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)    August 1, 2018

KIMBALL INTERNATIONAL, INC.

________________________________________________________________________________________________________

(Exact name of registrant as specified in its charter)

Indiana	0-3279	35-0514506
(State or other jurisdiction of	(Commission File	(IRS Employer Identification No.)
incorporation)	Number)

1600 Royal Street, Jasper, Indiana	47549-1001
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code   (812) 482-1600

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):

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

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

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

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

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

Emerging growth company  o

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. o

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Item 2.02 Results of Operations and Financial Condition

On August 1, 2018, Kimball International, Inc. issued an earnings release for the quarter and fiscal year ended June 30, 2018.  The earnings release is attached as Exhibit 99.1.

Item 7.01 Regulation FD Disclosure

Attached hereto as Exhibit 99.2 is an investor presentation that supplements the information to be discussed on the Kimball International, Inc. earnings call to be held on August 2, 2018 at 11:00 a.m. Eastern Time. The presentation attached as Exhibit 99.2 is incorporated into this Item 7.01 by reference.

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Item 9.01 Financial Statements and Exhibits

(d) Exhibits

The following exhibits are furnished as part of this report:

Exhibit
Number	Description
99.1	Earnings Release dated August 1, 2018
99.2	Fourth Quarter and Fiscal Year 2018 Investor Presentation dated August 1, 2018

The information in this Current Report on Form 8-K set forth in Item 2.02, Item 7.01, and Exhibits 99.1 and 99.2, is being furnished in accordance with the provisions of General Instruction B.2 of Form 8-K and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information contained in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, that is being furnished under Item 2.02 and Item 7.01 shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such filing.

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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 INTERNATIONAL, INC.
By:	/s/ Michelle R. Schroeder
	MICHELLE R. SCHROEDER Vice President, Chief Financial Officer

Date: August 1, 2018

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EX-99.1

Exhibit 99.1

KIMBALL INTERNATIONAL, INC. REPORTS FOURTH QUARTER AND FISCAL YEAR 2018 RESULTS

JASPER, IN (August 1, 2018) - Kimball International, Inc. (NASDAQ: KBAL) today announced results for the quarter and fiscal year ended June 30, 2018.

Highlights:

• Revenue growth of 7%, or 4% on an organic basis; highest quarterly sales in over 15 years at $184.5 million

• Strong order growth of 19% at $208 million, or 10% on an organic basis and adjusted for timing of price increases

• Significant growth of 33% in orders in hospitality vertical on an organic basis

• Transportation, steel and other commodity cost increases continued to put pressure on margins

• Operating cash flow increased 35% over prior year fourth quarter

• Our Kimball brand received “#MetropolisLikes” award by Metropolis Magazine for its Wilder seating collection

• The National brand Danville, KY, facility recognized with the 2017 Governor’s Safety and Health Award by the Kentucky Labor Cabinet

Bob Schneider, Chairman and CEO, stated, “We ended fiscal year 2018 on a strong note with fourth quarter organic revenue growth of 4% throughout most of our market verticals. While we were encouraged with the growth, our margins in the quarter experienced pressure from higher transportation, steel and other commodity costs, which lowered profits. We are progressing with our cost reduction initiatives announced last quarter, which will save approximately $7 million in fiscal year 2019, and we will begin to realize the benefits of our recent price increases within our National and Kimball brands as those price increases begin to take hold over the next couple quarters and positively impact earnings. We anticipate these actions once fully ramped up will offset the higher costs in the second quarter of fiscal year 2019. Comparing profits to the prior year gets challenging because in the prior year fourth quarter, we sold some idle land at a $1.2 million pre-tax gain. Had we not realized that gain last year, our fourth quarter operating income would have been $0.4 million higher than last year, although we are not satisfied with these results.”

Mr. Schneider concluded, “Our strong order growth in the fourth quarter reflects a level of activity occurring within our markets that we have not seen for a while. The excitement and enthusiasm experienced during the office furniture show in Chicago in June was very encouraging, as is the 33% increase in hospitality vertical orders. The macroeconomic environment is signaling continued growth, while we are continuing to evaluate effects from the tariff discussions. I am encouraged by our results in the fourth quarter and the order momentum going into fiscal year 2019.”

Overview

Financial Highlights (Amounts in Thousands, Except Per Share Data)	Three Months Ended
	June 30, 2018			June 30, 2017			Percent Change
Net Sales	$	184,512		$	171,983		7	%
Gross Profit	$	60,166		$	57,808		4	%
Gross Profit %	32.6		%	33.6		%
Selling and Administrative Expenses	$	45,575		$	42,413		7	%
Selling and Administrative Expenses %	24.7		%	24.6		%
Operating Income	$	14,591		$	15,395		(5	%)
Operating Income %	7.9		%	9.0		%
Net Income	$	10,254		$	10,560		(3	%)
Diluted Earnings Per Share	$	0.28		$	0.28
Return on Capital	20.8		%	23.0		%
EBITDA *	$	18,631		$	19,481

* The item indicated represents a Non-GAAP measurement. See “Reconciliation of Non-GAAP Financial Measures” below.

• Consolidated net sales increased 7%, or 4% on an organic basis, driven by increases in all vertical markets except the government vertical. The hospitality vertical grew 26% including D’style acquisition sales, or 12% excluding D’style, due to increasing optimism in the hospitality industry fueled in part by the tax stimulus. The healthcare vertical increased 14% as a result of an increased focus and realignment of strategies for this vertical. Sales in the government vertical declined 16% as a result of large prior year shipments which did not repeat this year given the project nature of this vertical.

• Orders received during the fourth quarter of fiscal year 2018 increased 19% from the prior year, or 10% on a comparable basis excluding the D’style acquisition and adjusting for the timing of price increases. The increase was driven by growth in all vertical markets except the government vertical. Orders in the hospitality vertical grew 50% including the D’style acquisition, or 33% organically, driven by strong demand for both custom and non-custom products. Orders in the commercial and finance verticals increased due to our continued strategy to deliver value to customers in these segments, while the government vertical declined due to construction delays which pushed back orders to later quarters.

• Gross profit as a percent of net sales declined 100 basis points from the prior year as incremental margins from price increases were more than offset by a less profitable sales mix, higher transportation, steel, and other commodities, and an increase in the LIFO inventory reserve.

• Selling and administrative expenses in the fourth quarter increased 10 basis points as a percent of net sales and increased 7% in absolute dollars compared to the prior year. The increase in selling and administrative expense was driven by the additional selling and administrative expenses of the D’style acquisition as well as prior year gains on the sale of idle land and bad debt reversals not repeating in the current year, and increased marketing expenses, partially offset by lower incentive compensation costs. The prior year fourth quarter gains on the sale of idle land reduced prior year administrative expenses by $1.2 million.

• The Company benefited from a lower effective tax rate of 31.4% for the fourth quarter of fiscal year 2018 compared to the prior year effective tax rate of 33.4%. The decline was driven by the recently enacted tax act, where the Company’s statutory federal tax rate for fiscal year 2018 is a blended rate of 28.1% compared to the previous rate of 35%. The Company expects the tax act to generate significant tax savings in future periods, as the final 21% tax rate becomes effective in fiscal year 2019.

• Operating cash flow for the fourth quarter of fiscal year 2018 was $20.5 million compared to operating cash flow of $15.1 million in the prior year, an increase of $5.4 million. The increase was primarily driven by lower fourth quarter estimated tax payments due to a reduction in federal tax rates from the Tax Cuts and Jobs Act, and the acceleration of certain deductions into the current fiscal year to take advantage of higher tax rates in fiscal year 2018 versus fiscal year 2019.

• The Company’s balance in cash, cash equivalents, and short-term investments was $87.3 million at June 30, 2018, compared to $98.6 million at June 30, 2017. The fiscal year 2018 decrease was primarily due to capital expenditures of $22.3 million, a $18.2 million cash outflow for the D’style acquisition, and the return of capital to shareowners in the form of $8.9 million in stock repurchases and $10.1 million in dividends, which more than offset $46.9 million of cash flows from operations.

Fiscal year 2018 net sales of $685.6 million increased 2% from fiscal year 2017 net sales of $669.9 million. Fiscal year 2018 operating income was $51.1 million, or 7.4% of net sales, compared to fiscal year 2017 operating income of $56.7 million, or 8.5% of net sales. Fiscal year 2018 operating income includes a $1.7 million gain on the sale of an administrative building, and fiscal year 2017 operating income includes a $1.8 million gain on the sale of a facility related to a prior year restructuring plan and $1.2 million of gains from the sale of idle land. Net income for fiscal year 2018 was $34.4 million, or $0.92 per diluted share, inclusive of the $1.2 million or $0.03 per share gain on the sale of an administrative building. Fiscal year 2017 net income was $37.5 million, or $0.99 per diluted share, inclusive of the $1.1 million or $0.03 per share gain related to the prior year restructuring plan and the $0.7 million or $0.02 per share of gains from the sale of idle land.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a company’s financial performance that excludes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with Generally Accepted Accounting Principles (“GAAP”) in the United States in the statement of income, statement of comprehensive income, balance sheet, or statement of cash flows of the Company. The non-GAAP financial measures used within this release are organic net sales and

EBITDA. Organic net sales are defined as net sales excluding acquisition-related sales, and EBITDA is defined as net income before interest expense, income taxes, depreciation expense, amortization expense, and restructuring expense. A reconciliation of the reported GAAP numbers to the non-GAAP financial measures is included in the Reconciliation of Non-GAAP Financial Measures table below. Management believes that organic net sales is useful to investors to aid in identifying underlying trends in our business and facilitating comparisons of our sales performance with prior periods. Management believes that EBITDA is a useful measurement to assist investors in comparing our performance over various reporting periods on a consistent basis by removing from operating results the impact of items that do not reflect our core operating performance.

The orders received metric is a key performance indicator used to evaluate general sales trends and develop future operating plans. Orders received represent firm orders placed by our customers during the current quarter which are expected to be recognized as revenue during current or future quarters. The orders received metric is not intended to be presented as an alternative measure of revenue recognized in accordance with GAAP.

Forward-Looking Statements

Certain statements contained within this release are considered forward-looking under the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties including, but not limited to, the risk that any projections or guidance, including revenues, margins, earnings, or any other financial results are not realized, the outcome of a governmental review of our subcontractor reporting practices, adverse changes in the global economic conditions, significant volume reductions from key contract customers, significant reduction in customer order patterns, financial stability of key customers and suppliers, and availability or cost of raw materials. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of the Company are contained in the Company’s Form 10-K filing for the fiscal year ended June 30, 2017 and other filings with the Securities and Exchange Commission.

Conference Call / Webcast
Date:	August 2, 2018
Time:	11:00 AM Eastern Time
Dial-In #:	844-602-5643 (International Calls - 574-990-3014)
Pass Code:	Kimball

A webcast of the live conference call may be accessed by visiting Kimball International’s Investor Relations website at www.ir.kimballinternational.com.

For those unable to participate in the live webcast, the call will be archived at www.ir.kimballinternational.com within two hours of the conclusion of the live call.

About Kimball International, Inc.

Kimball International, Inc. creates design driven, innovative furnishings sold through our family of brands: Kimball, National, and Kimball Hospitality. Our diverse portfolio offers solutions for the workplace, learning, healing, and hospitality environments. Dedicated to our Guiding Principles, our values and integrity are evidenced by public recognition as a highly trusted company and an employer of choice. “We Build Success” by establishing long-term relationships with customers, employees, suppliers, shareowners and the communities in which we operate. To learn more about Kimball International, Inc. (NASDAQ: KBAL), visit www.kimballinternational.com.

Financial highlights for the fourth quarter and fiscal year ended June 30, 2018 are as follows:

Condensed Consolidated Statements of Income
(Unaudited)	Three Months Ended
(Amounts in Thousands, except per share data)	June 30, 2018				June 30, 2017
Net Sales	$	184,512	100.0	%	$	171,983	100.0	%
Cost of Sales	124,346		67.4	%	114,175		66.4	%
Gross Profit	60,166		32.6	%	57,808		33.6	%
Selling and Administrative Expenses	45,575		24.7	%	42,413		24.6	%
Operating Income	14,591		7.9	%	15,395		9.0	%
Other Income, net	352		0.2	%	456		0.2	%
Income Before Taxes on Income	14,943		8.1	%	15,851		9.2	%
Provision for Income Taxes	4,689		2.5	%	5,291		3.1	%
Net Income	$	10,254	5.6	%	$	10,560	6.1	%
Earnings Per Share of Common Stock:
Basic	$	0.28			$	0.28
Diluted	$	0.28			$	0.28
Average Number of Total Shares Outstanding:
Basic	37,094				37,261
Diluted	37,248				37,729

(Unaudited)	Fiscal Year Ended
(Amounts in Thousands, except per share data)	June 30, 2018				June 30, 2017
Net Sales	$	685,600	100.0	%	$	669,934		100.0	%
Cost of Sales	464,154		67.7	%	446,629			66.7	%
Gross Profit	221,446		32.3	%	223,305			33.3	%
Selling and Administrative Expenses	170,383		24.9	%	168,474			25.1	%
Restructuring (Gain) Expense	0		0.0	%	(1,832		)	(0.3	%)
Operating Income	51,063		7.4	%	56,663			8.5	%
Other Income, net	1,262		0.2	%	1,355			0.2	%
Income Before Taxes on Income	52,325		7.6	%	58,018			8.7	%
Provision for Income Taxes	17,886		2.6	%	20,512			3.1	%
Net Income	$	34,439	5.0	%	$	37,506		5.6	%
Earnings Per Share of Common Stock:
Basic	$	0.92			$	1.00
Diluted	$	0.92			$	0.99
Average Number of Total Shares Outstanding:
Basic	37,314				37,334
Diluted	37,494				37,833

	(Unaudited)
Condensed Consolidated Balance Sheets	June 30, 2018		June 30, 2017
(Amounts in Thousands)
ASSETS
Cash and cash equivalents	$	52,663	$	62,882
Short-term investments	34,607		35,683
Receivables, net	60,984		53,909
Inventories	39,509		38,062
Prepaid expenses and other current assets	18,523		8,050
Assets held for sale	281		4,223
Property and Equipment, net	84,487		80,069
Goodwill	8,824		0
Intangible Assets, net	12,607		2,932
Deferred Tax Assets	4,916		14,487
Other Assets	12,767		13,450
Total Assets	$	330,168	$	313,747
LIABILITIES AND SHAREOWNERS’ EQUITY
Current maturities of long-term debt	$	23	$	27
Accounts payable	48,214		44,730
Customer deposits	21,253		20,516
Sale-leaseback financing obligation	0		3,752
Dividends payable	2,662		2,296
Accrued expenses	49,294		49,018
Long-term debt, less current maturities	161		184
Other	15,537		17,020
Shareowners’ Equity	193,024		176,204
Total Liabilities and Shareowners’ Equity	$	330,168	$	313,747

Condensed Consolidated Statements of Cash Flows	Fiscal Year Ended
(Unaudited)	June 30,
(Amounts in Thousands)	2018			2017
Net Cash Flow provided by Operating Activities	$	46,866		$	64,844
Net Cash Flow used for Investing Activities	(35,216		)	(36,176		)
Net Cash Flow used for Financing Activities	(21,869		)	(13,362		)
Net (Decrease) Increase in Cash and Cash Equivalents	(10,219		)	15,306
Cash and Cash Equivalents at Beginning of Period	62,882			47,576
Cash and Cash Equivalents at End of Period	$	52,663		$	62,882

Net Sales by End Vertical Market
	Three Months Ended						Fiscal Year Ended
(Unaudited)	June 30,						June 30,
(Amounts in Millions)	2018		2017		% Change		2018		2017		% Change
Commercial	$	52.7	$	50.8	4	%	$	201.7	$	198.5	2	%
Education	23.5		23.3		1	%	82.8		78.0		6	%
Finance	18.4		17.1		8	%	66.6		68.1		(2	%)
Government	18.6		22.1		(16	%)	81.3		75.5		8	%
Healthcare	24.5		21.4		14	%	86.6		96.0		(10	%)
Hospitality	46.8		37.2		26	%	166.6		153.8		8	%
Total Net Sales	$	184.5	$	171.9	7	%	$	685.6	$	669.9	2	%

Orders Received by End Vertical Market
	Three Months Ended						Fiscal Year Ended
(Unaudited)	June 30,						June 30,
(Amounts in Millions)	2018		2017		% Change		2018		2017		% Change
Commercial	$	58.5	$	48.6	20	%	$	211.0	$	207.1	2	%
Education	34.5		31.6		9	%	88.0		84.6		4	%
Finance	20.4		16.1		27	%	73.6		68.8		7	%
Government	19.0		22.6		(16	%)	77.8		81.7		(5	%)
Healthcare	24.9		22.8		9	%	92.6		99.4		(7	%)
Hospitality	50.8		33.9		50	%	164.9		143.6		15	%
Total Orders Received	$	208.1	$	175.6	19	%	$	707.9	$	685.2	3	%

During the second quarter of fiscal year 2018, vertical market reporting was redefined to better reflect the end markets that the Company serves. The largest shifts among vertical markets were sales to certain government-affiliated medical facilities, which were previously classified in the government vertical market and are now classified in the healthcare vertical market. Prior period information was estimated to reflect the new vertical market definitions on a comparable basis.

Supplementary Information
Components of Other Income (Expense), net	Three Months Ended						Fiscal Year Ended
(Unaudited)	June 30,						June 30,
(Amounts in Thousands)	2018			2017			2018			2017
Interest Income	$	331		$	191		$	1,057		$	536
Interest Expense	(61		)	(22		)	(221		)	(37		)
Foreign Currency Gain (Loss)	(62		)	46			(93		)	18
Gain on Supplemental Employee Retirement Plan Investment	224			346			980			1,215
Other Non-Operating Expense	(80		)	(105		)	(461		)	(377		)
Other Income, net	$	352		$	456		$	1,262		$	1,355

Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(Amounts in Thousands)
Net Sales excluding D’style acquisition (“Organic Net Sales”)
	Three Months Ended				Fiscal Year Ended
	June 30,				June 30,
	2018		2017		2018		2017
Net Sales, as reported	$	184,512	$	171,983	$	685,600	$	669,934
Less: D’style acquisition net sales	5,398		0		13,031		0
Organic Net Sales	$	179,114	$	171,983	$	672,569	$	669,934

Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) excluding Restructuring
	Three Months Ended						Fiscal Year Ended
	June 30,						June 30,
	2018			2017			2018			2017
Net Income	$	10,254		$	10,560		$	34,439		$	37,506
Provision for Income Taxes	4,689			5,291			17,886			20,512
Income Before Taxes on Income	14,943			15,851			52,325			58,018
Interest Expense	61			22			221			37
Interest Income	(331		)	(191		)	(1,057		)	(536		)
Depreciation and Amortization	3,958			3,799			15,470			15,553
Pre-tax Restructuring Gain	0			0			0			(1,832		)
EBITDA	$	18,631		$	19,481		$	66,959		$	71,240

EX-99.2

Exhibit 99.2 Investor Presentation Fourth Quarter Fiscal Year 2018

Safe Harbor Statement Certain statements contained within this release are considered forward-looking under the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties including, but not limited to, the risk that any projections or guidance, including revenues, margins, earnings, or any other financial results are not realized, the outcome of a governmental review of our subcontractor reporting practices, adverse changes in the global economic conditions, significant volume reductions from key contract customers, significant reduction in customer order patterns, financial stability of key customers and suppliers, and availability or cost of raw materials. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of the Company are contained in the Company's Form 10-K filing for the fiscal year ended June 30, 2017 and other filings with the Securities and Exchange Commission. 1

Company Snapshot Headquarters: Jasper, Indiana, USA Founded: 1950 Employees: ~3,000 _____________________ (1) Unaudited. See Appendix for Non-GAAP reconciliation. 2

Who We Are Kimball International, Inc. creates design driven, innovative furnishings sold through our family of brands: Kimball, National, and Kimball Hospitality. Our diverse portfolio offers solutions for the workplace, learning, healing, and hospitality environments. Dedicated to our Guiding Principles, our values and integrity are evidenced by public recognition as a highly trusted company and an employer of choice. “We Build Success” by establishing long-term relationships with customers, employees, suppliers, shareowners, and the communities in which we operate. We are committed to sales growth, profitability and return on capital that is among the best in each of our markets. 3

Why Invest in Us • Size and Focus Enabling Response to Changing Market • Design Driven New Products Fueling Growth • Strong Return on Capital Relative to Competitors • Hospitality Industry Continuing Growth • $7 Million in Savings in FY’19 Expected from Lean Initiatives • Capital Available for Accelerated Growth 4

Design Driven and Award Winning 5

Evolving Office Environment Driving New Products ✓ Increased mobility/technology requires flexible work space ✓ Promotion of healthy work environments ✓ Shifting to more open and collaborative office layouts to ✓ Real Estate Optimization promote teamwork 6

Office Furniture New Products 21 New Products Introduced In Fiscal Year 2018 7

Office Furniture New Products New Product Introductions and Year Over Year Growth (1) New product ($ in millions) introductions (NPIs) are defined as those introduced in last 3 58% years. Some significant 54% NPIs hit this mark this fiscal year causing them to be excluded. Investment in NPI remains a strategic 37% priority. We had 20 33% 33% 33% NPIs in FY’17 and 21 31% NPIs in FY’18. 26% 22% 21% 22% 6% -18% -26% -27% -28% $21 $21 $19 $27 $29 $28 $29 $36 $39 $34 $35 $43 $29 $25 $26 $36 FY'15 Q2 Q3 Q4 FY'16 Q2 Q3 Q4 FY'17 Q2 Q3 Q4 FY'18 Q2 Q3 Q4 Q1 Q1 Q1 Q1 (1) Unaudited 8

Order Trend Relative to Office Furniture Market 18% Without both the Price increase on April 1, prior and current 2017 pulled orders forward year price increase effects, 13% to Q3. Without this effect, estimated orders would Q4’18 orders have been up 12% in would have 11% Q3’17 and 4% in Q4’17. been up approximately 8% 8% 7% 6% 4%. 6% 6% 4% 4% 2% 3% 3% 1% 1% 3% 0% 0% -1% -1% -1% -2% -2% -5% -9% Without the prior year price increase effect, Q3’18 orders are down approximately 4%. Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Kimball Int'l (excluding Hospitality vertical)(1) Office Furniture Industry (BIFMA) (2) (1) Sales and order data are not available for the Hospitality furniture industry (BIFMA industry data excludes Hospitality furniture). Therefore, to get a comparable industry comparison, sales and orders for the Hospitality vertical are excluded from the Kimball International numbers presented in this graph. (2) Calculated using monthly year over year % growth reported by BIFMA for the U.S. Commercial Furniture Market. 9

US Furniture Leading Indicators US Corporate Profit After Tax Conference Board CEOConfidence With IVA and CCA adjustment ($billion) 80 2500 70 60 2000 50 1500 40 30 1000 20 500 10 0 0 Source: Conference Board June 2018) 2018) June Board Conference Source: 6/1/2008 6/1/2009 6/1/2010 6/1/2011 6/1/2012 6/1/2013 6/1/2014 6/1/2015 6/1/2016 6/1/2017 6/1/2018 12/1/2008 12/1/2009 12/1/2010 12/1/2011 12/1/2012 12/1/2013 12/1/2014 12/1/2015 12/1/2016 12/1/2017 9/1/2004 3/1/2005 9/1/2005 3/1/2006 9/1/2006 3/1/2007 9/1/2007 3/1/2008 9/1/2008 3/1/2009 9/1/2009 3/1/2010 9/1/2010 3/1/2011 9/1/2011 3/1/2012 9/1/2012 3/1/2013 9/1/2013 3/1/2014 9/1/2014 3/1/2015 9/1/2015 3/1/2016 9/1/2016 3/1/2017 9/1/2017 3/1/2018 Source: US Bureau of Economic Analysis (March 2018) (March Analysis of Economic USBureau Source: May Architecture Billings Index marked the BIFMA 8th month of $20,000 8% consecutive billings 6.9% 7% growth $15,000 5.8% 6% 5% $10,000 4% 3.6% 3% $5,000 2.0% 2% 1.5% 1.9% 1% $- 0% Source: BIFMA (April 2018) (April BIFMA Source: 2014 2015 2016 2017 Prelim 2018 2019 2018) (May AIA Source: Actual Actual Actual Estimate Forecast Forecast US Office Furniture US Ed. and Health Furniture US Total Total Growth Includes imported product 10

Hospitality Industry Growth Revenue Per Available Room (RevPAR) Growth Rates Estimated (1) 5.0% 4.0% 3.0% 3.0% 2.8% 2.0% 1.0% 0.0% 2018 2019 (1) Source PWC May 2018 Hospitality Directions 11

Financial Performance ($ in millions) $685.6 $669.9 8.2% $635.1 7.4% $600.9 6.4% FY’18 margins pressured by $543.8 higher 4.8% transportation, steel and other commodity cost increases 1.6% FY 2014 FY 2015 FY 2016 FY 2017 FY2018 Net Sales Adjusted Pro Forma Operating Income from Continuing Operations Percentage of Net Sales (1) (1) Unaudited. Adjusted Pro Forma Operating Income from Continuing Operations. See Appendix for Non-GAAP reconciliation. 12

Operating Income Long Term Target: 10% Fiscal Year Quarterly 10.0% (3) (2) 9.4% 9.0% 9.0% 8.2% 8.0% 7.9% 7.4% (4) 7.0% 6.9% 6.4% 6.0% 5.4% 5.0% 4.8% FY’18 margins 4.0% pressured by higher 3.0% transportation, steel and other 2.0% 1.6% commodity cost increases 1.0% 0.0% 2014 2015 2016 2017 2018 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Adjusted Pro Forma Operating Income from Continuing Operations Percentage of Net Sales (1) Series 2 _____________________ (1) Unaudited. See Appendix for Non-GAAP reconciliation. (2) Includes pre-tax gain of $1.2 million on sale of land which had 70 basis point favorable impact on Q4’17 percent. (3) Includes pre-tax gain of $0.4 million on sale of excess land partially offset by $0.3 million acquisition costs related to D’style. (4) Includes pre-tax gain of $1.7 million on sale of administrative building offset by $0.4 million acquisition costs related to D’style. 13

Financial Targets Over the Next Three to Five Years Sales Mid-single digit organic growth annually Operating Income Margin Growth of 2X to 2.5X sales growth Operating Income Long-Term Target 10% Effective Tax Rate 25% to 27% EPS Growth of 2X to 2.5X sales growth 14

Capital Available for Growth ($ in millions) Capital Expenditures Priorities for Capital Allocation $22.3 • Reinvestment for growth • Stock buy back offsetting dilution • Dividends comparable to peers • Acquisitions $6.6 $6.5 • Stock buy back if excess capital $5.6 $4.4 $3.7 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Trailing 4 Qtrs Fiscal Year Dividends and Share Repurchases Quarterly Dividends and Share Repurchases $8.9 $6.3 $10.3 $9.7 $6.7 $1.7 $0.8 $0.1 $0.1 $10.1 $7.7 $8.1 $8.8 $7.5 $2.2 $2.2 $2.6 $2.6 $2.6 FY'14 FY'15 FY'16 FY'17 FY'18 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Dividends Paid (1) Share Repurchases Dividends Paid (1) Share Repurchases _____________________ (1) Includes total Class A and Class B dividends paid. Note: All periods presented above are unaudited 15

Sales Growth Each Quarter ($ in millions) $200 18.0% $184.5 $173.7 16.0% $172.0 $169.5 $157.9 14.0% 12.0% 10.0% 8.0% 7.3% $100 6.0% 4.4% 1st sales decline 4.1% 4.0% 3.2% in 17 quarters 2.2% 2.0% 0.6% 0.0% 0.0% -2.0% -3.1% -4.0% $0 -6.0% Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 (1) Net Sales Year Over Year Growth(1) Organic Growth (1) (1) Unaudited. 16

Orders ($ in millions) 20.0% 18.5% Excluding both current and prior year price increase $200 effects and acquisition, Q4’18 orders would be up 9.7% 16.0% 15.3% 13.4% 12.1% 12.0% 7.8% 8.0% 6.9% 5.8% 5.9% 4.0% $100 2.5% 2.4% 0.3% 0.0% -1.3% -5.7% -4.0% -7.4% -8.0% -8.8% $165.9 $168.2 $148.4 $176.4 $177.2 $165.9 $166.4 $175.7 $164.1 $178.9 $156.8 $208.1 $0 -12.0% Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Orders Received(1) Year Over Year Growth (1) Organic Growth (1) (1) Unaudited. 17

Sales by Vertical – Good Diversification(1) ($ in millions) 26% growth or 12% Sales growth broad $52.7 growth excluding based with increases $50.8 D’style acquisition in five out of six $46.8 vertical markets $37.2 $24.5 $23.3 $23.5 $21.4 $22.1 $18.6 $18.4 $17.1 Commercial Hospitality Healthcare Education Government Finance Q4'17 Q4'18 _____________________ (1) Unaudited. 18

Orders by Vertical(1) ($ in millions) 50% growth or 33% $58.5 growth excluding D’style acquisition Order growth broad based with increases $50.8 in five out of six $48.6 vertical markets $33.9 $34.5 $31.6 $24.9 $22.8 $22.6 $20.4 $19.0 $16.1 Commercial Hospitality Healthcare Education Government Finance Q4'17 Q4'18 _____________________ (1) Unaudited. 19

Gross Profit(1) 35.2% 33.6% Highest in 15 years 32.6% 31.1% 30.2% Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 % of Net Sales _____________________ (1) Unaudited. 20

Selling and Administrative Expenses(1) Q2’18 includes $1.7 million gain on sale of an administrative 25.8% building. $45.6 $43.6 $42.4 $41.9 $39.2 24.8% 24.7% 24.6% 24.2% Q4’17 includes $1.2 million gain on sale of land. Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 S&A S&A % of Net Sales _____________________ (1) Unaudited. 21

Adjusted Return on Capital(1) 23.0% 23.2% 20.8% 16.7% 12.1% Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Adjusted Return on Capital _____________________ (1) Unaudited. See Appendix for Non-GAAP reconciliation. 22

Free Cash Flow(1) ($ in millions) 30 $24.5 25 20 15 $14.0 10 $7.3 5 $2.8 $0.4 0 Q1'18 Q2'18 Q3'18 Q4'18 Trailing 4 Qtrs _____________________ (1) Unaudited. See Appendix for Non-GAAP reconciliation. 23

Appendix

Annual Non-GAAP Reconciliation (Unaudited) Millions $ 2014 2015 2016 2017 2018 Operating Income from Continuing Operations $1.9 $17.3 $33.5 $56.6 $51.1 Add: Spin Cost – Included in SGA $1.5 $3.2 Add (Deduct): Restructuring $5.3 $7.3 -$1.8 Adjusted Operating Income from Continuing Operations $3.4 $25.8 $40.8 $54.8 $51.1 Adjusted Operating Income from Continuing Operations as a % of Sales .6% 4.3% 6.4% 8.2% 7.4% Add: Employee Retirements – Included in SGA (1) $6.8 $3.3 Add: Other Non-operational – Included in SGA (2) -$.5 Adjusted Pro Forma Operating Income from Continuing Operations $9.7 $29.1 $40.8 $54.8 $51.1 before External Reverse Synergies Deduct: External Reverse Synergies (3) -$1.2 -$0.4 Adjusted Pro Forma Operating Income from Continuing Operations (3) $8.5 $28.7 $40.8 $54.8 $51.1 Adjusted Pro Forma Operating Income from Continuing Operations as a 1.6% 4.8% 6.4% 8.2% 7.4% % of Sales _____________________ (1) Estimated cost associated with the retirement and separation of people due to spin. Costs include that for salary, incentive compensation, performance shares, retirement contribution, and payroll tax. (2) Includes: pre-tax airplane write-off $1.2M and gain from sale of idle property of $1.7M in FY’14. (3) Adjusted pro forma operating income includes external reverse synergies representing estimated increases to the cost structure necessitated by the split into two companies. For example, pre-spin Kimball had one board of directors, and such costs were allocated to Furniture and Electronics. Post spin, there are two boards with each company experiencing a cost increase merely because of the separation. Other examples include IT expenditures and certain insurance cost among others. The $1.3M per year reflected in the table above is a mid-point of a range estimated to be from $1.0M to $1.5M adjusting the adjusted pro forma operating income from continuing operations to reflect this estimated increase in cost structure post spin. In addition to external cost, internal reverse synergy cost also exist and are embedded in the calculation of Operating Income from continuing operations reducing income. Different than external cost, these costs do not have to be separately deducted in this reconciliation because by way of the discontinued operation calculation this cost increase remains within the computed Operating Income from continuing operations. As an example for this type of cost, pre-spin Kimball had an SEC financial reporting function, and such costs were allocated to Furniture and Electronics. Post spin, there are two separate functions experiencing a cost increase as it takes more resource to perform this function for two separate companies than one. This cost increase is estimated to be $500k to $1M. So in total, it is estimated that reverse synergy cost will increase cost structure post spin by $1.5 to $2.5M per year as already reflected in the adjusted results included in the reconciliation above. Note: We had formerly excluded Supplemental Employee Retirement Plan (SERP) expense from adjusted pro forma operating income. We are no longer excluding SERP because it does not have a material impact on the trend of operating income. The annual amounts of SERP expense now included in adjusted pro forma operating income are $2.6M in FY’14, and $0.6M in FY’15, $0.0 in FY’16, $1.2M in FY’17, and $1.0M in FY’18. 25

Quarterly Non-GAAP Reconciliation (Unaudited) Millions $ Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 Operating Income $15.4 $16.0 $12.0 $8.5 $14.6 Median Effective Income Tax Rate for Trailing Four Quarters 35.1% 33.4% 35.1% 33.4% 32.4% Median Income Tax Expense $5.4 $5.4 $4.2 $2.8 $4.7 Net Operating Profit After-Tax (NOPAT) $10.0 $10.6 $7.8 $5.7 $9.9 Average Capital (Total Equity plus Interest-Bearing Total Debt) (1) $173.8 $183.1 $187.0 $186.7 $189.3 Adjusted Return on Capital (annualized) 23.0% 23.2% 16.7% 12.1% 20.8% Millions $ Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 Operating Cash Flow, as reported $15.1 $7.0 $8.4 $11.0 $20.5 Total Capital Expenditures -$4.4 -$6.6 -$5.6 -$3.7 -$6.5 Free Cash Flow $10.7 $0.4 $2.8 $7.3 $14.0 (1) Includes Cash And Investments 26