Kimball Electronics, Inc. Reports Record Third Quarter Fiscal Year 2018 Results
May 02 2018 - 4:05PM
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
ended March 31, 2018.
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
March 31, |
|
March 31, |
(Amounts in Thousands,
except EPS) |
2018 |
|
2017 |
|
2018 |
|
2017 |
Net Sales |
$ |
283,938 |
|
|
$ |
232,930 |
|
|
$ |
795,293 |
|
|
$ |
689,646 |
|
Operating Income |
$ |
11,211 |
|
|
$ |
9,539 |
|
|
$ |
30,994 |
|
|
$ |
34,602 |
|
Adjusted Operating
Income (non-GAAP)* |
$ |
11,211 |
|
|
$ |
9,539 |
|
|
$ |
30,994 |
|
|
$ |
30,597 |
|
Operating Income % |
3.9 |
% |
|
4.1 |
% |
|
3.9 |
% |
|
5.0 |
% |
Adjusted Operating
Income (non-GAAP) % |
3.9 |
% |
|
4.1 |
% |
|
3.9 |
% |
|
4.4 |
% |
Net Income |
$ |
10,835 |
|
|
$ |
8,117 |
|
|
$ |
10,968 |
|
|
$ |
26,051 |
|
Adjusted Net Income
(non-GAAP)* |
$ |
10,705 |
|
|
$ |
8,117 |
|
|
$ |
27,418 |
|
|
$ |
22,627 |
|
Diluted EPS |
$ |
0.40 |
|
|
$ |
0.30 |
|
|
$ |
0.41 |
|
|
$ |
0.94 |
|
Adjusted Diluted EPS
(non-GAAP)* |
$ |
0.40 |
|
|
$ |
0.30 |
|
|
$ |
1.01 |
|
|
$ |
0.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* A
reconciliation of GAAP and non-GAAP financial measures is included
below. |
|
Donald D. Charron, Chairman and Chief Executive Officer, stated,
“Very strong growth in our automotive and medical end market
verticals helped us set a new quarterly sales record for the ninth
consecutive quarter. We are now on a pace to significantly
exceed our long-time stated goal of $1 billion in annual sales in
fiscal year 2018.”
Mr. Charron continued, “We are pleased to have set new quarterly
records for net income and diluted EPS in the third quarter of
fiscal year 2018. The fourth quarter of fiscal year 2018 is a
pivotal quarter for our margin expansion efforts as we continue to
focus on yield and throughput improvements on recently launched new
programs and further progress on the ramp-up in Romania to help us
achieve our goal of 4.5% operating income.”
Third Quarter Fiscal Year 2018 Overview:
- Consolidated net sales increased 22% compared to the third
quarter of fiscal year 2017, which included a 7% favorable impact
from foreign currency movements. This represents the ninth
consecutive quarterly sales record.
- The current year quarter results include non-operating income
related to pre-tax net gains from foreign currency movements of
$2.1 million. In the prior year third quarter, pre-tax net
gains from foreign currency movements in non-operating income were
less than $0.1 million.
- Return on invested capital (“ROIC”) was 10.2% for the first
nine months of fiscal year 2018, which compares to 10.7% for the
same period of the prior year (see reconciliation of non-GAAP
financial measures for ROIC calculation).
- Operating activities provided cash flow of $9.5 million during
the quarter, which compares to cash flow provided by operating
activities of $8.7 million in the third quarter of fiscal year
2017.
- Cash conversion days (“CCD”) for the quarter ended
March 31, 2018 were 62 days, up slightly from 61 days in 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 $7.2 million during
the quarter.
- Cash and cash equivalents were $44.2 million and borrowings
outstanding on credit facilities were $16.3 million at
March 31, 2018.
Net Sales by Vertical Market:
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
(Amounts in
Millions) |
2018 |
|
2017 |
|
PercentChange |
Automotive |
$ |
136.2 |
|
|
$ |
94.3 |
|
|
44 |
% |
Medical |
77.8 |
|
|
59.8 |
|
|
30 |
% |
Industrial |
53.3 |
|
|
53.8 |
|
|
(1 |
)% |
Public Safety |
14.3 |
|
|
20.6 |
|
|
(31 |
)% |
Other |
2.3 |
|
|
4.4 |
|
|
(47 |
)% |
Total Net
Sales |
$ |
283.9 |
|
|
$ |
232.9 |
|
|
22 |
% |
|
|
|
|
|
|
|
|
|
|
|
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, global
economic conditions, geopolitical environment, 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, 2017.
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 include adjustments in the three and nine months ended
March 31, 2018 for the provisional discrete tax items related
to the U.S. Tax Cuts and Jobs Act (“Tax Reform”) enacted in
December 2017 and in the nine months ended March 31, 2017
related to proceeds from a lawsuit settlement and a bargain
purchase gain on the acquisition of Aircom Manufacturing,
Inc. 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 discrete tax items related to Tax Reform,
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 items to enable meaningful trending of core
operating metrics.
|
Conference Call / Webcast |
|
|
Date: |
May 3, 2018 |
Time: |
10:00 AM Eastern
Time |
Dial-In #: |
800-992-4934
(International Calls - 937-502-2251) |
Conference ID: |
4576138 |
|
|
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 automotive, medical, 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
electronic manufacturing services, including engineering and supply
chain support, 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,
2018 are as follows:
|
|
|
|
|
|
|
Condensed Consolidated Statements of
Income |
|
|
|
(Unaudited) |
Three Months Ended |
(Amounts in Thousands,
except Per Share Data) |
March 31, 2018 |
|
March 31, 2017 |
Net Sales |
$ |
283,938 |
|
|
100.0 |
% |
|
$ |
232,930 |
|
|
100.0 |
% |
Cost of Sales |
261,011 |
|
|
91.9 |
% |
|
214,212 |
|
|
92.0 |
% |
Gross Profit |
22,927 |
|
|
8.1 |
% |
|
18,718 |
|
|
8.0 |
% |
Selling and
Administrative Expenses |
11,716 |
|
|
4.2 |
% |
|
9,179 |
|
|
3.9 |
% |
Operating Income |
11,211 |
|
|
3.9 |
% |
|
9,539 |
|
|
4.1 |
% |
Other Income (Expense),
net |
1,918 |
|
|
0.7 |
% |
|
332 |
|
|
0.1 |
% |
Income Before Taxes on
Income |
13,129 |
|
|
4.6 |
% |
|
9,871 |
|
|
4.2 |
% |
Provision for Income
Taxes |
2,294 |
|
|
0.8 |
% |
|
1,754 |
|
|
0.7 |
% |
Net Income |
$ |
10,835 |
|
|
3.8 |
% |
|
$ |
8,117 |
|
|
3.5 |
% |
|
|
|
|
|
|
|
|
Earnings Per Share of
Common Stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.41 |
|
|
|
|
$ |
0.30 |
|
|
|
Diluted |
$ |
0.40 |
|
|
|
|
$ |
0.30 |
|
|
|
|
|
|
|
|
|
|
|
Average Number of
Shares Outstanding: |
|
|
|
|
|
|
|
Basic |
26,714 |
|
|
|
|
27,266 |
|
|
|
Diluted |
26,846 |
|
|
|
|
27,416 |
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Nine Months Ended |
(Amounts in Thousands,
except Per Share Data) |
March 31, 2018 |
|
March 31, 2017 |
Net Sales |
$ |
795,293 |
|
|
100.0 |
% |
|
$ |
689,646 |
|
|
100.0 |
% |
Cost of Sales |
731,914 |
|
|
92.0 |
% |
|
632,053 |
|
|
91.6 |
% |
Gross Profit |
63,379 |
|
|
8.0 |
% |
|
57,593 |
|
|
8.4 |
% |
Selling and
Administrative Expenses |
32,385 |
|
|
4.1 |
% |
|
26,996 |
|
|
4.0 |
% |
Other General
Income |
— |
|
|
— |
% |
|
(4,005 |
) |
|
(0.6 |
)% |
Operating Income |
30,994 |
|
|
3.9 |
% |
|
34,602 |
|
|
5.0 |
% |
Other Income (Expense),
net |
3,556 |
|
|
0.4 |
% |
|
81 |
|
|
0.0 |
% |
Income Before Taxes on
Income |
34,550 |
|
|
4.3 |
% |
|
34,683 |
|
|
5.0 |
% |
Provision for Income
Taxes |
23,582 |
|
|
2.9 |
% |
|
8,632 |
|
|
1.2 |
% |
Net Income |
$ |
10,968 |
|
|
1.4 |
% |
|
$ |
26,051 |
|
|
3.8 |
% |
|
|
|
|
|
|
|
|
Earnings Per Share of
Common Stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.41 |
|
|
|
|
$ |
0.94 |
|
|
|
Diluted |
$ |
0.41 |
|
|
|
|
$ |
0.94 |
|
|
|
|
|
|
|
|
|
|
|
Average Number of
Shares Outstanding: |
|
|
|
|
|
|
|
Basic |
26,779 |
|
|
|
|
27,565 |
|
|
|
Diluted |
27,006 |
|
|
|
|
27,655 |
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows |
Nine Months Ended |
(Unaudited) |
March 31, |
(Amounts in
Thousands) |
2018 |
|
2017 |
Net Cash Flow provided
by Operating Activities |
$ |
20,888 |
|
|
$ |
34,742 |
|
Net Cash Flow used for
Investing Activities |
(21,823 |
) |
|
(27,921 |
) |
Net Cash Flow used for
Financing Activities |
(1,718 |
) |
|
(20,529 |
) |
Effect of Exchange Rate
Change on Cash and Cash Equivalents |
2,342 |
|
|
(974 |
) |
Net Decrease in Cash
and Cash Equivalents |
(311 |
) |
|
(14,682 |
) |
Cash and Cash
Equivalents at Beginning of Period |
44,555 |
|
|
54,738 |
|
Cash and Cash
Equivalents at End of Period |
$ |
44,244 |
|
|
$ |
40,056 |
|
|
|
|
|
|
(Unaudited) |
|
|
Condensed
Consolidated Balance Sheets |
March 31, 2018 |
|
June 30, 2017 |
(Amounts in
Thousands) |
ASSETS |
|
|
|
Cash and cash
equivalents |
$ |
44,244 |
|
|
$ |
44,555 |
|
Receivables,
net |
189,502 |
|
|
169,785 |
|
Inventories |
193,240 |
|
|
144,606 |
|
Prepaid expenses
and other current assets |
25,243 |
|
|
29,219 |
|
Property and
Equipment, net |
141,943 |
|
|
137,549 |
|
Goodwill |
6,191 |
|
|
6,191 |
|
Other Intangible
Assets, net |
4,533 |
|
|
4,581 |
|
Other
Assets |
16,159 |
|
|
18,458 |
|
Total Assets |
$ |
621,055 |
|
|
$ |
554,944 |
|
|
|
|
|
LIABILITIES AND
SHARE OWNERS’ EQUITY |
|
|
|
Borrowings under
credit facilities |
$ |
16,250 |
|
|
$ |
10,000 |
|
Accounts
payable |
190,775 |
|
|
154,619 |
|
Accrued
expenses |
32,050 |
|
|
34,630 |
|
Long-term income
taxes payable |
11,786 |
|
|
— |
|
Other |
13,076 |
|
|
13,423 |
|
Share Owners’
Equity |
357,118 |
|
|
342,272 |
|
Total Liabilities and Share Owners’ Equity |
$ |
621,055 |
|
|
$ |
554,944 |
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial
Measures |
(Unaudited) |
(Amounts
in Thousands, except Per Share Data) |
|
|
|
|
|
|
|
|
Operating Income excluding Lawsuit Proceeds |
|
Three Months Ended |
|
Nine Months Ended |
|
March 31, |
|
March 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Operating Income, as
reported |
$ |
11,211 |
|
|
$ |
9,539 |
|
|
$ |
30,994 |
|
|
$ |
34,602 |
|
Less: Pre-tax
Settlement Proceeds from Lawsuit |
— |
|
|
— |
|
|
— |
|
|
4,005 |
|
Adjusted Operating
Income |
$ |
11,211 |
|
|
$ |
9,539 |
|
|
$ |
30,994 |
|
|
$ |
30,597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income excluding Tax Reform, Lawsuit Proceeds, and
Bargain Purchase Gain |
|
Three Months Ended |
|
Nine Months Ended |
|
March 31, |
|
March 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net Income, as
reported |
$ |
10,835 |
|
|
$ |
8,117 |
|
|
$ |
10,968 |
|
|
$ |
26,051 |
|
Add: Discrete Tax Items
Resulting from Tax Reform Act |
(130 |
) |
|
— |
|
|
16,450 |
|
|
— |
|
Less: After-tax
Settlement Proceeds from Lawsuit |
— |
|
|
— |
|
|
— |
|
|
2,499 |
|
Less: Bargain Purchase
Gain |
— |
|
|
— |
|
|
— |
|
|
925 |
|
Adjusted Net
Income |
$ |
10,705 |
|
|
$ |
8,117 |
|
|
$ |
27,418 |
|
|
$ |
22,627 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per Share excluding Tax Reform, Lawsuit
Proceeds, and Bargain Purchase Gain |
|
Three Months Ended |
|
Nine Months Ended |
|
March 31, |
|
March 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Diluted Earnings per
Share, as reported |
$ |
0.40 |
|
|
$ |
0.30 |
|
|
$ |
0.41 |
|
|
$ |
0.94 |
|
Add: Impact of Discrete
Tax Items Resulting from Tax Reform Act |
0.00 |
|
|
— |
|
|
0.60 |
|
|
— |
|
Less: Impact of
Settlement Proceeds from Lawsuits |
— |
|
|
— |
|
|
— |
|
|
0.09 |
|
Less: Bargain Purchase
Gain |
— |
|
|
— |
|
|
— |
|
|
0.03 |
|
Adjusted Diluted
Earnings per Share |
$ |
0.40 |
|
|
$ |
0.30 |
|
|
$ |
1.01 |
|
|
$ |
0.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on Invested Capital (ROIC) |
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
March 31, |
|
|
|
|
|
2018 |
|
2017 |
Adjusted Operating
Income |
|
|
|
|
$ |
30,994 |
|
|
$ |
30,597 |
|
Annualized Adjusted
Operating Income |
|
|
|
|
$ |
41,325 |
|
|
$ |
40,796 |
|
Tax Rate |
|
|
|
|
21.2 |
% |
|
24.3 |
% |
Tax Effect |
|
|
|
|
$ |
8,761 |
|
|
$ |
9,913 |
|
After Tax Annualized
Adjusted Operating Income |
|
|
|
|
$ |
32,564 |
|
|
$ |
30,883 |
|
Average Invested
Capital * |
|
|
|
|
$ |
319,484 |
|
|
$ |
289,966 |
|
ROIC |
|
|
|
|
10.2 |
% |
|
10.7 |
% |
|
|
|
|
|
|
|
|
|
|
* 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. SmithTreasurerTelephone 812.634.4000E-mail:
Investor.Relations@kimballelectronics.com
Kimball Electronics (NASDAQ:KE)
Historical Stock Chart
From Jul 2024 to Aug 2024
Kimball Electronics (NASDAQ:KE)
Historical Stock Chart
From Aug 2023 to Aug 2024