Slide 1: Third Quarter Fiscal 2023 Results
Third Quarter Fiscal 2023 Results Quarter Ended March 31, 2023 Supplementary Information to the May 5, 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 Ric Phillips CEO Andy Regrut VP Investor Relations Kimball Electronics | 3
Slide 4: Strong results for the third quarter of fiscal 2023
Strong results for the third quarter of fiscal 2023 • On a path of unprecedented growth… • Fifth consecutive quarter, revenue reached an all-time, record high in Q3 • Operating margin has steadily improved as we ramp-up new and existing programs • Continue to leverage facility expansions in Thailand
Slide 5: Net sales in Q3 were $485 million, a 32% increase
Net sales in Q3 were $485 million, a 32% increase compared to the same period last year Net Sales $485 $368 +32% Q3 FY22 Q3 FY23 FX unfavorably impacted sales by 2% in Q3 All three vertical markets set record highs in the quarter Kimball Electronics | 5
Slide 6: Net sales in Automotive were a record $216 million
Net sales in Automotive were a record $216 million • 34% increase compared to Q3 last year • 45% of total company sales in the quarter • 8% sequential step-up from Q2 • Industry megatrends present meaningful tailwind, even if consumer demand softens during a global economic slowdown • Electronic con
Slide 7: Net sales in Medical were a record $134 million
Net sales in Medical were a record $134 million • 30% increase compared to Q3 last year • 28% of total company sales • 4th consecutive quarter with growth of 30% or more • 7% step-up from Q2 • Future growth fueled by industry megatrends • Strategically positioned to support growth • Respiratory care
Slide 8: Net sales in Industrial were a record $127 million
Net sales in Industrial were a record $127 million • 29% increase over the recast third quarter from last year • Represents 26% of total company sales • This record tops previous quarterly high by 21% • “Green & Clean” supports products that promote energy, efficiency, safety, carbon neutrality, and
Slide 9: Summary
Summary • Very good quarter with record-setting sales in all three vertical markets • Good momentum to close out fiscal 2023 Kimball Electronics | 9
Slide 10: Net sales in Q3 were $484.7 million, an all-time record
Net sales in Q3 were $484.7 million, an all-time, record high for the company +32% from Q3'22 • Foreign exchange negatively impacted sales by 2% in the quarter • At historical rates, this record result would have been even stronger Kimball Electronics | 10
Slide 11: The gross margin rate in Q3 was 8.9%
The gross margin rate in Q3 was 8.9%, a 30-bps decline compared to the third quarter last year • Under absorption at our facilities that have been recently expanded • Softness in semi-cap and handset space Kimball Electronics | 11
Slide 12: Adjusted selling and administrative expenses
Adjusted selling and administrative expenses (1) • Adjusted selling and administrative expenses were $17.4 million, compared to $14.4 million in Q3 last year • Increase coming from added resources to support top-line growth, wage inflation, and accounts receivable factoring fees • When measured as a
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 on the final slide 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 third quarter of this year compared to expense of $2.1 million last year • The change resulting from higher interest expense - an outcome from elevated debt levels and current interest rate
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 on the final slide of this supplementary information. Kimball Electronics | 15
Slide 16: Balance sheet
Balance sheet • Cash and cash equivalents were $30.4 million at March 31, 2023 • Cash flow from operating activities was $14.0 million in the third quarter of fiscal 2023 • Cash conversion days were 92 days, up from 79 days in the third quarter last year, and 97 days in Q2* • Customer advances now i
Slide 17: Capital expenditures in the third quarter were $24.7 million
Capital expenditures in the third quarter were $24.7 million • Completing the facility expansion in Poland, adding equipment in Mexico, and capital needed for new product introductions (1) Capital Expenditures include purchases of capitalized software. Kimball Electronics | 17
Slide 18: Borrowings
Borrowings • Borrowings on credit facilities at March 31, 2023, were $289.4 million • Compared to $137.1 million dollars a year ago • Borrowings last quarter of $273.5 million • Our short-term liquidity available totaled $128.5 million at March 31, 2023 Kimball Electronics | 18
Slide 19: Share repurchases
Share repurchases • No shares were repurchased in the third 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 fo
Slide 20: Updating outlook for fiscal 2023
Updating outlook for fiscal 2023 Net sales expected at high-end of range $1.7 - $1.8 billion Net sales expected at high-end of guidance range of $1.7 - $1.8 billion, which would represent a 30%+ increase year-over-year Increase compared to fiscal 2022 30%+ in net sales Adjusted operating income expe
Slide 21: Next earnings release
Next earnings release… • Report Q4 results in mid-August, which is a couple of weeks later than normal practice • Reduce gap between earnings release and filing of 10-K • Will issue press release with details ~2 weeks in advance of event Kimball Electronics | 21
Slide 22: Closing remarks
Closing remarks Financial results • Very pleased with Q3 and expectations for fiscal year 2023 Strategic Plan • Heavy focus on EMS • Road to $2 billion in annual revenue within our sights • Strategically positioned to achieve that milestone • New program wins • Facility expansions • Ribbon cutting c
Slide 23: ESG Report
ESG Report • Published ESG report for calendar 2022 • Poised to Make an Impact • Available on our corporate website • Company remains committed to Creating Quality for Life • Customers • Employees • Communities where we operate • Share Owners • Morningstar Sustainalytics rated KE #1 among electronic
Slide 24: Thank you
Thank you • Looking forward to working together with our team to: • Provide excellent service and growth for our customers • Enhance our outstanding company culture • Serve our communities • Create short and long-term value for the Company and our Share Owners Kimball Electronics | 24
Slide 25: Q&A
Q&A Kimball Electronics | 25
Slide 26: Appendix
Appendix Kimball Electronics | 26
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation (Unaudited, Amounts in Thousands, Except Per Share Data) Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Net Sales Growth (vs. same quarter in prior year) 15 % (12) % (2) % 19 % 13 % 39 % 39 % 32 % Foreign Currency Exchange Impact 3 % 1 % — % (2) % (3) % (5) % (5) % (2) % Con
Slide 28: Net Sales, Automotive
Net Sales, Automotive +34% from Q3'22 Kimball Electronics | 28
Slide 29: Net Sales, Medical
Net Sales, Medical +30% from Q3'22 Kimball Electronics | 29
Slide 30: Net Sales, Industrial
Net Sales, Industrial +29% from Q3'22 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 | 30