Kimball Electronics(KE) - 2025 Q2 - Quarterly Results

Financial Performance - Net sales for Q2 Fiscal 2025 totaled $357.4 million, a decrease of 15% compared to $421.2 million in Q2 Fiscal 2024[5] - Operating income was $8.2 million, representing 2.3% of net sales, down from 3.9% in the same quarter last year[5] - Net sales for the three months ended December 31, 2024, were reported at $12.5 million, a decline of 15% compared to the same period in 2023[21] - Adjusted operating income for the six months ended December 31, 2024, was $25,923,000, down from $40,069,000 in the same period of 2023, representing a decrease of approximately 35%[22] - The company reported a net income of $3,432,000 for the three months ended December 31, 2024, compared to $8,290,000 in the same period of 2023, indicating a decline of approximately 59%[22] - The diluted earnings per share for the three months ended December 31, 2024, was $0.14, down from $0.33 in the same period of 2023[22] Cash Flow and Liquidity - Cash generated from operating activities was $29.5 million, marking the fourth consecutive quarter of positive cash flow[5] - Net cash flow provided by operating activities for the six months ended December 31, 2024, was $74,932,000, a significant improvement from a cash outflow of $(17,922,000) in the same period of 2023[18] - Cash conversion days (CCD) improved to 107 days for the three months ended December 31, 2024, compared to 117 days in the same period of 2023[19] Inventory and Assets - Inventory levels decreased by $29 million from Q1 and are down $182 million, or 37%, from peak levels[5] - Total assets decreased to $1,074,436,000 as of December 31, 2024, down from $1,207,919,000 on June 30, 2024, reflecting a reduction of approximately 11%[18] - Open orders decreased to $564 million as of December 31, 2024, down from $836 million in the same period of 2023, primarily due to demand reductions[20] Liabilities and Debt - Borrowings on credit facilities decreased to $205 million, down $90 million, or 30%, from the beginning of the fiscal year[5] - The company’s total liabilities decreased to $536,960,000 as of December 31, 2024, from $667,458,000 on June 30, 2024, reflecting a reduction of approximately 20%[18] Guidance and Forecast - Fiscal year 2025 guidance revised to net sales in the range of $1.40 - $1.44 billion, down from previous guidance of $1.44 - $1.54 billion[8] - Adjusted operating income forecasted at 3.4% - 3.6% of net sales, reduced from the previous guidance of 4.0% - 4.5%[8] - Capital expenditures for Fiscal 2025 are estimated to remain unchanged at $40 - $50 million[8] Market Performance - Sales in the automotive, medical, and industrial vertical markets declined by 4%, 22%, and 20%, respectively[6] Restructuring and Impairment - The company is implementing a restructuring plan, including divestiture of non-core assets and closing the Tampa plant to focus on medical CMO[4] - The company recognized a goodwill impairment of $5,820,000 during the twelve months ended December 31, 2024[23]