Kimball Electronics(US:KE)2022-08-05 19:21Financial Data and Key Metrics Changes - Net sales in Q4 reached $373 million, a 13% increase compared to the same quarter last year, marking an all-time high for the company [9][16] - Adjusted operating income for Q4 was $19.4 million, representing 5.2% of net sales, compared to $18 million or 5.5% of net sales in Q4 last year [17] - Net income for Q4 was $9.9 million or $0.40 per diluted share, down from $14.7 million or $0.58 per diluted share in the same quarter last year [20] Business Line Data and Key Metrics Changes - Automotive sales were $152 million, a 7% increase year-over-year, accounting for 41% of total sales [10] - Medical sales reached $114 million, a 34% increase year-over-year, making it the best-performing business segment in Q4 [12] - Industrial sales totaled $88 million, a 2% increase year-over-year, marking a record performance for the segment [13] - Public safety sales were $14 million, a 33% increase year-over-year, driven by thermal imaging and security products [14] Market Data and Key Metrics Changes - The backlog of open orders exceeded $1 billion, indicating strong demand across all verticals [8] - Foreign exchange rates had a 3% unfavorable impact on net sales compared to Q4 of last year [9] Company Strategy and Development Direction - The company aims for double-digit sales increases and operating margin improvement in fiscal 2023, with guidance for net sales between $1.6 billion and $1.7 billion [25] - Facility expansions in Mexico and Poland are expected to increase production capacity significantly, aligning with customer growth [29][30] - The company is focusing on high-complexity applications in automotive, medical, and industrial sectors, with a goal of achieving $2 billion in annual revenue [29][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for growth in fiscal 2023 despite ongoing supply chain constraints [27][54] - The company anticipates a gradual improvement in supply chain conditions, which will support revenue growth [46] - Concerns about potential recessionary impacts in Europe were noted, but overall demand remains strong [41] Other Important Information - Capital expenditures for fiscal 2022 totaled $75 million, with guidance for $80 million to $100 million in fiscal 2023 [22][25] - The effective tax rate for Q4 was approximately 35.1%, up from 17.6% in the same quarter last year, influenced by foreign exchange re-measurement [19] Q&A Session Summary Question: Ability to pass through price increases to customers - Management confirmed strong relationships with customers allow for passing on material and logistics cost increases [36] Question: Backlog situation in the medical segment - The backlog in the medical segment is strong, with improvements expected as elective procedures return [38] Question: Supply chain improvements - Management indicated that supply chain conditions are slowly improving, but challenges remain [39] Question: Revenue guidance confidence - Management expressed confidence in achieving revenue growth due to established resources and ongoing expansions [53] Question: Seasonality in sales - Management noted that seasonality is difficult to assess due to material shortages affecting production [55][58] Question: Incremental revenue sources from capacity expansions - Management highlighted that growth will come from expansions in Thailand, Mexico, and Poland, as well as existing operations [60][61]