Fourth Quarter Fiscal 2023 Highlights
- Net sales totaled $496.1 million, a 33% increase compared to Q4 fiscal 2022, and completing a fiscal year with top-line growth of 35%.
- Operating income of $31.4 million, or 6.3% of net sales, a record high for the Company. For fiscal year 2023, operating income was 4.8% of net sales.
- Net income of $19.2 million, or $0.76 per diluted share. In fiscal year 2023, the Company earned $2.22 per diluted share, a 79% increase compared to the prior year.
- Cash flow generated from operating activities of $44.1 million in Q4.
- Company provides guidance for fiscal 2024 with expected top-line growth of 4%-7% and operating income in the range of 4.7%-5.2% of net sales.
JASPER, Ind.–(BUSINESS WIRE)–Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the fourth quarter and fiscal year ended June 30, 2023.
|
|
Three Months Ended |
|
Fiscal Year Ended |
||||||||||||
|
|
June 30, |
|
June 30, |
||||||||||||
|
(Amounts in Thousands, except EPS) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Net Sales |
$ |
496,141 |
|
|
$ |
373,497 |
|
|
$ |
1,823,429 |
|
|
$ |
1,349,535 |
|
|
Operating Income |
$ |
31,449 |
|
|
$ |
20,578 |
|
|
$ |
87,729 |
|
|
$ |
52,549 |
|
|
Adjusted Operating Income (non-GAAP) (1) |
$ |
31,480 |
|
|
$ |
19,419 |
|
|
$ |
88,218 |
|
|
$ |
49,602 |
|
|
Operating Income % |
|
6.3 |
% |
|
|
5.5 |
% |
|
|
4.8 |
% |
|
|
3.9 |
% |
|
Adjusted Operating Income (non-GAAP) % |
|
6.3 |
% |
|
|
5.2 |
% |
|
|
4.8 |
% |
|
|
3.7 |
% |
|
Net Income |
$ |
19,202 |
|
|
$ |
9,938 |
|
|
$ |
55,831 |
|
|
$ |
31,253 |
|
|
Adjusted Net Income (non-GAAP) (1) |
$ |
19,041 |
|
|
$ |
9,938 |
|
|
$ |
55,949 |
|
|
$ |
30,203 |
|
|
Diluted EPS |
$ |
0.76 |
|
|
$ |
0.40 |
|
|
$ |
2.22 |
|
|
$ |
1.24 |
|
|
Adjusted Diluted EPS (non-GAAP) (1) |
$ |
0.76 |
|
|
$ |
0.40 |
|
|
$ |
2.23 |
|
|
$ |
1.20 |
|
|
(1) A reconciliation of GAAP and non-GAAP financial measures is included below. |
|||||||||||||||
Richard D. Phillips, Chief Executive Officer, stated, “I am very pleased with the results we reported for the fourth quarter and fiscal year 2023. Q4 was our sixth consecutive quarter with record sales, and operating income and EPS were at all-time highs for the Company. The strong finish to the fiscal year drove net sales above the guidance we provided in May, and contributed to better than expected cash flow generation in the quarter. This performance was achieved with the highest levels of teamwork from our global organization, and many others in the value chain. I would like to thank our employees, our customers and our vendor partners for their passion, commitment, and support.”
Mr. Phillips continued, “In total, fiscal 2023 was an excellent year for Kimball Electronics, highlighted by record top-line growth, margin expansion, a 79% increase in net income, and improved return on invested capital. Each of our three vertical end markets reported strong results, with the sales volume to 48% of our customers reaching all-time highs. The team supported new product introductions at a rate four times above the historic norm, and we continued to leverage our facility expansions in Thailand and Mexico, while navigating a challenging macro environment. While we continue to see a strong pipeline for future growth, fiscal 2024 is tempered by slower sales with a large medical customer. Longer term we are excited by the prospects of our funnel of new business, and the relationship with this customer in particular.”
Fiscal Year 2023 Highlights:
- Net sales for fiscal year 2023 totaled $1,823.4 million, representing constant currency growth of 38% year-over-year when excluding the impact of foreign currency, which had a 3% unfavorable impact on net sales.
- Operating income of $87.7 million, or 4.8% of net sales, an improvement compared to $52.5 million, or 3.9% of net sales, in fiscal 2022.
- Net income of $55.8 million, or $2.22 per diluted share, a significant increase compared to net income of $31.3 million, or $1.24 per diluted share, in fiscal 2022.
- Capital expenditures of $90.7 million, supporting facility expansions in Thailand, Mexico, and Poland.
- Return on invested capital of 9.4%, a 220-basis point improvement compared to fiscal 2022; ROIC is a non-GAAP financial measure, see reconciliation of non-GAAP financial measures.
The Company ended fiscal 2023 with cash and cash equivalents of $43.0 million and borrowings outstanding on credit facilities of $281.5 million, including $235 million classified as long term, and $106.1 million of borrowing capacity available.
Net Sales by Vertical Market for Fiscal 2023:
|
|
Three Months Ended |
|
|
|
Fiscal Year Ended |
|
|
||||||||||||||||||||||
|
|
June 30, |
|
|
|
June 30, |
|
|
||||||||||||||||||||||
|
(Amounts in Millions) |
2023 |
|
* |
|
2022 |
|
* |
|
Percent |
|
2023 |
|
* |
|
2022 |
|
* |
|
Percent |
||||||||||
|
Automotive |
$ |
219.6 |
|
44 |
% |
|
$ |
152.4 |
|
41 |
% |
|
44 |
% |
|
$ |
820.1 |
|
45 |
% |
|
$ |
582.2 |
|
43 |
% |
|
41 |
% |
|
Medical |
|
120.5 |
|
24 |
% |
|
|
114.0 |
|
30 |
% |
|
6 |
% |
|
|
494.0 |
|
27 |
% |
|
|
391.7 |
|
29 |
% |
|
26 |
% |
|
Industrial (1) |
|
141.8 |
|
29 |
% |
|
|
102.4 |
|
28 |
% |
|
38 |
% |
|
|
474.6 |
|
26 |
% |
|
|
358.2 |
|
27 |
% |
|
33 |
% |
|
Other |
|
14.2 |
|
3 |
% |
|
|
4.7 |
|
1 |
% |
|
202 |
% |
|
|
34.7 |
|
2 |
% |
|
|
17.4 |
|
1 |
% |
|
99 |
% |
|
Total Net Sales |
$ |
496.1 |
|
|
|
$ |
373.5 |
|
|
|
33 |
% |
|
$ |
1,823.4 |
|
|
|
$ |
1,349.5 |
|
|
|
35 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
* 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 |
|||||||||||||||||||||||||||||
Fiscal Year 2024 Guidance:
- Net sales in the range of $1.9 – $1.95 billion, a 4% – 7% increase year-over-year.
- Operating income in the range of 4.7% – 5.2% of net sales.
- Capital expenditures of $70 – $80 million.
Commenting on today’s announcement, Jana T. Croom, Chief Financial Officer, stated, “Our outlook for fiscal 2024 reflects a capital allocation strategy focused on organic growth. We have a solid funnel of new business opportunities and additional capacity from our recent facility expansions, which I’m pleased to announce now includes Poland. We will be ramping-up operations in Poznan throughout the fiscal year. In addition, inventory should normalize as global supply chain disruptions continue to ease, and the resulting cash flow generated will be directed toward reducing our leverage ratio.”
Forward-Looking Statements
Certain statements contained within this release are considered forward-looking, including our fiscal year 2024 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 constant currency growth, 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: |
|
August 17, 2023 |
|
Time: |
|
10:00 AM Eastern Time |
|
Live Webcast: |
|
investors.kimballelectronics.com/events-and-presentations/events |
|
Dial-In #: |
|
404-975-4839 (other locations – 833-470-1428) |
|
Conference ID: |
|
941287 |
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 fourth quarter and fiscal year ended June 30, 2023 are as follows:
|
Condensed Consolidated Statements of Income |
|
|
|
|
|
|
|||||||
|
(Unaudited) |
Three Months Ended |
||||||||||||
|
(Amounts in Thousands, except Per Share Data) |
June 30, 2023 |
|
June 30, 2022 |
||||||||||
|
Net Sales |
$ |
496,141 |
|
|
100.0 |
% |
|
$ |
373,497 |
|
|
100.0 |
% |
|
Cost of Sales |
|
446,460 |
|
|
90.0 |
% |
|
|
339,276 |
|
|
90.8 |
% |
|
Gross Profit |
|
49,681 |
|
|
10.0 |
% |
|
|
34,221 |
|
|
9.2 |
% |
|
Selling and Administrative Expenses |
|
18,444 |
|
|
3.7 |
% |
|
|
13,643 |
|
|
3.7 |
% |
|
Other General Expense (Income) |
|
(212 |
) |
|
— |
% |
|
|
— |
|
|
— |
% |
|
Operating Income |
|
31,449 |
|
|
6.3 |
% |
|
|
20,578 |
|
|
5.5 |
% |
|
Interest Income |
|
65 |
|
|
— |
% |
|
|
15 |
|
|
— |
% |
|
Interest Expense |
|
(5,473 |
) |
|
(1.1 |
)% |
|
|
(1,118 |
) |
|
(0.3 |
)% |
|
Non-Operating Income (Expense), net |
|
466 |
|
|
0.1 |
% |
|
|
(4,154 |
) |
|
(1.1 |
)% |
|
Other Income (Expense), net |
|
(4,942 |
) |
|
(1.0 |
)% |
|
|
(5,257 |
) |
|
(1.4 |
)% |
|
Income Before Taxes on Income |
|
26,507 |
|
|
5.3 |
% |
|
|
15,321 |
|
|
4.1 |
% |
|
Provision for Income Taxes |
|
7,305 |
|
|
1.4 |
% |
|
|
5,383 |
|
|
1.4 |
% |
|
Net Income |
$ |
19,202 |
|
|
3.9 |
% |
|
$ |
9,938 |
|
|
2.7 |
% |
|
|
|
|
|
|
|
|
|
||||||
|
Earnings Per Share of Common Stock: |
|
|
|
|
|
|
|
||||||
|
Basic |
$ |
0.77 |
|
|
|
|
$ |
0.40 |
|
|
|
||
|
Diluted |
$ |
0.76 |
|
|
|
|
$ |
0.40 |
|
|
|
||
|
Average Number of Shares Outstanding: |
|
|
|
|
|
|
|
||||||
|
Basic |
|
25,009 |
|
|
|
|
|
24,885 |
|
|
|
||
|
Diluted |
|
25,161 |
|
|
|
|
|
24,989 |
|
|
|
||
|
|
|
|
|
|
|
|
|
||||||
|
(Unaudited) |
Fiscal Year Ended |
||||||||||||
|
(Amounts in Thousands, except Per Share Data) |
June 30, 2023 |
|
June 30, 2022 |
||||||||||
|
Net Sales |
$ |
1,823,429 |
|
|
100.0 |
% |
|
$ |
1,349,535 |
|
|
100.0 |
% |
|
Cost of Sales |
|
1,667,264 |
|
|
91.4 |
% |
|
|
1,244,933 |
|
|
92.2 |
% |
|
Gross Profit |
|
156,165 |
|
|
8.6 |
% |
|
|
104,602 |
|
|
7.8 |
% |
|
Selling and Administrative Expenses |
|
68,648 |
|
|
3.8 |
% |
|
|
53,437 |
|
|
4.0 |
% |
|
Other General Expense (Income) |
|
(212 |
) |
|
— |
% |
|
|
(1,384 |
) |
|
(0.1 |
)% |
|
Operating Income |
|
87,729 |
|
|
4.8 |
% |
|
|
52,549 |
|
|
3.9 |
% |
|
Interest Income |
|
153 |
|
|
— |
% |
|
|
81 |
|
|
— |
% |
|
Interest Expense |
|
(16,263 |
) |
|
(0.9 |
)% |
|
|
(2,655 |
) |
|
(0.2 |
)% |
|
Non-Operating Income (Expense), net |
|
3,125 |
|
|
0.2 |
% |
|
|
(6,244 |
) |
|
(0.5 |
)% |
|
Other Income (Expense), net |
|
(12,985 |
) |
|
(0.7 |
)% |
|
|
(8,818 |
) |
|
(0.7 |
)% |
|
Income Before Taxes on Income |
|
74,744 |
|
|
4.1 |
% |
|
|
43,731 |
|
|
3.2 |
% |
|
Provision for Income Taxes |
|
18,913 |
|
|
1.0 |
% |
|
|
12,478 |
|
|
0.9 |
% |
|
Net Income |
$ |
55,831 |
|
|
3.1 |
% |
|
$ |
31,253 |
|
|
2.3 |
% |
|
|
|
|
|
|
|
|
|
||||||
|
Earnings Per Share of Common Stock: |
|
|
|
|
|
|
|
||||||
|
Basic |
$ |
2.24 |
|
|
|
|
$ |
1.24 |
|
|
|
||
|
Diluted |
$ |
2.22 |
|
|
|
|
$ |
1.24 |
|
|
|
||
|
Average Number of Shares Outstanding: |
|
|
|
|
|
|
|
||||||
|
Basic |
|
24,904 |
|
|
|
|
|
25,115 |
|
|
|
||
|
Diluted |
|
25,076 |
|
|
|
|
|
25,221 |
|
|
|
||
|
Condensed Consolidated Statements of Cash Flows |
Fiscal Year Ended |
||||||
|
(Unaudited) |
June 30, |
||||||
|
(Amounts in Thousands) |
2023 |
|
2022 |
||||
|
Net Cash Flow used for Operating Activities |
$ |
(13,804 |
) |
|
$ |
(83,178 |
) |
|
Net Cash Flow used for Investing Activities |
|
(90,467 |
) |
|
|
(74,798 |
) |
|
Net Cash Flow provided by Financing Activities |
|
99,179 |
|
|
|
103,741 |
|
|
Effect of Exchange Rate Change on Cash, Cash Equivalents, and Restricted Cash |
|
(895 |
) |
|
|
(2,356 |
) |
|
Net Decrease in Cash, Cash Equivalents, and Restricted Cash |
|
(5,987 |
) |
|
|
(56,591 |
) |
|
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period |
|
49,851 |
|
|
|
106,442 |
|
|
Cash, Cash Equivalents, and Restricted Cash at End of Period |
$ |
43,864 |
|
|
$ |
49,851 |
|
|
|
(Unaudited) |
|
|
||
|
Condensed Consolidated Balance Sheets |
June 30, |
|
June 30, |
||
|
(Amounts in Thousands) |
|||||
|
ASSETS |
|
|
|
||
|
Cash and cash equivalents |
$ |
42,955 |
|
$ |
49,851 |
|
Receivables, net |
|
308,167 |
|
|
222,857 |
|
Contract assets |
|
78,798 |
|
|
64,080 |
|
Inventories |
|
450,319 |
|
|
395,630 |
|
Prepaid expenses and other current assets |
|
49,188 |
|
|
28,665 |
|
Property and Equipment, net |
|
267,684 |
|
|
206,835 |
|
Goodwill |
|
12,011 |
|
|
12,011 |
|
Other Intangible Assets, net |
|
12,335 |
|
|
14,707 |
|
Other Assets |
|
38,262 |
|
|
41,131 |
|
Total Assets |
$ |
1,259,719 |
|
$ |
1,035,767 |
|
|
|
|
|
||
|
LIABILITIES AND SHARE OWNERS’ EQUITY |
|
|
|
||
|
Current portion of borrowings under credit facilities |
$ |
46,454 |
|
$ |
35,580 |
|
Accounts payable |
|
322,274 |
|
|
300,224 |
|
Advances from customers (1) |
|
33,905 |
|
|
25,942 |
|
Accrued expenses |
|
72,515 |
|
|
46,996 |
|
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 |
|
19,718 |
|
|
20,242 |
|
Share Owners’ Equity |
|
523,994 |
|
|
453,971 |
|
Total Liabilities and Share Owners’ Equity |
$ |
1,259,719 |
|
$ |
1,035,767 |
|
(1) |
Beginning in fiscal year 2023, the Company changed its presentation that such inventory-related payments from customers are classified as Advances from customers on the Condensed Consolidated Balance Sheets. Prior year periods have been recast to conform to the current year presentation. |
|
Reconciliation of Non-GAAP Financial Measures |
|||||||||||||||
|
(Unaudited) |
|
|
|
|
|
|
|
||||||||
|
(Amounts in Thousands, except Per Share Data) |
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Fiscal Year Ended |
||||||||||||
|
|
June 30, |
|
June 30, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Net Sales Growth (vs. same period in prior year) |
|
33 |
% |
|
|
13 |
% |
|
|
35 |
% |
|
|
4 |
% |
|
Foreign Currency Exchange Impact |
|
— |
% |
|
|
(3 |
)% |
|
|
(3 |
)% |
|
|
(1 |
)% |
|
Constant Currency Growth |
|
33 |
% |
|
|
16 |
% |
|
|
38 |
% |
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
||||||||
|
Operating Income, as reported |
$ |
31,449 |
|
|
$ |
20,578 |
|
|
$ |
87,729 |
|
|
$ |
52,549 |
|
|
SERP |
|
243 |
|
|
|
(1,159 |
) |
|
|
701 |
|
|
|
(1,563 |
) |
|
Legal Settlements (Recovery) |
|
(212 |
) |
|
|
— |
|
|
|
(212 |
) |
|
|
(1,384 |
) |
|
Adjusted Operating Income |
$ |
31,480 |
|
|
$ |
19,419 |
|
|
$ |
88,218 |
|
|
$ |
49,602 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net Income, as reported |
$ |
19,202 |
|
|
$ |
9,938 |
|
|
$ |
55,831 |
|
|
$ |
31,253 |
|
|
Adjustments After Measurement Period on GES Acquisition |
|
— |
|
|
|
— |
|
|
|
279 |
|
|
|
— |
|
|
Legal Settlements (Recovery), After-Tax |
|
(161 |
) |
|
|
— |
|
|
|
(161 |
) |
|
|
(1,050 |
) |
|
Adjusted Net Income |
$ |
19,041 |
|
|
$ |
9,938 |
|
|
$ |
55,949 |
|
|
$ |
30,203 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Diluted Earnings per Share, as reported |
$ |
0.76 |
|
|
$ |
0.40 |
|
|
$ |
2.22 |
|
|
$ |
1.24 |
|
|
Adjustments After Measurement Period on GES Acquisition |
|
— |
|
|
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
Legal Settlements (Recovery) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.04 |
) |
|
Adjusted Diluted Earnings per Share |
$ |
0.76 |
|
|
$ |
0.40 |
|
|
$ |
2.23 |
|
|
$ |
1.20 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating Income |
|
|
|
|
$ |
87,729 |
|
|
$ |
52,549 |
|
||||
|
SERP |
|
|
|
|
|
701 |
|
|
|
(1,563 |
) |
||||
|
Legal Recovery |
|
|
|
|
|
(212 |
) |
|
|
(1,384 |
) |
||||
|
Adjusted Operating Income (non-GAAP) |
|
|
|
|
$ |
88,218 |
|
|
$ |
49,602 |
|
||||
|
Tax Effect |
|
|
|
|
|
22,235 |
|
|
|
14,417 |
|
||||
|
After-tax Adjusted Operating Income |
|
|
|
|
$ |
65,983 |
|
|
$ |
35,185 |
|
||||
|
Average Invested Capital (1) |
|
|
|
|
$ |
701,364 |
|
|
$ |
491,252 |
|
||||
|
ROIC |
|
|
|
|
|
9.4 |
% |
|
|
7.2 |
% |
||||
|
(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. |
Contacts
Andrew D. Regrut
Vice President, Investor Relations
812.827.4151
Investor.Relations@kimballelectronics.com
