Kimball Electronics posts solid third quarter results, buoyed by medical segment rebound

Kimball Electronics (Nasdaq: KE) reported third-quarter fiscal 2026 results broadly in line with expectations, highlighted by double-digit sequential growth in its medical business and a ninth consecutive quarter of positive operating cash flow.

Revenue came in at $352.9 million, up 3.4% from the second quarter, though down 6% year-over-year. The standout performer was the medical vertical, which grew 10.2% sequentially to $106.1 million, representing 30% of total sales. Automotive remained the largest segment at 46% of revenue ($160.5M), while industrial contributed 24% ($86.3M). On a year-over-year basis, all three segments declined, though the company noted that Q3 FY2025 medical results included a one-time $24 million consigned inventory sale that inflates the comparison.

Operating income held steady at $11.8 million (3.3% margin), with adjusted operating income of $14.8 million, or 4.2% of net sales. Net income improved to $5.7 million ($0.23 diluted EPS) from $3.8 million a year ago. On an adjusted basis, diluted EPS reached $0.33, up from $0.27 in Q3 FY2025.

Cash generation remained healthy at $14.9 million from operations. The company ended the quarter with $163 million in debt and $276 million in available borrowing capacity. Cash Conversion Days improved to 90, better than both the prior quarter and the year-ago period. Kimball also repurchased 165,000 shares for $4 million during the quarter.

CEO Richard D. Phillips struck an optimistic tone, emphasizing the medical contract manufacturing organization (CMO) as a central pillar of the company’s long-term strategy. “When volumes ramp, we expect it to become a meaningful driver of both top line growth and margin expansion,” he said, adding that the company is also pursuing inorganic growth opportunities.

For the full fiscal year 2026, Kimball affirmed its guidance: net sales of $1.40–$1.46 billion, adjusted operating margin of 4.2%–4.5% with results expected at the high end of that range, and capital expenditures of $50–$60 million.