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--Positive Momentum Continued with Profitability More than Doubling Year-on-Year--
--Workplace and Health Markets Delivered 20% Year-over-Year Revenue Growth--
--Favorable Product and Geographic Mix Continue to Drive Market Share Gains--
--Re-Affirms Fiscal 2023 Guidance for Revenue Growth of 15% and Adjusted EBITDA Growth of 47%, at the Midpoints--
JASPER, Ind., Nov. 03, 2022 (GLOBE NEWSWIRE) -- Kimball International, Inc. (NASDAQ: KBAL) today announced results for the first quarter ended September 30, 2022.
Selected Financial Highlights:
First Quarter FY 2023
Management Commentary
CEO Kristie Juster commented, “This marks our third consecutive quarter of industry-leading performance reflecting and underlining Kimball International’s differentiated market positioning and growth strategy. A product portfolio aligned with the new-forming post-COVID workplace and health markets and a leadership position in faster-growing secondary markets provide proof points of our resilience and enable us to gain share. Top line growth, together with ongoing operating efficiencies, continues to drive margin improvement and robust earnings growth.
“Our first quarter results demonstrate the strategic choices that set Kimball International apart within our industry. Ancillary products, which provide the flexibility, collaboration and privacy needs of today’s developing workplace and healthcare settings, accounted for 87% of our trailing twelve-month revenues and continue to see the most robust demand across all categories. Similarly, shipments to secondary markets, which have experienced employment growth and a faster return-to-office, continue to lead the way and represented 78% of trailing twelve-month shipments.
“Our Workplace and Health end markets continued to drive year-on-year sales growth and represented 89% of total first quarter revenues. First quarter order rates were slightly ahead of last year’s levels and the positive momentum continued into October. We are also experiencing a pick-up in demand from the Hospitality vertical, another market where Kimball International is a leader, although a meaningful recovery is not expected until later this year.”
Overview
First Quarter Fiscal 2023 Results
Consolidated net sales of $177.8 million increased by 14% from the year ago quarter, driven by double-digit growth of Workplace and Health end markets. Gross margin expanded 220 basis points year-over-year to 33.5%, benefiting from price increases that more than offset ongoing freight and raw material inflation, as well as continued operational excellence savings. Selling and administrative expenses (S&A) of $53.4 million declined year-over-year as a percentage of total net sales by 210 basis points to 30.0% in the first quarter of fiscal 2023. Adjusted S&A was $52.4 million, or 29.4% of net sales, compared to $48.6 million, or 31.1% of net sales, in last year’s first quarter. Net income was $6.6 million, or $0.18 per diluted share, up from net loss of $5.0 million or $(0.14) per diluted share in the year ago quarter. Adjusted net income was $4.8 million, or $0.13 per diluted share, ahead of adjusted net income of $1.9 million, or $0.05 per diluted share in the first quarter of fiscal 2022. Adjusted EBITDA was $11.5 million compared to $4.9 million in the year ago quarter.
Capital expenditures in the first quarter of 2023 amounted to $5.4 million. Kimball International returned $4.3 million to shareholders in the form of dividends and share repurchases in the first quarter of 2023.Net Sales by End Market Three Months Ended (Unaudited)September 30, (Amounts in Millions) 2022 2021 % ChangeWorkplace *$132.0 $108.6 22%Health 26.1 23.0 13%Hospitality 19.7 25.0 (21%)Total Net Sales$177.8 $156.6 14%Orders Received by End Market Three Months Ended (Unaudited)September 30, (Amounts in Millions) 2022 2021 % ChangeWorkplace *$126.3 $124.7 1%Health 29.7 28.9 3%Hospitality 31.7 33.0 (4%)Total Orders$187.7 $186.6 1%
* Workplace end market includes education, government, commercial, and financial vertical markets and eBusiness
Summary and Outlook
“First quarter results represented a strong start to fiscal 2023 and have set the stage for this to be another year of solid performance for Kimball International. Through our focused set of strategic choices, we are successfully delivering in-demand products and solutions to end markets and geographies of high growth, resiliency and favorable return-to-office dynamics. While we are mindful of the challenging macroeconomic environment and heightened recessionary risks, we are confident in our ability to outperform the industry, and we are pleased to reaffirm our guidance for substantial revenue and EBITDA growth in fiscal 2023,” Ms. Juster concluded. FY 2023 Guidance Ranges LowHighYoY GrowthRevenue$750 million$780 million15% at midpointAdjusted EBITDA$48 million$52 million47% at midpoint
The Company expects fiscal 2023 revenue and adjusted EBITDA to be weighted somewhat toward the second half of the year, with the fourth quarter being the strongest. We anticipate second quarter fiscal 2023 revenue to be similar to Q1 levels and adjusted EBITDA to be slightly below Q1 levels due to expected short-term inefficiencies in certain elements of our logistics network.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with Generally Accepted Accounting Principles (“GAAP”) in the United States in the statements of operations, statements of comprehensive income, balance sheets, statements of cash flows, or statement of shareholders’ equity of the Company. The non-GAAP financial measures used within this release include:
Reconciliations of the reported GAAP numbers to these non-GAAP financial measures are included in the tables below. Management believes that adjusted EBITDA and other metrics excluding restructuring expense, market value adjustments related to the SERP liability, and acquisition-related adjustments are useful measurements to assist investors in comparing our performance over various reporting periods on a consistent basis by removing from operating results the impact of items that do not reflect our core operating performance.
The orders received metric is a key performance indicator used to evaluate general sales trends and develop future operating plans. Orders received represent firm orders placed by our customers during the current quarter which are expected to be recognized as revenue during current or future quarters. The orders received metric is not intended to be presented as an alternative measure of revenue recognized in accordance with GAAP.
Forward-Looking Statements
This document may contain certain forward-looking statements about the Company, such as discussions of Company’s pricing trends, liquidity, new business results, expansion plans, anticipated expenses and planned schedules. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These statements generally can be identified by the use of words or phrases, including, but not limited to, “intend,” “anticipate,” “believe,” “estimate,” “project,” “target,” “plan,” “expect,” “setting up,” “beginning to,” “will,” “should,” “would,” “resume” or similar statements. We caution that forward-looking statements are subject to known and unknown risks and uncertainties that may cause the Company’s actual future results and performance to differ materially from expected results including, but not limited to, the risk that any projections or guidance by the Company, including revenues, margins, earnings, or any other financial results are not realized; a shortage of manufacturing labor and related cost; disruptions in our supply chain and freight channels including impacts on cost and availability; adverse changes in global economic conditions; successful execution of the second phase of the Company’s restructuring plan; significant reduction in customer order patterns; loss of key suppliers; relationships with strategic customers and product distributors; changes in the regulatory environment; global health concerns (including the impact of the COVID-19 pandemic); or similar unforeseen events. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of the Company are contained in filings made from time to time with the Securities and Exchange Commission, including but not limited to, our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.Conference Call / Webcast Date: November 3, 2022Time: 5:00 PM Eastern TimeUS Toll free Dial-In #: 1-877-270-2148International Dial-In #: 1-412-902-6510
A webcast of the live conference call may be accessed by visiting Kimball International’s Investor Relations website at www.ir.kimballinternational.com.
For those unable to participate in the live webcast, the call will be archived at www.ir.kimballinternational.com within two hours of the conclusion of the live call.
About Kimball International, Inc.
Kimball International is a leading omnichannel commercial furnishings company with deep expertise in the Workplace, Health and Hospitality markets. We combine our bold entrepreneurial spirit, a history of craftsmanship and today’s design-driven thinking alongside a commitment to our culture of caring and lasting connections with our customers, shareholders, employees and communities.
For over 70 years, our brands have seized opportunities to customize solutions into personalized experiences, turning ordinary spaces into meaningful places. Our family of brands includes Kimball, National, Etc., Interwoven, Kimball Hospitality, D’style and Poppin.
Kimball International is based in Jasper, Indiana.
www.kimballinternational.com
Financial highlights for the first quarter ended September 30, 2022 are as follows:Condensed Consolidated Statements of Operations (Unaudited)Three Months Ended(Amounts in Thousands, except per share data)September 30, 2022 September 30, 2021Net Sales$177,811 100.0% $156,610 100.0%Cost of Sales 118,197 66.5% 107,513 68.7%Gross Profit 59,614 33.5% 49,097 31.3%Selling and Administrative Expenses 53,407 30.0% 50,159 32.1%Contingent Earn-Out (Gain) Loss (3,160) (1.8%) 4,610 2.9%Restructuring Expense 370 0.2% 1,455 0.9%Operating Income (Loss) 8,997 5.1% (7,127) (4.6%)Other Expense, net (1,094) (0.7%) (434) (0.2%)Income (Loss) Before Taxes on Income 7,903 4.4% (7,561) (4.8%)Provision (Benefit) for Income Taxes 1,347 0.7% (2,512) (1.6%)Net Income (Loss)$6,556 3.7% $(5,049) (3.2%) Earnings (Loss) Per Share of Common Stock: Basic$0.18 $(0.14) Diluted$0.18 $(0.14) Average Number of Total Shares Outstanding: Basic 36,754 36,821 Diluted 36,976 36,821 (Unaudited) Condensed Consolidated Balance Sheets September 30,
2022
June 30,
2022
(Amounts in Thousands) ASSETS Cash and cash equivalents$16,760 $10,934 Receivables, net 64,726 79,301 Inventories 105,935 97,969 Prepaid expenses and other current assets 24,754 30,937 Property and Equipment, net 97,069 96,970 Right of use operating lease assets 13,172 12,839 Goodwill 47,844 47,844 Other Intangible Assets, net 53,644 54,767 Deferred Tax Assets 15,528 14,472 Other Assets 14,928 15,245 Total Assets$454,360 $461,278 LIABILITIES AND SHAREHOLDERS’ EQUITY Current maturities of long-term debt 0 33 Accounts payable 69,731 70,936 Customer deposits 36,427 29,706 Current portion of operating lease liability 5,718 6,096 Dividends payable 3,710 3,623 Accrued expenses 31,378 41,088 Long-term debt, less current maturities 65,000 68,046 Long-term operating lease liability 12,228 12,150 Other 12,797 16,064 Shareholders’ Equity 217,371 213,536 Total Liabilities and Shareholders’ Equity$454,360 $461,278 Condensed Consolidated Statements of Cash FlowsThree Months Ended(Unaudited)September 30,(Amounts in Thousands) 2022 2021 Net Cash Flow provided by Operating Activities$18,092 $11,905 Net Cash Flow used for Investing Activities (4,946) (3,592)Net Cash Flow used for Financing Activities (7,399) (5,085)Net Increase in Cash, Cash Equivalents, and Restricted Cash 5,747 3,228 Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 11,996 25,727 Cash, Cash Equivalents, and Restricted Cash at End of Period$17,743 $28,955 Reconciliation of Non-GAAP Financial Measures (Unaudited) (Amounts in Thousands, except per share data) Adjusted Selling and Administrative Expense Three Months Ended September 30, 2022 2021 Selling and Administrative Expense, as reported$53,407 $50,159 Less: Pre-tax Expense Adjustment to SERP Liability 459 93 Less: Pre-tax Acquisition-related Amortization (1,502) (1,609)Adjusted Selling and Administrative Expense$52,364 $48,643 Adjusted Selling and Administrative Expense % 29.4% 31.1% Adjusted Operating Income Three Months Ended September 30, 2022 2021 Operating Income (Loss), as reported$8,997 $(7,127)Add: Pre-tax Restructuring Expense 370 1,455 Add: Pre-tax Expense Adjustment to SERP Liability (459) (93)Add: Pre-tax Acquisition-related Amortization 1,502 1,609 Add: Pre-tax Acquisition-related Inventory Valuation Adjustment 0 143 Add: Pre-tax Contingent Earn-Out (Gain) Loss (3,160) 4,610 Adjusted Operating Income$7,250 $597 Adjusted Operating Income % 4.1% 0.4% Adjusted Net Income Three Months Ended September 30, 2022 2021 Net Income (Loss), as reported$6,556 $(5,049) Pre-tax Restructuring Expense 370 1,455 Tax on Restructuring Expense (96) (375)Add: After-tax Restructuring Expense 274 1,080 Pre-tax Acquisition-related Amortization 1,502 1,609 Tax on Acquisition-related Amortization (387) (414)Add: After-tax Acquisition-related Amortization 1,115 1,195 Pre-tax Acquisition-related Inventory Valuation Adjustment 0 143 Tax on Acquisition-related Inventory Valuation Adjustment 0 (37)Add: After-tax Acquisition-related Inventory Adjustment 0 106 Pre-tax Contingent Earn-Out (Gain) Loss (3,160) 4,610 Tax on Contingent Earn-Out (Gain) Loss 0 0 Add: After-tax Contingent Earn-Out (Gain) Loss (3,160) 4,610 Adjusted Net Income$4,785 $1,942 Adjusted Diluted Earnings Per Share Three Months Ended September 30, 2022 2021 Diluted Earnings (Loss) Per Share, as reported$0.18 $(0.14)Add: After-tax Restructuring Expense 0.01 0.03 Add: After-tax Acquisition-related Amortization 0.03 0.03 Add: After-tax Acquisition-related Inventory Valuation Adjustment 0.00 0.01 Add: After-tax Contingent Earn-Out (Gain) Loss (0.09) 0.12 Adjusted Diluted Earnings Per Share$0.13 $0.05 Adjusted EBITDA Three Months Ended September 30, 2022 2021 Net Income (Loss)$6,556 $(5,049)Provision (Benefit) for Income Taxes 1,347 (2,512)Income (Loss) Before Taxes on Income 7,903 (7,561)Interest Expense 681 257 Interest Income (77) (9)Depreciation 3,634 3,562 Amortization 2,195 2,439 Pre-tax Restructuring Expense 370 1,455 Pre-tax Acquisition-related Inventory Valuation Adjustment 0 143 Pre-tax Contingent Earn-Out (Gain) Loss (3,160) 4,610 Adjusted EBITDA$11,546 $4,896 Net Income (Loss) % 3.7% (3.2%)Adjusted EBITDA % 6.5% 3.1%Supplementary Information Components of Other Income (Expense), netThree Months Ended(Unaudited)September 30,(Amounts in Thousands) 2022 2021 Interest Income$77 $9 Interest Expense (681) (257)Loss on Supplemental Employee Retirement Plan Investments (459) (93)Other Non-Operating Expense (31) (93)Other Expense, net$(1,094) $(434)
For additional information contact:
Chris Kuepper - chris.kuepper@kimballinternational.com
Lynn Morgen - lynn.morgen@advisiry.com
Eric Prouty - eric.prouty@advisiry.com
Kimball International
1600 Royal Street
Jasper, IN 47546-2256
Telephone 812.482.1600