Kimball Electronics (KE) investor relations material

Executive summary

• Q2 sales were $341.3 million, down 5% year-over-year, with strong 15% growth in the medical vertical offset by declines in automotive (down 13%) and industrial segments.

• Margins improved versus last year, with gross margin rising to 8.2% from 6.6%, and cash from operations was positive for the eighth consecutive quarter.

• The company is rebranding as Kimball Solutions and opened a new medical manufacturing facility in Indianapolis to support its expanded medical strategy.

• Net income for the quarter was $3.6 million, with adjusted net income at $6.9 million and adjusted diluted EPS of $0.28.

• Restructuring efforts, including the Tampa facility closure, are largely complete, with cumulative costs of $10 million since FY2024.

Financial highlights

• Net sales for Q2 were $341.3 million, a 5% decrease year-over-year; foreign exchange had a 2% favorable impact.

• Gross margin improved to 8.2% (up 160 bps year-over-year), driven by favorable mix, facility closure, FX, and restructuring.

• Adjusted operating income was $15.3 million (4.5% of sales), up from $13.3 million (3.7%) last year.

• Adjusted net income was $6.9 million ($0.28/share), compared to $7.4 million ($0.29/share) last year.

• Cash and equivalents at quarter-end were $77.9 million; operating cash flow was $6.9 million.

Outlook and guidance

• Fiscal 2026 net sales guidance raised to $1.4–$1.46 billion (previously $1.35–$1.45 billion), driven by medical and ramping automotive programs in Europe.

• Adjusted operating income now expected at 4.2%–4.5% of net sales, up from prior 4.0%–4.25%.

• Capital expenditures guidance unchanged at $50–$60 million for the year.

• Management expects to maintain sufficient liquidity for at least the next 12 months, with $363 million in available liquidity.

• Effective tax rate for the year expected in the high 20s to low 30s.