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)   November 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 November 7, 2022, the Company issued an earnings release for the first quarter ended September 30, 2022.  The earnings release is attached as Exhibit 99.1.

The information in Item 2.02 of this Form 8-K, including Exhibit 99.1, 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 November 7, 2022
104	Cover Page Interactive Data File (formatted in Inline XBRL)

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 Chief Financial Officer

Date: November 7, 2022

3

EX-99.1

Exhibit 99.1

KIMBALL ELECTRONICS REPORTS Q1 RESULTS WITH RECORD SALES AND IMPROVING YEAR-OVER-YEAR OPERATING MARGIN; COMPANY AFFIRMS GUIDANCE FOR FISCAL 2023 WITH FULL YEAR EXPECTED AT THE HIGH-END OF THE RANGE FOR SALES AND OPERATING MARGIN

•Net sales in the first quarter of fiscal 2023 totaled $405.9 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 first quarter of fiscal 2022

•Operating income of $13.6 million, or 3.3% of net sales, compared to operating income of $4.8 million, or 1.6% of net sales in the same period last year

•Net income of $9.5 million, or $0.38 per diluted share, compared to net income of $2.6 million, or $0.10 per diluted share, in the first quarter of fiscal 2022

JASPER, Ind., November 7, 2022 -- (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, 2022		June 30, 2022
(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.

XML

Cover	Nov. 07, 2022
Document Information [Line Items]
Document Type	8-K
Document Period End Date	Nov. 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