JASPER, Ind., Nov. 05, 2019 (GLOBE NEWSWIRE) — Kimball Electronics, Inc. (NASDAQ: KE) today announced financial results for its first quarter ended September 30, 2019.
Three Months Ended September 30,(Amounts in Thousands, except EPS)2019 2018Net Sales$313,385 $265,620 Operating Income$11,115 $7,032 Adjusted Operating Income (non-GAAP) (1)$11,115 $6,940 Operating Income %3.5% 2.6%Net Income$6,598 $5,069 Adjusted Net Income (non-GAAP) (1)$6,598 $4,999 Diluted EPS$0.26 $0.19
(1) A reconciliation of GAAP and non-GAAP financial measures is included below.
Donald D. Charron, Chairman and Chief Executive Officer, stated, “We delivered excellent growth results in the first quarter of fiscal year 2020 despite a general softening in the overall market. We achieved double-digit growth in three of our four end market verticals when compared to the same period last year, including a new quarterly record for net sales in our Medical end market vertical.”
Mr. Charron continued, “We are extremely pleased with the progress we made in expanding our operating margin in the first quarter when comparing both year-over-year and sequentially from the fourth quarter of fiscal year 2019. As new programs ramp up to projected run rates and we continue to drive improvements in the GES operations, we expect to realize additional leverage from our sales growth.”
First Quarter Fiscal Year 2020 Overview:
- Consolidated net sales increased 18% compared to the first quarter of fiscal year 2019. The GES acquisition added 2% to net sales for the quarter while unfavorable foreign currency movements adversely impacted consolidated net sales by approximately 2% compared to the same quarter a year ago.
- Operating activities provided cash of $39.6 million during the quarter, which compares to cash used by operating activities of $10.0 million in the first quarter of fiscal year 2019.
- Cash conversion days (“CCD”) for the quarter ended September 30, 2019 were 73 days, which declined sequentially from 77 days in the fourth quarter of fiscal year 2019 from improvement in days sales outstanding as a result of increased utilization of accounts receivable factoring arrangements. 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 $11.7 million during the quarter.
- $3.5 million was returned to Share Owners during the quarter in the form of common stock repurchases.
- Cash and cash equivalents were $55.4 million and borrowings outstanding on credit facilities were $109.6 million at September 30, 2019, including $91.5 million classified as long-term.
- Return on invested capital (“ROIC”), calculated for the trailing twelve months, was 9.0% and 9.3% for the twelve months ended September 30, 2019 and 2018, respectively (see reconciliation of non-GAAP financial measures for ROIC calculation).
Net Sales by Vertical Market:
Three Months Ended September 30, (Amounts in Millions)2019 2018 Percent
ChangeAutomotive$124.4 $105.9 17%Medical101.3 82.2 23%Industrial64.7 57.4 13%Public Safety17.1 17.1 —%Other5.9 3.0 96%Total Net Sales$313.4 $265.6 18%
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, successful integration of acquisitions, ramp up of new operations, global economic conditions, geopolitical environment, significant volume reductions from key contract customers, loss of key customers or suppliers, financial stability of key customers and suppliers, availability or cost of raw materials, impact related to tariffs and other trade barriers, and increased competitive pricing pressures. 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, 2019.
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 ROIC. These measures include adjustments for the three months ended September 30, 2018 for proceeds from a class action lawsuit settlement. Reconciliations of the reported GAAP numbers to these non-GAAP financial measures are included in the financial highlights table below. Management believes it is useful for investors to understand how its core operations performed without the effect of the proceeds from the lawsuit settlement. Excluding this amount allows investors to meaningfully trend, analyze, and benchmark the performance of the Company’s core operations.
Conference Call / Webcast Date: November 6, 2019Time: 10:00 AM Eastern TimeDial-In #: (International Calls -)Conference ID: 1836429
The live webcast of the conference call can be accessed at investors.kimballelectronics. For those unable to participate in the live webcast, the call will be archived at investors.kimballelectronics.
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.
Lasting relationships. Global success.
Financial highlights for the first quarter ended September 30, 2019 are as follows:
Condensed Consolidated Statements of Income (Unaudited)Three Months Ended(Amounts in Thousands, except Per Share Data)September 30, 2019 September 30, 2018Net Sales$313,385 100.0% $265,620 100.0%Cost of Sales291,192 92.9% 247,434 93.2%Gross Profit22,193 7.1% 18,186 6.8%Selling and Administrative Expenses11,078 3.6% 11,246 4.2%Other General Income— —% (92) —%Operating Income11,115 3.5% 7,032 2.6%Other Income (Expense), net(2,402) (0.7)% (554) (0.2)%Income Before Taxes on Income8,713 2.8% 6,478 2.4%Provision for Income Taxes2,115 0.7% 1,409 0.5%Net Income$6,598 2.1% $5,069 1.9% Earnings Per Share of Common Stock: Basic$0.26 $0.19 Diluted$0.26 $0.19 Average Number of Shares Outstanding: Basic25,495 26,507 Diluted25,609 26,628
Condensed Consolidated Statements of Cash FlowsThree Months Ended(Unaudited)September 30,(Amounts in Thousands)2019 2018Net Cash Flow provided by (used for) Operating Activities$39,619 $(10,013)Net Cash Flow used for Investing Activities(11,725) (4,646)Net Cash Flow (used for) provided by Financing Activities(20,588) 43,714 Effect of Exchange Rate Change on Cash and Cash Equivalents(1,231) (514)Net Increase in Cash and Cash Equivalents6,075 28,541 Cash and Cash Equivalents at Beginning of Period49,276 46,428 Cash and Cash Equivalents at End of Period$55,351 $74,969
(Unaudited) Condensed Consolidated Balance SheetsSeptember 30,
(Amounts in Thousands)20192019ASSETS Cash and cash equivalents$55,351 $49,276 Receivables, net185,771 225,555 Contract assets60,800 51,929 Inventories200,753 203,840 Prepaid expenses and other current assets25,377 24,713 Property and Equipment, net142,895 143,629 Goodwill19,936 18,104 Other Intangible Assets, net21,505 22,188 Other Assets27,507 24,877 Total Assets$739,895 $764,111 LIABILITIES AND SHARE OWNERS’ EQUITY Current portion of borrowings under credit facilities$18,067 $34,713 Accounts payable193,300 197,001 Accrued expenses38,210 43,196 Long-term debt under credit facilities, less current portion91,500 91,500 Long-term income taxes payable9,765 9,765 Other19,800 18,082 Share Owners’ Equity369,253 369,854 Total Liabilities and Share Owners’ Equity$739,895 $764,111
Reconciliation of Non-GAAP Financial Measures (Unaudited) (Amounts in Thousands, except Per Share Data) Operating Income excluding Lawsuit Proceeds Three Months Ended September 30, 2019 2018Operating Income, as reported $11,115 $7,032 Less: Pre-tax Settlement Proceeds from Lawsuit — 92 Adjusted Operating Income $11,115 $6,940 Net Income excluding Lawsuit Proceeds Three Months Ended September 30, 2019 2018Net Income, as reported $6,598 $5,069 Less: After-tax Settlement Proceeds from Lawsuit — 70 Adjusted Net Income $6,598 $4,999 Return on Invested Capital (ROIC) Twelve Months Ended September 30, 2019 2018Operating Income $46,143 $39,547 Less: Pre-tax Settlement Proceeds from Lawsuits $215 $92 Adjusted Operating Income (non-GAAP) $45,928 $39,455 Tax Effect (1) $8,920 $9,152 After-Tax Adjusted Operating Income $37,008 $30,303 Average Invested Capital (2) $411,735 $326,168 ROIC 9.0% 9.3%
(1) Accumulated tax effect utilizing the applicable quarterly effective tax rates, excludes tax effect of adjusted items including adjustments related to the U.S. Tax Cuts and Jobs Act.
(2) 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.
Adam W. Smith