JASPER, Ind., May 7, 2024 -- (BUSINESS WIRE) -- Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the third quarter of fiscal 2024 with net sales totaling $425.0 million and a net loss of $6.1 million, or $0.24 per share. This result includes the impairment of the Automation, Test & Measurement business, which the Company expects to divest, along with restructuring expense, partially offset by the recovery of a legal settlement. A detailed reconciliation is provided later in this release.

•Excluding these items, adjusted net income in the third quarter of fiscal 2024 totaled $8.4 million, or $0.34 per diluted share, and adjusted operating income equaled $17.0 million, or 4.0% of net sales.

•Cash flow from operating activities in the quarter was $42.6 million driven by inventory reductions.

•Company sharpens strategic focus on EMS operations and aligns cost structure to short-term demand trends.

•Guidance for adjusted operating income in fiscal 2024 reiterated, while the estimate for net sales was updated, in response to the challenging operating environment, and capital expenditures strategically reduced.

•Resumption of share repurchases approved by the Board of Directors.

Commenting on today’s announcement, Richard D. Phillips, Chief Executive Officer, stated, “As we anticipated, the operating environment has remained challenged for the EMS industry, and our sales in the third quarter declined as expected. During this period of end market softness, we have focused on ‘controlling what we can control,’ proactively aligning our cost structure with short-term demand trends, maintaining competitiveness with stable operating margins, and focusing on working capital improvements.”

Mr. Phillips continued, “We’re taking meaningful steps to sharpen our strategic focus and further position the Company for profitable growth, and stronger performance moving forward. With the expected divestiture of the Automation, Test & Measurement business, our team can increase focus and support on our core EMS operations. While we suspect the macro headwinds will persist in fiscal 2025, we’re continuing to make investments in long-term growth opportunities supported by a robust funnel for new business in the next 18-24 months, while deploying a capital allocation strategy that balances growth, lasting customer relationships, and returning cash to Share Owners with opportunistic share repurchases.”

The Company ended the third quarter of fiscal 2024 with cash and cash equivalents of $65.2 million and borrowings outstanding on credit facilities of $319.6 million, including $235.0 million classified as long term, and $117.4 million of borrowing capacity available. Capital expenditures were $13.4 million in Q3.

Net Sales by Vertical Market for Q3 Fiscal 2024:

Guidance for Fiscal Year 2024

The Company reiterated its guidance for adjusted operating income in fiscal year 2024 of 4.2% to 4.6% of net sales. In response to the current economic environment, net sales are now expected to decline 4% to 6%, compared to the previous estimate of a 2% to 4% decrease. Capital expenditures are estimated to be in the range of $55 to $60 million, compared to the previous guidance of $70 to $80 million.

Certain statements contained within this release are considered forward-looking, including our fiscal year 2024 guidance, under the Private Securities Litigation Reform Act of 1995. The statements may be identified by the use of words such as “expect,” “should,” “goal,” “predict,” “will,” “future,” “optimistic,” “confident,” and “believe.” Undue reliance should not be placed on these forward-looking statements. These statements are based on current expectations of future events and thus are inherently subject to uncertainty. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. These forward-looking statements are subject to risks and uncertainties including, without limitation, global economic conditions, geopolitical environment and conflicts such as the war in Ukraine, global health emergencies, 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, 2023.

This press release contains non-GAAP financial measures. The non-GAAP financial measures contained herein include constant currency growth, adjusted operating income, adjusted net income, adjusted diluted EPS, and ROIC. Reconciliations of the reported GAAP numbers to these non-GAAP financial measures are included in the Reconciliation of Non-GAAP Financial Measures section below. Management believes these measures are useful and allow investors to meaningfully trend, analyze, and benchmark the performance of the company’s core operations. The company’s non-GAAP financial measures are not necessarily comparable to non-GAAP information used by other companies.

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.

For those unable to participate in the live webcast, the call will be archived at investors.kimballelectronics.com.

Financial highlights for the third quarter and year-to-date period ended March 31, 2024 are as follows:

(Unaudited)			Nine Months Ended
(Amounts in Thousands, except Per Share Data)			March 31, 2024												March 31, 2023
Net Sales			$	1,284,352					100.0		%				$	1,327,288					100.0		%
Cost of Sales			1,180,833						91.9		%				1,220,804						92.0		%
Gross Profit			103,519						8.1		%				106,484						8.0		%
Selling and Administrative Expenses			50,736						4.0		%				50,204						3.8		%
Other General Expense (Income)			(892)						(0.1)		%				—						—		%
Restructuring Expense			1,622						0.1		%				—						—		%
Goodwill Impairment			5,820						0.5		%				—						—		%
Asset Impairment			16,564						1.3		%				—						—		%
Operating Income			29,669						2.3		%				56,280						4.2		%
Interest Income			483						—		%				88						—		%
Interest Expense			(17,459)						(1.4)		%				(10,790)						(0.8)		%
Non-Operating Income (Expense), net			(959)						—		%				2,659						0.2		%
Other Income (Expense), net			(17,935)						(1.4)		%				(8,043)						(0.6)		%
Income Before Taxes on Income			11,734						0.9		%				48,237						3.6		%
Provision for Income Taxes			(1,234)						(0.1)		%				11,608						0.8		%
Net Income			$	12,968					1.0		%				$	36,629					2.8		%
Earnings Per Share of Common Stock:
Basic			$	0.52											$	1.47
Diluted			$	0.51											$	1.46
Average Number of Shares Outstanding:
Basic			25,084												24,868
Diluted			25,263												25,031