Kimball Electronics (KE) Q2 2025 earnings summary

Executive summary

• Q2 FY25 results met expectations amid ongoing customer demand declines, with positive operating cash flow for the fourth consecutive quarter and significant reductions in inventory and debt.

• Strategic repositioning includes divestiture of non-core AT&M and GES assets, Tampa plant closure, and increased focus on medical CMO and high-level assemblies.

• Full-year guidance revised downward as stabilization and growth recovery are expected to take longer.

• Net income for Q2 FY25 was $3.4 million, down 59% year-over-year; diluted EPS was $0.14, down from $0.33.

• Open orders declined 33% year-over-year due to program cancellations and reduced customer demand.

Financial highlights

• Q2 FY25 net sales were $357.4 million, down 15% year-over-year (13% excluding AT&M); gross margin was 6.6%, a 160 basis point decline year-over-year.

• Adjusted operating income was $13.3 million (3.7% of sales), down from $19.1 million (4.5%) last year; operating income was $8.2 million (2.3% margin).

• Adjusted net income was $7.4 million ($0.29 per diluted share), compared to $9.8 million ($0.39) last year; reported net income was $3.4 million ($0.14 per share).

• Cash flow from operations was $29.5 million; cash and equivalents at $53.9 million.

• Inventory reduced to $306.2 million, down $149 million year-over-year and $29 million sequentially.

Outlook and guidance

• FY25 net sales expected at $1.4–$1.44 billion, down from prior $1.44–$1.54 billion guidance.

• Adjusted operating income margin guidance lowered to 3.4%–3.6% (prior 4%–4.5%).

• Capital expenditures guidance unchanged at $40–$50 million; Tampa facility exit costs estimated at $6.5–$8.5 million, with sale proceeds expected to exceed costs.

• Tax rate expected in the mid-20% range for the full year.

• Net sales expected to continue lagging prior year through calendar 2025 due to program loss, GES divestiture, and medical customer recall impacts.