Slide 1: First Quarter Fiscal 2025 Results
First Quarter Fiscal 2025 Results Quarter Ended September 30, 2024 Supplementary Information to the November 5, 2024, Earnings Conference Call & Webcast Lasting relationships. Global success. Kimball Electronics
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements contained within this supplementary information, including our fiscal year 2025 guidance, and any statements made during our earnings conference call today may be considered forward-looking under the Private Securities Litigation Reform Act of 1995. The state
Slide 3: Today’s speakers
Today’s speakers • Opening comments • Financial results for the quarter • Guidance for fiscal 2025 • Closing comments Ric Phillips CEO • Q&A Jana Croom CFO Lasting relationships. Global success. Kimball Electronics | 3
Slide 4: Strategically positioning the business for the future
Strategically positioning the business for the future • Restructured the Company by divesting Automation, Test, and Measurement • Folded medical CMO business into our core EMS portfolio… allowing greater focus on key and growing areas of the Medical vertical • Sharpened strategic focus in all vertic
Slide 5: Announcement regarding Tampa
Announcement regarding Tampa • Improve competitiveness by leveraging capacity in our global footprint while streamlining the operating structure • Production activities on existing customer programs will be transferred out of Tampa • Majority of the work going to our newly expanded facility in Mexic
Slide 6: Shutting down a location is a difficult decision
Shutting down a location is a difficult decision • Appropriate path forward considering the preferences of our customers, our outlook for U.S. manufacturing, and an objective of returning the Company to profitable growth and stronger performance • Grateful to the employees in Tampa and their accompl
Slide 7: Q1 another chapter of “controlling what we can control”
Q1 another chapter of “controlling what we can control” • Navigating the challenging operating environment stemming from sustained end market weakness • Results in line with expectations, considering the difficult comparisons from a record-setting Q1 last year • Continue to adjust costs, improve wor
Slide 8: Net sales in the quarter totaled $374 million
Net sales in the quarter totaled $374 million • Represents a 15% decrease year-over-year • When excluding AT&M from both periods, the decrease was 13% • From an end market perspective, each of the three vertical markets we serve posted declines * Percentage decrease compared to Q1 of fiscal 2024 Las
Slide 9: Automotive net sales were $188 million
Automotive net sales were $188 million • Down 11% compared to the first quarter last year • 50% of total company sales • Decrease occurred in Europe and North America, partially offset by a modest increase in Asia • Decline due to volume softening, a result of overstocking, lower demand, and dynamic
Slide 10: As announced in August…
As announced in August… • Working through a setback in electronic braking DOMAIN CONTROLLERS • Our customer – a tier one supplier – will no longer produce system for OEM ACTIVE SUSPENSION STEERING • Supporting wind down of production and ECUs transfer… conclude by end of Q3 INVERTERS DC-DC • No impa
Slide 11: Medical net sales in first quarter of $90 million
Medical net sales in first quarter of $90 million • Down 12% compared to the first quarter last year • 24% of total company sales • Decline heavily concentrated in Asia with North America and Europe down slightly Lasting relationships. Global success. Kimball Electronics | 11
Slide 12: Looking forward…
Looking forward… SLEEP & SURGICAL • Encouraged by growth prospects in this OXYGEN SYSTEMS vertical market THERAPY • Focus on higher level assemblies and finished medical devices AMBULANCE & • Announced in August, sole supplier of HOSPITAL PATIENT respiratory care final assembly and HLA MONITORING SY
Slide 13: Industrial net sales of $94 million, excluding AT&M
Industrial net sales of $94 million, excluding AT&M • Down 17% vs. Q1 last year • 25% of total company sales • Decline predominately occurred in North America and Europe, sales in Asia down slightly • Weak demand for internal climate control systems, battery storage, public safety products, and Smar
Slide 14: Continue to see a return to growth…
Continue to see a return to growth… OFF-HIGHWAY EQUIPMENT • Rebound for climate control GREEN ENERGY, products CHARGING, & STORAGE PUBLIC SAFETY • Opportunities in other sub-verticals within the industrial space CLIMATE CONTROL IoT & FACTORY & SMART ENERGY AUTOMATION MANAGEMENT Lasting relationships
Slide 15: Net sales in the first quarter were $374.3 million
Net sales in the first quarter were $374.3 million Net Sales • Foreign exchange had less than a 1% impact on sales in the quarter Lasting relationships. Global success. Kimball Electronics | 15
Slide 16: Gross margin rate in Q1 was 6.3%
Gross margin rate in Q1 was 6.3% Gross Margin % • 180 bps decline compared to the first quarter of fiscal 2024 (180) bps from Q1’24 • Decrease coming from lower absorption, a result of declining sales Lasting relationships. Global success. Kimball Electronics | 16
Slide 17: Adjusted selling & administrative expense (%)
Adjusted selling & administrative expense (%)(1)(2) • First quarter total of $11.0 million • $3.5 million – or 24% - reduction compared to the $14.5 million reported in Q1 last year • Decrease driven by aligning discretionary spending with current market demand and lower bonus • Only one month of ex
Slide 18: Adjusted operating income
Adjusted operating income (1)(2) • First quarter was $12.6 million, or 3.4% of net sales • Compared to last year’s adjusted result of $21.0 million, or 4.8% of net sales • Adopted the industry norm of excluding stock compensation expense from calculation (1) Adjusted Operating Income is a Non-GAAP m
Slide 19: Other income and expense
Other income and expense • In the first quarter, other income and expense was expense of $6.2 million, virtually flat year-over-year • Last year was expense of $6.3 million • Lower interest expense in the period, offset by an increase in foreign currency translation Lasting relationships. Global suc
Slide 20: Effective tax rate
Effective tax rate • In the first quarter, the effective tax rate was a negative 9.4%, compared to a positive 18.6% in Q1 of fiscal 2024 • The rate this quarter was driven by a favorable ruling on a prior period tax audit • Expect to resume a normalized tax rate in the mid-20s going forward Lasting
Slide 21: Adjusted net income and adjusted diluted EPS
Adjusted net income and adjusted diluted EPS (1)(2) (1) Adjusted Net Income and Adjusted Diluted EPS are Non-GAAP measures – refer to Reconciliation of Non-GAAP Results in the supplementary information. (2) Beginning in Q1’25, Adjusted Net Income and Adjusted Diluted EPS exclude stock compensation e
Slide 22: Balance sheet
Balance sheet • Cash and cash equivalents were $76.6 million at September 30, 2024 • Cash flow from operating activities in the quarter was $45.5 million, our third consecutive quarter of positive cash flow • Cash conversion days were 108 days, compared to 103 days in the first quarter last year, an
Slide 23: Inventory ended the quarter at $335.3 million
Inventory ended the quarter at $335.3 million • Represents a $147 million, or 30%, reduction compared to Q1 last year • Pleased with our progress in reducing inventory and will continue to work with our customers to right-size to the current demand outlook Lasting relationships. Global success. Kimb
Slide 24: Capital expenditures were $13.5 million
Capital expenditures were $13.5 million (1) Capital Expenditures and Depreciation & Amortization • Maintenance requirements • Investments in longer-term growth (1) Capital Expenditures include purchases of capitalized software. Lasting relationships. Global success. Kimball Electronics | 24
Slide 25: Borrowings
Borrowings • Borrowings on credit facilities at September 30, 2024, were $245.9 million • $48.9 million reduction from last quarter • Our lowest level of debt in 2 years • Short-term liquidity available totaled $263.4 million at the end of the first quarter Lasting relationships. Global success. Kim
Slide 26: Share repurchases
Share repurchases • Invested $2.9 million to repurchase 160,000 shares • Since October 2015, under our Board authorized share repurchase program: • A total of $94.7 million returned to Share Owners by repurchasing 6.1 million shares of common stock • $5.3 million remaining on the program for deploym
Slide 27: Confirming guidance for fiscal year 2025
Confirming guidance for fiscal year 2025 • Net sales expected to be in the range of $1.440 to $1.540 billion • Adjusted operating income of 4.0% to 4.5% of net sales • Capital expenditures of $40 to $50 million • Q2 revenue decline vs. prior year will be approximately in line with Q1, but with margi
Slide 28: Relative size of Tampa
Relative size of Tampa • Annual revenue of ~$75 million • Customers primarily in the Medical and Industrial verticals • By comparison, net sales in fiscal 2024 in Mexico exceeded $500 million • Program transfers to go to Reynosa and Jasper • Minimize disruption with set-up and qualification process
Slide 29: Controlling what we can control
Controlling what we can control • Leverage capacity within global footprint and streamline operating structure will improve competitiveness and drive efficiency • Closure of Tampa aligns electronics manufacturing footprint in U.S. with current and long-term market demand • Positions the Company to b
Slide 30: Questions
Questions Lasting relationships. Global success. Kimball Electronics | 30
Slide 31: Appendix
Appendix Lasting relationships. Global success. Kimball Electronics | 31
Slide 32: Reconciliation of non-GAAP results
Reconciliation of non-GAAP results (Unaudited, Amounts in Thousands, Except Per Share Data) Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Net Sales Growth (vs. same quarter in prior year) 39 % 32 % 33 % 8 % (4) % (12) % (13) % (15) % Foreign Currency Exchange Impact (5) % (2) % — % 1 % 1 % — % — %
Slide 33: Reconciliation of non-GAAP results continued
Reconciliation of non-GAAP results continued…. (Unaudited, Amounts in Thousands, Except Per Share Data) Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Operating Income (GAAP) (TTM) $ 71,915 $ 76,858 $ 87,729 $ 93,648 $ 92,769 $ 61,118 $ 49,277 $ 38,902 Add: Goodwill Impairment (TTM) — — — — — 5,820
Slide 34: Net Sales in Automotive
Net Sales in Automotive (1) (1) Beginning in fiscal year 2024, miscellaneous sales previously reported in Other are now reported in the respective three end market verticals; all prior periods have been recast to conform to current period presentation Lasting relationships. Global success. Kimball E
Slide 35: Net Sales in Medical
Net Sales in Medical (1) (1) Beginning in fiscal year 2024, miscellaneous sales previously reported in Other are now reported in the respective three end market verticals; all prior periods have been recast to conform to current period presentation Lasting relationships. Global success. Kimball Elec
Slide 36: Net Sales in Industrial
Net Sales in Industrial (1) (1) Beginning in fiscal year 2024, miscellaneous sales previously reported in Other are now reported in the respective three end market verticals; all prior periods have been recast to conform to current period presentation Lasting relationships. Global success. Kimball E
Slide 37: For more information, please contact:
For more information, please contact: Andy Regrut Treasurer and Investor Relations Officer 812.827.4151 andy.regrut@kimballelectronics.com Lasting relationships. Global success. Kimball Electronics | 37