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	Kimball Electronics Inc	21.10	0.28	1.34%
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Kimball Electronics Reports Q2 Results; Company Updates Guidance for Fiscal 2024

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  Net sales totaled $421.2 million, a 4% decrease compared to the second quarter of fiscal 2023; foreign currency had a 1% favorable impact on net sales year-over-year
  
  


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  Operating income of $16.6 million, or 3.9% of net sales, compared to $17.5 million or 4.0% of net sales, in the same period last year
  
  


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  Adjusted operating income of $17.1 million, or 4.1% of net sales, compared to $17.8 million, or 4.1% of net sales, in the same period last year
  
  


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  Net income of $8.3 million, or $0.33 per diluted share, compared to $10.7 million, or $0.43 per diluted share, in the second quarter of fiscal 2023
  
  

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Mr. Phillips continued, "Based on what we know today, it seems likely the macro environment will remain challenging for some time. Despite this near-term choppiness, we did not change our guidance for capital expenditures in fiscal 2024 as we continue to invest in long-term growth opportunities. With a strong funnel of new business supported by favorable industry megatrends, we're deploying a balanced capital allocation strategy focused on organic growth, global expansion, and long-lasting customer relationships."

The Company ended the second quarter of fiscal 2024 with cash and cash equivalents of $39.9 million and borrowings outstanding on credit facilities of $321.8 million, including $235.0 million classified as long term, and $65.8 million of borrowing capacity available. Cash flow used from operating activities in the second quarter of fiscal 2024 was $30.7 million and capital expenditures were $13.2 million.

Net Sales by Vertical Market for Q2 Fiscal 2024:

Guidance for Fiscal Year 2024

The Company updated its guidance for fiscal year 2024 with net sales expected to decline 2% to 4%, compared to fiscal year 2023. As a reminder, the previous guidance was an estimate of net sales flat with the prior year. Operating income is now expected to be in the range of 4.2% to 4.6% of net sales, compared to the prior estimate of flat with fiscal 2023. The guidance for capital expenditures did not change with a range of $70 to $80 million.

Commenting on today's update, Jana T. Croom, Chief Financial Officer, stated, "It is important to highlight that our second quarter results included an atypical charge in selling and administrative expenses. We recorded a $2 million allowance for credit losses associated with a customer who is not in bankruptcy, but their ability to pay an outstanding balance was deemed questionable. This item negatively impacted our operating income by approximately 40 basis points in the quarter."

Ms. Croom continued, "We remain focused on working capital management, and while inventory levels did improve in Q2, we still have an opportunity to drive down cash conversion days with better management of receivables and payables which will support a return to free cash flow generation in future quarters."

Forward-Looking Statements

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.

Non-GAAP Financial Measures

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.

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

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 second quarter and year-to-date period ended December 31, 2023 are as follows:

View source version on businesswire.com: https://www.businesswire.com/news/home/20240205258456/en/