Kimball Electronics Inc (KE) Q1 2025 Earnings Call Highlights: Navigating Challenges with ...

In This Article:

  • Net Sales: $374 million, a 15% decrease year over year.

  • Automotive Net Sales: $188 million, down 11% compared to the first quarter last year.

  • Medical Net Sales: $90 million, a 12% decrease compared to the same period last year.

  • Industrial Net Sales: $96 million, down 22% year over year.

  • Gross Margin Rate: 6.3%, a 180-basis point decline compared to the first quarter of fiscal 2024.

  • Adjusted Operating Income: $12.6 million or 3.4% of net sales.

  • Adjusted Net Income: $5.5 million or $0.22 per diluted share.

  • Cash and Cash Equivalents: $76.6 million as of September 30, 2024.

  • Cash Flow from Operating Activities: $45.5 million.

  • Inventory Reduction: $147 million or 30% reduction compared to Q1 last year.

  • Borrowings on Credit Facility: $245.9 million, a $48.9 million reduction from last quarter.

  • Fiscal Year 2025 Guidance: Net sales expected to be in the range of $1.44 billion to $1.54 billion.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Kimball Electronics Inc (NASDAQ:KE) has strategically restructured by divesting non-core businesses and focusing on key growth areas within the medical vertical.

  • The company has sharpened its strategic focus across its three vertical markets, targeting attractive new market spaces such as automotive domain controllers and energy storage solutions.

  • Kimball Electronics Inc (NASDAQ:KE) has been proactive in adjusting resources and costs to align with ongoing market demand, which is expected to benefit the company as demand stabilizes.

  • The company has successfully reduced inventory levels by over $150 million, generating significant positive cash flow and reducing debt to a two-year low.

  • Kimball Electronics Inc (NASDAQ:KE) announced the closure of its Tampa manufacturing facility to streamline operations and improve efficiency, with plans to transfer production to other facilities, enhancing competitiveness.

Negative Points

  • Net sales for the first quarter decreased by 15% year over year, with declines across all three verticals: automotive, medical, and industrial.

  • The automotive segment experienced an 11% decline in net sales due to volume softening and overstocking, particularly in Europe and North America.

  • The medical segment saw a 12% decrease in net sales, heavily impacted by volume declines in Asia due to excess inventory.

  • The industrial segment reported a 22% decline in net sales, with significant decreases in North America and Europe due to weak demand for certain products.

  • Gross margin rate declined by 180 basis points compared to the previous year, primarily due to lower absorption from declining sales.

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