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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number    001-36454
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KIMBALL ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
Indiana35-2047713
(State or other jurisdiction of(I.R.S. Employer Identification No.)
incorporation or organization)
1205 Kimball Boulevard, Jasper, Indiana
47546
(Address of principal executive offices)(Zip Code)
(812) 634-4000
Registrant’s telephone number, including area code
Not Applicable
Former name, former address and former fiscal year, if changed since last report
Securities registered pursuant to Section 12(b) of the Act:
Title of each ClassTrading SymbolName of each exchange on which registered
Common Stock, no par valueKEThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  
Yes  ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes  ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Emerging growth company
Non-accelerated filerSmaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 
Yes     No ☒

The number of shares outstanding of the Registrant’s common stock as of October 24, 2024 was 24,680,651 shares.



KIMBALL ELECTRONICS, INC.
FORM 10-Q
INDEX
Page No.
 
PART I    FINANCIAL INFORMATION
 
 
PART II    OTHER INFORMATION
 

2


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
KIMBALL ELECTRONICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except for Share Data)
(Unaudited) 
September 30,
2024
June 30,
2024
ASSETS  
Current Assets:  
Cash and cash equivalents$76,564 $77,965 
Receivables, net of allowances of $332 and $1,002, respectively
264,036 282,336 
Contract assets74,326 76,320 
Inventories335,272 338,116 
Prepaid expenses and other current assets32,496 44,682 
Assets held for sale 27,587 
Total current assets782,694 847,006 
Property and Equipment, net of accumulated depreciation of $318,609 and $309,499, respectively
275,674 269,659 
Goodwill6,191 6,191 
Other Intangible Assets, net of accumulated amortization of $27,604 and $27,300, respectively
2,880 2,994 
Other Assets, net
81,617 82,069 
Total Assets$1,149,056 $1,207,919 
LIABILITIES AND SHARE OWNERSEQUITY
Current Liabilities:
Current portion of borrowings under credit facilities$45,915 $59,837 
Accounts payable216,704 213,551 
Advances from customers35,616 30,151 
Accrued expenses45,492 63,189 
Liabilities held for sale
 8,594 
Total current liabilities343,727 375,322 
Other Liabilities:
Long-term debt under credit facilities, less current portion200,000 235,000 
Long-term income taxes payable 3,255 
Other long-term liabilities57,571 53,881 
Total other liabilities257,571 292,136 
Share Owners’ Equity:
Preferred stock-no par value
Shares authorized: 15,000,000
Shares issued: None
  
Common stock-no par value
Shares authorized: 150,000,000
Shares issued: 29,430,000
Shares outstanding: 24,679,000 and 24,733,000, respectively
  
Additional paid-in capital319,175 319,463 
Retained earnings319,718 316,564 
Accumulated other comprehensive loss(11,769)(17,807)
Treasury stock, at cost:
Shares: 4,751,000 and 4,697,000, respectively
(79,366)(77,759)
Total Share Owners’ Equity547,758 540,461 
Total Liabilities and Share Owners’ Equity$1,149,056 $1,207,919 
3


KIMBALL ELECTRONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except for Per Share Data)
Three Months Ended
September 30
(Unaudited)20242023
Net Sales$374,256 $438,081 
Cost of Sales350,656 402,539 
Gross Profit23,600 35,542 
Selling and Administrative Expenses13,427 16,052 
Restructuring Expense2,322  
Gain on Disposal(1,264) 
Operating Income9,115 19,490 
Other Income (Expense):
Interest income222 299 
Interest expense(4,792)(5,447)
Non-operating income (expense), net(1,661)(1,131)
Other income (expense), net(6,231)(6,279)
Income Before Taxes on Income2,884 13,211 
Provision (Benefit) for Income Taxes
(270)2,457 
Net Income$3,154 $10,754 
Earnings Per Share of Common Stock:  
Basic$0.13 $0.43 
Diluted$0.12 $0.43 
Average Number of Shares Outstanding:
Basic24,979 25,041 
Diluted25,235 25,238 


4


KIMBALL ELECTRONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Amounts in Thousands)
Three Months EndedThree Months Ended
September 30, 2024September 30, 2023
(Unaudited)Pre-taxTaxNet of TaxPre-taxTaxNet of Tax
Net income$3,154 $10,754 
Other comprehensive income (loss):
Foreign currency translation adjustments$6,951 $ $6,951 $(4,230)$ $(4,230)
Postemployment actuarial change106 (35)71 29 (7)22 
Derivative gain (loss)(1,747)445 (1,302)(387)78 (309)
Reclassification to (earnings) loss:
Derivatives384 (106)278 (2,867)654 (2,213)
Amortization of actuarial change53 (13)40 (6)1 (5)
Other comprehensive income (loss)$5,747 $291 $6,038 $(7,461)$726 $(6,735)
Total comprehensive income$9,192 $4,019 

5


KIMBALL ELECTRONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
 
Three Months Ended
September 30
(Unaudited)20242023
Cash Flows From Operating Activities:
Net income$3,154 $10,754 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization9,195 9,017 
Gain on sales of assets
(126)(10)
Deferred income taxes3,146 694 
Gain on disposal
(1,264) 
Stock-based compensation2,072 1,693 
Other, net646 315 
Change in operating assets and liabilities:
Receivables20,091 45,253 
Contract assets1,994 (8,877)
Inventories5,110 (34,023)
Prepaid expenses and other assets13,013 589 
Accounts payable2,300 (11,564)
Advances from customers8,685 7,574 
Accrued expenses and taxes payable(22,542)(8,614)
Net cash provided by operating activities45,474 12,801 
Cash Flows From Investing Activities:
Capital expenditures(13,357)(11,191)
Proceeds from sales of assets225 53 
Purchases of capitalized software(165)(148)
Net proceeds from disposal
18,507  
Other, net16 (16)
Net cash provided by (used for) investing activities5,226 (11,302)
Cash Flows From Financing Activities:
Payments on credit facilities(50,000) 
Net change in revolving credit facilities900 15,350 
Repurchases of common stock(2,917) 
Payments related to tax withholding for stock-based compensation(937)(1,365)
Net cash (used for) provided by financing activities(52,954)13,985 
Effect of Exchange Rate Change on Cash and Cash Equivalents1,830 (549)
Net (Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash(424)14,935 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period (1)
78,779 43,864 
Cash, Cash Equivalents, and Restricted Cash at End of Period (1)
$78,355 $58,799 
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Income taxes$5,269 $4,913 
Interest expense$7,179 $3,378 
Non-cash investing activity:
Unpaid purchases of property and equipment at the end of the period$855 $2,393 
(1) The following table reconciles cash and cash equivalents in the balance sheets to cash, cash equivalents, and restricted cash per the statements of cash flows. The restricted cash included in Prepaid expenses and other current assets on the balance sheet represents funds held by the Company for a foreign subsidiary’s employee savings plan.
(Unaudited)September 30,
2024
June 30,
2024
Cash and Cash Equivalents$76,564 $77,965 
Restricted Cash included in Prepaid expenses and other current assets$1,791 $814 
Total Cash, Cash Equivalents, and Restricted Cash at end of period$78,355 $78,779 
6


KIMBALL ELECTRONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHARE OWNERS’ EQUITY
(Amounts in Thousands, Except for Share Data)
Three Months Ended
Retained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Share Owners’ Equity
(Unaudited)Additional Paid-In Capital
Amounts at June 30, 2024$319,463 $316,564 $(17,807)$(77,759)$540,461 
Net income
3,154 3,154 
Other comprehensive income (loss)6,038 6,038 
Compensation expense related to stock compensation plans1,958 1,958 
Performance and restricted share issuance (83,000 and 22,000 shares, respectively)
(2,246)1,285 (961)
Repurchase of Common Stock (159,000 shares) (including excise tax)
(2,892)(2,892)
Amounts at September 30, 2024$319,175 $319,718 $(11,769)$(79,366)$547,758 
Amounts at June 30, 2023$315,482 $296,053 $(11,046)$(76,495)$523,994 
Net income10,754 10,754 
Other comprehensive income (loss)(6,735)(6,735)
Compensation expense related to stock compensation plans1,613 1,613 
Performance and restricted share issuance (107,000 shares and 14,000 shares, respectively)
(2,840)1,476 (1,364)
Amounts at September 30, 2023$314,255 $306,807 $(17,781)$(75,019)$528,262 
7


KIMBALL ELECTRONICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Business Description and Summary of Significant Accounting Policies
Business Description:
Kimball Electronics, Inc. (also referred to herein as “Kimball Electronics,” the “Company,” “we,” “us,” or “our”) is a global, multifaceted manufacturing solutions provider. We provide electronics manufacturing services (“EMS”), including engineering and supply chain support, to customers in the automotive, medical, and industrial end markets. We deliver a package of value that begins with our core competency of producing durable electronics, and we further offer contract manufacturing services for non-electronic components, medical disposables, and precision molded plastics. Our design and manufacturing expertise coupled with robust processes and procedures help us ensure that we deliver the highest levels of quality, reliability, and service throughout the entire life cycle of our customers’ products. We deliver award-winning service across our highly integrated global footprint, which is enabled by our largely common operating system, procedures, and standardization. We are well recognized by customers and industry trade publications for our excellent quality, reliability, and innovative service.
Basis of Presentation:
The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of September 30, 2024 and June 30, 2024, results of operations for the three months ended September 30, 2024 and 2023, cash flows for the three months ended September 30, 2024 and 2023, and share owners’ equity for the three months ended September 30, 2024 and 2023. The financial data presented herein is unaudited and should be read in conjunction with the annual Consolidated Financial Statements as of and for the year ended June 30, 2024 and related notes thereto included in our Annual Report on Form 10-K. As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted, although we believe that the disclosures are adequate to make the information presented not misleading. Intercompany transactions and balances have been eliminated. Management believes the financial statements include all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly the financial statements for the interim periods. The results of operations for the interim periods shown in this report are not necessarily indicative of results for any future interim period or for the entire fiscal year.
Revenue Recognition:
We recognize revenue in accordance with the standard issued by the Financial Accounting Standards Board (“FASB”), Revenue from Contracts with Customers and all the related amendments. Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, components, medical devices, medical disposables, precision molded plastics, and automation, test, and inspection equipment built to customer’s specifications. Our customer agreements are generally not for a definitive term but continue for the relevant product’s life cycle. Typically, our customer agreements do not commit the customer to purchase our services until a purchase order is provided, which is generally short term in nature. Customer purchase orders primarily have a single performance obligation. Generally, the prices stated in the customer purchase orders are agreed upon prices for the manufactured product and do not vary over the term of the order, and therefore, the majority of our contracts do not contain variable consideration. In limited circumstances, we may enter into a contract which contains minimum quantity thresholds to cover our capital costs, and we may offer our customer a rebate for specific volume thresholds or other incentives; in these cases, the rebates or incentives are accounted for as variable consideration.
The majority of our revenue is recognized over time as manufacturing services are performed as we manufacture a product to customer specifications with no alternative use and we have an enforceable right to payment for performance completed to date. The remaining revenue for manufacturing services is recognized when the customer obtains control of the product, typically either upon shipment or delivery of the product dependent on the terms of the contract, and the customer is able to direct the use of and obtain substantially all of the remaining benefits from the asset. We generally recognize revenue over time using costs based input methods, in which judgment is required to evaluate assumptions including anticipated margins to estimate the corresponding amount of revenue to recognize. Costs used as a basis for estimating anticipated margins include material, direct and indirect labor, and appropriate applied overheads. Anticipated margins are determined based on historical or quoted customer pricing. Costs based input methods are considered a faithful depiction of our efforts and progress toward satisfying our performance obligations for manufacturing services and for which we believe we are entitled to payment for performance completed to date. The cumulative effect of revisions to estimates related to net contract revenues or costs are recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated.
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We have elected to account for shipping and handling activities related to contracts with customers as costs to fulfill our promise to transfer the associated services and products. Accordingly, we record customer payments of shipping and handling costs as a component of net sales and classify such costs as a component of cost of sales. We recognize sales net of applicable sales or value add taxes. Based on estimated product returns and price concessions, a reserve for returns and allowances is recorded at the time revenue is recognized, resulting in a reduction of net revenue.
Direct incremental costs to obtain and fulfill a contract are capitalized as a contract asset only if they are material, expected to be recovered, and are not accounted for in accordance with other guidance. Incidental items that are immaterial in the context of the contract are recognized as expense in the period incurred.
Trade Accounts Receivable:
The Company’s trade accounts receivable are recorded per the terms of the agreement or sale, and accrued interest is recognized when earned. Our policy for estimating the allowance for credit losses on trade accounts receivable includes analysis of such items as aging, credit worthiness, payment history, and historical bad debt experience. Management uses these specific analyses in conjunction with an evaluation of the general economic and market conditions to estimate expected credit losses. Management believes that historical loss information generally provides a basis for its assessment of expected credit losses. Trade accounts receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. Adjustments to the allowance for credit losses are recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income.
In the ordinary course of business, customers periodically negotiate extended payment terms on trade accounts receivable. Customary terms require payment within 30 to 45 days, with any terms beyond 45 days being considered extended payment terms. We participate in our customers’ supply chain financing arrangements for certain of our accounts receivables in order to extend terms for the customer without negatively impacting our cash flow. These arrangements in all cases do not contain recourse provisions which would obligate us in the event of our customers’ failure to pay. Receivables are considered sold when they are transferred beyond the reach of Kimball Electronics and its creditors, the purchaser has the right to pledge or exchange the receivables, and we have surrendered control over the transferred receivables. In the three months ended September 30, 2024 and 2023, we sold, without recourse, $87.3 million and $103.0 million of accounts receivable, respectively. For the three months ended September 30, 2024 and 2023, factoring fees were $0.5 million and $0.9 million. Factoring fees are recorded in Non-operating income (expense), net on our Condensed Consolidated Statements of Income for the three months ended September 30, 2024. Prior to fiscal year 2025, factoring fees were recorded in Selling and Administrative Expenses.
During the three months ended December 31, 2023, changes to the expected timing of payments from and risk of default for a customer resulted in the recording of an allowance for credit losses of $2.0 million in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income. Although the customer is not in bankruptcy and we will continue to pursue full recovery, an allowance was deemed necessary in consideration of the expected timing of payments and risk of default. The amount expected to be collected after twelve months is included in Other Assets, net on the Condensed Consolidated Balance Sheet. At September 30, 2024, the noncurrent receivable associated with this customer in Other Assets, net totaled $2.7 million, which is net of the $2.0 million allowance for expected credit losses. The current portion of receivables from this customer is $2.2 million at September 30, 2024.
Non-operating Income (Expense), net:
Non-operating income (expense), net includes the impact of such items as foreign currency rate movements and related derivative gain or loss, fair value adjustments on supplemental employee retirement plan (“SERP”) investments, government subsidies, factoring fees, bank charges, and other miscellaneous non-operating income and expense items that are not directly related to operations. Prior to fiscal year 2025, factoring fees were recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income. The gain (loss) on SERP investments is offset by a change in the SERP liability that is recognized in Selling and Administrative Expenses.

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Components of Non-operating income (expense), net:
 Three Months Ended
 September 30
(Amounts in Thousands)20242023
Foreign currency/derivative gain (loss)$(1,034)$(674)
Gain (loss) on SERP investments345 (177)
Factoring fees(537) 
Credit facilities and bank fees(263)(201)
Other(172)(79)
Non-operating income (expense), net$(1,661)$(1,131)
Income Taxes:
In determining the quarterly provision for income taxes, we use an estimated annual effective tax rate which is based on expected annual income, statutory tax rates, and available tax planning opportunities in the various jurisdictions in which we operate. Unusual or infrequently occurring items are separately recognized in the quarter in which they occur.
Deferred income tax assets and liabilities, recorded in Other Assets, net and Other long-term liabilities, respectively, in the Condensed Consolidated Balance Sheets, are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse. We evaluate the recoverability of deferred tax assets each quarter by assessing the likelihood of future taxable income and available tax planning strategies that could be implemented to realize our deferred tax assets. If recovery is not likely, we provide a valuation allowance based on our best estimate of future taxable income in the various taxing jurisdictions and the amount of deferred taxes ultimately realizable. Future events could change management’s assessment.
We operate within multiple taxing jurisdictions and are subject to tax audits in these jurisdictions. These audits can involve complex uncertain tax positions, which may require an extended period of time to resolve. A tax benefit from an uncertain tax position may be recognized only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. We maintain a liability for uncertain income tax and other tax positions, including accrued interest and penalties on those positions. As tax positions are effectively settled, the tax liability is adjusted accordingly. We recognize interest and penalties related to unrecognized tax benefits in Provision for Income Taxes on the Condensed Consolidated Statements of Income.
The U.S. Tax Cuts and Jobs Act (“Tax Reform”) was enacted into law on December 22, 2017, making broad and complex changes to the U.S. tax code, for which complete guidance may have not yet been issued. Tax Reform, in addition to other changes, required a one-time transition tax on certain unremitted earnings of foreign subsidiaries that is payable over an eight-year period. As of September 30, 2024 and June 30, 2024, the remaining provision recorded for the one-time deemed repatriation tax was $3.3 million and $5.9 million, respectively, payable through fiscal year 2026. As of September 30, 2024, the remaining deemed repatriation tax is short term and is recorded in Accrued expenses on the Condensed Consolidated Balance Sheets.
New Accounting Standards:
Not Yet Adopted:
In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance on Improvements to Reportable Segment Disclosures, requiring additional, more detailed information about a reportable segment. The guidance is effective for fiscal years beginning after December 15, 2023 and for interim periods beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements.
In December 2023, the FASB issued guidance on Improvements to Income Tax Disclosures, intended to enhance the transparency and decision usefulness of income tax disclosures. The guidance is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements.

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Note 2. Revenue from Contracts with Customers
Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, electronic and non-electronic components, medical devices, medical disposables, and precision molded plastics in automotive, medical, and industrial applications, to the specifications and designs of our customers.
The following table disaggregates our revenue by end market vertical for the three months ended September 30, 2024 and 2023.
Three Months Ended
September 30
(Amounts in Millions)20242023
Vertical Markets:
Automotive
$188.4 $212.5 
Medical
89.8 102.4 
Industrial
96.1 123.2 
Total net sales$374.3 $438.1 
For both the three months ended September 30, 2024 and 2023, approximately 97% of our net sales were recognized over time as manufacturing services were performed under a customer contract on a product with no alternative use and we have an enforceable right to payment for performance completed to date. The remaining sales revenues were recognized at a point in time when the customer obtained control of the products.
The timing differences of revenue recognition, billings to our customers, and cash collections from our customers result in billed accounts receivable and unbilled accounts receivable. Contract assets on the Condensed Consolidated Balance Sheets relate to unbilled accounts receivable and occur when revenue is recognized over time as manufacturing services are provided and the billing to the customer has not yet occurred as of the balance sheet date, which are generally transferred to receivables in the next fiscal quarter due to the short-term nature of the manufacturing cycle. Contract assets were $74.3 million and $76.3 million as of September 30, 2024 and June 30, 2024, respectively.
The Company may receive payments from customers in advance of the satisfaction of performance obligations primarily for material price variances, inventory purchases, tooling, or other miscellaneous services or costs. These payments are recognized as contract liabilities until the performance obligations are completed and are included in Advances from customers, if inventory related, and Accrued expenses, if not inventory related, on the Condensed Consolidated Balance Sheets, which amounted to $42.3 million and $43.1 million as of September 30, 2024 and June 30, 2024, respectively. Our performance obligations are short term in nature and therefore our contract liabilities are all expected to be settled within twelve months. We also have deposits associated with inventory purchases classified as long term. See Note 5 - Inventories of Notes to Condensed Consolidated Financial Statements for further discussion.
Note 3. Sale of GES
Following approval by our Board of Directors, on July 31, 2024, we entered into a definitive agreement and closed on the sale of 100% of the equity interests in GES to Averna Test Systems, Inc., resulting in cash proceeds after costs to sell of $18.5 million, which is subject to additional purchase price adjustments. The pre-tax gain recognized on the sale in the first quarter of fiscal year 2025 was $1.3 million. In fiscal year 2024, following the Company’s decision to divest of GES, we classified the disposal group as held for sale and recognized $22.9 million in pre-tax impairment charges.
The following table summarizes net sales and income (loss) before taxes on income for the disposal group:
Three Months Ended
September 30
(Amounts in Thousands)20242023
Net Sales$2,075 $10,285 
Income (Loss) Before Taxes on Income (1)
$985 $(595)
(1) Includes gain on sale of $1.3 million for the three months ended September 30, 2024. Each period also includes allocated corporate overhead expenses.
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Note 4. Restructuring and Subsequent Event
In the three months ended September 30, 2024, we continued our restructuring efforts to align our cost structure with reduced end market demand levels, including resizing our workforce and taking specific cost actions, and recorded restructuring expense of $2.3 million which were primarily employee-related costs. The cumulative amount incurred since inception of these efforts beginning in fiscal year 2024 through September 30, 2024 was $4.7 million. We expect to continue executing these previously announced restructuring efforts over the remainder of the fiscal year and estimate between $2.0 million and $3.0 million of additional pre-tax restructuring charges.
In addition, on November 4, 2024, the Company announced that its Board of Directors has approved a plan to cease operations at our Tampa facility, expected to be completed by the end of the fiscal year. The decision was another important step towards sharpening our strategic focus, while leveraging our global footprint and streamlining the operating structure. We expect to incur approximately $8.0 million to $11.0 million in total exit costs, including most significantly $6.0 million to $7.0 million in employee termination benefits and $2.0 million to $3.0 million in logistical costs to transfer and validate programs at our other facilities. We expect these costs to be predominantly cash expenditures, and a majority are anticipated to be incurred over the remainder of fiscal year 2025. As the commitment to this disposal plan occurred subsequent to September 30, 2024, no charges have been incurred or recorded in the quarter.
Note 5. Inventories
Inventories were valued using the lower of first-in, first-out (“FIFO”) cost and net realizable value. Inventory components were as follows:
(Amounts in Thousands)September 30, 2024June 30, 2024
Finished products$192 $141 
Work-in-process  
Raw materials335,080 337,975 
Total inventory$335,272 $338,116 
Additionally, as of September 30 and June 30, 2024, we have raw materials inventory totaling $43.1 million and $42.8 million, respectively, classified as long-term included in Other Assets, net in our Condensed Consolidated Balance Sheets. This inventory is associated with a customer who is remediating a recall and we do not expect the inventory to be consumed within the next twelve months. As of September 30 and June 30, 2024, we have received deposits totaling $42.0 million and $38.7 million, respectively, from this customer related to this inventory, which is included in Other long-term liabilities in our Condensed Consolidated Balance Sheets.

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Note 6. Accumulated Other Comprehensive Income (Loss)
During the three months ended September 30, 2024 and 2023, the changes in the balances of each component of Accumulated Other Comprehensive Income (Loss), net of tax, were as follows:
Accumulated Other Comprehensive Income (Loss)
(Amounts in Thousands)Foreign Currency Translation AdjustmentsDerivative Gain (Loss)Post Employment Benefits
Net Actuarial Gain (Loss)
Accumulated Other Comprehensive Income (Loss)
Balance at June 30, 2024
$(14,260)$(2,395)$(1,152)$(17,807)
Other comprehensive income (loss) before reclassifications6,951 (1,302)71 5,720 
Reclassification to (earnings) loss 278 40 318 
Net current-period other comprehensive income (loss)6,951 (1,024)111 6,038 
Balance at September 30, 2024
$(7,309)$(3,419)$(1,041)$(11,769)
Balance at June 30, 2023
$(11,832)$1,368 $(582)$(11,046)
Other comprehensive income (loss) before reclassifications(4,230)(309)22 (4,517)
Reclassification to (earnings) loss (2,213)(5)(2,218)
Net current-period other comprehensive income (loss)(4,230)(2,522)17 (6,735)
Balance at September 30, 2023
$(16,062)$(1,154)$(565)$(17,781)
The following reclassifications were made from Accumulated Other Comprehensive Income (Loss) to the Condensed Consolidated Statements of Income:
Reclassifications from Accumulated Other Comprehensive Income (Loss)Three Months EndedAffected Line Item in the Condensed Consolidated Statements of Income
September 30
(Amounts in Thousands)20242023
Derivative gain (loss) (1)
$(384)$2,867 Cost of Sales
106 (654)Benefit (Provision) for Income Taxes
$(278)$2,213 Net of Tax
Postemployment Benefits:
  Amortization of actuarial gain (2)
(53)6 Non-operating income (expense), net
13 (1)Benefit (Provision) for Income Taxes
$(40)$5 Net of Tax
Total reclassifications for the period$(318)$2,218 Net of Tax
Amounts in parentheses indicate reductions to income.
(1) See Note 10 - Derivative Instruments of Notes to Condensed Consolidated Financial Statements for further information on derivative instruments.
(2) See Note 11 - Employee Benefit Plans of Notes to Condensed Consolidated Financial Statements for further information on postemployment benefit plans.
Note 7. Commitments and Contingent Liabilities
The Company typically provides only assurance-type warranties for a limited time period, which cover workmanship and assures the product complies with specifications provided by or agreed upon with the customer. We maintain a provision for limited warranty repair or replacement of products manufactured and sold, which has been established in specific manufacturing contract agreements. We estimate product warranty liability at the time of sale based on historical repair or replacement cost trends in conjunction with the length of the warranty offered. Management refines the warranty liability regularly based on changes in historical cost trends and in certain cases where specific warranty issues become known. This product warranty liability and expense were immaterial during the three months ended September 30, 2024 and 2023.
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Note 8. Credit Facilities
Credit facilities consisted of the following:
Available
Borrowing Capacity at
Borrowings Outstanding atBorrowings Outstanding at
(Amounts in Millions, in U.S Dollar Equivalents)September 30, 2024September 30, 2024June 30, 2024
Primary credit facility (1)
$63.1 $236.5 $285.5 
Secondary credit facility (2)
100.0   
Thailand overdraft credit facility (3)
10.1   
China revolving credit facility (3)
7.1   
Netherlands revolving credit facility (3)
0.9 9.4 9.3 
Poland revolving credit facility (3)
5.6   
Total credit facilities$186.8 $245.9 $294.8 
Less: current portion $(45.9)$(59.8)
Long-term debt under credit facilities, less current portion (4)
$200.0 $235.0 
(1) The Company maintains a U.S. primary credit facility (the “primary credit facility”) among the Company, the lenders party thereto, and JPMorgan Chase Bank, N. A., as Administrative Agent, and Bank of America, N.A., as Documentation Agent, scheduled to mature May 4, 2027. The primary credit facility provides for $300 million in borrowings, with an option to increase the amount available for borrowing to $450 million upon request, subject to the consent of each lender participating in such increase. This facility is maintained for working capital and general corporate purposes of the Company. A commitment fee is payable on the unused portion of the credit facility at a rate that ranges from 10.0 to 25.0 basis points per annum as determined by the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA, as defined in the primary credit facility. Types of borrowings available on the primary credit facility include revolving loans, multi-currency term loans, and swingline loans.
The interest rate on borrowings is dependent on the type and currencies of borrowings and will be one of the following options:
any Term Benchmark borrowing denominated in U.S. Dollars will utilize the Secured Overnight Financing Rate (“SOFR”), which is a rate per annum equal to the secured overnight financing rate for such business day published by the SOFR Administrator, the Federal Reserve Bank of New York, on the immediately succeeding business day, plus the Revolving Commitment Term Benchmark spread which can range from 100.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA;
any Term Benchmark borrowing denominated in Euros will utilize the Euro Interbank Offered Rate (“EURIBOR”) in effect two target days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus the Revolving Commitment Term Benchmark spread which can range from 100.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA; or
the Alternate Base Rate (“ABR”), which is defined as the highest of the fluctuating rate per annum equal to the higher of:
a.Prime Rate in the U.S. last quoted by the Wall Street Journal, and if this is ceased to be quoted, the highest bank prime loan rate or similar loan rate quoted by the Federal Reserve Board;
b.1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility); or
c.1% per annum above the Adjusted SOFR Rate (as defined under the primary credit facility);
plus the Revolving Commitment ABR spread which can range from 0.0 to 75.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA.
The Company’s financial covenants under the primary credit facility require:
a ratio of consolidated total indebtedness minus unencumbered U.S. cash on hand in the United States in excess of $15 million to adjusted consolidated EBITDA, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be greater than 3.0 to 1.0, provided, however, that for each fiscal quarter end during the four quarter period following a material permitted acquisition, as defined in the Credit Agreement, the Company will not permit this financial covenant to be greater than 3.5 to 1.0 for each such fiscal quarter end, and,
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an interest coverage ratio, defined as that ratio of consolidated EBITDA for such period to cash interest expense for such period, for any period of four consecutive fiscal quarters, to not be less than 3.5 to 1.0.
The Company had $0.4 million in letters of credit contingently committed against the primary credit facility at both September 30, 2024 and June 30, 2024.
(2) The Company amended its 364-day multi-currency revolving credit facility agreement on January 5, 2024 (the “secondary credit facility”), which allows for borrowings up to $100.0 million, among the Company, as borrower, certain subsidiaries of the Company as guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., as Documentation Agent. The secondary credit facility has a maturity date of January 3, 2025. The proceeds of the loans are to be used for working capital and general corporate purposes of the Company. A commitment fee on the unused portion of principal amount of this secondary credit facility is payable at 30.0 basis points per annum.
The interest rate on borrowings is dependent on the type of borrowings and will be one of the following options:
any Term Benchmark borrowing denominated in U.S. Dollars will utilize the Secured Overnight Financing Rate (“SOFR”), which is a rate per annum equal to the secured overnight financing rate for such business day published by the SOFR Administrator, the Federal Reserve Bank of New York, on the immediately succeeding business day, plus a Revolving Commitment Term Benchmark spread of 175.0 basis points;
any Term Benchmark borrowing denominated in Euros will utilize the Euro Interbank Offered Rate (“EURIBOR”) in effect two target days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus a Revolving Commitment Term Benchmark spread of 175.0 basis points; or
the Alternate Base Rate (“ABR”), which is defined as the highest of the fluctuating rate per annum equal to the higher of:
a.Prime Rate in the U.S. last quoted by the Wall Street Journal, and if this is ceased to be quoted, the highest bank prime loan rate or similar loan rate quoted by the Federal Reserve Board;
b.1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility); or
c.1% per annum above the Adjusted SOFR Rate (as defined under the primary credit facility);
plus a Revolving Commitment ABR spread of 75.0 basis points.
The Company’s financial covenants under this secondary credit facility are the same as the financial covenants for its primary credit facility.
(3) The Company also maintains foreign credit facilities for working capital and general corporate purposes at specific foreign locations rather than utilizing funding from intercompany sources. These foreign credit facilities can be canceled at any time by either the bank or us and generally include renewal clauses. Interest on borrowing under these facilities is charged at a rate as defined under the respective foreign credit facility. As a result of the GES divestiture that occurred on July 31, 2024, the Company no longer has the Vietnam credit facility, which allowed for borrowings up to $5.0 million.
(4) The amount of long-term debt under credit facilities, less current maturities, reflects the borrowings on the primary credit facility that the Company intends, and has the ability, to refinance for a period longer than twelve months. The primary credit facility matures on May 4, 2027.
The weighted-average interest rate on borrowings outstanding under the credit facilities at both September 30, 2024 and June 30, 2024 were 6.8%.
Note 9. Fair Value
The Company categorizes assets and liabilities measured at fair value into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas level 3 generally requires significant management judgment. The three levels are defined as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2: Observable inputs other than those included in level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.
There were no changes in the inputs or valuation techniques used to measure fair values during the three months ended September 30, 2024. For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2024.
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Recurring Fair Value Measurements:
As of September 30, 2024 and June 30, 2024, the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows:
 September 30, 2024
(Amounts in Thousands)Level 1Level 2Total
Assets   
Cash equivalents$17,431 $ $17,431 
Derivatives: foreign exchange contracts$ $916 $916 
Trading securities: mutual funds held in nonqualified SERP5,780  5,780 
Total assets at fair value$23,211 $916 $24,127 
Liabilities   
Derivatives: foreign exchange contracts$ $4,313 $4,313 
Total liabilities at fair value$ $4,313 $4,313 
    
 June 30, 2024
(Amounts in Thousands)Level 1Level 2Total
Assets   
Derivatives: foreign exchange contracts$ $1,420 $1,420 
Trading securities: mutual funds held in nonqualified SERP5,445  5,445 
Total assets at fair value$5,445 $1,420 $6,865 
Liabilities   
Derivatives: foreign exchange contracts$ $2,485 $2,485 
Total liabilities at fair value$ $2,485 $2,485 
We had no level 3 assets or liabilities at September 30, 2024 and June 30, 2024, or any activity in Level 3 assets or liabilities during the three months ended September 30, 2024.
The nonqualified supplemental employee retirement plan (“SERP”) assets consist primarily of equity funds, balanced funds, bond funds, and a money market fund. The SERP investment assets are offset by a SERP liability which represents the Company’s obligation to distribute SERP funds to participants. See Note 11 - Employee Benefit Plans of Notes to Condensed Consolidated Financial Statements for further information regarding the SERP.
Financial Instruments Not Carried At Fair Value:
Financial instruments that are not reflected in the Condensed Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include notes receivable and borrowings under credit facilities. There were no changes to the inputs and valuation techniques used to assess the fair value of these financial instruments during the three months ended September 30, 2024. For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2024.
The carrying values of our cash deposit accounts, trade accounts receivable, and trade accounts payable approximate fair value due to the relatively short maturity and immaterial non-performance risk.
Note 10. Derivative Instruments
Foreign Exchange Contracts:
We operate internationally and are therefore exposed to foreign currency exchange rate fluctuations in the normal course of business. Our primary means of managing this exposure is to utilize natural hedges, such as aligning currencies used in the supply chain with the sale currency. To the extent natural hedging techniques do not fully offset currency risk, we use derivative instruments with the objective of reducing the residual exposure to certain foreign currency rate movements. Factors considered in the decision to hedge an underlying market exposure include the materiality of the risk, the volatility of the market, the duration of the hedge, the degree to which the underlying exposure is committed to, and the availability, effectiveness, and cost of derivative instruments. Derivative instruments are only utilized for risk management purposes and are not used for speculative or trading purposes.
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We use forward contracts designated as cash flow hedges to protect against foreign currency exchange rate risks inherent in forecasted transactions denominated in a foreign currency. Non-designated foreign exchange contracts are also used to hedge against foreign currency exchange rate risks related to intercompany balances and other balance sheet positions denominated in currencies other than the functional currencies. As of September 30, 2024, we had outstanding foreign exchange contracts to hedge currencies against the U.S. dollar in the aggregate notional amount of $27.1 million and to hedge currencies against the Euro in the aggregate notional amount of 56.4 million Euro. The notional amounts are indicators of the volume of derivative activities but may not be indicators of the potential gain or loss on the derivatives.
In limited cases due to unexpected changes in forecasted transactions, cash flow hedges may cease to meet the criteria to be designated as cash flow hedges. Depending on the type of exposure hedged, we may either purchase a derivative contract in the opposite position of the undesignated hedge or may retain the hedge until it matures if the hedge continues to provide an adequate offset in earnings against the currency revaluation impact of foreign currency denominated liabilities.
The fair value of outstanding derivative instruments is recognized on the Condensed Consolidated Balance Sheets as a derivative asset or liability and presented with Prepaid expenses and other current assets and Accrued expenses, respectively. When derivatives are settled with the counterparty, the derivative asset or liability is relieved and cash flow is impacted for the net settlement. For derivative instruments that meet the criteria of hedging instruments under FASB guidance, the gain or loss on the derivative instrument is initially recorded net of related tax effect in Accumulated Other Comprehensive Income (Loss), a component of Share Owners’ Equity, and is subsequently reclassified into earnings in the period or periods during which the hedged transaction is recognized in earnings. The gain or loss associated with derivative instruments that are not designated as hedging instruments or that cease to meet the criteria for hedging under FASB guidance is reported immediately in Non-operating income (expense), net on the Condensed Consolidated Statements of Income.
Based on fair values as of September 30, 2024, we estimate that approximately $2.9 million of pre-tax derivative loss deferred in Accumulated Other Comprehensive Loss will be reclassified into earnings, along with the earnings effects of related forecasted transactions, within the next 12 months. Gains on foreign exchange contracts are generally offset by losses in operating income in the income statement when the underlying hedged transaction is recognized in earnings. Because gains or losses on foreign exchange contracts fluctuate partially based on currency spot rates, the future effect on earnings of the cash flow hedges alone is not determinable, but in conjunction with the underlying hedged transactions, the result is expected to be a decline in currency risk. The maximum length of time we had hedged our exposure to the variability in future cash flows was 12 months as of both September 30, 2024 and June 30, 2024.
See Note 9 - Fair Value of Notes to Condensed Consolidated Financial Statements for further information regarding the fair value of derivative assets and liabilities and Note 6 - Accumulated Other Comprehensive Income (Loss) of Notes to Condensed Consolidated Financial Statements for the changes in deferred derivative gains and losses.

17


Information on the location and amounts of derivative fair values in the Condensed Consolidated Balance Sheets and derivative gains and losses in the Condensed Consolidated Statements of Income are presented below.
Fair Value of Derivative Instruments on the Condensed Consolidated Balance Sheets
Asset DerivativesLiability Derivatives
Fair Value As of Fair Value As of
(Amounts in Thousands)Balance Sheet LocationSeptember 30,
2024
June 30,
2024
Balance Sheet LocationSeptember 30,
2024
June 30,
2024
Derivatives Designated as Hedging Instruments:
Foreign exchange contractsPrepaid expenses and other current assets$916 $966 Accrued expenses$3,621 $2,330 
      
Derivatives Not Designated as Hedging Instruments:    
Foreign exchange contractsPrepaid expenses and other current assets 454 Accrued expenses692 155 
Total derivatives $916 $1,420  $4,313 $2,485 
The Effect of Derivative Instruments on Other Comprehensive Income (Loss)
  Three Months Ended
September 30
(Amounts in Thousands) 20242023
Amount of Pre-Tax Gain or (Loss) Recognized in Other Comprehensive Income (Loss) (OCI) on Derivatives:  
Foreign exchange contracts $(1,747)$(387)
The Effect of Derivative Instruments on Condensed Consolidated Statements of Income
 Three Months Ended
(Amounts in Thousands)September 30
Derivatives in Cash Flow Hedging RelationshipsLocation of Gain or (Loss) 20242023
Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income: 
Foreign exchange contractsCost of Sales$(384)$2,867 
Derivatives Not Designated as Hedging Instruments   
Amount of Pre-Tax Gain or (Loss) Recognized in Income on Derivatives:  
Foreign exchange contractsNon-operating income (expense)$(1,545)$142 
   
Total Derivative Pre-Tax Gain (Loss) Recognized in Income$(1,929)$3,009 
Note 11. Employee Benefit Plans
Defined Contribution Retirement Plan:
The Company maintains a trusteed defined contribution retirement plan which is in effect for substantially all domestic employees meeting the eligibility requirements. The Company matches 50% of eligible employee contributions up to 6%. The Company also provides a discretionary contribution determined annually by the Talent, Culture, and Compensation Committee of the Company’s Board of Directors. Total expense related to employer contributions to the domestic retirement plans was $0.4 million and $1.6 million for the three months ended September 30, 2024 and September 30, 2023, respectively.
The Company also maintains a supplemental employee retirement plan (“SERP”) for executives and other key employees which enables them to defer cash compensation on a pre-tax basis and restore amounts that would otherwise be payable under our tax-qualified retirement plans if the IRS did not have limits on includable compensation and maximum benefits. The SERP is structured as a rabbi trust, and therefore, assets in the SERP portfolio are subject to creditor claims in the event of bankruptcy. We recognize SERP investment assets on the balance sheet at current fair value. A SERP liability of the same amount is recorded on the balance sheet representing an obligation to distribute SERP funds to participants. As of September 30, 2024, both total investments and obligations under SERP were $5.8 million, of which $2.1 million were short term and $3.7 million were long term. As of June 30, 2024, both total investments and obligations under SERP were $5.4 million, of which $2.0 million were short term and $3.4 million were long term. The SERP investment assets are classified as trading, and accordingly, realized and unrealized gains and losses are recognized in the Other Income (Expense) category on our Condensed Consolidated Statements of Income. Adjustments made to revalue the SERP liability are also recognized in income as selling and administrative expenses and offset valuation adjustments on SERP investment assets. The change in net unrealized holding gains for the three months ended September 30, 2024 and 2023 was approximately $0.3 million and $(0.2) million, respectively.
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Defined Benefit Postemployment Plan:
The Company established and maintains severance plans for all domestic employees and other postemployment plans for certain foreign subsidiaries. There are no statutory requirements for us to contribute to the plans, nor do employees contribute to the plans. The plans hold no assets. Benefits are paid using available cash on hand when eligible employees meet plan qualifications for payment. As of September 30, 2024, total obligations under these plans were $7.4 million of which $6.6 million were long term and $0.8 million were short term. As of June 30, 2024, total obligations under these plans were $7.0 million of which $6.2 million were long term and $0.8 million were short term. Net periodic benefit costs were not material for the three months ended September 30, 2024 and 2023.

Note 12. Stock Compensation Plans
A stock compensation plan was created and adopted by the Company’s Board of Directors (the “Board”) on September 20, 2023 and approved by our Share Owners at our 2023 Annual Meeting on November 17, 2023. The 2023 Plan allows for the issuance of up to 2.0 million shares and replaced our former 2014 plan. The shares under the 2023 Plan may be granted in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted awards, performance share awards, cash awards, and other equity awards. The Plan is a ten-year plan that terminates automatically on November 17, 2033. No award shall be granted pursuant to the Plan after such date, but awards theretofore granted may extend beyond that date.
On October 20, 2016, the Board approved a nonqualified deferred stock compensation plan, the Kimball Electronics, Inc. Non-Employee Directors Stock Compensation Deferral Plan (the “Deferral Plan”), which allows Non-Employee Directors to elect to defer all, or a portion of, their retainer fees in stock until retirement or termination from the Board or death. The Deferral Plan allows for issuance of up to 1.0 million shares of the Company’s common stock. For more information on the 2023 Plan and the Deferral Plan, refer to our Annual Report on Form 10-K for the year ended June 30, 2024.
During the first three months of fiscal year 2025, the following stock compensation was granted under the 2023 Plan and the Deferral Plan.
Stock Compensation GrantedQuarter GrantedShares/Units
Grant Date Fair Value (2)
Long-Term Performance Shares (1)
1st Quarter23,460 $18.49 
Restricted Shares (3)
1st Quarter152,917 $18.49 
(1) Long-term performance share awards for the leadership team members (consisting of our CEO and his direct reports) are expected to be granted in the second quarter of fiscal year 2025 upon approval of performance metrics by the Talent, Culture, and Compensation Committee of the Board (“Committee”). The Committee granted long-term performance share awards to key employees not on our leadership team during the quarter. These awards granted in fiscal year 2025 will cliff vest at the third anniversary of the award date in fiscal year 2028.
For these key employee awards, a number of shares will be issued to each participant based upon a combination of the Company’s profitability based on its operating income over the performance period as defined in the Company’s operating business plans for the applicable fiscal years and the Company’s growth based on a comparison of its three-year compounded annual growth rate (“CAGR”) with the Electronics Manufacturing Services Industry’s three-year CAGR. The number of shares issued could be zero if minimum thresholds are not met up to a maximum of 125% if results on both measures exceed targets under the formula.
(2) The grant date fair value is the weighted average stock price based on the dates of the grants.
(3) Restricted shares were granted to leadership team members and other key employees. These restricted shares were approved by the Talent, Culture, and Compensation Committee of the Board. The contractual life of the restricted shares is three years, with one-third of the interest in the restricted shares vested after year one of the grant, another one-third after year two of the grant, and the final one-third after year three of the grant. Restricted shares are expensed over the contractual vesting period as earned. If the employment of a holder of restricted shares terminates before the RSU has vested for any reason other than death, retirement, or disability, the restricted shares not yet vested will be forfeited.

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Note 13. Goodwill and Other Intangible Assets
A summary of goodwill is as follows, amounts as of June 30, 2024 exclude the amounts that were classified as held for sale and later divested on July 31, 2024:
(Amounts in Thousands)
Balance as of June 30, 2024
Goodwill$19,017 
Accumulated impairment(12,826)
Goodwill, net$6,191 
Balance as of September 30, 2024
Goodwill19,017 
Accumulated impairment(12,826)
Goodwill, net$6,191 
Other Intangible Assets includes capitalized software. The estimated useful life of internal-use software ranges from 3 years to 10 years. For the three months ended September 30, 2024 and 2023, amortization expense of other intangible assets was $0.3 million and $0.9 million, respectively. The three months ended September 30, 2023 included the amortization on customer relationships, technology, and trade name intangible assets associated with GES. See Note 3 - Sale of GES of Notes to Condensed Consolidated Financial Statements for additional information. We have no intangible assets with indefinite useful lives, which are not subject to amortization.
Note 14. Share Owners’ Equity
The Company has a Board-authorized stock repurchase plan (the “Repurchase Plan”) allowing the repurchase of up to $100 million of our common stock. Purchases may be made under various programs, including in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions, all in accordance with applicable securities laws and regulations. The Repurchase Plan has no expiration date but may be suspended or discontinued at any time.
During the three months ended September 30, 2024, the Company repurchased $2.9 million shares of common stock under the Repurchase Plan at an average price of $18.01 per share. During the three months ended September 30, 2023, the Company had no repurchases under the Repurchase Plan. Since the inception of the Repurchase Plan, the Company has repurchased $94.7 million of common stock at an average cost of $15.49 per share.
Note 15. Earnings Per Share
Basic and diluted earnings per share were calculated as follows under the two-class method:
Three Months Ended
September 30
(Amounts in thousands, except per share data)20242023
Basic and Diluted Earnings Per Share:
   Net Income$3,154 $10,754 
   Less: Net Income allocated to participating securities3 16 
   Net Income allocated to common Share Owners$3,151 $10,738 
Basic weighted average common shares outstanding24,979 25,041 
Dilutive effect of average outstanding stock compensation awards256 197 
Dilutive weighted average shares outstanding25,235 25,238 
Earnings Per Share of Common Stock:
Basic$0.13 $0.43 
Diluted$0.12 $0.43 


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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain statements contained within this document are considered forward-looking under the Private Securities Litigation Reform Act of 1995. The statements may be identified by the use of words such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “estimates,” “forecasts,” “likely,” “future,” “may,” “should,” “would,” “could,” “will,” “can,” “potentially,” and similar expressions. These forward-looking statements are subject to risks and uncertainties including, but not limited to, global economic conditions, geopolitical environment and conflicts such as the war in Ukraine, global health emergencies, availability or cost of raw materials and components, foreign exchange 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 Kimball Electronics are contained in our Annual Report on Form 10-K for the year ended June 30, 2024.
Business Overview
We are a global, multifaceted manufacturing solutions provider. We provide electronics manufacturing services (“EMS”), including engineering and supply chain support, to customers in the automotive, medical, and industrial end markets. Our core competency is producing durable electronics, and we further offer contract manufacturing services for non-electronic components, medical disposables, drug delivery solutions, and precision molded plastics. Our manufacturing services, including engineering and supply chain support, utilize common production and support capabilities globally. We are well recognized by our customers and the industry for our excellent quality, reliability, and innovative service. CIRCUITS ASSEMBLY, a leading brand and technical publication for electronics manufacturers worldwide, has previously recognized us four times for achieving the Highest Overall Customer Rating in their Service Excellence Awards, and most recently, we received Highest Overall Customer Ratings in four of their seven categories in 2023.
The contract manufacturing services industry is very competitive. As a mid-sized player, we can expect to be challenged by the agility and flexibility of the smaller, regional players, and we can expect to be challenged by the scale and price competitiveness of the larger, global players. We enjoy a unique market position between these extremes which allows us to compete with the larger scale players for high-volume projects, but also maintain our competitive position in the generally lower volume durable electronics market space. We expect to continue to effectively operate in this market space; however, one significant challenge will be maintaining our profit margins while we continue our revenue growth. Pricing is competitive in the market as production efficiencies and material pricing advantages for most projects drive costs and prices down over the life of the projects. This characteristic of the contract electronics marketplace is expected to continue.
The Worldwide Manufacturing Services Market - 2024 Edition, a comprehensive study on the worldwide EMS market published by New Venture Research (“NVR”), provided worldwide forecast trends through 2028. NVR projects the worldwide assembly market for electronics products to grow at a compound annual growth rate (“CAGR”) of 4.6% over the next five years, with the EMS industry projected to grow at a CAGR of 4.6%.
We continue to monitor the current economic and industry conditions for uncertainties that may pose a threat to our future growth or cause disruption in business strategy, execution, and timing in the markets in which we compete.
The EMS industry is experiencing the impacts of softening demand from global macroeconomic headwinds, especially in the current fiscal year. The financial impact on our future results cannot be reasonably estimated but could be material. Such headwinds include pressure from elevated levels of inflation, higher interest rates, and geopolitical uncertainty.
Net sales in the first quarter of the current fiscal year decreased 15% compared to the prior fiscal year first quarter, with decreases in each of our end market verticals. The decrease in sales to customers in the automotive and medical markets were largely driven by decreased demand. The decrease in sales to customers in the industrial market were related to the sale of GES and continued softness specific to smart metering and climate control production. We expect consolidated net sales to continue to lag when compared to fiscal year 2024 with the continued softness in demand and the loss of a major automotive program (impacts beginning in the third quarter) by our customer that was unrelated to any issues with our workmanship, quality, or ability to produce the product, in addition to the expected consolidated net sales decrease from the divestiture of our GES business.
We have a strong focus on cost control balanced with managing the future growth prospects of our business. We expect to make investments that will strengthen or add new capabilities to our package of value as a multifaceted manufacturing solutions company, including through our recently completed capacity expansions. Managing working capital in conjunction with fluctuating demand levels is likewise key. In addition, a long-standing component of our profit-sharing incentive bonus plan is its link to our financial performance, which results in varying amounts of compensation expense as profits change.
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To support our renewed strategic focus, we completed the divestiture of our GES business on July 31, 2024 and undertook restructuring efforts beginning in fiscal year 2024 to align our cost structure with reduced end-market demand levels. In addition, on November 4, 2024, the Company announced that its Board of Directors has approved a plan to cease operations at our Tampa facility, expected to be completed by the end of the fiscal year. The decision was another important step towards sharpening our strategic focus, while leveraging our global footprint and streamlining the operating structure. Production activities on existing customer programs will be transferred out of Tampa, with the majority of the work going to our plants in North America, primarily our newly expanded facility in Mexico and Jasper.
We continue to maintain a strong balance sheet, which included a current ratio of 2.3, a debt-to-equity ratio of 0.4, and Share Owners’ equity of $548 million at September 30, 2024. Recently, we have invested to support our expansions and growth in Mexico, Thailand, and Poland. Refer to the Future Liquidity section of Liquidity and Capital Resources below for further discussion of our liquidity.
The continuing success of our business is dependent upon our ability to replace expiring customers/programs with new customers/programs. We monitor our success in this area by tracking the number of customers and the percentage of our net sales generated from them by years of service as depicted in the table below. While variation in the size of program awards makes it difficult to directly correlate this data to our sales trends, we believe it does provide useful information regarding our customer loyalty and new business growth.
Three Months Ended
September 30
Customer Service Years20242023
More than 10 Years
% of Net Sales78 %74 %
# of Customers36 33 
5 to 10 Years
% of Net Sales15 %20 %
# of Customers12 20 
Less than 5 Years
% of Net Sales%%
# of Customers12 11 
Total
% of Net Sales100 %100 %
 # of Customers60 64 
A detailed discussion of risk factors and uncertainties that could have an effect on our performance are located within the “Risk Factors” section of our Annual Report on Form 10-K for the year ended June 30, 2024.
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Results of Operations
At or for the
 Three Months Ended 
 September 30
(Amounts in Millions, Except for Per Share Data)2024as a % of Net Sales2023as a % of Net Sales% Change
Net Sales$374.3 $438.1 (15)%
Gross Profit$23.6 6.3 %$35.5 8.1 %(34)%
Selling and Administrative Expenses13.5 3.6 %16.0 3.7 %(16)%
Restructuring Expense2.3 0.6 %— — %— %
Gain on Disposal
(1.3)(0.3)%— — %— %
Operating Income 9.1 2.4 %19.5 4.4 %(53)%
Other Income (Expense)(6.2)(6.2)
Provision (Benefit) for Income Taxes
(0.3)2.5 (111)%
Net Income$3.2 $10.8 (71)%
Diluted Earnings per Share$0.12 $0.43 (72)%
Open Orders$594 $907 (35)%
Net Sales by Vertical MarketThree Months Ended 
 September 30 
(Amounts in Millions)20242023% Change
Automotive$188.4 $212.5 (11)%
Medical89.8 102.4 (12)%
Industrial96.1 123.2 (22)%
Total Net Sales$374.3 $438.1 (15)%
First quarter fiscal year 2025 consolidated net sales decreased 15% compared to the first quarter of fiscal year 2024. The impact from foreign currency fluctuations on net sales was less than 1% in the current quarter compared to the first quarter of fiscal year 2024. By end market vertical, our market verticals fluctuated as follows:
Sales to customers in the automotive market decreased 11% during the first quarter of fiscal year 2025 compared to the first quarter of fiscal year 2024. The decrease in the first quarter is due to customer demand reductions, particularly in North America and Europe.
Sales to customers in the medical market declined in the first quarter of fiscal year 2025 compared to the first quarter of fiscal year 2024. The decrease is primarily due to customer demand reductions.
Sales to customers in the industrial market decreased 22% during the first quarter of fiscal year 2025, when compared to the first quarter of fiscal year 2024. Approximately half of the decline is related to the sale of GES and the remainder is due to continued softness in industrial specific to smart metering and climate control production.
Sales to Nexteer Automotive, ZF, and HL Mando accounted for the following portions of our net sales:
Three Months Ended
  September 30
 20242023
Nexteer Automotive18%16%
ZF13%14%
HL Mando*10%
* amount is less than 10% of total
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Gross profit as a percent of net sales in the first quarter of fiscal year 2025 declined when compared to the first quarter of fiscal year 2024 as we experienced lost absorption on lower revenue.
Selling and administrative expenses decreased both as a percent of net sales and in absolute dollars in the first quarter of fiscal year 2025 when compared to the first quarter of fiscal year 2024, driven by cost reduction efforts, decreased profit-sharing bonus expense, and the classification of factoring fees.
In the three months ended September 30, 2024, we recorded pre-tax restructuring expense of $2.3 million for employee-related costs as we undertook restructuring efforts to align our cost structure with reduced end market demand levels.
We completed the divestiture of GES on July 31, 2024 and recorded a gain on disposal of $1.3 million during the first quarter of fiscal year 2025. See Note 3 - Sale of GES of Notes to Condensed Consolidated Financial Statements for more information.
Other Income (Expense) consisted of the following:
Three Months Ended
 September 30
(Amounts in Thousands)20242023
Interest income$222 $299 
Interest expense(4,792)(5,447)
Foreign currency/derivative gain (loss)(1,034)(674)
Gain (loss) on SERP investments345 (177)
Factoring fees(537)— 
Credit facilities fees and bank charges(263)(201)
Other(172)(79)
Other income (expense), net$(6,231)$(6,279)
Interest expense has decreased in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due to lower interest rates and lower borrowings on credit facilities. Foreign currency/derivative gains (losses) result from net foreign currency exchange rate movements during the periods. The revaluation to fair value of the SERP investments recorded in Other Income (Expense) is offset by the revaluation of the SERP liability recorded in Selling and Administrative Expenses, and thus there is no effect on net income. Prior to fiscal year 2025, factoring fees were recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income.
Our provision (benefit) for income taxes for the three months ended September 30, 2024 and September 30, 2023 was $(0.3) million, or (9.4)% of income before taxes on income, and $2.5 million, or 18.6% of income before taxes on income, respectively. The tax benefit in the three months ended September 30, 2024 was the result of an interest recovery on a prior period tax audit.
Open orders were down 35% as of September 30, 2024 compared to September 30, 2023. The decrease in open orders from September 30, 2023 is primarily driven by reduced orders due to cancellation of a major automotive program, other automotive customer demand reductions, and medical customer demand reductions. Open orders at a point in time may not be indicative of future sales trends due to the contract nature of our business. Our open orders depend on the lead times from our customers, which have reduced since September 30, 2023 when parts were more constrained, which also contributed to the decline in open orders.
Liquidity and Capital Resources
Working capital at September 30, 2024 was $439.0 million compared to working capital of $471.7 million at June 30, 2024. The current ratio was 2.3 at both September 30, 2024 and June 30, 2024. The debt-to-equity ratio was 0.4 at September 30, 2024 and 0.5 at June 30, 2024. Our short-term liquidity available, represented as cash and cash equivalents plus the unused amount of our credit facilities, some of which are uncommitted, totaled $263.4 million at September 30, 2024 and $220.1 million at June 30, 2024.

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Cash Conversion Days (“CCD”) are calculated as the sum of Days Sales Outstanding (“DSO”) plus Contract Asset Days (“CAD”) plus Production Days Supply on Hand (“PDSOH”) less Accounts Payable Days (“APD”) and less Advances from Customers Days (“ACD”). CCD, or a similar metric, is used in our industry and by our management to measure the efficiency of managing working capital. The following table summarizes our CCD for the quarterly periods indicated.
Three Months Ended
September 30, 2024June 30, 2024September 30, 2023
Days Sales Outstanding665858
Contract Asset Days181617
Production Days Supply on Hand10093108
Accounts Payable Days565071
Advances from Customers Days20179
Cash Conversion Days108100103
We define Days Sales Outstanding as the average of monthly trade accounts and notes receivable divided by an average day’s net sales, Contract Asset Days as the average monthly contract assets divided by an average day’s net sales, Production Days Supply on Hand as the average of monthly gross inventory divided by an average day’s cost of sales, Accounts Payable Days as the average of monthly accounts payable divided by an average day’s cost of sales, and Advances from Customers Days as the average of monthly customer deposits divided by an average day’s cost of sales. Over the past several quarters, we have supported our customers through strategic inventory builds to mitigate parts shortages, which adversely impacted our PDSOH and CCD metrics. We have experienced customers push out deliveries and sales declines, which have negatively impacted our cash conversion days and working capital. We expect our CCD metrics to improve as we align our working capital with the lower sales levels.
Cash Flows
The following table reflects the major categories of cash flows for the first three months of fiscal years 2025 and 2024.
Three Months Ended
September 30
(Amounts in Millions)20242023
Net cash provided by operating activities$45.5 $12.8 
Net cash provided by (used for) investing activities$5.2 $(11.3)
Net cash (used for) provided by financing activities$(53.0)$14.0 
Cash Flows from Operating Activities
Net cash provided by operating activities for the first three months of fiscal year 2025 was driven by net income adjusted for non-cash items and changes in operating assets and liabilities. Net cash provided by operating activities for the first three months of the prior year was driven by net income adjusted for non-cash items, partially offset by changes in operating assets and liabilities.
Net income adjusted for non-cash items provided cash of $16.8 million in the first three months of fiscal year 2025, while changes in operating assets and liabilities provided $28.7 million of cash in the first three months of fiscal year 2025, largely due to a decrease of accounts receivable, which provided cash of $20.1 million primarily resulting from decreased sales volumes compared to the three months ended June 30, 2024, and an increase in advances from customers, which provided cash of $8.7 million. Partially offsetting cash provided by accounts receivable and advances from customers was a decrease in accrued expenses and taxes payable, which used cash of $22.5 million primarily driven by timing of profit-sharing incentive bonus and income tax payments.
The cash used of $9.7 million from changes in operating assets and liabilities in the first three months of fiscal year 2024 was largely due to an increase in inventory, which used cash of $34.0 million, driven by investment to support our newly expanded facilities, a decrease in accounts payable, which used cash of $11.6 million, and an increase in contract assets, which used cash of $8.9 million. Partially offsetting cash used by inventory, accounts payable, and contract assets was a decrease in accounts receivable, which provided cash of $45.3 million primarily resulting from decreased sales volumes compared to the three months ended June 30, 2023.
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Cash Flows from Investing Activities
Net cash provided by investing activities of $5.2 million in the first three months of fiscal year 2025 was largely due to the $18.5 million of proceeds from the sale of GES, partially offset by capital investments of $13.5 million primarily to support new business awards and replacement of older machinery and equipment. See Note 3 - Sale of GES of Notes to Consolidated Financial Statements for more information on the divestiture of GES.
Net cash used for investing activities in the first three months of fiscal year 2024 included $11.3 million cash used for capital investments. The capital investments were primarily to support new business awards, facility expansions, and replacement of older machinery and equipment.
Cash Flows from Financing Activities
For the first three months of fiscal year 2025, net cash used for financing activities of $53.0 million resulted largely from net payments on our credit facilities of $49.1 million. For the first three months of fiscal year 2024, net cash provided by financing activities of $14.0 million resulted largely from net borrowings on our credit facilities of $15.4 million primarily for working capital purposes and capital expenditures.
Credit Facilities
The Company maintains a U.S. primary credit facility (the “primary credit facility”) scheduled to mature May 4, 2027. The primary credit facility provides for $300 million in borrowings, with an option to increase the amount available for borrowing to $450 million at the Company’s request, subject to the consent of each lender participating in such increase. The Company also maintains a 364-day multi-currency revolving credit facility (the “secondary credit facility”), which allows for borrowings up to $100 million and has a maturity date of January 3, 2025. The proceeds of the loans on the primary credit facility and the secondary credit facility are to be used for working capital and general corporate purposes of the Company. We were in compliance with the financial covenants of the primary and secondary credit facilities during the period ended September 30, 2024.
We also maintain foreign credit facilities for working capital and general corporate purposes at specific foreign locations rather than utilizing funding from intercompany sources. These foreign credit facilities can be canceled at any time by either the bank or us and generally include renewal clauses. As of September 30, 2024, we maintained foreign credit facilities at our Thailand operation, our China operation, our Netherlands subsidiary, and our Poland operation.
See Note 8 - Credit Facilities of Notes to Consolidated Financial Statements for more information on our credit facilities, including the terms of the credit facilities such as interest, commitment fees, and debt covenants.
Factoring Arrangements
We participate in our customers’ supply chain financing arrangements in order to extend terms for the customer without negatively impacting our cash flow. These arrangements in all cases do not contain recourse provisions which would obligate us in the event of our customers’ failure to pay. Receivables are considered sold when they are transferred beyond the reach of Kimball Electronics and its creditors, the purchaser has the right to pledge or exchange the receivables, and we have surrendered control over the transferred receivables. In the three months ended September 30, 2024 and 2023, we sold, without recourse, $87.3 million and $103.0 million of accounts receivable, respectively. See Note 1 - Business Description and Summary of Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements for more information regarding the factoring arrangements.
Future Liquidity
We believe our principal sources of liquidity from available funds on hand, cash generated from operations, and the availability of borrowing under our credit facilities, will be sufficient to meet our working capital and other operating needs for at least the next 12 months. The unused borrowings in USD equivalent under all of our credit facilities totaled $186.8 million at September 30, 2024, including the $100 million secondary credit facility. Our secondary credit facility matures on January 3, 2025. Additionally, accounts receivable factoring arrangements could provide flexible access to cash as needed. While our primary credit facility includes a covenant that limits the amount of sold receivables outstanding at any time, currently and historically, we have been considerably below this limit.
We expect to continue to prudently invest in capital expenditures, including for capacity expansions and potential acquisitions, that would help us continue our growth as a multifaceted manufacturing solutions company. At September 30, 2024, our capital expenditure commitments were approximately $13 million, consisting primarily of capital related to new program wins. We anticipate our available liquidity will be sufficient to fund these capital expenditures.
26


We expect to continue our restructuring efforts, including the closure of our Tampa facility. We expect these restructuring efforts to be predominantly cash expenditures to be incurred over approximately the next 12 months and estimate between $10.0 million and $14.0 million of pre-tax restructuring charges, including $8.0 million to $11.0 million for Tampa exit costs. Once Tampa’s operations have ceased, we expect to sell the building and land, with the proceeds from the sale anticipated to exceed the exit costs.
We have purchase obligations that arise in the normal course of business for items such as raw materials, services, and software acquisitions/license commitments. In certain instances, such as when lead times dictate, we enter into contractual agreements for material in excess of the levels required to fulfill customer orders. In turn, material authorization agreements with customers cover a portion of the exposure for material that we must purchase prior to having a firm order.
At September 30, 2024, our foreign operations held cash totaling $75.7 million. Most of our accumulated unremitted foreign earnings have been invested in active non-U.S. business operations, and it is not anticipated such earnings will be remitted to the United States. The Company continually evaluates its global cash needs. If such funds were repatriated or we determined that all or a portion of such foreign earnings are no longer permanently reinvested, we may be subject to applicable non-U.S. income and withholding taxes. Determination of the amount of any potential future unrecognized deferred tax liability on such unremitted earnings is not practicable and is recorded in the period when any foreign earnings are determined to be no longer permanently reinvested.
The Company’s Repurchase Plan allows the repurchase of up to $100 million of our common stock. Purchases may be made under various programs, including in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions, all in accordance with applicable securities laws and regulations. The Repurchase Plan has no expiration date but may be suspended or discontinued at any time. The extent to which the Company repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements, and other corporate considerations, as determined by the Company’s management team. The Company expects to finance the purchases with existing liquidity. The Company has repurchased $94.7 million of common stock under the Repurchase Plan through September 30, 2024.
Our ability to generate cash from operations to meet our liquidity obligations could be adversely affected in the future by factors such as general economic and market conditions, lack of availability of raw material components in the supply chain, a decline in demand for our services, loss of key contract customers, unsuccessful integration of acquisitions and new operations, global health emergencies, and the related uncertainties around the financial impact, and other unforeseen circumstances. In particular, should demand for our customers’ products and, in turn, our services decrease significantly over the next 12 months, the available cash provided by operations could be adversely impacted. Additional cautionary statements regarding our risk factors are contained in our Annual Report on Form 10-K for the year ended June 30, 2024.
Fair Value
During the first quarter of fiscal year 2025, no level 1 or level 2 financial instruments were affected by a lack of market liquidity. For level 1 financial assets, readily available market pricing was used to value the financial instruments. Our foreign currency derivative assets and liabilities, which were classified as level 2, were independently valued using observable market inputs such as forward interest rate yield curves, current spot rates, and time value calculations. To verify the reasonableness of the independently determined fair values, these derivative fair values were compared to fair values calculated by the counterparty banks. Our own credit risk and counterparty credit risk had an immaterial impact on the valuation of the foreign currency derivatives. See Note 9 - Fair Value of Notes to Condensed Consolidated Financial Statements for additional information.
Off-Balance Sheet Arrangements
As of September 30, 2024, we do not have any material off-balance sheet arrangements.
Critical Accounting Policies
Kimball Electronics’ Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. These principles require the use of estimates and assumptions that affect amounts reported and disclosed in the Condensed Consolidated Financial Statements and related notes. Actual results could differ from these estimates and assumptions. Management uses its best judgment in the assumptions used to value these estimates, which are based on current facts and circumstances, prior experience, and other assumptions that are believed to be reasonable.
There have been no material changes to our critical accounting policies since our Annual Report on Form 10-K for the year ended June 30, 2024. For further information regarding our critical accounting policies, refer to “Note 1 - Business Description and Summary of Significant Accounting Policies” of Notes to Consolidated Financial Statements and “Critical Accounting Policies” in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended June 30, 2024.
27


New Accounting Standards
See Note 1 - Business Description and Summary of Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements for information regarding New Accounting Standards.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There were no material changes in our exposure to market risks for changes in foreign currency exchange rates and interest rates as compared to the fiscal year ended June 30, 2024.
Comprehensive disclosures of quantitative and qualitative market risk can be found in our Annual Report on Form 10-K for the year ended June 30, 2024.
Item 4. Controls and Procedures
(a)Evaluation of disclosure controls and procedures.
Kimball Electronics maintains controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon their evaluation of those controls and procedures performed, the Chief Executive Officer and Chief Financial Officer of the Company concluded that the disclosure controls and procedures were effective as of September 30, 2024.
(b)Changes in internal control over financial reporting.
There have been no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2024 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
28


PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We and our subsidiaries are not parties to any pending legal proceedings, other than ordinary routine litigation incidental to the business. The outcome of current routine pending litigation and claims, individually and in the aggregate, is not expected to have a material adverse impact on our business or financial condition.
Item 1A. Risk Factors
We are subject to various risks and uncertainties in the course of our business. A comprehensive disclosure of risk factors related to Kimball Electronics can be found in our Annual Report on Form 10-K for the year ended June 30, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On October 21, 2015, our Board approved an 18-month stock repurchase plan (the “Repurchase Plan”), authorizing the repurchase of up to $20 million worth of our common stock. Then, separately on each of September 29, 2016, August 23, 2017, November 8, 2018, and November 10, 2020, the Board extended and increased the Repurchase Plan to allow the repurchase of up to an additional $20 million worth of common stock with no expiration date, which brought the total authorized stock repurchases under the Repurchase Plan to $100 million.
During the three months ended September 30, 2024, the Company repurchased $2.9 million of common stock under the Repurchase Plan. The following table contains information about our purchases of equity securities during the three months ended September 30, 2024.
PeriodTotal Number of Shares Purchased
Average Price Paid per Share(1)
Total Number of Shares Purchased as Part of Publicly Announced Plan
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plan(1)
July 1, 2024 - July 31, 2024
$— $8,169,923 
August 1, 2024 - August 31, 2024
14,062$18.57 14,062$7,908,831 
September 1, 2024 - September 30, 2024
145,616$17.96 145,616$5,294,125 
Total159,678$18.01 159,678
(1) Excludes 1% U.S. excise tax on share repurchases which is recognized as part of the cost basis of the shares acquired in the Consolidated Statements of Share Owners’ Equity.
Item 5. Other Information
During the three months ended September 30, 2024, no officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”


29


Item 6. Exhibits
Exhibits (numbered in accordance with Item 601 of Regulation S-K)
Incorporated by Reference
Exhibit No.DescriptionFormPeriod EndingExhibitFiling Date
3.18-K3.12/18/2021
3.28-K3.2
9/23/2024
31.1Filed Herewith
31.2Filed Herewith
32.1(a)
Furnished Herewith
32.2(a)
Furnished Herewith
101.INS
Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its Inline XBRL tags are embedded within the Inline XBRL document
Filed Herewith
101.SCH
Inline XBRL Taxonomy Extension Schema Document
Filed Herewith
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Filed Herewith
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
Filed Herewith
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
Filed Herewith
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Filed Herewith
104Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)Filed Herewith
(a) In accordance with Item 601(b)(32)(ii) of Regulation S-K, the certifications furnished in Exhibit 32.1 and 32.2 will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.



30


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

  KIMBALL ELECTRONICS, INC.
   
 By:/s/ RICHARD D. PHILLIPS
  Richard D. Phillips
Chief Executive Officer
  November 6, 2024
   
   
 By:/s/ JANA T. CROOM
  Jana T. Croom
Chief Financial Officer
  November 6, 2024

31

Exhibit 31.1
CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Richard D. Phillips, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Kimball Electronics, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:November 6, 2024 
 /s/ RICHARD D. PHILLIPS
 RICHARD D. PHILLIPS
Chief Executive Officer and Director



Exhibit 31.2
CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jana T. Croom, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Kimball Electronics, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:November 6, 2024 
  /s/ JANA T. CROOM
  JANA T. CROOM
Chief Financial Officer
   



Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Kimball Electronics, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard D. Phillips, Chief Executive Officer and Director of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:November 6, 2024 
 /s/ RICHARD D. PHILLIPS
 RICHARD D. PHILLIPS
Chief Executive Officer and Director




Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Kimball Electronics, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jana T. Croom, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:November 6, 2024 
 /s/ JANA T. CROOM
 JANA T. CROOM
Chief Financial Officer


v3.24.3
Document and Entity Information - shares
3 Months Ended
Sep. 30, 2024
Oct. 24, 2024
Document Information    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2024  
Document Transition Report false  
Entity Interactive Data Current Yes  
Amendment Flag false  
Document Fiscal Year Focus 2025  
Document Fiscal Period Focus Q1  
Entity Information    
Entity Registrant Name KIMBALL ELECTRONICS, INC.  
Entity Central Index Key 0001606757  
Entity File Number 001-36454  
Entity Incorporation, State or Country Code IN  
Entity Tax Identification Number 35-2047713  
Current Fiscal Year End Date --06-30  
Entity Current Reporting Status Yes  
Entity Shell Company false  
Entity Filer Category Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Addresses    
Entity Address, Address Line One 1205 Kimball Boulevard  
Entity Address, City or Town Jasper  
Entity Address, State or Province IN  
Entity Address, Postal Zip Code 47546  
City Area Code 812  
Local Phone Number 634-4000  
Entity Listings    
Title of 12(b) Security Common Stock, no par value  
Trading Symbol KE  
Security Exchange Name NASDAQ  
Entity Common Stock, Shares Outstanding   24,680,651
v3.24.3
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Sep. 30, 2024
Jun. 30, 2024
Current Assets:    
Cash and cash equivalents $ 76,564 $ 77,965
Receivables, net of allowances of $332 and $1,002, respectively 264,036 282,336
Contract assets 74,326 76,320
Inventories 335,272 338,116
Prepaid expenses and other current assets 32,496 44,682
Assets held for sale 0 27,587
Total current assets 782,694 847,006
Property and Equipment, net of accumulated depreciation of $318,609 and $309,499, respectively 275,674 269,659
Goodwill 6,191 6,191
Other Intangible Assets, net of accumulated amortization of $27,604 and $27,300, respectively 2,880 2,994
Other Assets, net 81,617 82,069
Total Assets 1,149,056 1,207,919
Current Liabilities:    
Current portion of borrowings under credit facilities 45,915 59,837
Accounts payable 216,704 213,551
Advances from customers 35,616 30,151
Accrued expenses 45,492 63,189
Liabilities held for sale 0 8,594
Total current liabilities 343,727 375,322
Other Liabilities:    
Long-term debt under credit facilities, less current portion 200,000 235,000
Long-term income taxes payable 0 3,255
Other long-term liabilities 57,571 53,881
Total other liabilities 257,571 292,136
Share Owners’ Equity:    
Preferred stock-no par value 0 0
Common stock-no par value 0 0
Additional paid-in capital 319,175 319,463
Retained earnings 319,718 316,564
Accumulated other comprehensive loss (11,769) (17,807)
Treasury stock, at cost (79,366) (77,759)
Total Share Owners’ Equity 547,758 540,461
Total Liabilities and Share Owners’ Equity $ 1,149,056 $ 1,207,919
Preferred Stock, Par or Stated Value Per Share $ 0 $ 0
Common Stock, Par Value Per Share $ 0 $ 0
Common Stock, Shares, Issued 29,430,000 29,430,000
Preferred Stock, Shares Authorized 15,000,000 15,000,000
Preferred Stock, Shares Issued 0 0
v3.24.3
Condensed Consolidated Balance Sheets Parentheticals - USD ($)
$ in Thousands
Sep. 30, 2024
Jun. 30, 2024
ASSETS    
Allowance for Doubtful Accounts, Premiums and Other Receivables $ 332 $ 1,002
Property and Equipment Accumulated Depreciation 318,609 309,499
Other Intangible Assets Accumulated Amortization $ 27,604 $ 27,300
Share Owners' Equity    
Preferred Stock, Par or Stated Value Per Share $ 0 $ 0
Preferred Stock, Shares Authorized 15,000,000 15,000,000
Preferred Stock, Shares Issued 0 0
Common Stock, Par Value Per Share $ 0 $ 0
Common Stock, Shares Authorized 150,000,000 150,000,000
Common Stock, Shares, Issued 29,430,000 29,430,000
Common Stock, Shares, Outstanding 24,679,000 24,733,000
Treasury Stock, Shares 4,751,000 4,697,000
v3.24.3
Condensed Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Net Sales $ 374,256 $ 438,081
Cost of Sales 350,656 402,539
Gross Profit 23,600 35,542
Selling and Administrative Expenses 13,427 16,052
Restructuring Expense 2,322 0
Gain on disposal (1,264) 0
Operating Income 9,115 19,490
Other Income (Expense):    
Interest income 222 299
Interest expense (4,792) (5,447)
Non-operating income (expense), net (1,661) (1,131)
Other income (expense), net (6,231) (6,279)
Income Before Taxes on Income 2,884 13,211
Provision (Benefit) for Income Taxes (270) 2,457
Net Income $ 3,154 $ 10,754
Earnings Per Share of Common Stock:    
Earnings Per Share, Basic $ 0.13 $ 0.43
Earnings Per Share, Diluted $ 0.12 $ 0.43
Weighted Average Number of Shares Outstanding, Basic 24,979 25,041
Weighted Average Number of Shares Outstanding, Diluted 25,235 25,238
v3.24.3
Condensed Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Net income $ 3,154 $ 10,754
Other comprehensive income (loss):    
Foreign currency translation adjustments, Pre-tax 6,951 (4,230)
Foreign currency translation adjustments, Tax 0 0
Foreign currency translation adjustments, Net of Tax 6,951 (4,230)
Postemployment actuarial change, Pre-tax 106 29
Postemployment actuarial change, Tax (35) (7)
Postemployment actuarial change, Net of Tax 71 22
Derivative gain (loss), Pre-tax (1,747) (387)
Derivative gain (loss), Tax 445 78
Derivative gain (loss), Net of Tax (1,302) (309)
Reclassification to (earnings) loss:    
Derivatives, Reclassification to (earnings) loss, Pre-tax 384 (2,867)
Derivatives, Reclassification to (earnings) loss, Tax (106) 654
Derivatives, Reclassification to (earnings) loss, Net of Tax 278 (2,213)
Amortization of actuarial change, Pre-tax 53 (6)
Amortization of actuarial change, Tax (13) 1
Amortization of actuarial change, Net of Tax 40 (5)
Other comprehensive income (loss), Pre-tax 5,747 (7,461)
Other comprehensive income (loss), Tax 291 726
Other comprehensive income (loss), Net of Tax 6,038 (6,735)
Total comprehensive income (loss) 9,192 4,019
Foreign Exchange Contract    
Other comprehensive income (loss):    
Derivative gain (loss), Pre-tax $ (1,747) $ (387)
v3.24.3
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Cash Flows From Operating Activities:    
Net income $ 3,154 $ 10,754
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 9,195 9,017
Gain on sales of assets (126) (10)
Deferred income taxes 3,146 694
Gain on disposal (1,264) 0
Stock-based compensation 2,072 1,693
Other, net 646 315
Change in operating assets and liabilities:    
Receivables 20,091 45,253
Contract assets 1,994 (8,877)
Inventories 5,110 (34,023)
Prepaid expenses and other assets 13,013 589
Accounts payable 2,300 (11,564)
Advances from customers 8,685 7,574
Accrued expenses and taxes payable (22,542) (8,614)
Net cash provided by operating activities 45,474 12,801
Cash Flows From Investing Activities:    
Capital expenditures (13,357) (11,191)
Proceeds from sales of assets 225 53
Purchases of capitalized software (165) (148)
Proceeds from Divestiture of Businesses 18,507 0
Other, net 16 (16)
Net cash provided by (used for) investing activities 5,226 (11,302)
Cash Flows From Financing Activities:    
Payments on credit facilities 50,000 0
Net change in revolving credit facilities 900 15,350
Repurchases of common stock (2,917) 0
Payments related to tax withholding for stock-based compensation (937) (1,365)
Net cash (used for) provided by financing activities (52,954) 13,985
Effect of Exchange Rate Change on Cash and Cash Equivalents 1,830 (549)
Net (Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash (424) 14,935
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period (1) 78,779 43,864
Cash, Cash Equivalents, and Restricted Cash at End of Period (1) 78,355 [1] 58,799
Cash paid during the period for:    
Income taxes 5,269 4,913
Interest expense 7,179 3,378
Non-cash investing activity:    
Unpaid purchases of property and equipment at the end of the period 855 $ 2,393
Cash and cash equivalents 76,564  
Restricted Cash $ 1,791  
[1]
(1) The following table reconciles cash and cash equivalents in the balance sheets to cash, cash equivalents, and restricted cash per the statements of cash flows. The restricted cash included in Prepaid expenses and other current assets on the balance sheet represents funds held by the Company for a foreign subsidiary’s employee savings plan.
v3.24.3
Condensed Consolidated Statements of Cash Flows - Cash Reconciliation - USD ($)
$ in Thousands
Sep. 30, 2024
Jun. 30, 2024
Sep. 30, 2023
Jun. 30, 2023
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents [Abstract]        
Cash and cash equivalents $ 76,564 $ 77,965    
Restricted Cash 1,791 814    
Cash, Cash Equivalents, and Restricted Cash $ 78,355 [1] $ 78,779 $ 58,799 $ 43,864
[1]
(1) The following table reconciles cash and cash equivalents in the balance sheets to cash, cash equivalents, and restricted cash per the statements of cash flows. The restricted cash included in Prepaid expenses and other current assets on the balance sheet represents funds held by the Company for a foreign subsidiary’s employee savings plan.
v3.24.3
Condensed Consolidated Statement of Share Owners' Equity Statement - USD ($)
$ in Thousands
Total
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Treasury Stock, Common
Share Owners' Equity at Jun. 30, 2023 $ 523,994 $ 315,482 $ 296,053 $ (11,046) $ (76,495)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income 10,754   10,754    
Other Comprehensive Income (Loss), Net of Tax (6,735)     (6,735)  
Compensation expense related to stock compensation plan 1,613 1,613      
Performance Share Issuance (1,364) (2,840)     1,476
Share Owners' Equity at Sep. 30, 2023 528,262 314,255 306,807 (17,781) (75,019)
Share Owners' Equity at Jun. 30, 2024 540,461 319,463 316,564 (17,807) (77,759)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income 3,154   3,154    
Other Comprehensive Income (Loss), Net of Tax 6,038     6,038  
Compensation expense related to stock compensation plan 1,958 1,958      
Performance Share Issuance (961) (2,246)     1,285
Share Owners' Equity at Sep. 30, 2024 $ 547,758 $ 319,175 $ 319,718 $ (11,769) $ (79,366)
v3.24.3
Condensed Consolidated Statement of Share Owners' Equity Parentheticals - shares
3 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Performance Share Issuance, Shares 83,000 107,000
Restricted Share Units Issuance, Shares 22,000 14,000
Stock Issued During Period, Shares, Issued for Services 0 0
Treasury Stock, Shares, Acquired 159,000  
v3.24.3
Note 1. Business Description and Summary of Significant Accounting Policies
3 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Significant Accounting Policies Business Description and Summary of Significant Accounting Policies
Business Description:
Kimball Electronics, Inc. (also referred to herein as “Kimball Electronics,” the “Company,” “we,” “us,” or “our”) is a global, multifaceted manufacturing solutions provider. We provide electronics manufacturing services (“EMS”), including engineering and supply chain support, to customers in the automotive, medical, and industrial end markets. We deliver a package of value that begins with our core competency of producing durable electronics, and we further offer contract manufacturing services for non-electronic components, medical disposables, and precision molded plastics. Our design and manufacturing expertise coupled with robust processes and procedures help us ensure that we deliver the highest levels of quality, reliability, and service throughout the entire life cycle of our customers’ products. We deliver award-winning service across our highly integrated global footprint, which is enabled by our largely common operating system, procedures, and standardization. We are well recognized by customers and industry trade publications for our excellent quality, reliability, and innovative service.
Basis of Presentation:
The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of September 30, 2024 and June 30, 2024, results of operations for the three months ended September 30, 2024 and 2023, cash flows for the three months ended September 30, 2024 and 2023, and share owners’ equity for the three months ended September 30, 2024 and 2023. The financial data presented herein is unaudited and should be read in conjunction with the annual Consolidated Financial Statements as of and for the year ended June 30, 2024 and related notes thereto included in our Annual Report on Form 10-K. As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted, although we believe that the disclosures are adequate to make the information presented not misleading. Intercompany transactions and balances have been eliminated. Management believes the financial statements include all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly the financial statements for the interim periods. The results of operations for the interim periods shown in this report are not necessarily indicative of results for any future interim period or for the entire fiscal year.
Revenue Recognition:
We recognize revenue in accordance with the standard issued by the Financial Accounting Standards Board (“FASB”), Revenue from Contracts with Customers and all the related amendments. Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, components, medical devices, medical disposables, precision molded plastics, and automation, test, and inspection equipment built to customer’s specifications. Our customer agreements are generally not for a definitive term but continue for the relevant product’s life cycle. Typically, our customer agreements do not commit the customer to purchase our services until a purchase order is provided, which is generally short term in nature. Customer purchase orders primarily have a single performance obligation. Generally, the prices stated in the customer purchase orders are agreed upon prices for the manufactured product and do not vary over the term of the order, and therefore, the majority of our contracts do not contain variable consideration. In limited circumstances, we may enter into a contract which contains minimum quantity thresholds to cover our capital costs, and we may offer our customer a rebate for specific volume thresholds or other incentives; in these cases, the rebates or incentives are accounted for as variable consideration.
The majority of our revenue is recognized over time as manufacturing services are performed as we manufacture a product to customer specifications with no alternative use and we have an enforceable right to payment for performance completed to date. The remaining revenue for manufacturing services is recognized when the customer obtains control of the product, typically either upon shipment or delivery of the product dependent on the terms of the contract, and the customer is able to direct the use of and obtain substantially all of the remaining benefits from the asset. We generally recognize revenue over time using costs based input methods, in which judgment is required to evaluate assumptions including anticipated margins to estimate the corresponding amount of revenue to recognize. Costs used as a basis for estimating anticipated margins include material, direct and indirect labor, and appropriate applied overheads. Anticipated margins are determined based on historical or quoted customer pricing. Costs based input methods are considered a faithful depiction of our efforts and progress toward satisfying our performance obligations for manufacturing services and for which we believe we are entitled to payment for performance completed to date. The cumulative effect of revisions to estimates related to net contract revenues or costs are recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated.
We have elected to account for shipping and handling activities related to contracts with customers as costs to fulfill our promise to transfer the associated services and products. Accordingly, we record customer payments of shipping and handling costs as a component of net sales and classify such costs as a component of cost of sales. We recognize sales net of applicable sales or value add taxes. Based on estimated product returns and price concessions, a reserve for returns and allowances is recorded at the time revenue is recognized, resulting in a reduction of net revenue.
Direct incremental costs to obtain and fulfill a contract are capitalized as a contract asset only if they are material, expected to be recovered, and are not accounted for in accordance with other guidance. Incidental items that are immaterial in the context of the contract are recognized as expense in the period incurred.
Trade Accounts Receivable:
The Company’s trade accounts receivable are recorded per the terms of the agreement or sale, and accrued interest is recognized when earned. Our policy for estimating the allowance for credit losses on trade accounts receivable includes analysis of such items as aging, credit worthiness, payment history, and historical bad debt experience. Management uses these specific analyses in conjunction with an evaluation of the general economic and market conditions to estimate expected credit losses. Management believes that historical loss information generally provides a basis for its assessment of expected credit losses. Trade accounts receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. Adjustments to the allowance for credit losses are recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income.
In the ordinary course of business, customers periodically negotiate extended payment terms on trade accounts receivable. Customary terms require payment within 30 to 45 days, with any terms beyond 45 days being considered extended payment terms. We participate in our customers’ supply chain financing arrangements for certain of our accounts receivables in order to extend terms for the customer without negatively impacting our cash flow. These arrangements in all cases do not contain recourse provisions which would obligate us in the event of our customers’ failure to pay. Receivables are considered sold when they are transferred beyond the reach of Kimball Electronics and its creditors, the purchaser has the right to pledge or exchange the receivables, and we have surrendered control over the transferred receivables. In the three months ended September 30, 2024 and 2023, we sold, without recourse, $87.3 million and $103.0 million of accounts receivable, respectively. For the three months ended September 30, 2024 and 2023, factoring fees were $0.5 million and $0.9 million. Factoring fees are recorded in Non-operating income (expense), net on our Condensed Consolidated Statements of Income for the three months ended September 30, 2024. Prior to fiscal year 2025, factoring fees were recorded in Selling and Administrative Expenses.
During the three months ended December 31, 2023, changes to the expected timing of payments from and risk of default for a customer resulted in the recording of an allowance for credit losses of $2.0 million in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income. Although the customer is not in bankruptcy and we will continue to pursue full recovery, an allowance was deemed necessary in consideration of the expected timing of payments and risk of default. The amount expected to be collected after twelve months is included in Other Assets, net on the Condensed Consolidated Balance Sheet. At September 30, 2024, the noncurrent receivable associated with this customer in Other Assets, net totaled $2.7 million, which is net of the $2.0 million allowance for expected credit losses. The current portion of receivables from this customer is $2.2 million at September 30, 2024.
Non-operating Income (Expense), net:
Non-operating income (expense), net includes the impact of such items as foreign currency rate movements and related derivative gain or loss, fair value adjustments on supplemental employee retirement plan (“SERP”) investments, government subsidies, factoring fees, bank charges, and other miscellaneous non-operating income and expense items that are not directly related to operations. Prior to fiscal year 2025, factoring fees were recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income. The gain (loss) on SERP investments is offset by a change in the SERP liability that is recognized in Selling and Administrative Expenses.
Components of Non-operating income (expense), net:
 Three Months Ended
 September 30
(Amounts in Thousands)20242023
Foreign currency/derivative gain (loss)$(1,034)$(674)
Gain (loss) on SERP investments345 (177)
Factoring fees(537)— 
Credit facilities and bank fees(263)(201)
Other(172)(79)
Non-operating income (expense), net$(1,661)$(1,131)
Income Taxes:
In determining the quarterly provision for income taxes, we use an estimated annual effective tax rate which is based on expected annual income, statutory tax rates, and available tax planning opportunities in the various jurisdictions in which we operate. Unusual or infrequently occurring items are separately recognized in the quarter in which they occur.
Deferred income tax assets and liabilities, recorded in Other Assets, net and Other long-term liabilities, respectively, in the Condensed Consolidated Balance Sheets, are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse. We evaluate the recoverability of deferred tax assets each quarter by assessing the likelihood of future taxable income and available tax planning strategies that could be implemented to realize our deferred tax assets. If recovery is not likely, we provide a valuation allowance based on our best estimate of future taxable income in the various taxing jurisdictions and the amount of deferred taxes ultimately realizable. Future events could change management’s assessment.
We operate within multiple taxing jurisdictions and are subject to tax audits in these jurisdictions. These audits can involve complex uncertain tax positions, which may require an extended period of time to resolve. A tax benefit from an uncertain tax position may be recognized only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. We maintain a liability for uncertain income tax and other tax positions, including accrued interest and penalties on those positions. As tax positions are effectively settled, the tax liability is adjusted accordingly. We recognize interest and penalties related to unrecognized tax benefits in Provision for Income Taxes on the Condensed Consolidated Statements of Income.
The U.S. Tax Cuts and Jobs Act (“Tax Reform”) was enacted into law on December 22, 2017, making broad and complex changes to the U.S. tax code, for which complete guidance may have not yet been issued. Tax Reform, in addition to other changes, required a one-time transition tax on certain unremitted earnings of foreign subsidiaries that is payable over an eight-year period. As of September 30, 2024 and June 30, 2024, the remaining provision recorded for the one-time deemed repatriation tax was $3.3 million and $5.9 million, respectively, payable through fiscal year 2026. As of September 30, 2024, the remaining deemed repatriation tax is short term and is recorded in Accrued expenses on the Condensed Consolidated Balance Sheets.
New Accounting Standards:
Not Yet Adopted:
In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance on Improvements to Reportable Segment Disclosures, requiring additional, more detailed information about a reportable segment. The guidance is effective for fiscal years beginning after December 15, 2023 and for interim periods beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements.
In December 2023, the FASB issued guidance on Improvements to Income Tax Disclosures, intended to enhance the transparency and decision usefulness of income tax disclosures. The guidance is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements.
v3.24.3
Note 2. Revenue from Contracts with Customers
3 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
Revenue from Contract with Customer Revenue from Contracts with Customers
Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, electronic and non-electronic components, medical devices, medical disposables, and precision molded plastics in automotive, medical, and industrial applications, to the specifications and designs of our customers.
The following table disaggregates our revenue by end market vertical for the three months ended September 30, 2024 and 2023.
Three Months Ended
September 30
(Amounts in Millions)20242023
Vertical Markets:
Automotive
$188.4 $212.5 
Medical
89.8 102.4 
Industrial
96.1 123.2 
Total net sales$374.3 $438.1 
For both the three months ended September 30, 2024 and 2023, approximately 97% of our net sales were recognized over time as manufacturing services were performed under a customer contract on a product with no alternative use and we have an enforceable right to payment for performance completed to date. The remaining sales revenues were recognized at a point in time when the customer obtained control of the products.
The timing differences of revenue recognition, billings to our customers, and cash collections from our customers result in billed accounts receivable and unbilled accounts receivable. Contract assets on the Condensed Consolidated Balance Sheets relate to unbilled accounts receivable and occur when revenue is recognized over time as manufacturing services are provided and the billing to the customer has not yet occurred as of the balance sheet date, which are generally transferred to receivables in the next fiscal quarter due to the short-term nature of the manufacturing cycle. Contract assets were $74.3 million and $76.3 million as of September 30, 2024 and June 30, 2024, respectively.
The Company may receive payments from customers in advance of the satisfaction of performance obligations primarily for material price variances, inventory purchases, tooling, or other miscellaneous services or costs. These payments are recognized as contract liabilities until the performance obligations are completed and are included in Advances from customers, if inventory related, and Accrued expenses, if not inventory related, on the Condensed Consolidated Balance Sheets, which amounted to $42.3 million and $43.1 million as of September 30, 2024 and June 30, 2024, respectively. Our performance obligations are short term in nature and therefore our contract liabilities are all expected to be settled within twelve months. We also have deposits associated with inventory purchases classified as long term. See Note 5 - Inventories of Notes to Condensed Consolidated Financial Statements for further discussion.
v3.24.3
Note 3. Assets and Liabilities Held for Sale
3 Months Ended
Sep. 30, 2024
Discontinued Operations and Disposal Groups [Abstract]  
Disposal Groups, Including Discontinued Operations, Disclosure Sale of GES
Following approval by our Board of Directors, on July 31, 2024, we entered into a definitive agreement and closed on the sale of 100% of the equity interests in GES to Averna Test Systems, Inc., resulting in cash proceeds after costs to sell of $18.5 million, which is subject to additional purchase price adjustments. The pre-tax gain recognized on the sale in the first quarter of fiscal year 2025 was $1.3 million. In fiscal year 2024, following the Company’s decision to divest of GES, we classified the disposal group as held for sale and recognized $22.9 million in pre-tax impairment charges.
The following table summarizes net sales and income (loss) before taxes on income for the disposal group:
Three Months Ended
September 30
(Amounts in Thousands)20242023
Net Sales$2,075 $10,285 
Income (Loss) Before Taxes on Income (1)
$985 $(595)
(1) Includes gain on sale of $1.3 million for the three months ended September 30, 2024. Each period also includes allocated corporate overhead expenses.
v3.24.3
Note 4. Restructuring and Subsequent Event
3 Months Ended
Sep. 30, 2024
Restructuring and Related Activities [Abstract]  
Restructuring and Related Activities Disclosure Restructuring and Subsequent Event
In the three months ended September 30, 2024, we continued our restructuring efforts to align our cost structure with reduced end market demand levels, including resizing our workforce and taking specific cost actions, and recorded restructuring expense of $2.3 million which were primarily employee-related costs. The cumulative amount incurred since inception of these efforts beginning in fiscal year 2024 through September 30, 2024 was $4.7 million. We expect to continue executing these previously announced restructuring efforts over the remainder of the fiscal year and estimate between $2.0 million and $3.0 million of additional pre-tax restructuring charges.
In addition, on November 4, 2024, the Company announced that its Board of Directors has approved a plan to cease operations at our Tampa facility, expected to be completed by the end of the fiscal year. The decision was another important step towards sharpening our strategic focus, while leveraging our global footprint and streamlining the operating structure. We expect to incur approximately $8.0 million to $11.0 million in total exit costs, including most significantly $6.0 million to $7.0 million in employee termination benefits and $2.0 million to $3.0 million in logistical costs to transfer and validate programs at our other facilities. We expect these costs to be predominantly cash expenditures, and a majority are anticipated to be incurred over the remainder of fiscal year 2025. As the commitment to this disposal plan occurred subsequent to September 30, 2024, no charges have been incurred or recorded in the quarter.
v3.24.3
Note 5. Inventories
3 Months Ended
Sep. 30, 2024
Inventory Disclosure [Abstract]  
Inventory Disclosure Inventories
Inventories were valued using the lower of first-in, first-out (“FIFO”) cost and net realizable value. Inventory components were as follows:
(Amounts in Thousands)September 30, 2024June 30, 2024
Finished products$192 $141 
Work-in-process— — 
Raw materials335,080 337,975 
Total inventory$335,272 $338,116 
Additionally, as of September 30 and June 30, 2024, we have raw materials inventory totaling $43.1 million and $42.8 million, respectively, classified as long-term included in Other Assets, net in our Condensed Consolidated Balance Sheets. This inventory is associated with a customer who is remediating a recall and we do not expect the inventory to be consumed within the next twelve months. As of September 30 and June 30, 2024, we have received deposits totaling $42.0 million and $38.7 million, respectively, from this customer related to this inventory, which is included in Other long-term liabilities in our Condensed Consolidated Balance Sheets.
v3.24.3
Note 6. Accumulated Other Comprehensive Income (Loss)
3 Months Ended
Sep. 30, 2024
Equity [Abstract]  
Accumulated Comprehensive Income (Loss) Accumulated Other Comprehensive Income (Loss)
During the three months ended September 30, 2024 and 2023, the changes in the balances of each component of Accumulated Other Comprehensive Income (Loss), net of tax, were as follows:
Accumulated Other Comprehensive Income (Loss)
(Amounts in Thousands)Foreign Currency Translation AdjustmentsDerivative Gain (Loss)Post Employment Benefits
Net Actuarial Gain (Loss)
Accumulated Other Comprehensive Income (Loss)
Balance at June 30, 2024
$(14,260)$(2,395)$(1,152)$(17,807)
Other comprehensive income (loss) before reclassifications6,951 (1,302)71 5,720 
Reclassification to (earnings) loss— 278 40 318 
Net current-period other comprehensive income (loss)6,951 (1,024)111 6,038 
Balance at September 30, 2024
$(7,309)$(3,419)$(1,041)$(11,769)
Balance at June 30, 2023
$(11,832)$1,368 $(582)$(11,046)
Other comprehensive income (loss) before reclassifications(4,230)(309)22 (4,517)
Reclassification to (earnings) loss— (2,213)(5)(2,218)
Net current-period other comprehensive income (loss)(4,230)(2,522)17 (6,735)
Balance at September 30, 2023
$(16,062)$(1,154)$(565)$(17,781)
The following reclassifications were made from Accumulated Other Comprehensive Income (Loss) to the Condensed Consolidated Statements of Income:
Reclassifications from Accumulated Other Comprehensive Income (Loss)Three Months EndedAffected Line Item in the Condensed Consolidated Statements of Income
September 30
(Amounts in Thousands)20242023
Derivative gain (loss) (1)
$(384)$2,867 Cost of Sales
106 (654)Benefit (Provision) for Income Taxes
$(278)$2,213 Net of Tax
Postemployment Benefits:
  Amortization of actuarial gain (2)
(53)Non-operating income (expense), net
13 (1)Benefit (Provision) for Income Taxes
$(40)$Net of Tax
Total reclassifications for the period$(318)$2,218 Net of Tax
Amounts in parentheses indicate reductions to income.
(1) See Note 10 - Derivative Instruments of Notes to Condensed Consolidated Financial Statements for further information on derivative instruments.
(2) See Note 11 - Employee Benefit Plans of Notes to Condensed Consolidated Financial Statements for further information on postemployment benefit plans.
v3.24.3
Note 7. Commitments and Contingent Liabilities
3 Months Ended
Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure Commitments and Contingent Liabilities
The Company typically provides only assurance-type warranties for a limited time period, which cover workmanship and assures the product complies with specifications provided by or agreed upon with the customer. We maintain a provision for limited warranty repair or replacement of products manufactured and sold, which has been established in specific manufacturing contract agreements. We estimate product warranty liability at the time of sale based on historical repair or replacement cost trends in conjunction with the length of the warranty offered. Management refines the warranty liability regularly based on changes in historical cost trends and in certain cases where specific warranty issues become known. This product warranty liability and expense were immaterial during the three months ended September 30, 2024 and 2023.
v3.24.3
Note 8. Credit Facilities
3 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Debt Disclosure Credit Facilities
Credit facilities consisted of the following:
Available
Borrowing Capacity at
Borrowings Outstanding atBorrowings Outstanding at
(Amounts in Millions, in U.S Dollar Equivalents)September 30, 2024September 30, 2024June 30, 2024
Primary credit facility (1)
$63.1 $236.5 $285.5 
Secondary credit facility (2)
100.0 — — 
Thailand overdraft credit facility (3)
10.1 — — 
China revolving credit facility (3)
7.1 — — 
Netherlands revolving credit facility (3)
0.9 9.4 9.3 
Poland revolving credit facility (3)
5.6 — — 
Total credit facilities$186.8 $245.9 $294.8 
Less: current portion $(45.9)$(59.8)
Long-term debt under credit facilities, less current portion (4)
$200.0 $235.0 
(1) The Company maintains a U.S. primary credit facility (the “primary credit facility”) among the Company, the lenders party thereto, and JPMorgan Chase Bank, N. A., as Administrative Agent, and Bank of America, N.A., as Documentation Agent, scheduled to mature May 4, 2027. The primary credit facility provides for $300 million in borrowings, with an option to increase the amount available for borrowing to $450 million upon request, subject to the consent of each lender participating in such increase. This facility is maintained for working capital and general corporate purposes of the Company. A commitment fee is payable on the unused portion of the credit facility at a rate that ranges from 10.0 to 25.0 basis points per annum as determined by the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA, as defined in the primary credit facility. Types of borrowings available on the primary credit facility include revolving loans, multi-currency term loans, and swingline loans.
The interest rate on borrowings is dependent on the type and currencies of borrowings and will be one of the following options:
any Term Benchmark borrowing denominated in U.S. Dollars will utilize the Secured Overnight Financing Rate (“SOFR”), which is a rate per annum equal to the secured overnight financing rate for such business day published by the SOFR Administrator, the Federal Reserve Bank of New York, on the immediately succeeding business day, plus the Revolving Commitment Term Benchmark spread which can range from 100.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA;
any Term Benchmark borrowing denominated in Euros will utilize the Euro Interbank Offered Rate (“EURIBOR”) in effect two target days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus the Revolving Commitment Term Benchmark spread which can range from 100.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA; or
the Alternate Base Rate (“ABR”), which is defined as the highest of the fluctuating rate per annum equal to the higher of:
a.Prime Rate in the U.S. last quoted by the Wall Street Journal, and if this is ceased to be quoted, the highest bank prime loan rate or similar loan rate quoted by the Federal Reserve Board;
b.1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility); or
c.1% per annum above the Adjusted SOFR Rate (as defined under the primary credit facility);
plus the Revolving Commitment ABR spread which can range from 0.0 to 75.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA.
The Company’s financial covenants under the primary credit facility require:
a ratio of consolidated total indebtedness minus unencumbered U.S. cash on hand in the United States in excess of $15 million to adjusted consolidated EBITDA, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be greater than 3.0 to 1.0, provided, however, that for each fiscal quarter end during the four quarter period following a material permitted acquisition, as defined in the Credit Agreement, the Company will not permit this financial covenant to be greater than 3.5 to 1.0 for each such fiscal quarter end, and,
an interest coverage ratio, defined as that ratio of consolidated EBITDA for such period to cash interest expense for such period, for any period of four consecutive fiscal quarters, to not be less than 3.5 to 1.0.
The Company had $0.4 million in letters of credit contingently committed against the primary credit facility at both September 30, 2024 and June 30, 2024.
(2) The Company amended its 364-day multi-currency revolving credit facility agreement on January 5, 2024 (the “secondary credit facility”), which allows for borrowings up to $100.0 million, among the Company, as borrower, certain subsidiaries of the Company as guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., as Documentation Agent. The secondary credit facility has a maturity date of January 3, 2025. The proceeds of the loans are to be used for working capital and general corporate purposes of the Company. A commitment fee on the unused portion of principal amount of this secondary credit facility is payable at 30.0 basis points per annum.
The interest rate on borrowings is dependent on the type of borrowings and will be one of the following options:
any Term Benchmark borrowing denominated in U.S. Dollars will utilize the Secured Overnight Financing Rate (“SOFR”), which is a rate per annum equal to the secured overnight financing rate for such business day published by the SOFR Administrator, the Federal Reserve Bank of New York, on the immediately succeeding business day, plus a Revolving Commitment Term Benchmark spread of 175.0 basis points;
any Term Benchmark borrowing denominated in Euros will utilize the Euro Interbank Offered Rate (“EURIBOR”) in effect two target days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus a Revolving Commitment Term Benchmark spread of 175.0 basis points; or
the Alternate Base Rate (“ABR”), which is defined as the highest of the fluctuating rate per annum equal to the higher of:
a.Prime Rate in the U.S. last quoted by the Wall Street Journal, and if this is ceased to be quoted, the highest bank prime loan rate or similar loan rate quoted by the Federal Reserve Board;
b.1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility); or
c.1% per annum above the Adjusted SOFR Rate (as defined under the primary credit facility);
plus a Revolving Commitment ABR spread of 75.0 basis points.
The Company’s financial covenants under this secondary credit facility are the same as the financial covenants for its primary credit facility.
(3) The Company also maintains foreign credit facilities for working capital and general corporate purposes at specific foreign locations rather than utilizing funding from intercompany sources. These foreign credit facilities can be canceled at any time by either the bank or us and generally include renewal clauses. Interest on borrowing under these facilities is charged at a rate as defined under the respective foreign credit facility. As a result of the GES divestiture that occurred on July 31, 2024, the Company no longer has the Vietnam credit facility, which allowed for borrowings up to $5.0 million.
(4) The amount of long-term debt under credit facilities, less current maturities, reflects the borrowings on the primary credit facility that the Company intends, and has the ability, to refinance for a period longer than twelve months. The primary credit facility matures on May 4, 2027.
The weighted-average interest rate on borrowings outstanding under the credit facilities at both September 30, 2024 and June 30, 2024 were 6.8%.
v3.24.3
Note 9. Fair Value
3 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Disclosures Fair Value
The Company categorizes assets and liabilities measured at fair value into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas level 3 generally requires significant management judgment. The three levels are defined as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2: Observable inputs other than those included in level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.
There were no changes in the inputs or valuation techniques used to measure fair values during the three months ended September 30, 2024. For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2024.
Recurring Fair Value Measurements:
As of September 30, 2024 and June 30, 2024, the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows:
 September 30, 2024
(Amounts in Thousands)Level 1Level 2Total
Assets   
Cash equivalents$17,431 $— $17,431 
Derivatives: foreign exchange contracts$— $916 $916 
Trading securities: mutual funds held in nonqualified SERP5,780 — 5,780 
Total assets at fair value$23,211 $916 $24,127 
Liabilities   
Derivatives: foreign exchange contracts$— $4,313 $4,313 
Total liabilities at fair value$— $4,313 $4,313 
    
 June 30, 2024
(Amounts in Thousands)Level 1Level 2Total
Assets   
Derivatives: foreign exchange contracts$— $1,420 $1,420 
Trading securities: mutual funds held in nonqualified SERP5,445 — 5,445 
Total assets at fair value$5,445 $1,420 $6,865 
Liabilities   
Derivatives: foreign exchange contracts$— $2,485 $2,485 
Total liabilities at fair value$— $2,485 $2,485 
We had no level 3 assets or liabilities at September 30, 2024 and June 30, 2024, or any activity in Level 3 assets or liabilities during the three months ended September 30, 2024.
The nonqualified supplemental employee retirement plan (“SERP”) assets consist primarily of equity funds, balanced funds, bond funds, and a money market fund. The SERP investment assets are offset by a SERP liability which represents the Company’s obligation to distribute SERP funds to participants. See Note 11 - Employee Benefit Plans of Notes to Condensed Consolidated Financial Statements for further information regarding the SERP.
Financial Instruments Not Carried At Fair Value:
Financial instruments that are not reflected in the Condensed Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include notes receivable and borrowings under credit facilities. There were no changes to the inputs and valuation techniques used to assess the fair value of these financial instruments during the three months ended September 30, 2024. For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2024.
The carrying values of our cash deposit accounts, trade accounts receivable, and trade accounts payable approximate fair value due to the relatively short maturity and immaterial non-performance risk.
v3.24.3
Note 10. Derivative Instruments
3 Months Ended
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Disclosure Derivative Instruments
Foreign Exchange Contracts:
We operate internationally and are therefore exposed to foreign currency exchange rate fluctuations in the normal course of business. Our primary means of managing this exposure is to utilize natural hedges, such as aligning currencies used in the supply chain with the sale currency. To the extent natural hedging techniques do not fully offset currency risk, we use derivative instruments with the objective of reducing the residual exposure to certain foreign currency rate movements. Factors considered in the decision to hedge an underlying market exposure include the materiality of the risk, the volatility of the market, the duration of the hedge, the degree to which the underlying exposure is committed to, and the availability, effectiveness, and cost of derivative instruments. Derivative instruments are only utilized for risk management purposes and are not used for speculative or trading purposes.
We use forward contracts designated as cash flow hedges to protect against foreign currency exchange rate risks inherent in forecasted transactions denominated in a foreign currency. Non-designated foreign exchange contracts are also used to hedge against foreign currency exchange rate risks related to intercompany balances and other balance sheet positions denominated in currencies other than the functional currencies. As of September 30, 2024, we had outstanding foreign exchange contracts to hedge currencies against the U.S. dollar in the aggregate notional amount of $27.1 million and to hedge currencies against the Euro in the aggregate notional amount of 56.4 million Euro. The notional amounts are indicators of the volume of derivative activities but may not be indicators of the potential gain or loss on the derivatives.
In limited cases due to unexpected changes in forecasted transactions, cash flow hedges may cease to meet the criteria to be designated as cash flow hedges. Depending on the type of exposure hedged, we may either purchase a derivative contract in the opposite position of the undesignated hedge or may retain the hedge until it matures if the hedge continues to provide an adequate offset in earnings against the currency revaluation impact of foreign currency denominated liabilities.
The fair value of outstanding derivative instruments is recognized on the Condensed Consolidated Balance Sheets as a derivative asset or liability and presented with Prepaid expenses and other current assets and Accrued expenses, respectively. When derivatives are settled with the counterparty, the derivative asset or liability is relieved and cash flow is impacted for the net settlement. For derivative instruments that meet the criteria of hedging instruments under FASB guidance, the gain or loss on the derivative instrument is initially recorded net of related tax effect in Accumulated Other Comprehensive Income (Loss), a component of Share Owners’ Equity, and is subsequently reclassified into earnings in the period or periods during which the hedged transaction is recognized in earnings. The gain or loss associated with derivative instruments that are not designated as hedging instruments or that cease to meet the criteria for hedging under FASB guidance is reported immediately in Non-operating income (expense), net on the Condensed Consolidated Statements of Income.
Based on fair values as of September 30, 2024, we estimate that approximately $2.9 million of pre-tax derivative loss deferred in Accumulated Other Comprehensive Loss will be reclassified into earnings, along with the earnings effects of related forecasted transactions, within the next 12 months. Gains on foreign exchange contracts are generally offset by losses in operating income in the income statement when the underlying hedged transaction is recognized in earnings. Because gains or losses on foreign exchange contracts fluctuate partially based on currency spot rates, the future effect on earnings of the cash flow hedges alone is not determinable, but in conjunction with the underlying hedged transactions, the result is expected to be a decline in currency risk. The maximum length of time we had hedged our exposure to the variability in future cash flows was 12 months as of both September 30, 2024 and June 30, 2024.
See Note 9 - Fair Value of Notes to Condensed Consolidated Financial Statements for further information regarding the fair value of derivative assets and liabilities and Note 6 - Accumulated Other Comprehensive Income (Loss) of Notes to Condensed Consolidated Financial Statements for the changes in deferred derivative gains and losses.
Information on the location and amounts of derivative fair values in the Condensed Consolidated Balance Sheets and derivative gains and losses in the Condensed Consolidated Statements of Income are presented below.
Fair Value of Derivative Instruments on the Condensed Consolidated Balance Sheets
Asset DerivativesLiability Derivatives
Fair Value As of Fair Value As of
(Amounts in Thousands)Balance Sheet LocationSeptember 30,
2024
June 30,
2024
Balance Sheet LocationSeptember 30,
2024
June 30,
2024
Derivatives Designated as Hedging Instruments:
Foreign exchange contractsPrepaid expenses and other current assets$916 $966 Accrued expenses$3,621 $2,330 
      
Derivatives Not Designated as Hedging Instruments:    
Foreign exchange contractsPrepaid expenses and other current assets— 454 Accrued expenses692 155 
Total derivatives $916 $1,420  $4,313 $2,485 
The Effect of Derivative Instruments on Other Comprehensive Income (Loss)
  Three Months Ended
September 30
(Amounts in Thousands) 20242023
Amount of Pre-Tax Gain or (Loss) Recognized in Other Comprehensive Income (Loss) (OCI) on Derivatives:  
Foreign exchange contracts $(1,747)$(387)
The Effect of Derivative Instruments on Condensed Consolidated Statements of Income
 Three Months Ended
(Amounts in Thousands)September 30
Derivatives in Cash Flow Hedging RelationshipsLocation of Gain or (Loss) 20242023
Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income: 
Foreign exchange contractsCost of Sales$(384)$2,867 
Derivatives Not Designated as Hedging Instruments   
Amount of Pre-Tax Gain or (Loss) Recognized in Income on Derivatives:  
Foreign exchange contractsNon-operating income (expense)$(1,545)$142 
   
Total Derivative Pre-Tax Gain (Loss) Recognized in Income$(1,929)$3,009 
v3.24.3
Note 11. Employee Benefit Plans
3 Months Ended
Sep. 30, 2024
Retirement Benefits [Abstract]  
Postemployment Benefits Disclosure Employee Benefit Plans
Defined Contribution Retirement Plan:
The Company maintains a trusteed defined contribution retirement plan which is in effect for substantially all domestic employees meeting the eligibility requirements. The Company matches 50% of eligible employee contributions up to 6%. The Company also provides a discretionary contribution determined annually by the Talent, Culture, and Compensation Committee of the Company’s Board of Directors. Total expense related to employer contributions to the domestic retirement plans was $0.4 million and $1.6 million for the three months ended September 30, 2024 and September 30, 2023, respectively.
The Company also maintains a supplemental employee retirement plan (“SERP”) for executives and other key employees which enables them to defer cash compensation on a pre-tax basis and restore amounts that would otherwise be payable under our tax-qualified retirement plans if the IRS did not have limits on includable compensation and maximum benefits. The SERP is structured as a rabbi trust, and therefore, assets in the SERP portfolio are subject to creditor claims in the event of bankruptcy. We recognize SERP investment assets on the balance sheet at current fair value. A SERP liability of the same amount is recorded on the balance sheet representing an obligation to distribute SERP funds to participants. As of September 30, 2024, both total investments and obligations under SERP were $5.8 million, of which $2.1 million were short term and $3.7 million were long term. As of June 30, 2024, both total investments and obligations under SERP were $5.4 million, of which $2.0 million were short term and $3.4 million were long term. The SERP investment assets are classified as trading, and accordingly, realized and unrealized gains and losses are recognized in the Other Income (Expense) category on our Condensed Consolidated Statements of Income. Adjustments made to revalue the SERP liability are also recognized in income as selling and administrative expenses and offset valuation adjustments on SERP investment assets. The change in net unrealized holding gains for the three months ended September 30, 2024 and 2023 was approximately $0.3 million and $(0.2) million, respectively.
Defined Benefit Postemployment Plan:
The Company established and maintains severance plans for all domestic employees and other postemployment plans for certain foreign subsidiaries. There are no statutory requirements for us to contribute to the plans, nor do employees contribute to the plans. The plans hold no assets. Benefits are paid using available cash on hand when eligible employees meet plan qualifications for payment. As of September 30, 2024, total obligations under these plans were $7.4 million of which $6.6 million were long term and $0.8 million were short term. As of June 30, 2024, total obligations under these plans were $7.0 million of which $6.2 million were long term and $0.8 million were short term. Net periodic benefit costs were not material for the three months ended September 30, 2024 and 2023.
v3.24.3
Note 12. Stock Compensation Plans
3 Months Ended
Sep. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments Stock Compensation Plans
A stock compensation plan was created and adopted by the Company’s Board of Directors (the “Board”) on September 20, 2023 and approved by our Share Owners at our 2023 Annual Meeting on November 17, 2023. The 2023 Plan allows for the issuance of up to 2.0 million shares and replaced our former 2014 plan. The shares under the 2023 Plan may be granted in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted awards, performance share awards, cash awards, and other equity awards. The Plan is a ten-year plan that terminates automatically on November 17, 2033. No award shall be granted pursuant to the Plan after such date, but awards theretofore granted may extend beyond that date.
On October 20, 2016, the Board approved a nonqualified deferred stock compensation plan, the Kimball Electronics, Inc. Non-Employee Directors Stock Compensation Deferral Plan (the “Deferral Plan”), which allows Non-Employee Directors to elect to defer all, or a portion of, their retainer fees in stock until retirement or termination from the Board or death. The Deferral Plan allows for issuance of up to 1.0 million shares of the Company’s common stock. For more information on the 2023 Plan and the Deferral Plan, refer to our Annual Report on Form 10-K for the year ended June 30, 2024.
During the first three months of fiscal year 2025, the following stock compensation was granted under the 2023 Plan and the Deferral Plan.
Stock Compensation GrantedQuarter GrantedShares/Units
Grant Date Fair Value (2)
Long-Term Performance Shares (1)
1st Quarter23,460 $18.49 
Restricted Shares (3)
1st Quarter152,917 $18.49 
(1) Long-term performance share awards for the leadership team members (consisting of our CEO and his direct reports) are expected to be granted in the second quarter of fiscal year 2025 upon approval of performance metrics by the Talent, Culture, and Compensation Committee of the Board (“Committee”). The Committee granted long-term performance share awards to key employees not on our leadership team during the quarter. These awards granted in fiscal year 2025 will cliff vest at the third anniversary of the award date in fiscal year 2028.
For these key employee awards, a number of shares will be issued to each participant based upon a combination of the Company’s profitability based on its operating income over the performance period as defined in the Company’s operating business plans for the applicable fiscal years and the Company’s growth based on a comparison of its three-year compounded annual growth rate (“CAGR”) with the Electronics Manufacturing Services Industry’s three-year CAGR. The number of shares issued could be zero if minimum thresholds are not met up to a maximum of 125% if results on both measures exceed targets under the formula.
(2) The grant date fair value is the weighted average stock price based on the dates of the grants.
(3) Restricted shares were granted to leadership team members and other key employees. These restricted shares were approved by the Talent, Culture, and Compensation Committee of the Board. The contractual life of the restricted shares is three years, with one-third of the interest in the restricted shares vested after year one of the grant, another one-third after year two of the grant, and the final one-third after year three of the grant. Restricted shares are expensed over the contractual vesting period as earned. If the employment of a holder of restricted shares terminates before the RSU has vested for any reason other than death, retirement, or disability, the restricted shares not yet vested will be forfeited.
v3.24.3
Note 13. Goodwill and Other Intangible Assets
3 Months Ended
Sep. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Disclosure Goodwill and Other Intangible Assets
A summary of goodwill is as follows, amounts as of June 30, 2024 exclude the amounts that were classified as held for sale and later divested on July 31, 2024:
(Amounts in Thousands)
Balance as of June 30, 2024
Goodwill$19,017 
Accumulated impairment(12,826)
Goodwill, net$6,191 
Balance as of September 30, 2024
Goodwill19,017 
Accumulated impairment(12,826)
Goodwill, net$6,191 
Other Intangible Assets includes capitalized software. The estimated useful life of internal-use software ranges from 3 years to 10 years. For the three months ended September 30, 2024 and 2023, amortization expense of other intangible assets was $0.3 million and $0.9 million, respectively. The three months ended September 30, 2023 included the amortization on customer relationships, technology, and trade name intangible assets associated with GES. See Note 3 - Sale of GES of Notes to Condensed Consolidated Financial Statements for additional information. We have no intangible assets with indefinite useful lives, which are not subject to amortization.
v3.24.3
Note 14. Share Owners' Equity
3 Months Ended
Sep. 30, 2024
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure Share Owners’ Equity
The Company has a Board-authorized stock repurchase plan (the “Repurchase Plan”) allowing the repurchase of up to $100 million of our common stock. Purchases may be made under various programs, including in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions, all in accordance with applicable securities laws and regulations. The Repurchase Plan has no expiration date but may be suspended or discontinued at any time.
During the three months ended September 30, 2024, the Company repurchased $2.9 million shares of common stock under the Repurchase Plan at an average price of $18.01 per share. During the three months ended September 30, 2023, the Company had no repurchases under the Repurchase Plan. Since the inception of the Repurchase Plan, the Company has repurchased $94.7 million of common stock at an average cost of $15.49 per share.
v3.24.3
Note 15. Earnings Per Share
3 Months Ended
Sep. 30, 2024
Earnings Per Share [Abstract]  
Earnings Per Share Earnings Per Share
Basic and diluted earnings per share were calculated as follows under the two-class method:
Three Months Ended
September 30
(Amounts in thousands, except per share data)20242023
Basic and Diluted Earnings Per Share:
   Net Income$3,154 $10,754 
   Less: Net Income allocated to participating securities16 
   Net Income allocated to common Share Owners$3,151 $10,738 
Basic weighted average common shares outstanding24,979 25,041 
Dilutive effect of average outstanding stock compensation awards256 197 
Dilutive weighted average shares outstanding25,235 25,238 
Earnings Per Share of Common Stock:
Basic$0.13 $0.43 
Diluted$0.12 $0.43 
v3.24.3
Pay vs Performance Disclosure - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Pay vs Performance Disclosure    
Net income $ 3,154 $ 10,754
v3.24.3
Insider Trading Arrangements
3 Months Ended
Sep. 30, 2024
Trading Arrangements, by Individual  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.24.3
Note 1. Business Description and Summary of Significant Accounting Policies (Policies)
3 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation:
The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of September 30, 2024 and June 30, 2024, results of operations for the three months ended September 30, 2024 and 2023, cash flows for the three months ended September 30, 2024 and 2023, and share owners’ equity for the three months ended September 30, 2024 and 2023. The financial data presented herein is unaudited and should be read in conjunction with the annual Consolidated Financial Statements as of and for the year ended June 30, 2024 and related notes thereto included in our Annual Report on Form 10-K. As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted, although we believe that the disclosures are adequate to make the information presented not misleading. Intercompany transactions and balances have been eliminated. Management believes the financial statements include all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly the financial statements for the interim periods. The results of operations for the interim periods shown in this report are not necessarily indicative of results for any future interim period or for the entire fiscal year.
Revenue Recognition
Revenue Recognition:
We recognize revenue in accordance with the standard issued by the Financial Accounting Standards Board (“FASB”), Revenue from Contracts with Customers and all the related amendments. Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, components, medical devices, medical disposables, precision molded plastics, and automation, test, and inspection equipment built to customer’s specifications. Our customer agreements are generally not for a definitive term but continue for the relevant product’s life cycle. Typically, our customer agreements do not commit the customer to purchase our services until a purchase order is provided, which is generally short term in nature. Customer purchase orders primarily have a single performance obligation. Generally, the prices stated in the customer purchase orders are agreed upon prices for the manufactured product and do not vary over the term of the order, and therefore, the majority of our contracts do not contain variable consideration. In limited circumstances, we may enter into a contract which contains minimum quantity thresholds to cover our capital costs, and we may offer our customer a rebate for specific volume thresholds or other incentives; in these cases, the rebates or incentives are accounted for as variable consideration.
The majority of our revenue is recognized over time as manufacturing services are performed as we manufacture a product to customer specifications with no alternative use and we have an enforceable right to payment for performance completed to date. The remaining revenue for manufacturing services is recognized when the customer obtains control of the product, typically either upon shipment or delivery of the product dependent on the terms of the contract, and the customer is able to direct the use of and obtain substantially all of the remaining benefits from the asset. We generally recognize revenue over time using costs based input methods, in which judgment is required to evaluate assumptions including anticipated margins to estimate the corresponding amount of revenue to recognize. Costs used as a basis for estimating anticipated margins include material, direct and indirect labor, and appropriate applied overheads. Anticipated margins are determined based on historical or quoted customer pricing. Costs based input methods are considered a faithful depiction of our efforts and progress toward satisfying our performance obligations for manufacturing services and for which we believe we are entitled to payment for performance completed to date. The cumulative effect of revisions to estimates related to net contract revenues or costs are recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated.
We have elected to account for shipping and handling activities related to contracts with customers as costs to fulfill our promise to transfer the associated services and products. Accordingly, we record customer payments of shipping and handling costs as a component of net sales and classify such costs as a component of cost of sales. We recognize sales net of applicable sales or value add taxes. Based on estimated product returns and price concessions, a reserve for returns and allowances is recorded at the time revenue is recognized, resulting in a reduction of net revenue.
Direct incremental costs to obtain and fulfill a contract are capitalized as a contract asset only if they are material, expected to be recovered, and are not accounted for in accordance with other guidance. Incidental items that are immaterial in the context of the contract are recognized as expense in the period incurred.
Trade Accounts Receivable
Trade Accounts Receivable:
The Company’s trade accounts receivable are recorded per the terms of the agreement or sale, and accrued interest is recognized when earned. Our policy for estimating the allowance for credit losses on trade accounts receivable includes analysis of such items as aging, credit worthiness, payment history, and historical bad debt experience. Management uses these specific analyses in conjunction with an evaluation of the general economic and market conditions to estimate expected credit losses. Management believes that historical loss information generally provides a basis for its assessment of expected credit losses. Trade accounts receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. Adjustments to the allowance for credit losses are recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income.
In the ordinary course of business, customers periodically negotiate extended payment terms on trade accounts receivable. Customary terms require payment within 30 to 45 days, with any terms beyond 45 days being considered extended payment terms. We participate in our customers’ supply chain financing arrangements for certain of our accounts receivables in order to extend terms for the customer without negatively impacting our cash flow. These arrangements in all cases do not contain recourse provisions which would obligate us in the event of our customers’ failure to pay. Receivables are considered sold when they are transferred beyond the reach of Kimball Electronics and its creditors, the purchaser has the right to pledge or exchange the receivables, and we have surrendered control over the transferred receivables.
Non-operating Income (Expense), net
Non-operating Income (Expense), net:
Non-operating income (expense), net includes the impact of such items as foreign currency rate movements and related derivative gain or loss, fair value adjustments on supplemental employee retirement plan (“SERP”) investments, government subsidies, factoring fees, bank charges, and other miscellaneous non-operating income and expense items that are not directly related to operations. Prior to fiscal year 2025, factoring fees were recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income. The gain (loss) on SERP investments is offset by a change in the SERP liability that is recognized in Selling and Administrative Expenses.
Income Taxes
Income Taxes:
In determining the quarterly provision for income taxes, we use an estimated annual effective tax rate which is based on expected annual income, statutory tax rates, and available tax planning opportunities in the various jurisdictions in which we operate. Unusual or infrequently occurring items are separately recognized in the quarter in which they occur.
Deferred income tax assets and liabilities, recorded in Other Assets, net and Other long-term liabilities, respectively, in the Condensed Consolidated Balance Sheets, are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse. We evaluate the recoverability of deferred tax assets each quarter by assessing the likelihood of future taxable income and available tax planning strategies that could be implemented to realize our deferred tax assets. If recovery is not likely, we provide a valuation allowance based on our best estimate of future taxable income in the various taxing jurisdictions and the amount of deferred taxes ultimately realizable. Future events could change management’s assessment.
Income Tax Uncertainties
We operate within multiple taxing jurisdictions and are subject to tax audits in these jurisdictions. These audits can involve complex uncertain tax positions, which may require an extended period of time to resolve. A tax benefit from an uncertain tax position may be recognized only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. We maintain a liability for uncertain income tax and other tax positions, including accrued interest and penalties on those positions. As tax positions are effectively settled, the tax liability is adjusted accordingly. We recognize interest and penalties related to unrecognized tax benefits in Provision for Income Taxes on the Condensed Consolidated Statements of Income.
New Accounting Standards
New Accounting Standards:
Not Yet Adopted:
In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance on Improvements to Reportable Segment Disclosures, requiring additional, more detailed information about a reportable segment. The guidance is effective for fiscal years beginning after December 15, 2023 and for interim periods beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements.
In December 2023, the FASB issued guidance on Improvements to Income Tax Disclosures, intended to enhance the transparency and decision usefulness of income tax disclosures. The guidance is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements.
v3.24.3
Note 2. Revenue from Contracts with Customers (Policies)
3 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
Revenue Recognition, Deferred Revenue The Company may receive payments from customers in advance of the satisfaction of performance obligations primarily for material price variances, inventory purchases, tooling, or other miscellaneous services or costs. These payments are recognized as contract liabilities until the performance obligations are completed and are included in Advances from customers, if inventory related, and Accrued expenses, if not inventory related, on the Condensed Consolidated Balance Sheets
v3.24.3
Note 5. Inventories (Policies)
3 Months Ended
Sep. 30, 2024
Inventory Disclosure [Abstract]  
Inventory Inventories were valued using the lower of first-in, first-out (“FIFO”) cost and net realizable value.
v3.24.3
Note 7. Commitments and Contingent Liabilities (Policies)
3 Months Ended
Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
Product Warranties The Company typically provides only assurance-type warranties for a limited time period, which cover workmanship and assures the product complies with specifications provided by or agreed upon with the customer. We maintain a provision for limited warranty repair or replacement of products manufactured and sold, which has been established in specific manufacturing contract agreements. We estimate product warranty liability at the time of sale based on historical repair or replacement cost trends in conjunction with the length of the warranty offered. Management refines the warranty liability regularly based on changes in historical cost trends and in certain cases where specific warranty issues become known.
v3.24.3
Note 8. Credit Facilities (Policies)
3 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Debt The amount of long-term debt under credit facilities, less current maturities, reflects the borrowings on the primary credit facility that the Company intends, and has the ability, to refinance for a period longer than twelve months. The primary credit facility matures on May 4, 2027.
v3.24.3
Note 9. Fair Value (Policies)
3 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value
The Company categorizes assets and liabilities measured at fair value into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas level 3 generally requires significant management judgment. The three levels are defined as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2: Observable inputs other than those included in level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.
There were no changes in the inputs or valuation techniques used to measure fair values during the three months ended September 30, 2024. For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2024.
Fair Value of Financial Instruments Not Carried at Fair Value
Financial Instruments Not Carried At Fair Value:
Financial instruments that are not reflected in the Condensed Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include notes receivable and borrowings under credit facilities. There were no changes to the inputs and valuation techniques used to assess the fair value of these financial instruments during the three months ended September 30, 2024. For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2024.
The carrying values of our cash deposit accounts, trade accounts receivable, and trade accounts payable approximate fair value due to the relatively short maturity and immaterial non-performance risk.
v3.24.3
Note 10. Derivative Instruments (Policies)
3 Months Ended
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Our primary means of managing this exposure is to utilize natural hedges, such as aligning currencies used in the supply chain with the sale currency. To the extent natural hedging techniques do not fully offset currency risk, we use derivative instruments with the objective of reducing the residual exposure to certain foreign currency rate movements. Factors considered in the decision to hedge an underlying market exposure include the materiality of the risk, the volatility of the market, the duration of the hedge, the degree to which the underlying exposure is committed to, and the availability, effectiveness, and cost of derivative instruments. Derivative instruments are only utilized for risk management purposes and are not used for speculative or trading purposes.
We use forward contracts designated as cash flow hedges to protect against foreign currency exchange rate risks inherent in forecasted transactions denominated in a foreign currency. Non-designated foreign exchange contracts are also used to hedge against foreign currency exchange rate risks related to intercompany balances and other balance sheet positions denominated in currencies other than the functional currencies. As of September 30, 2024, we had outstanding foreign exchange contracts to hedge currencies against the U.S. dollar in the aggregate notional amount of $27.1 million and to hedge currencies against the Euro in the aggregate notional amount of 56.4 million Euro. The notional amounts are indicators of the volume of derivative activities but may not be indicators of the potential gain or loss on the derivatives.
In limited cases due to unexpected changes in forecasted transactions, cash flow hedges may cease to meet the criteria to be designated as cash flow hedges. Depending on the type of exposure hedged, we may either purchase a derivative contract in the opposite position of the undesignated hedge or may retain the hedge until it matures if the hedge continues to provide an adequate offset in earnings against the currency revaluation impact of foreign currency denominated liabilities.
Derivatives, Reporting of Derivative Activity
The fair value of outstanding derivative instruments is recognized on the Condensed Consolidated Balance Sheets as a derivative asset or liability and presented with Prepaid expenses and other current assets and Accrued expenses, respectively. When derivatives are settled with the counterparty, the derivative asset or liability is relieved and cash flow is impacted for the net settlement. For derivative instruments that meet the criteria of hedging instruments under FASB guidance, the gain or loss on the derivative instrument is initially recorded net of related tax effect in Accumulated Other Comprehensive Income (Loss), a component of Share Owners’ Equity, and is subsequently reclassified into earnings in the period or periods during which the hedged transaction is recognized in earnings. The gain or loss associated with derivative instruments that are not designated as hedging instruments or that cease to meet the criteria for hedging under FASB guidance is reported immediately in Non-operating income (expense), net on the Condensed Consolidated Statements of Income.
v3.24.3
Note 11. Employee Benefit Plans (Policies)
3 Months Ended
Sep. 30, 2024
Retirement Benefits [Abstract]  
Investment The Company also maintains a supplemental employee retirement plan (“SERP”) for executives and other key employees which enables them to defer cash compensation on a pre-tax basis and restore amounts that would otherwise be payable under our tax-qualified retirement plans if the IRS did not have limits on includable compensation and maximum benefits. The SERP is structured as a rabbi trust, and therefore, assets in the SERP portfolio are subject to creditor claims in the event of bankruptcy. We recognize SERP investment assets on the balance sheet at current fair value. A SERP liability of the same amount is recorded on the balance sheet representing an obligation to distribute SERP funds to participants. As of September 30, 2024, both total investments and obligations under SERP were $5.8 million, of which $2.1 million were short term and $3.7 million were long term. As of June 30, 2024, both total investments and obligations under SERP were $5.4 million, of which $2.0 million were short term and $3.4 million were long term. The SERP investment assets are classified as trading, and accordingly, realized and unrealized gains and losses are recognized in the Other Income (Expense) category on our Condensed Consolidated Statements of Income. Adjustments made to revalue the SERP liability are also recognized in income as selling and administrative expenses and offset valuation adjustments on SERP investment assets.
v3.24.3
Note 13. Goodwill and Other Intangible Assets (Policies)
3 Months Ended
Sep. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets, Finite-Lived Other Intangible Assets includes capitalized software. The estimated useful life of internal-use software ranges from 3 years to 10 years. For the three months ended September 30, 2024 and 2023, amortization expense of other intangible assets was $0.3 million and $0.9 million, respectively. The three months ended September 30, 2023 included the amortization on customer relationships, technology, and trade name intangible assets associated with GES. See Note 3 - Sale of GES of Notes to Condensed Consolidated Financial Statements for additional information.
v3.24.3
Note 1. Business Description and Summary of Significant Accounting Policies (Tables)
3 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Components of Non-operating income (expense), net
Components of Non-operating income (expense), net:
 Three Months Ended
 September 30
(Amounts in Thousands)20242023
Foreign currency/derivative gain (loss)$(1,034)$(674)
Gain (loss) on SERP investments345 (177)
Factoring fees(537)— 
Credit facilities and bank fees(263)(201)
Other(172)(79)
Non-operating income (expense), net$(1,661)$(1,131)
v3.24.3
Note 2. Revenue from Contracts with Customers (Tables)
3 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
Disaggregation of Revenue
The following table disaggregates our revenue by end market vertical for the three months ended September 30, 2024 and 2023.
Three Months Ended
September 30
(Amounts in Millions)20242023
Vertical Markets:
Automotive
$188.4 $212.5 
Medical
89.8 102.4 
Industrial
96.1 123.2 
Total net sales$374.3 $438.1 
v3.24.3
Note 3. Assets and Liabilities Held for Sale (Tables)
3 Months Ended
Sep. 30, 2024
Discontinued Operations and Disposal Groups [Abstract]  
Disposal Groups, Including Discontinued Operations
The following table summarizes net sales and income (loss) before taxes on income for the disposal group:
Three Months Ended
September 30
(Amounts in Thousands)20242023
Net Sales$2,075 $10,285 
Income (Loss) Before Taxes on Income (1)
$985 $(595)
(1) Includes gain on sale of $1.3 million for the three months ended September 30, 2024. Each period also includes allocated corporate overhead expenses.
v3.24.3
Note 5. Inventories (Tables)
3 Months Ended
Sep. 30, 2024
Inventory Disclosure [Abstract]  
Schedule of Inventory, Current Inventory components were as follows:
(Amounts in Thousands)September 30, 2024June 30, 2024
Finished products$192 $141 
Work-in-process— — 
Raw materials335,080 337,975 
Total inventory$335,272 $338,116 
v3.24.3
Note 6. Accumulated Other Comprehensive Income (Loss) (Tables)
3 Months Ended
Sep. 30, 2024
Equity [Abstract]  
Schedule of Accumulated Other Comprehensive Income (Loss)
During the three months ended September 30, 2024 and 2023, the changes in the balances of each component of Accumulated Other Comprehensive Income (Loss), net of tax, were as follows:
Accumulated Other Comprehensive Income (Loss)
(Amounts in Thousands)Foreign Currency Translation AdjustmentsDerivative Gain (Loss)Post Employment Benefits
Net Actuarial Gain (Loss)
Accumulated Other Comprehensive Income (Loss)
Balance at June 30, 2024
$(14,260)$(2,395)$(1,152)$(17,807)
Other comprehensive income (loss) before reclassifications6,951 (1,302)71 5,720 
Reclassification to (earnings) loss— 278 40 318 
Net current-period other comprehensive income (loss)6,951 (1,024)111 6,038 
Balance at September 30, 2024
$(7,309)$(3,419)$(1,041)$(11,769)
Balance at June 30, 2023
$(11,832)$1,368 $(582)$(11,046)
Other comprehensive income (loss) before reclassifications(4,230)(309)22 (4,517)
Reclassification to (earnings) loss— (2,213)(5)(2,218)
Net current-period other comprehensive income (loss)(4,230)(2,522)17 (6,735)
Balance at September 30, 2023
$(16,062)$(1,154)$(565)$(17,781)
Reclassification out of Accumulated Other Comprehensive Income (Loss)
The following reclassifications were made from Accumulated Other Comprehensive Income (Loss) to the Condensed Consolidated Statements of Income:
Reclassifications from Accumulated Other Comprehensive Income (Loss)Three Months EndedAffected Line Item in the Condensed Consolidated Statements of Income
September 30
(Amounts in Thousands)20242023
Derivative gain (loss) (1)
$(384)$2,867 Cost of Sales
106 (654)Benefit (Provision) for Income Taxes
$(278)$2,213 Net of Tax
Postemployment Benefits:
  Amortization of actuarial gain (2)
(53)Non-operating income (expense), net
13 (1)Benefit (Provision) for Income Taxes
$(40)$Net of Tax
Total reclassifications for the period$(318)$2,218 Net of Tax
Amounts in parentheses indicate reductions to income.
(1) See Note 10 - Derivative Instruments of Notes to Condensed Consolidated Financial Statements for further information on derivative instruments.
(2) See Note 11 - Employee Benefit Plans of Notes to Condensed Consolidated Financial Statements for further information on postemployment benefit plans.
v3.24.3
Note 8. Credit Facilities (Tables)
3 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Schedule of Line of Credit Facilities
Credit facilities consisted of the following:
Available
Borrowing Capacity at
Borrowings Outstanding atBorrowings Outstanding at
(Amounts in Millions, in U.S Dollar Equivalents)September 30, 2024September 30, 2024June 30, 2024
Primary credit facility (1)
$63.1 $236.5 $285.5 
Secondary credit facility (2)
100.0 — — 
Thailand overdraft credit facility (3)
10.1 — — 
China revolving credit facility (3)
7.1 — — 
Netherlands revolving credit facility (3)
0.9 9.4 9.3 
Poland revolving credit facility (3)
5.6 — — 
Total credit facilities$186.8 $245.9 $294.8 
Less: current portion $(45.9)$(59.8)
Long-term debt under credit facilities, less current portion (4)
$200.0 $235.0 
(1) The Company maintains a U.S. primary credit facility (the “primary credit facility”) among the Company, the lenders party thereto, and JPMorgan Chase Bank, N. A., as Administrative Agent, and Bank of America, N.A., as Documentation Agent, scheduled to mature May 4, 2027. The primary credit facility provides for $300 million in borrowings, with an option to increase the amount available for borrowing to $450 million upon request, subject to the consent of each lender participating in such increase. This facility is maintained for working capital and general corporate purposes of the Company. A commitment fee is payable on the unused portion of the credit facility at a rate that ranges from 10.0 to 25.0 basis points per annum as determined by the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA, as defined in the primary credit facility. Types of borrowings available on the primary credit facility include revolving loans, multi-currency term loans, and swingline loans.
The interest rate on borrowings is dependent on the type and currencies of borrowings and will be one of the following options:
any Term Benchmark borrowing denominated in U.S. Dollars will utilize the Secured Overnight Financing Rate (“SOFR”), which is a rate per annum equal to the secured overnight financing rate for such business day published by the SOFR Administrator, the Federal Reserve Bank of New York, on the immediately succeeding business day, plus the Revolving Commitment Term Benchmark spread which can range from 100.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA;
any Term Benchmark borrowing denominated in Euros will utilize the Euro Interbank Offered Rate (“EURIBOR”) in effect two target days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus the Revolving Commitment Term Benchmark spread which can range from 100.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA; or
the Alternate Base Rate (“ABR”), which is defined as the highest of the fluctuating rate per annum equal to the higher of:
a.Prime Rate in the U.S. last quoted by the Wall Street Journal, and if this is ceased to be quoted, the highest bank prime loan rate or similar loan rate quoted by the Federal Reserve Board;
b.1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility); or
c.1% per annum above the Adjusted SOFR Rate (as defined under the primary credit facility);
plus the Revolving Commitment ABR spread which can range from 0.0 to 75.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA.
The Company’s financial covenants under the primary credit facility require:
a ratio of consolidated total indebtedness minus unencumbered U.S. cash on hand in the United States in excess of $15 million to adjusted consolidated EBITDA, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be greater than 3.0 to 1.0, provided, however, that for each fiscal quarter end during the four quarter period following a material permitted acquisition, as defined in the Credit Agreement, the Company will not permit this financial covenant to be greater than 3.5 to 1.0 for each such fiscal quarter end, and,
an interest coverage ratio, defined as that ratio of consolidated EBITDA for such period to cash interest expense for such period, for any period of four consecutive fiscal quarters, to not be less than 3.5 to 1.0.
The Company had $0.4 million in letters of credit contingently committed against the primary credit facility at both September 30, 2024 and June 30, 2024.
(2) The Company amended its 364-day multi-currency revolving credit facility agreement on January 5, 2024 (the “secondary credit facility”), which allows for borrowings up to $100.0 million, among the Company, as borrower, certain subsidiaries of the Company as guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., as Documentation Agent. The secondary credit facility has a maturity date of January 3, 2025. The proceeds of the loans are to be used for working capital and general corporate purposes of the Company. A commitment fee on the unused portion of principal amount of this secondary credit facility is payable at 30.0 basis points per annum.
The interest rate on borrowings is dependent on the type of borrowings and will be one of the following options:
any Term Benchmark borrowing denominated in U.S. Dollars will utilize the Secured Overnight Financing Rate (“SOFR”), which is a rate per annum equal to the secured overnight financing rate for such business day published by the SOFR Administrator, the Federal Reserve Bank of New York, on the immediately succeeding business day, plus a Revolving Commitment Term Benchmark spread of 175.0 basis points;
any Term Benchmark borrowing denominated in Euros will utilize the Euro Interbank Offered Rate (“EURIBOR”) in effect two target days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus a Revolving Commitment Term Benchmark spread of 175.0 basis points; or
the Alternate Base Rate (“ABR”), which is defined as the highest of the fluctuating rate per annum equal to the higher of:
a.Prime Rate in the U.S. last quoted by the Wall Street Journal, and if this is ceased to be quoted, the highest bank prime loan rate or similar loan rate quoted by the Federal Reserve Board;
b.1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility); or
c.1% per annum above the Adjusted SOFR Rate (as defined under the primary credit facility);
plus a Revolving Commitment ABR spread of 75.0 basis points.
The Company’s financial covenants under this secondary credit facility are the same as the financial covenants for its primary credit facility.
(3) The Company also maintains foreign credit facilities for working capital and general corporate purposes at specific foreign locations rather than utilizing funding from intercompany sources. These foreign credit facilities can be canceled at any time by either the bank or us and generally include renewal clauses. Interest on borrowing under these facilities is charged at a rate as defined under the respective foreign credit facility. As a result of the GES divestiture that occurred on July 31, 2024, the Company no longer has the Vietnam credit facility, which allowed for borrowings up to $5.0 million.
(4) The amount of long-term debt under credit facilities, less current maturities, reflects the borrowings on the primary credit facility that the Company intends, and has the ability, to refinance for a period longer than twelve months. The primary credit facility matures on May 4, 2027.
v3.24.3
Note 9. Fair Value (Tables)
3 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
As of September 30, 2024 and June 30, 2024, the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows:
 September 30, 2024
(Amounts in Thousands)Level 1Level 2Total
Assets   
Cash equivalents$17,431 $— $17,431 
Derivatives: foreign exchange contracts$— $916 $916 
Trading securities: mutual funds held in nonqualified SERP5,780 — 5,780 
Total assets at fair value$23,211 $916 $24,127 
Liabilities   
Derivatives: foreign exchange contracts$— $4,313 $4,313 
Total liabilities at fair value$— $4,313 $4,313 
    
 June 30, 2024
(Amounts in Thousands)Level 1Level 2Total
Assets   
Derivatives: foreign exchange contracts$— $1,420 $1,420 
Trading securities: mutual funds held in nonqualified SERP5,445 — 5,445 
Total assets at fair value$5,445 $1,420 $6,865 
Liabilities   
Derivatives: foreign exchange contracts$— $2,485 $2,485 
Total liabilities at fair value$— $2,485 $2,485 
v3.24.3
Note 10. Derivative Instruments (Tables)
3 Months Ended
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value
Fair Value of Derivative Instruments on the Condensed Consolidated Balance Sheets
Asset DerivativesLiability Derivatives
Fair Value As of Fair Value As of
(Amounts in Thousands)Balance Sheet LocationSeptember 30,
2024
June 30,
2024
Balance Sheet LocationSeptember 30,
2024
June 30,
2024
Derivatives Designated as Hedging Instruments:
Foreign exchange contractsPrepaid expenses and other current assets$916 $966 Accrued expenses$3,621 $2,330 
      
Derivatives Not Designated as Hedging Instruments:    
Foreign exchange contractsPrepaid expenses and other current assets— 454 Accrued expenses692 155 
Total derivatives $916 $1,420  $4,313 $2,485 
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance
The Effect of Derivative Instruments on Other Comprehensive Income (Loss)
  Three Months Ended
September 30
(Amounts in Thousands) 20242023
Amount of Pre-Tax Gain or (Loss) Recognized in Other Comprehensive Income (Loss) (OCI) on Derivatives:  
Foreign exchange contracts $(1,747)$(387)
The Effect of Derivative Instruments on Condensed Consolidated Statements of Income
 Three Months Ended
(Amounts in Thousands)September 30
Derivatives in Cash Flow Hedging RelationshipsLocation of Gain or (Loss) 20242023
Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income: 
Foreign exchange contractsCost of Sales$(384)$2,867 
Derivatives Not Designated as Hedging Instruments   
Amount of Pre-Tax Gain or (Loss) Recognized in Income on Derivatives:  
Foreign exchange contractsNon-operating income (expense)$(1,545)$142 
   
Total Derivative Pre-Tax Gain (Loss) Recognized in Income$(1,929)$3,009 
v3.24.3
Note 12. Stock Compensation Plans (Tables)
3 Months Ended
Sep. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award
During the first three months of fiscal year 2025, the following stock compensation was granted under the 2023 Plan and the Deferral Plan.
Stock Compensation GrantedQuarter GrantedShares/Units
Grant Date Fair Value (2)
Long-Term Performance Shares (1)
1st Quarter23,460 $18.49 
Restricted Shares (3)
1st Quarter152,917 $18.49 
(1) Long-term performance share awards for the leadership team members (consisting of our CEO and his direct reports) are expected to be granted in the second quarter of fiscal year 2025 upon approval of performance metrics by the Talent, Culture, and Compensation Committee of the Board (“Committee”). The Committee granted long-term performance share awards to key employees not on our leadership team during the quarter. These awards granted in fiscal year 2025 will cliff vest at the third anniversary of the award date in fiscal year 2028.
For these key employee awards, a number of shares will be issued to each participant based upon a combination of the Company’s profitability based on its operating income over the performance period as defined in the Company’s operating business plans for the applicable fiscal years and the Company’s growth based on a comparison of its three-year compounded annual growth rate (“CAGR”) with the Electronics Manufacturing Services Industry’s three-year CAGR. The number of shares issued could be zero if minimum thresholds are not met up to a maximum of 125% if results on both measures exceed targets under the formula.
(2) The grant date fair value is the weighted average stock price based on the dates of the grants.
(3) Restricted shares were granted to leadership team members and other key employees. These restricted shares were approved by the Talent, Culture, and Compensation Committee of the Board. The contractual life of the restricted shares is three years, with one-third of the interest in the restricted shares vested after year one of the grant, another one-third after year two of the grant, and the final one-third after year three of the grant. Restricted shares are expensed over the contractual vesting period as earned. If the employment of a holder of restricted shares terminates before the RSU has vested for any reason other than death, retirement, or disability, the restricted shares not yet vested will be forfeited.
v3.24.3
Note 13. Goodwill and Other Intangible Assets (Tables)
3 Months Ended
Sep. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Goodwill
A summary of goodwill is as follows, amounts as of June 30, 2024 exclude the amounts that were classified as held for sale and later divested on July 31, 2024:
(Amounts in Thousands)
Balance as of June 30, 2024
Goodwill$19,017 
Accumulated impairment(12,826)
Goodwill, net$6,191 
Balance as of September 30, 2024
Goodwill19,017 
Accumulated impairment(12,826)
Goodwill, net$6,191 
v3.24.3
Note 15. Earnings Per Share (Tables)
3 Months Ended
Sep. 30, 2024
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share, Basic and Diluted
Basic and diluted earnings per share were calculated as follows under the two-class method:
Three Months Ended
September 30
(Amounts in thousands, except per share data)20242023
Basic and Diluted Earnings Per Share:
   Net Income$3,154 $10,754 
   Less: Net Income allocated to participating securities16 
   Net Income allocated to common Share Owners$3,151 $10,738 
Basic weighted average common shares outstanding24,979 25,041 
Dilutive effect of average outstanding stock compensation awards256 197 
Dilutive weighted average shares outstanding25,235 25,238 
Earnings Per Share of Common Stock:
Basic$0.13 $0.43 
Diluted$0.12 $0.43 
v3.24.3
Note 1. Business Description and Summary of Significant Accounting Policies - Components of Non-operating income (expense), net (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Jun. 30, 2024
Foreign Currency/Derivative Gain (Loss) $ (1,034) $ (674)  
Gain (loss) on SERP investments 345 (177)  
Other (172) (79)  
Non-operating income (expense), net (1,661) (1,131)  
Credit facilities and bank fees (263) (201)  
Factoring Fees in Non-Operating (537) $ 0  
Other Noncurrent Liabilities      
Contract with Customer, Liability, Noncurrent $ 42,000   $ 38,700
v3.24.3
Note 1. Business Description and Summary of Significant Accounting Policies - Textuals (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Sep. 30, 2023
Depreciation and amortization $ 9,195   $ 9,017
Net income $ 3,154   $ 10,754
Earnings Per Share, Diluted $ 0.12   $ 0.43
Accounts Receivable, Extended Payment Terms 45 days    
Accounts Receivable Sold Without Recourse $ 87,300   $ 103,000
Factoring Fees 500   900
Tax Cuts and Jobs Act, Transition Tax for Accumulated Foreign Earnings, Liability 3,300 $ 5,900  
Goodwill 6,191 6,191  
Accounts Receivable, Allowance for Credit Loss, Noncurrent 2,000    
Receivables, net of allowances of $332 and $1,002, respectively 264,036 282,336  
Accounts Receivable, Credit Loss Expense (Reversal)   $ 2,000  
Restructuring Expense 2,322   $ 0
NES      
Receivables, net of allowances of $332 and $1,002, respectively 2,200    
Accounts Receivable, after Allowance for Credit Loss, Noncurrent $ 2,700    
Minimum      
Accounts Receivable, Customary Payment Terms 30 days    
Maximum      
Accounts Receivable, Customary Payment Terms 45 days    
v3.24.3
Note 2. Revenue from Contracts with Customers (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Jun. 30, 2024
Disaggregation of Revenue      
Net Sales $ 374,256 $ 438,081  
Contract assets 74,326   $ 76,320
Contract with Customer, Liability $ 42,300   $ 43,100
Transferred over Time      
Disaggregation of Revenue      
Revenue from Contract with Customer, Excluding Assessed Tax, Percentage 97.00% 97.00%  
Automotive      
Disaggregation of Revenue      
Net Sales $ 188,400 $ 212,500  
Medical      
Disaggregation of Revenue      
Net Sales 89,800 102,400  
Industrial      
Disaggregation of Revenue      
Net Sales $ 96,100 $ 123,200  
v3.24.3
Note 3. Assets and Liabilities Held for Sale (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]      
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal $ 1,264 $ 0  
Proceeds from Divestiture of Businesses 18,507 0  
GES Disposal Group      
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]      
Disposal Group, Including Discontinued Operation, Revenue 2,075 10,285  
Disposal Group, Including Discontinued Operation, Income Before Taxes [1] 985 $ (595)  
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal 1,300    
Impairment of Long-Lived Assets to be Disposed of     $ 22,900
Proceeds from Divestiture of Businesses $ 18,500    
[1]
(1) Includes gain on sale of $1.3 million for the three months ended September 30, 2024. Each period also includes allocated corporate overhead expenses.
v3.24.3
Note 4. Restructuring and Subsequent Event (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Nov. 04, 2024
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Restructuring Cost and Reserve [Line Items]        
Restructuring Expense   $ 2,322 $ 0  
Subsequent Event        
Restructuring Cost and Reserve [Line Items]        
Subsequent Event, Date Nov. 04, 2024      
2024 Plan        
Restructuring Cost and Reserve [Line Items]        
Restructuring Expense   2,300   $ 4,700
2024 Plan | Maximum Restructuring Charge        
Restructuring Cost and Reserve [Line Items]        
Restructuring and Related Cost, Expected Cost Remaining   3,000   3,000
2024 Plan | Minimum Restructuring Charge        
Restructuring Cost and Reserve [Line Items]        
Restructuring and Related Cost, Expected Cost Remaining   $ 2,000   $ 2,000
2025 Tampa Plan | Subsequent Event | Maximum Restructuring Charge        
Restructuring Cost and Reserve [Line Items]        
Restructuring and Related Cost, Expected Cost Remaining $ 11,000      
2025 Tampa Plan | Subsequent Event | Maximum Restructuring Charge | Employee Severance        
Restructuring Cost and Reserve [Line Items]        
Restructuring and Related Cost, Expected Cost Remaining 7,000      
2025 Tampa Plan | Subsequent Event | Maximum Restructuring Charge | Other Restructuring        
Restructuring Cost and Reserve [Line Items]        
Restructuring and Related Cost, Expected Cost Remaining 3,000      
2025 Tampa Plan | Subsequent Event | Minimum Restructuring Charge        
Restructuring Cost and Reserve [Line Items]        
Restructuring and Related Cost, Expected Cost Remaining 8,000      
2025 Tampa Plan | Subsequent Event | Minimum Restructuring Charge | Employee Severance        
Restructuring Cost and Reserve [Line Items]        
Restructuring and Related Cost, Expected Cost Remaining 6,000      
2025 Tampa Plan | Subsequent Event | Minimum Restructuring Charge | Other Restructuring        
Restructuring Cost and Reserve [Line Items]        
Restructuring and Related Cost, Expected Cost Remaining $ 2,000      
v3.24.3
Note 5. Inventories - Inventory Components (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Jun. 30, 2024
Inventory, Finished Goods, Net of Reserves $ 192 $ 141
Inventory, Work in Process, Net of Reserves 0 0
Inventory, Raw Materials, Net of Reserves 335,080 337,975
Total inventory 335,272 338,116
Other Noncurrent Liabilities    
Contract with Customer, Liability, Noncurrent 42,000 38,700
Other Noncurrent Assets    
Inventory, Noncurrent $ 43,100 $ 42,800
v3.24.3
Note 6. Accumulated Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]    
Share Owners' Equity $ 540,461 $ 523,994
Other comprehensive income (loss) before reclassifications 5,720 (4,517)
Reclassification to (earnings) loss 318 (2,218)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent 6,038 (6,735)
Share Owners' Equity 547,758 528,262
Accumulated Other Comprehensive Income (Loss)    
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]    
Share Owners' Equity (17,807) (11,046)
Share Owners' Equity (11,769) (17,781)
Foreign Currency Translation Adjustments    
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]    
Share Owners' Equity (14,260) (11,832)
Other comprehensive income (loss) before reclassifications 6,951 (4,230)
Reclassification to (earnings) loss 0 0
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent 6,951 (4,230)
Share Owners' Equity (7,309) (16,062)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent    
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]    
Share Owners' Equity (2,395) 1,368
Other comprehensive income (loss) before reclassifications (1,302) (309)
Reclassification to (earnings) loss 278 (2,213)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent (1,024) (2,522)
Share Owners' Equity (3,419) (1,154)
Post Employment Benefits Net Actuarial Gain (Loss)    
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]    
Share Owners' Equity (1,152) (582)
Other comprehensive income (loss) before reclassifications 71 22
Reclassification to (earnings) loss 40 (5)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent 111 17
Share Owners' Equity $ (1,041) $ (565)
v3.24.3
Note 6. Accumulated Other Comprehensive Income (Loss) - Reclassifications from Accumulated Other Comprehensive Income (Loss) (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss)    
Cost of Sales $ (350,656) $ (402,539)
Benefit (Provision) for Income Taxes 270 (2,457)
Net Income 3,154 10,754
Reclassification out of Accumulated Other Comprehensive Income    
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss)    
Net Income (318) 2,218
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Foreign Exchange Contract    
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss)    
Cost of Sales [1] (384) 2,867
Benefit (Provision) for Income Taxes [1] 106 (654)
Net Income [1] (278) 2,213
Reclassification out of Accumulated Other Comprehensive Income | Postemployment Benefits, Amortization of actuarial gain (loss)    
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss)    
Non-operating income (expense), net [2] (53) 6
Benefit (Provision) for Income Taxes [2] 13 (1)
Net Income [2] $ (40) $ 5
[1] See Note 10 - Derivative Instruments of Notes to Condensed Consolidated Financial Statements for further information on derivative instruments.
[2] See Note 11 - Employee Benefit Plans of Notes to Condensed Consolidated Financial Statements for further information on postemployment benefit plans.
v3.24.3
Note 8. Credit Facilities (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Line of Credit Facility    
Line of Credit Facility, Remaining Borrowing Capacity $ 186,800  
Long-term Line of Credit 245,900 $ 294,800
Current portion of borrowings under credit facilities 45,915 59,837
Long-term debt under credit facilities, less current portion $ 200,000 $ 235,000
Debt, Weighted Average Interest Rate 6.80% 6.80%
Primary Credit Facility    
Line of Credit Facility    
Line of Credit Facility, Remaining Borrowing Capacity [1] $ 63,100  
Long-term Line of Credit [1] 236,500 $ 285,500
Long-term debt under credit facilities, less current portion [2] 200,000 235,000
Line of Credit Facility, Maximum Borrowing Capacity 300,000  
Line of Credit Facility, Maximum Borrowing Capacity Upon Request $ 450,000  
Line of Credit Facility, Above the Adjusted SOFR Rate to Calculate Alternate Base Rate 1.00%  
Adjusted Leverage Ratio Covenant 3.0  
Adjusted Leverage Ratio, Indebtedness Reduction For Excess Cash $ 15,000  
Line of Credit Facility, Above the Federal Funds Rate to Calculate Alternate Base Rate 0.50%  
Adjusted Leverage Ratio Covenant Material Acquisition 3.5  
Interest Coverage Ratio Covenant 3.5  
Secondary Credit Facility    
Line of Credit Facility    
Line of Credit Facility, Remaining Borrowing Capacity [3] $ 100,000  
Current portion of borrowings under credit facilities [3] 0 0
Line of Credit Facility, Maximum Borrowing Capacity $ 100,000  
Line of Credit Facility, Commitment Fee Percentage 0.30%  
Line of Credit Facility, Term Benchmark Loans Spread for SOFR 0.01750  
Line of Credit Facility, Term Benchmark Loans Spread for EURIBOR 0.01750  
Line of Credit Facility, Above the Adjusted SOFR Rate to Calculate Alternate Base Rate 1.00%  
Adjusted Leverage Ratio Covenant 3.0  
Line of Credit Facility, Alternate Base Rate Loans Spread 0.00750  
Adjusted Leverage Ratio, Indebtedness Reduction For Excess Cash $ 15,000  
Line of Credit Facility, Above the Federal Funds Rate to Calculate Alternate Base Rate 0.50%  
Adjusted Leverage Ratio Covenant Material Acquisition 3.5  
Interest Coverage Ratio Covenant 3.5  
Thailand Overdraft Credit Facility    
Line of Credit Facility    
Line of Credit Facility, Remaining Borrowing Capacity [4] $ 10,100  
Current portion of borrowings under credit facilities [4] 0 0
China Revolving Credit Facility    
Line of Credit Facility    
Line of Credit Facility, Remaining Borrowing Capacity [4] 7,100  
Current portion of borrowings under credit facilities [4] 0 0
Netherlands Revolving Credit Facility    
Line of Credit Facility    
Line of Credit Facility, Remaining Borrowing Capacity [4] 900  
Current portion of borrowings under credit facilities [4] 9,400 9,300
Poland Revolving Credit Facility    
Line of Credit Facility    
Line of Credit Facility, Remaining Borrowing Capacity [4] 5,600  
Current portion of borrowings under credit facilities [4] 0 0
Vietnam Credit Facility    
Line of Credit Facility    
Line of Credit Facility, Remaining Borrowing Capacity   5,000
Financial Standby Letter of Credit    
Line of Credit Facility    
Guarantor Obligations, Maximum Exposure, Undiscounted $ 400 $ 400
Minimum | Primary Credit Facility    
Line of Credit Facility    
Line of Credit Facility, Commitment Fee Percentage 0.10%  
Line of Credit Facility, Term Benchmark Loans Spread for SOFR 0.01000  
Line of Credit Facility, Term Benchmark Loans Spread for EURIBOR 0.01000  
Line of Credit Facility, Alternate Base Rate Loans Spread 0.00000  
Maximum | Primary Credit Facility    
Line of Credit Facility    
Line of Credit Facility, Commitment Fee Percentage 0.25%  
Line of Credit Facility, Term Benchmark Loans Spread for SOFR 0.01750  
Line of Credit Facility, Term Benchmark Loans Spread for EURIBOR 0.01750  
Line of Credit Facility, Alternate Base Rate Loans Spread 0.00750  
[1] The Company maintains a U.S. primary credit facility (the “primary credit facility”) among the Company, the lenders party thereto, and JPMorgan Chase Bank, N. A., as Administrative Agent, and Bank of America, N.A., as Documentation Agent, scheduled to mature May 4, 2027. The primary credit facility provides for $300 million in borrowings, with an option to increase the amount available for borrowing to $450 million upon request, subject to the consent of each lender participating in such increase. This facility is maintained for working capital and general corporate purposes of the Company. A commitment fee is payable on the unused portion of the credit facility at a rate that ranges from 10.0 to 25.0 basis points per annum as determined by the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA, as defined in the primary credit facility. Types of borrowings available on the primary credit facility include revolving loans, multi-currency term loans, and swingline loans.
The interest rate on borrowings is dependent on the type and currencies of borrowings and will be one of the following options:
any Term Benchmark borrowing denominated in U.S. Dollars will utilize the Secured Overnight Financing Rate (“SOFR”), which is a rate per annum equal to the secured overnight financing rate for such business day published by the SOFR Administrator, the Federal Reserve Bank of New York, on the immediately succeeding business day, plus the Revolving Commitment Term Benchmark spread which can range from 100.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA;
any Term Benchmark borrowing denominated in Euros will utilize the Euro Interbank Offered Rate (“EURIBOR”) in effect two target days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus the Revolving Commitment Term Benchmark spread which can range from 100.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA; or
the Alternate Base Rate (“ABR”), which is defined as the highest of the fluctuating rate per annum equal to the higher of:
a.Prime Rate in the U.S. last quoted by the Wall Street Journal, and if this is ceased to be quoted, the highest bank prime loan rate or similar loan rate quoted by the Federal Reserve Board;
b.1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility); or
c.1% per annum above the Adjusted SOFR Rate (as defined under the primary credit facility);
plus the Revolving Commitment ABR spread which can range from 0.0 to 75.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA.
The Company’s financial covenants under the primary credit facility require:
a ratio of consolidated total indebtedness minus unencumbered U.S. cash on hand in the United States in excess of $15 million to adjusted consolidated EBITDA, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be greater than 3.0 to 1.0, provided, however, that for each fiscal quarter end during the four quarter period following a material permitted acquisition, as defined in the Credit Agreement, the Company will not permit this financial covenant to be greater than 3.5 to 1.0 for each such fiscal quarter end, and,
an interest coverage ratio, defined as that ratio of consolidated EBITDA for such period to cash interest expense for such period, for any period of four consecutive fiscal quarters, to not be less than 3.5 to 1.0.
The Company had $0.4 million in letters of credit contingently committed against the primary credit facility at both September 30, 2024 and June 30, 2024.
[2] The amount of long-term debt under credit facilities, less current maturities, reflects the borrowings on the primary credit facility that the Company intends, and has the ability, to refinance for a period longer than twelve months. The primary credit facility matures on May 4, 2027.
[3] The Company amended its 364-day multi-currency revolving credit facility agreement on January 5, 2024 (the “secondary credit facility”), which allows for borrowings up to $100.0 million, among the Company, as borrower, certain subsidiaries of the Company as guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., as Documentation Agent. The secondary credit facility has a maturity date of January 3, 2025. The proceeds of the loans are to be used for working capital and general corporate purposes of the Company. A commitment fee on the unused portion of principal amount of this secondary credit facility is payable at 30.0 basis points per annum.
The interest rate on borrowings is dependent on the type of borrowings and will be one of the following options:
any Term Benchmark borrowing denominated in U.S. Dollars will utilize the Secured Overnight Financing Rate (“SOFR”), which is a rate per annum equal to the secured overnight financing rate for such business day published by the SOFR Administrator, the Federal Reserve Bank of New York, on the immediately succeeding business day, plus a Revolving Commitment Term Benchmark spread of 175.0 basis points;
any Term Benchmark borrowing denominated in Euros will utilize the Euro Interbank Offered Rate (“EURIBOR”) in effect two target days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus a Revolving Commitment Term Benchmark spread of 175.0 basis points; or
the Alternate Base Rate (“ABR”), which is defined as the highest of the fluctuating rate per annum equal to the higher of:
a.Prime Rate in the U.S. last quoted by the Wall Street Journal, and if this is ceased to be quoted, the highest bank prime loan rate or similar loan rate quoted by the Federal Reserve Board;
b.1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility); or
c.1% per annum above the Adjusted SOFR Rate (as defined under the primary credit facility);
plus a Revolving Commitment ABR spread of 75.0 basis points.
The Company’s financial covenants under this secondary credit facility are the same as the financial covenants for its primary credit facility.
[4] The Company also maintains foreign credit facilities for working capital and general corporate purposes at specific foreign locations rather than utilizing funding from intercompany sources. These foreign credit facilities can be canceled at any time by either the bank or us and generally include renewal clauses. Interest on borrowing under these facilities is charged at a rate as defined under the respective foreign credit facility. As a result of the GES divestiture that occurred on July 31, 2024, the Company no longer has the Vietnam credit facility, which allowed for borrowings up to $5.0 million.
v3.24.3
Note 9. Fair Value - Recurring Fair Value Measurements (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Jun. 30, 2024
Recurring Fair Value Measurements:    
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement $ 916 $ 1,420
Debt Securities, Trading, and Equity Securities, FV-NI 5,800 5,400
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement 4,313 2,485
Fair Value, Measurements, Recurring    
Recurring Fair Value Measurements:    
Debt Securities, Trading, and Equity Securities, FV-NI 5,780 5,445
Total assets at fair value 24,127 6,865
Total liabilities at fair value 4,313 2,485
Cash Equivalents, at Carrying Value 17,431  
Fair Value, Measurements, Recurring | Foreign Exchange Contract    
Recurring Fair Value Measurements:    
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement 916 1,420
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement 4,313 2,485
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1    
Recurring Fair Value Measurements:    
Debt Securities, Trading, and Equity Securities, FV-NI 5,780 5,445
Total assets at fair value 23,211 5,445
Total liabilities at fair value 0 0
Cash Equivalents, at Carrying Value 17,431  
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | Foreign Exchange Contract    
Recurring Fair Value Measurements:    
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement 0 0
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement 0 0
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2    
Recurring Fair Value Measurements:    
Debt Securities, Trading, and Equity Securities, FV-NI 0 0
Total assets at fair value 916 1,420
Total liabilities at fair value 4,313 2,485
Cash Equivalents, at Carrying Value 0  
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Foreign Exchange Contract    
Recurring Fair Value Measurements:    
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement 916 1,420
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement $ 4,313 $ 2,485
v3.24.3
Note 9. Fair Value - Textuals (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Recurring Fair Value Measurements:    
Fair Value, Purchases and Sales of Level 3 Assets $ 0  
Fair Value, Purchases and Sales of Level 3 Liabilities 0  
Fair Value, Measurements, Recurring    
Recurring Fair Value Measurements:    
Total assets at fair value 24,127 $ 6,865
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring    
Recurring Fair Value Measurements:    
Total assets at fair value 0 0
Nonfinancial Liabilities Fair Value Disclosure $ 0 $ 0
v3.24.3
Note 10. Derivative Instruments - Textuals (Details) - Foreign Exchange Contract
€ in Millions, $ in Millions
3 Months Ended
Sep. 30, 2024
USD ($)
Sep. 30, 2023
Sep. 30, 2024
EUR (€)
Derivatives, Fair Value      
Derivative, Notional Amount $ 27.1   € 56.4
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months $ 2.9    
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimate of Time to Transfer 12 months 12 months  
v3.24.3
Note 10. Derivative Instruments - Fair Values of Derivative Instruments on the Consolidated Balance Sheet (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Jun. 30, 2024
Derivatives, Fair Value    
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement $ 4,313 $ 2,485
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement 916 1,420
Foreign Exchange Contract | Fair Value, Measurements, Recurring    
Derivatives, Fair Value    
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement 4,313 2,485
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement 916 1,420
Designated as Hedging Instrument | Foreign Exchange Contract | Prepaid Expenses and Other Current Assets    
Derivatives, Fair Value    
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement 916 966
Designated as Hedging Instrument | Foreign Exchange Contract | Accrued Liabilities    
Derivatives, Fair Value    
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement 3,621 2,330
Not Designated as Hedging Instrument | Foreign Exchange Contract | Prepaid Expenses and Other Current Assets    
Derivatives, Fair Value    
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement 0 454
Not Designated as Hedging Instrument | Foreign Exchange Contract | Accrued Liabilities    
Derivatives, Fair Value    
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement $ 692 $ 155
v3.24.3
Note 10. Derivative Instruments - The Effect of Derivative Instruments on Other Comprehensive Income (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Derivative Instruments, Gain (Loss)    
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax $ (1,747) $ (387)
Foreign Exchange Contract    
Derivative Instruments, Gain (Loss)    
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax $ (1,747) $ (387)
v3.24.3
Note 10. Derivative Instruments - The Effect of Derivative Instruments on Consolidated Statements of Income (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Derivative Instruments, Gain (Loss)    
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification before Tax $ (384) $ 2,867
Total Derivative Pre-Tax Gain (Loss) Recognized in Income (1,929) 3,009
Foreign Exchange Contract | Nonoperating Income (Expense)    
Derivative Instruments, Gain (Loss)    
Derivatives Not Designated as Hedging Instruments, Pre-Tax Gain (Loss) Recognized in Income (1,545) 142
Cash Flow Hedging | Foreign Exchange Contract | Cost of Sales    
Derivative Instruments, Gain (Loss)    
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification before Tax $ (384) $ 2,867
v3.24.3
Note 11. Employee Benefit Plans (Details) - USD ($)
3 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Jun. 30, 2024
Components of Net Periodic Benefit Cost (before tax):      
Assets for Plan Benefits, Defined Benefit Plan $ 0   $ 0
SERP investments 5,800,000   5,400,000
SERP obligation 5,800,000   5,400,000
Equity Securities, FV-NI, Unrealized Gain (Loss) $ 300,000 $ (200,000)  
Defined Contribution Plan, Description The Company matches 50% of eligible employee contributions up to 6%. The Company also provides a discretionary contribution determined annually by the Talent, Culture, and Compensation Committee of the Company’s Board of Directors.    
Liability, Defined Benefit Plan $ 7,400,000   7,000,000.0
Liability, Defined Benefit Plan, Noncurrent 6,600,000   6,200,000
Liability, Defined Benefit Plan, Current 800,000   800,000
Other Current Liabilities      
Components of Net Periodic Benefit Cost (before tax):      
SERP obligation 2,100,000   2,000,000.0
Other Noncurrent Liabilities      
Components of Net Periodic Benefit Cost (before tax):      
SERP obligation 3,700,000   3,400,000
Prepaid Expenses and Other Current Assets      
Components of Net Periodic Benefit Cost (before tax):      
SERP investments 2,100,000   2,000,000.0
Other Noncurrent Assets      
Components of Net Periodic Benefit Cost (before tax):      
SERP investments 3,700,000   $ 3,400,000
Domestic Defined Contribution Plan [Member]      
Components of Net Periodic Benefit Cost (before tax):      
Defined Contribution Plan, Cost $ 400,000 $ 1,600,000  
v3.24.3
Note 12. Stock Compensation Plans - Textuals (Details) - $ / shares
3 Months Ended
Sep. 30, 2024
Nov. 17, 2023
Oct. 20, 2016
Non-Employee Directors Stock Compensation Deferral Plan      
Share-based Compensation Arrangement by Share-based Payment Award      
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized     1,000,000.0
2023 Equity Incentive Plan      
Share-based Compensation Arrangement by Share-based Payment Award      
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized   2,000,000.0  
Performance Shares | 2023 Equity Incentive Plan      
Share-based Compensation Arrangement by Share-based Payment Award      
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period [1] 23,460    
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value [1],[2] $ 18.49    
Performance Shares | 2023 Equity Incentive Plan | Maximum      
Share-based Compensation Arrangement by Share-based Payment Award      
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage 125.00%    
Performance Shares | 2023 Equity Incentive Plan | Minimum      
Share-based Compensation Arrangement by Share-based Payment Award      
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage 0.00%    
Restricted Stock | 2023 Equity Incentive Plan      
Share-based Compensation Arrangement by Share-based Payment Award      
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period [3] 152,917    
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value [2],[3] $ 18.49    
Restricted Stock | 2023 Equity Incentive Plan | Maximum      
Share-based Compensation Arrangement by Share-based Payment Award      
ShareBasedCompensationArrangementByShareBasedPaymentAwardContractualLife 3 years    
[1] Long-term performance share awards for the leadership team members (consisting of our CEO and his direct reports) are expected to be granted in the second quarter of fiscal year 2025 upon approval of performance metrics by the Talent, Culture, and Compensation Committee of the Board (“Committee”). The Committee granted long-term performance share awards to key employees not on our leadership team during the quarter. These awards granted in fiscal year 2025 will cliff vest at the third anniversary of the award date in fiscal year 2028.
For these key employee awards, a number of shares will be issued to each participant based upon a combination of the Company’s profitability based on its operating income over the performance period as defined in the Company’s operating business plans for the applicable fiscal years and the Company’s growth based on a comparison of its three-year compounded annual growth rate (“CAGR”) with the Electronics Manufacturing Services Industry’s three-year CAGR. The number of shares issued could be zero if minimum thresholds are not met up to a maximum of 125% if results on both measures exceed targets under the formula.
[2] The grant date fair value is the weighted average stock price based on the dates of the grants.
[3] Restricted shares were granted to leadership team members and other key employees. These restricted shares were approved by the Talent, Culture, and Compensation Committee of the Board. The contractual life of the restricted shares is three years, with one-third of the interest in the restricted shares vested after year one of the grant, another one-third after year two of the grant, and the final one-third after year three of the grant. Restricted shares are expensed over the contractual vesting period as earned. If the employment of a holder of restricted shares terminates before the RSU has vested for any reason other than death, retirement, or disability, the restricted shares not yet vested will be forfeited.
v3.24.3
Note 13. Goodwill and Other Intangible Assets (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Jun. 30, 2024
Goodwill      
Goodwill $ 6,191   $ 6,191
Goodwill, Impaired, Accumulated Impairment Loss (12,826)   (12,826)
Goodwill, Gross 19,017   $ 19,017
Indefinite-lived Intangible Assets      
Amortization of Intangible Assets 300 $ 900  
Indefinite-lived Intangible Assets (Excluding Goodwill) $ 0    
Maximum | Computer Software, Intangible Asset      
Indefinite-lived Intangible Assets      
Finite-Lived Intangible Asset, Useful Life 10 years    
Minimum | Computer Software, Intangible Asset      
Indefinite-lived Intangible Assets      
Finite-Lived Intangible Asset, Useful Life 3 years    
v3.24.3
Note 14. Share Owners' Equity (Details) - USD ($)
3 Months Ended 107 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Share Repurchase Program, Authorized, Amount $ 100,000,000   $ 100,000,000
Repurchase of Common Stock $ 2,892,000    
Treasury Stock Acquired, Average Cost Per Share $ 18.01   $ 15.49
Treasury Stock, Common      
Repurchase of Common Stock $ 2,892,000 $ 0 $ 94,700,000
v3.24.3
Note 15. Earnings Per Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Net income $ 3,154 $ 10,754
Undistributed Earnings (Loss) Allocated to Participating Securities, Basic 3 16
Net Income (Loss) Available to Common Stockholders, Basic $ 3,151 $ 10,738
Weighted Average Number of Shares Outstanding, Basic 24,979 25,041
Dilutive effect of average outstanding stock compensation awards 256 197
Weighted Average Number of Shares Outstanding, Diluted 25,235 25,238
Earnings Per Share, Basic $ 0.13 $ 0.43
Earnings Per Share, Diluted $ 0.12 $ 0.43

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