Financial Performance - Net sales for the second quarter of fiscal year 2026 decreased by 5% to $341.3 million compared to $357.4 million in the same quarter of fiscal year 2025[113] - Gross profit increased by 19% to $27.9 million, representing 8.2% of net sales, compared to 6.6% in the prior year[113] - Selling and administrative expenses rose by 41% to $14.9 million, accounting for 4.4% of net sales, up from 3.0%[113] - Operating income improved by 31% to $10.8 million, or 3.2% of net sales, compared to 2.3% in the previous year[113] - Net income for the second quarter increased by 6% to $3.6 million, with diluted earnings per share rising to $0.15 from $0.14[113] Segment Performance - The automotive vertical experienced a significant decline, with net sales dropping 13% to $162.3 million in the second quarter[113] - Medical segment sales increased by 15% to $96.3 million, while industrial sales decreased by 5% to $82.7 million[113] - Automotive end market sales decreased both quarter over quarter and year-to-date due to the loss of a major program and tariff impacts, while medical end market sales increased driven by new program wins[120] Restructuring and Expenses - The company recorded a pre-tax restructuring expense of $1.8 million in the second quarter due to alignment with reduced market demand[118] Financial Ratios and Liquidity - The current ratio stands at 2.2, and the debt-to-equity ratio is 0.3, indicating a strong balance sheet[109] - As of December 31, 2025, the company had $77.9 million in cash and $285.1 million in unused borrowings under credit facilities, indicating a strong liquidity position[139] Cash Flow and Investments - Net cash provided by operating activities for the first six months of fiscal year 2026 was $14.9 million, a significant decrease from $74.9 million in the same period of fiscal year 2025[127] - Net cash used for investing activities in the first six months of fiscal year 2026 was $24.4 million, primarily for capital investments in a new medical facility and equipment[131] - The company sold $144.1 million of accounts receivable without recourse in the six months ended December 31, 2025, compared to $169.0 million in the same period of 2024[137] Capital Expenditures - Capital expenditure commitments as of December 31, 2025, were approximately $16.0 million, primarily for new program wins and improvements to the medical facility[140] - The company expects proceeds from the sale of the Tampa facility to exceed the total expected restructuring costs and the carrying value of the assets held for sale[141] Currency Impact - Foreign currency fluctuations positively impacted net sales by 2% in the current quarter compared to the same period last year[115] Working Capital - Working capital as of December 31, 2025, was $378.5 million, slightly down from $381.0 million at June 30, 2025, with a current ratio of 2.2[123] Cash Conversion - Cash Conversion Days improved to 91 days in the quarter ended December 31, 2025, down from 107 days in the same quarter of the previous year[125] Stock Repurchase - The company has repurchased $109.5 million of common stock under its Repurchase Plan through December 31, 2025, with a total authorization of up to $120 million[144]

Financial Data and Key Metrics Changes - Net sales for Q2 were $341 million, a 5% decline year-over-year, with a 2% favorable impact from foreign exchange [6][11] - The gross margin rate improved to 8.2%, a 160 basis point increase from 6.6% in the same period last year [11] - Adjusted operating income was $15.3 million, or 4.5% of net sales, compared to $13.3 million, or 3.7% of net sales last year [12] Business Line Data and Key Metrics Changes - Medical sales were $96 million, up 15% year-over-year, representing 28% of total company sales [6][10] - Automotive sales totaled $162 million, down 13% year-over-year, accounting for 48% of total sales [8][10] - Industrial sales were $83 million, a 5% decrease year-over-year, making up 24% of total sales [10] Market Data and Key Metrics Changes - Medical vertical growth was driven by increases in Poland and Thailand, while North America remained flat [6][7] - Automotive sales declined primarily in North America due to the transfer of an electronic braking program and tariff pressures [8][9] - Industrial business saw a decline in North America, offset by higher sales in Europe due to a rebound in the smart meter business [10] Company Strategy and Development Direction - The company is focusing on the medical vertical as a key growth area, leveraging its capabilities in a highly regulated industry [5][7] - A rebranding to Kimball Solutions reflects the company's evolution beyond traditional manufacturing services, expanding into design, engineering, and supply chain management [18] - The grand opening of a new medical manufacturing facility in Indianapolis is part of the strategy to enhance capabilities and capacity [5][7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the medical vertical's growth potential, driven by megatrends such as an aging population and increasing healthcare access [7] - The company is monitoring the outlook for FY27, particularly in North American automotive and industrial sectors, due to economic concerns and tariff impacts [17] - Management raised guidance for fiscal 2026, expecting net sales to be in the range of $1.4-$1.46 billion, driven by strength in the medical vertical [15][16] Other Important Information - Cash and cash equivalents at the end of Q2 were $77.9 million, with positive cash flow for the eighth consecutive quarter [14] - The company invested $4.3 million in share repurchases during Q2, with a total of $109.5 million returned to shareholders since October 2015 [15] Q&A Session Summary Question: What percentage was Nexteer in December? - Nexteer accounted for 20% of sales in December [23][24] Question: What is the capacity and ramp expectations for the new facility in Indianapolis? - The new facility is 300,000 sq ft, significantly larger than the current footprint, with significant growth opportunities anticipated [26] Question: How should we think about growth in the automotive piece for Q3 and Q4? - Q3 automotive is expected to be flat to slightly up as the company anniversaries the end of the EB100 program [34] Question: What are the win rates and sizes of new programs? - Win rates remain consistent, with larger programs expected from lift and shift opportunities and CMO discussions [36][39] Question: How will the new facility impact margins? - In the near term, the new facility will drag margins due to depreciation and additional expenses, but long-term margins are expected to improve [42][43] Question: How do you see cash cycle days play out in the coming quarters? - Cash conversion days are expected to decrease in Q3 from elevated levels in Q2 [46]

Financial Data and Key Metrics Changes - Net sales for Q2 were $341 million, a 5% decline compared to Q2 last year [6][12] - Gross margin rate improved to 8.2%, a 160 basis point increase from 6.6% in the same period last year [12] - Adjusted operating income was $15.3 million, or 4.5% of net sales, compared to $13.3 million, or 3.7% of net sales last year [13] - Adjusted net income was $6.9 million, or $0.28 per diluted share, compared to $7.4 million, or $0.29 per diluted share last year [15] Business Line Data and Key Metrics Changes - Medical sales were $96 million, up 15% year-over-year, representing 28% of total company sales [6][8] - Automotive sales totaled $162 million, down 13% year-over-year, accounting for 48% of total sales [9] - Industrial sales were $83 million, a 5% decrease compared to Q2 last year, representing 24% of total sales [11] Market Data and Key Metrics Changes - Medical vertical growth was driven by increases in Poland and Thailand, while North America remained flat [7][8] - Automotive sales decline was primarily due to lower sales in North America and China, with some offset from growth in Poland and Romania [9][10] - Industrial business decline was concentrated in North America, with some recovery in Europe [11] Company Strategy and Development Direction - The company is focusing on the medical vertical as a key growth area, leveraging its capabilities in a highly regulated industry [5][8] - A rebranding to Kimball Solutions reflects the company's evolution beyond traditional manufacturing services, expanding into design, engineering, and supply chain management [20] - The grand opening of a new medical manufacturing facility in Indianapolis is part of the strategy to enhance capabilities and capacity [5][8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the medical vertical's growth potential, driven by megatrends such as an aging population and increasing healthcare access [8] - The company raised its guidance for fiscal 2026, expecting net sales between $1.4 billion and $1.46 billion, driven by strength in the medical vertical and automotive programs [17][18] - Management is monitoring the outlook for FY27, particularly in North America automotive and industrial sectors, due to economic concerns and tariff impacts [19] Other Important Information - Cash and cash equivalents at the end of Q2 were $77.9 million, with cash generated from operations at $6.9 million [15][16] - The company invested $4.3 million in share repurchases during Q2, with a total of $109.5 million returned to shareholders since October 2015 [17] - The effective tax rate for Q2 was 47.9%, significantly higher than the previous year due to adjustments related to the sale of the Tampa facility [15] Q&A Session Summary Question: What percentage was Nexteer in December? - Nexteer accounted for 20% of sales in December [25][26] Question: What is the capacity and ramp expectations for the new facility in Indianapolis? - The new facility is 300,000 sq ft, significantly larger than the current footprint, with substantial growth opportunities [28] Question: How should we think about growth in the automotive piece for Q3 and Q4? - Q3 automotive is expected to be flat to slightly up as the company anniversaries the end of the EB100 program [37] Question: What are the win rates and sizes of new programs? - Win rates remain consistent, with larger programs expected from lift and shift opportunities and CMO discussions [39][40] Question: How will the new facility impact margins? - The new facility is expected to drag margins in the near term due to depreciation and additional expenses, but long-term margins are expected to improve [44][45] Question: How do you see cash cycle days play out in the coming quarters? - Cash conversion days are expected to decrease in Q3 from elevated levels in Q2 [49] Question: What are the opportunities in the medical space for acquisitions? - The company is interested in in vitro diagnostics and cardiology as potential areas for expansion [58]

Financial Data and Key Metrics Changes - Net sales for Q2 were $341 million, a 5% decline compared to Q2 last year [5] - The growth margin rate improved to 8.2%, a 160 basis point increase from 6.6% in the same period last year [10] - Adjusted net income was $6.9 million, or $0.28 per diluted share, compared to $7.4 million, or $0.29 per diluted share last year [12] - Cash generated by operating activities was $6.9 million, marking the eighth consecutive quarter of positive cash flow [13] - The company raised its guidance for fiscal 2026, expecting net sales in the range of $1.4-$1.46 billion, up from previous guidance of $1.35-$1.45 billion [15] Business Line Data and Key Metrics Changes - Medical sales were $96 million, up 15% year-over-year, representing 28% of total company sales [5] - Automotive sales totaled $162 million, down 13% year-over-year, accounting for 48% of total sales [7] - Industrial sales were $83 million, a 5% decrease compared to Q2 last year, making up 24% of total sales [9] Market Data and Key Metrics Changes - The medical vertical showed strong growth, particularly in Poland and Thailand, while North America remained flat [5] - The automotive sector faced declines in North America and China, primarily due to the transfer of an electronic braking program and tariff pressures [7] - Industrial demand in North America decreased, although there was a rebound in Europe due to smart meter sales [9] Company Strategy and Development Direction - The company is focusing on the medical vertical as a key growth area, leveraging its capabilities in a highly regulated industry [6] - A new facility in Indianapolis is part of the strategy to expand manufacturing capacity for medical products [6] - The company is pursuing disciplined acquisitions to enhance geographic reach and manufacturing capabilities [7] - A rebranding to Kimball Solutions reflects the company's evolution beyond traditional manufacturing services [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the medical vertical's growth potential, driven by megatrends such as an aging population and increasing healthcare access [6] - The company is monitoring the North American automotive and industrial markets due to economic concerns and tariff impacts [17] - Future growth in automotive is expected to stabilize as the company anniversaries the end of a significant program [33] Other Important Information - The effective tax rate for Q2 was 47.9%, significantly higher than the previous year's rate of 1.2% [12] - Capital expenditures in Q2 were $18.2 million, primarily for the new facility in Indianapolis [14] - The company has $10.5 million remaining on its share repurchase program, having returned $109.5 million to shareholders since October 2015 [15] Q&A Session Summary Question: What percentage was Nexteer in December? - Nexteer accounted for 20% of sales in December [22] Question: What is the capacity and ramp expectations for the new facility in Indianapolis? - The new facility is 300,000 sq ft, significantly larger than the current footprint, with substantial growth opportunities anticipated [25] Question: How should we think about growth in the automotive piece for Q3 and Q4? - Q3 automotive is expected to be flat to slightly up as the company anniversaries the end of the EB100 program [33] Question: What are the win rates and size of wins across the business? - Win rates remain consistent, with larger programs expected from lift and shift opportunities and CMO discussions [36] Question: How will the new facility impact margins? - The CMO space is expected to be margin accretive long-term, but will initially drag margins due to depreciation and additional expenses [40][41] Question: How do you see cash cycle days play out in the coming quarters? - Cash conversion days are expected to decrease in Q3 from elevated levels in Q2 [44] Question: What are the opportunities in the medical space for acquisitions? - The company is interested in in vitro diagnostics and cardiology as potential areas for expansion [54]

Core Insights - Kimball Electronics (KE) reported second-quarter fiscal 2026 earnings of 28 cents per share, matching Zacks Consensus Estimates, but down from 29 cents per share a year ago [1][10] - Revenues for the quarter were $341.28 million, missing the Zacks Consensus Estimate by 0.36% and down from $357.4 million in the same quarter last year [1][10] Financial Performance - The medical vertical contributed 28% to KE's second-quarter revenue, growing 15% year over year to $96.3 million, driven by strong performance in core medical programs [3] - The automotive vertical, accounting for 48% of total revenue, declined 13% year over year to $162.3 million [4] - The industrial segment, contributing 24% of total revenues, saw a 5% year-over-year decline to $82.7 million [5] - Gross profit increased 19% year over year to $27.8 million, with gross margin rising 160 basis points to 8.2% [6] - Non-GAAP operating income was $15.31 million, up 14.8% year over year, with a non-GAAP operating margin increase of 80 basis points to 4.5% [6] Balance Sheet and Cash Flow - As of December 31, 2025, KE had cash and cash equivalents of $77.85 million, up from $75.7 million as of September 30, 2025 [7] - The company generated $6.9 million in cash from operations, marking the eighth consecutive quarter of positive operating cash flow [7] - Total debt stood at $154.2 million [7] Guidance and Outlook - For fiscal 2026, KE raised its net sales guidance to a range of $1.40 billion to $1.46 billion, up from the previous outlook of $1.35 billion to $1.45 billion [8] - The Zacks Consensus Estimate for fiscal 2026 revenues is $1.41 billion, indicating a year-over-year decline of 5.4% [8] - Adjusted operating income is projected to be 4.2% to 4.5% of net sales, an increase from the earlier estimate of 4.0% to 4.25% [9]

Second Quarter Fiscal 2026 Results Quarter Ended December 31, 2025 Supplementary Information to the February 5, 2026, Earnings Conference Call & Webcast Lasting relationships. Global success. Kimball Electronics Confidential Jana Croom CFO Safe Harbor Statement Certain statements contained within this supplementary information, including our fiscal year 2026 guidance, and any statements made during our earnings conference call today may be considered forward-looking under the Private Securities Litigation R ...

Core Viewpoint - Kimball Electronics reported quarterly earnings of $0.28 per share, matching the Zacks Consensus Estimate, but down from $0.29 per share a year ago, indicating a slight decline in profitability [1]. Financial Performance - The company achieved revenues of $341.28 million for the quarter ended December 2025, which was a 4.5% decrease from $357.39 million year-over-year and missed the Zacks Consensus Estimate by 0.36% [2]. - Over the last four quarters, Kimball Electronics has surpassed consensus EPS estimates four times and topped revenue estimates three times [2]. Stock Performance - Kimball Electronics shares have increased approximately 11.7% since the beginning of the year, significantly outperforming the S&P 500's gain of 1.1% [3]. Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.37 on revenues of $348.25 million, while for the current fiscal year, the estimate is $1.36 on revenues of $1.41 billion [7]. - The estimate revisions trend for Kimball Electronics was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6]. Industry Context - The Electronics - Miscellaneous Products industry, to which Kimball Electronics belongs, is currently ranked in the top 26% of over 250 Zacks industries, suggesting a favorable industry outlook [8].

Revenue and Sales Performance - Revenue for Q2 2026 was $341.3 million, a 5% decrease compared to Q2 2025[5] - Sales in the medical vertical increased by 15% year-over-year, while automotive sales decreased by 13% and industrial sales decreased by 5%[6] - Net sales growth for the three months ended December 31, 2025, was reported at -5% compared to the same period in the prior year[24] Operating Income and Cash Flow - Operating income for Q2 was $10.8 million, representing 3.2% of net sales, with adjusted operating income at 4.5%, up 80 basis points year-over-year[5] - Cash from operations was $6.9 million, marking the eighth consecutive quarter of positive operating cash generation[5] - Adjusted operating income for the six months ended December 31, 2025, was $32.842 million, up from $25.923 million in 2024[24] - The company reported a net income of $13.723 million for the six months ended December 31, 2025, compared to $6.586 million in 2024[24] Financial Guidance and Estimates - The company has increased its fiscal 2026 guidance for net sales to a range of $1,400 - $1,460 million, up from the previous range of $1,350 - $1,450 million[9] - Adjusted operating income guidance for fiscal 2026 is now estimated to be 4.2% - 4.5% of net sales, compared to the prior estimate of 4.0% - 4.25%[9] Debt and Cash Management - Debt stands at $154.2 million with a borrowing capacity of $285.1 million[5] - The current portion of long-term debt increased to $24.112 million as of December 31, 2025, from $17.400 million as of June 30, 2025[20] - The company’s cash and cash equivalents at the end of the period were $78.523 million, a decrease from $89.467 million at the beginning of the period[20] Operational Efficiency - Cash Conversion Days improved by 16 days to 91 days compared to the same period last year[5] - Cash conversion days (CCD) increased to 91 days for the three months ended December 31, 2025, compared to 83 days in the previous quarter[21] Shareholder Actions and Investments - The company invested $4.3 million to repurchase 149,000 shares of common stock[5] Asset Management - Total assets increased to $1,083.471 million as of December 31, 2025, compared to $1,077.312 million as of June 30, 2025[20] - Open orders amounted to $557 million as of December 31, 2025, down from $593 million in the previous quarter[21] New Developments - The grand opening of a new medical manufacturing facility in Indianapolis reflects the company's strategy to expand its capabilities and services in the medical sector[4]

Core Viewpoint - Kimball Electronics, Inc. reported a decline in net sales for the second quarter of fiscal year 2025 compared to the same period in 2024, while operating income showed an improvement [1]. Financial Performance - Net Sales for the three months ended December 31, 2025, were $341,280,000, down from $357,392,000 in the same period of 2024, representing a decrease of approximately 14.5% [1]. - For the six months ended December 31, 2025, net sales totaled $706,883,000, compared to $731,648,000 in 2024, indicating a decline of about 3.4% [1]. - Operating Income for the three months ended December 31, 2025, was $10,767,000, an increase from $8,230,000 in 2024, reflecting a growth of approximately 30.9% [1]. - Adjusted Operating Income (non-GAAP) for the same quarter was $15,308,000, up from $13,300,000 in 2024, marking an increase of around 15.1% [1].

Core Insights - Kimball Electronics, Inc. (KE) is set to report its second-quarter fiscal 2026 results on February 4, with sales expected to decline by 4.2% year-over-year to $342.5 million and earnings estimated at 28 cents per share, reflecting a 3.5% decrease from the previous year [1][9]. Group 1: Earnings Performance - Kimball Electronics has consistently surpassed the Zacks Consensus Estimate in the last four quarters, with an average surprise of 49.71% [2]. - The current Earnings ESP for Kimball Electronics is 0.00%, and it holds a Zacks Rank of 3 (Hold), indicating uncertainty regarding an earnings beat this time [7]. Group 2: Factors Influencing Q2 Results - The company's second-quarter results are expected to benefit from its expansion in the high-growth medical contract manufacturing sector, particularly with a new 300,000 sq. ft. facility in Indianapolis [3]. - Demand for medical devices is driven by an aging population, increased healthcare access, and advancements in connected drug-delivery systems, which are anticipated to positively impact Kimball Electronics' performance [4]. - Operational improvements, including reduced inventory and lower selling, general, and administrative expenses, along with significant debt reduction, are likely to enhance the bottom line for the quarter [5]. Group 3: Industry Challenges - Despite the positive factors, overall results may be negatively impacted by industry-wide softness in the automotive and industrial segments, which could outweigh the strong performance in the medical division [6]. - The company's heavy reliance on a few large medical and automotive customers presents an additional concern [6].