Kimball Electronics posts strong Q1 results, doubles adjusted earnings year-over-year

Kimball Electronics Inc. reported first-quarter net income of $10.1 million, or 40 cents per diluted share, more than tripling the $3.2 million, or 12 cents per share, earned during the same period last year.

The electronics manufacturing services provider posted adjusted earnings per share of 49 cents for the quarter ended Sept. 30, more than double the 22 cents reported in the first quarter of fiscal 2025.

Revenue comes in at $365.6 million, down 2% from $374.3 million in the prior-year quarter. The company attributes the decline mainly to a 10% drop in automotive sales, though this is partially offset by a 13% increase in medical vertical revenue.

“I’m pleased with the results for the first quarter and start to the new fiscal year,” says Richard D. Phillips, chief executive officer. “Sales were in line with expectations, driven by strength in the medical vertical, margins improved year-over-year, cash from operations was positive for the seventh consecutive quarter, and debt at the end of Q1 was the lowest level in over three years.”

Operating income reached $14.5 million, or 4.0% of net sales, compared with $9.1 million, or 2.4%, in the year-ago period. Adjusted operating income improves to 4.8% of net sales, up 140 basis points year-over-year.

The medical vertical accounted for 28% of total sales at $101.6 million, up from 24% in the prior-year quarter. Automotive sales declined to $164.4 million, representing 45% of revenue, down from 49% a year earlier. Industrial sales, excluding the divested Automation, Test and Measurement business, total $99.6 million, or 27% of revenue.

Cash from operations totaled $8.1 million, marking the seventh consecutive quarter of positive cash generation. Total debt falls to $138 million, down $9.5 million during the quarter, reaching the lowest level in more than three years.

The company’s cash conversion days improved to 83, the lowest level in three years. Borrowing capacity stands at $294.3 million.

Kimball Electronics invested $1.5 million to repurchase 49,000 shares of common stock during the quarter.

“I continue to be impressed with our team’s progress in positioning the company for the future,” Phillips says. “Our solid footing as an EMS provider and our capabilities as a medical CMO are unique in the industry, and we look to expand upon them through organic, and possibly inorganic, channels.”

The company reiterated its fiscal 2026 guidance, expecting net sales between $1.35 billion and $1.45 billion with adjusted operating income of 4.0% to 4.25% of net sales. Capital expenditures are estimated at $50 million to $60 million.

“We remain confident this powerful combination will result in a return to profitable topline growth next year, and we are reiterating our guidance for fiscal 2026,” Phillips says.

Kimball Electronics operates manufacturing facilities in the United States, China, Mexico, Poland, Romania and Thailand, providing electronics manufacturing services and contract manufacturing organization solutions across automotive, medical and industrial sectors.