KE - Earnings call transcript Q1 2025 | Kimball Electronics, Inc.

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Operator

Good morning, ladies and gentlemen. Welcome to Kimball Electronics First Quarter Fiscal 2025 Earnings Conference Call. My name is Maria, and I will be the facilitator for today's call. [Operator Instructions] Today's call, November 5, 2024, is being recorded. A replay of the call will be available on the Investor Relations page of the Kimball Electronics website. At this time, I would like to turn the call over to Andy Regrut, Treasurer and Investor Relations Officer. Mr. begin. may you Regrut,

Andrew Regrut

Officer. We for good With our Welcome Ric me company Officer; Chief accompany XXXX Investor To first Chief quarter and call, release quarter Phillips, our Relations to conference website. the a presentation page yesterday ended results Executive Financial Croom, of XX, Jana our September call. here and a afternoon morning, you, the press with to everyone. posted on first XXXX. our issued today's Thank today fiscal has is been

that Before that safe we from materially uncertainty forward-looking involve remind stated SEC get started, statements. actual forward-looking our I'd the and press and provisions harbor like statements results we to you our can and risk to and in making differ will subject as are be release that filings,

Our Jana and Ric results will Ric focused XXXX, taking our commentary results. press GAAP to adjusted Ric. remarks prepared in the start over amounts for complete few your Reconciliations comments, will to for and before release. This a the of non-GAAP guidance call our today review are with the now opening available will be non-GAAP fiscal turn quarter morning, on the will call questions. I'll financial

Richard Phillips

Thanks, Andy, everyone. and good morning,

the progress into the Before for we control, control the what have I'd our thus quarterly we business the we highlight continued made get to can moment future. a like and results theme position strategically to to to far take

on growing AT&M of CMO and into portfolio, business vertical. allowing greater First, EMS we company the key areas folded we our restructured the and medical the Medical divesting focus business, the by core non-core us

shift. from new customer seeing are and the We this opportunities differentiation potential

market strategic all this that vertical have spaces sharpened of focus new fit attractive target Next, and our move, current capabilities. our we and consistent in with markets to three our

and drug off-highway solutions Some combinations in domain and in energy and assemblies these Medical. device equipment examples spaces include high-level Automotive, controllers Industrial, storage of in

adjusting and position as ongoing cost demand to has to been resources our future been levels. demand our business for in well actions stable softness. on serve to set more returns the the we've cost us where proactive side, Another of will the This market very

In sheet, flow. million and inventory $XXX significant positive by levels our over balance lowering addition, up shoring we've generating been cash

do. Finally, drive streamlining last announced But we business, necessary our will help intend we more powder well in to the to which this a discuss believe Tampa footprint of efficiency the position future. this dry night, series strategic manufacturing us manufacturing of which the growing our meaningfully from with of future Collectively, for for provide very the and perspective, will the a I'll both we will moment. move a strategic core invest closure in moves facility,

of Production Mexico facility the capacity to in programs difficult we the decision strategic As our newly the customer of night we footprint majority close a with global part transferred Tampa, announced facility Jasper activities and will objective the out last structure. on ago, mentioned Tampa that will made This work in I to by while us improve expanded operating leveraging sharpen as focus our the help competitiveness streamlining company. our our be to facility. of moment in to the of existing going the

in expect XXXX. we anticipate We operations to facility year, the the in fiscal end and QX Tampa of fiscal by close the cease of will

returning the forward stronger the growth profitable difficult shutting and customers, not is a imagine, to and a an appropriate an our did outlook preferences we company U.S. decision, that objective path location down considering you we lightly. performance. for and our of feel it's can manufacturing, But As take one of

ventilators thing a vital to employees the those acquisition team Throughout pandemic, supplying Reptron since Tampa in and of process, part their there accomplishments during the Kimball. we XXXX. for to The remain future. sharing need, to in this look contributions customers, and to grateful the in their we as for doing our come. Kimball community. played more appreciate the are a committed the our our strategy We in set as and to to people, We role These right up with forward quarters have actions bright suppliers unfolds the you our been designed local

market quarter, the controlling of another Now control challenging turning from navigating operating sustained with chapter to the environment while we can end first representing weakness. what stemming QX

with Our expectations, comparisons QX year. results last considering the line from a difficult were in record-setting

to in QX, adjust nearly X-year We periods, quarter America, posted costs, debt, year, the The sales. company was our North QX pay million, both verticals capital last were million decrease declines. Starting in of continue and low. Net the excluding XX% Automotive, modest a to of million, with partially to levels working the net which by perspective, end-of-life improve flow debt down an when to production. versus occurred Europe NPIs From result quarter dynamic $XXX a and from serve $XXX in and is each XX% softening, totaled first a timing a offset compared positive XX% due the quarter total overstocking, in reducing in decrease year-over-year $XX of in of sales AT&M down Asia. cash decline The generate volume increase and management, lower demand, three market the sales XX%. we end was decrease to

Tier in electronic system the longer OEM. the we learned they announced an program, no producing are a customer, As will braking working through a for be we X with our supplier, August, setback

the to the We supporting QX. as of production of are operating activities by and transfer expect end down wind necessary, conclude and

such, to Romania and positive program the this for customer a on we're due same this to note, As ramp-up quarter the in schedule On impact ending. new a launch with in revenue braking was QX. program of there no in

vertical that the We through industry-wide in levels sales inventory return to vehicle when the in supply expect the growth elevated exist burn chain.

decline compared the to a was quarter inventory. same the last total XX% in concentrated due by decrease heavily sales With declines volume year, Medical. XX% Asia, company. quarter net $XX first is to excess of and Next in the period driven in The million, of

both Additionally, and slightly. down North America Europe were

by vertical business we're on the sole care prospects the toward medical growth XXXX higher-level our market the forward, encouraged As we for launch we and We supplier final of assemblies the assembly and finished as largest our this HLA of in working selected are devices. with customer, respiratory focus recently were look medical program. and this fiscal

attractive devices, future about auto-injectors, in expertise discussions we're manufacturing in opportunities a selected area. encouraged is as Our very our and overall current drug and an customer this differentiator market, in such

$XX net sales predominantly control down Europe, sales and occurred demand public in weak internal in in total XX% and net down climate a Asia $XX Finally, North When from meters sales smart were excluding of Europe, XX%, of million, sales. products for decrease have safety The million, systems, were With Industrial, decline year-over-year. AT&M been company XX% which America with both of periods, and commoditizing. slightly.

We expect space. I'll to to quarter call rebound turn on over from other to Jana for the and and Jana? detail return within more products, a the for growth the climate industrial on control in now outlook. coming sub-verticals opportunities insights the

Jana Croom

everyone. good and morning, you, Thank

quarter has facility full This our for the it his very gratitude in decision our year. As Ric difficult, decision close our Florida. mentioned, the not first and to for the team changed outlook and echo in was not adjusted I Tampa did to impact results

will were sales the restructuring will, additional be expense, outline quarter I first however, million. in a moment. Net for which We $XXX.X incurring

with Foreign decrease quarter had sales. sales X% exchange the gross the of the margin decline a XXXX, X.X%, absorption, in less The rate coming result XXX-basis-point on impact fiscal a first quarter. declining in was than to QX lower a from compared of

right-size first and X.X% income to administrative net in X.X% $X.X net pickup quarters. Adjusted results quarter $XX.X $XX.X X.X% quarter. for along with we of adjusted year. sales, the in to AT&M year. Adjusted lower million, The continue company, the and compared margin in was in first million reduction $XX discretionary with decrease was million, reported by QX market were last to last which see sales, a the a quarter of align from of expenses last our improvement measured operating bonus compared the XX% percentage a expense, month expenses current million, in year's spending were gross sales. efforts we As as selling we selling should X.X%, of or driven or adjusted to coming a and the QX the X million, compares administrative to of or When XX-basis-point only in $XX expense demand

with has industry on of from expense $X.X $X.X As the with of virtually first a the reminder, excluding foreign to expense from tax in million last The driven period, positive recast fiscal X.X% QX have reflect prior expense on by effective rate results interest ruling norm lower quarter been quarter a stock adopted was a we of in negative income increase last year's this in the rate with audit. this and from the the offset year compared of this expense expense favorable 'XX, flat tax comp currency metric. XX.X% period was change. Other million, translation. The to calculation by a an

to QX normalized was $X.XX in fiscal $X.XX adjusted in resume to compared XXXX per income last quarter expect forward. Adjusted tax per the in the or share share. net a first rate We of million going income mid-XXs $XX diluted year net or $X.X of diluted million,

to quarter controlling as days balance days, days of the $XX.X our work compared fiscal September operating revenue. first and challenges were to million, XXXX, was we Cash through of cash of flow, positive now XXX last by quarter were Improving $XX.X XXXX, third can year. generated sheet. Cash the sheet million. we Turning on in balance and cash XX, and our QX at days flows the conversion XXX what equivalents example in another declining consecutive the in Cash activities our quarter control. XXX focus of

reduction to $XXX.X QX improving components. Inventory managing actively which continuing quarter ended are a year. million conversion $XXX cash million, to We or the compared the at XX% on days last focus represents by

will to our shares. the Since of $XXX.X share been at requirements between of We in demand million current million, million to reducing first with progress repurchase repurchase work the Board cash million the remaining balanced expenditures were first facility October our quarter with XXXX, the portion common customers the our on are right-size in $XX.X million $XX.X outlook. Capital inventory maintenance plus growth. Borrowings and and of to totaled longer-term $X.X last continue of our have $XX.X XXX,XXX as credit purchasing by total invested we available million, returned of lowest quarter, XX, $X.X at represented level facility in end program: unused our stock; authorized and on reduction Short-term investments we quarter. In from in under shareholders has were liquidity to million September debt X our program. $XXX.X credit X.X XXXX, QX, and a our repurchase years. million cash pleased the shares a equivalents

We are confirming our XXXX. for fiscal year guidance

be to versus $X.XX expenditures restructuring anticipate billion of continue of the operating sales the X% net As revenue QX We capital income decline a line to and million. net with prior $XX our expect reminder, X.X% in with billion, range $XX as adjusted we to to improvement roughly million be in year margin but to efforts. of $X.XX we of QX, sales,

part other $X million benefits, in million closing approximately facilities As in including programs to expect incur validate well to logistical of exit total $XX $X million and other in costs, as at to employee of to costs. transfer termination our we $X the to most Tampa, significantly and million $X $X as million costs facility ancillary million

We cash predominantly expect be will expenditures. costs these

verticals. in Tampa million its the XXXX. approximately customers In sales size, fiscal Mexico comparison, has of we By revenue terms annual delivered Industrial $XXX in in for in relative million, $XX Medical and of primarily

we the supported operations levels will Tampa and are stock. Ric. low building turn process the program the our from We to new to disruption to the the facility go to transferred parallel production sales in the call transfers exceeding will back runs safety at with and customers run to ceased, with Once come expect Reynosa expect over exit to complete Tampa To Jasper. cost. I'll to be proceeds in the set-up land of here sell Tampa, qualification in with of and out have and minimize with normal the be now or

Richard Phillips

Thanks, Jana.

the to within for thoughts a representing like leverage footprint, few lines capacity Before closing. streamline can year of U.S. With structure aligns better our in share the and in The our what in and positions improve control, efficiency. we XXXX, electronics facilities company the footprint we competitiveness demand, and decision another controlling our and facility in questions, global of long-term will drive our open closure manufacturing regions. to current market our operating I'd Tampa low-cost fiscal with to our utilize the

control means greatness to that controlling what we our growth. way focusing on However, we also line also recognize cannot and cut we can that top

customer care opportunity. respiratory focus medical pursue combinations. on our of Kimball technologies, avenues making the strong example you most the open sole for a operations core in lines the now is would efforts With We capabilities our we high-level HLA assembly have and I'm continue different balance opportunities business, emerging we support. Operator, final now EMS growth, on our support quarter's and announcement to largest future our excited medical to notably your new strategic the how for see thank by that the sheet the to actively we assemblies where for supports a questions. company, where supplier drug-device where and profitably and like manufacturing and great intensified on grow. Last of

Operator

from question Our first Instructions] B. comes Mike Securities. Riley with Crawford [Operator

Michael Crawford

what on currently? the detail clarify and the talking the whether or it's book us you're the Bay the land Thank you from Can cost again, remind the this you And $X exceeds selling million all Tampa building? expect land for that you and as of proceeds to for building about just million well on facility. $XX books giving us that the

Jana Croom

Yes.

So considerably than is expect less for what on building to for. the would the books we sell it we have what

our and cost. which million, million more And fetch exit $XX price estimate $XX exceeds exit could It's for is -- costs the the around land the somewhere the that expect. we it's so for than Xx we roughly to significantly building

Michael Crawford

ramping long they've cycle there, that the then is the or still vertical they're for you if majority where could Okay. started of characterize years for Excellent. life and up us look Jana the by the to tail And programs production maybe programs Ric, within NPI are years of maybe and out in at come help are business the whether been decline. market starting maybe or

Jana Croom

me do Yes, you to? want

Richard Phillips

way interesting to it. an That's at Yes. look

Jana Croom

I out Mike. to the which No, he's portfolio trying figure appreciate, revenue, of

average bring to in span in program XX over that the the and So and particularly significant announced portfolio, then QX of one that's then see, next XX Industrial to the the three down really has Poland, Romania. got actually shortest a in coming in months going the over Automotive in life Medical the China, nice NPIs Medical, braking on we most ramping next probably going And fairly life we've of time. one business in steady that stream has programs that you're on months. over And coming are

life the stable fairly that the range. portfolio in of to remain so X-year tends to X- And

Michael Crawford

Okay. And just one more for me.

find you've know any market. at focus I don't avenues might I looks such what further -- what any potential promising off-highway studying equipment there exactly the So progress been or adjacencies where of you Is know, can on point? there new you as, this growth, tangible

Richard Phillips

Yes.

-- I this to this is space is that braking any disclosed want as right? wins, such on what haven't see we specific things, the are sharpened mean our these -- in, be we've attractive to would Mike. we as the say and But focus -- again, ramp We continue which domain to -- monitor up. to that all those I and areas obviously new isn't particularly our characterize for we is quite and time like high Those controllers, continue and where, guess, storage, off-highway and level I readiness quoting discussion investment Automotive, Medical take auto we're and steering injectors it of optimistic. equipment to would Areas spaces I believe. are energy as very in in the

long-term win point also disclose some of at attractiveness with but our those and pleased any really have spaces. So the can we activity we're specific customers, with of don't on that agreements based this we the

Operator

from comes Schmidt Street. Our with question next Jaeson Lake

Jaeson Schmidt

auto. elevated the inventory in noted You

think what out? And have about clearing you potential should the how we line? to that curious time guys Just visibility

Richard Phillips

question, around do how many as a we we closed What holding malls there see we in is Jaeson. It's great lots and cars drive have of stations.

inventory this with persisted Now of we're sort To has a what glut seen period customers obviously in they're have touch of close demand. update about demand We time. the your that all we time seeing point, our in for regularly.

it's It's this and when ahead adjust, now to adjust wouldn't I we from but we say as it's try to quarters up. see from monitor of opens and can get so now, we have X ups we X we and And that downs, to. something quarter best say

So demand to of on clear line think I but a sight it. that don't we're have we stability,

Jaeson Schmidt

And think 'XX. Okay. No, but we that's for about Obviously, on more to fiscal than should gross going it's dependent, of revenue how the fair. margin trending? remainder trajectory any help be the

Jana Croom

-- we're by something we and a the right? So where it's that's And have doing. I'm Jaeson, the and that Yes, spending that area revenue great bulk question. my restructuring geographic rightsizing of that's time,

I can the $X.X after. that of and revenue do you in back? So restructuring cost ready margin million when approach the the see. being something to demand similar can we've also comes It's facilities. in cost And that QX is, we the to terms with quarter, volumes quickly rightsizing And when space? the tell is everyone. see question, be had on that in the the dependent previous for of to in to upon workforce the that costs return start is of containment dependent out your challenge measured we disappointing X.X% So We what's been how restructuring gross what drive we demand to expect of of costs versus

QX, And year. the so would and in the more half I expect significant in measured a improvement back of improvement

Jaeson Schmidt

just for the the perspective? the Should That's really a one we me, helpful. for September revenue watermark Okay. queue. low consider jump to into I'll be and then last And back from year

Jana Croom

QX revenue QX seeing would indicate decline realize decline at just indicated. would that which and it you fly. slightly just on quarter-over-quarter, QX below as you, do QX can be so guide, I with in the look probably you gave We're if to Well, the I math line

October that would the I low probably that to likely is may me closed... so say have just watermark. And And

Operator

[Operator Instructions] Sidoti. question Soderstrom comes Our next with from Anja

Anja Soderstrom

decline to par I to quarter that by be you with on clarify, just when the the want about dollar the sequential second quarter, is amount? talk in first

Jana Croom

By revenue, yes.

So revenue improved -- margin. but gross with

Anja Soderstrom

And Yes, inventory the from any from inventory you in is I'm customer to auto. just and falloff the can there Okay. margin, operating a because yes, program? your And that the you curious then of follow-up there of on get or... right? remedy have there Do lot

Jana Croom

inventory, longest Automotive the that's and challenging. time lead of here's has why

we from supply a challenges. with dealing months You now. ordered And XX further and were months we chain ago, out much before from as were ordering XX year remember, that, now

So months placed you and coming, order you the demand from then the X and inventory is get order you've and after the demand the updated drops customers.

so And cancel? you lag deal to the the work day, will to of you That with, customers is out X-month So push most auto has What with right? can it. the inventory a it. At can the what with align rightsize with to end you challenging demand? your associated

that just managing We're And becomes though. us and going but books. timing of creep the so of year. impact faster of corresponding a the better as getting the over the of that it as it inventory it up can, sitting see we're We're issue at course your we on signals, on cost to demand effectively

Richard Phillips

Sorry, Anja. mentioned you it's here, Ric want cancellation. program follow-up, to I just the

Tier we on We down X working with the work wind are and that recovery of certainly program. through how that customer

still yes, but in that's So process.

Jana Croom

we'll recover inventory. Yes, the fully

Anja Soderstrom

to or... year back Okay. of that in helpful. half exit fall $XX cost, then more That And going the in the is was the the million

Jana Croom

We will process tow the begin immediately.

customers. all contacted And We're in process. will that the you of tell so I we've

so would that QX. of in expect through cost I to see come And some

Anja Soderstrom

that Okay. savings to you And kind quantified expect you of get what closure? from have

Jana Croom

question. this I expected

closing be will feel you the is not tell consolidated out the burden ] I the to a meaningful facility, you North you the labor, and the the consolidated. to indirect [ have would overhead administrative absolutely on It pickup can disclosed a savings. America it depreciation, enterprise. certainly We of What when figure

more like you we will give that's If be to I when report with when information. you patient would me QX, we'll --

Richard Phillips

utilization North will other transfer to as result. those are would as that receive expect, the of a you American But improve going facilities

Operator

will replay XXX-XXXX dial XXXXXXXX. then conclude access access call. (XXX) This conference XXX-XXXX A available session (XXX) replay, telephone please question-and-answer our shortly. concludes or enter be ID and To does our the the

your Thank you. You may this disconnect time. lines at

Kimball Electronics (KE) 5 Nov 242025 Q1 Earnings call transcript