EX-99.1 2 exhibit9918k09302022q110q.htm KIMBALL ELECTRONICS, INC. EXHIBIT 99.1 Document

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)20222021
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 %
Medical114.8 28 %85.0 29 %35 %
Industrial (1)
100.9 25 %75.0 26 %35 %
Other5.7 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, 2022September 30, 2021
Net Sales$405,889 100.0 %$292,717 100.0 %
Cost of Sales376,568 92.8 %277,117 94.7 %
Gross Profit29,321 7.2 %15,600 5.3 %
Selling and Administrative Expenses15,750 3.9 %12,204 4.2 %
Other General Expense (Income)— — %(1,384)(0.5)%
Operating Income13,571 3.3 %4,780 1.6 %
Other Income (Expense), net(1,403)(0.3)%(1,249)(0.4)%
Income Before Taxes on Income12,168 3.0 %3,531 1.2 %
Provision for Income Taxes2,659 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 $0.10 
Average Number of Shares Outstanding:
     Basic24,826 25,145 
     Diluted24,955 25,301 
Condensed Consolidated Statements of Cash FlowsThree Months Ended
(Unaudited)September 30,
(Amounts in Thousands)20222021
Net Cash Flow used for Operating Activities$(60,194)$(8,187)
Net Cash Flow used for Investing Activities(19,320)(12,868)
Net Cash Flow provided by Financing Activities50,769 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 Period49,851 106,442 
Cash and Cash Equivalents at End of Period$19,715 $89,324 




(Unaudited)
Condensed Consolidated Balance SheetsSeptember 30,
2022		June 30,
2022
(Amounts in Thousands)
ASSETS
    Cash and cash equivalents$19,715 $49,851 
    Receivables, net253,823 222,857 
    Contract assets68,314 64,080 
    Inventories 449,528 395,630 
    Prepaid expenses and other current assets28,637 28,665 
    Property and Equipment, net215,469 206,835 
    Goodwill12,011 12,011 
    Other Intangible Assets, net13,792 14,707 
    Other Assets40,474 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 payable322,199 308,617 
    Accrued expenses65,258 64,545 
    Long-term debt under credit facilities, less current portion180,000 145,000 
    Long-term income taxes payable5,859 7,812 
    Other long-term liabilities19,697 20,242 
    Share Owners’ Equity456,245 453,971 
        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,
20222021
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,
20222021
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 Effect16,356 11,017 
After-tax Adjusted Operating Income$43,273 $41,680 
Average Invested Capital (1)
$544,711 $414,121 
ROIC7.9 %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.