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- **Medical Dominance**: 28% of Q1 revenue, +13% YoY, with new Indianapolis facility driving device manufacturing expansion.
- **Profitability Boost**: Gross margin up 160bps to 7.9%, operating income +4.8% of sales, lowest debt in 3 years.
- **Growth Catalysts**: Medical CMO M&A pipeline and FY27 return to top-line growth via tariff mitigation and restructuring.
- **Risks**: Automotive softness (-10% YoY), industrial HVAC weakness, and geopolitical tariff uncertainty.

**【CEO Summary Section】**
- **Medical Segment Growth**: Q1 sales of $102 million (+13% YoY), driven by Asia and Europe. New Indianapolis facility to expand into medical devices and single-use instruments.
- **Tariff Management**: Passing on tariffs to customers; restructuring costs may occur if recovery fails.
- **Long-Term Strategy**: Focus on medical CMO (contract manufacturing organization) with potential tuck-in acquisitions to diversify end markets and geographies.
- **Financial Health**: 7 consecutive quarters of positive cash flow; debt reduced by 44% YoY to $138 million.

**【CFO Financial Commentary】**
- **Revenue & Margin**: Net sales $365.6 million (-2% YoY). Gross margin improved 160bps to 7.9% due to product mix and Tampa facility closure.
- **Cost Control**: Adjusted S&A expenses flat YoY at $11.3 million; operating income $17.5 million (+4.8% of sales vs 3.4% last year).
- **Liquidity**: $75.7 million cash; $370 million short-term liquidity. Shares repurchased: 49,000 in Q1, $105.2 million returned since 2015.
- **Guidance**: FY26 net sales $1.35-1.45B; operating income 4-4.25% of sales.

**【Q&A Key Highlights】**
- **Medical Pipeline**: Diversified growth across geographies and customers; new programs ramping up in Europe and Asia.
- **Automotive Challenges**: Softness in North America (braking program transfer) offset by Europe growth. Long-term outlook positive for e-braking systems.
- **M&A Strategy**: Seeking medical CMO tuck-ins with scalable capabilities; disciplined approach to valuation.
- **Working Capital**: Expect cash conversion days to stabilize in low 80s as growth resumes; inventory management tight.
- **Tariff Impact**: FY26 guidance assumes full recovery of tariffs; monitoring geopolitical risks.


Kimball Electronics, Inc. (KE) Q1 2026 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

KE

KE fundamentals

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