Attached files
| file | filename |
|---|---|
| EX-99.1 - KIMBALL ELECTRONICS, INC. EXHIBIT 99.1 - Kimball Electronics, Inc. | a8kexhibit99109302017q110q.htm |
| 8-K - KIMBALL ELECTRONICS, INC. FORM 8-K - Kimball Electronics, Inc. | keform8-kearningsrelease09.htm |
Lasting relationships. Global success.Lasting relationships. Global success.
Financial Results
First Quarter Fiscal Year 2018
Quarter Ended September 30, 2017
Supplementary Information to November 2,
2017 Earnings Conference Call
Exhibit 99.2
Lasting relationships. Global success.Lasting relationships. Global success.
Safe Harbor Statement
Certain statements contained within this supplementary information and any statements made during our earnings
conference call today may be considered forward-looking under the Private Securities Litigation Reform Act of 1995
and are subject to risks and uncertainties including, but not limited to, successful integration of acquisitions and new
operations, global economic conditions, geopolitical environment, significant volume reductions from key contract
customers, loss of key customers or suppliers, financial stability of key customers and suppliers, availability or cost of
raw materials, and increased competitive pricing pressures reflecting excess industry capacities. Additional cautionary
statements regarding other risk factors that could have an effect on the future performance of Kimball Electronics, Inc.
(the “Company”) are contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017,
our earnings release, and other filings with the Securities and Exchange Commission (the “SEC”).
This supplementary information contains non-GAAP financial measures. A non-GAAP financial measure is a numerical
measure of a company’s financial performance that excludes or includes amounts so as to be different than the most
directly comparable measure calculated and presented in accordance with Generally Accepted Accounting Principles
(GAAP) in the United States in the statement of income, statement of comprehensive income, balance sheet, statement
of cash flows, or statement of equity of the company. The non-GAAP financial measures contained herein include
Adjusted Operating Income, Adjusted Net Income, Adjusted EBITDA, and Return on Invested Capital (ROIC), which
have been adjusted for spin-off expenses, proceeds from a lawsuit settlement and a bargain purchase gain.
Management believes it is useful for investors to understand how its core operations performed without the effects of
incremental costs related to the spin-off, the lawsuit proceeds and the bargain purchase gain. Excluding these
amounts allows investors to meaningfully trend, analyze, and benchmark the performance of the Company’s core
operations. Many of the Company’s internal performance measures that management uses to make certain operating
decisions use these and other non-GAAP measures to enable meaningful trending of core operating metrics.
2
Lasting relationships. Global success.Lasting relationships. Global success.
Net Sales
(Unaudited)
$260
$250
$240
$230
$220
$210
$200
$190
$180
In
M
illi
on
s
Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18
$207
$214
$220
$226
$230
$233
$241
$253
+12%
from Q1'17
3
Lasting relationships. Global success.Lasting relationships. Global success.
Net Sales Mix by Vertical Market
(Unaudited)
Automotive Medical Industrial Public Safety Other
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
%
of
Sa
le
s
Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18
40% 40% 39% 41% 42% 40% 40% 40%
29% 31% 30% 28% 28% 26% 28% 30%
20%
21% 22% 23% 21%
23% 22%
22%
8%
7% 7% 6% 7% 9% 8% 7%
3% 1% 2% 2% 2% 2% 2% 1%
4
Lasting relationships. Global success.Lasting relationships. Global success.
Gross Margin %
(Unaudited)
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
%
of
Sa
le
s
Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18
7.8% 7.6% 7.7%
8.1%
8.9%
8.0%
7.5% 7.7%
5
Lasting relationships. Global success.Lasting relationships. Global success.
Selling & Administrative Expense (%)
(Unaudited)
5.0%
4.5%
4.0%
3.5%
3.0%
%
of
Sa
le
s
Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18
4.5%
4.3%
3.7%
4.2%
3.6%
3.9%
4.0%
3.9%
6
Lasting relationships. Global success.Lasting relationships. Global success.
Adjusted Operating Income
(Excludes lawsuit settlement proceeds)
(Unaudited)
Adj Op Income % of Net Sales
$14.0
$12.0
$10.0
$8.0
$6.0
$4.0
$2.0
$0.0
In
M
illi
on
s
6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
%
of
Sa
le
s
Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18
$6.9 $7.1
$8.8 $8.8
$12.2
$9.5
$8.5
$9.6
3.3% 3.3%
4.0% 3.9%
5.3%
4.1%
3.5%
3.8%
Note: Adjusted Operating Income is a Non-GAAP measure – refer to Reconciliation of Non-GAAP Results
on the final slide of this supplementary information 7
Lasting relationships. Global success.Lasting relationships. Global success.
Adjusted Net Income
(Excludes lawsuit settlement proceeds
and bargain purchase gain)
(Unaudited)
$10.0
$9.0
$8.0
$7.0
$6.0
$5.0
$4.0
$3.0
$2.0
$1.0
$0.0
In
M
illi
on
s
Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18
$4.6
$7.5
$5.8
$6.7
$7.8
$8.1 $8.1
$8.5
Notes: Q3'16 includes a $1.8 million discrete foreign tax benefit related to the capitalization of our Romania subsidiary;
Adjusted Net Income is a Non-GAAP measure - refer to Reconciliation of Non-GAAP Results on the final slide of this
supplementary information
8
Lasting relationships. Global success.Lasting relationships. Global success.
Adjusted EBITDA
(Excludes lawsuit settlement proceeds
and bargain purchase gain)
(Unaudited)
Adjusted EBITDA Adjusted EBITDA % of Sales
$18.0
$16.0
$14.0
$12.0
$10.0
$8.0
$6.0
$4.0
$2.0
$0.0
In
M
illi
on
s
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
%
of
Sa
le
s
Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18
$11.2
$11.9
$13.6
$15.9
$17.0
$16.0 $16.1
$17.3
5.4% 5.5%
6.2%
7.0%
7.4%
6.9% 6.7% 6.8%
Note: Adjusted EBITDA is a Non-GAAP measure - refer to Reconciliation of Non-GAAP Results on the final slide
of this supplementary information
9
Lasting relationships. Global success.Lasting relationships. Global success.
Return on Invested Capital
(Excludes spin-off costs and lawsuit settlement proceeds)
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
R
O
IC
%
Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18
7.7%
8.7% 9.0%
9.6%
10.7% 10.7% 10.4%
9.0%
Notes: We define ROIC as after tax annualized adjusted operating income divided by average invested capital;
ROIC is a Non-GAAP measure - refer to Reconciliation of Non-GAAP Results on the final slide of this
supplementary information
(Unaudited)
10
Lasting relationships. Global success.Lasting relationships. Global success.
Operating Cash Flow
(Unaudited)
$20.0
$15.0
$10.0
$5.0
$0.0
-$5.0
In
M
illi
on
s
Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18
$16.8
$11.7
$8.8
$14.0
$12.1
$8.7
$12.0
($0.2)
11
Lasting relationships. Global success.Lasting relationships. Global success.
Capital Expenditures and
Depreciation & Amortization
(Unaudited)
Cap Ex Depr & Amort
$15.0
$13.0
$11.0
$9.0
$7.0
$5.0
$3.0
In
M
illi
on
s
Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18
$8.2
$8.6
$6.5
$10.3
$9.4
$6.3
$8.3
$6.1
$4.9 $4.6
$5.5 $5.7 $5.7
$6.1 $6.4 $6.4
Note: Capital Expenditures include purchases of capitalized software.
12
Lasting relationships. Global success.Lasting relationships. Global success.
Reconciliation of Non-GAAP Results
(Unaudited) Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18
Operating Income, as Reported $ 6,933 $ 7,078 $ 8,790 $ 12,822 $ 12,241 $ 9,539 $ 8,455 $ 9,590
Less: Lawsuit Proceeds — — — 4,005 — — — —
Adjusted Operating Income $ 6,933 $ 7,078 $ 8,790 $ 8,817 $ 12,241 $ 9,539 $ 8,455 $ 9,590
Net Income, as reported $ 4,564 $ 7,477 $ 5,771 $ 10,122 $ 7,812 $ 8,117 $ 8,128 $ 8,480
Less: Lawsuit Proceeds — — — 2,499 — — — —
Less: Bargain Purchase Gain — — — 925 — — — —
Adjusted Net Income $ 4,564 $ 7,477 $ 5,771 $ 6,698 $ 7,812 $ 8,117 $ 8,128 $ 8,480
Adjusted Net Income $ 4,564 $ 7,477 $ 5,771 $ 6,698 $ 7,812 $ 8,117 $ 8,128 $ 8,480
Add(Less) Interest, net (8) 1 19 16 46 41 104 98
Add Depreciation & Amortization 4,894 4,557 5,533 5,713 5,716 6,072 6,403 6,369
Add(Less) Taxes 1,781 (166) 2,294 3,463 3,415 1,754 1,444 2,355
Adjusted EBITDA $ 11,231 $ 11,869 $ 13,617 $ 15,890 $ 16,989 $ 15,984 $ 16,079 $ 17,302
Operating Income, As Reported (YTD) $ 13,854 $ 20,932 $ 29,722 $ 12,822 $ 25,063 $ 34,602 $ 43,057 $ 9,590
Add: Spin-off Expenses (YTD) $ 137 $ 137 $ 137 $ — $ — $ — $ — $ —
Less: Lawsuit Proceeds (YTD) $ — $ — $ — $ 4,005 $ 4,005 $ 4,005 $ 4,005 $ —
Adjusted Operating Income (YTD) $ 13,991 $ 21,069 $ 29,859 $ 8,817 $ 21,058 $ 30,597 $ 39,052 $ 9,590
Annualized Adjusted Operating Income $ 27,982 $ 28,092 $ 35,268 $ 42,116 $ 40,796 $ 38,360
Tax Rate 29.2% 19.5% 20.4% 22.7% 27.0% 24.3% 21.8% 25.7%
Tax Effect $ 8,171 $ 5,478 $ 6,091 $ 8,006 $ 11,371 $ 9,913 $ 8,513 $ 9,859
After Tax Adjusted Operating Income (YTD) $ 19,811 $ 22,614 $ 23,768 $ 27,262 $ 30,745 $ 30,883 $ 30,539 $ 28,501
Average Invested Capital * $ 256,785 $ 259,557 $ 263,371 $ 283,490 $ 286,347 $ 289,966 $ 293,516 $ 316,187
ROIC 7.7% 8.7% 9.0% 9.6% 10.7% 10.7% 10.4% 9.0%
13* Average Invested Capital is computed using the average quarterly Share Owners equity plus current and non-current debt less cash and cash equivalents.