Slide 1: Second Quarter Fiscal 2022 Results
Second Quarter Fiscal 2022 Results Quarter Ended December 31, 2021 Supplementary Information to the February 8, 2022 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 2022 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
Kimball Electronics (Nasdaq: KE) Today’s speakers Don Jana Andy Charron Croom Regrut CHAIRMAN AND VICE PRESIDEN T, HEA D OF IN V ESTOR CHIEF EXECUTIVE OFFIC ER CHIEF FINANCIA L OFFI CE R REL ATION S 3
Slide 4: Q2 was another hard-fought quarter…
Kimball Electronics (Nasdaq: KE) Q2 was another hard-fought quarter… • Global supply chain issues stemming from the COVID-19 pandemic persisted and adversely impacted results • Component shortages continued to make it challenging to obtain materials needed to support customer demand • Conditions imp
Slide 5: Our manufacturing facilities have been ramping up production
Kimball Electronics (Nasdaq: KE) Our manufacturing facilities have been ramping up production • Expect running several production lines at maximum capacity • Often, we are the single source supplier • Customers may share eagerness for conditions to normalize so that we both can deliver on contractua
Slide 6: Facility expansion in Poznan, Poland
Kimball Electronics (Nasdaq: KE) Facility expansion in Poznan, Poland • Third facility expansion in the last 15 months • Representative of our success in winning new business • Additional capacity needed for programs with new and existing customers • Expect to add approximately 40% to existing produ
Slide 7: Updating Capex guidance for fiscal 2022
Kimball Electronics (Nasdaq: KE) Updating Capex guidance for fiscal 2022 • Includes early investments in Poznan • Additional capital related to a major win in the next generation of electronic braking systems for a long-standing customer: • New high-tech system will support one of the world’s most p
Slide 8: Disappointed with the results in the first half of the fiscal year
Kimball Electronics (Nasdaq: KE) Disappointed with the results in the first half of the fiscal year • Outcome driven by the unavailability of materials • Lowering forecast for operating income margin in fiscal 2022 • Fully anticipate returning to an annual run rate for operating income levels in a r
Slide 9: Net sales decreased 2% compared to the same period last year
Kimball Electronics (Nasdaq: KE) Net sales decreased 2% compared to the same period last year Net Sales $321 $315 (2%) Q2 ‘21 Q2 ‘22 3 of 4 vertical markets reported increases in the quarter 9
Slide 10: Sales in the Automotive vertical market decreased 8%
44% Kimball Electronics (Nasdaq: KE) OF REVENUE Sales in the Automotive vertical market decreased 8% • Automotive was the only vertical market with Automotive decreasing sales in Q2 $152 • First quarterly decline in over a year $139 • Driven by shortage of semiconductors (8%) • This vertical market
Slide 11: Sales in the Medical vertical market increased 3%
29% Kimball Electronics (Nasdaq: KE) OF REVENUE Sales in the Medical vertical market increased 3% • Welcomed rebound to a business that has experienced ebbs & flows throughout the pandemic Medical • Increase driven by launch and ramp-up of new $87 $90 products +3% • Longer-term, we continue to belie
Slide 12: Sales in the Industrial vertical market increased 6%
23% Kimball Electronics (Nasdaq: KE) OF REVENUE Sales in the Industrial vertical market increased 6% • Glad to see early signs of bouncing back from today’s challenging operating environment Industrial • Business commonly referred to as “green & clean” $68 $72 • Climate control, smart metering, and
Slide 13: Sales in the Public Safety vertical market increased 3%
3% Kimball Electronics (Nasdaq: KE) OF REVENUE Sales in the Public Safety vertical market increased 3% Public Safety • Sales were $10.8 million in Q2 +3% $11 $11 Q2 ‘21 Q2 ‘22 13
Slide 14: Summary
Kimball Electronics (Nasdaq: KE) Summary • Challenging quarter with very good work from our team in tough conditions • Signs of improvement as evidenced by the higher level of sales in Q2 compared to Q1… an 8% increase • December the best month 14
Slide 15: Net sales declined 2% compared to Q2 2021
Kimball Electronics (Nasdaq: KE) Net sales declined 2% compared to Q2 2021 Overview Net Sales Trend • Sales were $315.3 million, a 2% decrease compared Q2 last year • Foreign exchange rates had a negligible impact on sales 15
Slide 16: Gross margin rate of 6.6%, a 270 bps decline compared to Q2 2021
Kimball Electronics (Nasdaq: KE) Gross margin rate of 6.6%, a 270 bps decline compared to Q2 2021 Drivers of GM% Gross Margin Trend • Challenged by lower volumes related to the continued global parts shortage; impacting our absorption rate • Certain costs have increased this year… including higher m
Slide 17: Adjusted Selling & Administrative Expense (%)
Kimball Electronics (Nasdaq: KE) Adjusted Selling & Administrative Expense (%) (1)(2) (1) Adjusted Selling & Administrative Expense is a Non-GAAP measure – refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information. (2) Beginning in Q1’21, Adjusted Selling & Adm
Slide 18: Adjusted Operating Income
Kimball Electronics (Nasdaq: KE) Adjusted Operating Income (1)(2) (1) Adjusted Operating Income is a Non-GAAP measure – refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information. (2) Beginning in Q1’21, Adjusted Operating Income excludes changes in the fair val
Slide 19: Adjusted Net Income and Adjusted Diluted EPS
Kimball Electronics (Nasdaq: KE) 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. 19
Slide 20: Balance Sheet
Kimball Electronics (Nasdaq: KE) Balance Sheet • Cash and cash equivalents were $56.7 million at December 31, 2021 • Cash flow used for operating activities was $48.3 million in the second quarter of fiscal 2022 • Cash conversion days were 81 days, up from 75 days in the second quarter last year • I
Slide 21: Share repurchases
Kimball Electronics (Nasdaq: KE) Share repurchases • No shares were repurchased in the second quarter of fiscal 2022 • Looking at balance sheet and capital allocation opportunities • Share repurchases would be an effective use of capital • Since October 2015, under our Board authorized share repurch
Slide 22: Guidance for fiscal year 2022
Kimball Electronics (Nasdaq: KE) Guidance for fiscal year 2022 Expect to finish the fiscal year at the lower end of the Net sales range sales range of $1.4 - $1.5 billion $1.4 - $1.5 billion Operating income guidance of 3.75% - 4.25% Increase compared to fiscal 2021 compares to original guidance of
Slide 23: Closing comments
Kimball Electronics (Nasdaq: KE) Closing comments • First half of fiscal 2022 not for the faint of heart • Ongoing impact of the pandemic, global supply chain issues, parts shortages, and rising costs creating challenging environment • Forecasting a strong second half to the fiscal year • Backlog of
Slide 24: Q&A
Q&A
Slide 25: Appendix
Appendix ee
Slide 26: Net Sales Automotive Vertical Market
Kimball Electronics (Nasdaq: KE) Net Sales Automotive Vertical Market -8% from Q2'21 26
Slide 27: Net Sales Medical Vertical Market
Kimball Electronics (Nasdaq: KE) Net Sales Medical Vertical Market +3% from Q2'21 27
Slide 28: Net Sales Industrial Vertical Market
Kimball Electronics (Nasdaq: KE) Net Sales Industrial Vertical Market +6% from Q2'21 28
Slide 29: Net Sales Public Safety Vertical Market
Kimball Electronics (Nasdaq: KE) Net Sales Public Safety Vertical Market +3% from Q2'21 29
Slide 30: Reconciliation of Non-GAAP Results
Kimball Electronics (Nasdaq: KE) Reconciliation of Non-GAAP Results (Unaudited, Amounts in Thousands, Except Per Share Data) Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Selling & Administrative Expenses, as reported $ 9,624 $ 11,391 $ 13,117 $ 13,486 $ 11,744 $ 14,357 $ 12,204 $ 13,923 Less: SER