Slide 1: Second Quarter Fiscal 2023 Results
Second Quarter Fiscal 2023 Results Quarter Ended December 31, 2022 Supplementary Information to the February 7, 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 2023 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 Don Charron Chairman & CEO Andy Regrut VP Investor Relations Ric Phillips Incoming CEO Kimball Electronics | 3
Slide 4: Q2 results were very good…
Q2 results were very good… • For the fourth consecutive quarter, net sales were at all-time high for the Company • Operating margin expanded both sequentially and compared to the same period last year • Ramp-up production on new & existing programs • Leverage our facility expansions in Thailand and
Slide 5: Net sales in Q2 were $437 million, a 39% increase
Net sales in Q2 were $437 million, a 39% increase compared to the same period last year Net Sales $437 $315 +39% Q2 FY22 Q2 FY23 FX unfavorably impacted sales by 5% in Q2 All three vertical markets reported robust, double-digit increases with two of them posting all-time bests Kimball Electronics |
Slide 6: Net sales in Automotive were a record $200 million
Net sales in Automotive were a record $200 million • 44% increase compared to Q2 last year • 46% of total company sales in the quarter • 8% sequential step-up from Q1 • Growth fueled by next generation braking system • Opportunities from the “electrification” of vehicles • 70% of our work in Automot
Slide 7: Net sales in Medical were $125 million
Net sales in Medical were $125 million • 39% increase compared to Q2 last year • 29% of total company sales • 3rd consecutive quarter to post gains in excess of 30% • 9% step-up from Q1 • Served the Medical industry for over 20 years • Future growth fueled by macro megatrends • Manufacturing capabil
Slide 8: Net sales in our Industrial vertical totaled $105 million
Net sales in our Industrial vertical totaled $105 million • 27% increase over the recasted second quarter last year • Represents 24% of total company sales • All-time best result for the Company • As a reminder, Public Safety is now included in this vertical • “Green & Clean” – well positioned in th
Slide 9: Summary
Summary • Another very good quarter of financial results with record- setting sales, improving margins, and momentum that will build throughout fiscal 2023 • Honored by Circuits Assembly for achieving the Highest Overall Customer rating in 7 categories • Congratulations – and thank you – to associat
Slide 10: Net sales in Q2 were $437 million, an all-time record high
Net sales in Q2 were $437 million, an all-time, record high for the company +39% from Q2 FY22 Foreign exchange negatively impacted sales by 5% in the quarter Year-over-year growth would have exceeded 40% at historical rates Kimball Electronics | 10
Slide 11: The gross margin rate in Q2 was 7.8%
The gross margin rate in Q2 was 7.8%, a 120-bps improvement compared to the second quarter last year Drivers of GM% Gross Margin Trend • Record sales volume driving operating leverage versus a year ago • In Q2 2022, production was more significantly constrained by parts shortages Kimball Electronics
Slide 12: Adjusted selling and administrative expenses
Adjusted selling and administrative expenses (1) • Adjusted selling and administrative expenses were $16.4 million, compared to $13.5 million in Q2 last year • Increase coming from added resources to support our significant growth, wage inflation, and accounts receivable factoring fees • When measur
Slide 13: Adjusted operating income
Adjusted operating income (1) (1) Adjusted Operating Income is a Non-GAAP measure – refer to Reconciliation of Non-GAAP Results in the Appendix of this supplementary information. Kimball Electronics | 13
Slide 14: Other income & expense and the effective tax rate
Other income & expense and the effective tax rate • Other income & expense was expense of $3.3 million in the second quarter of this year compared to expense of $0.2 million last year • Higher interest expense primarily accounting for the increase, an outcome from elevated debt levels and today’s in
Slide 15: 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 in the Appendix of this supplementary information. Kimball Electronics | 15
Slide 16: Balance sheet
Balance sheet • Cash and cash equivalents were $26.3 million at December 31, 2022 • Cash flow used by operating activities was $11.7 million in the second quarter of fiscal 2023 • Cash conversion days were 103 days, up from 81 days in the second quarter last year, and 99 days in Q1 • Cash flow and C
Slide 17: Balance sheet - continued
Balance sheet - continued • Capital expenditures in the second quarter were $22.7 million, focused on completing the facility expansion in Poland, adding equipment in Mexico, and capital needed for new product introductions • Borrowings on our credit facilities at December 31, 2022, were $273.5 mill
Slide 18: Share repurchases
Share repurchases • No shares were repurchased in the second 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 19: Raising our guidance for net sales in fiscal 2023
Raising our guidance for net sales in fiscal 2023 Net sales range Net sales estimated to be in the range of $1.7 - $1.8 billion, a 26% - 33% increase compared to fiscal 2022 $1.7 - $1.8 billion Reminder: original guidance was $1.6 - $1.7 billion Increase compared to fiscal 2022 Operating margin of 4
Slide 20: Retiring at the end of February
Retiring at the end of February • Last earnings conference call and webcast as Chairman and CEO of Kimball Electronics • Plan to stay in the Jasper area and remain major Share Owner of the Company • Clean transfer of responsibility and authority on March 1st • Ric Phillips as CEO • Bob Phillippy as
Slide 21: Incoming CEO
Incoming CEO Excited to join the Kimball Electronics family • Rich history of excellence • Positioned for growth • Near record levels of open order backlog • New program wins • Increased capacity from recent facility expansions • $2 billion in annual revenue is in the planning horizon Leverage exper
Slide 22: Q&A
Q&A Kimball Electronics | 22
Slide 23: Appendix
Appendix Kimball Electronics | 23
Slide 24: Non-GAAP Reconciliation
Non-GAAP Reconciliation (Unaudited, Amounts in Thousands, Except Per Share Data) Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Net Sales Growth (vs. same quarter in prior year) 6 % 15 % (12) % (2) % 19 % 13 % 39 % 39 % Foreign Currency Exchange Impact 3 % 3 % 1 % — % (2) % (3) % (5) % (5) % Consta
Slide 25: Net Sales, Automotive
Net Sales, Automotive +44% from Q2 FY22 Kimball Electronics | 25
Slide 26: Net Sales, Medical
Net Sales, Medical +39% from Q2 FY22 Kimball Electronics | 26
Slide 27: Net Sales, Industrial
Net Sales, Industrial +27% from Q2 FY22 Beginning in FY23, Public Safety was combined with Industrial; all prior periods have been recast to conform to current period presentation Kimball Electronics | 27