Kimball Electronics, Inc. Reports First Quarter Fiscal Year 2017 Results
November 02 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 first quarter
ended September 30, 2016.
|
Three Months Ended |
|
September 30, |
(Amounts in Thousands,
except EPS) |
2016 |
|
2015 |
Net Sales |
$ |
226,451 |
|
|
$ |
200,418 |
|
Operating Income |
$ |
12,822 |
|
|
$ |
6,921 |
|
Adjusted Operating
Income (non-GAAP)* |
$ |
8,817 |
|
|
$ |
7,058 |
|
Operating Income % |
5.7 |
% |
|
3.5 |
% |
Adjusted Operating
Income (non-GAAP) % |
3.9 |
% |
|
3.5 |
% |
Net Income |
$ |
10,122 |
|
|
$ |
4,475 |
|
Adjusted Net Income
(non-GAAP)* |
$ |
6,698 |
|
|
$ |
4,560 |
|
Diluted EPS |
$ |
0.36 |
|
|
$ |
0.15 |
|
Adjusted Diluted EPS
(non-GAAP)* |
$ |
0.24 |
|
|
$ |
0.16 |
|
* A reconciliation of GAAP and non-GAAP financial measures is
included below.
Donald D. Charron, Chairman and Chief Executive Officer, stated,
“Continued strength in the automotive market combined with double
digit growth in our medical end market vertical helped us set a new
quarterly sales record in the first quarter of fiscal year
2017. Our new program launch activity remains high as we
continue to work diligently to achieve our goal of $1 billion in
annual sales by fiscal year 2018.”
Mr. Charron continued, “We continue to experience pressure on
our margins and we still have work to do to achieve our goal of
12.5% ROIC. Margin expansion and capital efficiency will
continue to be priorities of focus for us going forward. This
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.”
First Quarter Fiscal Year 2017 Overview:
- Consolidated net sales increased 13% compared to the first
quarter of fiscal year 2016, setting a new quarterly sales record
for the third consecutive quarter.
- The Company received $4.0 million during the quarter, $2.5
million net of tax, related to proceeds from the settlement of a
class action lawsuit of which the Company was a member.
- During the quarter, the Company completed the acquisition of
Aircom Manufacturing, Inc. As a result of the acquisition, a
bargain purchase gain of $0.9 million was recognized during the
quarter and included in net income.
- Incremental net loss associated with the start-up of the
Company’s Romania facility was $1.1 million during the current
fiscal year first quarter.
- Return on invested capital (“ROIC”) was 9.6% for the first
quarter of fiscal year 2017, which improved from 7.9% in the prior
year quarter (see reconciliation of non-GAAP financial measures for
ROIC calculation).
- Cash flow from operating activities was $14.0 million for the
quarter.
- Cash conversion days (“CCD”) for the quarter ended
September 30, 2016 were 58 days, which improved from 61 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.
- Investments in capital expenditures, excluding the Aircom
acquisition, were $10.3 million during the
quarter.
- $6.4 million was returned to Share Owners during the quarter in
the form of common stock repurchases. On September 29, 2016,
the Company’s Board of Directors authorized an extension of the
current stock repurchase plan to allow the repurchase of up to an
additional $20 million worth of common stock.
- Cash and cash equivalents were $50.0 million and borrowings
outstanding on credit facilities were $9.0 million at
September 30, 2016.
Net Sales by Vertical Market:
|
Three Months Ended |
|
|
|
September 30, |
|
|
(Amounts in
Millions) |
2016 |
|
2015 |
|
Percent Change |
Automotive |
$ |
92.2 |
|
|
$ |
72.0 |
|
|
28 |
% |
Medical |
65.0 |
|
|
58.5 |
|
|
11 |
% |
Industrial |
51.5 |
|
|
49.5 |
|
|
4 |
% |
Public Safety |
13.2 |
|
|
16.4 |
|
|
(20 |
)% |
Other |
4.6 |
|
|
4.0 |
|
|
15 |
% |
Total Net
Sales |
$ |
226.5 |
|
|
$ |
200.4 |
|
|
13 |
% |
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,
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, 2016.
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, proceeds from a
lawsuit settlement, and a bargain purchase gain.
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, proceeds from the lawsuit settlement, and
the bargain purchase gain. 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: |
|
November 3, 2016 |
Time: |
|
10:00 AM Eastern
Time |
Dial-In #: |
|
800-992-4934
(International Calls - 937-502-2251) |
Conference ID: |
|
94379299 |
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, China, Mexico,
Poland, Romania, and Thailand, 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 first quarter ended
September 30, 2016 are as follows:
Condensed Consolidated Statements of Income |
|
|
|
|
|
|
(Unaudited) |
Three Months Ended |
(Amounts in Thousands,
except Per Share Data) |
September 30, 2016 |
|
September 30, 2015 |
Net Sales |
$ |
226,451 |
|
|
100.0 |
% |
|
$ |
200,418 |
|
|
100.0 |
% |
Cost of Sales |
208,129 |
|
|
91.9 |
% |
|
185,138 |
|
|
92.4 |
% |
Gross Profit |
18,322 |
|
|
8.1 |
% |
|
15,280 |
|
|
7.6 |
% |
Selling and
Administrative Expenses |
9,505 |
|
|
4.2 |
% |
|
8,359 |
|
|
4.1 |
% |
Other General
Income |
(4,005 |
) |
|
(1.8 |
)% |
|
— |
|
|
— |
% |
Operating Income |
12,822 |
|
|
5.7 |
% |
|
6,921 |
|
|
3.5 |
% |
Other Income (Expense),
net |
763 |
|
|
0.3 |
% |
|
(666 |
) |
|
(0.4 |
)% |
Income Before Taxes on
Income |
13,585 |
|
|
6.0 |
% |
|
6,255 |
|
|
3.1 |
% |
Provision for Income
Taxes |
3,463 |
|
|
1.5 |
% |
|
1,780 |
|
|
0.9 |
% |
Net Income |
$ |
10,122 |
|
|
4.5 |
% |
|
$ |
4,475 |
|
|
2.2 |
% |
|
|
|
|
|
|
|
|
Earnings Per Share of
Common Stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.36 |
|
|
|
|
$ |
0.15 |
|
|
|
Diluted |
$ |
0.36 |
|
|
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
|
Average Number of
Shares Outstanding: |
|
|
|
|
|
|
|
Basic |
28,078 |
|
|
|
|
29,292 |
|
|
|
Diluted |
28,095 |
|
|
|
|
29,349 |
|
|
|
Condensed
Consolidated Statements of Cash Flows |
Three Months Ended |
(Unaudited) |
September 30, |
(Amounts in
Thousands) |
2016 |
|
2015 |
Net Cash Flow provided
by (used for) Operating Activities |
$ |
14,039 |
|
|
$ |
(529 |
) |
Net Cash Flow used for
Investing Activities |
(12,284 |
) |
|
(11,114 |
) |
Net Cash Flow used for
Financing Activities |
(6,664 |
) |
|
(694 |
) |
Effect of Exchange Rate
Change on Cash and Cash Equivalents |
190 |
|
|
(160 |
) |
Net Decrease in Cash
and Cash Equivalents |
(4,719 |
) |
|
(12,497 |
) |
Cash and Cash
Equivalents at Beginning of Period |
54,738 |
|
|
65,180 |
|
Cash and Cash
Equivalents at End of Period |
$ |
50,019 |
|
|
$ |
52,683 |
|
|
(Unaudited) |
|
|
Condensed
Consolidated Balance Sheets |
September 30,
2016 |
|
June 30, 2016 |
(Amounts in
Thousands) |
|
ASSETS |
|
|
|
Cash and cash
equivalents |
$ |
50,019 |
|
|
$ |
54,738 |
|
Receivables,
net |
159,680 |
|
|
149,652 |
|
Inventories |
139,230 |
|
|
132,877 |
|
Prepaid expenses
and other current assets |
21,866 |
|
|
24,944 |
|
Property and
Equipment, net |
131,457 |
|
|
120,701 |
|
Goodwill |
6,191 |
|
|
6,191 |
|
Other Intangible
Assets, net |
4,868 |
|
|
4,593 |
|
Other
Assets |
16,702 |
|
|
16,869 |
|
Total Assets |
$ |
530,013 |
|
|
$ |
510,565 |
|
|
|
|
|
LIABILITIES AND
SHARE OWNERS’ EQUITY |
|
|
|
Borrowings under
credit facilities |
$ |
9,000 |
|
|
$ |
9,000 |
|
Accounts
payable |
156,941 |
|
|
142,152 |
|
Accrued
expenses |
22,470 |
|
|
23,651 |
|
Other |
12,235 |
|
|
11,393 |
|
Share Owners’
Equity |
329,367 |
|
|
324,369 |
|
Total Liabilities and Share
Owners’ Equity |
$ |
530,013 |
|
|
$ |
510,565 |
|
Reconciliation of Non-GAAP Financial Measures |
|
|
(Unaudited) |
|
|
|
(Amounts in Thousands,
except Per Share Data) |
|
|
|
|
|
|
|
Operating Income excluding Spin-off Expenses and Lawsuit
Proceeds |
|
Three Months Ended |
|
September 30, |
|
2016 |
|
2015 |
Operating Income, as
reported |
$ |
12,822 |
|
|
$ |
6,921 |
|
Add: Pre-tax Spin-off
Expenses |
— |
|
|
137 |
|
Less: Pre-tax
Settlement Proceeds from Lawsuit |
4,005 |
|
|
— |
|
Adjusted Operating
Income |
$ |
8,817 |
|
|
$ |
7,058 |
|
|
|
|
|
|
|
|
|
Net
Income excluding Spin-off Expenses, Lawsuit Proceeds, and Bargain
Purchase Gain |
|
Three Months Ended |
|
September 30, |
|
2016 |
|
2015 |
Net Income, as
reported |
$ |
10,122 |
|
|
$ |
4,475 |
|
Add: After-tax Spin-off
Expenses |
— |
|
|
85 |
|
Less: After-tax
Settlement Proceeds from Lawsuit |
2,499 |
|
|
— |
|
Less: Bargain Purchase
Gain |
925 |
|
|
— |
|
Adjusted Net
Income |
$ |
6,698 |
|
|
$ |
4,560 |
|
|
|
|
|
|
|
|
|
Diluted Earnings per Share excluding Spin-off Expenses,
Lawsuit Proceeds, and Bargain Purchase Gain |
|
Three Months Ended |
|
September 30, |
|
2016 |
|
2015 |
Diluted Earnings per
Share, as reported |
$ |
0.36 |
|
|
$ |
0.15 |
|
Add: Impact of Spin-off
Expenses |
— |
|
|
0.01 |
|
Less: Impact of
Settlement Proceeds from Lawsuits |
0.09 |
|
|
— |
|
Less: Bargain Purchase
Gain |
0.03 |
|
|
— |
|
Adjusted Diluted
Earnings per Share |
$ |
0.24 |
|
|
$ |
0.16 |
|
|
|
|
|
Return on
Invested Capital (ROIC) |
|
|
|
|
Three Months Ended |
|
September 30, |
|
2016 |
|
2015 |
Adjusted Operating
Income |
$ |
8,817 |
|
|
$ |
7,058 |
|
|
|
|
|
Annualized Adjusted
Operating Income |
$ |
35,268 |
|
|
$ |
28,232 |
|
Tax Rate |
22.7 |
% |
|
28.8 |
% |
Tax Effect |
$ |
8,006 |
|
|
$ |
8,131 |
|
After Tax Annualized
Adjusted Operating Income |
$ |
27,262 |
|
|
$ |
20,101 |
|
|
|
|
|
Average Invested
Capital * |
$ |
283,490 |
|
|
$ |
255,406 |
|
|
|
|
|
ROIC |
9.6 |
% |
|
7.9 |
% |
* 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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