Slide 1: Third Quarter Fiscal 2022 Results
Third Quarter Fiscal 2022 Results Quarter Ended March 31, 2022 Supplementary Information to the May 6, 2022 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 2022 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
Kimball Electronics (Nasdaq: KE) Today’s speakers Don Jana Andy Charron Croom Regrut CHAIRMAN AND CHIEF FINANCIA L OFFI CE R V ICE PRESIDEN T, CHIEF EXECUTIVE OFFIC ER IN V ESTOR REL ATION S 3
Slide 4: Q3 results were incredibly strong…
Kimball Electronics (Nasdaq: KE) Q3 results were incredibly strong… • Sales exceeded our all-time high in a quarter by 10% • Operating margin was 5.5% of net sales • Significantly better than the first half of the fiscal year • 80 bps higher than a year ago • Diluted EPS increased more than 30% • Ba
Slide 5: The challenges in Q3 compounded by the devastation in Ukraine
Kimball Electronics (Nasdaq: KE) The challenges in Q3 compounded by the devastation in Ukraine • We have Ukrainian associates in our U.S. and European operations • Facilities in nearby Poland and Romania • Our number one priority has been the health and safety of our associates • Supporting their fa
Slide 6: Poznan facility located in western Poland
Kimball Electronics (Nasdaq: KE) Poznan facility located in western Poland • Roughly 240 kilometers from Berlin • Employ ~1,000 associates in Poznan • Expansion targeted for completion in early fiscal 2024 • Morale of the team is positive and up-beat, and the business is operating well • Expansion r
Slide 7: Conflict could cause incremental stress on global supply chains
Kimball Electronics (Nasdaq: KE) Conflict could cause incremental stress on global supply chains • Russia is a large exporter of commodities including metals and mining output • Relative to car manufacturing: • Major supplier of palladium, platinum, nickel, and aluminum • Palladium and platinum are
Slide 8: Ukraine also plays an important role in the auto industry
Kimball Electronics (Nasdaq: KE) Ukraine also plays an important role in the auto industry • Produces wiring harnesses for cars • Supplier of neon and other noble gasses critical for semiconductor production • Many factories making these components have slowed, or shutdown altogether, in the face of
Slide 9: Monitoring the ongoing impact of China’s zero tolerance policy related to COVID
Kimball Electronics (Nasdaq: KE) Monitoring the ongoing impact of China’s zero tolerance policy related to COVID • Several cities experienced shutdowns recently due to a rise in the number of COVID cases • If shutdowns continue, there may be temporary disruptions in both the supply chain and demand
Slide 10: Net sales in the third quarter totaled $368 million, a 19% increase
Kimball Electronics (Nasdaq: KE) Net sales in the third quarter totaled $368 million, a 19% increase compared to Q3 last year, and $50 million higher than Q2 Net Sales $368 $310 +19% Q3 ‘21 Q3 ‘22 All 4 vertical markets reported increases in the quarter 10
Slide 11: Sales in the Automotive vertical market exceeded $160 million
44% Kimball Electronics (Nasdaq: KE) OF REVENUE Sales in the Automotive vertical market exceeded $160 million, a 16% increase year-over-year Automotive • All-time high for the Automotive vertical market $162 $140 • Driven by the ramp-up of certain programs including fully electric vehicles +16% • In
Slide 12: Sales in Medical were $103 million, a 20% increase
28% Kimball Electronics (Nasdaq: KE) OF REVENUE Sales in Medical were $103 million, a 20% increase compared to Q3 last year Medical • Very good result… suggests the industry is $103 continuing to recover and normalize from the $85 pandemic • Increase driven by launch and ramp-up of new +20% products
Slide 13: Sales in the Industrial vertical market totaled $84 million
23% Kimball Electronics (Nasdaq: KE) OF REVENUE Sales in the Industrial vertical market totaled $84 million, a 22% increase compared to last year Industrial • Higher end market demand for climate control products $84 and new customer additions drove the increase $69 • Represent longer-term growth op
Slide 14: Sales in the Public Safety vertical market were $13.8 million
4% Kimball Electronics (Nasdaq: KE) OF REVENUE Sales in the Public Safety vertical market were $13.8 million, a 2% increase compared to Q3 2021 Public Safety • Sales were $13.8 million in Q3 +2% • 2% increase year-over-year $13 $14 • Representing 4% of total company sales Q3 ‘21 Q3 ‘22 14
Slide 15: Summary
Kimball Electronics (Nasdaq: KE) Summary • Excellent results in Q3 • Promising outlook for Q4 • On track for a strong close to the fiscal year 15
Slide 16: Net sales increased 19% compared to Q3 2021
Kimball Electronics (Nasdaq: KE) Net sales increased 19% compared to Q3 2021 Overview Net Sales Trend • Sales were $368 million, a record for our company • Foreign exchange rates had an unfavorable impact of 2% on sales in the quarter 16
Slide 17: Gross margin rate of 9.2%, an 80 bps increase
Kimball Electronics (Nasdaq: KE) Gross margin rate of 9.2%, an 80 bps increase over the same period last year Drivers of GM% Gross Margin Trend • Improvement driven by lower depreciation and leverage gain that occurs on higher levels of sales • Depreciation impact occurred when we changed the estima
Slide 18: Adjusted Selling & Administrative Expense (%)
Kimball Electronics (Nasdaq: KE) Adjusted Selling & Administrative Expense (%) (1)(2) • Adjusted selling and administrative expenses were $14.3 million • Increase from Q3 last year driven by: • Higher salary and related payroll costs • Stock-based compensation • When measured as a percent of sales,
Slide 19: Adjusted Operating Income
Kimball Electronics (Nasdaq: KE) Adjusted Operating Income (1)(2) (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) Beginning in Q1’21, Adjusted Operating Income excludes changes in the fair val
Slide 20: Adjusted Net Income and Adjusted Diluted EPS
Kimball Electronics (Nasdaq: KE) 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. 20
Slide 21: Balance Sheet
Kimball Electronics (Nasdaq: KE) Balance Sheet • Cash and cash equivalents were $35.6 million at March 31, 2022 • Cash flow used for operating activities was $28.2 million in the third quarter of fiscal 2022 primarily driven by accounts receivable due to strong sales • Cash conversion days were 83 d
Slide 22: Share repurchases
Kimball Electronics (Nasdaq: KE) Share repurchases • During the third quarter, we invested $4.9 million to repurchase 259,000 shares, at an average share price of $18.87 • Since October 2015, under our Board authorized share repurchase program: • A total of $84.6 million returned to Share Owners by
Slide 23: Capital allocation priorities
Kimball Electronics (Nasdaq: KE) Capital allocation priorities • Invest in organic growth opportunities • 3 facility expansions in 1 ½ years • Capital expenditures to support new programs • Return cash to Share Owners with opportunistic share repurchases • Strategic acquisitions that are appropriate
Slide 24: Expanded credit facility to support capital allocation priorities
Kimball Electronics (Nasdaq: KE) Expanded credit facility to support capital allocation priorities • On May 4th, we amended our primary credit facility • Capacity increased from $150 million to $300 million • 5-year revolving credit facility gives us the flexibility to meet CapEx and working capital
Slide 25: Guidance for fiscal year 2022
Kimball Electronics (Nasdaq: KE) Guidance for fiscal year 2022 Expect to finish the fiscal year at the lower end of the sales range of $1.345 - $1.365 billion, compared to Net sales range previous guidance of ~$1.4 billion $1.345 - $1.365 billion Reiterating guidance for operating income margin of I
Slide 26: Closing comments
Kimball Electronics (Nasdaq: KE) Closing comments • Very pleased with how the company is positioned • Excellent results in Q3 • We expect a strong finish to the fiscal year and the momentum carrying into fiscal 2023, particularly as… • Supply chain disruptions and component parts shortages continue
Slide 27: Looking toward the $2 billion revenue milestone
Kimball Electronics (Nasdaq: KE) Looking toward the $2 billion revenue milestone • Open order backlog totals $930 million • Record high • Up 43% year-over-year • Driven by component shortages as well as new business wins • New business aligns our facility expansions with our customers’ growth • Stra
Slide 28: Our facility in Thailand
Kimball Electronics (Nasdaq: KE) Our facility in Thailand • Opened in the year 2000 • Revenue in fiscal 2021 exceeded $100 million • Much of the product produced in Thailand is exported • Heavy focus on the Medical vertical market • Recent expansion doubled the capacity of the facility 28
Slide 29: Our facility in Mexico
Kimball Electronics (Nasdaq: KE) Our facility in Mexico • Revenue in fiscal 2021 exceeded $265 million • Scheduled to have footprint doubled with expansion scheduled for completion this summer • Heavy focus on the Automotive vertical market 29
Slide 30: The road to $2 billion is in our sights…
Kimball Electronics (Nasdaq: KE) The road to $2 billion is in our sights… • It took our company 57 years to reach $1 billion in sales • Second billion will be achieved in a fraction of that time • Bullish outlook for the company 30
Slide 31: Welcome Isabel Wells
Kimball Electronics (Nasdaq: KE) Welcome Isabel Wells • Joined Kimball Electronics in April • Chief Information Officer • Over 20 years of global IT experience 31
Slide 32: Q&A
Q&A
Slide 33: Appendix
Appendix ee
Slide 34: Net Sales Automotive Vertical Market
Kimball Electronics (Nasdaq: KE) Net Sales Automotive Vertical Market 16% from Q3'21 34
Slide 35: Net Sales Medical Vertical Market
Kimball Electronics (Nasdaq: KE) Net Sales Medical Vertical Market +20% from Q3'21 35
Slide 36: Net Sales Industrial Vertical Market
Kimball Electronics (Nasdaq: KE) Net Sales Industrial Vertical Market +22% from Q3'21 36
Slide 37: Net Sales Public Safety Vertical Market
Kimball Electronics (Nasdaq: KE) Net Sales Public Safety Vertical Market +2% from Q3'21 37
Slide 38: Reconciliation of Non-GAAP Results
Kimball Electronics (Nasdaq: KE) Reconciliation of Non-GAAP Results (Unaudited, Amounts in Thousands, Except Per Share Data) Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Selling & Administrative Expenses, as reported $ 11,391 $ 13,117 $ 13,486 $ 11,744 $ 14,357 $ 12,204 $ 13,923 $ 13,667 Less: SE