KE - Earnings call transcript Q3 2017 | Kimball Electronics, Inc.

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Operator

Good morning, ladies and gentlemen. My name is Saeed, and I'll be your conference call facilitator today. At this time, I would like to welcome everyone to the Kimball Electronics First Quarter Fiscal 2018 Financial Results Conference Call. All lines have been placed on a listen-only-mode to prevent any background noise. After the Kimball's speakers' opening remarks, there will be a question-and-answer period, where Kimball will respond to the questions from analysts. November statements will Private as Reform of call, may recorded Securities Today's Act forward-looking contain defined XXXX. Instructions] X, be XXXX, and Litigation [Operator under the can the Form on for today's the XX, of influence release. annual June XX-K may ended and that in Kimball's factors forward-looking Risk statements XXXX, be year seen report outcome in The panel for today's call is Mr. of Board and Officer; and Mr. Executive Don Chief the Charron, Chairman Officer Financial Mike Sergesketter, Kimball and Vice of Electronics. Chief President call would like turn to I today's over now Mr. to Charron. Don begin. may Sir, you

Don Charron

and to everyone, quarter call. Saeed, first you, Thank welcome, conference our

Our earnings results ended XXXX. release was afternoon on issued September of the yesterday quarter our first XX,

Downloads We making the if you have we Relations And a to by summary listening After financial you I webcast, a overall may you're will I'll overview. few Investor and it Mike website can turn presentation this presentation to tab begin Events quarter. posted webcast via call. the questions that the The the conference over our find answer financial found can within any Or it the then on on in tab. on have. portal. be for will the accompany remarks that, Presentations

XXXX. consecutive quarter. billion exceed this the us helped X the year previous set market to of were our year sales $X of quarter X% from end XXXX. goal set record Double-digit verticals And when stated sales up year fiscal X the Our in fiscal of a seventh our new for in the the achieve in long in quarter sales of XX% first up us for quarter and XXXX compared fiscal first pace year-over-year annual to and quarterly growth

and a the public goal years, is sustain previous X%, years growth years. X our annual newly this to approximately next CAGR, X compound the first our rate or growth few rate Over our over spawned was company, fiscal as

year. last compared margins the Our of improved fourth to quarter fiscal sequentially when

of target operating below However, we new X.X%. are income our

We new in throughput progress improvements on goal. achieve sequential, and launched ramp are up to new focused Romania, us and recently further make And our the improvement programs. help on yield on incremental

in While we have to will capital priorities goal ROIC. year fiscal of Margin good continue we us work made and expansion of XX.X% to long-term our to this efficiency progress still for achieve focus year. fiscal be do XXXX,

We have entered the activity Romania. phase ramp-up in next of

quarter sales rate XXXX operating from run our points. expect And the year more of fiscal we XXXX. quarter by the year approximately operating expect ramp-up double of point approach XXXX. of to our We fiscal fourth year Romania The fourth fiscal breakeven than XX of to XXXX was end to first impact year quarter fiscal the our on basis income the

capacity continue We in capital $X our indicated release, make in to of expenditures first to in expected expense drive year year quarter fiscal fiscal our investments expansion further million. $XX our expect the customers, for XXXX increase total in fiscal the additional forecasted XXXX. will demand the fiscal than year year several expected level Due existing capital be profits. million and we We that invested stronger expenditures we closer approximate sales growth XXXX from that Last our of in capital will depreciation XXXX. now that to of expenditures quarter to in expenditures to we

our that production focused cycles, achieves levels to expected on returns. new up ramping ensuring through capital the newly launch deployed are We forecasted getting and

under to brings And common strategy repurchase our share this of a manufacturing stock. also and shares EMS year multifaceted Which of solutions new investments consultant first, approved authorized our million the capital make revenue year October XXXX, plan, our company. business updated second, focusing efficiency, purchasing And our first us beyond plan $XX margin that board we returned our by was reviewed help to quality fiscal and looks optimize purchased expansion, quarter past growth. million and $X.X strategic since engaged to our high a our million The program. total will by shareowners which and X.X finally, develop During by to shares XXX,XXX EMS we XXXX on sales with board. our

to Now detail. discuss I'll Mike results turn it our over first quarter to in more

your will We call to open the then Mike? questions.

Mike Sergesketter

Don. Thanks,

presentations the to our Don I deck be webcast Investor comments, it in the Relations my find events During if will website listening found you the can via you're portal. in which downloads the tab be and can on slide tab. mentioned, Or within webcast, referring the

new by was a our net ago net vertical our first by Slide Comparing vertical first on increase XX% the sales ago, in year in were sales prior automotive vertical up net quarter quarter. Slide sales by the quarterly to million, market. As which our $XXX of represents digits quarter sales million our $XXX.X record of a year same mix net X, record net to X shown million. compared was sales a compared to year a to a double $XXX.X

China. increase a steady ago topping North America a in offset first and which quarter. million demand decline The $XXX was from program largely more continued year time than introductions due a in demand The in to and new in Europe,

year, introductions. compared Our last also digits medical up was vertical from to QX primarily program by new double

product both increased launches vertical and of over XX% devices new up a climate smart for demand relating And first industrial and prior demand metering from ramp-up to new of the year was Safety Our Public our result from was quarter the existing increased vertical control up programs as products. products. from

X.X%, in on same year. Slide last first the in quarter the down which was margin X.X% from gross reflected was X, Our quarter,

improve margin of quarter X.X% year sequentially gross the did fiscal fourth posted XXXX. our from in However,

The dollars, Slide in expenses, X support administrative the year was product costs in dollars part deck, and selling the current employee in class associated leveraging from which we fixing yields purchasers to volumes. current and sales No lawsuit of ago with down which other quarter general due on to was in and first to to to primarily in the costs. compares quarter. compared $X during quarter, general of related components. benefit settlement number other in million year gross of year were of prior due the overcharges resulted new impact the the was a but which Selling EMS the the over of salaries of prices compared current first and was higher points decline quarter, XX administrative related margin those year basis of the in proceeds million income income to the recorded prior Our a quarter distribution in absolute In to quarter. The prior up the of in large higher company introductions $X.X year suppliers increase were due a were related price suit of first a year action a years, to member. certain absolute funds received to the from and by recorded components higher electronic year inflated $XXX,XXX we

income ago. million, net reported operating of year or came $X.X $XX.X of in or a sales. sales to Our X.X% at net million X.X% of operating Which income compares

million, in X.X% from prior lawsuit income, core year However, the $X.X operating quarter quarter, a of or Slide million non-GAAP fiscal income $X.X shown first compared year XXXX by as of ago on excluding of was first year $XXX,XXX income if percent as was operating in adjusted operations Other the adjust the net the XXXX. income sales, to X. income year a income you the fiscal of expense

This our other net fluctuations, of in XXXX purchase be income $XXX,XXX a last rate had share quarter. Slide quarter of which earnings. was $X.XX bargain trend. were related statement. prior the the Incorporated. manufacturing in During reported gains tax to the the shares earnings by included for current in of decrease first recognized to from expense currency the current a simplify favorable excess the recognized expense foreign item our XX.X% income of offset in Net rate during result tax the Aircom year. compared was quarter first of $XXX,XXX for excess the year to year of share-based was tax first The the the of on tax requires to $X.X gain reflects quarter exchange income diluted primarily recognized a adoption which X prior to expense year to $XX.X section was first payment first quarter million as year the recognized other benefit largely and current and tax the a current the the result in result effective year benefits deduction accounting, quarter, quarter first accounting recognized discrete in of The year derivative and net during excess as performance losses, the difference This income The impact of net for compared income amount in rate standard of the of the foreign partially the million net benefit income per prospectively acquisition XX.X% fiscal income new quarter granted a period. quarter. the book a tax favorable drove

share income However, first gain. in prior earnings quarter. quarter year current first bargain compared lawsuit first in was prior for was after million non-GAAP purchase $X.X $X.XX the per adjusting the the adjusted net Diluted and the year proceeds year quarter for $X.XX to the

and income on year quarter, bargain on equivalents cash shown in of the September cash the XXXX, adjusted $XX.X per Cash prior non-GAAP earnings XX. for diluted were share Our million. slide $X.XX are gain. trends in lawsuit flow adjusted Operating the XX, purchase again

in sales flow volumes. was the quarter by cash an increase production accounts and Our growing first year during for impacted receivable current and from operations largely inventory

year. quarter of of the by the also the a activities our included prior compared current million cash million As proceeds last The first of from $XXX,XXX year to operating result, $X in quarter of operations used the settlement. provided quarter we from lawsuit in first cash $XX

ended for Our to months in the cash increased year. the same compared XXXX, X day the X prior days period XX, conversion when September

by accounts days days payable day XX declined our compared year to quarter. As prior one the of

metric, our reflects product million, new new and hand, to awards Our and trends. first equipment sales at and our year PDSOH inventory days, receivables days Capital respectively. outstanding, XX capital metric, quarter support with Slide or on depreciation XX accounts and totaled our to were manufacturing $X.X the the flat prior sales production in XX, days manufacturing quarter capacity. related increased our investment our both investments in largely

As XX, on which were Don our million, from $X.X purchased June Borrowings were of XX, September million our common during the million up at stock credit $X mentioned, facilities XXXX. we $XX XXXX, quarter.

have by facilities, Our represented short-term million and credit the balance would plus any amount at unused to growth. as well our continued like that, to our Saeed, would strong, I call with for $XX XXXX. conclude analysts. With we in to of analysts very totaled questions today's we're September positioned I the XX, and sheet cash saying up like liquidity questions do available, equivalents from queue? cash the is open

Operator

Thank sir. [Operator Instructions]. you,

Our Capital. first question AWH comes Basta from Chase from

ahead. line Your go Please is open.

Chase Basta

seemed Thanks strong shares. with been taking question. morning, pretty a the my quarter how about historically you Good guys. guys Noticed go have for and repurchasing buyback bit lumpy you little during

if curious a of thought on process this kind shed you quarter. it Just can light behind little the

Don Charron

timing, market on and business Well, of of Chase, a of alternative variety general other the depends factors. the repurchased opportunities. shares course, numbers conditions and actual investment Including price,

So the up weigh end given that purchasing during what into any those ultimately we are factors quarter.

Chase Basta

next a good quarter Well luck of and in sense. make the looks like best Okay, quarter.

Don Charron

you. Thank

Operator

Thank time. am showing no further questions at Gentlemen, this you. Instructions]. I [Operator

Don Charron

to your a us interest the today's you, next appreciate great with We everyone. you day. you, speaking thank on and Thank Brings Okay, forward have end to and our look of call. call.

Operator

this gentlemen, today's call. and Ladies conference concludes

disconnect. all have a day. may And You wonderful

Kimball Electronics (KE) 5 Nov 172017 Q3 Earnings call transcript