Kimball Electronics Reports Decline in Sales and Profit for Third Quarter and Nine Months Ended March 31, 2025

Kimball Electronics, Inc. reported a decline in financial performance for the third quarter and nine months ended March 31, 2025, compared to the same periods in the previous fiscal year. Net sales for the third quarter were $374.6 million, a decrease of 12% from $425.0 million in the prior year. For the nine-month period, net sales fell 14% to $1.106 billion from $1.284 billion. The company experienced a gross profit of $26.9 million for the third quarter, down 20% from $33.5 million, while gross profit for the nine months decreased by 29% to $73.9 million. Net income for the third quarter was $3.8 million, a significant recovery from a loss of $6.1 million in the same quarter last year, while net income for the nine months was $10.4 million, down from $13.0 million.

The decline in sales was attributed to several factors, including the loss of a major automotive program unrelated to Kimball's performance, as well as reduced demand in the industrial sector. However, the medical segment saw a temporary boost from a $24 million consignment inventory sale. The company also noted that foreign currency fluctuations negatively impacted sales by 1% in the third quarter. Despite these challenges, Kimball Electronics reported an operating income of $11.7 million for the third quarter, a turnaround from an operating loss of $6.4 million in the previous year.

Strategically, Kimball Electronics completed the divestiture of its GES business on July 31, 2024, which resulted in a pre-tax gain of $1.3 million. The company has also initiated restructuring efforts to align its cost structure with reduced market demand, incurring $2.0 million in restructuring expenses during the third quarter. Additionally, the company announced plans to close its Tampa facility, with expected costs between $6.5 million and $8.5 million, primarily related to employee termination benefits and logistical expenses.

Operationally, Kimball Electronics reported a decrease in open orders, down 23% year-over-year, primarily due to the cancellation of a major automotive program and reduced demand from industrial customers. The company maintained a strong balance sheet with a current ratio of 2.1 and a debt-to-equity ratio of 0.3 as of March 31, 2025. Cash provided by operating activities significantly increased to $105.9 million for the nine months ended March 31, 2025, compared to $24.7 million in the prior year, driven by improved working capital management.

Looking ahead, Kimball Electronics anticipates continued challenges in sales, particularly in the automotive sector, and expects consolidated net sales to lag behind fiscal year 2024 levels through calendar year 2025. The company remains focused on cost control while investing in new capabilities and managing working capital in response to fluctuating demand.