Three Months Ended | Fiscal Year Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(Amounts in Thousands, except EPS) | 2019 (1) | 2018 | 2019 (1) | 2018 | |||||||||||
Net Sales | $ | 318,621 | $ | 276,768 | $ | 1,181,844 | $ | 1,072,061 | |||||||
Operating Income (2) | $ | 10,319 | $ | 11,266 | $ | 42,060 | $ | 42,038 | |||||||
Adjusted Operating Income (non-GAAP) (2) (3) | $ | 10,104 | $ | 11,266 | $ | 41,753 | $ | 42,038 | |||||||
Operating Income % | 3.2 | % | 4.1 | % | 3.6 | % | 3.9 | % | |||||||
Adjusted Operating Income (non-GAAP) % | 3.2 | % | 4.1 | % | 3.5 | % | 3.9 | % | |||||||
Net Income | $ | 7,525 | $ | 5,784 | $ | 31,558 | $ | 16,752 | |||||||
Adjusted Net Income (non-GAAP) (3) | $ | 7,362 | $ | 7,193 | $ | 31,074 | $ | 34,611 | |||||||
Diluted EPS | $ | 0.29 | $ | 0.22 | $ | 1.21 | $ | 0.62 | |||||||
Adjusted Diluted EPS (non-GAAP) (3) | $ | 0.29 | $ | 0.27 | $ | 1.19 | $ | 1.28 |
(1) As of the beginning of fiscal year 2019, the Company adopted the new accounting standard on Revenue from Contracts with Customers on a modified retrospective basis. The impact of the adoption was not material to the results of operations for the three months ended
(2) Prior period amounts have been restated to reflect the retrospective adoption of new accounting guidance on improving the presentation of net periodic pension cost and net periodic postretirement benefit cost.
(3) A reconciliation of GAAP and non-GAAP financial measures is included below.
Mr. Charron continued, “We are extremely pleased with the success that we have had with the organic growth of our business, even while experiencing softness in select markets. We recognize that there is still work to do to achieve our profitability goals. As new programs ramp up to projected run rates and we drive improvements in the GES operations, we expect to realize the leverage from our sales growth. With the dedication and commitment of our associates around the world, we will continue our relentless pursuit to create greater value for our Share Owners.”
Fourth Quarter Fiscal Year 2019 Overview:
- Consolidated net sales set a new quarterly record while increasing 15% compared to the fourth quarter of fiscal year 2018. The GES acquisition added 2% to net sales during the quarter while unfavorable foreign currency movements decreased net sales by approximately 3% compared to the prior year fourth quarter.
- Operating activities provided cash of
$12.2 million during the quarter, which compares to cash provided by operating activities of$19.3 million in the fourth quarter of fiscal year 2018. - Cash conversion days (“CCD”) for the quarter ended June 30, 2019 were 77 days, up from 63 days in the same quarter last year largely related to an increase in raw material inventories to maintain appropriate buffer stock levels in the tight supply environment. CCD is calculated as the sum of days sales outstanding plus contract asset days plus production days supply on hand less accounts payable days.
- Investments in capital expenditures were
$9.8 million during the quarter. - Cash and cash equivalents were
$49.3 million and borrowings outstanding on credit facilities were$126.2 million at June 30, 2019, including$91.5 million classified as long-term.
Net Sales by Vertical Market:
Three Months Ended | ||||||||||
June 30, | ||||||||||
(Amounts in Millions) | 2019 | 2018 | Percent Change |
|||||||
Automotive | $ | 128.7 | $ | 114.7 | 12 | % | ||||
Medical | 100.5 | 86.4 | 16 | % | ||||||
Industrial | 68.3 | 57.0 | 20 | % | ||||||
Public Safety | 16.1 | 15.9 | 1 | % | ||||||
Other | 5.0 | 2.8 | 83 | % | ||||||
Total Net Sales | $ | 318.6 | $ | 276.8 | 15 | % |
Fiscal Year 2019 Overview:
- Net sales increased 10% from the prior fiscal year, setting a new annual net sales record of
$1.18 billion . - Cash flow used by operating activities for fiscal year 2019 was
$6.7 million . - Investments in capital expenditures were
$25.8 million and cash paid, net of cash acquired, for the GES acquisition was$43.9 million during fiscal year 2019. - Return on invested capital (“ROIC”) was 8.7% for fiscal year 2019, down from 10.1% for the prior fiscal year (see reconciliation of non-GAAP financial measures for ROIC calculation).
- During the year,
$23.4 million was returned to Share Owners in the form of common stock repurchases.
Financial Goals
- Net sales goal remains 8% annual organic growth rate.
- Operating income percent goal remains 4.5%.
- ROIC long-term goal remains 12.5%.
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, ramp up of 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, impact related to tariffs and other trade barriers, 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
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
Conference Call / Webcast | |||
Date: | August 1, 2019 | ||
Time: | 10:00 AM Eastern Time | ||
Dial-In #: | 800-992-4934 (International Calls - 937-502-2251) | ||
Conference ID: | 8487695 |
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.
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Financial highlights for the fourth quarter and fiscal year ended June 30, 2019 are as follows:
Condensed Consolidated Statements of Income | |||||||||||||
(Unaudited) | Three Months Ended | ||||||||||||
(Amounts in Thousands, except Per Share Data) | June 30, 2019 (1) | June 30, 2018 | |||||||||||
Net Sales | $ | 318,621 | 100.0 | % | $ | 276,768 | 100.0 | % | |||||
Cost of Sales (2) | 295,399 | 92.7 | % | 253,993 | 91.8 | % | |||||||
Gross Profit (2) | 23,222 | 7.3 | % | 22,775 | 8.2 | % | |||||||
Selling and Administrative Expenses (2) | 13,118 | 4.2 | % | 11,509 | 4.1 | % | |||||||
Other General Income | (215 | ) | (0.1 | )% | — | — | % | ||||||
Operating Income (2) | 10,319 | 3.2 | % | 11,266 | 4.1 | % | |||||||
Other Income (Expense), net (2) | (1,605 | ) | (0.5 | )% | (1,041 | ) | (0.4 | )% | |||||
Income Before Taxes on Income | 8,714 | 2.7 | % | 10,225 | 3.7 | % | |||||||
Provision for Income Taxes | 1,189 | 0.3 | % | 4,441 | 1.6 | % | |||||||
Net Income | $ | 7,525 | 2.4 | % | $ | 5,784 | 2.1 | % | |||||
Earnings Per Share of Common Stock: | |||||||||||||
Basic | $ | 0.30 | $ | 0.22 | |||||||||
Diluted | $ | 0.29 | $ | 0.22 | |||||||||
Average Number of Shares Outstanding: | |||||||||||||
Basic | 25,450 | 26,642 | |||||||||||
Diluted | 25,622 | 26,851 | |||||||||||
(Unaudited) | Fiscal Year Ended | ||||||||||||
(Amounts in Thousands, except Per Share Data) | June 30, 2019 (1) | June 30, 2018 | |||||||||||
Net Sales | $ | 1,181,844 | 100.0 | % | $ | 1,072,061 | 100.0 | % | |||||
Cost of Sales (2) | 1,093,438 | 92.5 | % | 986,031 | 92.0 | % | |||||||
Gross Profit (2) | 88,406 | 7.5 | % | 86,030 | 8.0 | % | |||||||
Selling and Administrative Expenses (2) | 46,653 | 3.9 | % | 43,992 | 4.1 | % | |||||||
Other General Income | (307 | ) | — | % | — | — | % | ||||||
Operating Income (2) | 42,060 | 3.6 | % | 42,038 | 3.9 | % | |||||||
Other Income (Expense), net (2) | (3,575 | ) | (0.3 | )% | 2,737 | 0.3 | % | ||||||
Income Before Taxes on Income | 38,485 | 3.3 | % | 44,775 | 4.2 | % | |||||||
Provision for Income Taxes | 6,927 | 0.6 | % | 28,023 | 2.6 | % | |||||||
Net Income | $ | 31,558 | 2.7 | % | $ | 16,752 | 1.6 | % | |||||
Earnings Per Share of Common Stock: | |||||||||||||
Basic | $ | 1.22 | $ | 0.63 | |||||||||
Diluted | $ | 1.21 | $ | 0.62 | |||||||||
Average Number of Shares Outstanding: | |||||||||||||
Basic | 25,857 | 26,745 | |||||||||||
Diluted | 26,082 | 27,007 | |||||||||||
(1) As of July 1, 2018, the Company adopted the new accounting standard on Revenue from Contracts with Customers on a modified retrospective basis. The impact of the adoption was not material to the results of operations for the three months ended June 30, 2019. For the fiscal year ended June 30, 2019, the adoption increased Net Sales $8.7 million, increased Net Income $0.8 million, and Diluted EPS increased $0.03. The prior periods were not restated. | |||||||||||||
(2) The Condensed Consolidated Statements of Income for the three months and fiscal year ended June 30, 2018 have been retrospectively restated for the adoption of new accounting guidance on improving the presentation of net periodic pension cost and net periodic postretirement benefit cost. | |||||||||||||
Condensed Consolidated Statements of Cash Flows | Fiscal Year Ended | ||||||
(Unaudited) | June 30, | ||||||
(Amounts in Thousands) | 2019 | 2018 | |||||
Net Cash Flow (used for) provided by Operating Activities | $ | (6,748 | ) | $ | 40,200 | ||
Net Cash Flow used for Investing Activities | (68,709 | ) | (26,214 | ) | |||
Net Cash Flow provided by (used for) Financing Activities | 79,430 | (12,603 | ) | ||||
Effect of Exchange Rate Change on Cash and Cash Equivalents | (1,125 | ) | 490 | ||||
Net Increase in Cash and Cash Equivalents | 2,848 | 1,873 | |||||
Cash and Cash Equivalents at Beginning of Period | 46,428 | 44,555 | |||||
Cash and Cash Equivalents at End of Period | $ | 49,276 | $ | 46,428 | |||
(Unaudited) | |||||||
Condensed Consolidated Balance Sheets | June 30, |
June 30, |
|||||
(Amounts in Thousands) | 2019 | 2018 | |||||
ASSETS | |||||||
Cash and cash equivalents | $ | 49,276 | $ | 46,428 | |||
Receivables, net | 225,555 | 173,559 | |||||
Contract assets (1) | 51,929 | — | |||||
Inventories (1) | 203,840 | 201,596 | |||||
Prepaid expenses and other current assets | 24,713 | 15,405 | |||||
Property and Equipment, net | 143,629 | 137,210 | |||||
Goodwill | 16,104 | 6,191 | |||||
Other Intangible Assets, net | 22,188 | 4,375 | |||||
Other Assets (1) | 24,877 | 23,994 | |||||
Total Assets | $ | 762,111 | $ | 608,758 | |||
LIABILITIES AND SHARE OWNERS’ EQUITY | |||||||
Current portion of borrowings under credit facilities | $ | 34,713 | $ | 8,337 | |||
Accounts payable | 197,001 | 187,788 | |||||
Accrued expenses (1) | 43,196 | 32,446 | |||||
Long-term debt under credit facilities, less current portion | 91,500 | — | |||||
Long-term income taxes payable | 9,765 | 12,361 | |||||
Other | 16,082 | 12,299 | |||||
Share Owners’ Equity (1) | 369,854 | 355,527 | |||||
Total Liabilities and Share Owners’ Equity | $ | 762,111 | $ | 608,758 | |||
(1) The Company adopted new accounting guidance for the recognition of revenue from contracts with customers on a modified retrospective basis as of July 1, 2018. As a result of the adoption of this new guidance, on July 1, 2018, the Company recognized Contract assets of $43.2 million, reduced Inventories by $39.2 million, reduced Other Assets by $0.9 million, increased Accrued expenses by $0.2 million, and increased retained earnings in Share Owners’ Equity by $3.1 million. |
Reconciliation of Non-GAAP Financial Measures | |||||||||||||||
(Unaudited) | |||||||||||||||
(Amounts in Thousands, except Per Share Data) | |||||||||||||||
Operating Income excluding Lawsuit Proceeds | |||||||||||||||
Three Months Ended | Fiscal Year Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Operating Income, as reported (1) | $ | 10,319 | $ | 11,266 | $ | 42,060 | $ | 42,038 | |||||||
Less: Pre-tax Settlement Proceeds from Lawsuits | 215 | — | 307 | — | |||||||||||
Adjusted Operating Income (1) | $ | 10,104 | $ | 11,266 | $ | 41,753 | $ | 42,038 | |||||||
Net Income excluding Tax Reform and Lawsuit Proceeds | |||||||||||||||
Three Months Ended | Fiscal Year Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net Income, as reported | $ | 7,525 | $ | 5,784 | $ | 31,558 | $ | 16,752 | |||||||
Add: Adjustments to Provision for Income Taxes from Tax Reform during measurement period | — | 1,409 | (251 | ) | 17,859 | ||||||||||
Less: After-tax Settlement Proceeds from Lawsuits | 163 | — | 233 | — | |||||||||||
Adjusted Net Income | $ | 7,362 | $ | 7,193 | $ | 31,074 | $ | 34,611 | |||||||
Diluted Earnings per Share excluding Tax Reform and Lawsuit Proceeds | |||||||||||||||
Three Months Ended | Fiscal Year Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Diluted Earnings per Share, as reported | $ | 0.29 | $ | 0.22 | $ | 1.21 | $ | 0.62 | |||||||
Add: Adjustments to Provision for Income Taxes from Tax Reform during measurement period | — | 0.05 | (0.01 | ) | 0.66 | ||||||||||
Less: Impact of Settlement Proceeds from Lawsuits | — | — | 0.01 | — | |||||||||||
Adjusted Diluted Earnings per Share | $ | 0.29 | $ | 0.27 | $ | 1.19 | $ | 1.28 | |||||||
Return on Invested Capital (ROIC) | |||||||||||||||
Fiscal Year Ended | |||||||||||||||
June 30, | |||||||||||||||
2019 | 2018 | ||||||||||||||
Operating Income (GAAP) (1) | $ | 42,060 | $ | 42,038 | |||||||||||
Less: Pre-tax Settlement Proceeds from Lawsuits | $ | 307 | $ | — | |||||||||||
Adjusted Operating Income (non-GAAP) (1) | $ | 41,753 | $ | 42,038 | |||||||||||
Tax Effect (2) | $ | 7,729 | $ | 9,715 | |||||||||||
After Tax Adjusted Operating Income | $ | 34,024 | $ | 32,323 | |||||||||||
Average Invested Capital (3) | $ | 390,528 | $ | 319,074 | |||||||||||
ROIC | 8.7 | % | 10.1 | % | |||||||||||
(1) Prior period Operating Income has been retrospectively restated for the adoption of new accounting guidance on improving the presentation of net periodic pension cost and net periodic postretirement benefit cost. |
|||||||||||||||
(2) Accumulated tax effect utilizing the applicable quarterly effective tax rates, excludes adjustments to provision for income taxes related to the U.S. Tax Cuts and Jobs Act. |
|||||||||||||||
(3) Average Invested Capital is computed using Share Owners’ equity plus current and non-current debt less cash and cash equivalents averaged for the last five quarters. |
CONTACT:
Treasurer
Telephone: 812.634.4000
E-mail: Investor.Relations@kimballelectronics.com
Source: Kimball Electronics, Inc.