JASPER, Ind.--(BUSINESS WIRE)--Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the first quarter ended September 30, 2022.
|
Three Months Ended |
||||||
|
September 30, |
||||||
(Amounts in Thousands, except EPS) |
2022 |
|
2021 |
||||
Net Sales |
$ |
405,889 |
|
|
$ |
292,717 |
|
Operating Income |
$ |
13,571 |
|
|
$ |
4,780 |
|
Adjusted Operating Income (non-GAAP) (1) |
$ |
13,336 |
|
|
$ |
3,309 |
|
Operating Income % |
|
3.3 |
% |
|
|
1.6 |
% |
Adjusted Operating Income (non-GAAP) % |
|
3.3 |
% |
|
|
1.1 |
% |
Net Income |
$ |
9,509 |
|
|
$ |
2,564 |
|
Adjusted Net Income (non-GAAP) (1) |
$ |
9,509 |
|
|
$ |
1,514 |
|
Diluted EPS |
$ |
0.38 |
|
|
$ |
0.10 |
|
Adjusted Diluted EPS (non-GAAP) (1) |
$ |
0.38 |
|
|
$ |
0.06 |
|
(1) A reconciliation of GAAP and non-GAAP financial measures is included below. |
|||||||
Donald D. Charron, Chairman and Chief Executive Officer, stated, “I am pleased with our results in Q1 and the strong start to the new fiscal year. For the third consecutive quarter, net sales surged to a record-breaking level, setting another all-time high for our company, and operating margin improved compared to the same period last year. This was in line with our estimates as we ramp-up production on new and existing programs, and leverage our facility expansions in Thailand and Mexico. These investments, however, increased fixed costs that were not fully absorbed when comparing the operating margin rate to Q4 of fiscal 2022. New customers and product start-ups generally cause margin dilution early in the life cycle, which are recovered as the program matures. As a result, we expect sequential quarterly increases in a stair stepped fiscal 2023, and we are affirming our guidance for the full year with results expected at the high end of the range for sales and operating margin.”
As part of today’s announcement, the Company is affirming its guidance for fiscal year 2023.
- Net sales in the range of $1.6 - $1.7 billion, a 19% - 26% increase year-over-year
- Operating income in the range of 4.6% - 5.2% of net sales
- Capital expenditures in the range of $80 - $100 million, supporting the facility expansion in Poland, new product introductions, and the addition of equipment with leading-edge technologies and capabilities
First Quarter Fiscal 2023 Overview
- Cash flow used by operating activities of $60.2 million during the first quarter of fiscal 2023
- Cash conversion days (“CCD”) for the quarter ended September 30, 2022 were 99 days, up from 91 days in the fourth quarter of fiscal year 2022, 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 $19.5 million during the quarter
- Cash and cash equivalents of $19.7 million and borrowings outstanding on credit facilities of $232.5 million at September 30, 2022, including $180.0 million classified as long term
Net Sales by Vertical Market for Q1 Fiscal 2023:
|
Three Months Ended |
|
|
|||||||||||
|
September 30, |
|
|
|||||||||||
(Amounts in Millions) |
2022 |
|
* |
|
2021 |
|
* |
|
Percent Change |
|||||
Automotive |
$ |
184.5 |
|
46 |
% |
|
$ |
129.4 |
|
44 |
% |
|
43 |
% |
Medical |
|
114.8 |
|
28 |
% |
|
|
85.0 |
|
29 |
% |
|
35 |
% |
Industrial (1) |
|
100.9 |
|
25 |
% |
|
|
75.0 |
|
26 |
% |
|
35 |
% |
Other |
|
5.7 |
|
1 |
% |
|
|
3.3 |
|
1 |
% |
|
75 |
% |
Total Net Sales |
$ |
405.9 |
|
|
|
$ |
292.7 |
|
|
|
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: |
|
November 8, 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: |
|
924286 |
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 first quarter ended September 30, 2022 are as follows:
Condensed Consolidated Statements of Income |
|
|
|
|
|
|
|||||||
(Unaudited) |
Three Months Ended |
||||||||||||
(Amounts in Thousands, except Per Share Data) |
September 30, 2022 |
|
September 30, 2021 |
||||||||||
Net Sales |
$ |
405,889 |
|
|
100.0 |
% |
|
$ |
292,717 |
|
|
100.0 |
% |
Cost of Sales |
|
376,568 |
|
|
92.8 |
% |
|
|
277,117 |
|
|
94.7 |
% |
Gross Profit |
|
29,321 |
|
|
7.2 |
% |
|
|
15,600 |
|
|
5.3 |
% |
Selling and Administrative Expenses |
|
15,750 |
|
|
3.9 |
% |
|
|
12,204 |
|
|
4.2 |
% |
Other General Expense (Income) |
|
— |
|
|
— |
% |
|
|
(1,384 |
) |
|
(0.5 |
)% |
Operating Income |
|
13,571 |
|
|
3.3 |
% |
|
|
4,780 |
|
|
1.6 |
% |
Other Income (Expense), net |
|
(1,403 |
) |
|
(0.3 |
)% |
|
|
(1,249 |
) |
|
(0.4 |
)% |
Income Before Taxes on Income |
|
12,168 |
|
|
3.0 |
% |
|
|
3,531 |
|
|
1.2 |
% |
Provision for Income Taxes |
|
2,659 |
|
|
0.7 |
% |
|
|
967 |
|
|
0.3 |
% |
Net Income |
$ |
9,509 |
|
|
2.3 |
% |
|
$ |
2,564 |
|
|
0.9 |
% |
|
|
|
|
|
|
|
|
||||||
Earnings Per Share of Common Stock: |
|
|
|
|
|
|
|
||||||
Basic |
$ |
0.38 |
|
|
|
|
$ |
0.10 |
|
|
|
||
Diluted |
$ |
0.38 |
|
|
|
|
$ |
0.10 |
|
|
|
||
|
|
|
|
|
|
|
|
||||||
Average Number of Shares Outstanding: |
|
|
|
|
|
|
|
||||||
Basic |
|
24,826 |
|
|
|
|
|
25,145 |
|
|
|
||
Diluted |
|
24,955 |
|
|
|
|
|
25,301 |
|
|
|
||
Condensed Consolidated Statements of Cash Flows |
Three Months Ended |
||||||
(Unaudited) |
September 30, |
||||||
(Amounts in Thousands) |
2022 |
|
2021 |
||||
Net Cash Flow used for Operating Activities |
$ |
(60,194 |
) |
|
$ |
(8,187 |
) |
Net Cash Flow used for Investing Activities |
|
(19,320 |
) |
|
|
(12,868 |
) |
Net Cash Flow provided by Financing Activities |
|
50,769 |
|
|
|
4,965 |
|
Effect of Exchange Rate Change on Cash and Cash Equivalents |
|
(1,391 |
) |
|
|
(1,028 |
) |
Net Decrease in Cash and Cash Equivalents |
|
(30,136 |
) |
|
|
(17,118 |
) |
Cash and Cash Equivalents at Beginning of Period |
|
49,851 |
|
|
|
106,442 |
|
Cash and Cash Equivalents at End of Period |
$ |
19,715 |
|
|
$ |
89,324 |
|
|
(Unaudited) |
|
|
||
Condensed Consolidated Balance Sheets |
September 30,
|
|
June 30,
|
||
(Amounts in Thousands) |
|||||
ASSETS |
|
|
|
||
Cash and cash equivalents |
$ |
19,715 |
|
$ |
49,851 |
Receivables, net |
|
253,823 |
|
|
222,857 |
Contract assets |
|
68,314 |
|
|
64,080 |
Inventories |
|
449,528 |
|
|
395,630 |
Prepaid expenses and other current assets |
|
28,637 |
|
|
28,665 |
Property and Equipment, net |
|
215,469 |
|
|
206,835 |
Goodwill |
|
12,011 |
|
|
12,011 |
Other Intangible Assets, net |
|
13,792 |
|
|
14,707 |
Other Assets |
|
40,474 |
|
|
41,131 |
Total Assets |
$ |
1,101,763 |
|
$ |
1,035,767 |
|
|
|
|
||
LIABILITIES AND SHARE OWNERS’ EQUITY |
|
|
|
||
Current portion of borrowings under credit facilities |
$ |
52,505 |
|
$ |
35,580 |
Accounts payable |
|
322,199 |
|
|
308,617 |
Accrued expenses |
|
65,258 |
|
|
64,545 |
Long-term debt under credit facilities, less current portion |
|
180,000 |
|
|
145,000 |
Long-term income taxes payable |
|
5,859 |
|
|
7,812 |
Other long-term liabilities |
|
19,697 |
|
|
20,242 |
Share Owners’ Equity |
|
456,245 |
|
|
453,971 |
Total Liabilities and Share Owners’ Equity |
$ |
1,101,763 |
|
$ |
1,035,767 |
Reconciliation of Non-GAAP Financial Measures |
|
|
|||||
(Unaudited) |
|
|
|
||||
(Amounts in Thousands, except Per Share Data) |
|
|
|
||||
|
|
|
|
||||
|
Three Months Ended |
||||||
|
September 30, |
||||||
|
2022 |
|
2021 |
||||
Operating Income, as reported |
$ |
13,571 |
|
|
$ |
4,780 |
|
SERP |
|
(235 |
) |
|
(87 |
) |
|
Legal Settlements (Recovery) |
|
— |
|
|
|
(1,384 |
) |
Adjusted Operating Income |
$ |
13,336 |
|
|
$ |
3,309 |
|
|
|
|
|
||||
Net Income, as reported |
$ |
9,509 |
|
|
$ |
2,564 |
|
Legal Settlements (Recovery), After-Tax |
|
— |
|
|
|
(1,050 |
) |
Adjusted Net Income |
$ |
9,509 |
|
|
$ |
1,514 |
|
|
|
|
|
||||
Diluted Earnings per Share, as reported |
$ |
0.38 |
|
|
$ |
0.10 |
|
Legal Settlements (Recovery) |
|
— |
|
|
|
(0.04 |
) |
Adjusted Diluted Earnings per Share |
$ |
0.38 |
|
|
$ |
0.06 |
|
|
|
|
|
||||
|
Twelve Months Ended |
||||||
|
September 30, |
||||||
|
|
2022 |
|
|
|
2021 |
|
Operating Income |
$ |
61,340 |
|
|
$ |
52,676 |
|
SERP |
|
(1,711 |
) |
|
|
1,436 |
|
Legal Recovery |
|
— |
|
|
|
(1,415 |
) |
Adjusted Operating Income (non-GAAP) |
$ |
59,629 |
|
|
$ |
52,697 |
|
Tax Effect |
|
16,356 |
|
|
|
11,017 |
|
After-tax Adjusted Operating Income |
$ |
43,273 |
|
|
$ |
41,680 |
|
Average Invested Capital (1) |
$ |
544,711 |
|
|
$ |
414,121 |
|
ROIC |
|
7.9 |
% |
|
|
10.1 |
% |
(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. |
|||||||
