Kimball Electronics (KE) investor relations material

Executive summary

• Q3 2026 net sales were $352.9 million, down 6% year-over-year but up 3.4% sequentially, led by strong medical vertical growth and solid margins.

• Adjusted operating margin for Q3 was 4.2%, with net income at $5.7 million and adjusted net income at $8.0 million; diluted EPS was $0.23, adjusted EPS $0.33.

• Cash from operations was $14.9 million, marking the ninth consecutive quarter of positive cash flow; cash and equivalents at quarter-end were $82.5 million.

• Affirmed fiscal 2026 guidance, expecting results at the high end of the adjusted operating income margin range and continued focus on medical and strategic investments.

• Restructuring efforts, including the Tampa facility closure, are largely complete, with cumulative costs of $10.7 million since FY24.

Financial highlights

• Q3 net sales: $352.9 million (down 6% YoY, up 3.4% sequentially); medical sales up 10% sequentially.

• Adjusted gross margin was 7.9%, up 70 basis points year-over-year; gross profit for Q3 was $27.8 million.

• Adjusted operating income was $14.8 million (4.2% of sales), nearly flat year-over-year.

• Adjusted net income was $8.0 million ($0.33 per diluted share), up from $6.8 million ($0.27) last year.

• Inventory reduced to $273.3 million, down $23.3 million year-over-year.

Outlook and guidance

• Fiscal 2026 revenue guidance affirmed at $1.4–$1.46 billion, with Q4 sales expected at $370–$380 million.

• Adjusted operating income margin expected at the high end of 4.2%–4.5% for the year; Q4 margin guidance is 4.4%–4.6%.

• Capital expenditures projected at $50–$60 million for FY26.

• Gross margin expected to remain under pressure in FY 2027 due to ramp-up costs at the new Indianapolis facility, with improvement anticipated as volumes increase.

• Additional restructuring costs of $1.5M–$3.0M are anticipated through FY27.