EX-99.1 2 a8kexhibit99103312015q310q.htm KIMBALL ELECTRONICS, INC. EXHIBIT 99.1 8K.Exhibit 99.1 03.31.2015 Q3 10Q


Exhibit 99.1
KIMBALL ELECTRONICS, INC. REPORTS THIRD QUARTER FISCAL YEAR 2015 RESULTS
JASPER, IN (May 12, 2015) - Kimball Electronics, Inc. (Nasdaq: KE), a leading global electronic manufacturing services provider for high-quality, durable electronic products, today announced financial results for its third quarter of fiscal year 2015 which ended March 31, 2015. 
Donald D. Charron, Chairman and Chief Executive Officer, stated, “Solid growth in all four end market verticals helped us achieve year over year double digit growth for the third consecutive quarter, as well as excellent operating results.  We were particularly pleased with the results in our automotive vertical where stronger than expected sales to the China market helped us more than fill in the hole created by the earlier reported loss of the Johnson Controls (JCI) business.  The final JCI products were substantially completed last quarter and we continue to be encouraged by the progress that we are making to replace this business.” 
Mr. Charron continued, “This is our first full quarter as a stand-alone publicly traded company after the completion of the spin-off from Kimball International on October 31, 2014.  Our new business opportunities pipeline remains healthy and our operations teams remain focused on disciplined execution.  Our functional teams are ahead of schedule to complete the spin related actions necessary to physically separate the information technology systems and office facilities.  We continue to have good momentum.”
Third Quarter Fiscal Year 2015 Highlights:
•
Net sales of $206.9 million increased 11% from the prior year third quarter. Sales related to the exit of JCI were down $17.2 million compared to the same quarter last year.
•
Gross profit as a percent of net sales increased 0.3 percentage points from the prior year third quarter.
•
Spin-off expenses in the current year third quarter totaled $0.3 million. Prior year third quarter spin-off costs were $0.8 million.
•
Operating income was $10.8 million (5.2% of net sales) while adjusted operating income (non-GAAP), excluding spin-off costs, was $11.1 million (5.4% of net sales).
•
Net income was $7.2 million with adjusted net income (non-GAAP) of $7.5 million.
•
Diluted earnings per share for the current year third quarter was $0.25.
•
Cash flows provided by operating activities for the third quarter of fiscal year 2015 was $7.7 million.
•
Cash and cash equivalents at March 31, 2015 was $61.7 million.
•
Days sales outstanding, calculated as the average of monthly trade accounts and notes receivable divided by one day’s average net sales, was 58.9 days for the three months ended March 31, 2015 compared to 55.6 days for the three months ended March 31, 2014.
Net Sales by Vertical Market:

Three Months Ended
 
 
 
March 31,
 
 
(Amounts in Millions)
2015
 
2014
 
Percent Change
Automotive
$
74.9

 
$
72.1

 
4
%
Medical
59.7

 
54.7

 
9
%
Industrial
51.6

 
41.2

 
25
%
Public Safety
15.3

 
13.5

 
13
%
Other
5.4

 
4.2

 
28
%
    Total Net Sales
$
206.9

 
$
185.7

 
11
%











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, our ability to fully realize the expected benefits of the completed spin-off, the global economic conditions, 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, and increased competitive pricing pressures reflecting excess industry capacities. 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 Registration Statement filed on Form 10, as amended, and declared effective on October 7, 2014 and other filings with the Securities and Exchange Commission.

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 equity of the company. The non-GAAP financial measures contained herein include adjustments for spin-off expenses, restructuring charges, and settlement proceeds from lawsuits. 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 effects of the spin-off expenses, lawsuit income, and costs incurred in 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 charges to enable meaningful trending of core operating metrics.

Conference Call / Webcast
 
 
 
Date:
 
May 12, 2015
Time:
 
10:00 AM Eastern Time
Dial-In #:
 
800-992-4934 (International Calls - 937-502-2251)
Conference ID:
 
29616376

The live webcast of the conference call can be accessed at investors.kimballelectronics.com. For those unable to participate in the live webcast, the call will be archived at investors.kimballelectronics.com.

About Kimball Electronics, Inc.
Recognized with a reputation for excellence, Kimball Electronics is committed to a high performance culture that values personal and organizational commitment to quality, reliability, value, speed, and ethical behavior. Kimball Electronics employees know they are part of a company culture that builds lasting relationships and global success for customers while enabling employees to share in the Company’s success through personal, professional, and financial growth.

Kimball Electronics trades under the symbol “KE” on The NASDAQ Stock Market. Kimball Electronics is a global contract electronic manufacturing services (“EMS”) company that specializes in durable electronics for the medical, automotive, industrial, and public safety markets. Kimball Electronics is well recognized by customers and industry trade publications for its excellent quality, reliability, and innovative service. From its manufacturing operations in the United States, Mexico, Thailand, Poland, and China, Kimball Electronics provides engineering, manufacturing, and supply chain services which utilize common production and support capabilities to a variety of industries globally. Kimball Electronics is headquartered in Jasper, Indiana.
To learn more about Kimball Electronics, visit: www.kimballelectronics.com.

Lasting relationships. Global success.




Financial highlights for the third quarter ended March 31, 2015 are as follows:

Condensed Consolidated Statements of Income
 
 
 
 
 
 
(Unaudited)
Three Months Ended
(Amounts in Thousands, except per share data)
March 31, 2015
 
March 31, 2014
Net Sales
$
206,858

 
100.0
%
 
$
185,680

 
100.0
%
Cost of Sales
187,905

 
90.8
%
 
169,127

 
91.1
%
Gross Profit
18,953

 
9.2
%
 
16,553

 
8.9
%
Selling and Administrative Expenses
8,132

 
4.0
%
 
9,197

 
5.0
%
Other General Income
—

 
—
%
 
(666
)
 
(0.4
)%
Operating Income
10,821

 
5.2
%
 
8,022

 
4.3
%
Other Income (Expense), net
(886
)
 
(0.4
)%
 
103

 
0.1
%
Income Before Taxes on Income
9,935

 
4.8
%
 
8,125

 
4.4
%
Provision for Income Taxes
2,744

 
1.3
%
 
1,769

 
1.0
%
Net Income
$
7,191

 
3.5
%
 
$
6,356

 
3.4
%
 
 
 
 
 
 
 
 
Earnings Per Share of Common Stock:
 
 
 
 
 
 
 
Basic
$
0.25

 
 
 
$
0.22

 
 
Diluted
$
0.25

 
 
 
$
0.22

 
 
 
 
 
 
 
 
 
 
Average Number of Shares Outstanding:
 
 
 
 
 
 
 
     Basic
29,172

 
 
 
29,143

 
 
     Diluted
29,318

 
 
 
29,143

 
 
 
 
 
 
 
 
 
 
(Unaudited)
Nine Months Ended
(Amounts in Thousands, except per share data)
March 31, 2015
 
March 31, 2014
Net Sales
$
618,224

 
100.0
%
 
$
542,581

 
100.0
%
Cost of Sales
563,510

 
91.1
%
 
499,666

 
92.1
%
Gross Profit
54,714

 
8.9
%
 
42,915

 
7.9
%
Selling and Administrative Expenses
27,409

 
4.5
%
 
25,992

 
4.7
%
Other General Income
—

 
—
%
 
(5,688
)
 
(1.0
)%
Restructuring Expense
—

 
—
%
 
402

 
0.1
%
Operating Income
27,305

 
4.4
%
 
22,209

 
4.1
%
Other Income (Expense), net
(1,229
)
 
(0.2
)%
 
690

 
0.1
%
Income Before Taxes on Income
26,076

 
4.2
%
 
22,899

 
4.2
%
Provision for Income Taxes
7,265

 
1.2
%
 
3,645

 
0.7
%
Net Income
$
18,811

 
3.0
%
 
$
19,254

 
3.5
%
 
 
 
 
 
 
 
 
Earnings Per Share of Common Stock:
 
 
 
 
 
 
 
        Basic
$
0.65

 
 
 
$
0.66

 
 
        Diluted
$
0.64

 
 
 
$
0.66

 
 
 
 
 
 
 
 
 
 
Average Number of Shares Outstanding:
 
 
 
 
 
 
 
        Basic
29,159

 
 
 
29,143

 
 
        Diluted
29,344

 
 
 
29,143

 
 






Condensed Consolidated Statements of Cash Flows
Nine Months Ended
(Unaudited)
March 31,
(Amounts in Thousands)
2015
 
2014
Net Cash Flow provided by Operating Activities
$
11,250

 
$
32,886

Net Cash Flow used for Investing Activities
(22,668
)
 
(13,103
)
Net Cash Flow provided by (used for) Financing Activities
50,172

 
(842
)
Effect of Exchange Rate Change on Cash
(3,344
)
 
271

Net Increase in Cash and Cash Equivalents
35,410

 
19,212

Cash and Cash Equivalents at Beginning of Period
26,260

 
18,424

Cash and Cash Equivalents at End of Period
$
61,670

 
$
37,636



 
(Unaudited)
 
 
Condensed Consolidated Balance Sheets
March 31,
2015
 
June 30,
2014
(Amounts in Thousands)
 
ASSETS
 
 
 
    Cash and cash equivalents
$
61,670

 
$
26,260

    Receivables, net
139,196

 
128,425

    Inventories
122,799

 
116,159

    Prepaid expenses and other current assets
23,488

 
20,490

    Property and Equipment, net
94,770

 
97,934

    Goodwill
2,564

 
2,564

    Other Intangible Assets, net
4,271

 
1,830

    Other Assets
15,777

 
15,068

        Total Assets
$
464,535

 
$
408,730

 
 
 
 
LIABILITIES AND SHARE OWNERS’ EQUITY
 
 
 
    Accounts payable
$
123,537

 
$
119,853

    Accrued expenses
27,226

 
26,602

    Other
10,117

 
9,903

    Share Owners’ Equity
303,655

 
252,372

        Total Liabilities and Share Owners’ Equity
$
464,535

 
$
408,730





Reconciliation of Non-GAAP Financial Measures
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
(Amounts in Thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income excluding Spin-off Expenses, Restructuring Charges and Settlement Proceeds from Lawsuits
 
 
 
Three Months Ended
 
Nine Months Ended
 
March 31,
 
March 31,
Kimball Electronics, Inc.
2015
 
2014
 
2015
 
2014
Operating Income, as reported
$
10,821

 
$
8,022

 
$
27,305

 
$
22,209

Add: Pre-tax Spin-off Expenses
321

 
802

 
2,571

 
802

Less: Pre-tax Settlement Proceeds from Lawsuits
—

 
666

 
—

 
5,688

Add: Pre-tax Restructuring Charges
—

 
—

 
—

 
402

Adjusted Operating Income
$
11,142

 
$
8,158

 
$
29,876

 
$
17,725

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income excluding Spin-off Expenses, Restructuring Charges and Settlement Proceeds from Lawsuits
 
 
 
Three Months Ended
 
Nine Months Ended
 
March 31,
 
March 31,
Kimball Electronics, Inc.
2015
 
2014
 
2015
 
2014
Net Income, as reported
$
7,191

 
$
6,356

 
$
18,811

 
$
19,254

Add: After-tax Spin-off Expenses
278

 
802

 
2,410

 
802

Less: After-tax Settlement Proceeds from Lawsuits
—

 
415

 
—

 
3,549

Add: After-tax Restructuring Charges
—

 
—

 
—

 
251
Adjusted Net Income
$
7,469

 
$
6,743

 
$
21,221

 
$
16,758

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted Earnings per Share excluding Spin-off Expenses, Restructuring Charges and Settlement Proceeds from Lawsuits
 
 
 
Three Months Ended
 
Nine Months Ended
 
March 31,
 
March 31,
Kimball Electronics, Inc.
2015
 
2014
 
2015
 
2014
Diluted Earnings per Share, as reported
$
0.25

 
$
0.22

 
$
0.64

 
$
0.66

Add: Impact of Spin-off Expenses
0.00

 
0.03

 
0.08

 
0.03

Less: Impact of Settlement Proceeds from Lawsuits
—

 
0.02

 
—

 
0.12

Add: Impact of Restructuring Charges
—

 
—

 
—

 
0.01

Adjusted Diluted Earnings per Share
$
0.25

 
$
0.23

 
$
0.72

 
$
0.58