- Net sales in the second quarter of fiscal 2023 totaled $436.7
million, an all-time quarterly high and up 39% year-over-year;
foreign currency had a 5% unfavorable impact on net sales compared
to the second quarter of fiscal 2022
- Operating income of $17.5 million, or 4.0% of net sales,
compared to operating income of $6.9 million, or 2.2% of net sales
in the same period last year
- Net income of $10.7 million, or $0.43 per diluted share,
compared to net income of $5.1 million, or $0.20 per diluted share,
in the second quarter of fiscal 2022
Kimball Electronics, Inc. (Nasdaq: KE) today announced financial
results for the second quarter ended December 31, 2022.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20230206005480/en/
Three Months Ended
Six Months Ended
December 31,
December 31,
(Amounts in Thousands, except EPS)
2022
2021
2022
2021
Net Sales
$
436,696
$
315,264
$
842,585
$
607,981
Operating Income
$
17,489
$
6,914
$
31,060
$
11,694
Adjusted Operating Income (non-GAAP)
(1)
$
17,829
$
7,316
$
31,165
$
10,625
Operating Income %
4.0
%
2.2
%
3.7
%
1.9
%
Adjusted Operating Income (non-GAAP) %
4.1
%
2.3
%
3.7
%
1.7
%
Net Income
$
10,720
$
5,113
$
20,229
$
7,677
Adjusted Net Income (non-GAAP) (1)
$
10,999
$
5,113
$
20,508
$
6,627
Diluted EPS
$
0.43
$
0.20
$
0.81
$
0.30
Adjusted Diluted EPS (non-GAAP) (1)
$
0.44
$
0.20
$
0.82
$
0.26
(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 our results in Q2. For the fourth
consecutive quarter, net sales were at an all-time high for the
Company, and operating margin expanded both sequentially and
compared to the same period last year. Our team continues to
ramp-up production on new and existing programs, leverage our
facility expansions in Thailand and Mexico, and begin to work down
the backlog of open orders resulting from pandemic-related global
supply chain disruptions and component part shortages. We expect
improvement in sales and margin to continue for the balance of the
year, as part of a stair-stepped fiscal 2023, and we are raising
our outlook for full year sales, and expect operating margin to be
in the mid-to-upper end of the guidance range.”
Mr. Charron continued, “As previously announced, I will be
retiring at the end of February, so this will be my last earnings
release as Chairman and CEO of Kimball Electronics. It is with
immense gratitude and pride that I say farewell, and thank you. I
have been very fortunate throughout my career, and I’m confident
our global enterprise, exceptional leadership team, and impressive
incoming CEO, Ric Phillips, will build on our legacy of
award-winning service to customers, the communities where we
operate, and Share Owners. I have never been more excited about the
future of Kimball Electronics.”
As part of today’s announcement, the Company raised its guidance
for net sales in fiscal 2023 to a range of $1.7 - $1.8 billion, a
26% - 33% increase compared to the prior year. As a reminder, the
original guidance for net sales was in the range of $1.6 - $1.7
billion. Operating margin is expected to be at the mid-to-upper end
of the guidance range of 4.6% - 5.2% of net sales, and capital
expenditures are expected to be in the range of $80 - $100
million.
Second Quarter Fiscal 2023 Overview
- Cash flow used by operating activities of $11.7 million during
the second quarter of fiscal 2023
- Cash conversion days (“CCD”) for the quarter ended December 31,
2022 were 103 days, up from 99 days in the first quarter of fiscal
year 2023; 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 $22.7 million during
the quarter
- Cash and cash equivalents of $26.3 million and borrowings
outstanding on credit facilities of $273.5 million at December 31,
2022, including $235.0 million classified as long term
Net Sales by Vertical Market for Q2 Fiscal
2023:
Three Months Ended
Six Months Ended
December 31,
December 31,
(Amounts in Millions)
2022
*
2021
*
Percent Change
2022
*
2021
*
Percent Change
Automotive
$
200.0
46%
$
139.0
44%
44%
$
384.5
46%
$
268.4
44%
43%
Medical
124.7
29%
89.8
29%
39%
239.5
28%
174.8
29%
37%
Industrial (1)
105.0
24%
82.6
26%
27%
205.9
24%
157.6
26%
31%
Other
7.0
1%
3.9
1%
77%
12.7
2%
7.2
1%
76%
Total Net Sales
$
436.7
$
315.3
39%
$
842.6
$
608.0
39%
* As a percent of Total Net Sales
(1) Beginning in fiscal year 2023, Public
Safety was combined with Industrial; all prior periods have been
recast to conform to current period presentation
– 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, smart metering, and public
safety
Forward-Looking
Statements
Certain statements contained within this release are considered
forward-looking, including our fiscal year 2023 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, 2022.
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:
February 7, 2023
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:
914955
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 second quarter and year-to-date
period ended December 31, 2022 are as follows:
Condensed Consolidated Statements of
Income
(Unaudited)
Three Months Ended
(Amounts in Thousands, except Per Share
Data)
December 31, 2022
December 31, 2021
Net Sales
$
436,696
100.0
%
$
315,264
100.0
%
Cost of Sales
402,505
92.2
%
294,427
93.4
%
Gross Profit
34,191
7.8
%
20,837
6.6
%
Selling and Administrative Expenses
16,702
3.8
%
13,923
4.4
%
Operating Income
17,489
4.0
%
6,914
2.2
%
Other Income (Expense), net
(3,296
)
(0.7
) %
(209
)
(0.1
) %
Income Before Taxes on Income
14,193
3.3
%
6,705
2.1
%
Provision for Income Taxes
3,473
0.8
%
1,592
0.5
%
Net Income
$
10,720
2.5
%
$
5,113
1.6
%
Earnings Per Share of Common Stock:
Basic
$
0.43
$
0.20
Diluted
$
0.43
$
0.20
Average Number of Shares Outstanding:
Basic
24,881
25,238
Diluted
25,000
25,282
(Unaudited)
Six Months Ended
(Amounts in Thousands, except Per Share
Data)
December 31, 2022
December 31, 2021
Net Sales
$
842,585
100.0
%
$
607,981
100.0
%
Cost of Sales
779,073
92.5
%
571,544
94.0
%
Gross Profit
63,512
7.5
%
36,437
6.0
%
Selling and Administrative Expenses
32,452
3.8
%
26,127
4.3
%
Other General Expense (Income)
—
—
%
(1,384
)
(0.2
) %
Operating Income
31,060
3.7
%
11,694
1.9
%
Other Income (Expense), net
(4,699
)
(0.6
) %
(1,458
)
(0.2
) %
Income Before Taxes on Income
26,361
3.1
%
10,236
1.7
%
Provision for Income Taxes
6,132
0.7
%
2,559
0.4
%
Net Income
$
20,229
2.4
%
$
7,677
1.3
%
Earnings Per Share of Common Stock:
Basic
$
0.81
$
0.30
Diluted
$
0.81
$
0.30
Average Number of Shares Outstanding:
Basic
24,854
25,201
Diluted
24,985
25,283
Condensed Consolidated Statements of Cash Flows
Six Months Ended
(Unaudited)
December 31,
(Amounts in Thousands)
2022
2021
Net Cash Flow used for Operating
Activities
$
(71,921
)
$
(56,463
)
Net Cash Flow used for Investing
Activities
(41,886
)
(27,805
)
Net Cash Flow provided by Financing
Activities
91,435
35,465
Effect of Exchange Rate Change on Cash and
Cash Equivalents
(593
)
(901
)
Net Decrease in Cash, Cash Equivalents,
and Restricted Cash
(22,965
)
(49,704
)
Cash, Cash Equivalents, and Restricted
Cash at Beginning of Period
49,851
106,442
Cash, Cash Equivalents, and Restricted
Cash at End of Period
$
26,886
$
56,738
(Unaudited)
Condensed Consolidated Balance
Sheets
December 31,
2022
June 30, 2022
(Amounts in Thousands)
ASSETS
Cash and cash equivalents
$
26,251
$
49,851
Receivables, net
265,153
222,857
Contract assets
74,861
64,080
Inventories
487,527
395,630
Prepaid expenses and other current
assets
34,505
28,665
Property and Equipment, net
238,862
206,835
Goodwill
12,011
12,011
Other Intangible Assets, net
13,882
14,707
Other Assets
42,265
41,131
Total Assets
$
1,195,317
$
1,035,767
LIABILITIES AND SHARE OWNERS’
EQUITY
Current portion of borrowings under credit
facilities
$
38,534
$
35,580
Accounts payable
337,733
308,617
Accrued expenses
76,495
64,545
Long-term debt under credit facilities,
less current portion
235,000
145,000
Long-term income taxes payable
5,859
7,812
Other long-term liabilities
20,548
20,242
Share Owners’ Equity
481,148
453,971
Total Liabilities and Share Owners’
Equity
$
1,195,317
$
1,035,767
Reconciliation of Non-GAAP Financial
Measures
(Unaudited)
(Amounts in Thousands, except Per Share
Data)
Three Months Ended
Six Months Ended
December 31,
December 31,
2022
2021
2022
2021
Operating Income, as reported
$
17,489
$
6,914
$
31,060
$
11,694
SERP
340
402
105
315
Legal Settlements (Recovery)
—
—
—
(1,384
)
Adjusted Operating Income
$
17,829
$
7,316
$
31,165
$
10,625
Net Income, as reported
$
10,720
$
5,113
$
20,229
$
7,677
Adjustments After Measurement Period on
GES Acquisition
279
—
279
—
Legal Settlements (Recovery),
After-Tax
—
—
—
(1,050
)
Adjusted Net Income
$
10,999
$
5,113
$
20,508
$
6,627
Diluted Earnings per Share, as
reported
$
0.43
$
0.20
$
0.81
$
0.30
Adjustments After Measurement Period on
GES Acquisition
0.01
—
0.01
—
Legal Settlements (Recovery)
—
—
—
(0.04
)
Adjusted Diluted Earnings per Share
$
0.44
$
0.20
$
0.82
$
0.26
Twelve Months Ended
December 31,
2022
2021
Operating Income
$
71,915
$
43,411
SERP
(1,773
)
1,027
Legal Recovery
—
(1,415
)
Adjusted Operating Income (non-GAAP)
$
70,142
$
43,023
Tax Effect
18,856
9,530
After-tax Adjusted Operating Income
$
51,286
$
33,493
Average Invested Capital (1)
$
605,772
$
424,854
ROIC
8.5
%
7.9
%
(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/20230206005480/en/
Andrew D. Regrut Vice President, Investor Relations 812.827.4151
Investor.Relations@kimballelectronics.com
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