EX-99.2 3 kewebcastslidegraphs0331.htm KIMBALL ELECTRONICS, INC. EXHIBIT 99.2 kewebcastslidegraphs0331
Lasting relationships. Global success.Lasting relationships. Global success. Financial Results Third Quarter Fiscal Year 2018 Quarter Ended March 31, 2018 Supplementary Information to May 3, 2018 Earnings Conference Call Exhibit 99.2


 
Lasting relationships. Global success.Lasting relationships. Global success. Safe Harbor Statement Certain statements contained within this supplementary information and any statements made during our earnings conference call today may be 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 and new operations, global economic conditions, geopolitical environment, significant reductions in volumes and order patterns 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 Kimball Electronics, Inc. (the “Company”) are contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017, our earnings release, and other filings with the Securities and Exchange Commission (the “SEC”). This supplementary information 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 Adjusted Operating Income, Adjusted Net Income, Adjusted EBITDA, and Return on Invested Capital (ROIC), which have been adjusted for spin-off expenses, proceeds from a lawsuit settlement, a bargain purchase gain, and discrete tax items related to the U.S. Tax Cuts and Jobs Act (“Tax Reform”) enacted in December 2017. Management believes it is useful for investors to understand how its core operations performed without the effects of incremental costs related to the spin-off, the lawsuit proceeds, the bargain purchase gain, and discrete tax items related to Tax Reform. 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 use these and other non-GAAP measures to enable meaningful trending of core operating metrics. 2


 
Lasting relationships. Global success.Lasting relationships. Global success. Net Sales (Unaudited) $290 $280 $270 $260 $250 $240 $230 $220 $210 $200 In M illi on s Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 $220 $226 $230 $233 $241 $253 $258 $284+22% from Q3'17 3


 
Lasting relationships. Global success.Lasting relationships. Global success. Net Sales Mix by Vertical Market (Unaudited) Automotive Medical Industrial Public Safety Other 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% % of Sa le s Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 39% 41% 42% 40% 40% 40% 45% 48% 30% 28% 28% 26% 28% 30% 28% 27% 22% 23% 21% 23% 22% 22% 20% 19% 7% 6% 7% 9% 8% 7% 6% 5% 2% 2% 2% 2% 2% 1% 1% 1% 4


 
Lasting relationships. Global success.Lasting relationships. Global success. Gross Margin % (Unaudited) 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% % of Sa le s Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 7.7% 8.1% 8.9% 8.0% 7.5% 7.7% 8.1% 8.1% 5


 
Lasting relationships. Global success.Lasting relationships. Global success. Selling & Administrative Expense (%) (Unaudited) 5.0% 4.5% 4.0% 3.5% 3.0% % of Sa le s Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 3.7% 4.2% 3.6% 3.9% 4.0% 3.9% 4.2% 4.2% 6


 
Lasting relationships. Global success.Lasting relationships. Global success. Adjusted Operating Income (Excludes lawsuit settlement proceeds) (Unaudited) Adj Op Income % of Net Sales $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 In M illi on s 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% % of Sa le s Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 $8.8 $8.8 $12.2 $9.5 $8.5 $9.6 $10.2 $11.2 4.0% 3.9% 5.3% 4.1% 3.5% 3.8% 3.9% 3.9% Note: Adjusted Operating Income is a Non-GAAP measure – refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information 7


 
Lasting relationships. Global success.Lasting relationships. Global success. Adjusted Net Income (Excludes lawsuit settlement proceeds, bargain purchase gain, and discrete tax items due to Tax Reform) (Unaudited) $11.0 $10.0 $9.0 $8.0 $7.0 $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $0.0 In M illi on s Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 $5.8 $6.7 $7.8 $8.1 $8.1 $8.5 $8.2 $10.7 Note: Adjusted Net Income is a Non-GAAP measure – refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information 8


 
Lasting relationships. Global success.Lasting relationships. Global success. Adjusted EBITDA (Excludes lawsuit settlement proceeds and bargain purchase gain) (Unaudited) Adjusted EBITDA Adjusted EBITDA % of Sales $22.0 $20.0 $18.0 $16.0 $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 In M illi on s 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% % of Sa le s Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 $13.6 $15.9 $17.0 $16.0 $16.1 $17.3 $17.1 $20.1 6.2% 7.0% 7.4% 6.9% 6.7% 6.8% 6.6% 7.1% Note: Adjusted EBITDA is a Non-GAAP measure - refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information 9


 
Lasting relationships. Global success.Lasting relationships. Global success. Return on Invested Capital (Excludes spin-off costs and lawsuit settlement proceeds) 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% R O IC % Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 9.0% 9.6% 10.7% 10.7% 10.4% 9.0% 9.6% 10.2% Notes: We define ROIC as after tax annualized adjusted operating income divided by average invested capital; ROIC is a Non-GAAP measure - refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information (Unaudited) 10


 
Lasting relationships. Global success.Lasting relationships. Global success. Operating Cash Flow (Unaudited) $20.0 $15.0 $10.0 $5.0 $0.0 -$5.0 In M illi on s Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 $8.8 $14.0 $12.1 $8.7 $12.0 ($0.2) $11.6 $9.5 11


 
Lasting relationships. Global success.Lasting relationships. Global success. Capital Expenditures and Depreciation & Amortization (Unaudited) Cap Ex Depr & Amort $15.0 $13.0 $11.0 $9.0 $7.0 $5.0 $3.0 In M illi on s Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 $6.5 $10.3 $9.4 $6.3 $8.3 $6.1 $8.7 $7.2 $5.5 $5.7 $5.7 $6.1 $6.4 $6.4 $6.4 $6.8 Note: Capital Expenditures include purchases of capitalized software. 12


 
Lasting relationships. Global success.Lasting relationships. Global success. Reconciliation of Non-GAAP Results (Unaudited) Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Operating Income, as Reported $ 8,790 $ 12,822 $ 12,241 $ 9,539 $ 8,455 $ 9,590 $ 10,193 $ 11,211 Less: Lawsuit Proceeds — 4,005 — — — — — — Adjusted Operating Income $ 8,790 $ 8,817 $ 12,241 $ 9,539 $ 8,455 $ 9,590 $ 10,193 $ 11,211 Net Income (Loss), as reported $ 5,771 $ 10,122 $ 7,812 $ 8,117 $ 8,128 $ 8,480 $ (8,347) $ 10,835 Add: Discrete Tax Items from Tax Reform — — — — — — 16,580 (130) Less: Lawsuit Proceeds — 2,499 — — — — — — Less: Bargain Purchase Gain — 925 — — — — — — Adjusted Net Income $ 5,771 $ 6,698 $ 7,812 $ 8,117 $ 8,128 $ 8,480 $ 8,233 $ 10,705 Adjusted Net Income $ 5,771 $ 6,698 $ 7,812 $ 8,117 $ 8,128 $ 8,480 $ 8,233 $ 10,705 Add Interest, net 19 16 46 41 104 98 95 126 Add Depreciation & Amortization 5,533 5,713 5,716 6,072 6,403 6,369 6,386 6,824 Add Taxes 2,294 3,463 3,415 1,754 1,444 2,355 2,353 2,424 Adjusted EBITDA $ 13,617 $ 15,890 $ 16,989 $ 15,984 $ 16,079 $ 17,302 $ 17,067 $ 20,079 Operating Income, As Reported (YTD) $ 29,722 $ 12,822 $ 25,063 $ 34,602 $ 43,057 $ 9,590 $ 19,783 $ 30,994 Add: Spin-off Expenses (YTD) $ 137 $ — $ — $ — $ — $ — $ — $ — Less: Lawsuit Proceeds (YTD) $ — $ 4,005 $ 4,005 $ 4,005 $ 4,005 $ — $ — $ — Adjusted Operating Income (YTD) $ 29,859 $ 8,817 $ 21,058 $ 30,597 $ 39,052 $ 9,590 $ 19,783 $ 30,994 Annualized Adjusted Operating Income $ 35,268 $ 42,116 $ 40,796 $ 38,360 $ 39,566 $ 41,325 Tax Rate 20.4% 22.7% 27.0% 24.3% 21.8% 25.7% 23.6% 21.2% Tax Effect $ 6,091 $ 8,006 $ 11,371 $ 9,913 $ 8,513 $ 9,859 $ 9,338 $ 8,761 After Tax Annualized Adj. Operating Income $ 23,768 $ 27,262 $ 30,745 $ 30,883 $ 30,539 $ 28,501 $ 30,228 $ 32,564 Average Invested Capital * $ 263,371 $ 283,490 $ 286,347 $ 289,966 $ 293,516 $ 316,187 $ 316,270 $ 319,484 ROIC 9.0% 9.6% 10.7% 10.7% 10.4% 9.0% 9.6% 10.2% 13* Average Invested Capital is computed using the average quarterly Share Owners equity plus current and non-current debt less cash and cash equivalents.