Kimball Electronics Reports 15% Decline in Net Sales for Q2 and First Half of Fiscal Year 2025

Kimball Electronics, Inc. reported a significant decline in financial performance for the second quarter and first half of fiscal year 2025, with net sales of $357.4 million for the three months ended December 31, 2024, down 15% from $421.2 million in the same period last year. For the six months, net sales also decreased by 15% to $731.6 million compared to $859.3 million in the prior year. The company's gross profit fell to $23.4 million, or 6.6% of net sales, from $34.4 million, or 8.2% of net sales, in the previous year’s quarter. Net income for the quarter was $3.4 million, a 59% decrease from $8.3 million in the prior year, resulting in diluted earnings per share of $0.14, down from $0.33.

The decline in revenue was attributed to reduced demand in key markets, particularly in the medical and industrial sectors. The medical market was notably impacted by an FDA recall affecting a major customer, while the industrial sector faced challenges due to the divestiture of the GES business and declining demand in smart metering and public safety. The company also recorded restructuring expenses of $4.7 million in the second quarter as part of ongoing efforts to align its cost structure with market conditions, including the planned closure of its Tampa facility.

Operationally, Kimball Electronics reported a decrease in open orders, which fell by 33% year-over-year to $564 million, primarily due to the cancellation of a major automotive program and reduced demand from other customers. The company’s workforce restructuring efforts have resulted in a cumulative expense of $6.4 million since the beginning of these initiatives. As of December 31, 2024, the company maintained a strong balance sheet with total shareholders' equity of $537 million and a current ratio of 2.3.

Looking ahead, Kimball Electronics anticipates continued challenges in revenue generation, particularly through calendar year 2025, due to the loss of significant customer programs and the ongoing impacts of the GES divestiture. The company is focused on cost control and strategic investments to enhance its manufacturing capabilities. Management expects to incur additional restructuring charges related to the Tampa facility closure, estimated between $5 million and $6 million, but anticipates that proceeds from the sale of the facility will exceed these costs. The company remains committed to maintaining liquidity and has a robust credit facility to support its operational needs.