Form 8-K - Current report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)   November 4, 2024

KIMBALL ELECTRONICS, INC.

________________________________________________________________________________________________________

(Exact name of registrant as specified in its charter)

Indiana

001-36454

35-2047713

(State or other jurisdiction of

(Commission File

(IRS Employer Identification No.)

incorporation)

Number)

1205 Kimball Boulevard, Jasper, Indiana						47546
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code   [phone]

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each Class			Trading Symbol			Name of each exchange on which registered
Common Stock, no par value			KE			The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (Section 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (Section 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Item 2.02 Results of Operations and Financial Condition

On November 4, 2024, the Company issued an earnings release for the first quarter ended September 30, 2024. The earnings release is attached as Exhibit 99.1.

The information in Item 2.02 of this Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Form 8-K shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except as shall otherwise be expressly set forth by specific reference in such filing.

Item 2.05 Costs Associated with Exit or Disposal Activities

On November 4, 2024, the Company announced that its Board of Directors has approved a plan to cease operations of our Tampa facility by the end of the fiscal year. The decision was another important step towards sharpening our strategic focus, while leveraging the capacity in our global footprint and streamlining our operating structure. Production activities on existing customer programs will be transferred out of Tampa, with the majority of the work going to our plants in Mexico and Jasper. We are expected to incur approximately $8 million to $11 million in total exit costs, including most significantly $6 million to $7 million in employee termination benefits and $2 million to $3 million in logistical costs to transfer and validate programs at our other facilities. We expect these costs to be predominantly cash expenditures. Once the transfers are complete and operations have ceased, we expect to sell the building and land in Tampa.

Forward-Looking Statements

Certain statements contained within this document are considered forward-looking under the Private Securities Litigation Reform Act of 1995. The statements may be identified by the use of words such as “allow,” “expects,” “future,” “may,” “might,” “should,” “will,” and similar expressions. These forward-looking statements are subject to risks and uncertainties including, but not limited to, global economic conditions, geopolitical environment and conflicts, global health emergencies, availability or cost of raw materials and components, foreign exchange fluctuations, and our ability to convert new business opportunities into customers and revenue. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of Kimball Electronics are contained in our Annual Report on Form 10-K for the year ended June 30, 2024.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit
Number						Description
99.1						Earnings Release dated November 4, 2024
104						Cover Page Interactive Data File (formatted in Inline XBRL)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			KIMBALL ELECTRONICS, INC.
By:			/s/ Jana T. Croom
			JANA T. CROOM Chief Financial Officer

Date: November 4, 2024

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Exhibit 99.1

KIMBALL ELECTRONICS REPORTS Q1 RESULTS AND CONFIRMS GUIDANCE FOR FISCAL YEAR 2025, COMPANY CONTINUES TO SHARPEN ITS STRATEGIC FOCUS WITH CLOSURE OF ITS MANUFACTURING FACILITY IN TAMPA, FL

First Quarter Fiscal 2025 Highlights

•Net sales totaled $374.3 million

•Operating income of $9.1 million, or 2.4% of net sales, adjusted operating income of 3.4%

•Cash generated by operating activities of $45.5 million, borrowings on credit facilities reduced to 2-year low

•Company continues to sharpen its strategic focus by completing the divestiture of the Automation, Test, and Measurement business and announcing the closure of its manufacturing facility in Tampa, FL

JASPER, Ind., November 4, 2024 -- (BUSINESS WIRE) -- Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the first quarter ended September 30, 2024.

			Three Months Ended
			September 30,
(Amounts in Thousands, except EPS)			2024						2023
Net Sales			$	374,256					$	438,081
Operating Income			$	9,115					$	19,490
Adjusted Operating Income (non-GAAP) (1)			$	12,590					$	21,006
Operating Income %			2.4		%				4.4		%
Adjusted Operating Income (non-GAAP) %			3.4		%				4.8		%
Net Income			$	3,154					$	10,754
Adjusted Net Income (non-GAAP) (1)			$	5,527					$	12,038
Diluted EPS			$	0.12					$	0.43
Adjusted Diluted EPS (non-GAAP) (1)			$	0.22					$	0.48

(1) Beginning in the first quarter of fiscal year 2025, adjusted results exclude stock compensation expense. Prior reported periods have been revised accordingly. A reconciliation of GAAP and non-GAAP financial measures is included below.

Commenting on today’s announcement, Richard D. Phillips, Chief Executive Officer, stated, “Q1 represents another chapter of ‘controlling what we can control’ while navigating the challenging operating environment stemming from sustained end market weakness. Our results for the quarter were in line with expectations, considering the difficult comparisons from a record-setting Q1 last year. We continue to adjust costs, improve working capital management, and generate positive cash flow used to pay down debt. We made meaningful progress in the quarter with debt levels at a 2-year low, a result of the cash generated from operating activities and the proceeds from the disposition of the Automation, Test, and Measurement business, with its divestiture closing in July.”

Mr. Phillips continued, “As part of sharpening our strategic focus, we’re also announcing a plan to leverage the capacity in our global footprint and further streamline the operating structure. Production activities on existing customer programs will be transferred out of Tampa, with the majority of the work going to the newly expanded facility in Mexico and Jasper. Operations in Tampa are expected to cease by the end of the fiscal year, and we anticipate the facility closing in Q1 of fiscal 2026. We are grateful to the employees in Tampa and their accomplishments while part of Kimball, including supplying ventilators to those in need during the pandemic. This decision is based on the preferences of our customers, our outlook for US manufacturing, and an objective to improve the Company’s competitive positioning in the market, strengthen the balance sheet, increase liquidity, and improve financial flexibility. We are confirming our guidance for the full fiscal year and look forward to the future.”

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The Company ended the first quarter of fiscal 2025 with cash and cash equivalents of $76.6 million and borrowings outstanding on credit facilities of $245.9 million, including $200.0 million classified as long term. As of September 30, 2024, the Company had $186.8 million of borrowing capacity available. Cash generated from operating activities in the first quarter totaled $45.5 million and capital expenditures were $13.5 million, and the Company invested $2.9 million to repurchase 160,000 shares of common stock.

Net Sales by Vertical Market for Q1 Fiscal 2025:

			Three Months Ended
			September 30,
(Amounts in Millions)			2024						*						2023						*						Percent Change
Automotive			$	188.4					50		%				$	212.5					49		%				(11)		%
Medical			89.8						24		%				102.4						23		%				(12)		%
Industrial excluding AT&M (1)			94.0						25		%				112.9						26		%				(17)		%
Net Sales excluding AT&M (1)			$	372.2					99		%				$	427.8					98		%				(13)		%
AT&M (1)			2.1						1		%				10.3						2		%				(80)		%
Total Net Sales			$	374.3											$	438.1											(15)		%
*As a percent of Total Net Sales
(1) Sales from our Automation, Test, and Measurement business (AT&M), which was divested effective July 31, 2024, were previously included in the Industrial vertical
–Automotive includes electronic power steering, body controls, automated driver assist systems, and electronic braking systems
–Medical includes sleep therapy and respiratory care, image guided therapy, in vitro diagnostics, drug delivery, AED, and patient monitoring
–Industrial includes climate controls, automation controls, and public safety

Company guidance for fiscal year 2025:

•    Net sales in the range of $1.440 - $1.540 billion, an 8% to 14% decline year-over-year when excluding net sales from Automation, Test, and Measurement

•    Adjusted operating income of 4.0% - 4.5% of net sales(a)

•    Capital expenditures of $40 - $50 million

(a) Fiscal year 2025 guidance reflects a change in our adjusted operating income calculation beginning in fiscal year 2025, which excludes stock compensation expense. This change better aligns our presentation with others in our industry. A reconciliation of GAAP and non-GAAP financial measures is included below.

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Forward-Looking Statements

Certain statements contained within this release are considered forward-looking, including our guidance, under the Private Securities Litigation Reform Act of 1995. The statements may be identified by the use of words such as “expect,” “should,” “goal,” “predict,” “will,” “future,” “optimistic,” “confident,” and “believe.” Undue reliance should not be placed on these forward-looking statements. These statements are based on current expectations of future events and thus are inherently subject to uncertainty. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. These forward-looking statements are subject to risks and uncertainties including, without limitation, global economic conditions, geopolitical environment and conflicts such as the war in Ukraine, global health emergencies, availability or cost of raw materials and components, foreign exchange rate fluctuations, and our ability to convert new business opportunities into customers and revenue. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of the company are contained in its Annual Report on Form 10-K for the year ended June 30, 2024.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures. The non-GAAP financial measures contained herein include constant currency growth, net sales excluding Automation, Test & Measurement, adjusted selling and administrative expenses, adjusted operating income, adjusted net income, adjusted diluted EPS, and ROIC. Reconciliations of the reported GAAP numbers to these non-GAAP financial measures are included in the Reconciliation of Non-GAAP Financial Measures section below. Management believes these measures are useful and allow investors to meaningfully trend, analyze, and benchmark the performance of the company’s core operations. The company’s non-GAAP financial measures are not necessarily comparable to non-GAAP information used by other companies.

About Kimball Electronics, Inc.

Kimball Electronics is a global, multifaceted manufacturing solutions provider of electronics and diversified contract manufacturing services to customers around the world. From our operations in the United States, China, Mexico, Poland, Romania, and Thailand, our teams are proud to provide manufacturing services for a variety of industries. Recognized for a reputation of excellence, we are committed to a high-performance culture that values personal and organizational commitment to quality, reliability, value, speed, and ethical behavior. Kimball Electronics, Inc. (Nasdaq: KE) is headquartered in Jasper, Indiana.

To learn more about Kimball Electronics, visit www.kimballelectronics.com.

Conference Call / Webcast
Date:						November 5, 2024
Time:						10:00 AM Eastern Time
Live Webcast:						investors.kimballelectronics.com/events-and-presentations/events
Dial-In #:						877-407-8293 (or 201-689-8349)

For those unable to participate in the live webcast, the call will be archived at investors.kimballelectronics.com.

Lasting relationships. Global success.

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Financial highlights for the first quarter ended September 30, 2024 are as follows:

Condensed Consolidated Statements of Income
(Unaudited)			Three Months Ended
(Amounts in Thousands, except Per Share Data)			September 30, 2024												September 30, 2023
Net Sales			$	374,256					100.0		%				$	438,081					100.0		%
Cost of Sales			350,656						93.7		%				402,539						91.9		%
Gross Profit			23,600						6.3		%				35,542						8.1		%
Selling and Administrative Expenses			13,427						3.6		%				16,052						3.7		%
Restructuring Expense			2,322						0.6		%				—						—		%
Gain on Disposal			(1,264)						(0.3)		%				—						—		%
Operating Income			9,115						2.4		%				19,490						4.4		%
Interest Income			222						0.1		%				299						0.1		%
Interest Expense			(4,792)						(1.3)		%				(5,447)						(1.2)		%
Non-Operating Income (Expense), net			(1,661)						(0.4)		%				(1,131)						(0.3)		%
Other Income (Expense), net			(6,231)						(1.6)		%				(6,279)						(1.4)		%
Income Before Taxes on Income			2,884						0.8		%				13,211						3.0		%
Provision for Income Taxes			(270)						—		%				2,457						0.5		%
Net Income			$	3,154					0.8		%				$	10,754					2.5		%
Earnings Per Share of Common Stock:
Basic			$	0.13											$	0.43
Diluted			$	0.12											$	0.43
Average Number of Shares Outstanding:
Basic			24,979												25,041
Diluted			25,235												25,238

Condensed Consolidated Statements of Cash Flows			Three Months Ended
(Unaudited)			September 30,
(Amounts in Thousands)			2024						2023
Net Cash Flow provided by Operating Activities			$	45,474					$	12,801
Net Cash Flow provided by (used for) Investing Activities			5,226						(11,302)
Net Cash Flow (used for) provided by Financing Activities			(52,954)						13,985
Effect of Exchange Rate Change on Cash, Cash Equivalents, and Restricted Cash			1,830						(549)
Net (Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash			(424)						14,935
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period			78,779						43,864
Cash, Cash Equivalents, and Restricted Cash at End of Period			$	78,355					$	58,799

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			(Unaudited)
Condensed Consolidated Balance Sheets			September 30, 2024						June 30, 2024
(Amounts in Thousands)
ASSETS
Cash and cash equivalents			$	76,564					$	77,965
Receivables, net			264,036						282,336
Contract assets			74,326						76,320
Inventories			335,272						338,116
Prepaid expenses and other current assets			32,496						44,682
Assets held for sale			—						27,587
Property and Equipment, net			275,674						269,659
Goodwill			6,191						6,191
Other Intangible Assets, net			2,880						2,994
Other Assets, net			81,617						82,069
Total Assets			$	1,149,056					$	1,207,919
LIABILITIES AND SHARE OWNERS’ EQUITY
Current portion of borrowings under credit facilities			$	45,915					$	59,837
Accounts payable			216,704						213,551
Advances from customers			35,616						30,151
Accrued expenses			45,492						63,189
Liabilities held for sale			—						8,594
Long-term debt under credit facilities, less current portion			200,000						235,000
Long-term income taxes payable			—						3,255
Other long-term liabilities			57,571						53,881
Share Owners’ Equity			547,758						540,461
Total Liabilities and Share Owners’ Equity			$	1,149,056					$	1,207,919

Other Financial Metrics
(Unaudited)
(Amounts in Millions, except CCD)
			At or For the
			Three Months Ended
			September 30,						June 30,						September 30,
			2024						2024						2023
Depreciation and Amortization			$	9.2					$	9.5					$	9.0
Cash Conversion Days (CCD) (1)			108						100						103
Open Orders (2)			$	594					$	714					$	907

(1) Cash Conversion Days (“CCD”) are calculated as the sum of Days Sales Outstanding plus Contract Asset Days plus Production Days Supply on Hand less Accounts Payable Days and less Advances from Customers Days. CCD, or a similar metric, is used in our industry and by our management to measure the efficiency of managing working capital.

(2) Open Orders are the aggregate sales price of production pursuant to unfulfilled customer orders. Our declining open orders are primarily due to the cancellation of a major automotive program and other demand reductions, as well as reduced lead times on customer orders as compared to September 30, 2023, when parts were more constrained.

Select Financial Results of Automation, Test and Measurement
(Unaudited)
(Amounts in Millions)
			Three Months Ended
			September 30,
			2024						2023
Net Sales			$	2.1					$	10.3
Operating Income (Loss) (1)			$	0.8					$	(0.2)

(1) Includes gain on sale of $1.3 million following the close of the sale on July 31, 2024 for the three months ended September 30, 2024. Each period also includes allocated corporate overhead expenses.

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Reconciliation of Non-GAAP Financial Measures
(Unaudited, Amounts in Thousands, except Per Share Data)
			Three Months Ended
			September 30,
			2024						2023
Net Sales Growth (vs. same period in prior year)			(15)		%				8		%
Foreign Currency Exchange Impact			—		%				1		%
Constant Currency Growth			(15)		%				7		%
Selling and Administrative Expenses, as reported			$	13,427					$	16,052
Stock Compensation Expense			(2,072)						(1,693)
SERP			(345)						177
Adjusted Selling and Administrative Expenses			$	11,010					$	14,536
Operating Income (Loss), as reported			$	9,115					$	19,490
Stock Compensation Expense			2,072						1,693
SERP			345						(177)
Restructuring Expense			2,322						—
Gain on Disposal			(1,264)						—
Adjusted Operating Income			$	12,590					$	21,006
Net Income (Loss), as reported			$	3,154					$	10,754
Stock Compensation Expense, After-Tax			1,571						1,284
Restructuring Expense, After-Tax			1,761						—
Gain on Disposal, After-Tax			(959)						—
Adjusted Net Income			$	5,527					$	12,038
Diluted Earnings per Share, as reported			$	0.12					$	0.43
Stock Compensation Expense			0.06						0.05
Restructuring Expense			0.07						—
Gain on Disposal			(0.03)						—
Adjusted Diluted Earnings per Share			$	0.22					$	0.48
			Twelve Months Ended
			September 30,
			2024						2023
Operating Income			$	38,902					$	93,648
Goodwill Impairment			5,820						—
Stock Compensation Expense			7,564						6,975
SERP			1,202						759
Legal Recovery			(892)						(212)
Restructuring Expense			4,708						—
Asset Impairment and Gain on Disposal			15,776						—
Adjusted Operating Income (non-GAAP)			$	73,080					$	101,170
Tax Effect			16,285						24,625
After-tax Adjusted Operating Income			$	56,795					$	76,545
Average Invested Capital (1)			$	773,016					$	738,096
ROIC			7.3		%				10.4		%

(1) Average invested capital is computed using Share Owners’ equity plus current and non-current debt less cash and cash equivalents averaged for the last five quarters.

Cover	Nov. 04, 2024
Document Information [Line Items]
Document Type	8-K
Document Period End Date	Nov. 04, 2024
Entity Registrant Name	KIMBALL ELECTRONICS, INC.
Entity Incorporation, State or Country Code	IN
Entity File Number	001-36454
Entity Tax Identification Number	35-2047713
Entity Address, Address Line One	1205 Kimball Boulevard
Entity Address, City or Town	Jasper
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	47546
City Area Code	812
Local Phone Number	634-4000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	KE
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0001606757
Amendment Flag	false

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