- Net sales in the third quarter of fiscal 2022 totaled $368.1
million, an all-time quarterly high and up 19% year-over-year.
- Operating income of $20.3 million or 5.5% of net sales, an 80
basis point improvement compared to the third quarter of fiscal
2021.
- Net income of $13.6 million, or $0.54 per diluted share, a 30%
improvement compared to $10.5 million, or $0.41 per diluted share
in Q3 last year.
Kimball Electronics, Inc. (Nasdaq: KE) today announced financial
results for the third quarter ended March 31, 2022.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20220505006007/en/
Three Months Ended
Nine Months Ended
March 31,
March 31,
(Amounts in Thousands, except EPS)
2022
2021
2022
2021
Net Sales
$
368,057
$
310,329
$
976,038
$
962,682
Operating Income
$
20,277
$
14,638
$
31,971
$
48,624
Adjusted Operating Income (non-GAAP)
(1)
$
19,558
$
14,426
$
30,183
$
49,432
Operating Income %
5.5
%
4.7
%
3.3
%
5.1
%
Adjusted Operating Income (non-GAAP) %
5.3
%
4.6
%
3.1
%
5.1
%
Net Income
$
13,638
$
10,472
$
21,315
$
42,345
Adjusted Net Income (non-GAAP) (1)
$
13,638
$
9,933
$
20,265
$
41,680
Diluted EPS
$
0.54
$
0.41
$
0.84
$
1.67
Adjusted Diluted EPS (non-GAAP) (1)
$
0.54
$
0.39
$
0.80
$
1.65
(1) A reconciliation of GAAP and non-GAAP
financial measures is included below.
Donald D. Charron, Chairman and Chief Executive Officer, stated,
“I am very pleased with the results in Q3. Sales exceeded our
all-time high in a quarter by 10%, operating margin was 5.5% of net
sales, which is significantly better than the first half of the
fiscal year and 80 basis points higher than a year ago, and diluted
EPS increased by more than 30% year-over-year. With our backlog of
open orders at record levels, and manufacturing facilities running
at higher utilization and expanding capacity, we are ideally
positioned to maintain strength and momentum in this bifurcated
year, and we expect a strong pace to carry through the fourth
quarter. I continue to be extremely impressed with our team, and
how we’ve managed the global supply chain issues stemming from the
pandemic and component parts shortages.”
Mr. Charron continued, “The challenges in Q3, however, were
compounded by the devastation in Ukraine. We have Ukrainian
associates in our U.S. and European operations, and facilities
located in nearby Poland and Romania. Our number one priority has
been the health and safety of our associates, and supporting their
families directly affected by the conflict. We are also closely
monitoring the impact of China’s zero tolerance policy related to
COVID-19. Several cities experienced shutdowns recently due to a
rise in COVID cases. If shutdowns continue to occur in major cities
across China, there may be temporary disruptions in both the supply
chain and demand as our customers balance manufacturing delays.
We’ve updated our guidance for net sales to reflect the uncertainty
from these developments; however, we are reiterating our guidance
for operating income margin for fiscal year 2022.”
Third Quarter Fiscal 2022 Overview
- Net sales increased 19% compared to the third quarter of fiscal
year 2021. Foreign currency had a 2% unfavorable impact on net
sales in the quarter compared to the same period a year ago.
- Cash flow used for operating activities of $28.2 million during
the third quarter of fiscal 2022, driven by an increase in accounts
receivable as a result of the strong sales in the quarter.
- Cash conversion days (“CCD”) for the quarter ended March 31,
2022 were 83 days, up from 66 days in the third quarter of fiscal
year 2021, driven by an increase in inventory. 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 $22.3 million during
the quarter.
- Returned $4.9 million to Share Owners during the quarter in the
form of common stock repurchases.
- Cash and cash equivalents of $35.6 million and borrowings
outstanding on credit facilities of $137.1 million at March 31,
2022, including $95.0 million classified as long term.
Net Sales by Vertical Market for Q3 Fiscal 2022:
Three Months Ended
March 31,
(Amounts in Millions)
2022
*
2021
*
Percent Change
Automotive
$
161.5
44
%
$
139.6
45
%
16
%
Medical
102.9
28
%
85.4
28
%
20
%
Industrial
84.4
23
%
69.2
22
%
22
%
Public Safety
13.8
4
%
13.5
4
%
2
%
Other
5.5
1
%
2.6
1
%
115
%
Total Net Sales
$
368.1
$
310.3
19
%
* As a percent of Total Net Sales
– Automotive includes electronic power
steering, body controls, automated driver assist systems, and
electronic braking systems
– Medical includes sleep therapy and
respiratory care, image guided therapy, in vitro diagnostics, drug
delivery, AED, and patient monitoring
– Industrial includes climate controls,
automation controls, optical inspection, and smart metering
– Public Safety includes thermal imaging,
first responder electronics, and security
Fiscal Year 2022 Guidance
The company is updating its guidance for fiscal year 2022 with
net sales estimated to be in the range of $1.345 - $1.365 billion,
a 4% - 6% increase year-over-year. The company’s previous guidance
for net sales was approximately $1.4 billion. The company is
reiterating its guidance for operating income margin, which is
expected to be in the range of 3.75% - 4.25%, and capital
expenditures, which are expected to be in the range of $70 - $80
million.
Mr. Charron continued, “We are very pleased with how the company
is positioned. Q3 results were excellent. While supply chain
disruptions from the pandemic continue to normalize and improve,
the recent wave of lockdowns in China add a level of
unpredictability that did not exist a few months ago. We expect the
fourth quarter to be robust with net sales in the range of $370 to
$390 million, and operating margin once again above 5%. Our record
level of open orders, and recent facility expansions, support our
growth objectives as we look toward the $2 billion annual revenue
milestone. Finally, our hearts and thoughts are with all people
both inside and outside the Kimball Electronics family impacted by
the tragic turn of events in Ukraine.”
Forward-Looking
Statements
Certain statements contained within this release are considered
forward-looking, including our fiscal year 2022 guidance, 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.” Undue reliance should not be placed on these
forward-looking statements. These statements are based on current
expectations of future events and thus are inherently subject to
uncertainty. If underlying assumptions prove inaccurate or known or
unknown risks or uncertainties materialize, actual results could
vary materially from our expectations and projections. These
forward-looking statements are subject to risks and uncertainties
including, without limitation, global economic conditions,
geopolitical environment and conflicts such as the war in Ukraine,
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, 2021.
Non-GAAP Financial
Measures
This press release contains non-GAAP financial measures. The
non-GAAP financial measures contained herein include adjusted
operating income, adjusted net income, adjusted diluted EPS, and
ROIC. 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
these measures are useful and allow investors to meaningfully
trend, analyze, and benchmark the performance of the company’s core
operations. The company’s non-GAAP financial measures are not
necessarily comparable to non-GAAP information used by other
companies.
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.
Conference Call /
Webcast
Date:
May 6, 2022
Time:
10:00 AM Eastern Time
Live Webcast:
investors.kimballelectronics.com/events-and-presentations/events
Dial-In #:
844-200-6205 (other locations -
929-526-1599)
Conference ID:
250193
For those unable to participate in the live webcast, the call
will be archived at investors.kimballelectronics.com.
Lasting relationships. Global
success.
Financial highlights for the third quarter and year-to-date
period ended March 31, 2022 are as follows:
Condensed Consolidated Statements of
Income
(Unaudited)
Three Months Ended
(Amounts in Thousands, except Per Share
Data)
March 31, 2022
March 31, 2021
Net Sales
$
368,057
100.0
%
$
310,329
100.0
%
Cost of Sales
334,113
90.8
%
284,323
91.6
%
Gross Profit
33,944
9.2
%
26,006
8.4
%
Selling and Administrative Expenses
13,667
3.7
%
11,744
3.8
%
Other General Expense (Income)
—
—
%
(376
)
(0.1
) %
Operating Income
20,277
5.5
%
14,638
4.7
%
Other Income (Expense), net
(2,103
)
(0.6
) %
(641
)
(0.2
) %
Income Before Taxes on Income
18,174
4.9
%
13,997
4.5
%
Provision for Income Taxes
4,536
1.2
%
3,525
1.1
%
Net Income
$
13,638
3.7
%
$
10,472
3.4
%
Earnings Per Share of Common Stock:
Basic
$
0.54
$
0.42
Diluted
$
0.54
$
0.41
Average Number of Shares Outstanding:
Basic
25,175
25,049
Diluted
25,272
25,217
(Unaudited)
Nine Months Ended
(Amounts in Thousands, except Per Share
Data)
March 31, 2022
March 31, 2021
Net Sales
$
976,038
100.0
%
$
962,682
100.0
%
Cost of Sales
905,657
92.8
%
876,428
91.0
%
Gross Profit
70,381
7.2
%
86,254
9.0
%
Selling and Administrative Expenses
39,794
4.0
%
38,347
4.0
%
Other General Expense (Income)
(1,384
)
(0.1
) %
(717
)
(0.1
) %
Operating Income
31,971
3.3
%
48,624
5.1
%
Other Income (Expense), net
(3,561
)
(0.4
) %
3,905
0.4
%
Income Before Taxes on Income
28,410
2.9
%
52,529
5.5
%
Provision for Income Taxes
7,095
0.7
%
10,184
1.1
%
Net Income
$
21,315
2.2
%
$
42,345
4.4
%
Earnings Per Share of Common Stock:
Basic
$
0.84
$
1.68
Diluted
$
0.84
$
1.67
Average Number of Shares Outstanding:
Basic
25,192
25,101
Diluted
25,291
25,288
Condensed Consolidated Statements of
Cash Flows
Nine Months Ended
(Unaudited)
March 31,
(Amounts in Thousands)
2022
2021
Net Cash Flow (used for) provided by
Operating Activities
$
(84,665
)
$
103,755
Net Cash Flow used for Investing
Activities
(50,023
)
(22,972
)
Net Cash Flow provided by (used for)
Financing Activities
64,856
(58,729
)
Effect of Exchange Rate Change on Cash and
Cash Equivalents
(1,007
)
2,607
Net (Decrease) Increase in Cash and Cash
Equivalents
(70,839
)
24,661
Cash and Cash Equivalents at Beginning of
Period
106,442
64,990
Cash and Cash Equivalents at End of
Period
$
35,603
$
89,651
(Unaudited)
Condensed Consolidated Balance
Sheets
March 31, 2022
June 30, 2021
(Amounts in Thousands)
ASSETS
Cash and cash equivalents
$
35,603
$
106,442
Receivables, net
224,216
203,382
Contract assets
63,761
45,863
Inventories
338,375
200,386
Prepaid expenses and other current
assets
31,302
27,320
Property and Equipment, net
191,370
163,251
Goodwill
12,011
12,011
Other Intangible Assets, net
15,117
17,008
Other Assets
41,665
38,398
Total Assets
$
953,420
$
814,061
LIABILITIES AND SHARE OWNERS’
EQUITY
Current portion of borrowings under credit
facilities
$
42,096
$
26,214
Accounts payable
275,799
216,544
Accrued expenses
58,733
58,016
Long-term debt under credit facilities,
less current portion
95,000
40,000
Long-term income taxes payable
7,812
8,854
Other
20,246
22,461
Share Owners’ Equity
453,734
441,972
Total Liabilities and Share Owners’
Equity
$
953,420
$
814,061
Reconciliation of Non-GAAP Financial
Measures
(Unaudited)
(Amounts in Thousands, except Per Share
Data)
Three Months Ended
Nine Months Ended
March 31,
March 31,
2022
2021
2022
2021
Operating Income, as reported
$
20,277
$
14,638
$
31,971
$
48,624
SERP
(719
)
164
(404
)
1,525
Legal Recovery
—
(376
)
(1,384
)
(717
)
Adjusted Operating Income
$
19,558
$
14,426
$
30,183
$
49,432
Net Income, as reported
$
13,638
$
10,472
$
21,315
$
42,345
Adjustments After Measurement Period on
GES Acquisition
—
(254
)
—
(121
)
Legal Recovery, After-Tax
—
(285
)
(1,050
)
(544
)
Adjusted Net Income
$
13,638
$
9,933
$
20,265
$
41,680
Diluted Earnings per Share, as
reported
$
0.54
$
0.41
$
0.84
$
1.67
Adjustments After Measurement Period on
GES Acquisition
—
(0.01
)
—
—
Legal Recovery
—
(0.01
)
(0.04
)
(0.02
)
Adjusted Diluted Earnings per Share
$
0.54
$
0.39
$
0.80
$
1.65
Twelve Months Ended
March 31,
2022
2021
Operating Income
$
49,050
$
50,233
Goodwill Impairment
—
7,925
SERP
144
2,807
Legal Recovery
(1,039
)
(717
)
Adjusted Operating Income (non-GAAP)
$
48,155
$
60,248
Tax Effect
10,774
11,786
After-tax Adjusted Operating Income
$
37,381
$
48,462
Average Invested Capital (1)
$
453,479
$
423,545
ROIC
8.2
%
11.4
%
(1) 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220505006007/en/
Andrew D. Regrut Vice President, Investor Relations 812.827.4151
Investor.Relations@kimballelectronics.com
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