Kimball Electronics, Inc. (KE): history, ownership, mission, how it works & makes money

A Brief History of Kimball Electronics

Kimball Electronics, Inc. is a global electronics manufacturing services (EMS) provider, which has undergone significant changes and developments leading up to 2024. The company specializes in producing durable electronics and offering engineering and supply chain support across various sectors, including automotive, medical, and industrial markets.

Financial Performance Overview

As of September 30, 2024, Kimball Electronics reported net sales of $374.3 million, a decrease of 15% from $438.1 million in the same period of 2023. The company's gross profit also saw a decline to $23.6 million, representing 6.3% of net sales, down from $35.5 million or 8.1% in the prior year.

Operational Changes and Restructuring

In response to reduced market demand, Kimball Electronics initiated restructuring efforts in 2024, incurring pre-tax restructuring expenses of $2.3 million in the first quarter. Cumulatively, the restructuring expenses since the beginning of fiscal year 2024 reached approximately $4.7 million. The company anticipates further restructuring charges between $2.0 million and $3.0 million as it continues to align its workforce and operational strategies with current market conditions.

Divestiture of GES

On July 31, 2024, Kimball Electronics completed the divestiture of its subsidiary, GES, for cash proceeds of $18.5 million, recognizing a pre-tax gain of $1.3 million from this transaction.

Market Performance by Segment

Sales performance varied across different market verticals in the first quarter of fiscal year 2025:

Liquidity and Financial Position

As of September 30, 2024, Kimball Electronics reported working capital of $439.0 million, down from $471.7 million at June 30, 2024. The company maintained a current ratio of 2.3 and a debt-to-equity ratio of 0.4. Cash and cash equivalents, including unused credit facilities, totaled $263.4 million, an increase from $220.1 million in the previous quarter.

Cash Flow Analysis

The following table summarizes the major cash flow categories for the three months ended September 30, 2024:

Overall, Kimball Electronics has navigated through a challenging market environment, focusing on restructuring and operational efficiency while managing its financial position strategically.

A Who Owns Kimball Electronics, Inc. (KE)

Ownership Structure

As of September 30, 2024, Kimball Electronics, Inc. (KE) has a total of 29,430,000 shares issued with 24,679,000 shares outstanding. The company maintains a treasury stock of 4,751,000 shares.

Shareholders

The distribution of ownership among major shareholders as of late 2024 includes institutional investors, individual shareholders, and company insiders. The following table summarizes the ownership percentages of significant shareholders:

Recent Stock Performance

Kimball Electronics has experienced fluctuations in stock performance. As of September 30, 2024, the average stock price was $18.01. The company repurchased approximately $2.9 million of its common stock during the three months ended September 30, 2024.

Financial Performance Indicators

For the three months ending September 30, 2024, Kimball Electronics reported net sales of $374.3 million, down from $438.1 million in the same period the prior year, reflecting a 15% decrease. The company reported a net income of $3.2 million, significantly down from $10.8 million in the previous year.

Market Capitalization

The market capitalization of Kimball Electronics as of the end of September 2024 was approximately $445 million. The company's stock is traded on the NASDAQ under the ticker symbol "KE".

Debt and Equity Position

At the end of September 2024, Kimball Electronics reported total liabilities of $601.3 million and total shareholders' equity of $547.8 million. The debt-to-equity ratio was 0.4, indicating a relatively low level of debt compared to equity.

Recent Developments

In July 2024, Kimball Electronics completed the divestiture of its GES unit, resulting in cash proceeds of $18.5 million. This divestiture is part of a broader strategy to streamline operations and focus on core competencies, particularly in electronics manufacturing services for the automotive, medical, and industrial sectors.

Conclusion

The ownership and financial position of Kimball Electronics, Inc. illustrate a company navigating a challenging market environment while maintaining a solid equity base and commitment to shareholder value through stock repurchases and strategic divestitures.

Kimball Electronics, Inc. (KE) Mission Statement

Mission Statement Overview

The mission of Kimball Electronics, Inc. is to provide innovative electronic manufacturing services while delivering the highest quality and reliability to their customers. The company aims to support its clients in the automotive, medical, and industrial markets by leveraging advanced technology and skilled personnel.

Core Values

• Quality: Commitment to excellence in manufacturing.
• Innovation: Continuous improvement and embracing new technologies.
• Customer Satisfaction: Prioritizing customer needs and building strong relationships.
• Integrity: Conducting business ethically and responsibly.
• Teamwork: Fostering a collaborative environment among employees.

Financial Performance Snapshot

As of September 30, 2024, Kimball Electronics reported the following financial highlights:

Market Segmentation

Kimball Electronics serves three primary markets, reflecting their commitment to diverse manufacturing capabilities:

Restructuring and Strategic Focus

In response to market conditions, Kimball Electronics has engaged in restructuring efforts, incurring approximately $2.3 million in pre-tax restructuring expenses for employee-related costs during Q1 FY 2025. The cumulative restructuring expenses since the start of the fiscal year reached $4.7 million, with expectations of additional charges between $2.0 million and $3.0 million.

Liquidity and Capital Resources

As of September 30, 2024, Kimball Electronics reported:

Recent Developments

On July 31, 2024, Kimball Electronics successfully completed the sale of its GES division, yielding cash proceeds of $18.5 million and a pre-tax gain of $1.3 million.

Conclusion of Mission Statement Insights

Kimball Electronics remains focused on its mission to innovate and provide quality service while adapting to market challenges through strategic restructuring and maintaining a solid financial position.

How Kimball Electronics, Inc. (KE) Works

Business Overview

Kimball Electronics, Inc. (KE) operates as a global manufacturer providing electronics manufacturing services (EMS) primarily in the automotive, medical, and industrial sectors. The company specializes in producing durable electronics and contract manufacturing services for both electronic and non-electronic components.

Financial Performance

For the three months ended September 30, 2024, Kimball Electronics reported net sales of $374.3 million, a decrease of 15% compared to $438.1 million in the same period of 2023. The decline in sales can be attributed to decreased demand in key markets, particularly in automotive and industrial sectors.

Market Performance

Sales by market vertical for the three months ended September 30, 2024, included:

Cash Flow Analysis

For the first quarter of fiscal year 2025, the major categories of cash flows were as follows:

Balance Sheet Highlights

As of September 30, 2024, Kimball Electronics reported the following balance sheet metrics:

Operational Insights

During the first quarter of fiscal year 2025, Kimball Electronics undertook restructuring efforts, incurring pre-tax restructuring expenses of $2.3 million. The cumulative amount incurred since the inception of these efforts was $4.7 million, with expectations of additional pre-tax restructuring charges between $2.0 million and $3.0 million.

Stock Repurchase Program

Kimball Electronics has a Board-authorized stock repurchase plan allowing the repurchase of up to $100 million of common stock. During the three months ended September 30, 2024, the company repurchased $2.9 million of shares at an average price of $18.01 per share.

Future Outlook

Kimball Electronics anticipates continuing to align its operations with market demand, focusing on maintaining operational efficiency and managing costs amid fluctuating demand across its key market sectors.

How Kimball Electronics, Inc. (KE) Makes Money

Revenue Streams

Kimball Electronics, Inc. generates revenue primarily through manufacturing services for electronic assemblies and components across various sectors, including automotive, medical, and industrial markets. As of September 30, 2024, the total net sales amounted to $374.3 million, a decrease of 15% from $438.1 million in the same period of 2023.

Cost Structure

The cost of sales for the first quarter of fiscal year 2025 was $350.7 million, leading to a gross profit of $23.6 million. This represents a gross margin of 6.3%, down from 8.1% in the prior year. The decline in gross profit is attributed to lower sales volumes and lost absorption due to decreased production levels.

Operating Income

Operating income for the three months ended September 30, 2024, was $9.1 million, a decrease of 53% from $19.5 million in the previous year. Selling and administrative expenses were $13.5 million, which is a 16% reduction from $16.0 million in Q1 2024.

Net Income and Earnings Per Share

Net income for the first quarter of fiscal year 2025 was $3.2 million, a significant drop of 71% compared to $10.8 million in the same quarter of 2023. The diluted earnings per share fell to $0.12 from $0.43, reflecting the overall decline in profitability.

Cash Flow Analysis

Net cash provided by operating activities for the three months ended September 30, 2024, was $45.5 million, compared to $12.8 million in the same period in 2023. Changes in operating assets and liabilities contributed significantly to cash flow, particularly a decrease in accounts receivable by $20.1 million.

Market Demand and Challenges

The company has faced reduced customer demand, particularly in the automotive and industrial sectors, leading to significant decreases in sales. Open orders were down 35% year-over-year, totaling $594 million compared to $907 million in 2023. This decline is attributed to cancellations and demand reductions across key customer segments.

Strategic Divestitures and Restructuring

On July 31, 2024, Kimball Electronics completed the sale of its GES division for $18.5 million, recognizing a pre-tax gain of $1.3 million. In response to market conditions, the company has engaged in restructuring efforts, incurring $2.3 million in expenses to align its cost structure with reduced demand.

Financial Position

As of September 30, 2024, Kimball Electronics reported total assets of $1.149 billion and total liabilities of $601 million. The company had working capital of $439 million, with a current ratio of 2.3 and a debt-to-equity ratio of 0.4.

Updated on 16 Nov 2024

Resources:

1. Kimball Electronics, Inc. (KE) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Kimball Electronics, Inc. (KE)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Kimball Electronics, Inc. (KE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.