Kimball Electronics(KE) - 2026 Q1 - Quarterly Report

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]