First Quarter Fiscal 2025 Highlights

•Net sales totaled $374.3 million

•Operating income of $9.1 million, or 2.4% of net sales, adjusted operating income of 3.4%

•Cash generated by operating activities of $45.5 million, borrowings on credit facilities reduced to 2-year low

•Company continues to sharpen its strategic focus by completing the divestiture of the Automation, Test, and Measurement business and announcing the closure of its manufacturing facility in Tampa, FL

JASPER, Ind., November 4, 2024 -- (BUSINESS WIRE) -- Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the first quarter ended September 30, 2024.

Commenting on today’s announcement, Richard D. Phillips, Chief Executive Officer, stated, “Q1 represents another chapter of ‘controlling what we can control’ while navigating the challenging operating environment stemming from sustained end market weakness. Our results for the quarter were in line with expectations, considering the difficult comparisons from a record-setting Q1 last year. We continue to adjust costs, improve working capital management, and generate positive cash flow used to pay down debt. We made meaningful progress in the quarter with debt levels at a 2-year low, a result of the cash generated from operating activities and the proceeds from the disposition of the Automation, Test, and Measurement business, with its divestiture closing in July.”

Mr. Phillips continued, “As part of sharpening our strategic focus, we’re also announcing a plan to leverage the capacity in our global footprint and further streamline the operating structure. Production activities on existing customer programs will be transferred out of Tampa, with the majority of the work going to the newly expanded facility in Mexico and Jasper. Operations in Tampa are expected to cease by the end of the fiscal year, and we anticipate the facility closing in Q1 of fiscal 2026. We are grateful to the employees in Tampa and their accomplishments while part of Kimball, including supplying ventilators to those in need during the pandemic. This decision is based on the preferences of our customers, our outlook for US manufacturing, and an objective to improve the Company’s competitive positioning in the market, strengthen the balance sheet, increase liquidity, and improve financial flexibility. We are confirming our guidance for the full fiscal year and look forward to the future.”

The Company ended the first quarter of fiscal 2025 with cash and cash equivalents of $76.6 million and borrowings outstanding on credit facilities of $245.9 million, including $200.0 million classified as long term. As of September 30, 2024, the Company had $186.8 million of borrowing capacity available. Cash generated from operating activities in the first quarter totaled $45.5 million and capital expenditures were $13.5 million, and the Company invested $2.9 million to repurchase 160,000 shares of common stock.

Net Sales by Vertical Market for Q1 Fiscal 2025:

Company guidance for fiscal year 2025:

•    Net sales in the range of $1.440 - $1.540 billion, an 8% to 14% decline year-over-year when excluding net sales from Automation, Test, and Measurement

•    Adjusted operating income of 4.0% - 4.5% of net sales(a)

•    Capital expenditures of $40 - $50 million

(a) Fiscal year 2025 guidance reflects a change in our adjusted operating income calculation beginning in fiscal year 2025, which excludes stock compensation expense. This change better aligns our presentation with others in our industry. A reconciliation of GAAP and non-GAAP financial measures is included below.

Certain statements contained within this release are considered forward-looking, including our 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, 2024.

This press release contains non-GAAP financial measures. The non-GAAP financial measures contained herein include constant currency growth, net sales excluding Automation, Test & Measurement, adjusted selling and administrative expenses, 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 global, multifaceted manufacturing solutions provider of electronics and diversified contract manufacturing services to customers around the world. From our operations in the United States, China, Mexico, Poland, Romania, and Thailand, 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 first quarter ended September 30, 2024 are as follows: