Kimball Electronics, Inc. Reports Second Quarter Fiscal Year 2017 Results
February 01 2017 - 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 second quarter
ended December 31, 2016.
|
Three Months Ended |
|
December 31, |
(Amounts in Thousands,
except EPS) |
2016 |
|
2015 |
Net Sales |
$ |
230,265 |
|
|
$ |
207,129 |
|
Operating Income |
$ |
12,241 |
|
|
$ |
6,933 |
|
Operating Income % |
5.3 |
% |
|
3.3 |
% |
Net Income |
$ |
7,812 |
|
|
$ |
4,564 |
|
Diluted EPS |
$ |
0.28 |
|
|
$ |
0.16 |
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
December 31, |
(Amounts in Thousands,
except EPS) |
2016 |
|
2015 |
Net Sales |
$ |
456,716 |
|
|
$ |
407,547 |
|
Operating Income |
$ |
25,063 |
|
|
$ |
13,854 |
|
Adjusted Operating
Income (non-GAAP)* |
$ |
21,058 |
|
|
$ |
13,991 |
|
Operating Income % |
5.5 |
% |
|
3.4 |
% |
Adjusted Operating
Income (non-GAAP) % |
4.6 |
% |
|
3.4 |
% |
Net Income |
$ |
17,934 |
|
|
$ |
9,039 |
|
Adjusted Net Income
(non-GAAP)* |
$ |
14,510 |
|
|
$ |
9,124 |
|
Diluted EPS |
$ |
0.65 |
|
|
$ |
0.31 |
|
Adjusted Diluted EPS
(non-GAAP)* |
$ |
0.52 |
|
|
$ |
0.31 |
|
* 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 industrial end market vertical helped us
set a new quarterly sales record for the fourth consecutive
quarter. 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 made steady progress in our margin
improvement efforts and converted well on the strong demand during
the quarter; we continue to face margin pressure and 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. This is a pivotal year as we work through another year of
significant new program launches, the continued ramp-up of our new
Romania operation, and the integration of our Medivative and Aircom
acquisitions.”
Second Quarter Fiscal Year 2017 Overview:
- Consolidated net sales increased 11% compared to the second
quarter of fiscal year 2016, the fourth consecutive quarterly sales
record. Excluding sales from recent acquisitions,
consolidated net sales were up 9% from the prior year quarter.
- The ramp-up of the Company’s Romania facility negatively
impacted net income by $0.9 million during the quarter compared
with the net income impact of $0.7 million from incremental
start-up costs in the prior year.
- Return on invested capital (“ROIC”) is 10.7%, which has
improved from 7.7% in the prior year (see reconciliation of
non-GAAP financial measures for ROIC calculation).
- Cash flow from operating activities was $12.1 million for the
quarter.
- Cash conversion days (“CCD”) for the quarter ended
December 31, 2016 were 59 days, which were unchanged from 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 were $9.4 million during
the quarter.
- $7.4 million was returned to Share Owners during the quarter in
the form of common stock repurchases.
- Cash and cash equivalents were $42.7 million and borrowings
outstanding on credit facilities were $9.0 million at
December 31, 2016.
Net Sales by Vertical Market:
|
Three Months Ended |
|
|
|
December 31, |
|
|
(Amounts in Millions)
|
2016 |
|
2015 |
|
Percent Change |
Automotive |
$ |
96.3 |
|
|
$ |
82.6 |
|
|
16 |
% |
Medical |
63.4 |
|
|
60.0 |
|
|
6 |
% |
Industrial |
48.4 |
|
|
42.8 |
|
|
13 |
% |
Public Safety |
15.8 |
|
|
15.9 |
|
|
(1 |
)% |
Other |
6.4 |
|
|
5.8 |
|
|
10 |
% |
Total Net
Sales |
$ |
230.3 |
|
|
$ |
207.1 |
|
|
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
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 for the six months ended December 31,
2016 and 2015 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: |
|
February 2, 2017 |
Time: |
|
10:00 AM Eastern
Time |
Dial-In #: |
|
800-992-4934
(International Calls - 937-502-2251) |
Conference ID:
|
|
47809340 |
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 end 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 second quarter ended
December 31, 2016 are as follows:
|
|
|
|
|
|
|
Condensed Consolidated Statements of
Income |
(Unaudited) |
Three Months Ended |
(Amounts in Thousands,
except Per Share Data) |
December 31, 2016 |
|
December 31, 2015 |
Net Sales |
$ |
230,265 |
|
|
100.0 |
% |
|
$ |
207,129 |
|
|
100.0 |
% |
Cost of Sales |
209,712 |
|
|
91.1 |
% |
|
191,014 |
|
|
92.2 |
% |
Gross Profit |
20,553 |
|
|
8.9 |
% |
|
16,115 |
|
|
7.8 |
% |
Selling and
Administrative Expenses |
8,312 |
|
|
3.6 |
% |
|
9,182 |
|
|
4.5 |
% |
Operating Income |
12,241 |
|
|
5.3 |
% |
|
6,933 |
|
|
3.3 |
% |
Other Income (Expense),
net |
(1,014 |
) |
|
(0.4 |
)% |
|
(588 |
) |
|
(0.2 |
)% |
Income Before Taxes on
Income |
11,227 |
|
|
4.9 |
% |
|
6,345 |
|
|
3.1 |
% |
Provision for Income
Taxes |
3,415 |
|
|
1.5 |
% |
|
1,781 |
|
|
0.9 |
% |
Net Income |
$ |
7,812 |
|
|
3.4 |
% |
|
$ |
4,564 |
|
|
2.2 |
% |
|
|
|
|
|
|
|
|
Earnings Per Share of
Common Stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.29 |
|
|
|
|
$ |
0.16 |
|
|
|
Diluted |
$ |
0.28 |
|
|
|
|
$ |
0.16 |
|
|
|
|
|
|
|
|
|
|
|
Average Number of
Shares Outstanding: |
|
|
|
|
|
|
|
Basic |
27,350 |
|
|
|
|
29,228 |
|
|
|
Diluted |
27,455 |
|
|
|
|
29,278 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Six Months Ended |
(Amounts in Thousands,
except Per Share Data) |
December 31, 2016 |
|
December 31, 2015 |
Net Sales |
$ |
456,716 |
|
|
100.0 |
% |
|
$ |
407,547 |
|
|
100.0 |
% |
Cost of Sales |
417,841 |
|
|
91.5 |
% |
|
376,152 |
|
|
92.3 |
% |
Gross Profit |
38,875 |
|
|
8.5 |
% |
|
31,395 |
|
|
7.7 |
% |
Selling and
Administrative Expenses |
17,817 |
|
|
3.9 |
% |
|
17,541 |
|
|
4.3 |
% |
Other General
Income |
(4,005 |
) |
|
(0.9 |
)% |
|
— |
|
|
— |
% |
Operating Income |
25,063 |
|
|
5.5 |
% |
|
13,854 |
|
|
3.4 |
% |
Other Income (Expense),
net |
(251 |
) |
|
(0.1 |
)% |
|
(1,254 |
) |
|
(0.3 |
)% |
Income Before Taxes on
Income |
24,812 |
|
|
5.4 |
% |
|
12,600 |
|
|
3.1 |
% |
Provision for Income
Taxes |
6,878 |
|
|
1.5 |
% |
|
3,561 |
|
|
0.9 |
% |
Net Income |
$ |
17,934 |
|
|
3.9 |
% |
|
$ |
9,039 |
|
|
2.2 |
% |
|
|
|
|
|
|
|
|
Earnings Per Share of
Common Stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.65 |
|
|
|
|
$ |
0.31 |
|
|
|
Diluted |
$ |
0.65 |
|
|
|
|
$ |
0.31 |
|
|
|
|
|
|
|
|
|
|
|
Average Number of
Shares Outstanding: |
|
|
|
|
|
|
|
Basic |
27,714 |
|
|
|
|
29,260 |
|
|
|
Diluted |
27,775 |
|
|
|
|
29,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows |
Six Months Ended |
(Unaudited) |
December 31, |
(Amounts in
Thousands) |
2016 |
|
2015 |
Net Cash Flow provided
by Operating Activities |
$ |
26,091 |
|
|
$ |
16,319 |
|
Net Cash Flow used for
Investing Activities |
(21,688 |
) |
|
(19,262 |
) |
Net Cash Flow used for
Financing Activities |
(15,032 |
) |
|
(1,193 |
) |
Effect of Exchange Rate
Change on Cash and Cash Equivalents |
(1,369 |
) |
|
(545 |
) |
Net Decrease in Cash
and Cash Equivalents |
(11,998 |
) |
|
(4,681 |
) |
Cash and Cash
Equivalents at Beginning of Period |
54,738 |
|
|
65,180 |
|
Cash and Cash
Equivalents at End of Period |
$ |
42,740 |
|
|
$ |
60,499 |
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
Condensed
Consolidated Balance Sheets |
December 31,
2016 |
|
June 30, 2016 |
(Amounts in
Thousands) |
ASSETS |
|
|
|
Cash and
cash equivalents |
$ |
42,740 |
|
|
$ |
54,738 |
|
Receivables, net |
156,535 |
|
|
149,652 |
|
Inventories |
138,729 |
|
|
132,877 |
|
Prepaid
expenses and other current assets |
25,420 |
|
|
24,944 |
|
Property
and Equipment, net |
130,918 |
|
|
120,701 |
|
Goodwill |
6,191 |
|
|
6,191 |
|
Other
Intangible Assets, net |
4,804 |
|
|
4,593 |
|
Other
Assets |
18,034 |
|
|
16,869 |
|
Total
Assets |
$ |
523,371 |
|
|
$ |
510,565 |
|
|
|
|
|
LIABILITIES AND
SHARE OWNERS’ EQUITY
|
|
|
|
Borrowings under credit facilities |
$ |
9,000 |
|
|
$ |
9,000 |
|
Accounts
payable |
150,730 |
|
|
142,152 |
|
Accrued
expenses |
25,399 |
|
|
23,651 |
|
Other |
12,441 |
|
|
11,393 |
|
Share
Owners’ Equity |
325,801 |
|
|
324,369 |
|
Total
Liabilities and Share Owners’ Equity |
$ |
523,371 |
|
|
$ |
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 |
|
|
Six Months Ended |
|
|
December 31, |
|
|
2016 |
|
2015 |
Operating Income, as
reported |
|
$ |
25,063 |
|
|
$ |
13,854 |
|
Add: Pre-tax Spin-off
Expenses |
|
— |
|
|
137 |
|
Less: Pre-tax
Settlement Proceeds from Lawsuit |
|
4,005 |
|
|
— |
|
Adjusted Operating
Income |
|
$ |
21,058 |
|
|
$ |
13,991 |
|
|
|
|
|
|
|
|
|
|
|
Net
Income excluding Spin-off Expenses, Lawsuit Proceeds, and Bargain
Purchase Gain |
|
|
Six Months Ended |
|
|
December 31, |
|
|
2016 |
|
2015 |
Net Income, as
reported |
|
$ |
17,934 |
|
|
$ |
9,039 |
|
Add: After-tax Spin-off
Expenses |
|
— |
|
|
85 |
|
Less: After-tax
Settlement Proceeds from Lawsuit |
|
2,499 |
|
|
— |
|
Less: Bargain Purchase
Gain |
|
925 |
|
|
— |
|
Adjusted Net
Income |
|
$ |
14,510 |
|
|
$ |
9,124 |
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per Share excluding Spin-off Expenses,
Lawsuit Proceeds, and Bargain Purchase Gain |
|
|
Six Months Ended |
|
|
December 31, |
|
|
2016 |
|
2015 |
Diluted Earnings per
Share, as reported |
|
$ |
0.65 |
|
|
$ |
0.31 |
|
Add: Impact of Spin-off
Expenses |
|
— |
|
|
0.00 |
|
Less: Impact of
Settlement Proceeds from Lawsuits |
|
0.09 |
|
|
— |
|
Less: Bargain Purchase
Gain |
|
0.04 |
|
|
— |
|
Adjusted Diluted
Earnings per Share |
|
$ |
0.52 |
|
|
$ |
0.31 |
|
|
|
|
|
|
|
|
|
|
|
Return on
Invested Capital (ROIC) |
|
|
|
|
|
|
Six Months Ended |
|
|
December 31, |
|
|
2016 |
|
2015 |
Adjusted Operating
Income |
|
$ |
21,058 |
|
|
$ |
13,991 |
|
|
|
|
|
|
Annualized Adjusted
Operating Income |
|
$ |
42,116 |
|
|
$ |
27,982 |
|
Tax Rate |
|
27.0 |
% |
|
29.2 |
% |
Tax Effect |
|
$ |
11,371 |
|
|
$ |
8,171 |
|
After Tax Annualized
Adjusted Operating Income |
|
$ |
30,745 |
|
|
$ |
19,811 |
|
|
|
|
|
|
Average Invested
Capital * |
|
$ |
286,347 |
|
|
$ |
256,785 |
|
|
|
|
|
|
ROIC |
|
10.7 |
% |
|
7.7 |
% |
* 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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