Kimball Electronics, Inc. Reports Fourth Quarter and Fiscal Year 2016 Results
August 03 2016 - 4:30PM
Kimball Electronics, Inc. (Nasdaq:KE), a leading global electronic
manufacturing services provider of high-quality, durable electronic
products, today announced financial results for its fourth quarter
and fiscal year ended June 30, 2016.
|
Three Months Ended |
|
Fiscal Year Ended |
|
June 30, |
|
June 30, |
(Amounts in Thousands,
except EPS) |
2016 |
|
2015 |
|
2016 |
|
2015 |
Net Sales |
$ |
220,402 |
|
|
$ |
201,126 |
|
|
$ |
842,060 |
|
|
$ |
819,350 |
|
Operating Income |
$ |
8,790 |
|
|
$ |
9,050 |
|
|
$ |
29,722 |
|
|
$ |
36,355 |
|
Adjusted Operating
Income (non-GAAP) |
$ |
8,790 |
|
|
$ |
9,074 |
|
|
$ |
29,859 |
|
|
$ |
38,949 |
|
Operating Income % |
4.0 |
% |
|
4.5 |
% |
|
3.5 |
% |
|
4.4 |
% |
Adjusted Operating
Income (non-GAAP) % |
4.0 |
% |
|
4.5 |
% |
|
3.5 |
% |
|
4.8 |
% |
Net Income |
$ |
5,771 |
|
|
$ |
7,394 |
|
|
$ |
22,287 |
|
|
$ |
26,205 |
|
Adjusted Net Income
(non-GAAP) |
$ |
5,771 |
|
|
$ |
7,410 |
|
|
$ |
22,372 |
|
|
$ |
28,631 |
|
Diluted EPS |
$ |
0.20 |
|
|
$ |
0.25 |
|
|
$ |
0.76 |
|
|
$ |
0.89 |
|
Adjusted Diluted EPS
(non-GAAP) |
$ |
0.20 |
|
|
$ |
0.25 |
|
|
$ |
0.77 |
|
|
$ |
0.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald D. Charron, Chairman and Chief Executive Officer, stated,
“Continued strength in the automotive market combined with sales
from new program launches helped us set new quarterly and annual
sales records in the fourth quarter and fiscal year of 2016.
Our new business opportunities pipeline remains healthy and we
continue to work diligently to achieve our goal of $1 billion in
annual sales by fiscal year 2018.”
Mr. Charron continued, “While we were pleased to have achieved
our goal of 4% operating income in the fourth quarter, we continue
to experience pressure on our margins and still have work to do in
order to consistently achieve our 4% operating income target.
Margin expansion will continue to be a priority of focus for us
going forward. Fiscal year 2017 will be a pivotal year for us
as we work through another year of significant new program
launches, the ramp-up of our new Romania operation, and the
integration of our recent Medivative and Aircom acquisitions.”
Fourth Quarter Fiscal Year 2016 Overview:
- Consolidated net sales increased 10% compared to the fourth
quarter of fiscal year 2015, setting a new quarterly sales
record.
- On May 2, 2016, the Company announced the acquisition of
Medivative Technologies, LLC. Excluding the incremental net
sales associated with the acquisition, consolidated net sales
increased 8% over the prior year fourth quarter. Consolidated
earnings were not materially impacted during the quarter from the
Medivative
acquisition.
- Incremental net loss associated with the start-up of the
Romania facility was $1.0 million during the current year fourth
quarter.
- Cash flow from operating activities was $8.8 million during the
quarter.
- Investments in capital expenditures were $6.5 million during
the quarter.
- $5.0 million was returned to Share Owners during the quarter in
the form of common stock repurchases associated with the $20
million, 18-month stock repurchase program announced in October
2015.
- Cash and cash equivalents were $54.7 million and borrowings
outstanding on credit facilities were $9.0 million at June 30,
2016.
- Cash conversion days (“CCD”) for the quarter ended
June 30, 2016 were 59 days, which improved from 63 days for
the same quarter last year. CCD is calculated as the sum of
days sales outstanding plus production days supply on hand less
accounts payable days.
Net Sales by Vertical Market:
|
Three Months Ended |
|
|
|
June 30, |
|
|
(Amounts in
Millions) |
2016 |
|
2015 |
|
Percent Change |
Automotive |
$ |
86.5 |
|
|
$ |
79.2 |
|
|
9 |
% |
Medical |
65.2 |
|
|
58.0 |
|
|
12 |
% |
Industrial |
48.6 |
|
|
44.9 |
|
|
8 |
% |
Public Safety |
14.7 |
|
|
15.0 |
|
|
(2 |
)% |
Other |
5.4 |
|
|
4.0 |
|
|
34 |
% |
Total Net
Sales |
$ |
220.4 |
|
|
$ |
201.1 |
|
|
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2016 Overview:
- Net sales increased 3% from the prior fiscal year, setting a
new annual record of $842.1 million.
- Spin-off expenses totaled $0.1 million and $2.6 million in
fiscal years 2016 and 2015, respectively.
- Cash flow provided by operating activities for fiscal year 2016
was $36.8 million.
- Capital expenditures were $34.6 million in fiscal year 2016
compared to $36.9 million in fiscal year 2015.
- Return on invested capital (“ROIC”) was 9.0% for fiscal year
2016, which declined from 12.5% for the prior fiscal year (see
reconciliation of non-GAAP financial measures for ROIC
calculation).
- Fiscal year 2015 financial results included an allocation of
costs incurred by our former parent, Kimball International, Inc.,
through October 31, 2014, the completion date of our spin-off from
our former parent. As a result, the full fiscal year 2015
financial statements were not necessarily indicative of our
complete cost structure as an independent company.
Outlook
- Management maintains the goal of $1 billion in net sales by
fiscal year 2018 and believes it is achievable.
- Management is maintaining a mid-range goal of 4% operating
income.
- A long-term goal of 12.5% ROIC has been set by management.
- Fiscal year 2017 capital expenditures are expected to remain at
a similar level as fiscal year 2016 with significantly higher
spending occurring in the first half of the year. Fiscal year
2018 capital expenditures are expected to decline to a level that
approximates depreciation expense.
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, successful integration of acquisitions and new
operations, 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 adjusted operating income,
adjusted net income, adjusted diluted EPS, and ROIC. These
measures were adjusted 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: |
|
August 4, 2016 |
Time: |
|
10:00 AM Eastern
Time |
Dial-In #: |
|
800-992-4934
(International Calls - 937-502-2251) |
Conference ID: |
|
47764754 |
|
|
|
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 fourth quarter and fiscal year
ended June 30, 2016 are as follows:
Condensed Consolidated Statements of Income |
|
|
|
|
|
|
(Unaudited) |
Three Months Ended |
(Amounts in Thousands,
except Per Share Data) |
June 30, 2016 |
|
June 30, 2015 |
Net Sales |
$ |
220,402 |
|
|
100.0 |
% |
|
$ |
201,126 |
|
|
100.0 |
% |
Cost of Sales |
203,444 |
|
|
92.3 |
% |
|
183,417 |
|
|
91.2 |
% |
Gross Profit |
16,958 |
|
|
7.7 |
% |
|
17,709 |
|
|
8.8 |
% |
Selling and
Administrative Expenses |
8,168 |
|
|
3.7 |
% |
|
8,659 |
|
|
4.3 |
% |
Operating Income |
8,790 |
|
|
4.0 |
% |
|
9,050 |
|
|
4.5 |
% |
Other Income (Expense),
net |
(725 |
) |
|
(0.3 |
)% |
|
(355 |
) |
|
(0.2 |
)% |
Income Before Taxes on
Income |
8,065 |
|
|
3.7 |
% |
|
8,695 |
|
|
4.3 |
% |
Provision for Income
Taxes |
2,294 |
|
|
1.1 |
% |
|
1,301 |
|
|
0.6 |
% |
Net Income |
$ |
5,771 |
|
|
2.6 |
% |
|
$ |
7,394 |
|
|
3.7 |
% |
|
|
|
|
|
|
|
|
Earnings Per Share of
Common Stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.20 |
|
|
|
|
$ |
0.25 |
|
|
|
Diluted |
$ |
0.20 |
|
|
|
|
$ |
0.25 |
|
|
|
|
|
|
|
|
|
|
|
Average Number of
Shares Outstanding: |
|
|
|
|
|
|
|
Basic |
28,374 |
|
|
|
|
29,172 |
|
|
|
Diluted |
28,641 |
|
|
|
|
29,367 |
|
|
|
(Unaudited) |
Fiscal Year Ended |
(Amounts in Thousands,
except Per Share Data) |
June 30, 2016 |
|
June 30, 2015 |
Net Sales |
$ |
842,060 |
|
|
100.0 |
% |
|
$ |
819,350 |
|
|
100.0 |
% |
Cost of Sales |
777,522 |
|
|
92.3 |
% |
|
746,927 |
|
|
91.2 |
% |
Gross Profit |
64,538 |
|
|
7.7 |
% |
|
72,423 |
|
|
8.8 |
% |
Selling and
Administrative Expenses |
34,816 |
|
|
4.2 |
% |
|
36,068 |
|
|
4.4 |
% |
Operating Income |
29,722 |
|
|
3.5 |
% |
|
36,355 |
|
|
4.4 |
% |
Other Income (Expense),
net |
(1,746 |
) |
|
(0.2 |
)% |
|
(1,584 |
) |
|
(0.2 |
)% |
Income Before Taxes on
Income |
27,976 |
|
|
3.3 |
% |
|
34,771 |
|
|
4.2 |
% |
Provision for Income
Taxes |
5,689 |
|
|
0.7 |
% |
|
8,566 |
|
|
1.0 |
% |
Net Income |
$ |
22,287 |
|
|
2.6 |
% |
|
$ |
26,205 |
|
|
3.2 |
% |
|
|
|
|
|
|
|
|
Earnings Per Share of
Common Stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.77 |
|
|
|
|
$ |
0.90 |
|
|
|
Diluted |
$ |
0.76 |
|
|
|
|
$ |
0.89 |
|
|
|
|
|
|
|
|
|
|
|
Average Number of
Shares Outstanding: |
|
|
|
|
|
|
|
Basic |
28,916 |
|
|
|
|
29,162 |
|
|
|
Diluted |
29,176 |
|
|
|
|
29,388 |
|
|
|
Condensed
Consolidated Statements of Cash Flows |
Fiscal Year Ended |
(Unaudited) |
June 30, |
(Amounts in
Thousands) |
2016 |
|
2015 |
Net Cash Flow provided
by Operating Activities |
$ |
36,832 |
|
|
$ |
28,064 |
|
Net Cash Flow used for
Investing Activities |
(42,590 |
) |
|
(36,516 |
) |
Net Cash Flow (used
for) provided by Financing Activities |
(4,300 |
) |
|
50,172 |
|
Effect of Exchange Rate
Change on Cash and Cash Equivalents |
(384 |
) |
|
(2,800 |
) |
Net (Decrease) Increase
in Cash and Cash Equivalents |
(10,442 |
) |
|
38,920 |
|
Cash and Cash
Equivalents at Beginning of Year |
65,180 |
|
|
26,260 |
|
Cash and Cash
Equivalents at End of Year |
$ |
54,738 |
|
|
$ |
65,180 |
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
Condensed
Consolidated Balance Sheets |
June 30, 2016 |
|
June 30, 2015 |
(Amounts in
Thousands) |
|
ASSETS |
|
|
|
Cash and cash
equivalents |
$ |
54,738 |
|
|
$ |
65,180 |
|
Receivables,
net |
149,652 |
|
|
139,892 |
|
Inventories |
132,877 |
|
|
125,198 |
|
Prepaid expenses
and other current assets |
24,944 |
|
|
23,922 |
|
Property and
Equipment, net |
120,701 |
|
|
106,779 |
|
Goodwill |
6,191 |
|
|
2,564 |
|
Other Intangible
Assets, net |
4,593 |
|
|
4,509 |
|
Other
Assets |
16,869 |
|
|
15,213 |
|
Total
Assets |
$ |
510,565 |
|
|
$ |
483,257 |
|
|
|
|
|
LIABILITIES AND
SHARE OWNERS’ EQUITY |
|
|
|
Borrowings under
credit facilities |
$ |
9,000 |
|
|
$ |
— |
|
Accounts
payable |
142,152 |
|
|
133,409 |
|
Accrued
expenses |
23,651 |
|
|
26,545 |
|
Other |
11,393 |
|
|
10,854 |
|
Share Owners’
Equity |
324,369 |
|
|
312,449 |
|
Total
Liabilities and Share Owners’ Equity |
$ |
510,565 |
|
|
$ |
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 |
|
Fiscal Year Ended |
|
June 30, |
|
June 30, |
Kimball
Electronics, Inc. |
2016 |
|
2015 |
|
2016 |
|
2015 |
Operating Income, as
reported |
$ |
8,790 |
|
|
$ |
9,050 |
|
|
$ |
29,722 |
|
|
$ |
36,355 |
|
Add: Pre-tax Spin-off
Expenses |
— |
|
|
24 |
|
|
137 |
|
|
2,594 |
|
Adjusted Operating
Income |
$ |
8,790 |
|
|
$ |
9,074 |
|
|
$ |
29,859 |
|
|
$ |
38,949 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income excluding Spin-off Expenses |
|
|
|
Three Months Ended |
|
Fiscal Year Ended |
|
June 30, |
|
June 30, |
Kimball
Electronics, Inc. |
2016 |
|
2015 |
|
2016 |
|
2015 |
Net Income, as
reported |
$ |
5,771 |
|
|
$ |
7,394 |
|
|
$ |
22,287 |
|
|
$ |
26,205 |
|
Add: After-tax Spin-off
Expenses |
— |
|
|
16 |
|
|
85 |
|
|
2,426 |
|
Adjusted Net
Income |
$ |
5,771 |
|
|
$ |
7,410 |
|
|
$ |
22,372 |
|
|
$ |
28,631 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per Share excluding Spin-off
Expenses |
|
|
|
Three Months Ended |
|
Fiscal Year Ended |
|
June 30, |
|
June 30, |
Kimball
Electronics, Inc. |
2016 |
|
2015 |
|
2016 |
|
2015 |
Diluted Earnings per
Share, as reported |
$ |
0.20 |
|
|
$ |
0.25 |
|
|
$ |
0.76 |
|
|
$ |
0.89 |
|
Add: Impact of Spin-off
Expenses |
— |
|
|
0.00 |
|
|
0.01 |
|
|
0.08 |
|
Adjusted Diluted
Earnings per Share |
$ |
0.20 |
|
|
$ |
0.25 |
|
|
$ |
0.77 |
|
|
$ |
0.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
Invested Capital (ROIC) |
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
|
|
|
|
June 30, |
Kimball
Electronics, Inc. |
|
|
|
|
2016 |
|
2015 |
Adjusted Operating
Income |
|
|
|
|
$ |
29,859 |
|
|
$ |
38,949 |
|
Tax Rate |
|
|
|
|
20.4 |
% |
|
23.4 |
% |
Tax Effect |
|
|
|
|
$ |
6,091 |
|
|
$ |
9,114 |
|
After Tax Adjusted
Operating Income |
|
|
|
|
$ |
23,768 |
|
|
$ |
29,835 |
|
|
|
|
|
|
|
|
|
Average Invested
Capital * |
|
|
|
|
$ |
263,371 |
|
|
$ |
239,463 |
|
|
|
|
|
|
|
|
|
ROIC |
|
|
|
|
9.0 |
% |
|
12.5 |
% |
|
* Average
Invested Capital is computed using the average quarterly Share
Owners’ equity plus current and non-current debt less cash and cash
equivalents. |
CONTACT:
Adam W. Smith
Treasurer
Telephone 812.634.4000
E-mail: Investor.Relations@kimballelectronics.com
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