Kimball Electronics Conference Call Summary Company Overview - **Company**: Kimball Electronics (NasdaqGS:KE) - **Industry**: Electronic Manufacturing Services (EMS) and Contract Manufacturing Organization (CMO) focused on medical devices, automotive, and industrial sectors - **Headquarters**: Jasper, Indiana, with global operations in Asia (Thailand, Nanjing, China), Europe (Romania, Poland), and North America [4][6] Key Financials - **Revenue**: Approximately $1.5 billion in fiscal 2025 [5] - **Medical Segment**: Represents 27% of total revenue, with expectations for significant growth [48] Strategic Focus - **Core Business**: Emphasis on complex, high-quality products with stringent regulatory requirements, particularly in the medical sector [4][12] - **Growth Strategy**: Focus on expanding the medical CMO space, leveraging cash flow from automotive and industrial sectors to reinvest in medical [7][12] - **Recent Performance**: Double-digit growth in the medical segment for the last three quarters, with expectations for continued strong growth [12][13] Market Position and Competitive Advantages - **Quality Standards**: FDA qualified with a 99.999% quality expectation, differentiating Kimball in the medical CMO space [13] - **Customer Relationships**: 75% of customers have been with Kimball for over a decade, indicating strong long-term partnerships [14] - **Flexibility and Responsiveness**: High marks for flexibility and senior management attention to customer needs [14] Product and Service Offerings - **Medical Products**: Focus on respiratory care, drug delivery systems, surgical devices, and patient monitoring equipment [25][27] - **Manufacturing Capabilities**: Transitioning to higher-level assembly, with over half of medical products now involving full assembly [27] Future Growth Opportunities - **Facility Expansion**: New facility in Indianapolis aimed at increasing capacity for medical device production, with potential for further expansion [11][16] - **Inorganic Growth**: Actively considering mergers and acquisitions to enhance capabilities and market reach, particularly in the medical CMO space [17][41] - **Market Trends**: Observing a trend towards outsourcing manufacturing in the medtech and pharmaceutical sectors, which could benefit Kimball [70][71] Customer Insights - **Major Client**: Long-term partnership with Philips, serving multiple business units and adapting to their needs amid regulatory challenges [50][55] - **Geographic Growth**: Medical business growth is split between North America, Asia, and Europe, with robust performance in Asia and Europe [57][58] Conclusion - **Investment Potential**: Kimball Electronics is positioned for significant growth in the medical sector, supported by strong customer relationships, a focus on quality, and strategic investments in new facilities and capabilities [12][14][67]

JASPER, Ind.--(BUSINESS WIRE)--Kimball Electronics, Inc. (Nasdaq: KE) today announced the Company will participate in the 7th Annual Wolfe Research Healthcare Conference, which is being held November 17-19, 2025, at the Wolfe Research offices in New York, NY. Richard D. Phillips, Chief Executive Officer, and Jana T. Croom, Chief Financial Officer, are scheduled to present on Tuesday, November 18, 2025, at 10:40 a.m. Eastern Time. A webcast of the presentation will be available on the Events &am. ...

Core Insights - Kimball Electronics (KE) and Bel Fuse (BELFB) are both stocks in the Electronics - Miscellaneous Products sector that are currently attracting investor interest [1] - Both companies hold a Zacks Rank of 1 (Strong Buy), indicating positive earnings estimate revisions and improving earnings outlooks [3][4] Valuation Metrics - KE has a forward P/E ratio of 21.65, while BELFB has a forward P/E of 22.61, suggesting KE may be more attractively priced [5] - KE's PEG ratio is 1.08, compared to BELFB's PEG ratio of 1.51, indicating KE's expected earnings growth is more favorable relative to its price [5] - KE's P/B ratio is 1.24, significantly lower than BELFB's P/B of 4.55, further supporting KE's valuation advantage [6] Value Grades - KE has earned a Value grade of A, while BELFB has received a Value grade of D, highlighting KE as the superior value option based on traditional valuation metrics [6][7]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point for fast-moving stocks, which can lead to investments with limited upside or potential downside [2] - A safer approach may involve investing in bargain stocks that have recently shown price momentum, utilizing tools like the Zacks Momentum Style Score to identify promising candidates [3] Group 2: Kimball Electronics (KE) Analysis - Kimball Electronics (KE) has shown a price increase of 1.6% over the past four weeks, indicating growing investor interest [4] - Over the past 12 weeks, KE's stock has gained 7.4%, with a beta of 1.26, suggesting it moves 26% more than the market [5] - KE has a Momentum Score of A, indicating a favorable time to invest based on momentum [6] Group 3: Earnings Estimates and Valuation - KE has received upward revisions in earnings estimates, earning a Zacks Rank 1 (Strong Buy), which is associated with strong momentum effects [7] - The stock is currently trading at a Price-to-Sales ratio of 0.48, suggesting it is undervalued as investors pay only 48 cents for each dollar of sales [7] Group 4: Additional Investment Opportunities - Besides KE, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting additional investment opportunities [8] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [9]

Investors might want to bet on Kimball Electronics (KE) , as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.Individu ...

Core Viewpoint - Kimball Electronics has demonstrated confidence in its financial outlook and strategic direction by reaffirming its guidance for fiscal year 2026 following the release of its first-quarter results [1] Financial Performance - The company reported a price-to-earnings (P/E) ratio of 28.21, indicating investor willingness to pay for earnings [3] - A price-to-sales ratio of 0.45 reflects the company's market value relative to its sales, suggesting potential for growth and profitability [3] - The enterprise value to sales ratio stands at 0.49, while the enterprise value to operating cash flow ratio is 4.99, providing insights into valuation and cash flow efficiency [4] Investment Ratings and Outlook - On November 7, 2025, Lake Street upgraded Kimball Electronics to a "Buy" rating, raising the price target from $28 to $32, indicating optimism about future performance [2][6] - The earnings yield is reported at 3.54%, offering insight into the profitability generated from investments in the stock [4] Financial Structure - Kimball Electronics maintains a debt-to-equity ratio of 0.24, suggesting a conservative financial structure with low debt compared to equity [5][6] - A current ratio of 2.21 indicates the company's strong ability to cover short-term liabilities with its short-term assets [5][6]

Financial Performance - Net sales for the first quarter of fiscal year 2026 decreased by 2% to $365.6 million compared to $374.3 million in the same period last year[109] - Gross profit increased by 22% to $28.8 million, with a gross profit margin of 7.9% compared to 6.3% in the prior year[109] - Automotive sales decreased by 10% to $164.4 million, while medical sales increased by 13% to $101.6 million[110] - The company recorded a net income of $10.1 million, a significant increase of 220% compared to $3.2 million in the previous year[109] Liquidity and Financial Ratios - The debt-to-equity ratio improved to 0.2 as of September 30, 2025, down from 0.3 at June 30, 2025[105] - The current ratio was stable at 2.2 as of September 30, 2025, indicating strong liquidity[119] - As of September 30, 2025, the company had $75.7 million in cash and $294.3 million in unused borrowings under credit facilities, indicating a strong liquidity position[135] Cash Flow and Investments - Net cash provided by operating activities for the first three months of fiscal year 2026 was $8.1 million, a decrease of 82.2% compared to $45.5 million in the same period of the prior year[123] - Net cash used by investing activities was $6.2 million in the first three months of fiscal year 2026, primarily due to capital investments of $10.6 million for a new medical facility and equipment replacement[127] - Net cash used for financing activities was $14.0 million in the first three months of fiscal year 2026, significantly lower than $53.0 million in the same period of the prior year[129] - Capital expenditure commitments were approximately $29.0 million as of September 30, 2025, primarily for leasehold improvements and new program wins[136] Operational Efficiency - Open orders remained flat at $593 million compared to $594 million in the previous year[109] - Days Sales Outstanding improved to 54 days in the three months ended September 30, 2025, down from 66 days in the same period of the prior year[121] - The restructuring expense for the first quarter was $1.4 million, down from $2.3 million in the same quarter last year[114] Strategic Initiatives - The company plans to continue investments to strengthen capabilities, including a new facility lease in Indianapolis and capacity expansions[103] - The company expects to sell the Tampa facility, with proceeds anticipated to exceed the total expected restructuring costs and carrying value of the assets held for sale[137] - The company has repurchased $105.2 million of common stock under its Repurchase Plan through September 30, 2025, with a total authorization of up to $120 million[140] Foreign Currency Impact - The company experienced a favorable 1% impact from foreign currency fluctuations on net sales compared to the previous year[111] Non-Cash Adjustments - Net income adjusted for non-cash items generated cash of $18.0 million in the first three months of fiscal year 2026, while changes in operating assets and liabilities used $9.9 million of cash[125] Accounts Receivable - The company sold $71.2 million of accounts receivable without recourse in the three months ended September 30, 2025, compared to $87.3 million in the same period of the prior year[133]

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Financial Data and Key Metrics Changes - Net sales for Q1 fiscal 2026 were $366 million, a 2% decline compared to Q1 fiscal 2025 [5][10] - Gross margin rate improved to 7.9%, a 160 basis point increase from 6.3% in the same period last year [10] - Adjusted income for Q1 was $17.5 million, or 4.8% of net sales, compared to $12.6 million, or 3.4% of net sales last year [11][12] - Adjusted net income was $12.3 million, or $0.49 per diluted share, up from $5.5 million, or $0.22 per diluted share last year [12][13] - Cash and cash equivalents at the end of Q1 were $75.7 million, with cash generated from operations at $8.1 million [13][15] Business Line Data and Key Metrics Changes - Medical sales were $102 million, up 13% year-over-year, accounting for 28% of total revenue [5][6] - Automotive sales were $164 million, down 10% year-over-year, representing 45% of total sales [7] - Industrial sales totaled $100 million, a 1% decrease compared to Q1 last year, making up 27% of total sales [7][8] Market Data and Key Metrics Changes - Medical sales growth was driven by strong performance in North America, Asia, and Europe [5][6] - Automotive sales decline was primarily due to lower sales in North America and Asia, partially offset by growth in Europe [7] - Industrial business saw a decline in North America due to softening demand for HVAC, while Asia reported strong sales growth [8] Company Strategy and Development Direction - The company aims to expand its capabilities in the medical sector, focusing on higher-level assemblies and finished medical devices [6][18] - A tuck-in acquisition strategy is being pursued to add new end markets and manufacturing capabilities [18] - The company is committed to returning to profitable growth, particularly in the medical space, while managing costs and improving margins [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to profitable top-line growth next year and reiterated guidance for fiscal 2026 [4][16] - The company is monitoring the evolving global tariff landscape and expects to recover tariff costs by passing them on to customers [8][9] - Management highlighted the importance of maintaining a strong balance sheet while preparing for growth [43][44] Other Important Information - Cash conversion days improved to 83 days, representing the lowest level in over three years [13][14] - Capital expenditures in Q1 were $10.6 million, primarily for leasehold improvements and the new facility in Indianapolis [15][16] - The company has $14.8 million remaining on its share repurchase program [15] Q&A Session Summary Question: Will working capital increase as top-line growth resumes? - Management does not expect a significant increase in working capital as they have improved inventory management [21][22] Question: Is the current cash conversion days level stable? - Management aims for cash conversion days to remain in the low 80s as the business grows [23] Question: What are the expectations for EBITDA margins? - Management does not expect a deterioration in EBITDA margins and anticipates improvements as growth resumes [24] Question: What is the focus for potential acquisitions in the medical segment? - The company is exploring acquisitions in the medical CMO space, focusing on new technologies and geographies [28] Question: How does the pipeline of medical projects look for revenue growth? - The company has a strong pipeline of medical projects and expects to close several as the year progresses [37][38] Question: What is the outlook for the automotive segment? - Management anticipates continued pressure in the automotive market but remains strategically focused on high-visibility revenue [41] Question: How is the company balancing organic growth and potential acquisitions? - Management is focused on disciplined capital allocation and will consider acquisitions that enhance their CMO strategy [43][44] Question: What impact does accelerated depreciation have on the company? - Accelerated depreciation is beneficial, particularly regarding interest expense deductions [46]

Core Insights - Kimball Electronics, Inc. (KE) reported first-quarter fiscal 2026 non-GAAP earnings of 49 cents per share, exceeding the Zacks Consensus Estimate by 104.2% and up from 22 cents per share a year ago [1][9] - The company has consistently beaten earnings estimates over the past four quarters, with an average surprise of 23.7% [1] Revenue Performance - Kimball Electronics posted revenues of $365.6 million for the first quarter of fiscal 2026, surpassing the Zacks Consensus Estimate by 6.28%, but down 2.3% year over year from $374.26 million [2][9] - The medical vertical generated $101.6 million in revenues, accounting for 28% of total revenues, marking a 13% year-over-year increase driven by strong demand in various medical applications [3] - The automotive vertical contributed $164.4 million, representing 45% of total revenues, which is a 10% decline year over year due to normalization of demand and ongoing program transitions among OEM customers [4] - Revenues from the industrial vertical, excluding divested segments, were $99.6 million, making up 27% of total revenues, down 1% year over year, supported by steady demand across various industrial applications [5] Profitability Metrics - Gross profit for the quarter rose to $28.8 million, resulting in a gross margin of 7.9%, an increase of 160 basis points from the previous year [6] - Adjusted operating income reached $17.5 million, up 39.9% year over year, with an adjusted operating margin of 4.8%, expanding 140 basis points from 3.4% a year ago [6] - Adjusted net income was $12.25 million, reflecting a significant increase of 121.6% year over year [6] Balance Sheet and Cash Flow - At the end of the quarter, Kimball Electronics had cash and equivalents of $75.7 million, down from $88.8 million in June 2025, while debt decreased to $138 million, the lowest level in over three years [7] - The company generated $8.1 million in cash from operations [7] Guidance and Outlook - Kimball Electronics reiterated its fiscal 2026 revenue guidance, expecting a range between $1.35 billion and $1.45 billion, with the Zacks Consensus Estimate at $1.4 billion, indicating a year-over-year decline of 5.72% [8] - The company anticipates an adjusted operating margin between 4.0% and 4.25% for fiscal 2026 and capital expenditures in the range of $50-$60 million [8]