Kimball Electronics(US:KE)2025-02-05 22:47Financial Performance - Net sales for the second quarter of fiscal year 2025 decreased by 15% to $357.4 million compared to $421.2 million in the same quarter of fiscal year 2024[103]. - Gross profit as a percentage of net sales declined to 6.6% in the second quarter of fiscal year 2025 from 8.2% in the same quarter of fiscal year 2024, reflecting lost absorption on lower revenue[104]. - The automotive segment saw a 4% decrease in sales to $192.8 million in the second quarter of fiscal year 2025, while the medical segment experienced a 22% decline to $84.0 million[103]. - The company reported a net income of $3.4 million in the second quarter of fiscal year 2025, down 59% from $8.3 million in the same quarter of fiscal year 2024[103]. Cost Management - Selling and administrative expenses decreased by 41% to $10.5 million in the second quarter of fiscal year 2025 compared to $17.8 million in the same quarter of fiscal year 2024[103]. - Restructuring expenses of $4.7 million were recorded in the second quarter of fiscal year 2025 to align the cost structure with reduced end-market demand levels[106]. - The company has a strong focus on cost control while managing future growth prospects, including investments in capacity expansions[98]. Business Divestitures and Expectations - The company completed the divestiture of its GES business on July 31, 2024, recording a gain on disposal of $1.3 million[107]. - The company expects consolidated net sales to continue to lag through calendar year 2025 due to the loss of a major automotive program and the divestiture of the GES business[97]. - The company expects additional pre-tax restructuring charges between $5 million to $6 million, including $4 million to $5 million for the closure of the Tampa facility[129]. Liquidity and Capital Management - The current ratio stands at 2.3, with a debt-to-equity ratio of 0.4 and shareholders' equity of $537 million as of December 31, 2024[100]. - Working capital at December 31, 2024, was $397.6 million, down from $471.7 million at June 30, 2024, while the current ratio remained stable at 2.3[111]. - As of December 31, 2024, the company maintained unused borrowings under credit facilities totaling $226.4 million, providing sufficient liquidity for working capital needs[127]. - The company has repurchased $97.7 million of common stock under its Repurchase Plan through December 31, 2024, with a total repurchase authorization of up to $120 million[132]. - The company anticipates capital expenditure commitments of approximately $17 million, primarily related to new program wins, and expects available liquidity to fund these expenditures[128]. Cash Flow - Net cash provided by operating activities for the first six months of fiscal year 2025 was $74.9 million, a significant improvement from $(17.9) million in the same period of 2024[115]. - Net cash used for investing activities was $1.2 million in the first six months of fiscal year 2025, primarily due to capital investments of $20.0 million, offset by $18.5 million from the sale of GES[119]. - Net cash used for financing activities was $97.3 million in the first six months of fiscal year 2025, largely due to net payments on credit facilities of $89.8 million[121]. Market Risks - No material changes in exposure to market risks for foreign currency exchange rates and interest rates compared to the fiscal year ended June 30, 2024[140]. - Comprehensive disclosures of quantitative and qualitative market risk available in the Annual Report on Form 10-K for the year ended June 30, 2024[140]. Orders and Demand - Open orders decreased by 33% as of December 31, 2024, primarily due to cancellations in a major automotive program and reduced demand from automotive and medical customers[110]. - The provision for income taxes for the six months ended December 31, 2024, was $(0.2) million, or (3.6)% of income before taxes, compared to $5.4 million, or 22.2% for the same period in 2023[108].