JASPER, Ind., Nov. 01, 2017 (GLOBE NEWSWIRE) -- Kimball International, Inc. (NASDAQ:KBAL) today announced the following results for the quarter ended September 30, 2017:
Bob Schneider, Chairman and CEO, stated, “I am very pleased with our ability to convert lower sales into higher earnings for the first quarter. Our first quarter results reflect strong execution and focus on continuous improvement, as our 9.4% adjusted operating income excluding restructuring was the highest in over 15 years. Improved sales in the office verticals was offset by lower sales in our hospitality vertical, resulting in our consolidated revenue declining 3%. Our hospitality vertical revenues have historically fluctuated from quarter to quarter, and we expect second quarter revenues to increase substantially from the first quarter.”
Mr. Schneider continued, “I am also very excited by our pending acquisition of D’style, along with its subsidiary Allan Copley Designs. D’style, headquartered in Chula Vista, CA, is well-known and respected in the hospitality industry for providing public space furnishings and guest room accent pieces, and will be a natural fit with our existing hospitality brand. These offerings will also enable us to take advantage of the trend where hospitality, residential, and commercial designs are merging. D’style sells primarily in North America with prior calendar year sales of approximately $20 million. The acquisition is expected to be accretive to earnings in fiscal year 2018. We look forward to welcoming the D’style employees to the Kimball International team.”
Overview
Financial Highlights (Amounts in Thousands, Except Per Share Data) | Three Months Ended | |||||||||
September 30, 2017 | September 30, 2016 | Percent Change | ||||||||
Net Sales | $ | 169,517 | $ | 174,996 | (3 | %) | ||||
Gross Profit | $ | 59,589 | $ | 58,687 | 2 | % | ||||
Gross Profit % | 35.2 | % | 33.5 | % | ||||||
Selling and Administrative Expenses | $ | 43,632 | $ | 43,227 | 1 | % | ||||
Selling and Administrative Expenses % | 25.8 | % | 24.6 | % | ||||||
Restructuring Gain | $ | 0 | $ | (1,832 | ) | |||||
Operating Income | $ | 15,957 | $ | 17,292 | (8 | %) | ||||
Operating Income % | 9.4 | % | 9.9 | % | ||||||
Adjusted Operating Income * | $ | 15,957 | $ | 15,460 | 3 | % | ||||
Adjusted Operating Income % * | 9.4 | % | 8.8 | % | ||||||
Net Income | $ | 10,957 | $ | 10,998 | 0 | % | ||||
Adjusted Net Income * | $ | 10,957 | $ | 9,879 | 11 | % | ||||
Diluted Earnings Per Share | $ | 0.29 | $ | 0.29 | ||||||
Adjusted Diluted Earnings Per Share * | $ | 0.29 | $ | 0.26 | ||||||
Adjusted Return on Capital * | 23.2 | % | 25.5 | % | ||||||
Adjusted EBITDA * | $ | 19,911 | $ | 19,687 | ||||||
* Items indicated represent Non-GAAP measurements. See “Reconciliation of Non-GAAP Financial Measures” below. | ||||||||||
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a company's financial performance that excludes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with Generally Accepted Accounting Principles (“GAAP”) in the United States in the statement of income, statement of comprehensive income, balance sheet, or statement of cash flows of the Company. The non-GAAP financial measures used within this release include (1) operating income excluding restructuring; (2) net income excluding restructuring; (3) diluted earnings per share excluding restructuring; (4) return on capital excluding restructuring; and (5) EBITDA excluding restructuring. Reconciliations of the reported GAAP numbers to these non-GAAP financial measures are included in the Reconciliation of Non-GAAP Financial Measures table below. Management believes it is useful for investors to understand how its core operations performed without gains and expenses related to executing its restructuring plans. Excluding these amounts allows investors to meaningfully trend, analyze, and benchmark the performance of the Company's core operations. Many of the Company's internal performance measures that management uses to make certain operating decisions exclude these items to enable meaningful trending of core operating metrics.
The orders received metric is a key performance indicator used to evaluate general sales trends and develop future operating plans. Orders received represent firm orders placed by our customers during the current quarter which are expected to be recognized as revenue during current or future quarters. The orders received metric is not intended to be presented as an alternative measure of revenue recognized in accordance with GAAP.
Forward-Looking Statements
Certain statements contained within this release are considered forward-looking under the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties including, but not limited to, the risk that any projections or guidance, including revenues, margins, earnings, or any other financial results are not realized, the outcome of a governmental review of our subcontractor reporting practices, adverse changes in the global economic conditions, significant volume reductions from key contract customers, significant reduction in customer order patterns, financial stability of key customers and suppliers, and availability or cost of raw materials. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of the Company are contained in the Company's Form 10-K filing for the fiscal year ended June 30, 2017 and other filings with the Securities and Exchange Commission.
Conference Call / Webcast | ||
Date: | November 2, 2017 | |
Time: | 11:00 AM Eastern Time | |
Dial-In #: | 844-602-5643 (International Calls - 574-990-3014) | |
Pass Code: | Kimball | |
A webcast of the live conference call may be accessed by visiting Kimball International's Investor Relations website at www.ir.kimballinternational.com.
For those unable to participate in the live webcast, the call will be archived at www.ir.kimballinternational.com within two hours of the conclusion of the live call.
About Kimball International, Inc.
Kimball International, Inc. creates design driven, innovative furnishings sold through our family of brands: Kimball, National, and Kimball Hospitality. Our diverse portfolio offers solutions for the workplace, learning, healing, and hospitality environments. Dedicated to our Guiding Principles, our values and integrity are evidenced by public recognition as a highly trusted company and an employer of choice. “We Build Success” by establishing long-term relationships with customers, employees, suppliers, share owners and the communities in which we operate. To learn more about Kimball International, Inc. (NASDAQ:KBAL), visit www.kimballinternational.com.
Financial highlights for the first quarter ended September 30, 2017 are as follows:
Condensed Consolidated Statements of Income | |||||||||||||
(Unaudited) | Three Months Ended | ||||||||||||
(Amounts in Thousands, except per share data) | September 30, 2017 | September 30, 2016 | |||||||||||
Net Sales | $ | 169,517 | 100.0 | % | $ | 174,996 | 100.0 | % | |||||
Cost of Sales | 109,928 | 64.8 | % | 116,309 | 66.5 | % | |||||||
Gross Profit | 59,589 | 35.2 | % | 58,687 | 33.5 | % | |||||||
Selling and Administrative Expenses | 43,632 | 25.8 | % | 43,227 | 24.6 | % | |||||||
Restructuring Gain | 0 | 0.0 | % | (1,832 | ) | (1.0 | %) | ||||||
Operating Income | 15,957 | 9.4 | % | 17,292 | 9.9 | % | |||||||
Other Income, net | 489 | 0.3 | % | 397 | 0.2 | % | |||||||
Income Before Taxes on Income | 16,446 | 9.7 | % | 17,689 | 10.1 | % | |||||||
Provision for Income Taxes | 5,489 | 3.2 | % | 6,691 | 3.8 | % | |||||||
Net Income | $ | 10,957 | 6.5 | % | $ | 10,998 | 6.3 | % | |||||
Earnings Per Share of Common Stock: | |||||||||||||
Basic | $ | 0.29 | $ | 0.29 | |||||||||
Diluted | $ | 0.29 | $ | 0.29 | |||||||||
Average Number of Total Shares Outstanding: | |||||||||||||
Basic | 37,428 | 37,609 | |||||||||||
Diluted | 37,733 | 38,024 |
(Unaudited) | |||||||
Condensed Consolidated Balance Sheets | September 30, 2017 | June 30, 2017 | |||||
(Amounts in Thousands) | |||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 64,250 | $ | 62,882 | |||
Short-term investments | 33,528 | 35,683 | |||||
Receivables, net | 54,262 | 53,909 | |||||
Inventories | 41,320 | 38,062 | |||||
Prepaid expenses and other current assets | 9,044 | 8,050 | |||||
Assets held for sale | 193 | 4,223 | |||||
Property and Equipment, net | 81,125 | 80,069 | |||||
Intangible Assets, net | 2,824 | 2,932 | |||||
Deferred Tax Assets | 16,415 | 14,487 | |||||
Other Assets | 13,033 | 13,450 | |||||
Total Assets | $ | 315,994 | $ | 313,747 | |||
LIABILITIES AND SHARE OWNERS' EQUITY | |||||||
Current maturities of long-term debt | $ | 26 | $ | 27 | |||
Accounts payable | 46,388 | 44,730 | |||||
Customer deposits | 21,079 | 20,516 | |||||
Sale-leaseback financing obligation | 3,777 | 3,752 | |||||
Dividends payable | 2,703 | 2,296 | |||||
Accrued expenses | 43,654 | 49,018 | |||||
Long-term debt, less current maturities | 161 | 184 | |||||
Other | 16,191 | 17,020 | |||||
Share Owners' Equity | 182,015 | 176,204 | |||||
Total Liabilities and Share Owners' Equity | $ | 315,994 | $ | 313,747 |
Condensed Consolidated Statements of Cash Flows | Three Months Ended | ||||||
(Unaudited) | September 30, | ||||||
(Amounts in Thousands) | 2017 | 2016 | |||||
Net Cash Flow provided by Operating Activities | $ | 7,025 | $ | 13,012 | |||
Net Cash Flow provided by (used for) Investing Activities | 748 | (7,761 | ) | ||||
Net Cash Flow used for Financing Activities | (6,405 | ) | (5,966 | ) | |||
Net Increase (Decrease) in Cash and Cash Equivalents | 1,368 | (715 | ) | ||||
Cash and Cash Equivalents at Beginning of Period | 62,882 | 47,576 | |||||
Cash and Cash Equivalents at End of Period | $ | 64,250 | $ | 46,861 |
Net Sales by End Market Vertical | ||||||||||
Three Months Ended | ||||||||||
(Unaudited) | September 30, | |||||||||
(Amounts in Millions) | 2017 | 2016 | % Change | |||||||
Commercial | $ | 51.7 | $ | 50.5 | 2 | % | ||||
Education | 30.5 | 26.6 | 15 | % | ||||||
Finance | 13.0 | 16.7 | (22 | %) | ||||||
Government | 26.0 | 19.7 | 32 | % | ||||||
Healthcare | 18.0 | 22.6 | (20 | %) | ||||||
Hospitality | 30.3 | 38.9 | (22 | %) | ||||||
Total Net Sales | $ | 169.5 | $ | 175.0 | (3 | %) |
Orders Received by End Market Vertical | ||||||||||
Three Months Ended | ||||||||||
(Unaudited) | September 30, | |||||||||
(Amounts in Millions) | 2017 | 2016 | % Change | |||||||
Commercial | $ | 49.6 | $ | 52.2 | (5 | %) | ||||
Education | 19.5 | 19.3 | 1 | % | ||||||
Finance | 16.3 | 19.0 | (14 | %) | ||||||
Government | 25.5 | 19.9 | 28 | % | ||||||
Healthcare | 18.6 | 26.1 | (29 | %) | ||||||
Hospitality | 34.6 | 40.7 | (15 | %) | ||||||
Total Orders Received | $ | 164.1 | $ | 177.2 | (7 | %) |
Supplementary Information | |||||||
Components of Other Income (Expense), net | Three Months Ended | ||||||
(Unaudited) | September 30, | ||||||
(Amounts in Thousands) | 2017 | 2016 | |||||
Interest Income | $ | 234 | $ | 110 | |||
Interest Expense | (31 | ) | (5 | ) | |||
Foreign Currency Gain (Loss) | 17 | (7 | ) | ||||
Gain on Supplemental Employee Retirement Plan Investment | 351 | 367 | |||||
Other Non-Operating Expense | (82 | ) | (68 | ) | |||
Other Income, net | $ | 489 | $ | 397 |
Reconciliation of Non-GAAP Financial Measures | |||||||
(Unaudited) | |||||||
(Amounts in Thousands, except per share data) | |||||||
Operating Income excluding Restructuring | |||||||
Three Months Ended | |||||||
September 30, | |||||||
2017 | 2016 | ||||||
Operating Income, as reported | $ | 15,957 | $ | 17,292 | |||
Pre-tax Restructuring Gain | 0 | (1,832 | ) | ||||
Adjusted Operating Income | $ | 15,957 | $ | 15,460 | |||
Net Income excluding Restructuring | |||||||
Three Months Ended | |||||||
September 30, | |||||||
2017 | 2016 | ||||||
Net Income, as reported | $ | 10,957 | $ | 10,998 | |||
Pre-tax Restructuring Gain | 0 | (1,832 | ) | ||||
Tax on Restructuring Gain | 0 | 713 | |||||
After-tax Restructuring Gain | 0 | (1,119 | ) | ||||
Adjusted Net Income | $ | 10,957 | $ | 9,879 | |||
Diluted Earnings Per Share excluding Restructuring | |||||||
Three Months Ended | |||||||
September 30, | |||||||
2017 | 2016 | ||||||
Diluted Earnings Per Share, as reported | $ | 0.29 | $ | 0.29 | |||
After-tax Restructuring Gain | 0.00 | (0.03 | ) | ||||
Adjusted Diluted Earnings Per Share | $ | 0.29 | $ | 0.26 | |||
Return on Capital excluding Restructuring | |||||||
Three Months Ended | |||||||
September 30, | |||||||
2017 | 2016 | ||||||
Adjusted Operating Income — see non-GAAP reconciliation above | $ | 15,957 | $ | 15,460 | |||
Median Effective Income Tax Rate for trailing four quarters | 33.4 | % | 37.2 | % | |||
Median Income Tax Expense | 5,330 | 5,751 | |||||
Net Operating Profit After-Tax (NOPAT) | 10,627 | 9,709 | |||||
Average Capital * | 183,073 | 152,572 | |||||
Adjusted Return on Capital (annualized) | 23.2 | % | 25.5 | % | |||
* Capital is defined as Total Equity plus Total Interest-Bearing Debt |
Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) excluding Restructuring | |||||||
Three Months Ended | |||||||
September 30, | |||||||
2017 | 2016 | ||||||
Net Income | $ | 10,957 | $ | 10,998 | |||
Provision for Income Taxes | 5,489 | 6,691 | |||||
Income Before Taxes on Income | 16,446 | 17,689 | |||||
Interest Expense | 31 | 5 | |||||
Interest Income | (234 | ) | (110 | ) | |||
Depreciation and Amortization | 3,668 | 3,935 | |||||
Pre-tax Restructuring Gain | 0 | (1,832 | ) | ||||
Adjusted EBITDA | $ | 19,911 | $ | 19,687 |
Contact:
Dennis Gerber
Investor Relations
812-482-8619
Dennis.Gerber@kimball.com