Kimball Electronics(US:KE)2024-11-06 22:17Financial Performance - Net sales for the first quarter of fiscal year 2025 decreased by 15% to $374.3 million compared to $438.1 million in the same quarter of fiscal year 2024[83] - Gross profit declined by 34% to $23.6 million, representing 6.3% of net sales, down from 8.1% in the prior year[88] - The automotive market sales decreased by 11% to $188.4 million, while medical and industrial markets saw declines of 12% and 22%, respectively[89] - Open orders decreased by 35% to $594 million compared to $907 million a year earlier, primarily due to reduced orders from automotive and medical customers[95] - The company anticipates continued softness in demand and a decrease in consolidated net sales due to the loss of a major automotive program[83] Divestitures and Gains - The company completed the divestiture of its GES business on July 31, 2024, recording a gain on disposal of $1.3 million in the first quarter of fiscal year 2025[92] Working Capital and Debt Management - Working capital at September 30, 2024 was $439.0 million, down from $471.7 million at June 30, 2024, with a current ratio of 2.3[96] - The debt-to-equity ratio improved to 0.4 at September 30, 2024, compared to 0.5 at June 30, 2024[96] - As of September 30, 2024, the company had $186.8 million in unused borrowings under its credit facilities[111] Cash Flow and Financing Activities - Net cash provided by operating activities for the first three months of fiscal year 2025 was $45.5 million, compared to $12.8 million for the same period in 2023[101] - Net cash used for financing activities in the first three months of fiscal year 2025 was $53.0 million, largely from net payments on credit facilities[107] - The company sold $87.3 million of accounts receivable without recourse in the three months ended September 30, 2024, compared to $103.0 million in the same period of 2023[110] Restructuring and Future Outlook - The company expects to incur between $10.0 million and $14.0 million in pre-tax restructuring charges, including $8.0 million to $11.0 million for the closure of the Tampa facility[113] - The company anticipates that cash generated from operations and available funds will be sufficient to meet working capital needs for at least the next 12 months[111] Capital Expenditures and Investments - Capital expenditure commitments were approximately $13 million as of September 30, 2024, primarily related to new program wins[112] - Net cash provided by investing activities was $5.2 million in the first three months of fiscal year 2025, driven by proceeds from the sale of GES[106] - The company has repurchased $94.7 million of common stock under its Repurchase Plan through September 30, 2024[113] Industry Outlook - The EMS industry is projected to grow at a compound annual growth rate (CAGR) of 4.6% through 2028 according to New Venture Research[80] - The company is focusing on cost control while managing future growth prospects, including investments in capacity expansions[84] Working Capital Management - Cash conversion days (CCD) increased to 108 days in September 2024 from 103 days in September 2023, primarily due to changes in working capital management[99]