Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)   November 5, 2019
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KIMBALL ELECTRONICS, INC.
________________________________________________________________________________________________________
(Exact name of registrant as specified in its charter)
 
 
 
 
 
Indiana
 
001-36454
 
35-2047713
(State or other jurisdiction of
 
(Commission File
 
(IRS Employer Identification No.)
incorporation)
 
Number)
 
 
 
 
 
1205 Kimball Boulevard, Jasper, Indiana
 
47546
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code   (812) 634-4000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class
Trading Symbol
Name of each exchange on which registered
Common Stock, no par value
KE
The NASDAQ Stock Market LLC
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (Section 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (Section 240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

1



Item 2.02 Results of Operations and Financial Condition
On November 5, 2019, the Company issued an earnings release for the first quarter ended September 30, 2019.  The earnings release is attached as Exhibit 99.1 and supplementary information provided for the Company’s earnings conference call is attached as Exhibit 99.2.
The information in Item 2.02 of this Form 8-K, including Exhibit 99.1 and Exhibit 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Form 8-K shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except as shall otherwise be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
The following exhibits are filed as part of this report:
Exhibit
 
 
Number
 
Description
99.1
 
99.2
 


2



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
KIMBALL ELECTRONICS, INC.
 
 
By:
/s/ Michael K. Sergesketter
 
MICHAEL K. SERGESKETTER
Vice President,
Chief Financial Officer
Date: November 5, 2019


3
Exhibit


Exhibit 99.1
KIMBALL ELECTRONICS, INC. REPORTS FIRST QUARTER FISCAL YEAR 2020 RESULTS
First quarter net sales were $313 million, up 18% year-over-year
Operating income, as a percent of net sales, increased 90 basis points from the prior year first quarter
Strong cash flow provided by operations of $39.6 million during the quarter
Returned $3.5 million to Share Owners in stock repurchases during the quarter
JASPER, IN (November 5, 2019) - Kimball Electronics, Inc. (NASDAQ: KE) today announced financial results for its first quarter ended September 30, 2019
 
 
 
 
 
Three Months Ended
 
September 30,
(Amounts in Thousands, except EPS)
2019
 
2018
Net Sales
$
313,385

 
$
265,620

Operating Income
$
11,115

 
$
7,032

Adjusted Operating Income (non-GAAP) (1)
$
11,115

 
$
6,940

Operating Income %
3.5
%
 
2.6
%
Net Income
$
6,598

 
$
5,069

Adjusted Net Income (non-GAAP) (1)
$
6,598

 
$
4,999

Diluted EPS
$
0.26

 
$
0.19

(1) A reconciliation of GAAP and non-GAAP financial measures is included below.
Donald D. Charron, Chairman and Chief Executive Officer, stated, “We delivered excellent growth results in the first quarter of fiscal year 2020 despite a general softening in the overall market. We achieved double-digit growth in three of our four end market verticals when compared to the same period last year, including a new quarterly record for net sales in our Medical end market vertical.”
Mr. Charron continued, “We are extremely pleased with the progress we made in expanding our operating margin in the first quarter when comparing both year-over-year and sequentially from the fourth quarter of fiscal year 2019. As new programs ramp up to projected run rates and we continue to drive improvements in the GES operations, we expect to realize additional leverage from our sales growth.”
First Quarter Fiscal Year 2020 Overview:
Consolidated net sales increased 18% compared to the first quarter of fiscal year 2019. The GES acquisition added 2% to net sales for the quarter while unfavorable foreign currency movements adversely impacted consolidated net sales by approximately 2% compared to the same quarter a year ago.
Operating activities provided cash of $39.6 million during the quarter, which compares to cash used by operating activities of $10.0 million in the first quarter of fiscal year 2019.
Cash conversion days (“CCD”) for the quarter ended September 30, 2019 were 73 days, which declined sequentially from 77 days in the fourth quarter of fiscal year 2019 from improvement in days sales outstanding as a result of increased utilization of accounts receivable factoring arrangements. 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 $11.7 million during the quarter.
$3.5 million was returned to Share Owners during the quarter in the form of common stock repurchases.
Cash and cash equivalents were $55.4 million and borrowings outstanding on credit facilities were $109.6 million at September 30, 2019, including $91.5 million classified as long-term.
Return on invested capital (“ROIC”), calculated for the trailing twelve months, was 9.0% and 9.3% for the twelve months ended September 30, 2019 and 2018, respectively (see reconciliation of non-GAAP financial measures for ROIC calculation).






Net Sales by Vertical Market:

Three Months Ended
 
 
 
September 30,
 
 
(Amounts in Millions)
2019
 
2018
 
Percent Change
Automotive
$
124.4

 
$
105.9

 
17
%
Medical
101.3

 
82.2

 
23
%
Industrial
64.7

 
57.4

 
13
%
Public Safety
17.1

 
17.1

 
%
Other
5.9

 
3.0

 
96
%
    Total Net Sales
$
313.4

 
$
265.6

 
18
%
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. 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, 2019.
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 share owners’ equity of the Company. The non-GAAP financial measures contained herein include adjusted operating income, adjusted net income, and ROIC. These measures include adjustments for the three months ended September 30, 2018 for proceeds from a class action lawsuit settlement. 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 effect of the proceeds from the lawsuit settlement. Excluding this amount allows investors to meaningfully trend, analyze, and benchmark the performance of the Company’s core operations.
Conference Call / Webcast
 
 
 
Date:
 
November 6, 2019
Time:
 
10:00 AM Eastern Time
Dial-In #:
 
800-992-4934 (International Calls - 937-502-2251)
Conference ID:
 
1836429
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.
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.
Lasting relationships. Global success.





Financial highlights for the first quarter ended September 30, 2019 are as follows:
Condensed Consolidated Statements of Income
 
 
 
 
 
 
(Unaudited)
Three Months Ended
(Amounts in Thousands, except Per Share Data)
September 30, 2019
 
September 30, 2018
Net Sales
$
313,385

 
100.0
%
 
$
265,620

 
100.0
%
Cost of Sales
291,192

 
92.9
%
 
247,434

 
93.2
%
Gross Profit
22,193

 
7.1
%
 
18,186

 
6.8
%
Selling and Administrative Expenses
11,078

 
3.6
%
 
11,246

 
4.2
%
Other General Income

 
 %
 
(92
)
 
 %
Operating Income
11,115

 
3.5
%
 
7,032

 
2.6
%
Other Income (Expense), net
(2,402
)
 
(0.7
)%
 
(554
)
 
(0.2
)%
Income Before Taxes on Income
8,713

 
2.8
%
 
6,478

 
2.4
%
Provision for Income Taxes
2,115

 
0.7
%
 
1,409

 
0.5
%
Net Income
$
6,598

 
2.1
%
 
$
5,069

 
1.9
%
 
 
 
 
 
 
 
 
Earnings Per Share of Common Stock:
 
 
 
 
 
 
 
Basic
$
0.26

 
 
 
$
0.19

 
 
Diluted
$
0.26

 
 
 
$
0.19

 
 
 
 
 
 
 
 
 
 
Average Number of Shares Outstanding:
 
 
 
 
 
 
 
     Basic
25,495

 
 
 
26,507

 
 
     Diluted
25,609

 
 
 
26,628

 
 
 
 
 
 
 
 
 
 


Condensed Consolidated Statements of Cash Flows
Three Months Ended
(Unaudited)
September 30,
(Amounts in Thousands)
2019
 
2018
Net Cash Flow provided by (used for) Operating Activities
$
39,619

 
$
(10,013
)
Net Cash Flow used for Investing Activities
(11,725
)
 
(4,646
)
Net Cash Flow (used for) provided by Financing Activities
(20,588
)
 
43,714

Effect of Exchange Rate Change on Cash and Cash Equivalents
(1,231
)
 
(514
)
Net Increase in Cash and Cash Equivalents
6,075

 
28,541

Cash and Cash Equivalents at Beginning of Period
49,276

 
46,428

Cash and Cash Equivalents at End of Period
$
55,351

 
$
74,969








 
(Unaudited)
 
 
Condensed Consolidated Balance Sheets
September 30,
2019
 
June 30,
2019
(Amounts in Thousands)
ASSETS
 
 
 
    Cash and cash equivalents
$
55,351

 
$
49,276

    Receivables, net
185,771

 
225,555

    Contract assets
60,800

 
51,929

    Inventories
200,753

 
203,840

    Prepaid expenses and other current assets
25,377

 
24,713

    Property and Equipment, net
142,895

 
143,629

    Goodwill
19,936

 
18,104

    Other Intangible Assets, net
21,505

 
22,188

    Other Assets
27,507

 
24,877

        Total Assets
$
739,895

 
$
764,111

 
 
 
 
LIABILITIES AND SHARE OWNERS EQUITY
 
 
 
    Current portion of borrowings under credit facilities
$
18,067

 
$
34,713

    Accounts payable
193,300

 
197,001

    Accrued expenses
38,210

 
43,196

    Long-term debt under credit facilities, less current portion
91,500

 
91,500

    Long-term income taxes payable
9,765

 
9,765

    Other
19,800

 
18,082

    Share Owners’ Equity
369,253

 
369,854

        Total Liabilities and Share Owners’ Equity
$
739,895

 
$
764,111






Reconciliation of Non-GAAP Financial Measures
 
 
 
 
(Unaudited)
 
 
 
 
(Amounts in Thousands, except Per Share Data)
 
 
 
 
 
 
 
 
 
Operating Income excluding Lawsuit Proceeds
 
 
Three Months Ended
 
 
September 30,
 
 
2019
 
2018
Operating Income, as reported
 
$
11,115

 
$
7,032

Less: Pre-tax Settlement Proceeds from Lawsuit
 

 
92

Adjusted Operating Income
 
$
11,115

 
$
6,940

 
 
 
 
 
 
 
 
 
 
Net Income excluding Lawsuit Proceeds
 
 
Three Months Ended
 
 
September 30,
 
 
2019
 
2018
Net Income, as reported
 
$
6,598

 
$
5,069

Less: After-tax Settlement Proceeds from Lawsuit
 

 
70

Adjusted Net Income
 
$
6,598

 
$
4,999

 
 
 
 
 
Return on Invested Capital (ROIC)
 
 
 
 
 
 
Twelve Months Ended
 
 
September 30,
 
 
2019
 
2018
Operating Income
 
$
46,143

 
$
39,547

Less: Pre-tax Settlement Proceeds from Lawsuits
 
$
215

 
$
92

Adjusted Operating Income (non-GAAP)
 
$
45,928

 
$
39,455

Tax Effect (1)
 
$
8,920

 
$
9,152

After-Tax Adjusted Operating Income
 
$
37,008

 
$
30,303

Average Invested Capital (2)
 
$
411,735

 
$
326,168

ROIC
 
9.0
%
 
9.3
%

(1) Accumulated tax effect utilizing the applicable quarterly effective tax rates, excludes tax effect of adjusted items including adjustments related to the U.S. Tax Cuts and Jobs Act.
(2) 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.


kewebcastslidegraphs0930
Exhibit 99.2 Financial Results First Quarter Fiscal Year 2020 Quarter Ended September 30, 2019 Supplementary Information to November 6, 2019 Earnings Conference Call LastingLasting relationships. relationships. Global Global success. success.


 
Safe Harbor Statement Certain statements contained within this supplementary information and any statements made during our earnings conference call today may be 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 reductions in volumes and order patterns 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.  Additional cautionary statements regarding other risk factors that could have an effect on the future performance of Kimball Electronics, Inc. (the “Company”) are contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019, our earnings release, and other filings with the Securities and Exchange Commission (the “SEC”). This supplementary information 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 Share Owners' equity of the company. The non-GAAP financial measures contained herein include Adjusted Operating Income, Adjusted Net Income, Adjusted EBITDA, and Return on Invested Capital (ROIC), which have been adjusted for proceeds from lawsuit settlements and adjustments to provision for income taxes due to the U.S. Tax Cuts and Jobs Act (“Tax Reform”) enacted in December 2017. Management believes it is useful for investors to understand how its core operations performed without the effects of the lawsuit proceeds and adjustments to provision for income taxes due to Tax Reform. 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 use these and other non-GAAP measures to enable meaningful trending of core operating metrics. 2 LastingLasting relationships. relationships. Global Global success. success.


 
(Unaudited) Net Sales $350 +18% from Q1'19 $325 $319 $313 $313 $300 $284 $284 s n $277 o i l l i $275 M $266 n I $258 $250 $225 $200 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 3 LastingLasting relationships. relationships. Global Global success. success.


 
(Unaudited) Net Sales Mix by Vertical Market 100% 1% 1% 1% 1% 2% 1% 2% 2% 6% 5% 6% 6% 6% 5% 5% 5% 90% 19% 20% 21% 22% 22% 21% 21% 80% 22% 70% 27% 60% 28% s 31% e 32% 32% 32% l 31% 30% a S 50% f o % 40% 30% 45% 48% 20% 41% 40% 40% 40% 40% 40% 10% 0% Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Automotive Medical Industrial Public Safety Other 4 LastingLasting relationships. relationships. Global Global success. success.


 
(Unaudited) Gross Margin % 10.0% 9.0% 8.5% 8.1% 8.1% 8.2% 8.0% 7.3% 7.2% 7.1% 7.0% 6.8% 6.0% s e l a S 5.0% f o % 4.0% 3.0% 2.0% 1.0% 0.0% Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 5 LastingLasting relationships. relationships. Global Global success. success.


 
(Unaudited) Selling & Administrative Expense (%) 5.0% 4.5% 4.2% 4.2% 4.2% 4.2% 4.1% s e l a S 4.0% f 3.9% o % 3.6% 3.6% 3.5% 3.0% Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 6 LastingLasting relationships. relationships. Global Global success. success.


 
(Unaudited) Adjusted Operating Income(1)(2) (Excludes lawsuit proceeds) $16.0 6.0% $14.5 $14.0 5.5% $12.0 * 5.0% $11.1* $11.3 $11.1 $10.1* $10.2 $10.1 $10.0 4.6% 4.5% s s e n l o a i l l S i $8.0 4.0% 4.1% f M $6.9 o n I 3.9% 3.9% % $6.0 3.6% 3.5% 3.5% $4.0 3.2% 3.0% $2.0 2.6% 2.5% $0.0 2.0% Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Adj Op Income % of Net Sales (1) Adjusted Operating Income is a Non-GAAP measure – refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information. (2) Prior period amounts denoted by * have been restated to reflect retrospective adoption of new accounting guidance on improving the presentation of net periodic pension cost and net periodic postretirement benefit cost. 7 LastingLasting relationships. relationships. Global Global success. success.


 
(Unaudited) Adjusted Net Income(1) (Excludes lawsuit proceeds and adjustments to provision for income taxes due to Tax Reform) $11.8 $12.0 $11.0 $10.7 $10.0 $9.0 $8.2 $8.0 $7.2 $7.4 $6.9 $7.0 $6.6 s n o i l l i $6.0 M n $5.0 I $5.0 $4.0 $3.0 $2.0 $1.0 $0.0 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 (1) Adjusted Net Income is a Non-GAAP measure – refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information. 8 LastingLasting relationships. relationships. Global Global success. success.


 
(Unaudited) Adjusted EBITDA(1) (Excludes lawsuit proceeds) $24.0 $23.3 10.0% $22.0 $20.1 $20.0 8.0% $18.0 $17.1 $17.2 $16.9 $17.3 $17.2 7.4% $16.0 7.1% 6.6% $13.5 6.0% $14.0 s s 6.2% e n 6.0% l o a i l l S i $12.0 5.4% 5.5% f M 5.1% o n I % $10.0 4.0% $8.0 $6.0 2.0% $4.0 $2.0 $0.0 0.0% Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Adjusted EBITDA Adjusted EBITDA % of Sales (1) Adjusted EBITDA is a Non-GAAP measure - refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information. 9 LastingLasting relationships. relationships. Global Global success. success.


 
(Unaudited) Return on Invested Capital(1)(2)(3) (Excludes lawsuit proceeds) 14.0% 12.0% 10.1% 9.8% 10.0% 10.0% 9.3% 9.0% 9.0% 8.9% 8.7% 8.0% C I O R 6.0% 4.0% 2.0% 0.0% Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 (1) We define ROIC as after-tax adjusted operating income for the trailing twelve months divided by average invested capital for the last five quarters. (2) Prior period amounts have been restated to reflect our calculation change of ROIC from after-tax annualized adjusted operating income divided by average invested capital and 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) ROIC is a Non-GAAP measure - refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information. 10 LastingLasting relationships. relationships. Global Global success. success.


 
(Unaudited) Operating Cash Flow $45.0 $39.6 $40.0 $35.0 $30.0 $25.0 $19.3 $20.0 s n o $15.0 i $12.2 l $11.6 l i $9.5 M $10.0 n I $5.6 $5.0 $0.0 -$5.0 -$10.0 ($10.0) -$15.0 ($14.6) -$20.0 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 11 LastingLasting relationships. relationships. Global Global success. success.


 
(Unaudited) Capital Expenditures and Depreciation & Amortization(1) $12.0 $10.0 $8.0 $7.3 $7.5 $7.4 $7.3 $6.8 $6.8 $6.8 s $6.4 n o i l l i $6.0 $11.7 M n I $9.8 $8.7 $4.0 $7.2 $6.9 $4.4 $4.8 $2.0 $4.3 $0.0 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Cap Ex Depr & Amort (1) Capital Expenditures include purchases of capitalized software. 12 LastingLasting relationships. relationships. Global Global success. success.


 
Reconciliation of Non-GAAP Results (Unaudited) Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Operating Income, as reported (1) $ 10,119 $ 11,130 $ 11,266 $ 7,032 $ 10,212 $ 14,497 $ 10,319 $ 11,115 Less: Lawsuit Proceeds — — — 92 — — 215 — Adjusted Operating Income (1) $ 10,119 $ 11,130 $ 11,266 $ 6,940 $ 10,212 $ 14,497 $ 10,104 $ 11,115 Net Income (Loss), as reported $ (8,347) $ 10,835 $ 5,784 $ 5,069 $ 7,115 $ 11,849 $ 7,525 $ 6,598 Add: Tax Adjustments from Tax Reform 16,580 (130) 1,409 — (251) — — — Less: Lawsuit Proceeds — — — 70 — — 163 — Adjusted Net Income $ 8,233 $ 10,705 $ 7,193 $ 4,999 $ 6,864 $ 11,849 $ 7,362 $ 6,598 Adjusted Net Income $ 8,233 $ 10,705 $ 7,193 $ 4,999 $ 6,864 $ 11,849 $ 7,362 $ 6,598 Add Interest, net 95 126 135 383 1,073 1,146 1,405 1,190 Add Depreciation & Amortization 6,386 6,824 6,797 6,755 7,252 7,480 7,386 7,312 Add Taxes 2,353 2,424 3,032 1,387 1,755 2,825 1,137 2,115 Adjusted EBITDA $ 17,067 $ 20,079 $ 17,157 $ 13,524 $ 16,944 $ 23,300 $ 17,290 $ 17,215 Operating Income (GAAP) (TTM) (1)(3) $ 37,515 $ 39,177 $ 42,038 $ 39,547 $ 39,640 $ 43,007 $ 42,060 $ 46,143 Less: Lawsuit Proceeds (TTM) $ — $ — $ — $ 92 $ 92 $ 92 $ 307 $ 215 Adj. Operating Income (non-GAAP) (TTM) (1)(3) $ 37,515 $ 39,177 $ 42,038 $ 39,455 $ 39,548 $ 42,915 $ 41,753 $ 45,928 Tax Effect (TTM) (1)(3) $ 7,269 $ 7,642 $ 9,715 $ 9,152 $ 8,982 $ 9,718 $ 7,729 $ 8,920 After-Tax Adj. Operating Income (TTM) (1)(3) $ 30,246 $ 31,535 $ 32,323 $ 30,303 $ 30,566 $ 33,197 $ 34,024 $ 37,008 Average Invested Capital (2)(3) $ 308,339 $ 315,751 $ 319,074 $ 326,168 $ 342,408 $ 366,995 $ 390,528 $ 411,735 ROIC (1)(3) 9.8% 10.0% 10.1% 9.3% 8.9% 9.0% 8.7% 9.0% (1) Prior period amounts have been restated to reflect the retrospective adoption of new accounting guidance in Q1'19 on improving the presentation of net periodic pension cost and net periodic postretirement benefit cost. (2) Average Invested Capital is computed using the Share Owners equity plus current and non-current debt less cash and cash equivalents averaged for the last five quarters. (3) Prior period amounts have been restated to reflect our calculation change of ROIC in Q1'19 from after-tax annualized adjusted operating income divided by average invested capital to after-tax adjusted operating income for the trailing twelve months (TTM) divided by average invested capital for the last five quarters. 13 LastingLasting relationships. relationships. Global Global success. success.