Kimball Electronics, Inc. Reports Second Quarter Fiscal Year 2021 Results

February 3, 2021 at 4:05 PM EST
  • Net sales in the second quarter were $321 million, up 4% year-over-year
  • Second quarter operating income was 5.0% of net sales and adjusted operating income (non-GAAP) was 5.3%
  • Net income of $15.1 million and diluted EPS of $0.60 in the second quarter
  • Record quarterly cash flows provided by operating activities of $51.6 million during the second quarter

JASPER, Ind., Feb. 03, 2021 (GLOBE NEWSWIRE) -- Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the second quarter ended December 31, 2020

  Three Months Ended   Six Months Ended
  December 31,   December 31,
(Amounts in Thousands, except EPS) 2020   2019   2020   2019
Net Sales $ 320,604     $ 307,084     $ 652,353     $ 620,469  
Operating Income $ 16,179     $ 8,684     $ 33,986     $ 19,799  
Adjusted Operating Income (non-GAAP) (1)(2) $ 16,990     $ 9,186     $ 35,006     $ 20,279  
Operating Income % 5.0 %   2.8 %   5.2 %   3.2 %
Adjusted Operating Income (non-GAAP) % 5.3 %   3.0 %   5.4 %   3.3 %
Net Income $ 15,062     $ 6,612     $ 31,873     $ 13,210  
Adjusted Net Income (non-GAAP) (1) $ 15,195     $ 6,612     $ 31,747     $ 13,210  
Diluted EPS $ 0.60     $ 0.26     $ 1.26     $ 0.52  
Adjusted Diluted EPS (non-GAAP) (1) $ 0.60     $ 0.26     $ 1.25     $ 0.52  

(1) A reconciliation of GAAP and non-GAAP financial measures is included below.

(2) Beginning in the first quarter of fiscal year 2021, adjusted operating income excludes changes in the fair value of our supplemental employee retirement plan, or SERP, liability which are exactly offset by the revaluation to fair value of the SERP investments in Other Income (Expense), net, and as a result have no impact on net income. Prior reported periods have been revised accordingly.

Donald D. Charron, Chairman and Chief Executive Officer, stated, “We are very pleased with our operating results for the second quarter of fiscal year 2021. Our team remains resilient, and I am so proud of our collective response to the adversity that we have faced during this pandemic. We again exceeded our goal of 4.5% operating income and continued to deliver excellent cash flow from operations.”

Mr. Charron continued, “Our strong results were primarily driven by improved operating execution, favorable product mix, and a weaker dollar. Looking ahead, we expect that our performance should approximate our long-stated goal of 4.5% operating income. The persistence of the pandemic continues to draw our attention, and it’s difficult to predict what we will face in the future. However, we are confident that our business will remain strong, and we are optimistic about our new business opportunities funnel. We remain committed to our goal of 8% organic growth and believe the goal is well within our reach for fiscal year 2021.”

Second Quarter Fiscal Year 2021 Overview:

  • Consolidated net sales increased 4% compared to the second quarter of fiscal year 2020. Foreign currency had a favorable 3% impact on net sales in the current quarter compared to the same period a year ago.
  • Operating activities provided cash of $51.6 million during the quarter, which compares to cash used by operating activities of $0.3 million in the second quarter of fiscal year 2020.
  • Cash conversion days (“CCD”) for the quarter ended December 31, 2020 were 75 days, down from 76 days both in the first quarter of fiscal year 2021 and the quarter ended December 31, 2019. 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 $6.1 million during the quarter.
  • $3.0 million was returned to Share Owners during the quarter in the form of common stock repurchases.
  • Cash and cash equivalents were $93.6 million and borrowings outstanding on credit facilities were $86.1 million at December 31, 2020, including $61.0 million classified as long term.

Net Sales by Vertical Market:

  Three Months Ended    
  December 31,    
(Amounts in Millions) 2020   2019   Percent
Change
Automotive $ 151.9     $ 134.9     13 %
Medical 87.1     85.7     2 %
Industrial 67.7     66.4     2 %
Public Safety 10.5     14.6     (28 )%
Other 3.4     5.5     (38 )%
Total Net Sales $ 320.6     $ 307.1     4 %

Forward-Looking Statements
Certain statements contained within this release are considered forward-looking 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.” These forward-looking statements are subject to risks and uncertainties including, without limitation, global economic conditions, geopolitical environment, global health emergencies including the COVID-19 pandemic, 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, 2020.

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 adjusted diluted EPS. These measures include adjustments for the three and six months ended December 31, 2020 for settlement charges after the measurement period on the GES acquisition, and for the six months ended December 31, 2020, proceeds from lawsuit settlements. For all periods presented, adjusted operating income excludes changes in the fair value of our SERP liability. 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 it is useful for investors to understand how its core operations performed without the effects of the settlement charges after the measurement period on the GES acquisition, proceeds from lawsuit settlements, and changes in the fair value of our SERP liability. Excluding these amounts allows investors to meaningfully trend, analyze, and benchmark the performance of the Company’s core operations.

Conference Call / Webcast
     
Date:   February 4, 2021
Time:   10:00 AM Eastern Time
Live Webcast:   investors.kimballelectronics.com/events-presentations
Dial-In #:   800-992-4934 (International Calls - 937-502-2251)
Conference ID:   7896947

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 second quarter and year-to-date period ended December 31, 2020 are as follows:

Condensed Consolidated Statements of Income            
(Unaudited) Three Months Ended
(Amounts in Thousands, except Per Share Data) December 31, 2020   December 31, 2019
Net Sales $ 320,604     100.0 %   $ 307,084     100.0 %
Cost of Sales 290,939     90.7 %   286,573     93.3 %
Gross Profit 29,665     9.3 %   20,511     6.7 %
Selling and Administrative Expenses 13,486     4.3 %   11,827     3.9 %
Operating Income 16,179     5.0 %   8,684     2.8 %
Other Income (Expense), net 2,411     0.8 %   143     0.1 %
Income Before Taxes on Income 18,590     5.8 %   8,827     2.9 %
Provision for Income Taxes 3,528     1.1 %   2,215     0.7 %
Net Income $ 15,062     4.7 %   $ 6,612     2.2 %
               
Earnings Per Share of Common Stock:              
Basic $ 0.60         $ 0.26      
Diluted $ 0.60         $ 0.26      
               
Average Number of Shares Outstanding:              
Basic 25,101         25,247      
Diluted 25,171         25,330      


               
(Unaudited) Six Months Ended
(Amounts in Thousands, except Per Share Data) December 31, 2020   December 31, 2019
Net Sales $ 652,353     100.0   $ 620,469     100.0 %
Cost of Sales 592,105     90.8 %   577,765     93.1 %
Gross Profit 60,248     9.2 %   42,704     6.9 %
Selling and Administrative Expenses 26,603     4.1 %   22,905     3.7 %
Other General Income (341 )   (0.1 )%       %
Operating Income 33,986     5.2 %   19,799     3.2 %
Other Income (Expense), net 4,546     0.7 %   (2,259 )   (0.4 )%
Income Before Taxes on Income 38,532     5.9 %   17,540     2.8 %
Provision for Income Taxes 6,659     1.0 %   4,330     0.7 %
Net Income $ 31,873     4.9 %   $ 13,210     2.1 %
               
Earnings Per Share of Common Stock:              
Basic $ 1.27         $ 0.52      
Diluted $ 1.26         $ 0.52      
               
Average Number of Shares Outstanding:              
Basic 25,127         25,371      
Diluted 25,265         25,503      


Condensed Consolidated Statements of Cash Flows Six Months Ended
(Unaudited) December 31,
(Amounts in Thousands) 2020   2019
Net Cash Flow provided by Operating Activities $ 72,256     $ 39,282  
Net Cash Flow used for Investing Activities (14,417 )   (21,974 )
Net Cash Flow used for Financing Activities (33,433 )   (13,903 )
Effect of Exchange Rate Change on Cash and Cash Equivalents 4,222     (478 )
Net Increase in Cash and Cash Equivalents 28,628     2,927  
Cash and Cash Equivalents at Beginning of Period 64,990     49,276  
Cash and Cash Equivalents at End of Period $ 93,618     $ 52,203  


  (Unaudited)    
Condensed Consolidated Balance Sheets December 31,
2020
  June 30,
2020
(Amounts in Thousands)
ASSETS      
Cash and cash equivalents $ 93,618     $ 64,990  
Receivables, net 209,054     180,133  
Contract assets 61,569     70,350  
Inventories 174,422     219,043  
Prepaid expenses and other current assets 25,791     23,891  
Property and Equipment, net 153,572     154,529  
Goodwill 12,011     12,011  
Other Intangible Assets, net 18,205     19,343  
Other Assets 37,606     30,539  
Total Assets $ 785,848     $ 774,829  
       
LIABILITIES AND SHARE OWNERS EQUITY      
Current portion of borrowings under credit facilities $ 25,083     $ 26,638  
Accounts payable 199,382     203,703  
Accrued expenses 49,131     42,264  
Long-term debt under credit facilities, less current portion 61,000     91,500  
Long-term income taxes payable 8,854     9,765  
Other 22,760     21,594  
Share Owners’ Equity 419,638     379,365  
Total Liabilities and Share Owners’ Equity $ 785,848     $ 774,829  


Reconciliation of Non-GAAP Financial Measures            
(Unaudited)              
(Amounts in Thousands, except Per Share Data)              
               
Operating Income excluding SERP and Lawsuit Proceeds
  Three Months Ended   Six Months Ended
  December 31,   December 31,
  2020   2019   2020   2019
Operating Income, as reported $ 16,179     $ 8,684     $ 33,986     $ 19,799  
Add: SERP (1) 811     502     1,361     480  
Less: Pre-tax Settlement Proceeds from Lawsuit         341      
Adjusted Operating Income $ 16,990     $ 9,186     $ 35,006     $ 20,279  
               
               
Net Income excluding Settlement Charges on GES Acquisition and Lawsuit Proceeds
  Three Months Ended   Six Months Ended
  December 31,   December 31,
  2020   2019   2020   2019
Net Income, as reported $ 15,062     $ 6,612     $ 31,873     $ 13,210  
Add: After-Tax Settlement Charges on GES Acquisition 133         133      
Less: After-tax Settlement Proceeds from Lawsuit         259      
Adjusted Net Income $ 15,195     $ 6,612     $ 31,747     $ 13,210  
               
               
Diluted Earnings per Share excluding Settlement Charges on GES Acquisition and Lawsuit Proceeds
  Three Months Ended   Six Months Ended
  December 31,   December 31,
  2020   2019   2020   2019
Diluted Earnings per Share, as reported $ 0.60     $ 0.26     $ 1.26     $ 0.52  
Add: After-Tax Settlement Charges on GES Acquisition              
Less: Impact of Settlement Proceeds from Lawsuit         0.01      
Adjusted Diluted Earnings per Share $ 0.60     $ 0.26     $ 1.25     $ 0.52  
               

(1) Beginning in the first quarter of fiscal year 2021, adjusted operating income excludes changes in the fair value of our supplemental employee retirement plan, or SERP, liability which are exactly offset by the revaluation of the fair value of the SERP investments in Other Income (Expense), net, and as a result have no impact on net income. Prior reported periods have been revised accordingly.

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


Primary Logo

Source: Kimball Electronics, Inc.