Q4 2024 Kimball Electronics Inc Earnings Call Transcript
Key Points
- Kimball Electronics Inc (KE) successfully completed the divestiture of its automation test and measurement (AT&M) business, which is expected to sharpen the company's strategic focus and improve profitability.
- The company reported a $112 million or 25% reduction in inventory levels compared to Q4 last year, indicating effective working capital management.
- Kimball Electronics Inc (KE) has secured new medical wins and continues to focus on higher-level assemblies and finished medical device opportunities, which are expected to drive future growth.
- The company has a strong balance sheet with increased liquidity and financial flexibility, supported by the proceeds from the AT&M sale and improvements in working capital management.
- Kimball Electronics Inc (KE) has a robust long-term customer funnel and continues to explore opportunities in new geographies and capabilities, particularly in the medical space.
- Net sales in the fourth quarter were $430 million, a 13% decrease compared to Q4 last year, reflecting a challenging operating environment.
- The gross margin rate in Q4 was 8.5%, a 150 basis points decline compared to the fourth quarter of fiscal 2023, due to lower absorption in EMS manufacturing facilities and weaker performance in AT&M.
- The automotive vertical, which is the largest business segment, saw a 7% decrease in net sales compared to Q4 last year, impacting overall revenue.
- The medical vertical experienced a 17% decrease in net sales in Q4 compared to the same period last year, primarily driven by lost revenue associated with a customer involved in an FDA recall.
- The industrial vertical saw a 19% decline in net sales compared to the fourth quarter last year, with significant weakness in the AT&M business and lower demand for internal climate control systems and smart meters in Europe.
Good morning, ladies and gentlemen, and welcome to the Kimball Electronics fourth quarter fiscal 2024 earnings conference call. My name is Sherry, and I will be the facilitator for today's call. (Operator Instructions) Today's call, August 14, 2024 is being recorded. (Operator Instructions)
At this time, I would now like to turn the call over to Andy Regrut, Treasurer and Investor Relations Officer. Thank you, Mr. Regrut, you may begin.
Thank you, Sherry, and good morning, everyone. Welcome to our fourth quarter conference call. With me here today is Rick Phillips, our Chief Executive Officer; and Jana Croom, Chief Financial Officer. We issued a press release yesterday with our results for the fourth quarter and full fiscal year ended June 30, 2024.
To accompany today's call a presentation has been posted to the Investor Relations page on our company website. Before we get started, I'd like to remind you that we will be making forward-looking statements that
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