals were up
sequentially over the second quarter. Automotive was
particularly strong led by double-digit year over year growth in
China and stronger demand in Europe. Sales in our medical
vertical were up 10% year over year as we successfully completed
the launch of a critical next generation product for one of our
largest customers. We continue to make good progress on the
launches of a number of new business awards with both existing and
new customers, and we are still expecting sales from these launches
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 net sales by fiscal year
2018.”
Mr. Charron continued, “As we have stated previously, over the
last few quarters, and continuing in this quarter, our operating
margin is under pressure due to incremental costs related to the
Romania greenfield start-up and capital deployments for new
customer programs in advance of revenue. Margin improvement
through cost control and productivity improvements continues to be
a high focus area for us as we remain committed to our 4% operating
income goal.”
Third Quarter Fiscal Year 2016 Overview:
- Net sales increased 4% compared to the third quarter of fiscal
year 2015.
- A discrete foreign income tax benefit of $1.8 million was
recognized during the quarter as a result of a favorable tax ruling
related to the capitalization of the Company’s Romania
subsidiary.
- Incremental costs associated with the start-up of the Romania
facility, excluding the above tax benefit, reduced net income by
$0.4 million for the quarter.
- Spin-off expenses of $0.3 million were incurred in the prior
year third quarter. No spin-off expenses were incurred in the
current year third quarter.
- Cash flow from operating activities was $11.7 million during
the quarter.
- Investments in capital expenditures were $8.6 million during
the quarter.
- $4.4 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 in October 2015.
- Cash and cash equivalents were $59.8 million and borrowings
outstanding on credit facilities were $3.0 million at
March 31, 2016.
- Days sales outstanding, calculated as the average of monthly
trade accounts and notes receivable divided by one day’s average
net sales, was 59.5 days for the three months ended March 31,
2016 compared to 58.9 days for the three months ended
March 31, 2015.
- Production days supply on hand, defined as the average of the
monthly gross inventory divided by an average day’s cost of sales,
was 59.6 days for the current year third quarter compared to 60.0
days for the same period last year.
Net Sales by Vertical Market:
|
Three Months Ended |
|
|
|
March 31, |
|
|
(Amounts in Millions)
|
2016 |
|
2015 |
|
Percent Change |
Automotive |
$ |
85.6 |
|
|
$ |
74.9 |
|
|
14 |
% |
Medical |
65.6 |
|
|
59.7 |
|
|
10 |
% |
Industrial |
45.7 |
|
|
51.6 |
|
|
(11 |
)% |
Public Safety |
14.0 |
|
|
15.3 |
|
|
(8 |
)% |
Other |
3.2 |
|
|
5.4 |
|
|
(39 |
)% |
Total Net
Sales |
$ |
214.1 |
|
|
$ |
206.9 |
|
|
4 |
% |
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: |
|
May 5, 2016 |
Time: |
|
10:00 AM Eastern
Time |
Dial-In #: |
|
800-992-4934
(International Calls - 937-502-2251) |
Conference ID: |
|
87686985 |
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 third quarter ended March 31,
2016 are as follows:
Condensed Consolidated Statements of Income |
|
|
|
|
|
|
(Unaudited) |
Three Months Ended |
(Amounts in Thousands,
except per share data) |
March 31, 2016 |
|
March 31, 2015 |
Net Sales |
$ |
214,111 |
|
|
100.0 |
% |
|
$ |
206,858 |
|
|
100.0 |
% |
Cost of Sales |
197,926 |
|
|
92.4 |
% |
|
187,905 |
|
|
90.8 |
% |
Gross Profit |
16,185 |
|
|
7.6 |
% |
|
18,953 |
|
|
9.2 |
% |
Selling and
Administrative Expenses |
9,107 |
|
|
4.3 |
% |
|
8,132 |
|
|
4.0 |
% |
Operating Income |
7,078 |
|
|
3.3 |
% |
|
10,821 |
|
|
5.2 |
% |
Other Income (Expense),
net |
233 |
|
|
0.1 |
% |
|
(886 |
) |
|
(0.4 |
)% |
Income Before Taxes on
Income |
7,311 |
|
|
3.4 |
% |
|
9,935 |
|
|
4.8 |
% |
Provision (Benefit) for
Income Taxes |
(166 |
) |
|
(0.1 |
)% |
|
2,744 |
|
|
1.3 |
% |
Net Income |
$ |
7,477 |
|
|
3.5 |
% |
|
$ |
7,191 |
|
|
3.5 |
% |
|
|
|
|
|
|
|
|
Earnings Per Share of
Common Stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.26 |
|
|
|
|
$ |
0.25 |
|
|
|
Diluted |
$ |
0.26 |
|
|
|
|
$ |
0.25 |
|
|
|
|
|
|
|
|
|
|
|
Average Number of
Shares Outstanding: |
|
|
|
|
|
|
|
Basic |
28,771 |
|
|
|
|
29,172 |
|
|
|
Diluted |
28,860 |
|
|
|
|
29,318 |
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Nine Months Ended |
(Amounts in Thousands,
except per share data) |
March 31, 2016 |
|
March 31, 2015 |
Net Sales |
$ |
621,658 |
|
|
100.0 |
% |
|
$ |
618,224 |
|
|
100.0 |
% |
Cost of Sales |
574,078 |
|
|
92.3 |
% |
|
563,510 |
|
|
91.1 |
% |
Gross Profit |
47,580 |
|
|
7.7 |
% |
|
54,714 |
|
|
8.9 |
% |
Selling and
Administrative Expenses |
26,648 |
|
|
4.3 |
% |
|
27,409 |
|
|
4.5 |
% |
Operating Income |
20,932 |
|
|
3.4 |
% |
|
27,305 |
|
|
4.4 |
% |
Other Income (Expense),
net |
(1,021 |
) |
|
(0.2 |
)% |
|
(1,229 |
) |
|
(0.2 |
)% |
Income Before Taxes on
Income |
19,911 |
|
|
3.2 |
% |
|
26,076 |
|
|
4.2 |
% |
Provision for Income
Taxes |
3,395 |
|
|
0.5 |
% |
|
7,265 |
|
|
1.2 |
% |
Net Income |
$ |
16,516 |
|
|
2.7 |
% |
|
$ |
18,811 |
|
|
3.0 |
% |
|
|
|
|
|
|
|
|
Earnings Per Share of
Common Stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.57 |
|
|
|
|
$ |
0.65 |
|
|
|
Diluted |
$ |
0.57 |
|
|
|
|
$ |
0.64 |
|
|
|
|
|
|
|
|
|
|
|
Average Number of
Shares Outstanding: |
|
|
|
|
|
|
|
Basic |
29,097 |
|
|
|
|
29,159 |
|
|
|
Diluted |
29,211 |
|
|
|
|
29,344 |
|
|
|
Condensed
Consolidated Statements of Cash Flows |
Nine Months Ended |
(Unaudited) |
March 31, |
(Amounts in
Thousands) |
2016 |
|
2015 |
Net Cash Flow provided
by Operating Activities |
$ |
28,029 |
|
|
$ |
11,250 |
|
Net Cash Flow used for
Investing Activities |
(27,806 |
) |
|
(22,668 |
) |
Net Cash Flow (used
for) provided by Financing Activities |
(5,676 |
) |
|
50,172 |
|
Effect of Exchange Rate
Change on Cash and Cash Equivalents |
99 |
|
|
(3,344 |
) |
Net (Decrease) Increase
in Cash and Cash Equivalents |
(5,354 |
) |
|
35,410 |
|
Cash and Cash
Equivalents at Beginning of Period |
65,180 |
|
|
26,260 |
|
Cash and Cash
Equivalents at End of Period |
$ |
59,826 |
|
|
$ |
61,670 |
|
|
(Unaudited) |
|
|
Condensed
Consolidated Balance Sheets |
March 31,2016 |
|
June 30, 2015 |
(Amounts in
Thousands) |
|
ASSETS |
|
|
|
Cash and
cash equivalents |
$ |
59,826 |
|
|
$ |
65,180 |
|
Receivables, net |
147,879 |
|
|
139,892 |
|
Inventories |
132,077 |
|
|
125,198 |
|
Prepaid
expenses and other current assets |
26,532 |
|
|
23,922 |
|
Property
and Equipment, net |
118,518 |
|
|
106,779 |
|
Goodwill |
2,564 |
|
|
2,564 |
|
Other
Intangible Assets, net |
4,841 |
|
|
4,509 |
|
Other
Assets |
16,524 |
|
|
15,213 |
|
Total
Assets |
$ |
508,761 |
|
|
$ |
483,257 |
|
|
|
|
|
LIABILITIES AND
SHARE OWNERS’ EQUITY |
|
|
|
Accounts
payable |
$ |
145,210 |
|
|
$ |
133,409 |
|
Borrowings under credit facilities |
3,000 |
|
|
— |
|
Accrued
expenses |
24,472 |
|
|
26,545 |
|
Other |
11,381 |
|
|
10,854 |
|
Share
Owners’ Equity |
324,698 |
|
|
312,449 |
|
Total
Liabilities and Share Owners’ Equity |
$ |
508,761 |
|
|
$ |
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 |
|
Nine Months Ended |
|
March 31, |
|
March 31, |
Kimball
Electronics, Inc. |
2016 |
|
2015 |
|
2016 |
|
2015 |
Operating Income, as
reported |
$ |
7,078 |
|
|
$ |
10,821 |
|
|
$ |
20,932 |
|
|
$ |
27,305 |
|
Add: Pre-tax Spin-off
Expenses |
— |
|
|
321 |
|
|
137 |
|
|
2,571 |
|
Adjusted Operating
Income |
$ |
7,078 |
|
|
$ |
11,142 |
|
|
$ |
21,069 |
|
|
$ |
29,876 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income excluding Spin-off Expenses |
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
March 31, |
|
March 31, |
Kimball
Electronics, Inc. |
2016 |
|
2015 |
|
2016 |
|
2015 |
Net Income, as
reported |
$ |
7,477 |
|
|
$ |
7,191 |
|
|
$ |
16,516 |
|
|
$ |
18,811 |
|
Add: After-tax Spin-off
Expenses |
— |
|
|
278 |
|
|
85 |
|
|
2,410 |
|
Adjusted Net
Income |
$ |
7,477 |
|
|
$ |
7,469 |
|
|
$ |
16,601 |
|
|
$ |
21,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per Share excluding Spin-off
Expenses |
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
March 31, |
|
March 31, |
Kimball
Electronics, Inc. |
2016 |
|
2015 |
|
2016 |
|
2015 |
Diluted Earnings per
Share, as reported |
$ |
0.26 |
|
|
$ |
0.25 |
|
|
$ |
0.57 |
|
|
$ |
0.64 |
|
Add: Impact of Spin-off
Expenses |
— |
|
|
0.00 |
|
|
0.00 |
|
|
0.08 |
|
Adjusted Diluted
Earnings per Share |
$ |
0.26 |
|
|
$ |
0.25 |
|
|
$ |
0.57 |
|
|
$ |
0.72 |
|
CONTACT:
Adam W. Smith
Treasurer
Telephone 812.634.4000
E-mail: Investor.Relations@kimballelectronics.com
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