Kimball Electronics, Inc. Reports Results for Its Fourth Quarter and Fiscal Year 2019
July 31 2019 - 4:05PM
Kimball Electronics, Inc. (NASDAQ: KE) today announced financial
results for its fourth quarter and fiscal year ended June 30,
2019.
| |
Three Months Ended |
|
Fiscal Year Ended |
| |
June 30, |
|
June 30, |
| (Amounts in Thousands, except
EPS) |
2019 (1) |
|
2018 |
|
2019 (1) |
|
2018 |
|
Net Sales |
$ |
318,621 |
|
|
$ |
276,768 |
|
|
$ |
1,181,844 |
|
|
$ |
1,072,061 |
|
| Operating Income (2) |
$ |
10,319 |
|
|
$ |
11,266 |
|
|
$ |
42,060 |
|
|
$ |
42,038 |
|
| Adjusted Operating Income
(non-GAAP) (2) (3) |
$ |
10,104 |
|
|
$ |
11,266 |
|
|
$ |
41,753 |
|
|
$ |
42,038 |
|
| Operating Income % |
3.2 |
% |
|
4.1 |
% |
|
3.6 |
% |
|
3.9 |
% |
| Adjusted Operating Income
(non-GAAP) % |
3.2 |
% |
|
4.1 |
% |
|
3.5 |
% |
|
3.9 |
% |
| Net Income |
$ |
7,525 |
|
|
$ |
5,784 |
|
|
$ |
31,558 |
|
|
$ |
16,752 |
|
| Adjusted Net Income (non-GAAP)
(3) |
$ |
7,362 |
|
|
$ |
7,193 |
|
|
$ |
31,074 |
|
|
$ |
34,611 |
|
| Diluted EPS |
$ |
0.29 |
|
|
$ |
0.22 |
|
|
$ |
1.21 |
|
|
$ |
0.62 |
|
| Adjusted Diluted EPS
(non-GAAP) (3) |
$ |
0.29 |
|
|
$ |
0.27 |
|
|
$ |
1.19 |
|
|
$ |
1.28 |
|
(1) As of the beginning of fiscal year 2019, the Company
adopted the new accounting standard on Revenue from Contracts with
Customers on a modified retrospective basis. The impact of the
adoption was not material to the results of operations for the
three months ended June 30, 2019. For the fiscal year ended
June 30, 2019, the adoption increased Net Sales $8.7 million,
increased Net Income $0.8 million, and Diluted EPS increased
$0.03. The prior periods were not restated.(2) Prior
period amounts have been restated to reflect the retrospective
adoption of new accounting guidance on improving the presentation
of net periodic pension cost and net periodic postretirement
benefit cost.(3) A reconciliation of GAAP and non-GAAP
financial measures is included below.
Donald D. Charron, Chairman and Chief Executive Officer, stated,
“Fiscal year 2019 was another record-breaking year for our company
as we reached a new high in net sales and achieved double-digit
sales growth for the fourth time in the past five years.”
Mr. Charron continued, “We are extremely pleased with the
success that we have had with the organic growth of our business,
even while experiencing softness in select markets. We
recognize that there is still work to do to achieve our
profitability goals. As new programs ramp up to projected run
rates and we drive improvements in the GES operations, we expect to
realize the leverage from our sales growth. With the
dedication and commitment of our associates around the world, we
will continue our relentless pursuit to create greater value for
our Share Owners.”
Fourth Quarter Fiscal Year 2019 Overview:
- Consolidated net sales set a new quarterly record while
increasing 15% compared to the fourth quarter of fiscal year
2018. The GES acquisition added 2% to net sales during the
quarter while unfavorable foreign currency movements decreased net
sales by approximately 3% compared to the prior year fourth
quarter.
- Operating activities provided cash of $12.2 million during the
quarter, which compares to cash provided by operating activities of
$19.3 million in the fourth quarter of fiscal year 2018.
- Cash conversion days (“CCD”) for the quarter ended
June 30, 2019 were 77 days, up from 63 days in the same
quarter last year largely related to an increase in raw material
inventories to maintain appropriate buffer stock levels in the
tight supply environment. CCD is calculated as the sum of
days sales outstanding plus contract asset days plus production
days supply on hand less accounts payable days.
- Investments in capital expenditures were $9.8 million during
the quarter.
- Cash and cash equivalents were $49.3 million and borrowings
outstanding on credit facilities were $126.2 million at
June 30, 2019, including $91.5 million classified as
long-term.
Net Sales by Vertical Market:
| |
Three Months Ended |
|
|
| |
June 30, |
|
|
| (Amounts in Millions) |
2019 |
|
2018 |
|
PercentChange |
|
Automotive |
$ |
128.7 |
|
|
$ |
114.7 |
|
|
12 |
% |
| Medical |
100.5 |
|
|
86.4 |
|
|
16 |
% |
| Industrial |
68.3 |
|
|
57.0 |
|
|
20 |
% |
| Public Safety |
16.1 |
|
|
15.9 |
|
|
1 |
% |
| Other |
5.0 |
|
|
2.8 |
|
|
83 |
% |
|
Total Net Sales |
$ |
318.6 |
|
|
$ |
276.8 |
|
|
15 |
% |
Fiscal Year 2019 Overview:
- Net sales increased 10% from the prior fiscal year, setting a
new annual net sales record of $1.18 billion.
- Cash flow used by operating activities for fiscal year 2019 was
$6.7 million.
- Investments in capital expenditures were $25.8 million and cash
paid, net of cash acquired, for the GES acquisition was $43.9
million during fiscal year 2019.
- Return on invested capital (“ROIC”) was 8.7% for fiscal year
2019, down from 10.1% for the prior fiscal year (see reconciliation
of non-GAAP financial measures for ROIC calculation).
- During the year, $23.4 million was returned to Share Owners in
the form of common stock repurchases.
Financial Goals
- Net sales goal remains 8% annual organic growth rate.
- Operating income percent goal remains 4.5%.
- ROIC long-term goal remains 12.5%.
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, ramp up of 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, impact related to
tariffs and other trade barriers, 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,
2018.
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 share owners’ 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 fiscal year
ended June 30, 2019 and in the three months and fiscal year
ended June 30, 2018 related to adjustments to the provision
for income taxes resulting from the U.S. Tax Cuts and Jobs Act
(“Tax Reform”), and for the three months and fiscal year ended
June 30, 2019, for proceeds from lawsuit settlements.
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 provisional tax adjustments resulting from Tax Reform and
proceeds from the lawsuit settlements. 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 excludes these items to
enable meaningful trending of core operating metrics.
| Conference
Call / Webcast |
|
|
|
|
|
| Date: |
|
August 1, 2019 |
|
| Time: |
|
10:00 AM Eastern Time |
|
| Dial-In #: |
|
800-992-4934 (International
Calls - 937-502-2251) |
|
| Conference ID: |
|
8487695 |
|
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.Kimball
Electronics is a multifaceted manufacturing solutions provider of
electronics and diversified contract manufacturing services to
customers around the world. From our operations in the United
States, China, India, Japan, Mexico, Poland, Romania, Thailand, and
Vietnam, our teams are proud to provide manufacturing services for
a variety of industries. Recognized for a reputation of
excellence, we are committed to a high-performance culture that
values personal and organizational commitment to quality,
reliability, value, speed, and ethical behavior. Kimball
Electronics, Inc. (NASDAQ: KE) 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, 2019 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Condensed
Consolidated Statements of Income |
|
|
|
|
|
|
| (Unaudited) |
Three Months Ended |
| (Amounts in Thousands, except
Per Share Data) |
June 30, 2019 (1) |
|
June 30, 2018 |
| Net Sales |
$ |
318,621 |
|
|
100.0 |
% |
|
$ |
276,768 |
|
|
100.0 |
% |
| Cost of Sales (2) |
295,399 |
|
|
92.7 |
% |
|
253,993 |
|
|
91.8 |
% |
| Gross Profit (2) |
23,222 |
|
|
7.3 |
% |
|
22,775 |
|
|
8.2 |
% |
| Selling and Administrative
Expenses (2) |
13,118 |
|
|
4.2 |
% |
|
11,509 |
|
|
4.1 |
% |
| Other General Income |
(215 |
) |
|
(0.1 |
)% |
|
— |
|
|
— |
% |
| Operating Income (2) |
10,319 |
|
|
3.2 |
% |
|
11,266 |
|
|
4.1 |
% |
| Other Income (Expense), net
(2) |
(1,605 |
) |
|
(0.5 |
)% |
|
(1,041 |
) |
|
(0.4 |
)% |
| Income Before Taxes on
Income |
8,714 |
|
|
2.7 |
% |
|
10,225 |
|
|
3.7 |
% |
| Provision for Income
Taxes |
1,189 |
|
|
0.3 |
% |
|
4,441 |
|
|
1.6 |
% |
| Net Income |
$ |
7,525 |
|
|
2.4 |
% |
|
$ |
5,784 |
|
|
2.1 |
% |
| |
|
|
|
|
|
|
|
| Earnings Per Share of Common
Stock: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.30 |
|
|
|
|
$ |
0.22 |
|
|
|
|
Diluted |
$ |
0.29 |
|
|
|
|
$ |
0.22 |
|
|
|
| |
|
|
|
|
|
|
|
| Average Number of Shares
Outstanding: |
|
|
|
|
|
|
|
|
Basic |
25,450 |
|
|
|
|
26,642 |
|
|
|
|
Diluted |
25,622 |
|
|
|
|
26,851 |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| (Unaudited) |
Fiscal Year Ended |
| (Amounts in Thousands, except
Per Share Data) |
June 30, 2019 (1) |
|
June 30, 2018 |
| Net Sales |
$ |
1,181,844 |
|
|
100.0 |
% |
|
$ |
1,072,061 |
|
|
100.0 |
% |
| Cost of Sales (2) |
1,093,438 |
|
|
92.5 |
% |
|
986,031 |
|
|
92.0 |
% |
| Gross Profit (2) |
88,406 |
|
|
7.5 |
% |
|
86,030 |
|
|
8.0 |
% |
| Selling and Administrative
Expenses (2) |
46,653 |
|
|
3.9 |
% |
|
43,992 |
|
|
4.1 |
% |
| Other General Income |
(307 |
) |
|
— |
% |
|
— |
|
|
— |
% |
| Operating Income (2) |
42,060 |
|
|
3.6 |
% |
|
42,038 |
|
|
3.9 |
% |
| Other Income (Expense), net
(2) |
(3,575 |
) |
|
(0.3 |
)% |
|
2,737 |
|
|
0.3 |
% |
| Income Before Taxes on
Income |
38,485 |
|
|
3.3 |
% |
|
44,775 |
|
|
4.2 |
% |
| Provision for Income
Taxes |
6,927 |
|
|
0.6 |
% |
|
28,023 |
|
|
2.6 |
% |
| Net Income |
$ |
31,558 |
|
|
2.7 |
% |
|
$ |
16,752 |
|
|
1.6 |
% |
| |
|
|
|
|
|
|
|
| Earnings Per Share of Common
Stock: |
|
|
|
|
|
|
|
|
Basic |
$ |
1.22 |
|
|
|
|
$ |
0.63 |
|
|
|
|
Diluted |
$ |
1.21 |
|
|
|
|
$ |
0.62 |
|
|
|
| |
|
|
|
|
|
|
|
| Average Number of Shares
Outstanding: |
|
|
|
|
|
|
|
|
Basic |
25,857 |
|
|
|
|
26,745 |
|
|
|
|
Diluted |
26,082 |
|
|
|
|
27,007 |
|
|
|
| |
| (1) As of
July 1, 2018, the Company adopted the new accounting standard on
Revenue from Contracts with Customers on a modified retrospective
basis. The impact of the adoption was not material to the
results of operations for the three months ended June 30,
2019. For the fiscal year ended June 30, 2019, the adoption
increased Net Sales $8.7 million, increased Net Income $0.8
million, and Diluted EPS increased $0.03. The prior periods
were not restated. |
| (2) The
Condensed Consolidated Statements of Income for the three months
and fiscal year ended June 30, 2018 have been retrospectively
restated for the adoption of new accounting guidance on improving
the presentation of net periodic pension cost and net periodic
postretirement benefit cost. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Condensed Consolidated
Statements of Cash Flows |
Fiscal Year Ended |
| (Unaudited) |
June 30, |
| (Amounts in Thousands) |
2019 |
|
2018 |
|
Net Cash Flow (used for) provided by Operating Activities |
$ |
(6,748 |
) |
|
$ |
40,200 |
|
| Net Cash Flow used for
Investing Activities |
(68,709 |
) |
|
(26,214 |
) |
| Net Cash Flow provided by
(used for) Financing Activities |
79,430 |
|
|
(12,603 |
) |
| Effect of Exchange Rate Change
on Cash and Cash Equivalents |
(1,125 |
) |
|
490 |
|
| Net Increase in Cash and Cash
Equivalents |
2,848 |
|
|
1,873 |
|
| Cash and Cash Equivalents at
Beginning of Period |
46,428 |
|
|
44,555 |
|
| Cash and Cash Equivalents at
End of Period |
$ |
49,276 |
|
|
$ |
46,428 |
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
(Unaudited) |
|
|
| Condensed Consolidated
Balance Sheets |
June 30, |
|
June 30, |
| (Amounts in Thousands) |
2019 |
2018 |
| ASSETS |
|
|
|
|
Cash and cash equivalents |
$ |
49,276 |
|
|
$ |
46,428 |
|
|
Receivables, net |
225,555 |
|
|
173,559 |
|
|
Contract assets (1) |
51,929 |
|
|
— |
|
|
Inventories (1) |
203,840 |
|
|
201,596 |
|
|
Prepaid expenses and other current assets |
24,713 |
|
|
15,405 |
|
|
Property and Equipment, net |
143,629 |
|
|
137,210 |
|
|
Goodwill |
16,104 |
|
|
6,191 |
|
|
Other Intangible Assets, net |
22,188 |
|
|
4,375 |
|
|
Other Assets (1) |
24,877 |
|
|
23,994 |
|
|
Total Assets |
$ |
762,111 |
|
|
$ |
608,758 |
|
| |
|
|
|
| LIABILITIES AND SHARE
OWNERS’ EQUITY |
|
|
|
|
Current portion of borrowings under credit facilities |
$ |
34,713 |
|
|
$ |
8,337 |
|
|
Accounts payable |
197,001 |
|
|
187,788 |
|
|
Accrued expenses (1) |
43,196 |
|
|
32,446 |
|
|
Long-term debt under credit facilities, less current portion |
91,500 |
|
|
— |
|
|
Long-term income taxes payable |
9,765 |
|
|
12,361 |
|
|
Other |
16,082 |
|
|
12,299 |
|
|
Share Owners’ Equity (1) |
369,854 |
|
|
355,527 |
|
|
Total Liabilities and Share Owners’ Equity |
$ |
762,111 |
|
|
$ |
608,758 |
|
| |
|
|
|
|
|
|
|
| (1) The Company
adopted new accounting guidance for the recognition of revenue from
contracts with customers on a modified retrospective basis as of
July 1, 2018. As a result of the adoption of this new
guidance, on July 1, 2018, the Company recognized Contract assets
of $43.2 million, reduced Inventories by $39.2 million, reduced
Other Assets by $0.9 million, increased Accrued expenses by $0.2
million, and increased retained earnings in Share Owners’ Equity by
$3.1 million. |
|
Reconciliation of Non-GAAP Financial Measures |
|
|
|
|
|
|
| (Unaudited) |
|
|
|
|
|
|
|
| (Amounts in Thousands, except
Per Share Data) |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Operating
Income excluding Lawsuit Proceeds |
| |
Three Months Ended |
|
Fiscal Year Ended |
| |
June 30, |
|
June 30, |
| |
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Operating Income, as reported (1) |
$ |
10,319 |
|
|
$ |
11,266 |
|
|
$ |
42,060 |
|
|
$ |
42,038 |
|
| Less: Pre-tax Settlement
Proceeds from Lawsuits |
215 |
|
|
— |
|
|
307 |
|
|
— |
|
| Adjusted Operating Income
(1) |
$ |
10,104 |
|
|
$ |
11,266 |
|
|
$ |
41,753 |
|
|
$ |
42,038 |
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Net
Income excluding Tax Reform and Lawsuit Proceeds |
| |
Three Months Ended |
|
Fiscal Year Ended |
| |
June 30, |
|
June 30, |
| |
2019 |
|
2018 |
|
2019 |
|
2018 |
| Net Income, as reported |
$ |
7,525 |
|
|
$ |
5,784 |
|
|
$ |
31,558 |
|
|
$ |
16,752 |
|
| Add: Adjustments to Provision
for Income Taxes from Tax Reform during measurement period |
— |
|
|
1,409 |
|
|
(251 |
) |
|
17,859 |
|
| Less: After-tax Settlement
Proceeds from Lawsuits |
163 |
|
|
— |
|
|
233 |
|
|
— |
|
| Adjusted Net Income |
$ |
7,362 |
|
|
$ |
7,193 |
|
|
$ |
31,074 |
|
|
$ |
34,611 |
|
| |
|
|
|
|
|
|
|
| Diluted
Earnings per Share excluding Tax Reform and Lawsuit
Proceeds |
| |
Three Months Ended |
|
Fiscal Year Ended |
| |
June 30, |
|
June 30, |
| |
2019 |
|
2018 |
|
2019 |
|
2018 |
| Diluted Earnings per Share, as
reported |
$ |
0.29 |
|
|
$ |
0.22 |
|
|
$ |
1.21 |
|
|
$ |
0.62 |
|
| Add: Adjustments to Provision
for Income Taxes from Tax Reform during measurement period |
— |
|
|
0.05 |
|
|
(0.01 |
) |
|
0.66 |
|
| Less: Impact of Settlement
Proceeds from Lawsuits |
— |
|
|
— |
|
|
0.01 |
|
|
— |
|
| Adjusted Diluted Earnings per
Share |
$ |
0.29 |
|
|
$ |
0.27 |
|
|
$ |
1.19 |
|
|
$ |
1.28 |
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Return on Invested
Capital (ROIC) |
|
|
|
|
|
|
|
| |
|
|
Fiscal Year Ended |
| |
|
|
June 30, |
| |
|
|
|
|
2019 |
|
2018 |
| Operating Income (GAAP)
(1) |
|
|
|
|
$ |
42,060 |
|
|
$ |
42,038 |
|
| Less: Pre-tax Settlement
Proceeds from Lawsuits |
|
|
|
|
$ |
307 |
|
|
$ |
— |
|
| Adjusted Operating Income
(non-GAAP) (1) |
|
|
|
|
$ |
41,753 |
|
|
$ |
42,038 |
|
| Tax Effect (2) |
|
|
|
|
$ |
7,729 |
|
|
$ |
9,715 |
|
| After Tax Adjusted Operating
Income |
|
|
|
|
$ |
34,024 |
|
|
$ |
32,323 |
|
| Average Invested Capital
(3) |
|
|
|
|
$ |
390,528 |
|
|
$ |
319,074 |
|
| ROIC |
|
|
|
|
8.7 |
% |
|
10.1 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) Prior
period Operating Income has been retrospectively restated for the
adoption of new accounting guidance on improving the presentation
of net periodic pension cost and net periodic postretirement
benefit cost. |
| (2)
Accumulated tax effect utilizing the applicable quarterly effective
tax rates, excludes adjustments to provision for income taxes
related to the U.S. Tax Cuts and Jobs Act. |
| (3) Average
Invested Capital is computed using Share Owners’ equity plus
current and non-current debt less cash and cash equivalents
averaged for the last five quarters. |
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
