Kimball Electronics, Inc. Reports Second Quarter Fiscal Year 2021 Results
February 03 2021 - 4:05PM
Kimball Electronics, Inc. (Nasdaq: KE) today announced financial
results for the second quarter ended December 31, 2020.
|
Three Months Ended |
|
Six Months Ended |
|
December 31, |
|
December 31, |
(Amounts in Thousands, except
EPS) |
2020 |
|
2019 |
|
2020 |
|
2019 |
Net Sales |
$ |
320,604 |
|
|
$ |
307,084 |
|
|
$ |
652,353 |
|
|
$ |
620,469 |
|
Operating Income |
$ |
16,179 |
|
|
$ |
8,684 |
|
|
$ |
33,986 |
|
|
$ |
19,799 |
|
Adjusted Operating Income
(non-GAAP) (1)(2) |
$ |
16,990 |
|
|
$ |
9,186 |
|
|
$ |
35,006 |
|
|
$ |
20,279 |
|
Operating Income % |
5.0 |
% |
|
2.8 |
% |
|
5.2 |
% |
|
3.2 |
% |
Adjusted Operating Income
(non-GAAP) % |
5.3 |
% |
|
3.0 |
% |
|
5.4 |
% |
|
3.3 |
% |
Net Income |
$ |
15,062 |
|
|
$ |
6,612 |
|
|
$ |
31,873 |
|
|
$ |
13,210 |
|
Adjusted Net Income (non-GAAP)
(1) |
$ |
15,195 |
|
|
$ |
6,612 |
|
|
$ |
31,747 |
|
|
$ |
13,210 |
|
Diluted EPS |
$ |
0.60 |
|
|
$ |
0.26 |
|
|
$ |
1.26 |
|
|
$ |
0.52 |
|
Adjusted Diluted EPS
(non-GAAP) (1) |
$ |
0.60 |
|
|
$ |
0.26 |
|
|
$ |
1.25 |
|
|
$ |
0.52 |
|
(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 our operating results for the second
quarter of fiscal year 2021. Our team remains resilient, and I am
so proud of our collective response to the adversity that we have
faced during this pandemic. We again exceeded our goal of 4.5%
operating income and continued to deliver excellent cash flow from
operations.”
Mr. Charron continued, “Our strong results were primarily driven
by improved operating execution, favorable product mix, and a
weaker dollar. Looking ahead, we expect that our performance should
approximate our long-stated goal of 4.5% operating income. The
persistence of the pandemic continues to draw our attention, and
it’s difficult to predict what we will face in the future. However,
we are confident that our business will remain strong, and we are
optimistic about our new business opportunities funnel. We remain
committed to our goal of 8% organic growth and believe the goal is
well within our reach for fiscal year 2021.”
Second Quarter Fiscal Year 2021 Overview:
- Consolidated net sales increased 4% compared to the second
quarter of fiscal year 2020. Foreign currency had a favorable 3%
impact on net sales in the current quarter compared to the same
period a year ago.
- Operating activities provided cash of $51.6 million during the
quarter, which compares to cash used by operating activities of
$0.3 million in the second quarter of fiscal year 2020.
- Cash conversion days (“CCD”) for the quarter ended
December 31, 2020 were 75 days, down from 76 days both in the
first quarter of fiscal year 2021 and the quarter ended December
31, 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 $6.1 million during
the quarter.
- $3.0 million was returned to Share Owners during the quarter in
the form of common stock repurchases.
- Cash and cash equivalents were $93.6 million and borrowings
outstanding on credit facilities were $86.1 million at December 31,
2020, including $61.0 million classified as long term.
Net Sales by Vertical Market:
|
Three Months Ended |
|
|
|
December 31, |
|
|
(Amounts in Millions) |
2020 |
|
2019 |
|
Percent Change |
Automotive |
$ |
151.9 |
|
|
$ |
134.9 |
|
|
13 |
% |
Medical |
87.1 |
|
|
85.7 |
|
|
2 |
% |
Industrial |
67.7 |
|
|
66.4 |
|
|
2 |
% |
Public Safety |
10.5 |
|
|
14.6 |
|
|
(28 |
)% |
Other |
3.4 |
|
|
5.5 |
|
|
(38 |
)% |
Total Net Sales |
$ |
320.6 |
|
|
$ |
307.1 |
|
|
4 |
% |
Forward-Looking StatementsCertain statements
contained within this release are considered forward-looking under
the Private Securities Litigation Reform Act of 1995. The
statements may be identified by the use of words such as “expect,”
“should,” “goal,” “predict,” “will,” “future,” “optimistic,”
“confident,” and “believe.” These forward-looking statements are
subject to risks and uncertainties including, without limitation,
global economic conditions, geopolitical environment, global health
emergencies including the COVID-19 pandemic, availability or cost
of raw materials and components, foreign exchange rate
fluctuations, and our ability to convert new business opportunities
into customers and revenue. 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 and six months ended
December 31, 2020 for settlement charges after the measurement
period on the GES acquisition, and for the six months ended
December 31, 2020, 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
the settlement charges after the measurement period on the GES
acquisition, 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: |
|
February 4, 2021 |
Time: |
|
10:00 AM Eastern Time |
Live Webcast: |
|
investors.kimballelectronics.com/events-presentations |
Dial-In #: |
|
800-992-4934 (International
Calls - 937-502-2251) |
Conference ID: |
|
7896947 |
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 second quarter and year-to-date
period ended December 31, 2020 are as follows:
Condensed
Consolidated Statements of Income |
|
|
|
|
|
|
(Unaudited) |
Three Months Ended |
(Amounts in Thousands, except
Per Share Data) |
December 31, 2020 |
|
December 31, 2019 |
Net Sales |
$ |
320,604 |
|
|
100.0 |
% |
|
$ |
307,084 |
|
|
100.0 |
% |
Cost of Sales |
290,939 |
|
|
90.7 |
% |
|
286,573 |
|
|
93.3 |
% |
Gross Profit |
29,665 |
|
|
9.3 |
% |
|
20,511 |
|
|
6.7 |
% |
Selling and Administrative
Expenses |
13,486 |
|
|
4.3 |
% |
|
11,827 |
|
|
3.9 |
% |
Operating Income |
16,179 |
|
|
5.0 |
% |
|
8,684 |
|
|
2.8 |
% |
Other Income (Expense),
net |
2,411 |
|
|
0.8 |
% |
|
143 |
|
|
0.1 |
% |
Income Before Taxes on
Income |
18,590 |
|
|
5.8 |
% |
|
8,827 |
|
|
2.9 |
% |
Provision for Income
Taxes |
3,528 |
|
|
1.1 |
% |
|
2,215 |
|
|
0.7 |
% |
Net Income |
$ |
15,062 |
|
|
4.7 |
% |
|
$ |
6,612 |
|
|
2.2 |
% |
|
|
|
|
|
|
|
|
Earnings Per Share of Common
Stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.60 |
|
|
|
|
$ |
0.26 |
|
|
|
Diluted |
$ |
0.60 |
|
|
|
|
$ |
0.26 |
|
|
|
|
|
|
|
|
|
|
|
Average Number of Shares
Outstanding: |
|
|
|
|
|
|
|
Basic |
25,101 |
|
|
|
|
25,247 |
|
|
|
Diluted |
25,171 |
|
|
|
|
25,330 |
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Six Months Ended |
(Amounts in Thousands, except
Per Share Data) |
December 31, 2020 |
|
December 31, 2019 |
Net Sales |
$ |
652,353 |
|
|
100.0 |
% |
|
$ |
620,469 |
|
|
100.0 |
% |
Cost of Sales |
592,105 |
|
|
90.8 |
% |
|
577,765 |
|
|
93.1 |
% |
Gross Profit |
60,248 |
|
|
9.2 |
% |
|
42,704 |
|
|
6.9 |
% |
Selling and Administrative
Expenses |
26,603 |
|
|
4.1 |
% |
|
22,905 |
|
|
3.7 |
% |
Other General Income |
(341 |
) |
|
(0.1 |
)% |
|
— |
|
|
— |
% |
Operating Income |
33,986 |
|
|
5.2 |
% |
|
19,799 |
|
|
3.2 |
% |
Other Income (Expense),
net |
4,546 |
|
|
0.7 |
% |
|
(2,259 |
) |
|
(0.4 |
)% |
Income Before Taxes on
Income |
38,532 |
|
|
5.9 |
% |
|
17,540 |
|
|
2.8 |
% |
Provision for Income
Taxes |
6,659 |
|
|
1.0 |
% |
|
4,330 |
|
|
0.7 |
% |
Net Income |
$ |
31,873 |
|
|
4.9 |
% |
|
$ |
13,210 |
|
|
2.1 |
% |
|
|
|
|
|
|
|
|
Earnings Per Share of Common
Stock: |
|
|
|
|
|
|
|
Basic |
$ |
1.27 |
|
|
|
|
$ |
0.52 |
|
|
|
Diluted |
$ |
1.26 |
|
|
|
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
|
|
Average Number of Shares
Outstanding: |
|
|
|
|
|
|
|
Basic |
25,127 |
|
|
|
|
25,371 |
|
|
|
Diluted |
25,265 |
|
|
|
|
25,503 |
|
|
|
Condensed Consolidated
Statements of Cash Flows |
Six Months Ended |
(Unaudited) |
December 31, |
(Amounts in Thousands) |
2020 |
|
2019 |
Net Cash Flow provided by Operating Activities |
$ |
72,256 |
|
|
$ |
39,282 |
|
Net Cash Flow used for
Investing Activities |
(14,417 |
) |
|
(21,974 |
) |
Net Cash Flow used for
Financing Activities |
(33,433 |
) |
|
(13,903 |
) |
Effect of Exchange Rate Change
on Cash and Cash Equivalents |
4,222 |
|
|
(478 |
) |
Net Increase in Cash and Cash
Equivalents |
28,628 |
|
|
2,927 |
|
Cash and Cash Equivalents at
Beginning of Period |
64,990 |
|
|
49,276 |
|
Cash and Cash Equivalents at
End of Period |
$ |
93,618 |
|
|
$ |
52,203 |
|
|
(Unaudited) |
|
|
Condensed Consolidated
Balance Sheets |
December 31,2020 |
|
June 30,2020 |
(Amounts in Thousands) |
ASSETS |
|
|
|
Cash and cash equivalents |
$ |
93,618 |
|
|
$ |
64,990 |
|
Receivables, net |
209,054 |
|
|
180,133 |
|
Contract assets |
61,569 |
|
|
70,350 |
|
Inventories |
174,422 |
|
|
219,043 |
|
Prepaid expenses and other current assets |
25,791 |
|
|
23,891 |
|
Property and Equipment, net |
153,572 |
|
|
154,529 |
|
Goodwill |
12,011 |
|
|
12,011 |
|
Other Intangible Assets, net |
18,205 |
|
|
19,343 |
|
Other Assets |
37,606 |
|
|
30,539 |
|
Total Assets |
$ |
785,848 |
|
|
$ |
774,829 |
|
|
|
|
|
LIABILITIES AND SHARE
OWNERS’ EQUITY |
|
|
|
Current portion of borrowings under credit facilities |
$ |
25,083 |
|
|
$ |
26,638 |
|
Accounts payable |
199,382 |
|
|
203,703 |
|
Accrued expenses |
49,131 |
|
|
42,264 |
|
Long-term debt under credit facilities, less current portion |
61,000 |
|
|
91,500 |
|
Long-term income taxes payable |
8,854 |
|
|
9,765 |
|
Other |
22,760 |
|
|
21,594 |
|
Share Owners’ Equity |
419,638 |
|
|
379,365 |
|
Total Liabilities and Share Owners’ Equity |
$ |
785,848 |
|
|
$ |
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 |
|
Six Months Ended |
|
December 31, |
|
December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Operating Income, as reported |
$ |
16,179 |
|
|
$ |
8,684 |
|
|
$ |
33,986 |
|
|
$ |
19,799 |
|
Add: SERP (1) |
811 |
|
|
502 |
|
|
1,361 |
|
|
480 |
|
Less: Pre-tax Settlement
Proceeds from Lawsuit |
— |
|
|
— |
|
|
341 |
|
|
— |
|
Adjusted Operating Income |
$ |
16,990 |
|
|
$ |
9,186 |
|
|
$ |
35,006 |
|
|
$ |
20,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income excluding Settlement Charges on GES Acquisition and Lawsuit
Proceeds |
|
Three Months Ended |
|
Six Months Ended |
|
December 31, |
|
December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net Income, as reported |
$ |
15,062 |
|
|
$ |
6,612 |
|
|
$ |
31,873 |
|
|
$ |
13,210 |
|
Add: After-Tax Settlement
Charges on GES Acquisition |
133 |
|
|
— |
|
|
133 |
|
|
— |
|
Less: After-tax Settlement
Proceeds from Lawsuit |
— |
|
|
— |
|
|
259 |
|
|
— |
|
Adjusted Net Income |
$ |
15,195 |
|
|
$ |
6,612 |
|
|
$ |
31,747 |
|
|
$ |
13,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
Earnings per Share excluding Settlement Charges on GES Acquisition
and Lawsuit Proceeds |
|
Three Months Ended |
|
Six Months Ended |
|
December 31, |
|
December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Diluted Earnings per Share, as
reported |
$ |
0.60 |
|
|
$ |
0.26 |
|
|
$ |
1.26 |
|
|
$ |
0.52 |
|
Add: After-Tax Settlement
Charges on GES Acquisition |
— |
|
|
— |
|
|
— |
|
|
— |
|
Less: Impact of Settlement
Proceeds from Lawsuit |
— |
|
|
— |
|
|
0.01 |
|
|
— |
|
Adjusted Diluted Earnings per
Share |
$ |
0.60 |
|
|
$ |
0.26 |
|
|
$ |
1.25 |
|
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
(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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