EX-99.1 2 exhibit9918k12312024q210q.htm KIMBALL ELECTRONICS, INC. EXHIBIT 99.1 Document

Exhibit 99.1
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KIMBALL ELECTRONICS REPORTS Q2 RESULTS,
COMPANY UPDATES OUTLOOK FOR FISCAL YEAR 2025

JASPER, Ind., February 4, 2025 -- (BUSINESS WIRE) -- Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the second quarter ended December 31, 2024.

“The results for the second quarter were in line with expectations as we continue to navigate a sustained period of declining customer demand, while focusing on what is controllable. For the fourth consecutive quarter, cash flow generated from operating activities was positive, inventory levels were reduced, and debt was paid down, with borrowings nearly 40% lower than a year ago. Our improved balance sheet provides ample liquidity to weather our current challenges, along with the necessary dry powder to opportunistically and meaningfully invest in growing the business.

The Company is being strategically repositioned for a return to growth with a restructuring plan that includes the divestiture of the non-core assets from the AT&M business, improved facility utilization with the planned closing of our plant in Tampa, and increased focus on the medical CMO. Our efforts in all three vertical markets have been sharpened to target attractive new spaces that align with our capabilities. While we remain optimistic for the future, we acknowledge that the necessary changes won’t happen overnight. As a result, we have revised our expectations for the full fiscal year as we anticipate more time will be needed to stabilize the business and return to our historical growth pattern.”




Richard D. Phillips
Chief Executive Officer
  Second Quarter Fiscal 2025 Highlights
•Net sales totaled $357.4 million
•Operating income of $8.2 million, or 2.3% of net sales, adjusted operating income of 3.7%
•Inventory ended the quarter at $306 million, a reduction of $29 million from Q1, and down $182 million, or 37%, from peak levels
•Cash generated by operating activities of $29.5 million, the fourth consecutive quarter of positive cash flow
•Borrowings on credit facilities of $205 million, a $41 million decrease from the first quarter, and down $90 million, or 30%, from the beginning of the fiscal year
•Enhanced capital structure by amending the credit facility with the addition of a 5-year, $100 million Term Loan A, which provides additional liquidity to grow the business
•Cash and cash equivalents of $53.9 million and borrowing capacity available of $226.4 million
•Capital expenditures of $6.5 million
•Invested $3.0 million to repurchase 160,000 shares of common stock    


Net Sales by Vertical Market for Q2 Fiscal 2025:
Sales in the automotive, medical, and industrial vertical markets declined 4%, 22%, and 20%, respectively.
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FISCAL YEAR 2025 GUIDANCE
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•Net sales in the range of $1.40 - $1.44 billion, compared to the previous guidance of $1.44 - $1.54 billion
•Adjusted operating income of 3.4% - 3.6% of net sales, compared to the previous guidance of 4.0% - 4.5% of net sales(a)
•The estimate for capital expenditures remains unchanged at $40 - $50 million
(a) Fiscal year 2025 guidance reflects a change in our adjusted operating income calculation beginning in fiscal year 2025, which excludes stock compensation expense. This change better aligns our presentation with others in our industry. A reconciliation of GAAP and non-GAAP financial measures is included below.



Forward-Looking Statements
Certain statements contained within this release are considered forward-looking, including our 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, 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, 2024.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures. The non-GAAP financial measures contained herein include constant currency growth, net sales excluding Automation, Test & Measurement, adjusted selling and administrative expenses, 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 global, multifaceted manufacturing solutions provider of electronics and diversified contract manufacturing services to customers around the world. From our operations in the United States, China, Mexico, Poland, Romania, and Thailand, 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 5, 2025
Time:10:00 AM Eastern Time
Live Webcast:investors.kimballelectronics.com/events-and-presentations/events
Dial-In #:877-407-8293 (or 201-689-8349)
For those unable to participate in the live webcast, the call will be archived at investors.kimballelectronics.com.
Lasting relationships. Global success.
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Contact:
Andrew D. Regrut
Treasurer and Investor Relations Officer
812.827.4151
Investor.Relations@kimballelectronics.com


Financial highlights for the second quarter and year-to-date period ended December 31, 2024 are as follows:
Three Months EndedSix Months Ended
December 31,December 31,
(Amounts in Thousands, except EPS)2024202320242023
Net Sales$357,392 $421,235 $731,648 $859,316 
Operating Income
$8,230 $16,610 $17,345 $36,100 
Adjusted Operating Income (non-GAAP) (1)
$13,333 $19,063 $25,923 $40,069 
Operating Income %2.3 %3.9 %2.4 %4.2 %
Adjusted Operating Income (non-GAAP) % 3.7 %4.5 %3.5 %4.7 %
Net Income $3,432 $8,290 $6,586 $19,044 
Adjusted Net Income (non-GAAP) (1)
$7,354 $9,783 $12,881 $21,821 
Diluted EPS
$0.14 $0.33 $0.26 $0.75 
Adjusted Diluted EPS (non-GAAP) (1)
$0.29 $0.39 $0.51 $0.86 

(1) Beginning in the first quarter of fiscal year 2025, adjusted results exclude stock compensation expense. Prior reported periods have been revised accordingly. A reconciliation of GAAP and non-GAAP financial measures is included below.

Net Sales by Vertical Market for Q2 Fiscal 2025:
Three Months EndedSix Months Ended
December 31,December 31,
(Amounts in Millions)2024*2023*Percent
Change		2024*2023*Percent Change
Automotive
$192.8 54 %$200.2 47 %(4)%$381.1 52 %$412.7 48 %(8)%
Medical
84.0 23 %108.1 26 %(22)%173.8 24 %210.5 25 %(17)%
Industrial excluding AT&M (1)
80.6 23 %100.4 24 %(20)%174.6 24 %213.3 24 %(18)%
Net Sales excluding AT&M (1)
$357.4 100 %$408.7 97 %(13)%$729.5 100 %$836.5 97 %(13)%
AT&M (1)
— — %12.5 3 %(100)%2.1 — %22.8 3 %(91)%
    Total Net Sales$357.4 100 %$421.2 100 %(15)%$731.6 100 %$859.3 100 %(15)%
*As a percent of Total Net Sales
(1) Sales from our Automation, Test, and Measurement business (AT&M), which was divested effective July 31, 2024, were previously included in the Industrial vertical
–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, and public safety



Condensed Consolidated Statements of Income
(Unaudited)Three Months Ended
(Amounts in Thousands, except Per Share Data)December 31, 2024December 31, 2023
Net Sales$357,392 100.0 %$421,235 100.0 %
Cost of Sales333,965 93.4 %386,802 91.8 %
Gross Profit23,427 6.6 %34,433 8.2 %
Selling and Administrative Expenses10,526 3.0 %17,823 4.3 %
Restructuring Expense4,671 1.3 %— — %
Operating Income
8,230 2.3 %16,610 3.9 %
Interest Income253 0.1 %101 — %
Interest Expense(4,241)(1.2)%(6,137)(1.5)%
Non-Operating Income (Expense), net(768)(0.2)%702 0.3 %
Other Income (Expense), net(4,756)(1.3)%(5,334)(1.2)%
Income Before Taxes on Income3,474 1.0 %11,276 2.7 %
Provision for Income Taxes42 — %2,986 0.7 %
Net Income
$3,432 1.0 %$8,290 2.0 %
Earnings Per Share of Common Stock:
Basic$0.14 $0.33 
Diluted$0.14 $0.33 
Average Number of Shares Outstanding:
     Basic24,870 25,094 
     Diluted24,968 25,211 
(Unaudited)Six Months Ended
(Amounts in Thousands, except Per Share Data)December 31, 2024December 31, 2023
Net Sales$731,648 100.0 %$859,316 100.0 %
Cost of Sales684,621 93.6 %789,341 91.9 %
Gross Profit47,027 6.4 %69,975 8.1 %
Selling and Administrative Expenses23,953 3.2 %33,875 3.9 %
Restructuring Expense6,993 1.0 %— — %
Gain on Disposal(1,264)(0.2)%— — %
Operating Income17,345 2.4 %36,100 4.2 %
Interest Income475 0.1 %400 — %
Interest Expense(9,033)(1.2)%(11,584)(1.3)%
Non-Operating Income (Expense), net(2,429)(0.4)%(429)(0.1)%
Other Income (Expense), net(10,987)(1.5)%(11,613)(1.4)%
Income Before Taxes on Income6,358 0.9 %24,487 2.8 %
Provision (Benefit) for Income Taxes
(228)0.0 %5,443 0.6 %
Net Income$6,586 0.9 %$19,044 2.2 %
Earnings Per Share of Common Stock:
Basic$0.26 $0.76 
Diluted$0.26 $0.75 
Average Number of Shares Outstanding:
     Basic24,924 25,067 
     Diluted25,098 25,240 


Condensed Consolidated Statements of Cash FlowsSix Months Ended
(Unaudited)December 31,
(Amounts in Thousands)20242023
Net Cash Flow provided by (used for) Operating Activities$74,932 $(17,922)
Net Cash Flow used for Investing Activities(1,214)(24,365)
Net Cash Flow (used for) provided by Financing Activities(97,255)38,859 
Effect of Exchange Rate Change on Cash, Cash Equivalents, and Restricted Cash(722)368 
Net Decrease in Cash, Cash Equivalents, and Restricted Cash(24,259)(3,060)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period78,779 43,864 
Cash, Cash Equivalents, and Restricted Cash at End of Period$54,520 $40,804 


(Unaudited)
Condensed Consolidated Balance SheetsDecember 31,
2024		June 30,
2024
(Amounts in Thousands)
ASSETS
    Cash and cash equivalents$53,865 $77,965 
    Receivables, net235,166 282,336 
    Contract assets81,957 76,320 
    Inventories 306,242 338,116 
    Prepaid expenses and other current assets31,550 44,682 
    Assets held for sale— 27,587 
    Property and Equipment, net271,251 269,659 
    Goodwill6,191 6,191 
    Other Intangible Assets, net2,716 2,994 
    Other Assets, net
85,498 82,069 
        Total Assets$1,074,436 $1,207,919 
LIABILITIES AND SHARE OWNERS’ EQUITY
    Current portion of long-term debt$24,900 $59,837 
    Accounts payable204,690 213,551 
    Advances from customers 39,340 30,151 
    Accrued expenses42,291 63,189 
    Liabilities held for sale— 8,594 
    Long-term debt, less current portion179,601 235,000 
    Long-term income taxes payable— 3,255 
    Other long-term liabilities46,138 53,881 
    Share Owners’ Equity537,476 540,461 
        Total Liabilities and Share Owners’ Equity$1,074,436 $1,207,919 




Other Financial Metrics
(Unaudited)
(Amounts in Millions, except CCD)
At or For the
Three Months Ended
December 31,September 30,December 31,
202420242023
Depreciation and Amortization$9.1 $9.2 $9.1 
Cash Conversion Days (CCD) (1)
107 108 117 
Open Orders (2)
$564 $594 $836 
(1) Cash Conversion Days (“CCD”) are calculated as the sum of Days Sales Outstanding plus Contract Asset Days plus Production Days Supply on Hand less Accounts Payable Days and less Advances from Customers Days. CCD, or a similar metric, is used in our industry and by our management to measure the efficiency of managing working capital.
(2) Open Orders are the aggregate sales price of production pursuant to unfulfilled customer orders. Our declining open orders are primarily due to the cancellation of a major automotive program and other demand reductions, as well as reduced lead times on customer orders as compared to December 31, 2023, when parts were more constrained.
Select Financial Results of Automation, Test and Measurement
(Unaudited)
(Amounts in Millions)
Three Months EndedSix Months Ended
December 31,December 31,
2024202320242023
Net Sales$— $12.5 $2.1 $22.8 
Operating Income (Loss) (1)
$— $1.4 $0.8 $1.2 
(1) Includes gain on sale of $1.3 million following the close of the sale on July 31, 2024 for the six months ended December 31, 2024. Each period also includes allocated corporate overhead expenses.


Reconciliation of Non-GAAP Financial Measures
(Unaudited, Amounts in Thousands, except Per Share Data)
Three Months EndedSix Months Ended
December 31,December 31,
2024202320242023
Net Sales Growth (vs. same period in prior year)(15)%(4)%(15)%2 %
Foreign Currency Exchange Impact— %1 %— %1 %
Constant Currency Growth(15)%(5)%(15)%1 %
Selling and Administrative Expenses, as reported$10,526 $17,823 $23,953 $33,875 
Stock Compensation Expense(501)(1,969)(2,573)(3,662)
SERP69 (484)(276)(307)
Adjusted Selling and Administrative Expenses$10,094 $15,370 $21,104 $29,906 
Operating Income, as reported
$8,230 $16,610 $17,345 $36,100 
Stock Compensation Expense501 1,969 2,573 3,662 
SERP (69)484 276 307 
Restructuring Expense4,671 — 6,993 — 
Gain on Disposal — — (1,264)— 
Adjusted Operating Income$13,333 $19,063 $25,923 $40,069 
Net Income, as reported
$3,432 $8,290 $6,586 $19,044 
Stock Compensation Expense, After-Tax380 1,493 1,951 2,777 
Restructuring Expense, After-Tax3,542 — 5,303 — 
Gain on Disposal, After-Tax— — (959)— 
Adjusted Net Income$7,354 $9,783 $12,881 $21,821 
Diluted Earnings per Share, as reported$0.14 $0.33 $0.26 $0.75 
Stock Compensation Expense0.01 0.06 0.07 0.11 
Restructuring Expense0.14 — 0.21 — 
Gain on Disposal— — (0.03)— 
Adjusted Diluted Earnings per Share$0.29 $0.39 $0.51 $0.86 
Twelve Months Ended
December 31,
20242023
Operating Income$30,522 $92,769 
Goodwill Impairment5,820 — 
Stock Compensation Expense6,096 7,219 
SERP 649 903 
Legal Recovery(892)(212)
Restructuring Expense9,379 — 
Asset Impairment and Gain on Disposal15,776 — 
Adjusted Operating Income (non-GAAP)$67,350 $100,679 
Tax Effect17,019 24,954 
After-tax Adjusted Operating Income$50,331 $75,725 
Average Invested Capital (1)
$756,966 $770,051 
ROIC6.6 %9.8 %
(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.