Slide 1: Second Quarter Fiscal 2025 Results
Second Quarter Fiscal 2025 Results Quarter Ended December 31, 2024 Supplementary Information to the February 5, 2025, 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: Results for the second quarter in line with expectations
Results for the second quarter in line with expectations • Continue to navigate a sustained period of declining customer demand • Focusing on what is controllable • Fourth consecutive quarter with positive cash flow from operating activities • Inventory levels were reduced • Debt was paid down • Bor
Slide 5: Repositioning the Company for a return to growth
Repositioning the Company for a return to growth… • Divestiture of the non-core assets from AT&M • Improved facility utilization with the planned closing of our plant in Tampa • Increased focus on the medical CMO • Sharpened strategic focus in all three verticals to target attractive new market spac
Slide 6: Net sales in the second quarter totaled $357 million
Net sales in the second quarter totaled $357 million • Represents a 15% decrease year-over-year • When excluding AT&M, the decrease was 13% • Increase in Asia • Offset by double-digit declines in North America and Europe • From an end-market perspective, each of the three verticals were down in the
Slide 7: Automotive net sales were $193 million
Automotive net sales were $193 million • 4% decrease compared to the second quarter last year • 54% of total company sales • For the second consecutive quarter, results in China were strong with monthly production rates reaching “record high” levels • Offset in North America • Volumes softening from
Slide 8: Medical with net sales in Q2 of $84 million
Medical with net sales in Q2 of $84 million • Down 22% compared to the same period last year • 23% of total company sales • Decline predominately occurred in North America & Asia • Program going end-of-life in Thailand • Adjacent impacts from the FDA recall • Encouraged by longer-term prospects with
Slide 9: Capabilities are a differentiator in an attractive market
Capabilities are a differentiator in an attractive market • Expect similar growth opportunities to SLEEP & SURGICAL continue to emerge as: OXYGEN SYSTEMS THERAPY • Population ages • Access & affordability to healthcare increases • Medical devices get smaller in size and AMBULANCE & require higher le
Slide 10: Industrial net sales of $81 million
Industrial net sales of $81 million • Down 20% year-over-year, when excluding AT&M • 23% of total company sales • Decrease occurred in North America and Europe, sales in Asia were slightly lower • Declines in Smart Metering programs • Moderate reductions in climate controls and public safety Lasting
Slide 11: Net sales in the second quarter were $357.4 million
Net sales in the second quarter were $357.4 million • Represents a 15% decrease year- over-year • When excluding AT&M, the decrease was 13% • Foreign exchange had a near 0% impact on sales in the quarter • On a sequential basis, sales were down 5% compared to Q1 • Declines in both the Medical and In
Slide 12: Gross margin rate in Q2 was 6.6%
Gross margin rate in Q2 was 6.6% • 160 bps decline compared to the second quarter of fiscal 2024 • Decrease coming from lower absorption, a result of declining sales Lasting relationships. Global success. Kimball Electronics | 12
Slide 13: Adjusted selling & administrative expense (%)
Adjusted selling & administrative expense (%)(1)(2) • Second quarter totaled $10.1 million • $5.3 million – or 34% - reduction compared to the $15.4 million reported in Q2 last year • Decrease driven by aligning discretionary spending with current demand, lower bonus, and no AT&M in Q2 this year • $
Slide 14: Adjusted operating income
Adjusted operating income (1)(2) • $13.3 million, or 3.7% of net sales • Last year’s adjusted result of $19.1 million, or 4.5% of net sales • Adopted the industry norm of excluding stock compensation expense from calculation (1) Adjusted Operating Income is a Non-GAAP measure – refer to Reconciliati
Slide 15: Other income and expense
Other income and expense • In the second quarter, other income and expense was expense of $4.8 million • Last year was expense of $5.3 million • Reduction driven by lower interest expense – down 31% year-over-year Lasting relationships. Global success. Kimball Electronics | 15
Slide 16: Effective tax rate
Effective tax rate • In the second quarter, the effective tax rate was 1.2%, compare to 26.5% in Q2 of fiscal 2024 • Due to the reversal of a valuation allowance as we reconcile the anticipated closure of Tampa with the sale of AT&M • Expect a tax rate in the mid-20s for the full fiscal year Lasting
Slide 17: 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 18: Balance sheet
Balance sheet • Cash and cash equivalents at December 31, 2024, were $53.9 million • Cash flow from operating activities in the quarter was $29.5 million, our fourth consecutive quarter of positive cash flow • Cash conversion days were 107 days, compared to 117 days in Q2 of FY2024, and 108 days las
Slide 19: Inventory ended the quarter at $306.2 million
Inventory ended the quarter at $306.2 million • Represents a $29 million reduction compared to Q1 • $149 million, or 33%, lower than a year ago • Pleased with our progress in reducing inventory • Working with our customers to right-size to the current demand outlook Lasting relationships. Global suc
Slide 20: Capital expenditures were $6.5 million
Capital expenditures were $6.5 million (1) • Maintenance requirements • Investments in longer-term growth (1) Capital Expenditures include purchases of capitalized software. Lasting relationships. Global success. Kimball Electronics | 20
Slide 21: Debt
Debt • Borrowings at December 31, 2024, were $205 million • $41 million reduction from the first quarter • Down $90 million, or 30%, from the beginning of the fiscal year • Short-term liquidity available totaled $280.3 million at the end of the second quarter Lasting relationships. Global success. K
Slide 22: Term Loan A
Term Loan A • Significantly enhanced our capital structure with the amendment of the credit facility • Replaced the $100 million side car that was up for renewal in January • TLA provides additional domestic liquidity for investments to meet working capital and other operating needs • Supports our e
Slide 23: Share repurchases
Share repurchases • Invested $3 million to repurchase 160,000 shares • Since October 2015, under our Board authorized share repurchase program: • A total of $97.7 million returned to Share Owners by repurchasing 6.3 million shares of common stock • $22.3 million remaining on the program for deployme
Slide 24: Updating guidance for fiscal year 2025
Updating guidance for fiscal year 2025 • Net sales now expected to be in the range of $1.4 to $1.44 billion • Previous guidance of $1.44 to $1.54 billion • Adjusted operating income of 3.4% to 3.6% of net sales • Previous guidance of 4% to 4.5% of net sales • Outlook for capital expenditures remains
Slide 25: Estimating the impact of tariffs
Estimating the impact of tariffs • Executive Orders implementing tariffs on February 1st on virtually all goods from China, Mexico, and Canada • Paused for 30 days • Partnering with customers to understand impacts and determine best solutions in the short-term and long-term • Our Mexico facility exp
Slide 26: CIRCUITS ASSEMBLY Service Excellence Awards
CIRCUITS ASSEMBLY Service Excellence Awards • Highest Overall Customer Ratings in seven categories • Dependability & timely delivery • Value for the price • Manufacturing quality • Flexibility • Responsiveness • Overall satisfaction • Technology • Consistent focus on building long-term relationships
Slide 27: With customer demand continuing to soften
With customer demand continuing to soften… • Timing of a recovery in our core EMS business becoming increasingly more difficult to predict • Intensified efforts to broaden our capabilities and role as a CMO • With a strong balance sheet, pursuing different paths of growth focused on emerging medical
Slide 28: Questions
Questions Lasting relationships. Global success. Kimball Electronics | 28
Slide 29: Appendix
Appendix Lasting relationships. Global success. Kimball Electronics | 29
Slide 30: Reconciliation of non-GAAP results
Reconciliation of non-GAAP results (Unaudited, Amounts in Thousands, Except Per Share Data) Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q2'25 Net Sales Growth (vs. same quarter in prior year) 32 % 33 % 8 % (4) % (12) % (13) % (15) % (15) % Foreign Currency Exchange Impact (2) % — % 1 % 1 % — % — % — %
Slide 31: Reconciliation of non-GAAP results continued
Reconciliation of non-GAAP results continued…. (Unaudited, Amounts in Thousands, Except Per Share Data) Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q2'25 Operating Income (GAAP) (TTM) $ 76,858 $ 87,729 $ 93,648 $ 92,769 $ 61,118 $ 49,277 $ 38,902 $ 30,522 Add: Goodwill Impairment (TTM) — — — — 5,820 5
Slide 32: 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 33: 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 34: 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 35: 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 | 35