• Quarterly net sales record of $220 million
• Cash flow from operating activities in the fourth quarter of $8.8 million
• Returned $5.0 million to Share Owners in stock repurchases during the fourth quarter

JASPER, Ind., Aug. 03, 2016 (GLOBE NEWSWIRE) -- Kimball Electronics, Inc. (Nasdaq:KE), a leading global electronic manufacturing services provider of high-quality, durable electronic products, today announced financial results for its fourth quarter and fiscal year ended June 30, 2016. 

Donald D. Charron, Chairman and Chief Executive Officer, stated, “Continued strength in the automotive market combined with sales from new program launches helped us set new quarterly and annual sales records in the fourth quarter and fiscal year of 2016.  Our new business opportunities pipeline remains healthy and we continue to work diligently to achieve our goal of $1 billion in annual sales by fiscal year 2018.”

Mr. Charron continued, “While we were pleased to have achieved our goal of 4% operating income in the fourth quarter, we continue to experience pressure on our margins and still have work to do in order to consistently achieve our 4% operating income target.  Margin expansion will continue to be a priority of focus for us going forward.  Fiscal year 2017 will be a pivotal year for us as we work through another year of significant new program launches, the ramp-up of our new Romania operation, and the integration of our recent Medivative and Aircom acquisitions.”

Fourth Quarter Fiscal Year 2016 Overview:

• Consolidated net sales increased 10% compared to the fourth quarter of fiscal year 2015, setting a new quarterly sales record.
• On May 2, 2016, the Company announced the acquisition of Medivative Technologies, LLC.  Excluding the incremental net sales associated with the acquisition, consolidated net sales increased 8% over the prior year fourth quarter.  Consolidated earnings were not materially impacted during the quarter from the Medivative acquisition.       
• Incremental net loss associated with the start-up of the Romania facility was $1.0 million during the current year fourth quarter.
• Cash flow from operating activities was $8.8 million during the quarter.
• Investments in capital expenditures were $6.5 million during the quarter.  
• $5.0 million was returned to Share Owners during the quarter in the form of common stock repurchases associated with the $20 million, 18-month stock repurchase program announced in October 2015.
• Cash and cash equivalents were $54.7 million and borrowings outstanding on credit facilities were $9.0 million at June 30, 2016.
• Cash conversion days (“CCD”) for the quarter ended June 30, 2016 were 59 days, which improved from 63 days for the same quarter last year.  CCD is calculated as the sum of days sales outstanding plus production days supply on hand less accounts payable days.

Net Sales by Vertical Market:

Fiscal Year 2016 Overview:

• Net sales increased 3% from the prior fiscal year, setting a new annual record of $842.1 million. 
• Spin-off expenses totaled $0.1 million and $2.6 million in fiscal years 2016 and 2015, respectively.
• Cash flow provided by operating activities for fiscal year 2016 was $36.8 million.
• Capital expenditures were $34.6 million in fiscal year 2016 compared to $36.9 million in fiscal year 2015.
• Return on invested capital (“ROIC”) was 9.0% for fiscal year 2016, which declined from 12.5% for the prior fiscal year (see reconciliation of non-GAAP financial measures for ROIC calculation).
• Fiscal year 2015 financial results included an allocation of costs incurred by our former parent, Kimball International, Inc., through October 31, 2014, the completion date of our spin-off from our former parent.  As a result, the full fiscal year 2015 financial statements were not necessarily indicative of our complete cost structure as an independent company.

Outlook

• Management maintains the goal of $1 billion in net sales by fiscal year 2018 and believes it is achievable.
• Management is maintaining a mid-range goal of 4% operating income.
• A long-term goal of 12.5% ROIC has been set by management.
• Fiscal year 2017 capital expenditures are expected to remain at a similar level as fiscal year 2016 with significantly higher spending occurring in the first half of the year.  Fiscal year 2018 capital expenditures are expected to decline to a level that approximates depreciation expense.

Forward-Looking Statements
Certain statements contained within this release are considered forward-looking under the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties including, but not limited to, our ability to fully realize the expected benefits of the completed spin-off, successful integration of acquisitions and new operations, the global economic conditions, significant volume reductions from key contract customers, loss of key customers or suppliers, financial stability of key customers and suppliers, availability or cost of raw materials, and increased competitive pricing pressures reflecting excess industry capacities.  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, 2015.

Non-GAAP Financial Measures
This press release contains non-GAAP financial measures.  A non-GAAP financial measure is a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with Generally Accepted Accounting Principles (GAAP) in the United States in the statement of income, statement of comprehensive income, balance sheet, statement of cash flows, or statement of equity of the company.  The non-GAAP financial measures contained herein include adjusted operating income, adjusted net income, adjusted diluted EPS, and ROIC.  These measures were adjusted for spin-off expenses.  Reconciliations of the reported GAAP numbers to these non-GAAP financial measures are included in the financial highlights table below.  Management believes it is useful for investors to understand how its core operations performed without the effects of the spin-off expenses.  Excluding these amounts allows 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 exclude these charges to enable meaningful trending of core operating metrics.

The live webcast of the conference call can be accessed at investors.kimballelectronics.com.  For those unable to participate in the live webcast, the call will be archived at investors.kimballelectronics.com.

About Kimball Electronics, Inc.
Recognized with a reputation for excellence, Kimball Electronics is committed to a high performance culture that values personal and organizational commitment to quality, reliability, value, speed, and ethical behavior.  Kimball Electronics employees know they are part of a company culture that builds lasting relationships and global success for customers while enabling employees to share in the Company’s success through personal, professional, and financial growth.

Kimball Electronics trades under the symbol “KE” on The NASDAQ Stock Market.  Kimball Electronics is a global contract electronic manufacturing services (“EMS”) company that specializes in durable electronics for the medical, automotive, industrial, and public safety markets.  Kimball Electronics is well recognized by customers and industry trade publications for its excellent quality, reliability, and innovative service.  From its manufacturing operations in the United States, Mexico, Thailand, Poland, China, and Romania, Kimball Electronics provides engineering, manufacturing, and supply chain services which utilize common production and support capabilities to a variety of industries globally.  Kimball Electronics is headquartered in Jasper, Indiana.

To learn more about Kimball Electronics, visit: www.kimballelectronics.com. 

Lasting relationships. Global success.

Financial highlights for the fourth quarter and fiscal year ended June 30, 2016 are as follows:

CONTACT:
Adam W. Smith
Treasurer
Telephone 812.634.4000
E-mail: Investor.Relations@kimballelectronics.com