KE 8-K
Kimball Electronics, Inc. (KE)
8-K
2021-05-05
For: 2021-05-05
View Original
Added on
April 11, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 5, 2021
________________________________________________________________________________________________________
(Exact name of registrant as specified in its charter)
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Registrant’s telephone number, including area code (812 ) 634-4000
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (Section 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (Section 240.12b-2 of this chapter).
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02 Results of Operations and Financial Condition
On May 5, 2021, the Company issued an earnings release for the third quarter ended March 31, 2021. The earnings release is attached as Exhibit 99.1 and supplementary information provided for the Company’s earnings conference call is attached as Exhibit 99.2.
The information in Item 2.02 of this Form 8-K, including Exhibit 99.1 and Exhibit 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Form 8-K shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except as shall otherwise be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| Exhibit | ||||||||
| Number | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| KIMBALL ELECTRONICS, INC. | |||||
| By: | /s/ Michael K. Sergesketter | ||||
| MICHAEL K. SERGESKETTER Vice President, Chief Financial Officer | |||||
Date: May 5, 2021
3
Exhibit 99.1
KIMBALL ELECTRONICS, INC. REPORTS THIRD QUARTER FISCAL YEAR 2021 RESULTS
•Net sales in the third quarter were $310 million, up 6% year-over-year
•Third quarter operating income was 4.7% of net sales and adjusted operating income (non-GAAP) was 4.6%
•Net income of $10.5 million (adjusted non-GAAP $9.9 million) and diluted EPS of $0.41 (adjusted non-GAAP $0.39) in the third quarter
•Strong cash flows provided by operating activities of $31.5 million during the third quarter
JASPER, Ind., May 5, 2021 (GLOBE NEWSWIRE) -- Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the third quarter ended March 31, 2021.
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| March 31, | March 31, | ||||||||||||||||||||||
| (Amounts in Thousands, except EPS) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Net Sales | $ | 310,329 | $ | 293,925 | $ | 962,682 | $ | 914,394 | |||||||||||||||
| Operating Income | $ | 14,638 | $ | 10,588 | $ | 48,624 | $ | 30,387 | |||||||||||||||
Adjusted Operating Income (non-GAAP) (1)(2) | $ | 14,426 | $ | 9,674 | $ | 49,432 | $ | 29,953 | |||||||||||||||
| Operating Income % | 4.7 | % | 3.6 | % | 5.1 | % | 3.3 | % | |||||||||||||||
| Adjusted Operating Income (non-GAAP) % | 4.6 | % | 3.3 | % | 5.1 | % | 3.3 | % | |||||||||||||||
| Net Income | $ | 10,472 | $ | 6,259 | $ | 42,345 | $ | 19,469 | |||||||||||||||
Adjusted Net Income (non-GAAP) (1) | $ | 9,933 | $ | 6,259 | $ | 41,680 | $ | 19,469 | |||||||||||||||
| Diluted EPS | $ | 0.41 | $ | 0.25 | $ | 1.67 | $ | 0.76 | |||||||||||||||
Adjusted Diluted EPS (non-GAAP) (1) | $ | 0.39 | $ | 0.25 | $ | 1.65 | $ | 0.76 | |||||||||||||||
(1) A reconciliation of GAAP and non-GAAP financial measures is included below.
(2) Beginning in the first quarter of fiscal year 2021, adjusted operating income excludes changes in the fair value of our supplemental employee retirement plan, or SERP, liability which are exactly offset by the revaluation to fair value of the SERP investments in Other Income (Expense), net, and as a result have no impact on net income. Prior reported periods have been revised accordingly.
Donald D. Charron, Chairman and Chief Executive Officer, stated, “We are very pleased with our operating results for the third quarter of fiscal year 2021. Our team remains resilient as we work through the ongoing challenges caused by the pandemic and the global semiconductor shortage. Despite the adversity, we again delivered solid operating income exceeding our goal of 4.5%, and we continued to deliver excellent cash flow from operations, which on a year-to-date basis has more than doubled from the prior year.”
Mr. Charron continued, “Due to the global semiconductor shortage, a significant amount of our shippable backlog shifted out of Q3 and Q4 of fiscal year 2021 to the first half of fiscal year 2022. Many industry experts are forecasting the global semiconductor shortage will remain with us for most of this calendar year. However, when considering the semiconductor delivery commitments that we currently have from our suppliers, we are still expecting a very strong fourth quarter of fiscal year 2021 both sequentially and year-over-year.”
Third Quarter Fiscal Year 2021 Overview:
•Consolidated net sales increased 6% compared to the third quarter of fiscal year 2020. Foreign currency had a favorable 3% impact on net sales in the current quarter compared to the same period a year ago.
•Operating activities provided cash of $31.5 million during the quarter, which compares to cash provided by operating activities of $12.0 million in the third quarter of fiscal year 2020.
•Cash conversion days (“CCD”) for the quarter ended March 31, 2021 were 66 days, down from 75 days in the second quarter of fiscal year 2021 and 81 days in the quarter ended March 31, 2020. CCD is calculated as the sum of days sales outstanding plus contract asset days plus production days supply on hand less accounts payable days.
•Investments in capital expenditures were $8.7 million during the quarter.
•Cash and cash equivalents were $89.7 million and borrowings outstanding on credit facilities were $60.5 million at March 31, 2021, including $40.0 million classified as long term.
Net Sales by Vertical Market:
| Three Months Ended | |||||||||||||||||
| March 31, | |||||||||||||||||
| (Amounts in Millions) | 2021 | 2020 | Percent Change | ||||||||||||||
| Automotive | $ | 139.6 | $ | 124.4 | 12 | % | |||||||||||
| Medical | 85.4 | 87.1 | (2) | % | |||||||||||||
| Industrial | 69.2 | 65.6 | 5 | % | |||||||||||||
| Public Safety | 13.5 | 12.5 | 9 | % | |||||||||||||
| Other | 2.6 | 4.3 | (41) | % | |||||||||||||
| Total Net Sales | $ | 310.3 | $ | 293.9 | 6 | % | |||||||||||
Forward-Looking Statements
Certain statements contained within this release are considered forward-looking under the Private Securities Litigation Reform Act of 1995. The statements may be identified by the use of words such as “expect,” “should,” “goal,” “predict,” “will,” “future,” “optimistic,” “confident,” and “believe.” These forward-looking statements are subject to risks and uncertainties including, without limitation, global economic conditions, geopolitical environment, global health emergencies including the COVID-19 pandemic, availability or cost of raw materials and components, foreign exchange rate fluctuations, and our ability to convert new business opportunities into customers and revenue. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of the Company are contained in its Annual Report on Form 10-K for the year ended June 30, 2020.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures. The non-GAAP financial measures contained herein include adjusted operating income, adjusted net income, and adjusted diluted EPS. Reconciliations of the reported GAAP numbers to these non-GAAP financial measures are included in the Reconciliation of Non-GAAP Financial Measures section below. Management believes these measures are useful and allow investors to meaningfully trend, analyze, and benchmark the performance of the Company’s core operations. The Company’s non-GAAP financial measures are not necessarily comparable to non-GAAP information used by other companies.
| Conference Call / Webcast | ||||||||
| Date: | May 6, 2021 | |||||||
| Time: | 10:00 AM Eastern Time | |||||||
| Live Webcast: | investors.kimballelectronics.com/events-presentations | |||||||
| Dial-In #: | 800-992-4934 (International Calls - 937-502-2251) | |||||||
| Conference ID: | 5958058 | |||||||
For those unable to participate in the live webcast, the call will be archived at investors.kimballelectronics.com.
About Kimball Electronics, Inc.
Kimball Electronics is a multifaceted manufacturing solutions provider of electronics and diversified contract manufacturing services to customers around the world. From our operations in the United States, China, India, Japan, Mexico, Poland, Romania, Thailand, and Vietnam, our teams are proud to provide manufacturing services for a variety of industries. Recognized for a reputation of excellence, we are committed to a high-performance culture that values personal and organizational commitment to quality, reliability, value, speed, and ethical behavior. Kimball Electronics, Inc. (Nasdaq: KE) is headquartered in Jasper, Indiana.
To learn more about Kimball Electronics, visit: www.kimballelectronics.com.
Lasting relationships. Global success.
Financial highlights for the third quarter and year-to-date period ended March 31, 2021 are as follows:
| Condensed Consolidated Statements of Income | |||||||||||||||||||||||
| (Unaudited) | Three Months Ended | ||||||||||||||||||||||
| (Amounts in Thousands, except Per Share Data) | March 31, 2021 | March 31, 2020 | |||||||||||||||||||||
| Net Sales | $ | 310,329 | 100.0 | % | $ | 293,925 | 100.0 | % | |||||||||||||||
| Cost of Sales | 284,323 | 91.6 | % | 273,713 | 93.1 | % | |||||||||||||||||
| Gross Profit | 26,006 | 8.4 | % | 20,212 | 6.9 | % | |||||||||||||||||
| Selling and Administrative Expenses | 11,744 | 3.8 | % | 9,624 | 3.3 | % | |||||||||||||||||
| Other General Income | (376) | (0.1) | % | — | — | % | |||||||||||||||||
| Operating Income | 14,638 | 4.7 | % | 10,588 | 3.6 | % | |||||||||||||||||
| Other Income (Expense), net | (641) | (0.2) | % | (1,893) | (0.6) | % | |||||||||||||||||
| Income Before Taxes on Income | 13,997 | 4.5 | % | 8,695 | 3.0 | % | |||||||||||||||||
| Provision for Income Taxes | 3,525 | 1.1 | % | 2,436 | 0.9 | % | |||||||||||||||||
| Net Income | $ | 10,472 | 3.4 | % | $ | 6,259 | 2.1 | % | |||||||||||||||
| Earnings Per Share of Common Stock: | |||||||||||||||||||||||
| Basic | $ | 0.42 | $ | 0.25 | |||||||||||||||||||
| Diluted | $ | 0.41 | $ | 0.25 | |||||||||||||||||||
| Average Number of Shares Outstanding: | |||||||||||||||||||||||
| Basic | 25,049 | 25,181 | |||||||||||||||||||||
| Diluted | 25,217 | 25,287 | |||||||||||||||||||||
| (Unaudited) | Nine Months Ended | ||||||||||||||||||||||
| (Amounts in Thousands, except Per Share Data) | March 31, 2021 | March 31, 2020 | |||||||||||||||||||||
| Net Sales | $ | 962,682 | 100.0 | % | $ | 914,394 | 100.0 | % | |||||||||||||||
| Cost of Sales | 876,428 | 91.0 | % | 851,478 | 93.1 | % | |||||||||||||||||
| Gross Profit | 86,254 | 9.0 | % | 62,916 | 6.9 | % | |||||||||||||||||
| Selling and Administrative Expenses | 38,347 | 4.0 | % | 32,529 | 3.6 | % | |||||||||||||||||
| Other General Income | (717) | (0.1) | % | — | — | % | |||||||||||||||||
| Operating Income | 48,624 | 5.1 | % | 30,387 | 3.3 | % | |||||||||||||||||
| Other Income (Expense), net | 3,905 | 0.4 | % | (4,152) | (0.4) | % | |||||||||||||||||
| Income Before Taxes on Income | 52,529 | 5.5 | % | 26,235 | 2.9 | % | |||||||||||||||||
| Provision for Income Taxes | 10,184 | 1.1 | % | 6,766 | 0.8 | % | |||||||||||||||||
| Net Income | $ | 42,345 | 4.4 | % | $ | 19,469 | 2.1 | % | |||||||||||||||
| Earnings Per Share of Common Stock: | |||||||||||||||||||||||
| Basic | $ | 1.68 | $ | 0.77 | |||||||||||||||||||
| Diluted | $ | 1.67 | $ | 0.76 | |||||||||||||||||||
| Average Number of Shares Outstanding: | |||||||||||||||||||||||
| Basic | 25,101 | 25,308 | |||||||||||||||||||||
| Diluted | 25,288 | 25,466 | |||||||||||||||||||||
| Condensed Consolidated Statements of Cash Flows | Nine Months Ended | ||||||||||
| (Unaudited) | March 31, | ||||||||||
| (Amounts in Thousands) | 2021 | 2020 | |||||||||
| Net Cash Flow provided by Operating Activities | $ | 103,755 | $ | 51,318 | |||||||
| Net Cash Flow used for Investing Activities | (22,972) | (27,602) | |||||||||
| Net Cash Flow used for Financing Activities | (58,729) | (13,489) | |||||||||
| Effect of Exchange Rate Change on Cash and Cash Equivalents | 2,607 | (1,191) | |||||||||
| Net Increase in Cash and Cash Equivalents | 24,661 | 9,036 | |||||||||
| Cash and Cash Equivalents at Beginning of Period | 64,990 | 49,276 | |||||||||
| Cash and Cash Equivalents at End of Period | $ | 89,651 | $ | 58,312 | |||||||
| (Unaudited) | |||||||||||
| Condensed Consolidated Balance Sheets | March 31, 2021 | June 30, 2020 | |||||||||
| (Amounts in Thousands) | |||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 89,651 | $ | 64,990 | |||||||
| Receivables, net | 197,769 | 180,133 | |||||||||
| Contract assets | 53,171 | 70,350 | |||||||||
| Inventories | 181,131 | 219,043 | |||||||||
| Prepaid expenses and other current assets | 31,959 | 23,891 | |||||||||
| Property and Equipment, net | 154,409 | 154,529 | |||||||||
| Goodwill | 12,011 | 12,011 | |||||||||
| Other Intangible Assets, net | 17,590 | 19,343 | |||||||||
| Other Assets | 37,542 | 30,539 | |||||||||
| Total Assets | $ | 775,233 | $ | 774,829 | |||||||
LIABILITIES AND SHARE OWNERS’ EQUITY | |||||||||||
| Current portion of borrowings under credit facilities | $ | 20,518 | $ | 26,638 | |||||||
| Accounts payable | 208,281 | 203,703 | |||||||||
| Accrued expenses | 49,985 | 42,264 | |||||||||
| Long-term debt under credit facilities, less current portion | 40,000 | 91,500 | |||||||||
| Long-term income taxes payable | 8,854 | 9,765 | |||||||||
| Other | 22,630 | 21,594 | |||||||||
| Share Owners’ Equity | 424,965 | 379,365 | |||||||||
| Total Liabilities and Share Owners’ Equity | $ | 775,233 | $ | 774,829 | |||||||
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| (Amounts in Thousands, except Per Share Data) | |||||||||||||||||||||||
| Operating Income excluding SERP and Lawsuit Proceeds | |||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| March 31, | March 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Operating Income, as reported | $ | 14,638 | $ | 10,588 | $ | 48,624 | $ | 30,387 | |||||||||||||||
Add: SERP (1) | 164 | (914) | 1,525 | (434) | |||||||||||||||||||
| Less: Settlement Proceeds from Lawsuit | 376 | — | 717 | — | |||||||||||||||||||
| Adjusted Operating Income | $ | 14,426 | $ | 9,674 | $ | 49,432 | $ | 29,953 | |||||||||||||||
| Net Income excluding Adjustments After Measurement Period on GES Acquisition and Lawsuit Proceeds | |||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| March 31, | March 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net Income, as reported | $ | 10,472 | $ | 6,259 | $ | 42,345 | $ | 19,469 | |||||||||||||||
| Less: After-Tax Adjustments After Measurement Period on GES Acquisition | 254 | — | 121 | — | |||||||||||||||||||
| Less: After-Tax Settlement Proceeds from Lawsuit | 285 | — | 544 | — | |||||||||||||||||||
| Adjusted Net Income | $ | 9,933 | $ | 6,259 | $ | 41,680 | $ | 19,469 | |||||||||||||||
| Diluted Earnings per Share excluding Adjustments After Measurement Period on GES Acquisition and Lawsuit Proceeds | |||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| March 31, | March 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Diluted Earnings per Share, as reported | $ | 0.41 | $ | 0.25 | $ | 1.67 | $ | 0.76 | |||||||||||||||
| Less: After-Tax Adjustments After Measurement Period on GES Acquisition | 0.01 | — | — | — | |||||||||||||||||||
| Less: Impact of Settlement Proceeds from Lawsuit | 0.01 | — | 0.02 | — | |||||||||||||||||||
| Adjusted Diluted Earnings per Share | $ | 0.39 | $ | 0.25 | $ | 1.65 | $ | 0.76 | |||||||||||||||
(1) Beginning in the first quarter of fiscal year 2021, adjusted operating income excludes changes in the fair value of our supplemental employee retirement plan, or SERP, liability which are exactly offset by the revaluation of the fair value of the SERP investments in Other Income (Expense), net, and as a result have no impact on net income. Prior reported periods have been revised accordingly.
Financial Results Third Quarter Fiscal Year 2021 Quarter Ended March 31, 2021 Supplementary Information to May 6, 2021 Earnings Conference Call Exhibit 99.2
Kimball Electronics (Nasdaq: KE) Safe Harbor Statement Certain statements contained within this supplementary information and any statements made during our earnings conference call today may be considered forward-looking under the Private Securities Litigation Reform Act of 1995. The statements may be identified by the use of words such as “expect,” “should,” “goal,” “predict,” “will,” “future,” “optimistic,” “confident,” and “believe.” These forward-looking statements are subject to risks and uncertainties including, without limitation, global economic conditions, geopolitical environment, global health emergencies including the COVID-19 pandemic, availability or cost of raw materials and components, foreign exchange fluctuations, and our ability to convert new business opportunities into customers and revenue. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of Kimball Electronics, Inc. (the “Company”) are contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020, our earnings release, and other filings with the Securities and Exchange Commission (the “SEC”). This supplementary information contains non-GAAP financial measures. The non-GAAP financial measures contained herein include Adjusted Selling & Administrative Expenses, Adjusted Operating Income, Adjusted Net Income, Adjusted EBITDA, and Return on Invested Capital (“ROIC”). Management believes these measures are useful and allow investors to meaningfully trend, analyze, and benchmark the performance of the Company’s core operations. Many of the Company’s internal performance measures that management uses to make certain operating decisions use these and other non-GAAP measures to enable meaningful trending of core operating metrics. Reconciliations of the reported GAAP numbers to these non-GAAP financial measures are included on the Reconciliation of Non-GAAP Results slide, which is the final slide of this supplementary information. 2
(Unaudited) In M ill io ns $319 $313 $307 $294 $286 $332 $321 $310 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 $200 $225 $250 $275 $300 $325 $350 +6% from Q3'20 3 Kimball Electronics (Nasdaq: KE) Net Sales
(Unaudited) % o f S al es 40% 40% 44% 42% 26% 36% 48% 45% 32% 32% 28% 30% 43% 38% 27% 28% 21% 21% 21% 22% 26% 21% 21% 22% 5% 5% 5% 4% 4% 4% 3% 4% 2% 2% 2% 2% 1% 1% 1% 1% Automotive Medical Industrial Public Safety Other Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 4 Kimball Electronics (Nasdaq: KE) Net Sales Mix by Vertical Market
(Unaudited) % o f S al es 7.3% 7.1% 6.7% 6.9% 7.3% 9.2% 9.3% 8.4% Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 5 Kimball Electronics (Nasdaq: KE) Gross Margin %
(Unaudited) % o f S al es 4.1% 3.6% 3.7% 3.6% 3.5% 3.8% 4.0% 3.7% Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 3.0% 3.5% 4.0% 4.5% 6 Kimball Electronics (Nasdaq: KE) Adjusted Selling & Administrative Expense (%)(1)(2) (Excludes SERP) (1) Adjusted Selling & Administrative Expense is a Non-GAAP measure – refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information. (2) Beginning in Q1’21, Adjusted Selling & Administrative Expense excludes changes in the fair value of our supplemental employee retirement plan (“SERP”) liability. Prior periods have been revised accordingly.
(Unaudited) In M ill io ns % of S ales $10.3 $11.1 $9.2 $9.7 $10.8 $18.0 $17.0 $14.4 3.2% 3.5% 3.0% 3.3% 3.8% 5.4% 5.3% 4.6% Adj Operating Income % of Net Sales Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% (1) Adjusted Operating Income is a Non-GAAP measure – refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information. (2) Beginning in Q1’21, Adjusted Operating Income excludes changes in the fair value of our supplemental employee retirement plan (“SERP”) liability. Prior periods have been revised accordingly. 7 Kimball Electronics (Nasdaq: KE) Adjusted Operating Income (1)(2) (Excludes SERP, goodwill impairment, and lawsuit proceeds)
(Unaudited) In M ill io ns $7.4 $6.6 $6.6 $6.3 $8.5 $16.6 $15.2 $9.9 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 $11.0 $12.0 $13.0 $14.0 $15.0 $16.0 $17.0 $18.0 (1) Adjusted Net Income is a Non-GAAP measure – refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information. 8 Kimball Electronics (Nasdaq: KE) Adjusted Net Income(1) (Excludes goodwill impairment, adjustments after the measurement period on GES acquisition, and lawsuit proceeds)
(Unaudited) In M ill io ns % of S ales $17.3 $17.2 $17.6 $17.7 $19.5 $28.7 $27.9 $22.1 5.4% 5.5% 5.7% 6.0% 6.8% 8.7% 8.7% 7.1% Adjusted EBITDA Adjusted EBITDA % of Sales Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 $20.0 $22.0 $24.0 $26.0 $28.0 $30.0 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% (1) Adjusted EBITDA is a Non-GAAP measure - refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information. 9 Kimball Electronics (Nasdaq: KE) Adjusted EBITDA(1) (Excludes goodwill impairment, adjustments after the measurement period on GES acquisition, and lawsuit proceeds)
R O IC 8.8% 9.0% 8.4% 7.1% 7.1% 8.7% 10.3% 11.4% Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% (1) We define ROIC as after-tax adjusted operating income for the trailing twelve months divided by average invested capital for the last five quarters. (2) ROIC is a Non-GAAP measure - refer to Reconciliation of Non-GAAP Results on the final slide of this supplementary information. (3) Beginning in Q1’21, after-tax adjusted operating income excludes changes in the fair value of our supplemental employee retirement plan (“SERP”) liability. Prior periods have been revised accordingly. (Unaudited) 10 Kimball Electronics (Nasdaq: KE) Return on Invested Capital(1)(2)(3) (Excludes SERP, goodwill impairment, and lawsuit proceeds)
(Unaudited) In M ill io ns $12.2 $39.6 ($0.3) $12.0 $21.5 $20.7 $51.6 $31.5 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 $(5.0) $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 $45.0 $50.0 $55.0 11 Kimball Electronics (Nasdaq: KE) Operating Cash Flow
(Unaudited) In M ill io ns $9.8 $11.7 $10.4 $5.7 $11.0 $8.5 $6.1 $8.7 $7.4 $7.3 $7.7 $7.9 $8.0 $8.3 $8.4 $8.5 Cap Ex Depr & Amort Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 (1) Capital Expenditures include purchases of capitalized software. 12 Kimball Electronics (Nasdaq: KE) Capital Expenditures and Depreciation & Amortization(1)
(Unaudited, Amounts in Thousands) Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Selling & Administrative Expenses, as reported $ 13,118 $ 11,078 $ 11,827 9,624 $ 11,391 $ 13,117 $ 13,486 $ 11,744 Less: SERP(2) 228 (22) 502 (914) 1,282 550 811 164 Adjusted S&A Expense $ 12,890 $ 11,100 $ 11,325 $ 10,538 $ 10,109 $ 12,567 $ 12,675 $ 11,580 Operating Income, as reported $ 10,319 $ 11,115 $ 8,684 $ 10,588 $ 1,609 $ 17,807 $ 16,179 $ 14,638 Add: SERP(2) 228 (22) 502 (914) 1,282 550 811 164 Add: Goodwill Impairment — — — — 7,925 — — — Less: Lawsuit Proceeds 215 — — — — 341 — 376 Adjusted Operating Income (2) $ 10,332 $ 11,093 $ 9,186 $ 9,674 $ 10,816 $ 18,016 $ 16,990 $ 14,426 Net Income, as reported $ 7,525 $ 6,598 $ 6,612 $ 6,259 $ (1,273) $ 16,811 $ 15,062 $ 10,472 Add: After-Tax Goodwill Impairment — — — — 6,947 — — — Add: After-Tax Adjustments after Measurement Period of GES Acquisition — — — — 2,871 — 133 (254) Less: Lawsuit Proceeds 163 — — — — 259 — 285 Adjusted Net Income $ 7,362 $ 6,598 $ 6,612 $ 6,259 $ 8,545 $ 16,552 $ 15,195 $ 9,933 Adjusted Net Income $ 7,362 $ 6,598 $ 6,612 $ 6,259 $ 8,545 $ 16,552 $ 15,195 $ 9,933 Add: Interest, net 1,405 1,190 1,142 1,148 881 816 590 332 Add: Depreciation & Amortization 7,386 7,312 7,674 7,897 7,989 8,314 8,448 8,483 Add: Taxes 1,137 2,115 2,215 2,436 2,087 3,049 3,677 3,353 Adjusted EBITDA $ 17,290 $ 17,215 $ 17,643 $ 17,740 $ 19,502 $ 28,731 $ 27,910 $ 22,101 Operating Income (GAAP) (TTM) $ 42,060 $ 46,143 $ 44,615 $ 40,706 $ 31,996 $ 38,688 $ 46,183 $ 50,233 Add: Goodwill Impairment — — — — 7,925 7,925 7,925 7,925 Add: SERP(2) 327 186 1,314 (206) 848 1,420 1,729 2,807 Less: Lawsuit Proceeds (TTM) 307 215 215 215 — 341 341 717 Adj. Operating Income (non-GAAP) (TTM) (2) $ 42,080 $ 46,114 $ 45,714 $ 40,285 $ 40,769 $ 47,692 $ 55,496 $ 60,248 Tax Effect (TTM) (2) 7,775 8,935 9,288 9,090 9,831 9,940 10,859 11,786 After-Tax Adj. Operating Income (TTM) (2) $ 34,305 $ 37,179 $ 36,426 $ 31,195 $ 30,938 $ 37,752 $ 44,637 $ 48,462 Average Invested Capital (1) $ 390,528 $ 411,735 $ 431,910 $ 438,634 $ 437,263 $ 435,465 $ 433,192 $ 423,545 ROIC (2) 8.8 % 9.0 % 8.4 % 7.1 % 7.1 % 8.7 % 10.3 % 11.4 % 13 (1) Average Invested Capital is computed using the Share Owners equity plus current and non-current debt less cash and cash equivalents averaged for the last five quarters. (2) Beginning in Q1 FY'21, adjusted selling and administrative expense, adjusted operating income, and ROIC exclude changes in the fair value of our supplemental employee retirement plan (“SERP”) liability. Prior periods have been revised accordingly. Kimball Electronics (Nasdaq: KE) Reconciliation of Non-GAAP Results