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Kimball Electronics, Inc. Reports First Quarter Fiscal Year 2018 Results
  • New quarterly net sales record of $253 million, a 12% increase year-over-year
  • Net income of $8.5 million and diluted EPS of $0.31
  • Returned $3.3 million to Share Owners through stock repurchases during the quarter

JASPER, Ind., Nov. 01, 2017 (GLOBE NEWSWIRE) -- Kimball Electronics, Inc. (Nasdaq:KE), a leading global electronic manufacturing services provider of high-quality, durable electronic products, today announced financial results for its first quarter ended September 30, 2017. 

   
  Three Months Ended
  September 30,
(Amounts in Thousands, except EPS) 2017   2016
Net Sales $ 253,204     $ 226,451  
Operating Income $ 9,590     $ 12,822  
Adjusted Operating Income (non-GAAP)* $ 9,590     $ 8,817  
Operating Income % 3.8 %   5.7 %
Adjusted Operating Income (non-GAAP) % 3.8 %   3.9 %
Net Income $ 8,480     $ 10,122  
Adjusted Net Income (non-GAAP)* $ 8,480     $ 6,698  
Diluted EPS $ 0.31     $ 0.36  
Adjusted Diluted EPS (non-GAAP)* $ 0.31     $ 0.24  

* A reconciliation of GAAP and non-GAAP financial measures is included below.

Donald D. Charron, Chairman and Chief Executive Officer, stated, “Double-digit growth in three of our four end market verticals helped us set a new quarterly sales record for the seventh consecutive quarter and kept us on a course to achieve our long-time stated goal of $1 billion in annual sales in fiscal year 2018.”

Mr. Charron continued, “While our margins improved sequentially from the fourth quarter of the prior fiscal year, we are still below our new operating income goal of 4.5%.  We are focused on yield and throughput improvements on recently launched new programs and further progress on the ramp-up in Romania to help us make sequential, incremental improvement and achieve our new goal.”

First Quarter Fiscal Year 2018 Overview:

  • Consolidated net sales increased 12% compared to the first quarter of fiscal year 2017, the seventh consecutive quarterly sales record.
  • Operating activities used cash flow of $0.2 million during the quarter, which compares to cash flow provided by operating activities of $14.0 million in the first quarter of fiscal year 2017.
  • Cash conversion days (“CCD”) for the quarter ended September 30, 2017 were 59 days, which increased from 58 days in the same quarter last year.  CCD is calculated as the sum of days sales outstanding plus production days supply on hand less accounts payable days.
  • Investments in capital expenditures were $6.1 million during the quarter.
  • $3.3 million was returned to Share Owners during the quarter in the form of common stock repurchases.
  • Cash and cash equivalents were $38.3 million and borrowings outstanding on credit facilities were $14.0 million at September 30, 2017.
  • Return on invested capital (“ROIC”) was 9.0% for the first quarter of fiscal year 2018, which compares to 9.6% for the prior year first quarter (see reconciliation of non-GAAP financial measures for ROIC calculation).

Net Sales by Vertical Market:

  Three Months Ended    
  September 30,    
(Amounts in Millions) 2017   2016   Percent
Change
Automotive $ 102.0     $ 92.2     11 %
Medical 76.2     65.0     17 %
Industrial 54.8     51.5     6 %
Public Safety 17.2     13.2     31 %
Other 3.0     4.6     (34 )%
  Total Net Sales $ 253.2     $ 226.5     12 %

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, successful integration of acquisitions and new operations, global economic conditions, geopolitical environment, significant volume reductions from key contract customers, loss of key customers or suppliers, financial stability of key customers and suppliers, availability or cost of raw materials, and increased competitive pricing pressures reflecting excess industry capacities.  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, 2017.

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 or includes 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, statement of cash flows, or statement of equity of the Company.  The non-GAAP financial measures contained herein include adjusted operating income, adjusted net income, adjusted diluted EPS, and ROIC.  These measures were adjusted for the three months ended September 30, 2016 due to proceeds from a lawsuit settlement of $4.0 million, $2.5 million net of tax, and a bargain purchase gain on the acquisition of Aircom Manufacturing, Inc. of $0.9 million.  Reconciliations of the reported GAAP numbers to these non-GAAP financial measures are included in the financial highlights table below.  Management believes it is useful for investors to understand how its core operations performed without the effects of the proceeds from the lawsuit settlement and the bargain purchase gain.  Excluding these amounts allows investors to meaningfully trend, analyze, and benchmark the performance of the Company’s core operations.  Many of the Company’s internal performance measures that management uses to make certain operating decisions exclude these items to enable meaningful trending of core operating metrics.

Conference Call / Webcast
Date:   November 2, 2017
Time:   10:00 AM Eastern Time
Dial-In #:   800-992-4934 (International Calls - 937-502-2251)
Conference ID:   4796117

The live webcast of the conference call can be accessed at investors.kimballelectronics.com.  For those unable to participate in the live webcast, the call will be archived at investors.kimballelectronics.com.

About Kimball Electronics, Inc.
Recognized with a reputation for excellence, Kimball Electronics is committed to a high performance culture that values personal and organizational commitment to quality, reliability, value, speed, and ethical behavior.  Kimball Electronics employees know they are part of a company culture that builds lasting relationships and global success for customers while enabling employees to share in the Company’s success through personal, professional, and financial growth.

Kimball Electronics trades under the symbol “KE” on The NASDAQ Stock MarketKimball Electronics is a global contract electronic manufacturing services (“EMS”) company that specializes in durable electronics for the automotive, medical, industrial, and public safety end markets.  Kimball Electronics is well recognized by customers and industry trade publications for its excellent quality, reliability, and innovative service.  From its manufacturing operations in the United States, China, Mexico, Poland, Romania, and Thailand, Kimball Electronics provides electronic manufacturing services, including engineering and supply chain support, which utilize common production and support capabilities to a variety of industries globally.  Kimball Electronics is headquartered in Jasper, Indiana.

To learn more about Kimball Electronics, visit: www.kimballelectronics.com.

Lasting relationships. Global success.

Financial highlights for the first quarter ended September 30, 2017 are as follows:

Condensed Consolidated Statements of Income            
(Unaudited) Three Months Ended
(Amounts in Thousands, except Per Share Data) September 30, 2017   September 30, 2016
Net Sales $ 253,204     100.0 %   $ 226,451     100.0 %
Cost of Sales 233,714     92.3 %   208,129     91.9 %
Gross Profit 19,490     7.7 %   18,322     8.1 %
Selling and Administrative Expenses 9,900     3.9 %   9,505     4.2 %
Other General Income     %   (4,005 )   (1.8 )%
Operating Income 9,590     3.8 %   12,822     5.7 %
Other Income (Expense), net 1,245     0.5 %   763     0.3 %
Income Before Taxes on Income 10,835     4.3 %   13,585     6.0 %
Provision for Income Taxes 2,355     1.0 %   3,463     1.5 %
Net Income $ 8,480     3.3 %   $ 10,122     4.5 %
               
Earnings Per Share of Common Stock:              
Basic $ 0.32         $ 0.36      
Diluted $ 0.31         $ 0.36      
               
Average Number of Shares Outstanding:              
Basic 26,859         28,078      
Diluted 27,028         28,095      


Condensed Consolidated Statements of Cash Flows Three Months Ended
(Unaudited) September 30,
(Amounts in Thousands) 2017   2016
Net Cash Flow (used for) provided by Operating Activities $ (169 )   $ 14,039  
Net Cash Flow used for Investing Activities (6,066 )   (12,284 )
Net Cash Flow used for Financing Activities (948 )   (6,664 )
Effect of Exchange Rate Change on Cash and Cash Equivalents 944     190  
Net Decrease in Cash and Cash Equivalents (6,239 )   (4,719 )
Cash and Cash Equivalents at Beginning of Period 44,555     54,738  
Cash and Cash Equivalents at End of Period $ 38,316     $ 50,019  


  (Unaudited)    
Condensed Consolidated Balance Sheets September 30,
 2017
  June 30,
 2017
(Amounts in Thousands)
ASSETS      
Cash and cash equivalents $ 38,316     $ 44,555  
Receivables, net 174,820     169,785  
Inventories 164,632     144,606  
Prepaid expenses and other current assets 31,126     29,219  
Property and Equipment, net 136,915     137,549  
Goodwill 6,191     6,191  
Other Intangible Assets, net 4,423     4,581  
Other Assets 19,079     18,458  
Total Assets $ 575,502     $ 554,944  
       
LIABILITIES AND SHARE OWNERS EQUITY      
Borrowings under credit facilities $ 14,000     $ 10,000  
Accounts payable 166,655     154,619  
Accrued expenses 33,443     34,630  
Other 12,432     13,423  
Share Owners’ Equity 348,972     342,272  
Total Liabilities and Share Owners’ Equity $ 575,502     $ 554,944  


Reconciliation of Non-GAAP Financial Measures        
(Unaudited)        
(Amounts in Thousands, except Per Share Data)        
         
Operating Income excluding Lawsuit Proceeds
    Three Months Ended
    September 30,
    2017   2016
Operating Income, as reported   $ 9,590     $ 12,822  
Less: Pre-tax Settlement Proceeds from Lawsuit       4,005  
Adjusted Operating Income   $ 9,590     $ 8,817  
         
         
Net Income excluding Lawsuit Proceeds and Bargain Purchase Gain
    Three Months Ended
    September 30,
    2017   2016
Net Income, as reported   $ 8,480     $ 10,122  
Less: After-tax Settlement Proceeds from Lawsuit       2,499  
Less: Bargain Purchase Gain       925  
Adjusted Net Income   $ 8,480     $ 6,698  
         
         
Diluted Earnings per Share excluding Lawsuit Proceeds and Bargain Purchase Gain
    Three Months Ended
    September 30,
    2017   2016
Diluted Earnings per Share, as reported   $ 0.31     $ 0.36  
Less: Impact of Settlement Proceeds from Lawsuits       0.09  
Less: Bargain Purchase Gain       0.03  
Adjusted Diluted Earnings per Share   $ 0.31     $ 0.24  
         
         
Return on Invested Capital (ROIC)        
    Three Months Ended
    September 30,
    2017   2016
Adjusted Operating Income   $ 9,590     $ 8,817  
Annualized Adjusted Operating Income   $ 38,360     $ 35,268  
Tax Rate   25.7 %   22.7 %
Tax Effect   $ 9,859     $ 8,006  
After Tax Annualized Adjusted Operating Income   $ 28,501     $ 27,262  
Average Invested Capital *   $ 316,187     $ 283,490  
ROIC   9.0 %   9.6 %

* Average Invested Capital is computed using the average quarterly Share Owners’ equity plus current and non-current debt less cash and cash equivalents.

CONTACT:
Adam W. Smith
Treasurer
Telephone 812.634.4000
E-mail: Investor.Relations@kimballelectronics.com

Source: Kimball Electronics, Inc.

 

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