Kimball Electronics Reports 15% Decline in Net Sales, Net Income Down 71% in Q1 FY 2025

Kimball Electronics, Inc. reported a challenging first quarter for fiscal year 2025, with net sales of $374.3 million, a 15% decrease from $438.1 million in the same period of the previous year. This decline was attributed to reduced demand across all market verticals, particularly in the automotive and medical sectors, as well as the impact of the divestiture of the GES business, which was completed on July 31, 2024. The industrial market also faced challenges due to ongoing softness in smart metering and climate control production.

Gross profit for the quarter fell to $23.6 million, representing 6.3% of net sales, down from $35.5 million (8.1% of net sales) in Q1 FY 2024. Operating income decreased significantly by 53% to $9.1 million, while net income dropped 71% to $3.2 million, compared to $10.8 million in the prior year. Earnings per share also reflected this downturn, with diluted earnings per share at $0.12, down from $0.43.

The company’s financial position showed total current assets of $782.7 million as of September 30, 2024, down from $847.0 million at the end of June 2024. Total assets decreased to $1.15 billion, while total current liabilities also fell to $343.7 million. Long-term debt was reduced to $200 million from $235 million, contributing to an increase in total shareholders' equity to $547.8 million.

Kimball Electronics has initiated restructuring efforts to align its cost structure with the reduced demand, including the planned closure of its Tampa facility by the end of the fiscal year. This move is expected to incur total exit costs of approximately $8.0 million to $11.0 million, primarily for employee termination benefits. The company has also recorded a pre-tax restructuring expense of $2.3 million in Q1 FY 2025.

Cash flow from operating activities improved significantly, providing $45.5 million compared to $12.8 million in the same quarter last year, driven by adjustments in working capital. The company sold $87.3 million of accounts receivable without recourse, down from $103 million in Q1 FY 2024, with factoring fees decreasing to $0.5 million from $0.9 million.

Looking ahead, Kimball Electronics anticipates continued challenges due to demand softness and the loss of a major automotive program. The company is focusing on cost control and managing working capital effectively while investing in new capabilities and capacity expansions to support future growth.