8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)   February 7, 2022

KIMBALL ELECTRONICS, INC.

________________________________________________________________________________________________________

(Exact name of registrant as specified in its charter)

Indiana	001-36454	35-2047713
(State or other jurisdiction of	(Commission File	(IRS Employer Identification No.)
incorporation)	Number)

1205 Kimball Boulevard, Jasper, Indiana	47546
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code   (812) 634-4000

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each Class	Trading Symbol	Name of each exchange on which registered
Common Stock, no par value	KE	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (Section 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (Section 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition

On February 7, 2022, the Company issued an earnings release for the second quarter ended December 31, 2021.  The earnings release is attached as Exhibit 99.1 and supplementary information provided for the Company’s earnings conference call is attached as Exhibit 99.2.

The information in Item 2.02 of this Form 8-K, including Exhibit 99.1 and Exhibit 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Form 8-K shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except as shall otherwise be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit
Number	Description
99.1	Earnings Release dated February 7, 2022
99.2	Supplementary Information

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	KIMBALL ELECTRONICS, INC.
By:	/s/ Jana T. Croom
	JANA T. CROOM Vice President, Chief Financial Officer

Date: February 7, 2022

3

EX-99.1

Exhibit 99.1

KIMBALL ELECTRONICS, INC. REPORTS SECOND QUARTER FISCAL 2022 RESULTS; REITERATES SALES GUIDANCE FOR FISCAL 2022 AND ANNOUNCES FACILITY EXPANSION IN POLAND

•Net sales in the second quarter of fiscal 2022 totaled $315.3 million.

•Net income of $5.1 million, or $0.20 per diluted share.

JASPER, Ind., February 7, 2022 (BUSINESS WIRE) -- Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the second quarter ended December 31, 2021. 

	Three Months Ended						Six Months Ended
	December 31,						December 31,
(Amounts in Thousands, except EPS)	2021			2020			2021			2020
Net Sales	$	315,264		$	320,604		$	607,981		$	652,353
Operating Income	$	6,914		$	16,179		$	11,694		$	33,986
Adjusted Operating Income (non-GAAP) (1)	$	7,316		$	16,990		$	10,625		$	35,006
Operating Income %	2.2		%	5.0		%	1.9		%	5.2		%
Adjusted Operating Income (non-GAAP) %	2.3		%	5.3		%	1.7		%	5.4		%
Net Income	$	5,113		$	15,062		$	7,677		$	31,873
Adjusted Net Income (non-GAAP) (1)	$	5,113		$	15,195		$	6,627		$	31,747
Diluted EPS	$	0.20		$	0.60		$	0.30		$	1.26
Adjusted Diluted EPS (non-GAAP) (1)	$	0.20		$	0.60		$	0.26		$	1.25

(1) A reconciliation of GAAP and non-GAAP financial measures is included below.

Donald D. Charron, Chairman and Chief Executive Officer, stated, “Q2 was another hard fought quarter for our company, as global supply chain issues stemming from the COVID-19 pandemic persisted and adversely impacted our results. Component shortages continued to make it extremely challenging to obtain the materials needed to support customer demand. While conditions improved modestly in December with sales accelerating, the lost absorption was significant once again this quarter, as we remained committed to retaining our highly skilled workforce in anticipation of a strong second half to the fiscal year. We continue to be well positioned with record levels of backlog, and we are reiterating our sales guidance for fiscal 2022, although we expect to finish the year at the lower end of the range. We are revising our operating income margin guidance to reflect the difficult first half and our outlook for the balance of the fiscal year.”

Mr. Charron continued, “We are also excited to announce our plans to expand the facility in Poznan, Poland. This is our third facility expansion in the last 15 months, and representative of the high level of success we’ve experienced in winning new business. Similar to Thailand and Mexico, the additional capacity is needed for programs with new and existing customers. We expect the expansion in Poznan to add approximately 40% to existing production square footage, and will leverage our team in Poland to support our customers based in Europe when the expansion is complete in early fiscal 2024. We are updating our guidance for capital expenditures for fiscal 2022, which will include the early investments in Poznan and additional capital related to a major win in the next generation of electronic braking systems for a longstanding customer.”

Second Quarter Fiscal Year 2022 Overview

•Net sales decreased 2% compared to the second quarter of fiscal year 2021. Foreign currency had a negligible impact on net sales in the quarter compared to the same period a year ago.

•Cash flow used for operating activities of $48.3 million during the second quarter of fiscal 2022.

•Cash conversion days (“CCD”) for the quarter ended December 31, 2021 were 81 days, up from 75 days in the second quarter of fiscal year 2021. 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 $15.1 million during the quarter.

•Cash and cash equivalents were $56.7 million and borrowings outstanding on credit facilities were $103.0 million at December 31, 2021, including $40.0 million classified as long term.

Facility Expansion in Poznan, Poland

The company also announced its intent to expand the facility in Poznan, Poland. The additional capacity is needed for programs with new and existing customers. The expansion is expected to require approximately $8 million of capital investment, adding approximately 40% to the facility’s existing production square footage, and will leverage the team in Poland to support customers based in Europe when complete in early fiscal 2024.

Fiscal Year 2022 Guidance

The company is reiterating its sales guidance for fiscal year 2022 with net sales in the range of $1.4 - $1.5 billion, an 8% to 16% increase year-over-year, although the final result is expected to be at the lower end of the range. Operating income is estimated to be 3.75% - 4.25% of net sales, compared to the original guidance of 4.5% - 5.0% of net sales. The change in the operating income estimate reflects a difficult first half due to the unavailability of material. Under normal operating conditions, the company expects an annual run rate for operating income in the range of 4.5% - 5.0% of net sales. The second half of fiscal 2022 is expected to ramp up significantly throughout the period, with a very strong finish to the fiscal year and operating income above that range, as the backlog of open orders is worked down. Capital expenditures for fiscal year 2022 are now expected to be in the range of $70 - $80 million compared to the original guidance of $60 - $70 million. This update includes the facility expansions in Thailand, Mexico, and the early investments associated with today’s announcement of the facility expansion in Poland.

Net Sales by Vertical Market for Q2 Fiscal 2022:

	Three Months Ended
	December 31,
(Amounts in Millions)	2021		*		2020		*		Percent Change
Automotive	$	139.0	44	%	$	151.9	48	%	(8)	%
Medical	89.8		29	%	87.1		27	%	3	%
Industrial	71.8		23	%	67.7		21	%	6	%
Public Safety	10.8		3	%	10.5		3	%	3	%
Other	3.9		1	%	3.4		1	%	17	%
Total Net Sales	$	315.3			$	320.6			(2)	%
*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

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, 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:	February 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:	262854

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, 2021 are as follows:

Condensed Consolidated Statements of Income
(Unaudited)	Three Months Ended
(Amounts in Thousands, except Per Share Data)	December 31, 2021				December 31, 2020
Net Sales	$	315,264	100.0	%	$	320,604	100.0	%
Cost of Sales	294,427		93.4	%	290,939		90.7	%
Gross Profit	20,837		6.6	%	29,665		9.3	%
Selling and Administrative Expenses	13,923		4.4	%	13,486		4.3	%
Operating Income	6,914		2.2	%	16,179		5.0	%
Other Income (Expense), net	(209)		(0.1)	%	2,411		0.8	%
Income Before Taxes on Income	6,705		2.1	%	18,590		5.8	%
Provision for Income Taxes	1,592		0.5	%	3,528		1.1	%
Net Income	$	5,113	1.6	%	$	15,062	4.7	%
Earnings Per Share of Common Stock:
Basic	$	0.20			$	0.60
Diluted	$	0.20			$	0.60
Average Number of Shares Outstanding:
Basic	25,238				25,101
Diluted	25,282				25,171

(Unaudited)	Six Months Ended
(Amounts in Thousands, except Per Share Data)	December 31, 2021				December 31, 2020
Net Sales	$	607,981	100.0	%	$	652,353	100.0	%
Cost of Sales	571,544		94.0	%	592,105		90.8	%
Gross Profit	36,437		6.0	%	60,248		9.2	%
Selling and Administrative Expenses	26,127		4.3	%	26,603		4.1	%
Other General Expense (Income)	(1,384)		(0.2)	%	(341)		(0.1)	%
Operating Income	11,694		1.9	%	33,986		5.2	%
Other Income (Expense), net	(1,458)		(0.2)	%	4,546		0.7	%
Income Before Taxes on Income	10,236		1.7	%	38,532		5.9	%
Provision for Income Taxes	2,559		0.4	%	6,659		1.0	%
Net Income	$	7,677	1.3	%	$	31,873	4.9	%
Earnings Per Share of Common Stock:
Basic	$	0.30			$	1.27
Diluted	$	0.30			$	1.26
Average Number of Shares Outstanding:
Basic	25,201				25,127
Diluted	25,283				25,265

Condensed Consolidated Statements of Cash Flows	Six Months Ended
(Unaudited)	December 31,
(Amounts in Thousands)	2021		2020
Net Cash Flow (used for) provided by Operating Activities	$	(56,463)	$	72,256
Net Cash Flow used for Investing Activities	(27,805)		(14,417)
Net Cash Flow provided by (used for) Financing Activities	35,465		(33,433)
Effect of Exchange Rate Change on Cash and Cash Equivalents	(901)		4,222
Net (Decrease) Increase in Cash and Cash Equivalents	(49,704)		28,628
Cash and Cash Equivalents at Beginning of Period	106,442		64,990
Cash and Cash Equivalents at End of Period	$	56,738	$	93,618

	(Unaudited)
Condensed Consolidated Balance Sheets	December 31, 2021		June 30, 2021
(Amounts in Thousands)
ASSETS
Cash and cash equivalents	$	56,738	$	106,442
Receivables, net	186,175		203,382
Contract assets	57,186		45,863
Inventories	304,194		200,386
Prepaid expenses and other current assets	28,469		27,320
Property and Equipment, net	179,046		163,251
Goodwill	12,011		12,011
Other Intangible Assets, net	15,893		17,008
Other Assets	43,513		38,398
Total Assets	$	883,225	$	814,061
LIABILITIES AND SHARE OWNERS’ EQUITY
Current portion of borrowings under credit facilities	$	63,038	$	26,214
Accounts payable	254,987		216,544
Accrued expenses	49,441		58,016
Long-term debt under credit facilities, less current portion	40,000		40,000
Long-term income taxes payable	7,812		8,854
Other	22,780		22,461
Share Owners’ Equity	445,167		441,972
Total Liabilities and Share Owners’ Equity	$	883,225	$	814,061

Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(Amounts in Thousands, except Per Share Data)
	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2021		2020		2021			2020
Operating Income, as reported	$	6,914	$	16,179	$	11,694		$	33,986
SERP	402		811		315			1,361
Legal Recovery	—		—		(1,384)			(341)
Adjusted Operating Income	$	7,316	$	16,990	$	10,625		$	35,006
Net Income, as reported	$	5,113	$	15,062	$	7,677		$	31,873
Adjustments After Measurement Period on GES Acquisition	—		133		—			133
Legal Recovery, After-Tax	—		—		(1,050)			(259)
Adjusted Net Income	$	5,113	$	15,195	$	6,627		$	31,747
Diluted Earnings per Share, as reported	$	0.20	$	0.60	$	0.30		$	1.26
Adjustments After Measurement Period on GES Acquisition	—		—		—			—
Legal Recovery	—		—		(0.04)			(0.01)
Adjusted Diluted Earnings per Share	$	0.20	$	0.60	$	0.26		$	1.25
					Twelve Months Ended
					December 31,
					2021			2020
Operating Income					$	43,411		$	46,183
Goodwill Impairment					—			7,925
SERP					1,027			1,729
Legal Recovery					(1,415)			(341)
Adjusted Operating Income (non-GAAP)					$	43,023		$	55,496
Tax Effect					9,530			10,859
After-tax Adjusted Operating Income					$	33,493		$	44,637
Average Invested Capital (1)					$	424,854		$	433,192
ROIC					7.9		%	10.3		%

(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.

EX-99.2

Second Quarter Fiscal 2022 Results Quarter Ended December 31, 2021 Supplementary Information to the February 8, 2022 Earnings Conference Call & Webcast Exhibit 99.2

Kimball Electronics (Nasdaq: KE) Safe Harbor Statement Certain statements contained within this supplementary information, including our fiscal year 2022 guidance, and any statements made during our earnings conference call today may be considered forward-looking 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, global health emergencies including the COVID-19 pandemic, availability or cost of raw materials and components, foreign exchange 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 Kimball Electronics, Inc. (the “Company”) are contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021, our earnings release, and other filings with the Securities and Exchange Commission (the “SEC”). This supplementary information contains non-GAAP financial measures. The non-GAAP financial measures contained herein include Adjusted Selling & Administrative Expenses, Adjusted Operating Income, Adjusted Net Income, Adjusted Diluted Earnings Per Share, and Return on Invested Capital (“ROIC”). Management believes these measures are useful and allow investors to meaningfully trend, analyze, and benchmark the performance of the Company’s core operations. Many of the Company’s internal performance measures that management uses to make certain operating decisions use these and other non-GAAP measures to enable meaningful trending of core operating metrics. Reconciliations of the reported GAAP numbers to these non-GAAP financial measures are included on the Reconciliation of Non-GAAP Results slide, which is the final slide of this supplementary information. 2

Kimball Electronics (Nasdaq: KE) Today’s speakers 3 Andy Regrut HEAD OF INVESTOR RELATIONS Jana Croom VICE PRESIDENT, CHIEF F INANCIAL OFFICER Don Charron CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Kimball Electronics (Nasdaq: KE) Q2 was another hard-fought quarter… 4 • Global supply chain issues stemming from the COVID-19 pandemic persisted and adversely impacted results • Component shortages continued to make it challenging to obtain materials needed to support customer demand • Conditions improved modestly in December with sales accelerating • Lost absorption was significant again this quarter, as we remained committed to retaining our highly skilled workforce • Well positioned with record levels of backlog • Reiterating sales guidance for fiscal 2022, result at lower end of range • Revising operating income guidance for difficult first half and outlook for balance of fiscal year

Kimball Electronics (Nasdaq: KE) Our manufacturing facilities have been ramping up production 5 • Expect running several production lines at maximum capacity • Often, we are the single source supplier • Customers may share eagerness for conditions to normalize so that we both can deliver on contractual agreements • Customer collaboration at levels even higher than our award- winning norm

Kimball Electronics (Nasdaq: KE) Facility expansion in Poznan, Poland 6 • Third facility expansion in the last 15 months • Representative of our success in winning new business • Additional capacity needed for programs with new and existing customers • Expect to add approximately 40% to existing production square footage • Leverage team in Poland to support customers based in Europe • Expansion expected to be complete in early fiscal 2024

Kimball Electronics (Nasdaq: KE) Updating Capex guidance for fiscal 2022 7 • Includes early investments in Poznan • Additional capital related to a major win in the next generation of electronic braking systems for a long-standing customer: • New high-tech system will support one of the world’s most popular light pick-up trucks • Similar to Poland, reflects success in new business development activities • With the expansions in Thailand, Mexico and Poland, expanding square footage capabilities to support growth potential in excess of $2 billion of annual revenue • Strength of our funnel and newly awarded programs

Kimball Electronics (Nasdaq: KE) Disappointed with the results in the first half of the fiscal year 8 • Outcome driven by the unavailability of materials • Lowering forecast for operating income margin in fiscal 2022 • Fully anticipate returning to an annual run rate for operating income levels in a range of 4.5% - 5% as the supply chain normalizes • Expect second half of fiscal 2022 to significantly ramp-up throughout the period, with a very strong finish to the fiscal year and operating income above that range, as the backlog of open orders is worked down

Kimball Electronics (Nasdaq: KE) Net sales decreased 2% compared to the same period last year 9 3 of 4 vertical markets reported increases in the quarter Net Sales Q2 ‘21 Q2 ‘22 $321 $315 (2%)

Kimball Electronics (Nasdaq: KE) $152 $139 Sales in the Automotive vertical market decreased 8% 10 Automotive (8%) • Automotive was the only vertical market with decreasing sales in Q2 • First quarterly decline in over a year • Driven by shortage of semiconductors • This vertical market reported record sales in the second quarter last year • OEMs are forecasting double-digit growth as the industry looks to recover • We remain bullish on the growth prospects of this vertical market Q2 ‘21 Q2 ‘22 44% O F R E V E N U E

Kimball Electronics (Nasdaq: KE) Medical Q2 ‘21 Q2 ‘22 $87 $90 +3% 11 Sales in the Medical vertical market increased 3% 29% O F R E V E N U E • Welcomed rebound to a business that has experienced ebbs & flows throughout the pandemic • Increase driven by launch and ramp-up of new products • Longer-term, we continue to believe the megatrends in the healthcare industry are an excellent set-up for growth • Launch of Kimball Medical Solutions should continue to drive growth supporting our goal of 30% of revenue coming from this space

Kimball Electronics (Nasdaq: KE) • Glad to see early signs of bouncing back from today’s challenging operating environment • Business commonly referred to as “green & clean” • Climate control, smart metering, and new customer additions drove increase in Q2 • Represent longer-term growth opportunities • Consumption – and ultimately conservation – of water, gas, and electricity increase in popularity Industrial Q2 ‘21 Q2 ‘22 $68 $72 +6% 12 Sales in the Industrial vertical market increased 6% 23% O F R E V E N U E

Kimball Electronics (Nasdaq: KE) Public Safety +3% Q2 ‘21 Q2 ‘22 $11 $11 13 Sales in the Public Safety vertical market increased 3% • Sales were $10.8 million in Q2 3% O F R E V E N U E

Kimball Electronics (Nasdaq: KE) Summary 14 • Challenging quarter with very good work from our team in tough conditions • Signs of improvement as evidenced by the higher level of sales in Q2 compared to Q1… an 8% increase • December the best month

Kimball Electronics (Nasdaq: KE) Net sales declined 2% compared to Q2 2021 15 • Sales were $315.3 million, a 2% decrease compared Q2 last year • Foreign exchange rates had a negligible impact on sales Overview Net Sales Trend

Kimball Electronics (Nasdaq: KE) Gross margin rate of 6.6%, a 270 bps decline compared to Q2 2021 16 Drivers of GM% Gross Margin Trend • Challenged by lower volumes related to the continued global parts shortage; impacting our absorption rate • Certain costs have increased this year… including higher material costs, increased freight, and wage inflation and other labor costs • Partially offset by lower profit-sharing bonus expense and lower depreciation

Kimball Electronics (Nasdaq: KE) Adjusted Selling & Administrative Expense (%)(1)(2) 17 (1) Adjusted Selling & Administrative Expense is a Non-GAAP measure – refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information. (2) Beginning in Q1’21, Adjusted Selling & Administrative Expense excludes changes in the fair value of our supplemental employee retirement plan (“SERP”) liability. Prior periods have been revised accordingly.

Kimball Electronics (Nasdaq: KE) Adjusted Operating Income (1)(2) 18 (1) Adjusted Operating Income is a Non-GAAP measure – refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information. (2) Beginning in Q1’21, Adjusted Operating Income excludes changes in the fair value of our supplemental employee retirement plan (“SERP”) liability. Prior periods have been revised accordingly.

Kimball Electronics (Nasdaq: KE) Adjusted Net Income and Adjusted Diluted EPS(1) 19 (1) Adjusted Net Income and Adjusted Diluted EPS are Non-GAAP measures – refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information.

Kimball Electronics (Nasdaq: KE) Balance Sheet 20 • Cash and cash equivalents were $56.7 million at December 31, 2021 • Cash flow used for operating activities was $48.3 million in the second quarter of fiscal 2022 • Cash conversion days were 81 days, up from 75 days in the second quarter last year • Inventory increased over $40 million in the quarter and $100 million year-to-date • Capital investments in the second quarter of fiscal 2022 were $15.1 million • Borrowings on our credit facilities were $103.0 million at December 31, 2021 • Our short-term liquidity available totaled $119.5 million at December 31, 2021

Kimball Electronics (Nasdaq: KE) Share repurchases 21 • No shares were repurchased in the second quarter of fiscal 2022 • Looking at balance sheet and capital allocation opportunities • Share repurchases would be an effective use of capital • Since October 2015, under our Board authorized share repurchase program: • A total of $79.7 million returned to Share Owners by repurchasing 5.3 million shares of common stock • $20.3 million remaining on program for deployment

Kimball Electronics (Nasdaq: KE) Guidance for fiscal year 2022 Supports facility expansions in Thailand, Mexico, early investments in Poland CapEx $70 - $80 million Expect the second half of fiscal 2022 to ramp-up significantly throughout the period, with a very strong finish to the fiscal year and operating income above that range, as we work down the backlog of orders CapEx guidance of $70 - $80 million compares to original guidance of $60 - $70 million. Additional capacity from facility expansions is needed for programs with new and existing customers, and a major win in the next generation of electronic braking systems for a longstanding customer $1.4 - $1.5 billion Net sales range 8%- 16% in net sales Operating income expected to be 3.75% - 4.25% of net sales Fully anticipate returning to an annual run rate for operating income in a range of 4.5% - 5.0% of net sales Operating income guidance of 3.75% - 4.25% compares to original guidance of 4.5% - 5.0% Expect to finish the fiscal year at the lower end of the sales range of $1.4 - $1.5 billion Increase compared to fiscal 2021 22

Kimball Electronics (Nasdaq: KE) Closing comments 23 • First half of fiscal 2022 not for the faint of heart • Ongoing impact of the pandemic, global supply chain issues, parts shortages, and rising costs creating challenging environment • Forecasting a strong second half to the fiscal year • Backlog of open orders at record levels – up approximately 78% compared to Q2 2021 • Expansion in Poland is representative of success in winning new business • Adding to package of value as multifaceted manufacturing solutions provider • Supports growing business to the $2 billion revenue milestone • ESG Report for 2021 available on corporate website

Q&A

Appendix

Kimball Electronics (Nasdaq: KE) Net Sales Automotive Vertical Market 26 -8% from Q2'21

Kimball Electronics (Nasdaq: KE) Net Sales Medical Vertical Market 27 +3% from Q2'21

Kimball Electronics (Nasdaq: KE) Net Sales Industrial Vertical Market 28 +6% from Q2'21

Kimball Electronics (Nasdaq: KE) Net Sales Public Safety Vertical Market 29 +3% from Q2'21

Kimball Electronics (Nasdaq: KE) Reconciliation of Non-GAAP Results 30 (Unaudited, Amounts in Thousands, Except Per Share Data) Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Selling & Administrative Expenses, as reported $ 9,624 $ 11,391 $ 13,117 $ 13,486 $ 11,744 $ 14,357 $ 12,204 $ 13,923 Less: SERP(2) (914) 1,282 550 811 164 548 (87) 402 Adjusted S&A Expense $ 10,538 $ 10,109 $ 12,567 $ 12,675 $ 11,580 $ 13,809 $ 12,291 $ 13,521 Operating Income, as reported $ 10,588 $ 1,609 $ 17,807 $ 16,179 $ 14,638 $ 17,079 $ 4,780 $ 6,914 Add: SERP(2) (914) 1,282 550 811 164 548 (87) 402 Add: Goodwill Impairment — 7,925 — — — — — — Add: Lawsuit Settlements (Recovery) — — (341) — (376) 345 (1,384) — Adjusted Operating Income (2) $ 9,674 $ 10,816 $ 18,016 $ 16,990 $ 14,426 $ 17,972 $ 3,309 $ 7,316 Net Income, as reported $ 6,259 $ (1,273) $ 16,811 $ 15,062 $ 10,472 $ 14,446 $ 2,564 $ 5,113 Add: After-Tax Goodwill Impairment — 6,947 — — — — — — Add: After-Tax Adjustments after Measurement Period of GES Acquisition — 2,871 — 133 (254) — — — Add: Lawsuit Settlements (Recovery) — — (259) — (285) 262 (1,050) — Adjusted Net Income $ 6,259 $ 8,545 $ 16,552 $ 15,195 $ 9,933 $ 14,708 $ 1,514 $ 5,113 Diluted Earnings per Share, as reported $ 0.25 $ (0.05) $ 0.66 $ 0.60 $ 0.41 $ 0.57 $ 0.10 $ 0.20 Add: After-Tax Goodwill Impairment $ — $ 0.28 $ — $ — $ — $ — $ — $ — Add: After-Tax Adjustments after Measurement Period of GES Acquisition $ — $ 0.11 $ — $ — $ (0.01) $ — $ — $ — Add: Lawsuit Settlements (Recovery) $ — $ — $ (0.01) $ — $ (0.01) $ 0.01 $ (0.04) $ — Adjusted Diluted Earnings per Share $ 0.25 $ 0.34 $ 0.65 $ 0.60 $ 0.39 $ 0.58 $ 0.06 $ 0.20 Operating Income (GAAP) (TTM) $ 40,706 $ 31,996 $ 38,688 $ 46,183 $ 50,233 $ 65,703 $ 52,676 $ 43,411 Add: Goodwill Impairment (TTM) — 7,925 7,925 7,925 7,925 — — — Add: SERP (TTM)(2) (206) 848 1,420 1,729 2,807 2,073 1,436 1,027 Add: Lawsuit Settlements (Recovery) (TTM) (215) — (341) (341) (717) (372) (1,415) (1,415) Adj. Operating Income (non-GAAP) (TTM) (2) $ 40,285 $ 40,769 $ 47,692 $ 55,496 $ 60,248 $ 67,404 $ 52,697 $ 43,023 Tax Effect (TTM) (2) 9,090 9,831 9,940 10,859 11,786 12,844 11,017 9,530 After-Tax Adj. Operating Income (TTM) (2) $ 31,195 $ 30,938 $ 37,752 $ 44,637 $ 48,462 $ 54,560 $ 41,680 $ 33,493 Average Invested Capital (1) $ 438,634 $ 437,263 $ 435,465 $ 433,192 $ 423,545 $ 415,999 $ 414,121 $ 424,854 ROIC (2) 7.1 % 7.1 % 8.7 % 10.3 % 11.4 % 13.1 % 10.1 % 7.9 % (1) Average Invested Capital is computed using the Share Owners equity plus current and non-current debt less cash and cash equivalents averaged for the last five quarters. (2) Beginning in Q1 FY'21, adjusted selling and administrative expense, adjusted operating income, and ROIC exclude changes in the fair value of our supplemental employee retirement plan (“SERP”) liability. Prior periods have been revised accordingly.

XML

Cover	Feb. 07, 2022
Document Information [Line Items]
Document Type	8-K
Document Period End Date	Feb. 07, 2022
Entity Registrant Name	KIMBALL ELECTRONICS, INC.
Entity Incorporation, State or Country Code	IN
Entity File Number	001-36454
Entity Tax Identification Number	35-2047713
Entity Address, Address Line One	1205 Kimball Boulevard
Entity Address, City or Town	Jasper
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	47546
City Area Code	812
Local Phone Number	634-4000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	KE
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0001606757
Amendment Flag	false