In This Article:
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Net Sales: $357 million, a 13% decline year over year excluding A T&M.
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Automotive Net Sales: $193 million, a 4% decrease year over year.
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Medical Net Sales: $84 million, a 22% decrease year over year.
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Industrial Net Sales: $81 million, a 20% decrease year over year excluding A T&M.
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Gross Margin Rate: 6.6%, a 160 basis point decline compared to the previous year.
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Adjusted Operating Income: $13.3 million or 3.7% of net sales.
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Adjusted Net Income: $7.4 million or $0.29 per diluted share.
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Cash and Cash Equivalents: $53.9 million as of December 31, 2024.
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Cash Flow from Operating Activities: $29.5 million.
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Inventory: $306.2 million, a $29 million reduction from Q1.
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Borrowings: $205 million, a $41 million reduction from Q1.
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Capital Expenditures: $6.5 million in the second quarter.
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Updated Fiscal Year 2025 Guidance: Net sales expected to be $1.4 to $1.44 billion; adjusted operating income estimated at 3.4% to 3.6% of net sales.
Release Date: February 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Kimball Electronics Inc (NASDAQ:KE) reported positive cash flow from operating activities for the fourth consecutive quarter.
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The company successfully reduced inventory levels by $149 million or 33% year-over-year.
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Debt was significantly reduced, with borrowings nearly 40% lower than a year ago.
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Kimball Electronics Inc (NASDAQ:KE) is strategically repositioning for growth with a restructuring plan, including divesting non-core assets and focusing on medical CMO.
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The company was recognized with the highest overall customer rating in all seven categories by Circuits Assembly Service Excellence Awards.
Negative Points
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Net sales in the second quarter declined by 13% year-over-year, excluding A T&M, with significant declines in North America and Europe.
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The automotive segment experienced a 4% decrease in net sales compared to the previous year.
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The medical segment saw a 22% decrease in net sales, primarily due to program end-of-life and impacts from an FDA recall.
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Industrial net sales were down 20% year-over-year, with declines in smart metering programs and other areas.
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Kimball Electronics Inc (NASDAQ:KE) revised its fiscal year 2025 guidance downward, anticipating more time needed to stabilize the business and return to historical growth patterns.
Q & A Highlights
Q: Is there a level of tariffs where it wouldn't make sense to move production back even at 25%? How should we think about that 25% number? A: Steve Korn, Chief Operating Officer, explained that even with the additional tariffs, it is still more cost-effective for most products to be manufactured in Mexico. If required, a better solution might be moving business to Thailand to eliminate tariffs from both Mexico and China.