Kimball Electronics, Inc. Reports First Quarter Fiscal Year 2021 Results
November 03 2020 - 4:05PM
Kimball Electronics, Inc. (Nasdaq: KE) today announced financial
results for the first quarter ended September 30, 2020.
|
Three Months Ended |
|
September 30, |
(Amounts in Thousands, except
EPS) |
2020 |
|
2019 |
Net Sales |
$ |
331,749 |
|
|
$ |
313,385 |
|
Operating Income |
$ |
17,807 |
|
|
$ |
11,115 |
|
Adjusted Operating Income
(non-GAAP) (1)(2) |
$ |
18,016 |
|
|
$ |
11,093 |
|
Operating Income % |
5.4 |
% |
|
3.5 |
% |
Adjusted Operating Income
(non-GAAP) % |
5.4 |
% |
|
3.5 |
% |
Net Income |
$ |
16,811 |
|
|
$ |
6,598 |
|
Adjusted Net Income (non-GAAP)
(1) |
$ |
16,552 |
|
|
$ |
6,598 |
|
Diluted EPS |
$ |
0.66 |
|
|
$ |
0.26 |
|
Adjusted Diluted EPS
(non-GAAP) (1) |
$ |
0.65 |
|
|
$ |
0.26 |
|
(1) A reconciliation of GAAP and non-GAAP financial
measures is included below.
(2) Beginning in the first quarter of fiscal year 2021,
adjusted operating income excludes changes in the fair value of our
supplemental employee retirement plan, or SERP, liability which are
exactly offset by the revaluation to fair value of the SERP
investments in Other Income (Expense), net, and as a result have no
impact on net income. Prior reported periods have been
revised accordingly.
Donald D. Charron, Chairman and Chief Executive Officer, stated,
“We are very pleased with the operating results we delivered in the
first quarter of fiscal year 2021. We set new quarterly
records for sales as well as operating income, net income, and
diluted EPS, while generating strong cash flow from operations for
the second consecutive quarter. Our sales in our medical
vertical increased 25% compared to the first quarter of fiscal year
2020 and were up 3% sequentially for a new quarterly record.
We expect the sales in our medical vertical to normalize and begin
to approximate pre-COVID-19 run rates during the second quarter of
fiscal year 2021. Sales in our automotive vertical continued
to gain momentum during the first quarter of fiscal year 2021
increasing 61% from the previous quarter and down just 5% from the
first quarter of fiscal year 2020. We expect the sales in our
automotive vertical will return to pre-COVID-19 levels in the
second quarter and steadily increase throughout fiscal year
2021.”
Mr. Charron continued, “Beyond our excellent financial results,
we never lost sight of the fact that the health and safety of our
employees remains our number one priority, and we continue to make
every effort to keep our facilities safe. The number of our
employees testing positive for COVID-19 has been kept at a low
level and disruptions have been kept to a minimum. Because of
the disciplined response and extraordinary effort of our people
around the world, we were able to perform our mission as an
“essential business” and support the significant increases from our
medical customers for their respiratory care and patient monitoring
products.”
First Quarter Fiscal Year 2021 Overview:
- Consolidated net sales increased 6% compared to the first
quarter of fiscal year 2020. Foreign currency had a favorable
1% impact on net sales in the current quarter compared to the same
period a year ago.
- Operating activities provided cash of $20.7 million during the
quarter, which compares to cash provided by operating activities of
$39.6 million in the first quarter of fiscal year 2020.
- Cash conversion days (“CCD”) for the quarter ended
September 30, 2020 were 76 days, down from 81 days in the
fourth quarter of fiscal year 2020 and up from 73 days for the
quarter ended September 30, 2019. 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 $8.5 million during
the quarter.
- Cash and cash equivalents were $73.4 million and borrowings
outstanding on credit facilities were $110.5 million at September
30, 2020, including $91.5 million classified as long term.
Net Sales by Vertical Market:
|
Three Months Ended |
|
|
|
September 30, |
|
|
(Amounts in Millions) |
2020 |
|
2019 |
|
PercentChange |
Automotive |
$ |
118.3 |
|
|
$ |
124.4 |
|
|
(5 |
)% |
Medical |
127.1 |
|
|
101.3 |
|
|
25 |
% |
Industrial |
70.0 |
|
|
64.7 |
|
|
8 |
% |
Public Safety |
13.3 |
|
|
17.1 |
|
|
(23 |
)% |
Other |
3.0 |
|
|
5.9 |
|
|
(49 |
)% |
Total Net Sales |
$ |
331.7 |
|
|
$ |
313.4 |
|
|
6 |
% |
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, global health
emergencies including the COVID-19 pandemic, 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, the ability of the supply
chain to react successfully to the significant increase in demand
for certain medical components, impact related to tariffs and other
trade barriers, and increased competitive pricing pressures.
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, 2020.
Non-GAAP Financial Measures This 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, and adjusted diluted
EPS. These measures include adjustments for the three months
ended September 30, 2020 for proceeds from lawsuit
settlements. For all periods presented, adjusted operating
income excludes changes in the fair value of our SERP
liability. Reconciliations of the reported GAAP numbers to
these non-GAAP financial measures are included in the
Reconciliation of Non-GAAP Financial Measures section below.
Management believes it is useful for investors to understand how
its core operations performed without the effects of proceeds from
lawsuit settlements and changes in the fair value of our SERP
liability. Excluding these amounts allows investors to
meaningfully trend, analyze, and benchmark the performance of the
Company’s core operations.
Conference
Call / Webcast |
|
|
|
Date: |
|
November 4, 2020 |
Time: |
|
10:00 AM Eastern Time |
Live Webcast: |
|
investors.kimballelectronics.com/events-and-presentations |
Dial-In #: |
|
800-992-4934 (International
Calls - 937-502-2251) |
Conference ID: |
|
7190817 |
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 first quarter ended
September 30, 2020 are as follows:
Condensed
Consolidated Statements of Income |
|
|
|
|
|
|
(Unaudited) |
Three Months Ended |
|
(Amounts in Thousands, except
Per Share Data) |
September 30, 2020 |
|
September 30, 2019 |
|
Net Sales |
$ |
331,749 |
|
|
100.0 |
% |
|
|
$ |
313,385 |
|
|
100.0 |
% |
|
|
Cost of Sales |
301,166 |
|
|
90.8 |
% |
|
|
291,192 |
|
|
92.9 |
% |
|
|
Gross Profit |
30,583 |
|
|
9.2 |
% |
|
|
22,193 |
|
|
7.1 |
% |
|
|
Selling and Administrative
Expenses |
13,117 |
|
|
3.9 |
% |
|
|
11,078 |
|
|
3.6 |
% |
|
|
Other General Income |
(341 |
) |
|
(0.1) |
% |
|
|
— |
|
|
— |
% |
|
|
Operating Income |
17,807 |
|
|
5.4 |
% |
|
|
11,115 |
|
|
3.5 |
% |
|
|
Other Income (Expense),
net |
2,135 |
|
|
0.6 |
% |
|
|
(2,402 |
) |
|
(0.7) |
% |
|
|
Income Before Taxes on
Income |
19,942 |
|
|
6.0 |
% |
|
|
8,713 |
|
|
2.8 |
% |
|
|
Provision for Income
Taxes |
3,131 |
|
|
0.9 |
% |
|
|
2,115 |
|
|
0.7 |
% |
|
|
Net Income |
$ |
16,811 |
|
|
5.1 |
% |
|
|
$ |
6,598 |
|
|
2.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share of Common
Stock: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.67 |
|
|
|
|
$ |
0.26 |
|
|
|
|
Diluted |
$ |
0.66 |
|
|
|
|
$ |
0.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Number of Shares
Outstanding: |
|
|
|
|
|
|
|
|
Basic |
25,153 |
|
|
|
|
25,495 |
|
|
|
|
Diluted |
25,270 |
|
|
|
|
25,609 |
|
|
|
|
Condensed Consolidated
Statements of Cash Flows |
Three Months Ended |
(Unaudited) |
September 30, |
(Amounts in Thousands) |
2020 |
|
2019 |
Net Cash Flow provided by Operating Activities |
$ |
20,701 |
|
|
$ |
39,619 |
|
Net Cash Flow used for
Investing Activities |
(8,322 |
) |
|
(11,725 |
) |
Net Cash Flow used for
Financing Activities |
(5,787 |
) |
|
(20,588 |
) |
Effect of Exchange Rate Change
on Cash and Cash Equivalents |
1,793 |
|
|
(1,231 |
) |
Net Increase in Cash and Cash
Equivalents |
8,385 |
|
|
6,075 |
|
Cash and Cash Equivalents at
Beginning of Period |
64,990 |
|
|
49,276 |
|
Cash and Cash Equivalents at
End of Period |
$ |
73,375 |
|
|
$ |
55,351 |
|
|
(Unaudited) |
|
|
Condensed Consolidated
Balance Sheets |
September 30, 2020 |
|
June 30, 2020 |
(Amounts in Thousands) |
ASSETS |
|
|
|
Cash and
cash equivalents |
$ |
73,375 |
|
|
$ |
64,990 |
|
Receivables, net |
190,794 |
|
|
180,133 |
|
Contract
assets |
70,188 |
|
|
70,350 |
|
Inventories |
201,475 |
|
|
219,043 |
|
Prepaid
expenses and other current assets |
24,404 |
|
|
23,891 |
|
Property
and Equipment, net |
153,578 |
|
|
154,529 |
|
Goodwill |
12,011 |
|
|
12,011 |
|
Other
Intangible Assets, net |
18,943 |
|
|
19,343 |
|
Other
Assets |
35,606 |
|
|
30,539 |
|
Total Assets |
$ |
780,374 |
|
|
$ |
774,829 |
|
|
|
|
|
LIABILITIES AND SHARE
OWNERS’ EQUITY |
|
|
|
Current
portion of borrowings under credit facilities |
$ |
18,963 |
|
|
$ |
26,638 |
|
Accounts
payable |
190,461 |
|
|
203,703 |
|
Accrued
expenses |
47,841 |
|
|
42,264 |
|
Long-term
debt under credit facilities, less current portion |
91,500 |
|
|
91,500 |
|
Long-term
income taxes payable |
8,854 |
|
|
9,765 |
|
Other |
22,043 |
|
|
21,594 |
|
Share
Owners’ Equity |
400,712 |
|
|
379,365 |
|
Total Liabilities and
Share Owners’ Equity |
$ |
780,374 |
|
|
$ |
774,829 |
|
Reconciliation of Non-GAAP Financial Measures |
|
|
(Unaudited) |
|
|
|
(Amounts in Thousands, except
Per Share Data) |
|
|
|
|
|
|
|
Operating
Income excluding SERP and Lawsuit Proceeds |
|
Three Months Ended |
|
September 30, |
|
2020 |
|
2019 |
Operating Income, as reported |
$ |
17,807 |
|
|
$ |
11,115 |
|
Add: SERP (1) |
550 |
|
|
(22 |
) |
Less: Pre-tax Settlement
Proceeds from Lawsuit |
341 |
|
|
— |
|
Adjusted Operating Income |
$ |
18,016 |
|
|
$ |
11,093 |
|
|
|
|
|
|
|
|
|
Net Income
excluding Lawsuit Proceeds |
|
Three Months Ended |
|
September 30, |
|
2020 |
|
2019 |
Net Income, as reported |
$ |
16,811 |
|
|
$ |
6,598 |
|
Less: After-tax Settlement
Proceeds from Lawsuit |
259 |
|
|
— |
|
Adjusted Net Income |
$ |
16,552 |
|
|
$ |
6,598 |
|
|
|
|
|
|
|
|
|
Diluted
Earnings per Share excluding Lawsuit Proceeds |
|
Three Months Ended |
|
September 30, |
|
2020 |
|
2019 |
Diluted Earnings per Share, as
reported |
$ |
0.66 |
|
|
$ |
0.26 |
|
Less: Impact of Settlement
Proceeds from Lawsuit |
0.01 |
|
|
— |
|
Adjusted Diluted Earnings per
Share |
$ |
0.65 |
|
|
$ |
0.26 |
|
|
|
|
|
(1) Beginning in the first quarter of fiscal year 2021,
adjusted operating income excludes changes in the fair value of our
supplemental employee retirement plan, or SERP, liability which are
exactly offset by the revaluation of the fair value of the SERP
investments in Other Income (Expense), net, and as a result have no
impact on net income. Prior reported periods have been
revised accordingly.
CONTACT:Adam W. SmithTreasurerTelephone:
812.634.4000E-mail: Investor.Relations@kimballelectronics.com
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