Kimball Electronics, Inc. SEC 10-Q Report

Kimball Electronics, Inc., a global provider of electronics manufacturing services, has released its Form 10-Q report for the second quarter of the fiscal year 2024. The report outlines significant financial and operational challenges faced by the company, including declines in key financial metrics and operational disruptions across various segments.

Financial Highlights

Net Sales: $357.4 million, decreased by 15% compared to the prior fiscal year second quarter, with significant declines in medical and industrial end market verticals.

Gross Profit: $23.4 million, representing 6.6% of Net Sales, down from 8.2% in the prior year, due to lost absorption on lower revenue.

Operating Income: $8.2 million, a decrease of 50% from the previous year, impacted by restructuring expenses and lower sales.

Net Income: $3.4 million, a decline of 59% from the prior year, reflecting reduced sales and restructuring costs.

Diluted Earnings per Share: $0.14, down 58% from the previous year, influenced by lower net income and restructuring expenses.

Business Highlights

Revenue Segments

The company's revenue is primarily generated from three vertical markets: Automotive, Medical, and Industrial. For the three months ended December 31, 2024, the Automotive segment contributed $192.8 million, the Medical segment $84.0 million, and the Industrial segment $80.6 million. Year-to-date figures show similar trends with Automotive at $381.1 million, Medical at $173.8 million, and Industrial at $176.7 million.

Geographical Performance

The company experienced varied demand across different regions. In the automotive sector, increased demand in China partially offset lower demand in North America and Europe. The medical segment faced challenges due to impacts from an FDA recall affecting a major customer, while the industrial segment saw declines due to the sale of GES and reduced demand in smart metering and public safety.

Sales Units

The company highlighted a decrease in open orders by 33% as of December 31, 2024, compared to the previous year, driven by reduced orders in the automotive and medical sectors.

New Production Launches

The company completed capacity expansions, particularly in its facility in Mexico and Jasper, to support the transfer of production activities from the Tampa facility, which is set to cease operations by the end of the fiscal year.

Future Outlook

The company anticipates continued challenges in maintaining profit margins due to competitive pricing pressures and expects consolidated net sales to lag compared to fiscal year 2024. This is attributed to the loss of a major automotive program, the divestiture of the GES business, and ongoing impacts from the FDA recall in the medical segment. The company plans to focus on cost control and strategic investments to strengthen its capabilities as a multifaceted manufacturing solutions provider.

SEC Filing: Kimball Electronics, Inc. [ KE ] - 10-Q - Feb. 05, 2025