0001606757false00016067572022-08-042022-08-04

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)   August 4, 2022
ke-20220804_g1.jpg
KIMBALL ELECTRONICS, INC.
________________________________________________________________________________________________________
(Exact name of registrant as specified in its charter)
   
Indiana001-3645435-2047713
(State or other jurisdiction of(Commission File(IRS Employer Identification No.)
incorporation)Number) 
   
1205 Kimball Boulevard, Jasper, Indiana
 47546
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code   (812) 634-4000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each ClassTrading SymbolName of each exchange on which registered
Common Stock, no par valueKEThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (Section 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (Section 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02 Results of Operations and Financial Condition
On August 4, 2022, the Company issued an earnings release for the fourth quarter ended June 30, 2022.  The earnings release is attached as Exhibit 99.1.
The information in Item 2.02 of this Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Form 8-K shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except as shall otherwise be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit 
NumberDescription
99.1
104Cover Page Interactive Data File (formatted in Inline XBRL)

2

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
  
 KIMBALL ELECTRONICS, INC.
  
By:/s/ Jana T. Croom
 JANA T. CROOM
Chief Financial Officer
Date: August 4, 2022

3

Exhibit 99.1
KIMBALL ELECTRONICS REPORTS Q4 AND FISCAL YEAR 2022 RESULTS WITH RECORD SALES AND STRONG OPERATING MARGIN; COMPANY GUIDES TO ANOTHER RECORD-SETTING YEAR IN FISCAL 2023
•Net sales in the fourth quarter of fiscal 2022 totaled $373.5 million, an all-time quarterly high and up 13% year-over-year, and was adversely impacted by 3% of net sales from foreign currency
•Operating income of $20.6 million, or 5.5% of net sales
•Net income of $9.9 million, or $0.40 per diluted share
•Foreign exchange unfavorably impacted earnings by $0.12 per diluted share in non-operating expense and provision for income taxes

JASPER, Ind., August 4, 2022 (BUSINESS WIRE) -- Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the fourth quarter and fiscal year ended June 30, 2022. 
Three Months EndedFiscal Year Ended
June 30,June 30,
(Amounts in Thousands, except EPS)2022202120222021
Net Sales$373,497 $329,125 $1,349,535 $1,291,807 
Operating Income$20,578 $17,079 $52,549 $65,703 
Adjusted Operating Income (non-GAAP) (1)
$19,419 $17,972 $49,602 $67,404 
Operating Income %5.5 %5.2 %3.9 %5.1 %
Adjusted Operating Income (non-GAAP) % 5.2 %5.5 %3.7 %5.2 %
Net Income $9,938 $14,446 $31,253 $56,791 
Adjusted Net Income (non-GAAP) (1)
$9,938 $14,708 $30,203 $56,388 
Diluted EPS$0.40 $0.57 $1.24 $2.24 
Adjusted Diluted EPS (non-GAAP) (1)
$0.40 $0.58 $1.20 $2.23 
(1) A reconciliation of GAAP and non-GAAP financial measures is included below.

Donald D. Charron, Chairman and Chief Executive Officer, stated, “I am very pleased with Q4 and full year fiscal 2022 results. For the second consecutive quarter, net sales reached an all-time high for the company, and operating income margin exceeded 5%. These results were in-line with the guidance we provided in May, and required the highest levels of partnership across the value chain, including our global organization, our customers, the OEMs, and our suppliers.”

Mr. Charron continued, “In total, fiscal 2022 was very much the bifurcated year we expected, with a strong second half driving annual revenue to record levels. The world continues to experience unprecedented events and circumstances, and the lockdowns associated with China’s zero-tolerance policy on COVID-19 have been a reminder of how unpredictable the current environment can be. Our company is embracing this ever-changing landscape with commitment and resolve, engaging in customer collaboration at levels even higher than our award winning norm. This is contributing to winning new business, and expanding existing programs, that have us poised for growth as we look forward. With a backlog of open orders exceeding $1 billion, our guidance reflects the strength continuing with double-digit sales increases and improving margin rates in fiscal year 2023. We will experience a quarterly step up in performance due to new and existing programs ramping up volumes, steadily improving leverage of our completed facility expansions, and continued easing of global supply chain constraints.”

Fiscal Year 2023 Guidance

•Net sales in the range of $1.6 - $1.7 billion, a 19% - 26% increase year-over-year
•Operating income in the range of 4.6% - 5.2% of net sales
•Capital expenditures in the range of $80 - $100 million, supporting the facility expansion in Poland, new product introductions, and the addition of equipment with leading-edge technologies and capabilities




Fourth Quarter Fiscal 2022 Overview

•Cash flow provided by operating activities of $1.5 million during the fourth quarter of fiscal 2022
•Cash conversion days (“CCD”) for the quarter ended June 30, 2022 were 91 days, up from 64 days in the fourth quarter of fiscal year 2021, driven by an increase in inventory; 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 $25 million during the quarter
•Returned $4.2 million to Share Owners during the quarter in the form of common stock repurchases
•Cash and cash equivalents of $49.9 million and borrowings outstanding on credit facilities of $180.6 million at June 30, 2022, including $145.0 million classified as long term


Net Sales by Vertical Market for Fiscal 2022:
Three Months EndedFiscal Year Ended
June 30,June 30,
(Amounts in Millions)2022*2021*Percent Change2022*2021*Percent Change
Automotive $152.4 41 %$141.7 43 %7 %$582.2 43 %$551.5 43 %6 %
Medical114.0 30 %85.1 26 %34 %391.7 29 %384.8 30 %2 %
Industrial88.0 24 %86.7 26 %2 %308.1 23 %293.7 23 %5 %
Public Safety14.4 4 %10.8 3 %33 %50.1 4 %48.1 3 %4 %
Other4.7 1 %4.8 2 %(1)%17.4 1 %13.7 1 %27 %
    Total Net Sales$373.5 $329.1 13 %$1,349.5 $1,291.8 4 %
*As a percent of Total Net Sales
–Automotive includes electronic power steering, body controls, automated driver assist systems, and electronic braking systems
–Medical includes sleep therapy and respiratory care, image guided therapy, in vitro diagnostics, drug delivery, AED, and patient monitoring
–Industrial includes climate controls, automation controls, optical inspection, and smart metering
–Public Safety includes thermal imaging, first responder electronics, and security

Fiscal Year 2022 Overview:

•Net sales for fiscal year 2022 totaled $1,349.5 million, an all-time annual high and up 4% year-over-year, and foreign currency had a 1% unfavorable impact on net sales compared to fiscal year 2021
•Cash flow used for operating activities of $83.2 million, primarily driven by an increase in inventory
•Capital expenditures were $75 million, supporting facility expansions in Thailand, Mexico, and Poland
•Returned $9.1 million to Share Owners in the form of common stock repurchases
•Return on invested capital of 7.2%; ROIC is a non-GAAP financial measure, see reconciliation of non-GAAP financial measures

Jana T. Croom, Chief Financial Officer, stated, “Fiscal 2022 was a good year for our company with record results on the top line, and a strong funnel of new business increasing our backlog of open orders. We executed a capital deployment strategy that included investing in future growth with expansions at multiple facilities, returning cash to Share Owners in the form of stock repurchases, and supporting our customers with strategic inventory builds to mitigate parts shortages, even though the increases adversely impacted certain financial metrics including cash flow, CCD, and ROIC. We fully expect improvement in these areas as conditions normalize in the global supply chain.”




Forward-Looking Statements
Certain statements contained within this release are considered forward-looking, including our fiscal year 2023 guidance, 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.” Undue reliance should not be placed on these forward-looking statements. These statements are based on current expectations of future events and thus are inherently subject to uncertainty. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. These forward-looking statements are subject to risks and uncertainties including, without limitation, global economic conditions, geopolitical environment and conflicts such as the war in Ukraine, 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, 2021.

Non-GAAP Financial Measures
This press release contains non-GAAP financial measures. The non-GAAP financial measures contained herein include adjusted operating income, adjusted net income, adjusted diluted EPS, and ROIC. 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 these measures are useful and allow investors to meaningfully trend, analyze, and benchmark the performance of the company’s core operations. The company’s non-GAAP financial measures are not necessarily comparable to non-GAAP information used by other companies.

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.
Conference Call / Webcast
Date:August 5, 2022
Time:10:00 AM Eastern Time
Live Webcast:investors.kimballelectronics.com/events-and-presentations/events
Dial-In #:
844-200-6205 (other locations - 929-526-1599)
Conference ID:335447
For those unable to participate in the live webcast, the call will be archived at investors.kimballelectronics.com.
Lasting relationships. Global success.


Financial highlights for the fourth quarter and fiscal year ended June 30, 2022 are as follows:
Condensed Consolidated Statements of Income
(Unaudited)Three Months Ended
(Amounts in Thousands, except Per Share Data)June 30, 2022June 30, 2021
Net Sales$373,497 100.0 %$329,125 100.0 %
Cost of Sales339,276 90.8 %297,344 90.3 %
Gross Profit34,221 9.2 %31,781 9.7 %
Selling and Administrative Expenses13,643 3.7 %14,357 4.4 %
Other General Expense (Income)— — %345 0.1 %
Operating Income20,578 5.5 %17,079 5.2 %
Other Income (Expense), net(5,257)(1.4)%446 0.1 %
Income Before Taxes on Income15,321 4.1 %17,525 5.3 %
Provision for Income Taxes5,383 1.4 %3,079 0.9 %
Net Income$9,938 2.7 %$14,446 4.4 %
Earnings Per Share of Common Stock:
Basic$0.40 $0.58 
Diluted$0.40 $0.57 
Average Number of Shares Outstanding:
     Basic24,885 25,049 
     Diluted24,989 25,232 
(Unaudited)Fiscal Year Ended
(Amounts in Thousands, except Per Share Data)June 30, 2022June 30, 2021
Net Sales$1,349,535 100.0 %$1,291,807 100.0 %
Cost of Sales1,244,933 92.2 %1,173,772 90.9 %
Gross Profit104,602 7.8 %118,035 9.1 %
Selling and Administrative Expenses53,437 4.0 %52,704 4.0 %
Other General Expense (Income)(1,384)(0.1)%(372)— %
Operating Income52,549 3.9 %65,703 5.1 %
Other Income (Expense), net(8,818)(0.7)%4,351 0.3 %
Income Before Taxes on Income43,731 3.2 %70,054 5.4 %
Provision for Income Taxes12,478 0.9 %13,263 1.0 %
Net Income$31,253 2.3 %$56,791 4.4 %
Earnings Per Share of Common Stock:
Basic$1.24 $2.26 
Diluted$1.24 $2.24 
Average Number of Shares Outstanding:
     Basic25,115 25,088 
     Diluted25,221 25,284 


Condensed Consolidated Statements of Cash FlowsFiscal Year Ended
(Unaudited)June 30,
(Amounts in Thousands)20222021
Net Cash Flow (used for) provided by Operating Activities$(83,178)$130,095 
Net Cash Flow used for Investing Activities(74,798)(38,796)
Net Cash Flow provided by (used for) Financing Activities103,741 (53,078)
Effect of Exchange Rate Change on Cash and Cash Equivalents(2,356)3,231 
Net (Decrease) Increase in Cash and Cash Equivalents(56,591)41,452 
Cash and Cash Equivalents at Beginning of Period106,442 64,990 
Cash and Cash Equivalents at End of Period$49,851 $106,442 


(Unaudited)
Condensed Consolidated Balance SheetsJune 30,
2022		June 30,
2021
(Amounts in Thousands)
ASSETS
    Cash and cash equivalents$49,851 $106,442 
    Receivables, net222,857 203,382 
    Contract assets64,080 45,863 
    Inventories 395,630 200,386 
    Prepaid expenses and other current assets28,665 27,320 
    Property and Equipment, net206,835 163,251 
    Goodwill12,011 12,011 
    Other Intangible Assets, net14,707 17,008 
    Other Assets41,131 38,398 
        Total Assets$1,035,767 $814,061 
LIABILITIES AND SHARE OWNERS’ EQUITY
    Current portion of borrowings under credit facilities$35,580 $26,214 
    Accounts payable308,617 216,544 
    Accrued expenses64,545 58,016 
    Long-term debt under credit facilities, less current portion145,000 40,000 
    Long-term income taxes payable7,812 8,854 
    Other20,242 22,461 
    Share Owners’ Equity453,971 441,972 
        Total Liabilities and Share Owners’ Equity$1,035,767 $814,061 





Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(Amounts in Thousands, except Per Share Data)
Three Months EndedFiscal Year Ended
June 30,June 30,
2022202120222021
Operating Income, as reported$20,578 $17,079 $52,549 $65,703 
SERP (1,159)548 (1,563)2,073 
Legal Settlements (Recovery)— 345 (1,384)(372)
Adjusted Operating Income$19,419 $17,972 $49,602 $67,404 
Net Income, as reported$9,938 $14,446 $31,253 $56,791 
Adjustments After Measurement Period on GES Acquisition— — — (121)
Legal Settlements (Recovery), After-Tax— 262 (1,050)(282)
Adjusted Net Income$9,938 $14,708 $30,203 $56,388 
Diluted Earnings per Share, as reported$0.40 $0.57 $1.24 $2.24 
Adjustments After Measurement Period on GES Acquisition— — — — 
Legal Settlements (Recovery)— 0.01 (0.04)(0.01)
Adjusted Diluted Earnings per Share$0.40 $0.58 $1.20 $2.23 
Operating Income$52,549 $65,703 
SERP (1,563)2,073 
Legal Recovery(1,384)(372)
Adjusted Operating Income (non-GAAP)$49,602 $67,404 
Tax Effect14,417 12,844 
After-tax Adjusted Operating Income$35,185 $54,560 
Average Invested Capital (1)
$491,252 $415,999 
ROIC7.2 %13.1 %
(1) 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.