Kimball Electronics Reports Q2 Results; With Strong Sales Growth in the Medical Vertical; Company Raises Its Guidance for Fiscal 2026

Second Quarter 2026 Highlights

• Revenue of $341.3 million, a 5% decrease compared to Q2 of fiscal 2025
• Sales in the medical vertical increased 15% year-over-year
• Operating income of $10.8 million, or 3.2% of net sales
• Adjusted operating income of 4.5%, up 80 bps year-over-year
• Cash from operations of $6.9 million, the eighth consecutive quarter of positive operating cash generation
• Debt of $154.2 million and borrowing capacity of $285.1 million
• Cash Conversion Days of 91, a 16-day improvement compared to the same period last year
• Invested $4.3 million to repurchase 149,000 shares of common stock
• Company increases guidance for fiscal 2026 sales and adjusted operating income

JASPER, Ind.--(BUSINESS WIRE)--Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the second quarter ended December 31, 2025.

	Three Months Ended						Six Months Ended
	December 31,						December 31,
(Amounts in Thousands, except EPS)		2025			2024			2025			2024
Net Sales	$	341,280		$	357,392		$	706,883		$	731,648
Operating Income	$	10,767		$	8,230		$	25,221		$	17,345
Adjusted Operating Income (non-GAAP)	$	15,308		$	13,333		$	32,842		$	25,923
Operating Income %		3.2	%		2.3	%		3.6	%		2.4	%
Adjusted Operating Income (non-GAAP) %		4.5	%		3.7	%		4.6	%		3.5	%
Net Income	$	3,637		$	3,432		$	13,723		$	6,586
Adjusted Net Income (non-GAAP)	$	6,925		$	7,354		$	19,175		$	12,881
Diluted EPS	$	0.15		$	0.14		$	0.55		$	0.26
Adjusted Diluted EPS (non-GAAP)	$	0.28		$	0.29		$	0.77		$	0.51

Commenting on today’s announcement, Richard D. Phillips, Chief Executive Officer, stated, “I’m pleased with the results for the second quarter and our updated guidance for fiscal 2026. Sales in Q2 were in line with expectations, highlighted by another quarter of strong double-digit year-over-year growth in the medical vertical, margins improved compared to the same period last year, and cash from operations was positive for the eighth consecutive quarter.”

Mr. Phillips continued, “Our focus as a medical CMO continues to gain momentum as we leverage our unique capabilities in the industry. We expect top-line growth in medical to outpace our other two verticals as we balance our portfolio across the markets we serve. Our recent announcement to rebrand as Kimball Solutions, and the grand opening of the new medical manufacturing facility in Indianapolis, reflects this strategy and our expanded offering of capabilities and services.”

Net Sales by Vertical Market for Q2 Fiscal 2026:

	Three Months Ended										Six Months Ended
	December 31,										December 31,
(Amounts in Millions)		2025	*			2024 ^(2)	*		Percent Change			2025	*			2024 ^(2)	*		Percent Change
Automotive	$	162.3	48	%	$	186.3	52	%	(13	)%	$	326.7	46	%	$	368.0	50	%	(11	)%
Medical		96.3	28	%		84.0	23	%	15	%		197.9	28	%		173.8	24	%	14	%
Industrial excluding AT&M^(1)		82.7	24	%		87.1	25	%	(5	)%		182.3	26	%		187.7	26	%	(3	)%
Net Sales excluding AT&M ^(1)	$	341.3	100	%	$	357.4	100	%	(5	)%	$	706.9	100	%	$	729.5	100	%	(3	)%
AT&M ^(1)		—	—	%		—	—	%	—	%		—	—	%		2.1	—	%	(100	)%
Total Net Sales	$	341.3	100	%	$	357.4	100	%	(5	)%	$	706.9	100	%	$	731.6	100	%	(3	)%

*	As a percent of Total Net Sales
(1)	Sales from our Automation, Test, and Measurement business (AT&M), which was divested effective July 31, 2024, were previously included in the industrial vertical
(2)	Beginning in the first quarter of fiscal year 2026, sales to customers related to commercial transportation, previously included in the automotive vertical, are now reflected in the industrial vertical; prior periods have been recast to conform to current period presentation
-	Automotive includes electronic power steering, body controls, advanced driver-assistance systems, and electronic braking systems
-	Medical includes sleep therapy and respiratory care, image guided therapy, in vitro diagnostics, drug delivery, AED, and patient monitoring
-	Industrial includes climate controls, automation controls, public safety, IoT and factory automation, efficient energy, off highway equipment, and commercial transportation

Fiscal Year 2026 Guidance

As part of today’s announcement, the Company increased its guidance for net sales and adjusted operating income in fiscal year 2026:

• Net sales are now expected to be in the range of $1,400 - $1,460 million, compared to the previous guidance of $1,350 - $1,450 million
• Adjusted operating income is estimated to be 4.2% - 4.5% of net sales versus the prior estimate of 4.0% - 4.25%
• The guidance for capital expenditures did not change with a range of $50 - $60 million

Conference Call / Webcast

Date: Thursday, February 5, 2026   Time: 10:00 AM Eastern Time   Live Webcast: investors.kimballelectronics.com/events-and-presentations/events   Dial-in #: 877-407-8293 (or 201-689-8349)   For those unable to participate in the live webcast, the call will be archived at investors.kimballelectronics.com.

Forward-Looking Statements

Certain statements contained within this release are considered forward-looking, including our guidance, under the Private Securities Litigation Reform Act of 1995. The statements may be identified by the use of words such as “expect,” “should,” “goal,” “predict,” “will,” “future,” “optimistic,” “confident,” and “believe.” Undue reliance should not be placed on these forward-looking statements. These statements are based on current expectations of future events and thus are inherently subject to uncertainty. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. These forward-looking statements are subject to risks and uncertainties including, without limitation, global economic conditions, geopolitical environment and conflicts such as the war in Ukraine, global health emergencies, availability or cost of raw materials and components, tariffs and other trade barriers, foreign exchange rate fluctuations, and our ability to convert new business opportunities into customers and revenue. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of the company are contained in its Annual Report on Form 10-K for the year ended June 30, 2025.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures. The non-GAAP financial measures contained herein include constant currency growth, net sales excluding Automation, Test & Measurement, adjusted selling and administrative expenses, adjusted operating income, adjusted net income, adjusted diluted EPS, and ROIC. Reconciliations of the reported GAAP numbers to these non-GAAP financial measures are included in the Reconciliation of Non-GAAP Financial Measures section below. Management believes these measures are useful and allow investors to meaningfully trend, analyze, and benchmark the performance of the company’s core operations. The company’s non-GAAP financial measures are not necessarily comparable to non-GAAP information used by other companies.

About Kimball Electronics, Inc.

Kimball Electronics is a global, multifaceted manufacturer offering Electronics Manufacturing Services (EMS) and Contract Manufacturing Organization (CMO) solutions to customers around the world. From our operations in the United States, China, Mexico, Poland, Romania, and Thailand, our teams are proud to provide manufacturing services for a variety of industries. Recognized for a reputation of excellence, we are committed to a high-performance culture that values quality, reliability, value, speed, and ethical behavior. Kimball Electronics, Inc. (Nasdaq: KE) is headquartered in Jasper, Indiana.

To learn more about Kimball Electronics, visit www.kimballelectronics.com.

Lasting relationships. Global success.

Condensed Consolidated Statements of Income
(Unaudited)	Three Months Ended
(Amounts in Thousands, except Per Share Data)	December 31, 2025					December 31, 2024
Net Sales	$	341,280		100.0	%	$	357,392		100.0	%
Cost of Sales		313,412		91.8	%		333,965		93.4	%
Gross Profit		27,868		8.2	%		23,427		6.6	%
Selling and Administrative Expenses		14,862		4.4	%		10,526		3.0	%
Restructuring Expense		1,817		0.5	%		4,671		1.3	%
Asset Impairment		422		0.1	%		—		—	%
Operating Income		10,767		3.2	%		8,230		2.3	%
Interest Income		375		0.1	%		253		0.1	%
Interest Expense		(2,095	)	(0.6	)%		(4,241	)	(1.2	)%
Non-Operating Income (Expense), net		(2,063	)	(0.7	)%		(768	)	(0.2	)%
Other Income (Expense), net		(3,783	)	(1.2	)%		(4,756	)	(1.3	)%
Income Before Taxes on Income		6,984		2.0	%		3,474		1.0	%
Provision (Benefit) for Income Taxes		3,347		0.9	%		42		—	%
Net Income	$	3,637		1.1	%	$	3,432		1.0	%
Earnings Per Share of Common Stock:
Basic	$	0.15				$	0.14
Diluted	$	0.15				$	0.14
Average Number of Shares Outstanding:
Basic		24,606					24,870
Diluted		24,823					24,968

(Unaudited)	Six Months Ended
(Amounts in Thousands, except Per Share Data)	December 31, 2025					December 31, 2024
Net Sales	$	706,883		100.0	%	$	731,648		100.0	%
Cost of Sales		650,179		92.0	%		684,621		93.6	%
Gross Profit		56,704		8.0	%		47,027		6.4	%
Selling and Administrative Expenses		27,952		3.9	%		23,953		3.2	%
Restructuring Expense		3,233		0.5	%		6,993		1.0	%
Asset Impairment (Gain on Disposal)		298		—	%		(1,264	)	(0.2	)%
Operating Income		25,221		3.6	%		17,345		2.4	%
Interest Income		514		0.1	%		475		0.1	%
Interest Expense		(4,448	)	(0.6	)%		(9,033	)	(1.2	)%
Non-Operating Income (Expense), net		(3,304	)	(0.6	)%		(2,429	)	(0.4	)%
Other Income (Expense), net		(7,238	)	(1.1	)%		(10,987	)	(1.5	)%
Income Before Taxes on Income		17,983		2.5	%		6,358		0.9	%
Provision (Benefit) for Income Taxes		4,260		0.6	%		(228	)	—	%
Net Income	$	13,723		1.9	%	$	6,586		0.9	%
Earnings Per Share of Common Stock:
Basic	$	0.56				$	0.26
Diluted	$	0.55				$	0.26
Average Number of Shares Outstanding:
Basic		24,603					24,924
Diluted		24,878					25,098

Condensed Consolidated Statements of Cash Flows	Six Months Ended
(Unaudited)	December 31,
(Amounts in Thousands)		2025			2024
Net Cash Flow provided by Operating Activities	$	14,943		$	74,932
Net Cash Flow used for Investing Activities		(24,368	)		(1,214	)
Net Cash Flow used for Financing Activities		(2,142	)		(97,255	)
Effect of Exchange Rate Change on Cash, Cash Equivalents, and Restricted Cash		623			(722	)
Net Decrease in Cash, Cash Equivalents, and Restricted Cash		(10,944	)		(24,259	)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period		89,467			78,779
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	78,523		$	54,520

	(Unaudited)
Condensed Consolidated Balance Sheets	December 31, 2025		June 30, 2025
(Amounts in Thousands)
ASSETS
Cash and cash equivalents	$	77,853	$	88,781
Receivables, net		213,994		222,623
Contract assets		79,521		71,812
Inventories		281,699		273,500
Prepaid expenses and other current assets		32,214		36,027
Assets held for sale		6,610		6,861
Property and Equipment, net		276,433		264,804
Goodwill		6,191		6,191
Other Intangible Assets, net		2,182		2,427
Other Assets, net		106,774		104,286
Total Assets	$	1,083,471	$	1,077,312
LIABILITIES AND SHARE OWNERS’ EQUITY
Current portion of long-term debt	$	24,112	$	17,400
Accounts payable		218,830		218,805
Advances from customers		28,439		35,867
Accrued expenses		41,995		46,489
Long-term debt, less current portion		129,700		129,650
Other long-term liabilities		61,233		59,217
Share Owners’ Equity		579,162		569,884
Total Liabilities and Share Owners’ Equity	$	1,083,471	$	1,077,312

Other Financial Metrics
(Unaudited)
(Amounts in Millions, except CCD)
	At or For the
	Three Months Ended
	December 31,		September 30,		December 31,
	2025		2025		2024
Depreciation and Amortization	$	9.3	$	9.1	$	9.1
Cash Conversion Days (CCD) ^(1)		91		83		107
Open Orders ^(2)	$	557	$	593	$	564

(1)	Cash Conversion Days (“CCD”) are calculated as the sum of Days Sales Outstanding plus Contract Asset Days plus Production Days Supply on Hand less Accounts Payable Days and less Advances from Customers Days. CCD, or a similar metric, is used in our industry and by our management to measure the efficiency of managing working capital.
(2)	Open Orders are the aggregate sales price of production pursuant to unfulfilled customer orders.

Select Financial Results of Automation, Test and Measurement
(Unaudited)
(Amounts in Millions)
	Three Months Ended					Six Months Ended
	December 31,					December 31,
		2025			2024		2025			2024
Net Sales	$	—		$	—	$	—		$	2.1
Operating Income (Loss) ^(1)	$	(0.4	)	$	—	$	(0.4	)	$	0.8

(1)	Amounts include gain (loss) on sale adjustments following the close of the sale on July 31, 2024: ($0.4 million) in the three and six months ended December 31, 2025 and $1.3 million for the six months ended December 31, 2024.

Reconciliation of Non-GAAP Financial Measures
(Unaudited, Amounts in Thousands, except Per Share Data)
	Three Months Ended						Six Months Ended
	December 31,						December 31,
		2025			2024			2025			2024
Net Sales Growth (vs. same period in prior year)		(5	)%		(15	)%		(3	)%		(15	)%
Foreign Currency Exchange Impact		2	%		—	%		2	%		—	%
Constant Currency Growth		(7	)%		(15	)%		(5	)%		(15	)%
Selling and Administrative Expenses, as reported	$	14,862		$	10,526		$	27,952		$	23,953
Stock Compensation Expense		(2,217	)		(501	)		(3,780	)		(2,573	)
SERP		(85	)		69			(310	)		(276	)
Adjusted Selling and Administrative Expenses	$	12,560		$	10,094		$	23,862		$	21,104
Operating Income, as reported	$	10,767		$	8,230		$	25,221		$	17,345
Stock Compensation Expense		2,217			501			3,780			2,573
SERP		85			(69	)		310			276
Restructuring Expense		1,817			4,671			3,233			6,993
Asset Impairment (Gain on Disposal)		422			—			298			(1,264	)
Adjusted Operating Income	$	15,308		$	13,333		$	32,842		$	25,923
Net Income, as reported	$	3,637		$	3,432		$	13,723		$	6,586
Stock Compensation Expense, After-Tax		1,681			380			2,866			1,951
Restructuring Expense, After-Tax		1,287			3,542			2,360			5,303
Asset Impairment (Gain on Disposal), After-Tax		320			—			226			(959	)
Adjusted Net Income	$	6,925		$	7,354		$	19,175		$	12,881
Diluted Earnings per Share, as reported	$	0.15		$	0.14		$	0.55		$	0.26
Stock Compensation Expense		0.07			0.01			0.12			0.07
Restructuring Expense		0.05			0.14			0.09			0.21
Asset Impairment (Gain on Disposal)		0.01			—			0.01			(0.03	)
Adjusted Diluted Earnings per Share	$	0.28		$	0.29		$	0.77		$	0.51
	Twelve Months Ended
	December 31,
		2025			2024
Operating Income, as reported	$	53,411		$	30,522
Goodwill Impairment		—			5,820
SERP		648			649
Restructuring Expense		7,230			9,379
Asset Impairment (Gain on Disposal)		(829	)		15,776
Legal Settlements (Recovery)		—			(892	)
Stock Compensation Expense		7,726			6,096
Adjusted Operating Income	$	68,186		$	67,350
Tax Effect		23,836			17,019
After-tax Adjusted Operating Income	$	44,350		$	50,331
Average Invested Capital ^(1)	$	657,074		$	756,966
ROIC		6.7	%		6.6	%

(1)	Average invested capital is computed using Share Owners’ equity plus current and non-current debt less cash and cash equivalents averaged for the last five quarters.