Kimball Electronics Reports Fourth Quarter Fiscal 2022 Results with Record Sales and Strong Operating Margin

Kimball Electronics Reports Fourth Quarter Fiscal 2022 Results with Record Sales and Strong Operating Margin

Kimball Electronics, Inc. announced its financial results for the fourth quarter and fiscal year ended June 30, 2022.

Donald D. Charron, Chairman and Chief Executive Officer, said, “I am very pleased with the results for the fourth quarter and fiscal year 2022. For the second consecutive quarter, net sales reached a record high for the ‘business and operating margin exceeded 5%. These results were consistent with the guidance we provided in May and required the highest levels of partnership across the value chain, including our global organization, customers, OEMs and suppliers.

Mr. Charron continued: “All in all, fiscal 2022 was the bifurcated year we expected, with a strong second half that drove annual revenues to record highs. The world continues to experience unprecedented events and circumstances, and the lockdowns associated with China’s zero-tolerance policy on COVID-19 have served as a reminder of how unpredictable the current environment can be. Our company embraces this ever-changing landscape with commitment and determination, engaging in collaboration with customers at levels even higher than our award-winning standard. This helps win new business and expand existing programs, setting us on the path to growth as we look to the future. With an outstanding order backlog exceeding $1 billion, our guidance reflects continued strength with double-digit sales increases and improving margin rates in fiscal 2023. We will see a quarterly increase performance due to increased volumes from new and existing programs, steadily improving leverage from our completed facility expansions and continued easing of global supply chain constraints.

Guidance for FY2023

  • Net sales of $1.6 billion to $1.7 billion, up 19% to 26% year over year
  • Operating profit between 4.6% and 5.2% of net sales
  • Capital expenditures in the range of $80-100 million, supporting the expansion of facilities in Poland, the launch of new products and the addition of equipment with advanced technologies and capabilities

Overview of the fourth quarter of fiscal 2022

  • Cash flow from operating activities of $1.5 million in the fourth quarter of fiscal 2022
  • Cash conversion days (“CCD”) for the quarter ended June 30, 2022 was 91 days, compared to 64 days in the fourth quarter of fiscal 2021, due to an increase in inventory; CCD is calculated as the sum of Open Sales Days plus Contract Asset Days plus Available Production Days minus Accounts Payable Days
  • Capital investments were $25 million in the quarter
  • $4.2 million returned to shareholders during the quarter in the form of common stock repurchases
  • Cash and cash equivalents of $49.9 million and outstanding borrowings on credit facilities of $180.6 million as of June 30, 2022, of which $145.0 million classified as long-term

Overview of the 2022 financial year:

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

Jana T. Croom, Chief Financial Officer, said, “Fiscal 2022 was a strong year for our business with record revenue results and a strong new business funnel growing our backlog. We executed a capital deployment strategy that included investing in future growth with expansions at multiple facilities, returning cash to equity owners through share buybacks, and supporting our clients with the incorporation of strategic inventory to mitigate parts shortages, although the increases had a negative impact on certain financial metrics, including cash flow, CCD and ROIC. We fully expect improvement in these areas as conditions normalize in the global supply chain.

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