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February 5, 2025 | BUSINESS WIREEstimated reading time: 2 minutes
Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the second quarter ended December 31, 2024.
Second Quarter Fiscal 2025 Highlights
- Net sales totaled $357.4 million
- Operating income of $8.2 million, or 2.3% of net sales, adjusted operating income of 3.7%
- Inventory ended the quarter at $306 million, a reduction of $29 million from Q1, and down $182 million, or 37%, from peak levels
- Cash generated by operating activities of $29.5 million, the fourth consecutive quarter of positive cash flow
- Borrowings on credit facilities of $205 million, a $41 million decrease from the first quarter, and down $90 million, or 30%, from the beginning of the fiscal year
- Enhanced the capital structure by amending the credit facility with the addition of a 5-year, $100 million Term Loan A, which provides additional liquidity to grow the business
Commenting on today’s announcement, Richard D. Phillips, Chief Executive Officer, stated, “The results for the second quarter were in line with expectations as we continue to navigate a sustained period of declining customer demand, while focusing on what is controllable. For the fourth consecutive quarter, cash flow generated from operating activities was positive, inventory levels were reduced, and debt was paid down, with borrowings nearly 40% lower than a year ago. Our improved balance sheet provides ample liquidity to weather our current challenges, along with the necessary dry powder to opportunistically and meaningfully invest in growing the business.”
Mr. Phillips continued, “The Company is being strategically repositioned for a return to growth with a restructuring plan that includes the divestiture of the non-core assets from the AT&M business, improved facility utilization with the planned closing of our plant in Tampa, and increased focus on the medical CMO. Our efforts in all three vertical markets have been sharpened to target attractive new spaces that align with our capabilities. While we remain optimistic for the future, we acknowledge that the necessary changes won’t happen overnight. As a result, we have revised our expectations for the full fiscal year as we anticipate more time will be needed to stabilize the business and return to our historical growth pattern.”
The Company ended the second quarter of fiscal 2025 with cash and cash equivalents of $53.9 million and borrowing capacity available of $226.4 million. Capital expenditures were $6.5 million, and the Company invested $3.0 million to repurchase 160,000 shares of common stock.
Company Guidance for Fiscal Year 2025:
- Net sales in the range of $1.40 - $1.44 billion, compared to the previous guidance of $1.44 - $1.54 billion
- Adjusted operating income of 3.4% - 3.6% of net sales, compared to the previous guidance of 4.0% - 4.5% of net sales(a)
- The estimate for capital expenditures remains unchanged at $40 - $50 million
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