Kimball Electronics Misses Q3 Expectations, Revises Sales Forecast By

JASPER, Ind. – Kimball Electronics, Inc. (NASDAQ:KE) has reported its financial results for the third quarter of fiscal 2024, falling short of analyst expectations. The company posted an adjusted earnings per share (EPS) of $0.34, which was $0.06 below the analyst estimate of $0.40. Revenue for the quarter was $425.04 million, also missing the consensus estimate of $440.2 million.

The electronics manufacturing services provider faced a challenging quarter, with a reported net loss of $6.1 million, or -$0.24 per share, due to the impairment of its Automation, Test & Measurement business, which is expected to be divested. This was partially offset by the recovery of a legal settlement. Excluding these items, the adjusted net income for the quarter stood at $8.4 million.

Kimball Electronics’ CEO, Richard D. Phillips, commented on the results, highlighting the company’s proactive measures in response to the current market softness. “During this period of end market softness, we have focused on ‘controlling what we can control,’ proactively aligning our cost structure with short-term demand trends, maintaining competitiveness with stable operating margins, and focusing on working capital improvements,” said Phillips.

The company’s net sales for the quarter saw a decrease of 12% compared to the same period last year. In light of the economic headwinds, Kimball Electronics has updated its fiscal year 2024 guidance. The company now expects net sales to decline by 4% to 6%, a revision from the previously estimated decrease of 2% to 4%. Adjusted operating income guidance for fiscal year 2024 remains unchanged at 4.2% to 4.6% of net sales. Additionally, capital expenditures are now projected to be between $55 to $60 million, down from the earlier forecast of $70 to $80 million.

Despite the setbacks, Phillips remains optimistic about the company’s strategic focus and its ability to navigate through the macroeconomic challenges. “We’re taking meaningful steps to sharpen our strategic focus and further position the Company for profitable growth, and stronger performance moving forward,” he added.

Kimball Electronics ended the quarter with $65.2 million in cash and cash equivalents and outstanding borrowings on credit facilities of $319.6 million. The company also resumed share repurchases, as approved by the Board of Directors.

As the company looks ahead, it continues to make investments in long-term growth opportunities and maintains a robust funnel for new business in the next 18-24 months. The focus remains on balancing growth, customer relationships, and returning cash to shareholders through share repurchases.

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