Slide 1: First Quarter Fiscal 2024 Results
First Quarter Fiscal 2024 Results Quarter Ended September 30, 2023 Supplementary Information to the November 7, 2023, Earnings Conference Call & Webcast Kimball Electronics | 1
Slide 2: Safe Harbor Statement
Kimball Electronics (Nasdaq: KE) Safe Harbor Statement Certain statements contained within this supplementary information, including our fiscal year 2024 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 • Opening comments • Financial results for the first quarter • Guidance for fiscal year 2024 • Closing comments • Q&A Ric Phillips CEO Jana Croom CFO Kimball Electronics | 3
Slide 4: Q1 was a strong start to the fiscal year
Q1 was a strong start to the fiscal year… • Record first quarter sales and operating income • Year-over-year margin expansion • 13% growth in net income • These results were in line with our expectations • Guidance for the full year of fiscal 2024 has been updated Kimball Electronics | 4
Slide 5: Net sales in Q1 totaled $438 million
Net sales in Q1 totaled $438 million… Net Sales • +8% increase compared to the first quarter last year $438 $406 • Foreign exchange had a 1% favorable impact on sales in Q1 • Two of three vertical markets posted double-digit +8% growth Q1 FY23 Q1 FY24 Kimball Electronics | 5
Slide 6: Automotive is our largest business
Automotive is our largest business… Net Sales Applications $213 $188 +13% * Percent of total sales Q1 FY23 Q1 FY24 Q1 results not materially impacted by Sensoring & Safety Control the UAW strike Kimball Electronics | 6
Slide 7: Growing as our customers grow
Growing as our customers grow… • Kimball Electronics awarded a new multiyear program by the ZF Group • Electronic power steering • Work to commence in calendar 2025 at our facilities in Poland and China • Strategic partnership between the companies dates back to our early beginnings in Automotive •
Slide 8: As expected, net sales in Medical declined in Q1
As expected, net sales in Medical declined in Q1 Net Sales Applications $116 $102 (12%) 1 2 * Percent of total sales Q1 FY23 Q1 FY24 3 Reflects impact of sales reduction 4 with major Medical customer Kimball Electronics | 8
Slide 9: Industrial reported the largest year-over-year increase in the quarter
Industrial reported the largest year-over-year increase in the quarter… Net Sales Applications $123 $102 +21% * Percent of total sales Q1 FY23 Q1 FY24 Support products that reduce environmental Climate Control & Smart Meters & Green Energy impacts, promote energy, efficiency, and safety Smart Energy
Slide 10: Summary
Summary • Very good quarter • Strong start to the fiscal year • More detail on financial results for Q1 and guidance for fiscal year Ric Phillips CEO Kimball Electronics | 10
Slide 11: Net sales in Q1 were $438.1 million, a first quarter record
Net sales in Q1 were $438.1 million, a first quarter record high for the Company Net Sales +8% from Q1'23 • +8% above Q1 of fiscal 2023 • Foreign exchange favorably impacted consolidated sales by approximately 1% year-over-year Kimball Electronics | 11
Slide 12: The gross margin rate in Q1 was 8.1%
The gross margin rate in Q1 was 8.1%... Gross Margin Rate +90 bps • 90 basis point improvement from Q1'23 compared to the same period last year • Increase predominately driven by higher levels of cost absorption in Mexico • Continue to leverage expansion Kimball Electronics | 12
Slide 13: Adjusted selling and administrative expenses
Adjusted selling and administrative expenses (1) Adjusted Selling & Administrative Expenses as % of Net Sales • Adjusted selling and administrative expenses were $16.2 million, compared to $16.0 million in Q1 +20 bps last year improvement from Q1'23 • When measured as a percent of sales, adjusted se
Slide 14: 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 | 14
Slide 15: Other income & expense and the effective tax rate
Other income & expense and the effective tax rate • Other income & expense was expense of $6.3 million, compared to expense of $1.4 million last year • The increase is a result of higher interest expense year-over-year • Product of our elevated debt levels and the current interest rate environment •
Slide 16: 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 | 16
Slide 17: Balance sheet
Balance sheet • Cash and cash equivalents were $56.6 million at September 30, 2023 • Cash flow from operating activities was $12.8 million in the first quarter of fiscal 2024 • Represents our third consecutive quarter of positive cash flow generation • Cash conversion days were 103 days, compared to
Slide 18: Inventory ended the quarter at $482.2 million
Inventory ended the quarter at $482.2 million • Compares to $450 million at the end of Q1 last year • Compares to $450 million at the end of fiscal 2023 Kimball Electronics | 18
Slide 19: Capital expenditures in the first quarter were $11.3 million
Capital expenditures in the first quarter were $11.3 million • Supporting organic growth • Maintenance requirements • Investments in automation and efficiency (1) Capital Expenditures include purchases of capitalized software. Kimball Electronics | 19
Slide 20: Borrowings
Borrowings • Borrowings on credit facilities at September 30, 2023, were $296.7 million • Compared to $232.5 million dollars a year ago • Borrowings at the end of Q4 were $281.5 million • Our short-term liquidity available totaled $147.1 million at the end of the first quarter Kimball Electronics |
Slide 21: Share repurchases
Share repurchases • No shares were repurchased in the first quarter of fiscal 2024 • 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 22: Guidance for fiscal year 2024 has been updated
Guidance for fiscal year 2024 has been updated • Net sales expected to be flat with the prior year • Previous estimate of a 4% - 7% increase year-over-year • Operating income also estimated to be in line with fiscal 2023 • Previous guidance in the range of 4.7% - 5.2% of net sales • The outlook for
Slide 23: Very proud of our accomplishments in the first quarter
Very proud of our accomplishments in the first quarter, and strong start to the fiscal year… • Includes the financial results • Other noteworthy awards, distinctions, and achievements for the Company • Facility in Jasper was recognized as one of the Best Places to Work in Manufacturing in Indiana •
Slide 24: Outlook for fiscal 2024 carefully navigating the current macro environment
Outlook for fiscal 2024 carefully navigating the current macro environment • Encouraged by the longer-term, growth opportunities in the three vertical markets we serve, each supported by favorable industry megatrends • With a strong funnel of new business, our capital allocation strategy is focused
Slide 25: Questions
Questions Kimball Electronics | 25
Slide 26: Appendix
Appendix Kimball Electronics | 26
Slide 27: Reconciliation of Non-GAAP Results
Reconciliation of Non-GAAP Results (Unaudited, Amounts in Thousands, Except Per Share Data) Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Net Sales Growth (vs. same quarter in prior year) (2) % 19 % 13 % 39 % 39 % 32 % 33 % 8 % Foreign Currency Exchange Impact — % (2) % (3) % (5) % (5) % (2) % — %
Slide 28: Net Sales in Automotive
Net Sales in Automotive +13% from Q1'23 (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 restated to conform to current period presentation Kimball Electronics | 28
Slide 29: Net Sales in Medical
Net Sales in Medical -12% from Q1'23 (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 restated to conform to current period presentation Kimball Electronics | 29
Slide 30: Net Sales in Industrial
Net Sales in Industrial (1) (2) +21% from Q1'23 (1) Beginning in fiscal year 2023, Public Safety was combined with Industrial; all prior periods have been recast to conform to current period presentation (2) Beginning in fiscal year 2024, miscellaneous sales previously reported in Other are now repo