Fourth Quarter Fiscal 2023 Highlights
- Net sales totaled $496.1 million, a 33% increase compared to Q4
fiscal 2022, and completing a fiscal year with top-line growth of
35%.
- Operating income of $31.4 million, or 6.3% of net sales, a
record high for the Company. For fiscal year 2023, operating income
was 4.8% of net sales.
- Net income of $19.2 million, or $0.76 per diluted share. In
fiscal year 2023, the Company earned $2.22 per diluted share, a 79%
increase compared to the prior year.
- Cash flow generated from operating activities of $44.1 million
in Q4.
- Company provides guidance for fiscal 2024 with expected
top-line growth of 4%-7% and operating income in the range of
4.7%-5.2% of net sales.
Kimball Electronics, Inc. (Nasdaq: KE) today announced financial
results for the fourth quarter and fiscal year ended June 30,
2023.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20230816530676/en/
Three Months Ended
Fiscal Year Ended
June 30,
June 30,
(Amounts in Thousands, except EPS)
2023
2022
2023
2022
Net Sales
$
496,141
$
373,497
$
1,823,429
$
1,349,535
Operating Income
$
31,449
$
20,578
$
87,729
$
52,549
Adjusted Operating Income (non-GAAP)
(1)
$
31,480
$
19,419
$
88,218
$
49,602
Operating Income %
6.3
%
5.5
%
4.8
%
3.9
%
Adjusted Operating Income (non-GAAP) %
6.3
%
5.2
%
4.8
%
3.7
%
Net Income
$
19,202
$
9,938
$
55,831
$
31,253
Adjusted Net Income (non-GAAP) (1)
$
19,041
$
9,938
$
55,949
$
30,203
Diluted EPS
$
0.76
$
0.40
$
2.22
$
1.24
Adjusted Diluted EPS (non-GAAP) (1)
$
0.76
$
0.40
$
2.23
$
1.20
(1) A reconciliation of GAAP and non-GAAP
financial measures is included below.
Richard D. Phillips, Chief Executive Officer, stated, “I am very
pleased with the results we reported for the fourth quarter and
fiscal year 2023. Q4 was our sixth consecutive quarter with record
sales, and operating income and EPS were at all-time highs for the
Company. The strong finish to the fiscal year drove net sales above
the guidance we provided in May, and contributed to better than
expected cash flow generation in the quarter. This performance was
achieved with the highest levels of teamwork from our global
organization, and many others in the value chain. I would like to
thank our employees, our customers and our vendor partners for
their passion, commitment, and support.”
Mr. Phillips continued, “In total, fiscal 2023 was an excellent
year for Kimball Electronics, highlighted by record top-line
growth, margin expansion, a 79% increase in net income, and
improved return on invested capital. Each of our three vertical end
markets reported strong results, with the sales volume to 48% of
our customers reaching all-time highs. The team supported new
product introductions at a rate four times above the historic norm,
and we continued to leverage our facility expansions in Thailand
and Mexico, while navigating a challenging macro environment. While
we continue to see a strong pipeline for future growth, fiscal 2024
is tempered by slower sales with a large medical customer. Longer
term we are excited by the prospects of our funnel of new business,
and the relationship with this customer in particular.”
Fiscal Year 2023 Highlights:
- Net sales for fiscal year 2023 totaled $1,823.4 million,
representing constant currency growth of 38% year-over-year when
excluding the impact of foreign currency, which had a 3%
unfavorable impact on net sales.
- Operating income of $87.7 million, or 4.8% of net sales, an
improvement compared to $52.5 million, or 3.9% of net sales, in
fiscal 2022.
- Net income of $55.8 million, or $2.22 per diluted share, a
significant increase compared to net income of $31.3 million, or
$1.24 per diluted share, in fiscal 2022.
- Capital expenditures of $90.7 million, supporting facility
expansions in Thailand, Mexico, and Poland.
- Return on invested capital of 9.4%, a 220-basis point
improvement compared to fiscal 2022; ROIC is a non-GAAP financial
measure, see reconciliation of non-GAAP financial measures.
The Company ended fiscal 2023 with cash and cash equivalents of
$43.0 million and borrowings outstanding on credit facilities of
$281.5 million, including $235 million classified as long term, and
$106.1 million of borrowing capacity available.
Net Sales by Vertical Market for Fiscal 2023:
Three Months Ended
Fiscal Year Ended
June 30,
June 30,
(Amounts in Millions)
2023
*
2022
*
Percent Change
2023
*
2022
*
Percent Change
Automotive
$
219.6
44
%
$
152.4
41
%
44
%
$
820.1
45
%
$
582.2
43
%
41
%
Medical
120.5
24
%
114.0
30
%
6
%
494.0
27
%
391.7
29
%
26
%
Industrial (1)
141.8
29
%
102.4
28
%
38
%
474.6
26
%
358.2
27
%
33
%
Other
14.2
3
%
4.7
1
%
202
%
34.7
2
%
17.4
1
%
99
%
Total Net Sales
$
496.1
$
373.5
33
%
$
1,823.4
$
1,349.5
35
%
* As a percent of Total Net Sales
(1) Beginning in fiscal year 2023, Public
Safety was combined with Industrial; all prior periods have been
recast to conform to current period presentation
– Automotive includes electronic power
steering, body controls, automated driver assist systems, and
electronic braking systems
– Medical includes sleep therapy and
respiratory care, image guided therapy, in vitro diagnostics, drug
delivery, AED, and patient monitoring
– Industrial includes climate controls,
automation controls, optical inspection, smart metering, and public
safety
Fiscal Year 2024 Guidance:
- Net sales in the range of $1.9 - $1.95 billion, a 4% - 7%
increase year-over-year.
- Operating income in the range of 4.7% - 5.2% of net sales.
- Capital expenditures of $70 - $80 million.
Commenting on today’s announcement, Jana T. Croom, Chief
Financial Officer, stated, “Our outlook for fiscal 2024 reflects a
capital allocation strategy focused on organic growth. We have a
solid funnel of new business opportunities and additional capacity
from our recent facility expansions, which I’m pleased to announce
now includes Poland. We will be ramping-up operations in Poznan
throughout the fiscal year. In addition, inventory should normalize
as global supply chain disruptions continue to ease, and the
resulting cash flow generated will be directed toward reducing our
leverage ratio.”
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 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, 2022.
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
Date:
August 17, 2023
Time:
10:00 AM Eastern Time
Live Webcast:
investors.kimballelectronics.com/events-and-presentations/events
Dial-In #:
404-975-4839 (other locations -
833-470-1428)
Conference ID:
941287
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 fourth quarter and fiscal year
ended June 30, 2023 are as follows:
Condensed Consolidated Statements of
Income
(Unaudited)
Three Months Ended
(Amounts in Thousands, except Per Share
Data)
June 30, 2023
June 30, 2022
Net Sales
$
496,141
100.0
%
$
373,497
100.0
%
Cost of Sales
446,460
90.0
%
339,276
90.8
%
Gross Profit
49,681
10.0
%
34,221
9.2
%
Selling and Administrative Expenses
18,444
3.7
%
13,643
3.7
%
Other General Expense (Income)
(212
)
—
%
—
—
%
Operating Income
31,449
6.3
%
20,578
5.5
%
Interest Income
65
—
%
15
—
%
Interest Expense
(5,473
)
(1.1
)%
(1,118
)
(0.3
)%
Non-Operating Income (Expense), net
466
0.1
%
(4,154
)
(1.1
)%
Other Income (Expense), net
(4,942
)
(1.0
)%
(5,257
)
(1.4
)%
Income Before Taxes on Income
26,507
5.3
%
15,321
4.1
%
Provision for Income Taxes
7,305
1.4
%
5,383
1.4
%
Net Income
$
19,202
3.9
%
$
9,938
2.7
%
Earnings Per Share of Common Stock:
Basic
$
0.77
$
0.40
Diluted
$
0.76
$
0.40
Average Number of Shares Outstanding:
Basic
25,009
24,885
Diluted
25,161
24,989
(Unaudited)
Fiscal Year Ended
(Amounts in Thousands, except Per Share
Data)
June 30, 2023
June 30, 2022
Net Sales
$
1,823,429
100.0
%
$
1,349,535
100.0
%
Cost of Sales
1,667,264
91.4
%
1,244,933
92.2
%
Gross Profit
156,165
8.6
%
104,602
7.8
%
Selling and Administrative Expenses
68,648
3.8
%
53,437
4.0
%
Other General Expense (Income)
(212
)
—
%
(1,384
)
(0.1
)%
Operating Income
87,729
4.8
%
52,549
3.9
%
Interest Income
153
—
%
81
—
%
Interest Expense
(16,263
)
(0.9
)%
(2,655
)
(0.2
)%
Non-Operating Income (Expense), net
3,125
0.2
%
(6,244
)
(0.5
)%
Other Income (Expense), net
(12,985
)
(0.7
)%
(8,818
)
(0.7
)%
Income Before Taxes on Income
74,744
4.1
%
43,731
3.2
%
Provision for Income Taxes
18,913
1.0
%
12,478
0.9
%
Net Income
$
55,831
3.1
%
$
31,253
2.3
%
Earnings Per Share of Common Stock:
Basic
$
2.24
$
1.24
Diluted
$
2.22
$
1.24
Average Number of Shares Outstanding:
Basic
24,904
25,115
Diluted
25,076
25,221
Condensed Consolidated Statements of
Cash Flows
Fiscal Year Ended
(Unaudited)
June 30,
(Amounts in Thousands)
2023
2022
Net Cash Flow used for Operating
Activities
$
(13,804
)
$
(83,178
)
Net Cash Flow used for Investing
Activities
(90,467
)
(74,798
)
Net Cash Flow provided by Financing
Activities
99,179
103,741
Effect of Exchange Rate Change on Cash,
Cash Equivalents, and Restricted Cash
(895
)
(2,356
)
Net Decrease in Cash, Cash Equivalents,
and Restricted Cash
(5,987
)
(56,591
)
Cash, Cash Equivalents, and Restricted
Cash at Beginning of Period
49,851
106,442
Cash, Cash Equivalents, and Restricted
Cash at End of Period
$
43,864
$
49,851
(Unaudited)
Condensed Consolidated Balance
Sheets
June 30, 2023
June 30, 2022
(Amounts in Thousands)
ASSETS
Cash and cash equivalents
$
42,955
$
49,851
Receivables, net
308,167
222,857
Contract assets
78,798
64,080
Inventories
450,319
395,630
Prepaid expenses and other current
assets
49,188
28,665
Property and Equipment, net
267,684
206,835
Goodwill
12,011
12,011
Other Intangible Assets, net
12,335
14,707
Other Assets
38,262
41,131
Total Assets
$
1,259,719
$
1,035,767
LIABILITIES AND SHARE OWNERS’
EQUITY
Current portion of borrowings under credit
facilities
$
46,454
$
35,580
Accounts payable
322,274
300,224
Advances from customers (1)
33,905
25,942
Accrued expenses
72,515
46,996
Long-term debt under credit facilities,
less current portion
235,000
145,000
Long-term income taxes payable
5,859
7,812
Other long-term liabilities
19,718
20,242
Share Owners’ Equity
523,994
453,971
Total Liabilities and Share Owners’
Equity
$
1,259,719
$
1,035,767
(1)
Beginning in fiscal year 2023, the Company
changed its presentation that such inventory-related payments from
customers are classified as Advances from customers on the
Condensed Consolidated Balance Sheets. Prior year periods have been
recast to conform to the current year presentation.
Reconciliation of Non-GAAP Financial
Measures
(Unaudited)
(Amounts in Thousands, except Per Share
Data)
Three Months Ended
Fiscal Year Ended
June 30,
June 30,
2023
2022
2023
2022
Net Sales Growth (vs. same period in prior
year)
33
%
13
%
35
%
4
%
Foreign Currency Exchange Impact
—
%
(3
)%
(3
)%
(1
)%
Constant Currency Growth
33
%
16
%
38
%
5
%
Operating Income, as reported
$
31,449
$
20,578
$
87,729
$
52,549
SERP
243
(1,159
)
701
(1,563
)
Legal Settlements (Recovery)
(212
)
—
(212
)
(1,384
)
Adjusted Operating Income
$
31,480
$
19,419
$
88,218
$
49,602
Net Income, as reported
$
19,202
$
9,938
$
55,831
$
31,253
Adjustments After Measurement Period on
GES Acquisition
—
—
279
—
Legal Settlements (Recovery),
After-Tax
(161
)
—
(161
)
(1,050
)
Adjusted Net Income
$
19,041
$
9,938
$
55,949
$
30,203
Diluted Earnings per Share, as
reported
$
0.76
$
0.40
$
2.22
$
1.24
Adjustments After Measurement Period on
GES Acquisition
—
—
0.01
—
Legal Settlements (Recovery)
—
—
—
(0.04
)
Adjusted Diluted Earnings per Share
$
0.76
$
0.40
$
2.23
$
1.20
Operating Income
$
87,729
$
52,549
SERP
701
(1,563
)
Legal Recovery
(212
)
(1,384
)
Adjusted Operating Income (non-GAAP)
$
88,218
$
49,602
Tax Effect
22,235
14,417
After-tax Adjusted Operating Income
$
65,983
$
35,185
Average Invested Capital (1)
$
701,364
$
491,252
ROIC
9.4
%
7.2
%
(1)
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230816530676/en/
Andrew D. Regrut Vice President, Investor Relations 812.827.4151
Investor.Relations@kimballelectronics.com
Kimball Electronics (NASDAQ:KE)
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