Slide 1: Fourth Quarter Fiscal 2023 Results
Fourth Quarter Fiscal 2023 Results Quarter Ended June 30, 2023 Supplementary Information to the August 17, 2023, Earnings Conference Call & Webcast
Slide 2: Safe Harbor Statement
Kimball Electronics (Nasdaq: KE) Safe Harbor Statement Certain statements contained within this supplementary information, including our fiscal year 2024 guidance, and any statements made during our earnings conference call today may be considered forward-looking under the Private Securities Litigat
Slide 3: Today's speakers
Today’s speakers Jana Croom CFO Ric Phillips CEO Andy Regrut VP Investor Relations Kimball Electronics | 3
Slide 4: In memoriam…
In memoriam… Don Charron Former Chairman & CEO Kimball Electronics | 4
Slide 5: Record results for Q4 and full year of fiscal 2023
Record results for Q4 and full year of fiscal 2023 • Sixth consecutive quarter with record sales • Operating income and EPS in Q4 were at all-time highs for the Company • Strong finish drove net sales above the guidance we provided in May • Contributed to better-than-expected cash flow generation •
Slide 6: In total, fiscal 2023 was an excellent year
In total, fiscal 2023 was an excellent year • Record sales • Margin expansion • 79% increase in net income growth • Improved return on invested capital • 48% of our customers reached an all-time high in sales volume with us for the year • 77% of revenue was with customers we’ve worked with for a dec
Slide 7: Received multiple customer service awards…
Received multiple customer service awards… • Four customer service awards in China • Circuits Assembly • Ninth consecutive year • Multiple categories for Service Excellence • ISS Prime ESG corporate rating, places us among the top 10% in our industry Kimball Electronics | 7
Slide 8: Net sales in Q4 were $496 million, a 33% increase
Net sales in Q4 were $496 million, a 33% increase compared to the same period last year Net Sales $496 $373 +33% Q4 FY22 Q4 FY23 FX had a less than 1% impact on sales in Q4 Kimball Electronics | 8
Slide 9: Net sales in Automotive were a record $220 million
Net sales in Automotive were a record $220 million • 44% increase compared to Q4 last year • 44% of total company sales in the quarter • Fiscal 2023 a record year with revenue of $820 million • 41% increase over the prior year • 70% of Automotive is electronic power steering 44% • Braking systems in
Slide 10: Expect growth in this vertical to continue….
Expect growth in this vertical to continue…. • Industry megatrend of adding electronic content to vehicles • Our chassis control expertise aligns well with the trend • Complexity of the manufacturing process and value-added contributions increase as features are added to the ECU • Steering architect
Slide 11: Net sales in Medical were $121 million
Net sales in Medical were $121 million • 6% increase compared to Q4 last year • 24% of total company sales • Results adversely impacted by a decline in sales with a major customer who is remediating a FDA recall that is not related to our work with them • Fiscal year 2023 revenue of $494 million • 2
Slide 12: Industry megatrends support future growth
Industry megatrends support future growth • Population ages • Accessibility & affordability to healthcare increases • Movement toward smaller medical device sizes with high levels of precision and accuracy • Higher Level Assemblies (HLAs) represent opportunity to increase value-added content • Pedia
Slide 13: Net sales in Industrial were a record $142 million
Net sales in Industrial were a record $142 million • 38% increase over the recast fourth quarter from last year • Represents 29% of total company sales • This record tops previous quarterly high by 12% • Fiscal year 2023 revenue of $475 million • 33% increase over the prior year 29% Kimball Electron
Slide 14: Excellent set-up for future growth
Excellent set-up for future growth • Consumer trends raising awareness on the consumption of natural resources and encouraging the conservation of water, gas, and electricity • Legislation – and incentives – focused on decarbonization • Strategically aligned with products that promote energy, effici
Slide 15: Summary
Summary • Excellent quarter • Record-setting year • Solid momentum headed into fiscal 2024 Kimball Electronics | 15
Slide 16: Net sales in Q4 were $496.1 million, a record high
Net sales in Q4 were $496.1 million, a record high for the Company • Sixth consecutive quarter with record revenue • $10+ million above previous best • Cap-off sequential “set-up” reflected in guidance • Foreign exchange had less than a 1% impact on consolidated sales Kimball Electronics | 16
Slide 17: The gross margin rate in Q4 was 10%, an all-time high
The gross margin rate in Q4 was 10%, an all-time high • Represents an 80-bps improvement compared to the fourth quarter of fiscal 2022 • High levels of efficiency resulting from record sales in EMS • Completion of a high margin program in our AT&M business • Produced throughout the fiscal year, but
Slide 18: Adjusted selling and administrative expenses
Adjusted selling and administrative expenses (1) • Adjusted selling and administrative expenses were $18.2 million, compared to $14.8 million in Q4 last year • Increase coming from added resources to support top-line growth, wage inflation, and higher bonus expense • When measured as a percent of sa
Slide 19: Adjusted operating income
Adjusted operating income (1) Kimball Electronics | 19
Slide 20: Other income & expense and the effective tax rate
Other income & expense and the effective tax rate • Other income & expense was expense of $4.9 million in the fourth quarter of this year compared to expense of $5.3 million last year • The effective tax rate in Q4 was 27.6%, compared to 35.1% in Q4 last year Kimball Electronics | 20
Slide 21: Adjusted net income and adjusted diluted EPS
Adjusted net income and adjusted diluted EPS (1) (1) Adjusted Net Income and Adjusted Diluted EPS are Non-GAAP measures – refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information. Kimball Electronics | 21
Slide 22: Balance sheet
Balance sheet • Cash and cash equivalents were $43.0 million at June 30, 2023 • Cash flow from operating activities was $44.1 million in the fourth quarter of fiscal 2023 • Cash conversion days were 94 days, up from 86 days in the fourth quarter last year, and 92 days in Q3 • Customer advances now i
Slide 23: Inventory ended the quarter at $450.3 million
Inventory ended the quarter at $450.3 million • $55 million higher than Q4 last year • $38 million lower than Q3 • As anticipated, inventory is leveling off, contributing to improved cash flow • Expect trend to continue in fiscal 2024 Kimball Electronics | 23
Slide 24: Capital expenditures in the fourth quarter were $23.9 million
Capital expenditures in the fourth quarter were $23.9 million • Supporting the facility expansion in Poland • Adding equipment in Mexico • Capital needed for new product introductions • In fiscal year 2023, capital expenditures equaled $90.7 million Note: Capital Expenditures include purchases of ca
Slide 25: Borrowings
Borrowings • Borrowings on credit facilities at June 30, 2023, were $281.5 million • Compared to $180.6 million dollars a year ago • Borrowings last quarter of $289.4 million • Our short-term liquidity available totaled $149.1 million at June 30, 2023 Kimball Electronics | 25
Slide 26: Share repurchases
Share repurchases • No shares were repurchased in the fourth quarter of fiscal 2023 • Since October 2015, under our Board authorized share repurchase program: • A total of $88.8 million returned to Share Owners by repurchasing 5.8 million shares of common stock • $11.2 million remaining on program f
Slide 27: In total, fiscal 2023 was an excellent year
In total, fiscal 2023 was an excellent year • Record sales of $1.8 billion, a 35% increase year-over-year • Adjusted operating income of 4.8% of net sales • 110-bps improvement compared to fiscal 2022 • EPS growth of nearly 80% • Return on Invested Capital of 9.4%, compared to ROIC of 7.2% last year
Slide 28: Guidance for fiscal 2024
Guidance for fiscal 2024 Net sales in the range of $1.9 - $1.95 billion Net sales in the range of $1.9 - $1.95 billion, which would represent a 4% - 7% increase year-over-year Increase compared to fiscal 2023 4% - 7% increase Operating income margin expected in the range of 4.7% - 5.2% of net sales
Slide 29: Closing remarks
Closing remarks Attracted to Kimball Electronics for 3 reasons: • Culture • People • Business opportunity for value creation All better than expected • We live our culture every day • Reflected in our Guiding Principles survey • Culture differentiates us from peers • Incredibly strong foundation • T
Slide 30: Winning Together – the Kimball Way
Winning Together – the Kimball Way “Winning Together” • Working on a great team • With a great culture, and a common set of priorities What does it mean to win the “Kimball Way”? • Staying true to our Guiding Principles • Being collaborative and team-oriented • Setting high aspirations • Maintaining
Slide 31: Q&A
Q&A Kimball Electronics | 31
Slide 32: Appendix
Appendix Kimball Electronics | 32
Slide 33: Non-GAAP Reconciliation
Non-GAAP Reconciliation (Unaudited, Amounts in Thousands, Except Per Share Data) Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Net Sales Growth (vs. same quarter in prior year) (12) % (2) % 19 % 13 % 39 % 39 % 32 % 33 % Foreign Currency Exchange Impact 1 % — % (2) % (3) % (5) % (5) % (2) % — % Con
Slide 34: Net Sales, Automotive
Net Sales, Automotive +44% from Q4'22 Kimball Electronics | 34
Slide 35: Net Sales, Medical
Net Sales, Medical +6% from Q4'22 Kimball Electronics | 35
Slide 36: Net Sales, Industrial
Net Sales, Industrial +38% from Q4'22 Beginning in fiscal year 2023, Public Safety was combined with Industrial; all prior periods have been recast to conform to current period presentation. Kimball Electronics | 36
Slide 37: Return on Invested Capital
Return on Invested Capital (1)(2) (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) ROIC is a Non-GAAP measure - refer to Reconciliation of Non-GAAP Results on the final slide of this supplemen