Slide 1: First Quarter Fiscal 2023 Results
First Quarter Fiscal 2023 Results Quarter Ended September 30, 2022 Supplementary Information to the November 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 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 Don Charron Chairman & CEO Andy Regrut VP Investor Relations Kimball Electronics | 3
Slide 4: Pleased with Q1 results and strong start to the new fiscal year
Pleased with Q1 results and strong start to the new fiscal year • For the third consecutive quarter, net sales surged to a record-breaking level, setting another all-time high for our company • Operating income margin improved compared to the same period last year • These results were in line with o
Slide 5: Today's operating environment remaining challenging, filled with uncertainty
Today’s operating environment remaining challenging, filled with uncertainty • Geopolitical events • The pandemic • Global supply chain disruptions and parts shortages • An economic slowdown with rising inflation rates Kimball Electronics | 5
Slide 6: Our team continues to navigate unprecedented circumstances by focusing on what we can control
Our team continues to navigate these unprecedented circumstances by focusing on what we can control… • Health & safety of our associates • Not just their physical well-being • Mental health is as important as ever • The global supply chain • Signs of a gradual recovery from the pandemic • Modest imp
Slide 7: For the first quarter, net sales were $406 million, a 39% increase
For the first quarter, net sales were $406 million, a 39% increase compared to Q1 last year Net Sales $406 $293 +39% Q1 ‘22 Q1 ‘23 FX unfavorably impacted sales by 5% in Q1 Record high… 1st time sales exceeded $400 million in quarter All three vertical markets reported large increases Kimball Electr
Slide 8: Net sales in Automotive were a record $185 million
Net sales in Automotive were a record $185 million • 43% increase compared to Q1 last year • Represents 46% of total company sales in the quarter • 21% step-up from Q4 • Advanced Driver Assistance Systems • Battery management • Electronic steering • Electronic motor controls 46% • Redundant safety s
Slide 9: Net sales in Medical were $115 million
Net sales in Medical were $115 million • 35% increase compared to Q1 last year • Represents 28% of total company sales in the quarter • Second consecutive quarter for this business to post gains in excess of 30% • Kimball Medical Solutions highlights our full- service of capabilities • When our cust
Slide 10: Net sales in our Industrial vertical totaled $101 million
Net sales in our Industrial vertical totaled $101 million • 35% increase over the recasted first quarter last year • Represents 25% of total company sales • As a reminder, Public Safety is now included in Industrial results • We collaborate with our customers on products that support smart cities, e
Slide 11: Summary
Summary • A very good quarter and strong start to the new fiscal year • Record-setting sales • Momentum that will continue throughout fiscal 2023 Kimball Electronics | 11
Slide 12: Net sales in Q1 were an all-time, record high for the company
Net sales in Q1 were an all-time, record high for +39% the company from Q1'22 Foreign exchange adversely impacted sales by 5% in the quarter At historical rates, the growth in Q1 would have been even more impressive Kimball Electronics | 12
Slide 13: The gross margin rate in Q1 was 7.2%, a 190 bps improvement
The gross margin rate in Q1 was 7.2%, a 190 bps improvement compared to the first quarter last year Drivers of GM% Gross Margin Trend • Record sales driving a higher level of absorption this year versus a year ago • In Q1 2022, production was more significantly curtailed by parts shortages Kimball E
Slide 14: Adjusted selling and administrative expenses
Adjusted selling and administrative expenses (1) • Adjusted selling and administrative expenses were $16.0 million, compared to $12.3 million in Q1 last year • Increase resulted from: • Higher salary and related payroll costs • Stock-based compensation • Factoring fees associated with accounts recei
Slide 15: Adjusted operating income
Adjusted operating income (1) (1) Adjusted Operating Income is a Non-GAAP measure – refer to Reconciliation of Non-GAAP Results in the Appendix of this supplementary information. Kimball Electronics | 15
Slide 16: Other income & expense and the effective tax rate
Other income & expense and the effective tax rate • Other income & expense increased slightly with expense of $1.4 million in the first quarter of this year vs. $1.2 million last year • The effective tax rate in Q1 was 21.9%, compared to 27.4% in the first quarter last year Kimball Electronics | 16
Slide 17: 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 in the Appendix of this supplementary information. Kimball Electronics | 17
Slide 18: Balance sheet
Balance sheet • Cash and cash equivalents were $19.7 million at September 30, 2022 • Cash flow used by operating activities was $60.2 million in the first quarter of fiscal 2023 • Cash conversion days were 99 days, up from 73 days in the first quarter last year • Cash flow and CCD were driven by an
Slide 19: Balance sheet - continued
Balance sheet - continued • Capital investments in the first quarter were $19 million, largely in support of our facility expansion in Poland, equipment for the expansion in Mexico, and new product introductions • Borrowings on our credit facilities at September 30, 2022, were $232.5 million compare
Slide 20: Share repurchases
Share repurchases • No shares were repurchased in the first 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 21: Affirming guidance for fiscal 2023, expect high-end of range
Affirming guidance for fiscal 2023, and expect full year results to be at the high-end of the range for sales and OI % Net sales range Net sales estimated to be in the range of $1.6 - $1.7 $1.6 - $1.7 billion billion, a 19% - 26% increase compared to fiscal 2022 Increase compared to fiscal 2022 Oper
Slide 22: Profitability: program life cycle
Program life cycle THESE PROGRAMS PROGRESS at a slow and steady pace, allowing for long-term sustainable growth gained through sourcing efficiencies and process improvements. As new programs mature, volumes ramp, and Program Lifecycle: cost efficiencies are gained Initial investments volume ramp Inc
Slide 23: Closing comments
Closing comments • Very proud of our accomplishments in Q1 • Includes not only financial results, but other achievements, honors, and distinctions • Awarded Silver Medal for corporate social responsibility and business sustainability from EcoVadis • Silver Medal places our company in the top 25% of
Slide 24: We are very bullish on the long-term prospects for the company
We are very bullish on the long-term prospects for the company Outlook for fiscal 2023 includes record results in certain financial metrics, including top-line growth • Forecasting sequential quarterly increases for the balance of fiscal 2023 • Emphasis on aligning production forecasts with material
Slide 25: Welcome
Welcome • Tom Vadaketh appointed new Director at our Board Meeting in September • Stands for election to a full term at our Annual Meeting of Share Owners later this week • Well-rounded financial expertise and vast experience with major multinational organizations • Demonstrated leadership in a vari
Slide 26: Q&A
Q&A Kimball Electronics | 26
Slide 27: Appendix
Appendix Kimball Electronics | 27
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation Kimball Electronics | 28
Slide 29: Net Sales, Automotive
Net Sales, Automotive +43% from Q1'22 Kimball Electronics | 29
Slide 30: Net Sales, Medical
Net Sales, Medical +35% from Q1'22 Kimball Electronics | 30
Slide 31: Net Sales, Industrial
Net Sales, Industrial +35% from Q1'22 Beginning in FY23, Public Safety was combined with Industrial; all prior periods have been recast to conform to current period presentation Kimball Electronics | 31