- Net sales in the second quarter were $321 million, up 4% year-over-year
- Second quarter operating income was 5.0% of net sales and adjusted operating income (non-GAAP) was 5.3%
- Net income of $15.1 million and diluted EPS of $0.60 in the second quarter
- Record quarterly cash flows provided by operating activities of $51.6 million during the second quarter
JASPER, Ind., Feb. 03, 2021 (GLOBE NEWSWIRE) -- Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the second quarter ended December 31, 2020.
| Three Months Ended | Six Months Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| (Amounts in Thousands, except EPS) | 2020 | 2019 | 2020 | 2019 | |||||||||||
| Net Sales | $ | 320,604 | $ | 307,084 | $ | 652,353 | $ | 620,469 | |||||||
| Operating Income | $ | 16,179 | $ | 8,684 | $ | 33,986 | $ | 19,799 | |||||||
| Adjusted Operating Income (non-GAAP) (1)(2) | $ | 16,990 | $ | 9,186 | $ | 35,006 | $ | 20,279 | |||||||
| Operating Income % | 5.0 | % | 2.8 | % | 5.2 | % | 3.2 | % | |||||||
| Adjusted Operating Income (non-GAAP) % | 5.3 | % | 3.0 | % | 5.4 | % | 3.3 | % | |||||||
| Net Income | $ | 15,062 | $ | 6,612 | $ | 31,873 | $ | 13,210 | |||||||
| Adjusted Net Income (non-GAAP) (1) | $ | 15,195 | $ | 6,612 | $ | 31,747 | $ | 13,210 | |||||||
| Diluted EPS | $ | 0.60 | $ | 0.26 | $ | 1.26 | $ | 0.52 | |||||||
| Adjusted Diluted EPS (non-GAAP) (1) | $ | 0.60 | $ | 0.26 | $ | 1.25 | $ | 0.52 | |||||||
(1) A reconciliation of GAAP and non-GAAP financial measures is included below.
(2) Beginning in the first quarter of fiscal year 2021, adjusted operating income excludes changes in the fair value of our supplemental employee retirement plan, or SERP, liability which are exactly offset by the revaluation to fair value of the SERP investments in Other Income (Expense), net, and as a result have no impact on net income. Prior reported periods have been revised accordingly.
Donald D. Charron, Chairman and Chief Executive Officer, stated, “We are very pleased with our operating results for the second quarter of fiscal year 2021. Our team remains resilient, and I am so proud of our collective response to the adversity that we have faced during this pandemic. We again exceeded our goal of 4.5% operating income and continued to deliver excellent cash flow from operations.”
Mr. Charron continued, “Our strong results were primarily driven by improved operating execution, favorable product mix, and a weaker dollar. Looking ahead, we expect that our performance should approximate our long-stated goal of 4.5% operating income. The persistence of the pandemic continues to draw our attention, and it’s difficult to predict what we will face in the future. However, we are confident that our business will remain strong, and we are optimistic about our new business opportunities funnel. We remain committed to our goal of 8% organic growth and believe the goal is well within our reach for fiscal year 2021.”
Second Quarter Fiscal Year 2021 Overview:
- Consolidated net sales increased 4% compared to the second quarter of fiscal year 2020. Foreign currency had a favorable 3% impact on net sales in the current quarter compared to the same period a year ago.
- Operating activities provided cash of $51.6 million during the quarter, which compares to cash used by operating activities of $0.3 million in the second quarter of fiscal year 2020.
- Cash conversion days (“CCD”) for the quarter ended December 31, 2020 were 75 days, down from 76 days both in the first quarter of fiscal year 2021 and the quarter ended December 31, 2019. CCD is calculated as the sum of days sales outstanding plus contract asset days plus production days supply on hand less accounts payable days.
- Investments in capital expenditures were $6.1 million during the quarter.
- $3.0 million was returned to Share Owners during the quarter in the form of common stock repurchases.
- Cash and cash equivalents were $93.6 million and borrowings outstanding on credit facilities were $86.1 million at December 31, 2020, including $61.0 million classified as long term.
Net Sales by Vertical Market:
| Three Months Ended | ||||||||||
| December 31, | ||||||||||
| (Amounts in Millions) | 2020 | 2019 | Percent Change | |||||||
| Automotive | $ | 151.9 | $ | 134.9 | 13 | % | ||||
| Medical | 87.1 | 85.7 | 2 | % | ||||||
| Industrial | 67.7 | 66.4 | 2 | % | ||||||
| Public Safety | 10.5 | 14.6 | (28 | )% | ||||||
| Other | 3.4 | 5.5 | (38 | )% | ||||||
| Total Net Sales | $ | 320.6 | $ | 307.1 | 4 | % | ||||
Forward-Looking Statements
Certain statements contained within this release 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 “expect,” “should,” “goal,” “predict,” “will,” “future,” “optimistic,” “confident,” and “believe.” These forward-looking statements are subject to risks and uncertainties including, without limitation, global economic conditions, geopolitical environment, global health emergencies including the COVID-19 pandemic, 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, 2020.
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 or includes 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, statement of cash flows, or statement of share owners’ equity of the Company. The non-GAAP financial measures contained herein include adjusted operating income, adjusted net income, and adjusted diluted EPS. These measures include adjustments for the three and six months ended December 31, 2020 for settlement charges after the measurement period on the GES acquisition, and for the six months ended December 31, 2020, proceeds from lawsuit settlements. For all periods presented, adjusted operating income excludes changes in the fair value of our SERP liability. 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 it is useful for investors to understand how its core operations performed without the effects of the settlement charges after the measurement period on the GES acquisition, proceeds from lawsuit settlements, and changes in the fair value of our SERP liability. Excluding these amounts allows investors to meaningfully trend, analyze, and benchmark the performance of the Company’s core operations.
| Conference Call / Webcast | ||
| Date: | February 4, 2021 | |
| Time: | 10:00 AM Eastern Time | |
| Live Webcast: | investors.kimballelectronics.com/events-presentations | |
| Dial-In #: | 800-992-4934 (International Calls - 937-502-2251) | |
| Conference ID: | 7896947 | |
For those unable to participate in the live webcast, the call will be archived at investors.kimballelectronics.com.
About Kimball Electronics, Inc.
Kimball Electronics is a multifaceted manufacturing solutions provider of electronics and diversified contract manufacturing services to customers around the world. From our operations in the United States, China, India, Japan, Mexico, Poland, Romania, Thailand, and Vietnam, 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.
Lasting relationships. Global success.
Financial highlights for the second quarter and year-to-date period ended December 31, 2020 are as follows:
| Condensed Consolidated Statements of Income | |||||||||||||
| (Unaudited) | Three Months Ended | ||||||||||||
| (Amounts in Thousands, except Per Share Data) | December 31, 2020 | December 31, 2019 | |||||||||||
| Net Sales | $ | 320,604 | 100.0 | % | $ | 307,084 | 100.0 | % | |||||
| Cost of Sales | 290,939 | 90.7 | % | 286,573 | 93.3 | % | |||||||
| Gross Profit | 29,665 | 9.3 | % | 20,511 | 6.7 | % | |||||||
| Selling and Administrative Expenses | 13,486 | 4.3 | % | 11,827 | 3.9 | % | |||||||
| Operating Income | 16,179 | 5.0 | % | 8,684 | 2.8 | % | |||||||
| Other Income (Expense), net | 2,411 | 0.8 | % | 143 | 0.1 | % | |||||||
| Income Before Taxes on Income | 18,590 | 5.8 | % | 8,827 | 2.9 | % | |||||||
| Provision for Income Taxes | 3,528 | 1.1 | % | 2,215 | 0.7 | % | |||||||
| Net Income | $ | 15,062 | 4.7 | % | $ | 6,612 | 2.2 | % | |||||
| Earnings Per Share of Common Stock: | |||||||||||||
| Basic | $ | 0.60 | $ | 0.26 | |||||||||
| Diluted | $ | 0.60 | $ | 0.26 | |||||||||
| Average Number of Shares Outstanding: | |||||||||||||
| Basic | 25,101 | 25,247 | |||||||||||
| Diluted | 25,171 | 25,330 | |||||||||||
| (Unaudited) | Six Months Ended | ||||||||||||
| (Amounts in Thousands, except Per Share Data) | December 31, 2020 | December 31, 2019 | |||||||||||
| Net Sales | $ | 652,353 | 100.0 | % | $ | 620,469 | 100.0 | % | |||||
| Cost of Sales | 592,105 | 90.8 | % | 577,765 | 93.1 | % | |||||||
| Gross Profit | 60,248 | 9.2 | % | 42,704 | 6.9 | % | |||||||
| Selling and Administrative Expenses | 26,603 | 4.1 | % | 22,905 | 3.7 | % | |||||||
| Other General Income | (341 | ) | (0.1 | )% | — | — | % | ||||||
| Operating Income | 33,986 | 5.2 | % | 19,799 | 3.2 | % | |||||||
| Other Income (Expense), net | 4,546 | 0.7 | % | (2,259 | ) | (0.4 | )% | ||||||
| Income Before Taxes on Income | 38,532 | 5.9 | % | 17,540 | 2.8 | % | |||||||
| Provision for Income Taxes | 6,659 | 1.0 | % | 4,330 | 0.7 | % | |||||||
| Net Income | $ | 31,873 | 4.9 | % | $ | 13,210 | 2.1 | % | |||||
| Earnings Per Share of Common Stock: | |||||||||||||
| Basic | $ | 1.27 | $ | 0.52 | |||||||||
| Diluted | $ | 1.26 | $ | 0.52 | |||||||||
| Average Number of Shares Outstanding: | |||||||||||||
| Basic | 25,127 | 25,371 | |||||||||||
| Diluted | 25,265 | 25,503 | |||||||||||
| Condensed Consolidated Statements of Cash Flows | Six Months Ended | ||||||
| (Unaudited) | December 31, | ||||||
| (Amounts in Thousands) | 2020 | 2019 | |||||
| Net Cash Flow provided by Operating Activities | $ | 72,256 | $ | 39,282 | |||
| Net Cash Flow used for Investing Activities | (14,417 | ) | (21,974 | ) | |||
| Net Cash Flow used for Financing Activities | (33,433 | ) | (13,903 | ) | |||
| Effect of Exchange Rate Change on Cash and Cash Equivalents | 4,222 | (478 | ) | ||||
| Net Increase in Cash and Cash Equivalents | 28,628 | 2,927 | |||||
| Cash and Cash Equivalents at Beginning of Period | 64,990 | 49,276 | |||||
| Cash and Cash Equivalents at End of Period | $ | 93,618 | $ | 52,203 | |||
| (Unaudited) | |||||||
| Condensed Consolidated Balance Sheets | December 31, 2020 | June 30, 2020 | |||||
| (Amounts in Thousands) | |||||||
| ASSETS | |||||||
| Cash and cash equivalents | $ | 93,618 | $ | 64,990 | |||
| Receivables, net | 209,054 | 180,133 | |||||
| Contract assets | 61,569 | 70,350 | |||||
| Inventories | 174,422 | 219,043 | |||||
| Prepaid expenses and other current assets | 25,791 | 23,891 | |||||
| Property and Equipment, net | 153,572 | 154,529 | |||||
| Goodwill | 12,011 | 12,011 | |||||
| Other Intangible Assets, net | 18,205 | 19,343 | |||||
| Other Assets | 37,606 | 30,539 | |||||
| Total Assets | $ | 785,848 | $ | 774,829 | |||
| LIABILITIES AND SHARE OWNERS’ EQUITY | |||||||
| Current portion of borrowings under credit facilities | $ | 25,083 | $ | 26,638 | |||
| Accounts payable | 199,382 | 203,703 | |||||
| Accrued expenses | 49,131 | 42,264 | |||||
| Long-term debt under credit facilities, less current portion | 61,000 | 91,500 | |||||
| Long-term income taxes payable | 8,854 | 9,765 | |||||
| Other | 22,760 | 21,594 | |||||
| Share Owners’ Equity | 419,638 | 379,365 | |||||
| Total Liabilities and Share Owners’ Equity | $ | 785,848 | $ | 774,829 | |||
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||
| (Unaudited) | |||||||||||||||
| (Amounts in Thousands, except Per Share Data) | |||||||||||||||
| Operating Income excluding SERP and Lawsuit Proceeds | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Operating Income, as reported | $ | 16,179 | $ | 8,684 | $ | 33,986 | $ | 19,799 | |||||||
| Add: SERP (1) | 811 | 502 | 1,361 | 480 | |||||||||||
| Less: Pre-tax Settlement Proceeds from Lawsuit | — | — | 341 | — | |||||||||||
| Adjusted Operating Income | $ | 16,990 | $ | 9,186 | $ | 35,006 | $ | 20,279 | |||||||
| Net Income excluding Settlement Charges on GES Acquisition and Lawsuit Proceeds | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Net Income, as reported | $ | 15,062 | $ | 6,612 | $ | 31,873 | $ | 13,210 | |||||||
| Add: After-Tax Settlement Charges on GES Acquisition | 133 | — | 133 | — | |||||||||||
| Less: After-tax Settlement Proceeds from Lawsuit | — | — | 259 | — | |||||||||||
| Adjusted Net Income | $ | 15,195 | $ | 6,612 | $ | 31,747 | $ | 13,210 | |||||||
| Diluted Earnings per Share excluding Settlement Charges on GES Acquisition and Lawsuit Proceeds | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Diluted Earnings per Share, as reported | $ | 0.60 | $ | 0.26 | $ | 1.26 | $ | 0.52 | |||||||
| Add: After-Tax Settlement Charges on GES Acquisition | — | — | — | — | |||||||||||
| Less: Impact of Settlement Proceeds from Lawsuit | — | — | 0.01 | — | |||||||||||
| Adjusted Diluted Earnings per Share | $ | 0.60 | $ | 0.26 | $ | 1.25 | $ | 0.52 | |||||||
(1) Beginning in the first quarter of fiscal year 2021, adjusted operating income excludes changes in the fair value of our supplemental employee retirement plan, or SERP, liability which are exactly offset by the revaluation of the fair value of the SERP investments in Other Income (Expense), net, and as a result have no impact on net income. Prior reported periods have been revised accordingly.
CONTACT:
Adam W. Smith
Treasurer
Telephone: 812.634.4000
E-mail: Investor.Relations@kimballelectronics.com