Kimball Electronics(KE) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents Kimball Electronics, Inc.'s unaudited condensed consolidated financial statements for the quarter ended September 30, 2023, including balance sheets, income statements, comprehensive income statements, cash flow statements, and statements of share owners' equity, along with detailed notes explaining business operations, accounting policies, and specific financial line items Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of September 30, 2023, and June 30, 2023 Balance Sheet Data | Metric | September 30, 2023 (Thousands) | June 30, 2023 (Thousands) | | :-------------------------------- | :----------------------------- | :-------------------------- | | ASSETS | | | | Cash and cash equivalents | $56,581 | $42,955 | | Receivables, net | $259,419 | $308,167 | | Contract assets | $87,675 | $78,798 | | Inventories | $482,229 | $450,319 | | Total current assets | $931,045 | $929,427 | | Property and Equipment, net | $268,645 | $267,684 | | Goodwill | $12,011 | $12,011 | | Other Intangible Assets, net | $11,603 | $12,335 | | Total Assets | $1,263,166 | $1,259,719 | | LIABILITIES AND SHARE OWNERS' EQUITY | | | | Current portion of borrowings | $61,680 | $46,454 | | Accounts payable | $308,912 | $322,274 | | Advances from customers | $41,467 | $33,905 | | Total current liabilities | $478,331 | $475,148 | | Long-term debt | $235,000 | $235,000 | | Total Liabilities | $734,904 | $735,725 | | Total Share Owners' Equity | $528,262 | $523,994 | | Total Liabilities and Share Owners' Equity | $1,263,166 | $1,259,719 | Condensed Consolidated Statements of Income This section details the company's financial performance over the three months ended September 30, 2023, including net sales, gross profit, operating income, and net income Income Statement Data | Metric | Three Months Ended September 30, 2023 (Thousands) | Three Months Ended September 30, 2022 (Thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net Sales | $438,081 | $405,889 | | Cost of Sales | $402,539 | $376,568 | | Gross Profit | $35,542 | $29,321 | | Selling and Administrative Expenses | $16,052 | $15,750 | | Operating Income | $19,490 | $13,571 | | Other income (expense), net | $(6,279) | $(1,403) | | Income Before Taxes on Income | $13,211 | $12,168 | | Provision for Income Taxes | $2,457 | $2,659 | | Net Income | $10,754 | $9,509 | | Basic Earnings Per Share | $0.43 | $0.38 | | Diluted Earnings Per Share | $0.43 | $0.38 | - Net Sales increased by 8% YoY to $438.1 million for the three months ended September 30, 2023, compared to $405.9 million in the prior year period. Gross Profit increased by 21% YoY to $35.5 million, and Operating Income increased by 44% YoY to $19.5 million. Net Income rose by 13% YoY to $10.8 million, with Diluted Earnings Per Share also increasing by 13% to $0.43[13] Condensed Consolidated Statements of Comprehensive Income This section outlines the company's total comprehensive income, including net income and other comprehensive income (loss) components, for the three months ended September 30, 2023 Comprehensive Income Data | Metric | Three Months Ended September 30, 2023 (Thousands) | Three Months Ended September 30, 2022 (Thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net income | $10,754 | $9,509 | | Other comprehensive income (loss), net of tax | $(6,735) | $(7,417) | | Total comprehensive income | $4,019 | $2,092 | - Total comprehensive income increased by 92% YoY to $4.0 million for the three months ended September 30, 2023, primarily due to a smaller other comprehensive loss compared to the prior year[14] Condensed Consolidated Statements of Cash Flows This section details the company's cash inflows and outflows from operating, investing, and financing activities for the three months ended September 30, 2023 Cash Flow Data | Metric | Three Months Ended September 30, 2023 (Thousands) | Three Months Ended September 30, 2022 (Thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash provided by (used for) operating activities | $12,801 | $(60,194) | | Net cash used for investing activities | $(11,302) | $(19,320) | | Net cash provided by financing activities | $13,985 | $50,769 | | Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | $14,935 | $(30,136) | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $58,799 | $19,715 | - Net cash provided by operating activities significantly improved to a positive $12.8 million in Q1 FY2024 from a net cash usage of $60.2 million in Q1 FY2023. This was largely driven by a decrease in accounts receivable providing $45.3 million in cash, partially offset by an increase in inventory using $34.0 million[17][109][110] - Net cash used for investing activities decreased to $11.3 million in Q1 FY2024 from $19.3 million in Q1 FY2023, reflecting reduced capital expenditures[17][112] - Net cash provided by financing activities decreased to $14.0 million in Q1 FY2024 from $50.8 million in Q1 FY2023, primarily due to lower net borrowings on credit facilities[17][113] Condensed Consolidated Statement of Share Owners' Equity This section presents changes in the company's share owners' equity, including net income, other comprehensive income, and stock compensation, for the period ended September 30, 2023 Share Owners' Equity Data | Metric | September 30, 2023 (Thousands) | June 30, 2023 (Thousands) | | :-------------------------------- | :----------------------------- | :-------------------------- | | Total Share Owners' Equity | $528,262 | $523,994 | | Net income | $10,754 | N/A | | Other comprehensive income (loss) | $(6,735) | N/A | | Compensation expense related to stock compensation plans | $1,613 | N/A | | Performance and restricted share issuance | $(1,364) | N/A | - Total Share Owners' Equity increased to $528.3 million as of September 30, 2023, from $524.0 million as of June 30, 2023, driven by net income and stock compensation expense, partially offset by other comprehensive loss and share issuance[19] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, revenue, inventories, and other financial items Note 1. Business Description and Summary of Significant Accounting Policies This note describes Kimball Electronics, Inc.'s global manufacturing solutions business and outlines its key accounting policies, including revenue recognition and treatment of non-operating income - Kimball Electronics, Inc. is a global manufacturing solutions provider offering electronics manufacturing services (EMS) and contract manufacturing for non-electronic components, medical disposables, precision molded plastics, and production automation equipment across automotive, medical, and industrial end markets[22] - The company recognizes revenue primarily over time as manufacturing services are performed for customer-specified products with no alternative use, and an enforceable right to payment exists[26] - Kimball Electronics sold $103.0 million and $97.6 million of accounts receivable without recourse in the three months ended September 30, 2023 and 2022, respectively, incurring factoring fees of $0.9 million in both periods[31] - Non-operating income (expense), net, includes foreign currency rate movements, derivative gains/losses, fair value adjustments on SERP investments, government subsidies, and bank charges[34] Note 2. Revenue from Contracts with Customers This note provides a breakdown of net sales by vertical market and details the company's contract assets related to revenue recognition Net Sales by Vertical Market | Vertical Market | Three Months Ended September 30, 2023 (Millions) | Three Months Ended September 30, 2022 (Millions) | | :---------------- | :------------------------------------------ | :------------------------------------------ | | Automotive | $212.5 | $188.2 | | Medical | $102.4 | $116.0 | | Industrial | $123.2 | $101.7 | | Total net sales | $438.1 | $405.9 | - Approximately 97% of net sales in Q1 FY2024 (96% in Q1 FY2023) were recognized over time as manufacturing services were performed[43] - Contract assets, representing unbilled accounts receivable, increased to $87.7 million as of September 30, 2023, from $78.8 million as of June 30, 2023[44] Note 3. Inventories This note details the composition of the company's inventories, including finished products, work-in-process, and raw materials, as of September 30, 2023 Inventory Composition | Inventory Component | September 30, 2023 (Thousands) | June 30, 2023 (Thousands) | | :------------------ | :----------------------------- | :-------------------------- | | Finished products | $54 | $432 | | Work-in-process | $4,347 | $3,117 | | Raw materials | $477,828 | $446,770 | | Total inventory | $482,229 | $450,319 | - Total inventory increased to $482.2 million as of September 30, 2023, from $450.3 million as of June 30, 2023, primarily driven by an increase in raw materials[46] Note 4. Accumulated Other Comprehensive Income (Loss) This note provides a breakdown of the components contributing to accumulated other comprehensive income (loss), including foreign currency translation adjustments and derivative gains/losses Accumulated Other Comprehensive Income (Loss) Components | Component | Balance at September 30, 2023 (Thousands) | Balance at June 30, 2023 (Thousands) | | :-------------------------------- | :-------------------------------------- | :----------------------------------- | | Foreign Currency Translation Adjustments | $(16,062) | $(11,832) | | Derivative Gain (Loss) | $(1,154) | $1,368 | | Post Employment Benefits Net Actuarial Gain (Loss) | $(565) | $(582) | | Accumulated Other Comprehensive Income (Loss) | $(17,781) | $(11,046) | - Accumulated Other Comprehensive Loss increased to $17.8 million as of September 30, 2023, from $11.0 million as of June 30, 2023, primarily due to foreign currency translation adjustments and derivative losses[47] Reclassification from AOCI to Income | Reclassification from AOCI to Income | Three Months Ended September 30, 2023 (Thousands) | Three Months Ended September 30, 2022 (Thousands) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | | Derivative gain (loss), net of tax | $2,213 | $408 | | Postemployment Benefits, net of tax | $5 | $77 | | Total reclassifications for the period, net of tax | $2,218 | $485 | Note 5. Commitments and Contingent Liabilities This note discusses the company's commitments and contingent liabilities, including warranty provisions, which are deemed immaterial for the reporting period - The Company provides assurance-type warranties for workmanship and product specifications, with related liability and expense being immaterial for the three months ended September 30, 2023 and 2022[49] Note 6. Credit Facilities This note outlines the company's credit facilities, including available borrowing capacity, outstanding borrowings, and weighted-average interest rates Credit Facility Details | Credit Facility | Available Borrowing Capacity at Sep 30, 2023 (Millions) | Borrowings Outstanding at Sep 30, 2023 (Millions) | Borrowings Outstanding at Jun 30, 2023 (Millions) | | :------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Primary credit facility | $12.1 | $287.5 | $272.1 | | Secondary credit facility | $50.0 | — | — | | Foreign credit facilities | $28.4 | $9.2 | $9.4 | | Total credit facilities | $90.5 | $296.7 | $281.5 | | Long-term debt under credit facilities, less current portion | N/A | $235.0 | $235.0 | - The weighted-average interest rate on borrowings outstanding under credit facilities increased to 7.1% at September 30, 2023, from 6.8% at June 30, 2023[54] - The Company maintains a $300 million primary credit facility maturing May 4, 2027, and a $50 million secondary credit facility maturing February 2, 2024, for working capital and general corporate purposes[50][52] Note 7. Fair Value This note provides fair value measurements for financial instruments, including derivatives and trading securities, categorized by valuation input levels Fair Value of Financial Instruments | Financial Instrument | September 30, 2023 (Thousands) | June 30, 2023 (Thousands) | | :-------------------------------- | :----------------------------- | :-------------------------- | | Assets | | | | Derivatives: foreign exchange contracts (Level 2) | $2,642 | $6,320 | | Trading securities: mutual funds held in nonqualified SERP (Level 1) | $6,019 | $8,668 | | Total assets at fair value | $8,661 | $14,988 | | Liabilities | | | | Derivatives: foreign exchange contracts (Level 2) | $2,136 | $1,245 | | Total liabilities at fair value | $2,136 | $1,245 | - The fair value of derivative assets (foreign exchange contracts) decreased from $6.3 million to $2.6 million, while derivative liabilities increased from $1.2 million to $2.1 million between June 30, 2023, and September 30, 2023[56] Note 8. Derivative Instruments This note describes the company's use of derivative instruments, primarily foreign exchange forward contracts, to manage currency risks and their impact on financial statements - The Company uses foreign exchange forward contracts as cash flow hedges to manage foreign currency exchange rate risks in forecasted transactions and non-designated contracts for intercompany balances[60][61] - As of September 30, 2023, outstanding foreign exchange contracts had an aggregate notional amount of $14.1 million against the U.S. dollar and 59.8 million Euro against the Euro[61] Derivative Gains and Losses in OCI | Derivative Type | Pre-Tax Gain or (Loss) Recognized in OCI (Sep 30, 2023) (Thousands) | Pre-Tax Gain or (Loss) Recognized in OCI (Sep 30, 2022) (Thousands) | | :---------------------- | :---------------------------------------------------------- | :---------------------------------------------------------- | | Foreign exchange contracts | $(387) | $283 | Derivative Reclassifications from AOCI | Derivative Type | Pre-Tax Gain or (Loss) Reclassified from AOCI into Income (Sep 30, 2023) (Thousands) | Pre-Tax Gain or (Loss) Reclassified from AOCI into Income (Sep 30, 2022) (Thousands) | | :---------------------- | :------------------------------------------------------------------- | :------------------------------------------------------------------- | | Foreign exchange contracts | $2,867 | $346 | Note 9. Employee Benefit Plans This note details the company's employee benefit plans, including defined contribution retirement plans, the Supplemental Employee Retirement Plan (SERP), and other postemployment plans - Employer contributions to domestic defined contribution retirement plans were $1.6 million for Q1 FY2024, up from $1.5 million in Q1 FY2023[70] - The Supplemental Employee Retirement Plan (SERP) assets and obligations totaled $6.0 million as of September 30, 2023, down from $8.7 million as of June 30, 2023[71] - The Company maintains severance plans for domestic employees and other postemployment plans for certain foreign subsidiaries, with total obligations of $6.6 million as of September 30, 2023[73] Note 10. Stock Compensation Plans This note describes the company's stock compensation plans, including the 2014 Stock Option and Incentive Plan and the newly adopted 2023 Equity Incentive Plan, along with details of recent awards - The 2014 Stock Option and Incentive Plan allows for the issuance of up to 4.5 million shares and expires on October 1, 2024. A new 2023 Equity Incentive Plan was adopted by the Board, subject to shareholder approval[74] Stock Compensation Granted | Stock Compensation Granted (Q1 FY2024) | Shares/Units | Grant Date Fair Value | | :------------------------------------- | :----------- | :-------------------- | | Long-Term Performance Shares | 172,079 | $29.19 | | Restricted Shares | 71,422 | $29.19 | - Long-term performance share awards granted in Q1 FY2024 will cliff vest at the third anniversary in FY2027, based on profitability and growth metrics[77] Note 11. Goodwill and Other Intangible Assets This note provides a breakdown of goodwill and other intangible assets, including capitalized software, customer relationships, and trade names, as of September 30, 2023 Goodwill and Other Intangible Assets Breakdown | Asset Type | September 30, 2023 (Thousands) | June 30, 2023 (Thousands) | | :---------------------- | :----------------------------- | :-------------------------- | | Goodwill, net | $12,011 | $12,011 | | Capitalized Software, net | $3,284 | $3,482 | | Customer Relationships, net | $4,965 | $5,094 | | Technology, net | — | $244 | | Trade Name, net | $3,354 | $3,515 | | Other Intangible Assets, net | $11,603 | $12,335 | - Goodwill remained stable at $12.0 million. Other intangible assets, net, decreased slightly to $11.6 million from $12.3 million, with amortization expense of $0.9 million for both Q1 FY2024 and Q1 FY2023[79] Note 12. Share Owners' Equity This note discusses the company's share owners' equity, including details on the Board-authorized stock repurchase plan and recent repurchase activity - The Company has a Board-authorized stock repurchase plan of up to $100 million, with $88.8 million repurchased since inception through September 30, 2023. No share repurchases occurred in Q1 FY2024 or Q1 FY2023[81][82][123] Note 13. Earnings Per Share This note provides a calculation of basic and diluted earnings per share, along with the weighted average common shares outstanding for the reporting periods Earnings Per Share Metrics | Metric | Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Net Income allocated to common Share Owners | $10,738 | $9,496 | | Basic weighted average common shares outstanding | 25,041 | 24,826 | | Dilutive weighted average shares outstanding | 25,238 | 24,955 | | Basic Earnings Per Share | $0.43 | $0.38 | | Diluted Earnings Per Share | $0.43 | $0.38 | - Basic and Diluted Earnings Per Share both increased to $0.43 in Q1 FY2024 from $0.38 in Q1 FY2023, reflecting higher net income allocated to common shareholders[83] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial performance, condition, and future outlook for the quarter ended September 30, 2023. It covers business overview, detailed results of operations, liquidity and capital resources, and critical accounting policies, highlighting key drivers of revenue and profitability changes, and strategies for managing working capital and growth Forward-Looking Statements This section highlights that the document contains forward-looking statements subject to various risks and uncertainties, including global economic conditions and supply chain challenges - The document contains forward-looking statements subject to risks such as global economic conditions, geopolitical conflicts, raw material availability/cost, foreign exchange fluctuations, and the ability to convert new business opportunities[84] Business Overview This section provides an overview of Kimball Electronics' global manufacturing solutions business, its market position, and the industry trends and challenges it faces - Kimball Electronics is a global, multifaceted manufacturing solutions provider specializing in electronics manufacturing services (EMS) for automotive, medical, and industrial markets, also offering contract manufacturing for non-electronic components and medical devices[85] - The EMS industry is projected to grow at a CAGR of 5.5% through 2027, while the worldwide assembly market for electronics products is expected to grow at 4.3%[87] - The Company faces ongoing challenges from component shortages (especially semiconductors), allocations, shipping delays, and industry-wide inflation, which impact costs and working capital[89][90] Customer Tenure and Net Sales Contribution | Customer Service Years | % of Net Sales (Sep 30, 2023) | of Customers (Sep 30, 2023) | % of Net Sales (Sep 30, 2022) | of Customers (Sep 30, 2022) | | :--------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | More than 10 Years | 74 % | 33 | 80 % | 31 | | 5 to 10 Years | 20 % | 20 | 16 % | 18 | | Less than 5 Years | 6 % | 11 | 4 % | 11 | | Total | 100 % | 64 | 100 % | 60 | Results of Operations This section analyzes the company's financial performance for the three months ended September 30, 2023, detailing changes in net sales, gross profit, operating income, and net income by vertical market Key Financial Results | Metric | Q1 FY2024 (Millions) | Q1 FY2023 (Millions) | % Change | | :-------------------------------- | :------------------- | :------------------- | :------- | | Net Sales | $438.1 | $405.9 | 8 % | | Gross Profit | $35.5 | $29.3 | 21 % | | Selling and Administrative Expenses | $16.0 | $15.7 | 2 % | | Operating Income | $19.5 | $13.6 | 44 % | | Other Income (Expense) | $(6.2) | $(1.4) | N/A | | Provision for Income Taxes | $2.5 | $2.7 | (8)% | | Net Income | $10.8 | $9.5 | 13 % | | Diluted Earnings per Share | $0.43 | $0.38 | 13 % | | Open Orders | $907 | $1,069 | (15)% | Net Sales by Vertical Market | Vertical Market | Q1 FY2024 Net Sales (Millions) | Q1 FY2023 Net Sales (Millions) | % Change | | :---------------- | :----------------------------- | :----------------------------- | :------- | | Automotive | $212.5 | $188.2 | 13 % | | Medical | $102.4 | $116.0 | (12)% | | Industrial | $123.2 | $101.7 | 21 % | | Total Net Sales | $438.1 | $405.9 | 8 % | - Automotive sales increased 13% due to program ramp-ups, new product launches, and improved component availability. Industrial sales increased 21% from program ramp-ups. Medical sales declined 12% primarily due to decreased sales with a large customer remediating a recall unrelated to the Company's products[99] - Gross profit as a percentage of net sales improved in Q1 FY2024, reflecting optimized operating performance post-facility expansions. Selling and administrative expenses remained relatively flat in absolute dollars but declined as a percentage of net sales[100][101] - Interest expense increased significantly due to higher interest rates and increased borrowings. Open orders decreased by 15% YoY, mainly driven by reduced orders from a large medical customer[101][103] Liquidity and Capital Resources This section discusses the company's financial liquidity, capital management, and ability to meet short-term and long-term obligations, including cash flows, credit facilities, and working capital metrics - Working capital was $452.7 million at September 30, 2023, compared to $454.3 million at June 30, 2023. The current ratio was 1.9, and the debt-to-equity ratio was 0.6 at September 30, 2023[104] Working Capital and Efficiency Metrics | Metric | Sep 30, 2023 | Jun 30, 2023 | Sep 30, 2022 | | :-------------------------- | :----------- | :----------- | :----------- | | Days Sales Outstanding | 58 | 56 | 54 | | Contract Asset Days | 17 | 14 | 14 | | Production Days Supply on Hand | 108 | 97 | 106 | | Accounts Payable Days | 71 | 65 | 73 | | Advances from Customers Days | 9 | 8 | 7 | | Cash Conversion Days | 103 | 94 | 94 | - Cash Conversion Days (CCD) increased to 103 at September 30, 2023, from 94 at June 30, 2023, primarily due to strategic inventory builds to mitigate parts shortages, which adversely impacted Production Days Supply on Hand[106] Cash Flows This subsection analyzes the company's cash generation and usage from operating, investing, and financing activities, highlighting key changes and their drivers Summary Cash Flows | Cash Flow Category | Q1 FY2024 (Millions) | Q1 FY2023 (Millions) | | :-------------------------------- | :------------------- | :------------------- | | Net cash provided by (used for) operating activities | $12.8 | $(60.2) | | Net cash used for investing activities | $(11.3) | $(19.3) | | Net cash provided by financing activities | $14.0 | $50.8 | - Operating cash flow significantly improved to a positive $12.8 million in Q1 FY2024, compared to a negative $60.2 million in Q1 FY2023, mainly due to a decrease in accounts receivable and a smaller increase in inventory[109][110] - Investing activities used $11.3 million in Q1 FY2024, down from $19.3 million in Q1 FY2023, reflecting lower capital expenditures for new business awards and facility expansions[112] - Financing activities provided $14.0 million in Q1 FY2024, primarily from net borrowings on credit facilities, a decrease from $50.8 million in Q1 FY2023[113] Credit Facilities This subsection details the company's credit facilities, including their purpose, maturity dates, and compliance with financial covenants - The Company maintains a $300 million primary credit facility (maturing May 4, 2027) and a $50 million secondary credit facility (maturing February 2, 2024) for working capital and general corporate purposes[114] - The Company was in compliance with all financial covenants of its primary and secondary credit facilities as of September 30, 2023[114] - Foreign credit facilities are also maintained for working capital at specific international locations (Thailand, China, Netherlands, Poland, Vietnam)[115] Factoring Arrangements This subsection explains the company's use of non-recourse accounts receivable factoring arrangements to manage customer payment terms and cash flow - The Company utilizes non-recourse accounts receivable factoring arrangements, selling $103.0 million and $97.6 million of receivables in Q1 FY2024 and Q1 FY2023, respectively, to extend customer terms without impacting cash flow[117] Future Liquidity This subsection outlines management's assessment of future liquidity, including expected sufficiency of funds, capital expenditure commitments, and foreign cash holdings - Management believes current liquidity sources (cash, operations, credit facilities) are sufficient for the next 12 months. Unused borrowing capacity totaled $90.5 million at September 30, 2023[118] - Capital expenditure commitments were approximately $12 million at September 30, 2023, primarily for new program wins and facility expansions[120] - Foreign operations held $54.1 million in cash, with accumulated unremitted foreign earnings intended for permanent reinvestment outside the U.S.[122] Fair Value This section discusses the fair value of financial instruments and the impact of market liquidity on their valuation during the reporting period - No Level 1 or Level 2 financial instruments were affected by a lack of market liquidity in Q1 FY2024. Foreign currency derivative assets and liabilities were valued using observable market inputs[125] Off-Balance Sheet Arrangements This section confirms the absence of any material off-balance sheet arrangements as of September 30, 2023 - As of September 30, 2023, the Company did not have any material off-balance sheet arrangements[126] Critical Accounting Policies This section states that there have been no material changes to the company's critical accounting policies since the last annual report - There have been no material changes to the Company's critical accounting policies since the Annual Report on Form 10-K for the year ended June 30, 2023[128] New Accounting Standards This section indicates that no newly issued accounting standards are expected to have a material impact on the company's financial statements - There are no issued but not yet adopted accounting standards expected to have a material impact on the Company[129] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there were no material changes in the Company's exposure to market risks related to foreign currency exchange rates and interest rates compared to the fiscal year ended June 30, 2023 - No material changes in exposure to market risks for foreign currency exchange rates and interest rates were reported compared to the fiscal year ended June 30, 2023[130] Item 4. Controls and Procedures This section confirms the effectiveness of the Company's disclosure controls and procedures as of September 30, 2023, and reports no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of September 30, 2023[131] - There were no material changes in internal control over financial reporting during the quarter ended September 30, 2023[131] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section states that the Company is not a party to any material legal proceedings beyond ordinary routine litigation incidental to its business, and the outcome of current litigation is not expected to have a material adverse impact - The Company is not involved in any legal proceedings expected to have a material adverse impact on its business or financial condition, beyond routine litigation[133] Item 1A. Risk Factors This section refers to the comprehensive disclosure of risk factors in the Company's Annual Report on Form 10-K for the year ended June 30, 2023 - A comprehensive disclosure of risk factors is available in the Company's Annual Report on Form 10-K for the year ended June 30, 2023[134] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the Company's stock repurchase plan, which authorizes up to $100 million in common stock repurchases. No shares were purchased during the quarter ended September 30, 2023, leaving $11.2 million remaining under the plan - The Board-approved stock repurchase plan authorizes up to $100 million in common stock repurchases[135] - No common stock was purchased under the Repurchase Plan during the three months ended September 30, 2023[136] - The maximum value of remaining shares that may be purchased under the plan was $11.2 million as of September 30, 2023[136] Item 5. Other Information This section confirms that no officers or directors adopted or terminated any Rule 10b5-1 trading arrangements during the quarter ended September 30, 2023 - No officers or directors adopted or terminated Rule 10b5-1 trading arrangements during the three months ended September 30, 2023[137] Item 6. Exhibits This section lists the exhibits filed with the 10-Q report, including articles of incorporation, by-laws, CEO/CFO certifications, and Inline XBRL documents - The report includes certifications from the Chief Executive Officer and Chief Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[138] SIGNATURES This section contains the signatures of the Chief Executive Officer and Chief Financial Officer, certifying the filing of the report on November 7, 2023 - The report was signed by Richard D. Phillips (Chief Executive Officer) and Jana T. Croom (Chief Financial Officer) on November 7, 2023[142]