Kimball Electronics, Inc. (KE) Q1 2026 Earnings Call Transcript
Net Sales $366 million, a 2% decline compared to Q1 fiscal '25. The decline was due to strong results in Medical being offset by declines in Automotive and Industrial.
Medical Sales $102 million, up 13% compared to the same period last year. Growth was driven by robust sales growth in Asia and Europe, while North America was up mid-single digits.
Automotive Sales $164 million, down 10% compared to the first quarter of last year. The decline was due to lower sales in North America (resulting from the electronic braking program transfer) and a decline in Asia, partially offset by strong sales growth in Europe.
Industrial Sales $100 million, a 1% decrease compared to Q1 last year. The decline was due to softening demand for HVAC driven by the slowing housing market in North America and a significant decline in Europe, partially offset by strong sales growth in Asia.
Gross Margin Rate 7.9%, a 160 basis point increase compared to 6.3% in the same period of fiscal 2025. The improvement was driven by favorable product mix, the closure of the Tampa facility, and global restructuring efforts.
Adjusted Selling and Administrative Expenses $11.3 million, nearly flat year-over-year. As a percentage of sales, the rate was 3.1% this year compared to 2.9% last year. A $2 million recovery was recorded due to a customer termination of a program.
Adjusted Income $17.5 million or 4.8% of net sales, compared to $12.6 million or 3.4% of net sales last year. The increase was due to efforts to rightsize expenses, reduce debt, and take advantage of tax opportunities.
Adjusted Net Income $12.3 million or $0.49 per diluted share, up 2x from last year's adjusted results of $5.5 million or $0.22 per diluted share. The increase was attributed to expense management, debt reduction, and tax opportunities.
Cash and Cash Equivalents $75.7 million as of September 30, 2025. Cash generated by operating activities in the quarter was $8.1 million, marking the seventh consecutive quarter of positive cash flow.
Inventory $272.7 million, roughly flat versus Q4 but down $62.6 million or 19% from a year ago.
Borrowings $138 million, a $9.5 million reduction from the fourth quarter and down $108 million or 44% from a year ago.
Capital Expenditures $10.6 million in the first quarter, primarily for leasehold improvements in the new facility in Indianapolis.
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Kimball Electronics Rebrands as Kimball Solutions Celebrating 65 Years of Innovation
- New Brand Launch: Kimball Electronics announced its intention to rebrand as Kimball Solutions starting July 2026, reflecting its expanded capabilities in the Electronics Manufacturing Services sector, which will enhance customer service flexibility and responsiveness.
- New Facility Opening: On February 6, 2026, Kimball will hold a ribbon-cutting ceremony for its new medical manufacturing facility in Indianapolis, marking the official launch of its innovation hub in the medical and life sciences sectors, expected to boost the company's competitiveness in this field.
- Investment Commitment: The construction of the new facility represents Kimball's commitment to growth, anticipated to create more opportunities for customers and employees while enhancing community economic vitality, further solidifying its position in the global market.
- Core Values Adherence: Despite the name change, Kimball will maintain its core values of integrity, quality, and continuous improvement, ensuring that it continues to deliver high-quality solutions to customers in its future endeavors.
BOX Shares Drop 14% Over Six Months: What’s Next for the Stock?
Box's Financial Performance: Box shares have declined 13.8% over the past six months, underperforming the industry and sector averages, primarily due to a tough macroeconomic environment and rising operational costs. The company reported flat gross margins and increased operating expenses, leading to a slight contraction in operating margins.
Future Expectations: For fiscal 2026, Box anticipates a gross margin of 81% and an operating margin of 28%. The company expects revenues of $1.175 billion, reflecting an 8% year-over-year growth, and non-GAAP earnings of $1.28 per share, indicating a decrease from the previous fiscal year.
AI and Product Innovations: Box is focusing on enhancing its AI capabilities with new products like Box Extract and Box Automate, which aim to improve data extraction and workflow automation. Partnerships with major tech companies are expected to bolster its AI ecosystem and drive revenue growth.
Customer Growth and Retention: Box has over 2,000 customers paying at least $100K annually, with a net retention rate of 104%. The company is investing in go-to-market initiatives, leading to a 12% year-over-year growth in billings for the third quarter of fiscal 2026.
