Kimball Electronics, Inc. · NASDAQ:KE
Kimball Electronics — Investor Presentation (March 2021)
31 slides from Kimball Electronics's investor presentation, Mar 23, 2021
Slide 1: Investor Presentation Second Quarter Fiscal Year 2021
KIMBALL ELECTRONICS 1 Investor Presentation Second Quarter Fiscal Year 2021 Exhibit 99.1
Slide 2: Safe Harbor Statement
KIMBALL ELECTRONICS 2 KIMBALL ELECTRONICS (Nasdaq: KE) // Safe Harbor Statement Certain statements contained within this presentation may be 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,” “
Slide 3: Who We Are
KIMBALL ELECTRONICS 3 KIMBALL ELECTRONICS (Nasdaq: KE) // Who We Are Global manufacturing solutions provider of contract electronics and diversified manufacturing services used in… Automotive, Industrial, Medical & Public Safety Industries Focused on non-commodity products and components that requir
Slide 4: Why Invest?
KIMBALL ELECTRONICS 4 KIMBALL ELECTRONICS (Nasdaq: KE) // Why Invest? Expect high single-digit revenue growth • Focus on secular growth trends • Positive outsourcing trends • Market share gains Above Average Revenue Growth Sustainable Competitive Advantage Opportunities to Expand Profitability and R
Slide 5: What We Do
KIMBALL ELECTRONICS 5 KIMBALL ELECTRONICS (Nasdaq: KE) // What We Do MEDICAL 33%* • Sleep Therapy and Respiratory Care • Medical Imaging and Guided Therapy • In Vitro Diagnostics • Drug Delivery • AED • Climate Controls • Automation Controls • Operator Interface • Optical Inspection • Smart Metering
Slide 6: Our Value Proposition/Competitive Moat
KIMBALL ELECTRONICS 6 KIMBALL ELECTRONICS (Nasdaq: KE) // Our Value Proposition/Competitive Moat Global consistency - Single instance of SAP supports manufacturing operations globally. Standard lean six sigma practices shared across all facilities. Deep domain expertise - Experienced body of knowled
Slide 7: Global Footprint
KIMBALL ELECTRONICS 7 KIMBALL ELECTRONICS (Nasdaq: KE) // Global Footprint 1.3 million square feet of owned manufacturing space Reynosa, Mexico Tampa, FL Jasper, IN Poznan, Poland Laem Chabang, Thailand Nanjing, ChinaTimisoara, Romania Indianapolis, IN San Jose, CA Suzhou, China Trivandrum, India Ch
Slide 8: Sustainable Long-Term Customer Relationships
KIMBALL ELECTRONICS 8 Typical Program Length Automotive: 5-7 years Medical: 10 years Industrial: 3-5 years KIMBALL ELECTRONICS (Nasdaq: KE) // Sustainable Long-Term Customer Relationships Programs are mostly single sourced Recurring revenue Long-term predictable revenue enables multi-year planning E
Slide 9: Megatrends Opportunities
KIMBALL ELECTRONICS 9 KIMBALL ELECTRONICS (Nasdaq: KE) // Megatrends Opportunities • Automated Driver Assistance Systems (“ADAS”) • Infotainment Systems • Passenger Safety Systems • Mobility/Vehicle Management • Electric Vehicles • Redundant Systems for Self Driving Cars Sources: Clemson University;
Slide 10: Megatrend Opportunities
KIMBALL ELECTRONICS 10 KIMBALL ELECTRONICS (Nasdaq: KE) // Megatrend Opportunities * THE WORLDWIDE ELECTRONICS MANUFACTURING SERVICES MARKET – 2018 EDITION New Venture Research Corp. • Aging Population • Affordability/Increasing Access to Care • Connected Care to Improve Patient Outcomes • Decreasin
Slide 11: Industry 4.0 Strategy for Success
KIMBALL ELECTRONICS 11 Industry 4.0 Strategy for Success Our Industry 4.0 strategy is to leverage a digital framework focused on meeting customer requirements and enhancing competitiveness by accelerating continuous improvement, sharing best practices, and process automation and optimization. EMTab,
Slide 12: Creating Shareholder Value
KIMBALL ELECTRONICS 12 KIMBALL ELECTRONICS (Nasdaq: KE) // Creating Shareholder Value Target end markets with strong secular growth Make investments that enable greater strategic customer engagement and enhance return profile Leveraging existing assets & continuously improving efficiencies
Slide 13: End Markets with Secular Growth - Automotive
KIMBALL ELECTRONICS 13 KIMBALL ELECTRONICS (Nasdaq: KE) // Creating Shareholder Value End Markets with Secular Growth - Automotive Representative Customers Kimball Automotive Growth CAGR 2012-2017** 5.9% CAGR 2015-2020 9% (4)% FY20 vs FY19 CAGR 2017-2022** 8.3% (Unaudited) 1 in 5 light vehicles have
Slide 14: End Markets with Secular Growth - Medical
KIMBALL ELECTRONICS 14 KIMBALL ELECTRONICS (Nasdaq: KE) // Creating Shareholder Value End Markets with Secular Growth - Medical Representative CustomersMarket Growth Kimball Medical Growth CAGR 2012-2017** 5.1% CAGR 2015-2020 10% 8% FY20 vs FY19 Growth HealthcareMedical Healthcare CAGR 2017-2022** 6
Slide 15: End Markets with Secular Growth - Industrial
KIMBALL ELECTRONICS 15 KIMBALL ELECTRONICS (Nasdaq: KE) // Creating Shareholder Value End Markets with Secular Growth – Industrial Representative CustomersMarket Growth Kimball Industrial Growth CAGR 2012-2017** 2.5% CAGR 2015-2020 6% 6% FY20 vs FY19 Growth 23% of Revenue* • Climate Controls • Autom
Slide 16: ROIC Measured Over Multiple Years
KIMBALL ELECTRONICS 16 KIMBALL ELECTRONICS (Nasdaq: KE) // Creating Shareholder Value ROIC Measured Over Multiple Years As new programs mature, volumes ramp, and cost efficiencies are gained Increased launch activity in recent years has put near term pressure on profitability/returns ROIC measured o
Slide 17: Investments that Increase Customer Engagement
KIMBALL ELECTRONICS 17 Electronics Manufacturing Services Outsourced Manufacturing Services Diversified Contract Manufacturing Services Automation, Test & Measurement Enhance profitability/return - Attractive margin and return profile Offer Turnkey Solutions & Package of Value Greater strategic cust
Slide 18: Financial Review
KIMBALL ELECTRONICS 18 KIMBALL ELECTRONICS (Nasdaq: KE) // Financial Review Revenue Growth, Margin Expansion, and Strong Financial Profile
Slide 19: Financial Targets
KIMBALL ELECTRONICS 19 KIMBALL ELECTRONICS (Nasdaq: KE) // Financial Targets 8% Revenue Growth 4.5% Operating Margin 12.5% Operating ROIC
Slide 20: Revenue Performance
KIMBALL ELECTRONICS 20 KIMBALL ELECTRONICS (Nasdaq: KE) // Revenue Performance Target 8% - Achieving above target growth rates (Unaudited) REVENUE BY VERTICAL MARKETREVENUE PERFORMANCE 9% CAGR FY2016 to FY2020 • 2% Growth FY20 (ended 6/30/20) 41% 44% 40% 38% 42% 41% 28% 29% 31% 33% 30% 33% 22% 20% 2
Slide 21: Profitability Trends
KIMBALL ELECTRONICS 21 KIMBALL ELECTRONICS (Nasdaq: KE) // Profitability Trends (Unaudited) •Adjusted Operating Income and Margin are Non-GAAP terms. A reconciliation is provided in the appendix of this presentation. Prior periods have been revised to reflect adjusted operating income excluding chan
Slide 22: Capital Expenditures and Depreciation & Amortization
KIMBALL ELECTRONICS 22 KIMBALL ELECTRONICS (Nasdaq: KE) // Capital Expenditures and Depreciation & Amortization Significant capex spending to fuel multi-year organic growth and expansion in ROIC (Unaudited) (IN M IL LI O N S ) $2 $4 $6 $8 $10 $12 $14 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19
Slide 23: Capital Allocation
KIMBALL ELECTRONICS 23 KIMBALL ELECTRONICS (Nasdaq: KE) // Capital Allocation (Unaudited) Reinvest in the business – Significant capex spending of approximately $30 million/year to fuel multi-year organic growth and expansion in ROIC Acquisitions – $50+ million of acquisitions over past five years.
Slide 24: Target ROIC 12.5%
KIMBALL ELECTRONICS 24 KIMBALL ELECTRONICS (Nasdaq: KE) // Target ROIC 12.5% (Unaudited) * ROIC is a Non-GAAP term. A reconciliation is provided in the appendix of this presentation. Prior periods have been revised to reflect adjusted operating income excluding changes in the fair value of our SERP.
Slide 25: Consistent Working Capital Management and Ample Liquidity for Growth
KIMBALL ELECTRONICS 25 Kimball Electronics (Nasdaq: KE) Consistent Working Capital Management and Ample Liquidity for Growth $94M CASH AND EQUIVALENTS* $205M IN TOTAL LIQUIDITY* * As of December 31, 2020 ** Range as reported for quarters ending December 31, 2019 and December 31, 2020 75-81 DAYS CASH
Slide 26: Why Invest?
KIMBALL ELECTRONICS 26 KIMBALL ELECTRONICS (Nasdaq: KE) // Why Invest? Expect high single-digit revenue growth • Focus on secular growth trends • Positive outsourcing trends • Market share gains Above Average Revenue Growth Sustainable Competitive Advantage Opportunities to Expand Profitability and
Slide 27: Questions
KIMBALL ELECTRONICS 27 Questions
Slide 28: Reconciliation of Non-GAAP Results
KIMBALL ELECTRONICS 28 KIMBALL ELECTRONICS (Nasdaq: KE) // Reconciliation of Non-GAAP Results (Unaudited)* Prior periods have been revised to reflect adjusted operating income excluding changes in the fair value of our SERP. (In Thousands) FY17 FY18 FY19 FY20 1HFY20 1HFY21 Revenue, as reported 930,9
Slide 29: Reconciliation of Non-GAAP Results
KIMBALL ELECTRONICS 29 KIMBALL ELECTRONICS (Nasdaq: KE) // Reconciliation of Non-GAAP Results (Unaudited) (In Thousands, except per share data) FY17 FY18 FY19 FY20 Shareholders Equity, as reported 342,272$ 355,527$ 369,854$ 379,365$ Goodwill & Intangibles 10,772 10,566 40,292 31,354 Tangible Book Va
Slide 30: Reconciliation of Non-GAAP Results
KIMBALL ELECTRONICS 30 KIMBALL ELECTRONICS (Nasdaq: KE) // Reconciliation of Non-GAAP Results (Unaudited) * 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. Prior periods have been re
Slide 31: Reconciliation of Non-GAAP Results
KIMBALL ELECTRONICS 31 KIMBALL ELECTRONICS (Nasdaq: KE) // Reconciliation of Non-GAAP Results (Unaudited) * 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. Prior periods have been re
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