Kimball International, Inc. Reports Third Quarter Fiscal Year 2013 Results

  Kimball International, Inc. Reports Third Quarter Fiscal Year 2013 Results

Business Wire

JASPER, Ind. -- May 02, 2013

Kimball International, Inc. (NASDAQ: KBALB) today reported net sales of $301.5
million and net income of $3.7 million, or $0.10 per Class B diluted share,
for the third quarter of fiscal year 2013 which ended March31, 2013.

Consolidated Overview

Financial Highlights
                                   Three Months Ended           
(Amounts in Thousands, Except
Per Share Data)
                                       March 31,     March 31,       Percent
                                       2013            2012            Change
Net Sales                              $ 301,486       $ 284,414       6    %
Gross Profit                           $ 53,809        $ 50,639        6    %
Gross Profit %                         17.8      %     17.8      %
Selling and Administrative             $ 50,358        $ 47,650        6    %
Expenses
Selling and Administrative             16.7      %     16.8      %
Expenses %
Restructuring Expense                  $ 47            $ 895           (95  %)
Operating Income                       $ 3,404         $ 2,094         63   %
Operating Income %                     1.1       %     0.7       %
Adjusted Operating Income *            $ 3,451         $ 2,989         15   %
Adjusted Operating Income % *          1.1       %     1.0       %
Net Income                             $ 3,678         $ 2,506         47   %
Adjusted Net Income *                  $ 3,707         $ 3,045         22   %
Earnings Per Class B Diluted           $ 0.10          $ 0.07          43   %
Share
Adjusted Earnings Per Class B          $ 0.10          $ 0.08          25   %
Diluted Share *

* Items indicated represent Non-GAAP measurements. See "Reconciliation of
Non-GAAP Financial Measures" below.

  *Consolidated net sales in the third quarter of fiscal year 2013 increased
    6% from the prior year third quarter as increased net sales in the
    Electronic Manufacturing Services (EMS) segment were partially offset by
    lower net sales in the Furniture segment. Similar to last quarter, growth
    in several market verticals within the Furniture segment was offset by a
    double digit decline in both office furniture sales to the federal
    government and in hospitality furniture sales due to the comparable prior
    year period including sales from two unusually large projects.
  *Third quarter gross profit as a percent of net sales was flat with the
    prior year third quarter as improved margins in the EMS segment were
    partially offset by lower margins in the Furniture segment. A sales mix
    shift toward the EMS segment which carries a lower gross profit percent
    than the Furniture segment also negatively impacted the consolidated gross
    profit percent.
  *Consolidated third quarter selling and administrative expenses increased
    6% in absolute dollars compared to the prior year but declined slightly as
    a percent of sales. The increased costs were primarily due to higher
    incentive compensation costs, an allowance recorded for uncollectible
    receivables related to one customer, and higher sales and marketing costs.
  *The Company's effective tax rate for the third quarter of fiscal year 2013
    was (6.0)% compared to 23.2% in the prior year third quarter. The current
    year third quarter effective tax rate was favorably impacted by the mix of
    earnings between U.S. and foreign jurisdictions (pre-tax loss in the
    high-tax U.S. jurisdiction coupled with pre-tax income in lower tax rate
    countries) and tax benefits related to the extension of the research and
    development tax credit.
  *Operating cash flow for the third quarter of fiscal year 2013 was a cash
    inflow of $11.4 million compared to $28.8 million in the third quarter of
    the prior year.
  *The Company's cash and cash equivalents less short-term borrowings
    increased to $89.0 million at March31, 2013, compared to $75.2 million at
    June30, 2012. Long-term debt including current maturities remains at less
    than $0.3 million.

James C. Thyen, President and Chief Executive Officer, stated, "We were very
pleased with the performance in the EMS segment during the third quarter. Our
key areas of focus in this segment are growth and further diversification of
our customer base. The team is focused and taking advantage of the
opportunities available in the marketplace. The progress made in the EMS
segment was partially negated by a loss in the Furniture segment for the third
quarter on the lower sales volumes. The comparison to the prior year third
quarter was a difficult one in the Furniture segment as we shipped two
unusually large hospitality furniture projects last year. Orders in this
segment were soft during the quarter, particularly within certain areas of
office furniture. Within the hospitality market, the high end of the market
appears to be recovering while there is continued price sensitivity and
discounting in the lower end of the market. Despite the challenges in this
segment, we expect to see sequential improvement in the Furniture segment
results in the fourth quarter compared to the third quarter we just
completed."

Electronic Manufacturing Services Segment

Financial Highlights
                                  Three Months Ended           
(Amounts in Thousands)
                                      March 31,     March 31,       Percent
                                      2013            2012            Change
Net Sales                             $ 182,067       $ 160,959       13   %
Operating Income                      $ 8,877         $ 5,009         77   %
Operating Income %                    4.9       %     3.1       %
Adjusted Operating Income *           $ 8,883         $ 5,869         51   %
Adjusted Operating Income % *         4.9       %     3.6       %
Net Income                            $ 6,491         $ 3,303         97   %
Adjusted Net Income *                 $ 6,496         $ 3,822         70   %

* Items indicated represent Non-GAAP measurements. See "Reconciliation of
Non-GAAP Financial Measures" below.

  *Fiscal year 2013 third quarter net sales in the EMS segment increased 13%
    compared to the third quarter of the prior year related to sales growth to
    customers in all four of the vertical markets in which this segment
    competes, including the automotive, medical, industrial and public safety
    industries.
  *Gross profit as a percent of net sales in the EMS segment for the third
    quarter of fiscal year 2013 improved 1.4 percentage points when compared
    to the third quarter of the prior year primarily due to leverage gained on
    the higher revenue as well as benefits realized from global purchasing
    efforts and operating efficiencies related to continuous improvement
    initiatives.
  *Selling and administrative expenses in this segment increased 16% in the
    fiscal year 2013 third quarter when compared to the prior year primarily
    due to increased incentive compensation costs related to the significant
    improvement in earnings. As a percent of net sales, selling and
    administrative costs in the EMS segment increased 0.2 of a percentage
    point.

Furniture Segment

Financial Highlights
                           Three Months Ended             
(Amounts in Thousands)
                               March 31,      March 31,        Percent
                               2013             2012             Change
Net Sales                      $ 119,419        $ 123,455        (3   %)
Operating Loss                 $ (3,703  )      $ (1,183  )      (213 %)
Operating Loss %               (3.1      %)     (1.0      %)
Net Loss                       $ (2,455  )      $ (842    )      (192 %)
                                                                      

  *Fiscal year 2013 third quarter net sales in the Furniture segment declined
    3% compared to the prior year as decreased net sales of hospitality
    furniture, primarily due to two unusually large projects in the third
    quarter of last year, more than offset an increase in net sales of office
    furniture despite a double digit decline in office furniture sales to the
    federal government.
  *Gross profit as a percent of net sales declined 0.6 of a percentage point
    in the Furniture segment in the third quarter of fiscal year 2013 when
    compared to the prior year partially due to higher discounting and other
    competitive pricing pressures. In addition, the quarter-over-quarter
    comparison was negatively impacted by income received in the prior year
    third quarter related to the recovery of previously paid import duties due
    to a retroactive change in the tariff rate. Favorable impacts to the
    quarter-over-quarter comparison include benefits realized in the current
    year third quarter from price increases and higher costs incurred last
    year for supplier-related issues.
  *Selling and administrative expenses in the Furniture segment for the third
    quarter of fiscal year 2013 increased 2% compared to the prior year
    related to an allowance recorded for uncollectible receivables and higher
    sales and marketing costs.

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 statement of
income, balance sheet or statement of cash flows of the Company. The non-GAAP
financial measures on a consolidated basis used within this release include 1)
operating income excluding restructuring charges, 2) net income excluding
restructuring charges, and 3) earnings per Class B diluted share excluding
restructuring charges. The non-GAAP financial measures on a segment basis used
within this release include 1) operating income excluding restructuring
charges and 2) net income excluding restructuring charges. Reconciliations of
the reported GAAP numbers to these non-GAAP financial measures are included in
the Financial Highlights table below. Management believes it is useful for
investors to understand how its core operations performed without the effects
of the costs incurred in executing its restructuring plans. Excluding the
restructuring charges allows investors to meaningfully trend, analyze, and
benchmark the performance of the Company's core operations. Many of the
Company's internal performance measures that management uses to make certain
operating decisions exclude these charges to enable meaningful trending of
core operating metrics.

Forward-Looking Statements

Certain statements contained within this release are considered
forward-looking under the Private Securities Litigation Reform Act of 1995 and
are subject to risks and uncertainties including, but not limited to, the
global economic conditions, significant volume reductions from key contract
customers, significant reduction in customer order patterns, loss of key
customers or suppliers within specific industries, financial stability of key
customers and suppliers, availability or cost of raw materials, and increased
competitive pricing pressures reflecting excess industry capacities.
Additional cautionary statements regarding other risk factors that could have
an effect on the future performance of the Company are contained in the
Company's Form 10-K filing for the fiscal year ended June30, 2012 and other
filings with the Securities and Exchange Commission.

Conference Call / Webcast
              
Date:              May 2, 2013
Time:              11:00 AM Eastern Time
Dial-In #:         877-415-3179 (International Calls - 857-244-7322)
Pass Code:         Kimball
                   

A webcast of the live conference call may be accessed by visiting Kimball's
Investor Relations website at www.ir.kimball.com.

For those unable to participate in the live webcast, the call will be archived
at www.ir.kimball.com within two hours of the conclusion of the live call and
will remain there for approximately 90 days. A telephone replay of the
conference call will be available within two hours after the conclusion of the
live event through May 16, 2013.

Replay Dial-In #:     888-286-8010 (International Calls - 617-801-6888)
Replay Pass Code:         85668893
                          

About Kimball International, Inc.

Recognized with a reputation for excellence, Kimball International, Inc. is
committed to a high performance culture that values personal and
organizational commitment to quality, reliability, value, speed and ethical
behavior. Kimball employees know they are part of a corporate culture that
builds success for Customers while enabling employees to share in the
Company's success through personal, professional and financial growth.

Kimball International, Inc. provides a variety of products from its two
business segments: the Electronic Manufacturing Services segment and the
Furniture segment. The Electronic Manufacturing Services segment provides
engineering and manufacturing services which utilize common production and
support capabilities to a variety of industries globally. The Furniture
segment provides furniture for the office and hospitality industries sold
under the Company's family of brand names.

For more information about Kimball International, Inc., visit the Company's
website on the Internet at www.kimball.com.

"We Build Success"



Financial highlights for the third quarter ended March31, 2013 are as
follows:

Condensed
Consolidated                                                 
Statements of Income
(Unaudited)                   Three Months Ended
(Amounts in
Thousands, except per         March 31, 2013             March 31, 2012
share data)
Net Sales                     $ 301,486     100.0 %      $ 284,414     100.0 %
Cost of Sales                 247,677      82.2  %      233,775      82.2  %
Gross Profit                  53,809        17.8  %      50,639        17.8  %
Selling and
Administrative                50,358        16.7  %      47,650        16.8  %
Expenses
Restructuring Expense         47           0.0   %      895          0.3   %
Operating Income              3,404         1.1   %      2,094         0.7   %
Other Income, net             67           0.1   %      1,168        0.4   %
Income Before Taxes           3,471         1.2   %      3,262         1.1   %
on Income
Provision (Benefit)           (207      )   0.0   %      756          0.2   %
for Income Taxes
Net Income                    $ 3,678      1.2   %      $ 2,506      0.9   %
Earnings Per Share of
Common Stock:
Basic Earnings Per
Share:
Class A                       $ 0.09                     $ 0.06
Class B                       $ 0.10                     $ 0.07
Diluted Earnings Per
Share:
Class A                       $ 0.09                     $ 0.06
Class B                       $ 0.10                     $ 0.07
                                                                       
Average Number of
Shares Outstanding
Class A and B Common
Stock:
Basic                         38,080                     37,899
Diluted                       38,176                     38,005
                              
                                                                             
(Unaudited)                   Nine Months Ended
(Amounts in
Thousands, except per         March 31, 2013             March 31, 2012
share data)
Net Sales                     $ 884,812     100.0 %      $ 851,953     100.0 %
Cost of Sales                 720,641      81.4  %      700,024      82.2  %
Gross Profit                  164,171       18.6  %      151,929       17.8  %
Selling and
Administrative                147,602       16.7  %      142,215       16.7  %
Expenses
Restructuring Expense         138          0.0   %      2,488        0.3   %
Operating Income              16,431        1.9   %      7,226         0.8   %
Other Income                  (1,003    )   (0.2  %)     1,408        0.2   %
(Expense), net
Income Before Taxes           15,428        1.7   %      8,634         1.0   %
on Income
Provision for Income          2,610        0.3   %      3,077        0.3   %
Taxes
Net Income                    $ 12,818     1.4   %      $ 5,557      0.7   %
Earnings Per Share of
Common Stock:
Basic Earnings Per
Share:
Class A                       $ 0.32                     $ 0.14
Class B                       $ 0.34                     $ 0.15
Diluted Earnings Per
Share:
Class A                       $ 0.32                     $ 0.14
Class B                       $ 0.34                     $ 0.15
                                                                       
Average Number of
Shares Outstanding
Class A and B Common
Stock:
Basic                         38,058                     37,875
Diluted                       38,428                     38,024
                                                                       

                                                
                                                     
Condensed Consolidated Statements of Cash            Nine Months Ended
Flows
(Unaudited)                                          March 31,
(Amounts in Thousands)                               2013         2012
Net Cash Flow provided by Operating                  $ 41,354       $ 29,999
Activities
Net Cash Flow used for Investing Activities          (21,954  )     (19,785  )
Net Cash Flow used for Financing Activities          (4,511   )     (5,826   )
Effect of Exchange Rate Change on Cash and           182           (1,330   )
Cash Equivalents
Net Increase in Cash and Cash Equivalents            15,071         3,058
Cash and Cash Equivalents at Beginning of            75,197        51,409   
Period
Cash and Cash Equivalents at End of Period           $ 90,268      $ 54,467 
                                                                             

                                                            
                                                                   
                                                   (Unaudited)
Condensed Consolidated Balance Sheets              March 31,       June 30,
(Amounts in Thousands)                             2013            2012
ASSETS
Cash and cash equivalents                          $ 90,268        $ 75,197
Receivables, net                                   144,611         139,467
Inventories                                        128,205         117,681
Prepaid expenses and other current assets          41,179          44,636
Assets held for sale                               1,709           1,709
Property and Equipment, net                        187,096         186,099
Goodwill                                           2,494           2,480
Other Intangible Assets, net                       5,439           6,206
Other Assets                                       25,130         22,041
Total Assets                                       $ 626,131      $ 595,516
                                                                   
LIABILITIES AND SHARE OWNERS' EQUITY
Current maturities of long-term debt               $ 23            $ 14
Accounts payable                                   146,587         137,423
Borrowings under credit facilities                 1,286           0
Dividends payable                                  1,863           1,843
Accrued expenses                                   53,108          48,460
Long-term debt, less current maturities            296             273
Other                                              24,039          21,275
Share Owners' Equity                               398,929        386,228
Total Liabilities and Share Owners' Equity         $ 626,131      $ 595,516
                                                                     

                                                            
                                                                     
Supplementary
Information
Components of Other              Three Months Ended     Nine Months Ended
Income (Expense), net
(Unaudited)                      March 31,              March 31,
(Amounts in Thousands)           2013     2012          2013         2012
Interest Income                  $ 94     $ 121         $ 325        $ 341
Interest Expense                 (12  )   (7      )     (27      )   (23     )
Foreign
Currency/Derivative Gain         (493 )   (261    )     (1,009   )   891
(Loss)
Gain on Supplemental
Employee Retirement Plan         970      1,370         1,956        495
Investment
Impairment Loss on
Privately-Held                   (173 )   0             (908     )   0
Investment
Loss on Stock Warrants           (119 )   (22     )     (871     )   (63     )
Other Non-Operating              (200 )   (33     )     (469     )   (233    )
Expense
Other Income (Expense),          $ 67    $ 1,168      $ (1,003 )   $ 1,408 
net
                                                                             

                                                                
                                                                       
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(Amounts in Thousands, except per share data)
                                                                       
                                                                       
Operating Income excluding Restructuring Charges
                                                         Three Months Ended
                                                         March 31,
Kimball International, Inc.                              2013          2012
Operating Income, as reported                            $ 3,404       $ 2,094
Pre-tax Restructuring Charges                            47           895
Adjusted Operating Income                                $ 3,451      $ 2,989
                                                                       
Electronic Manufacturing Services Segment
Operating Income, as reported                            $ 8,877       $ 5,009
Pre-tax Restructuring Charges                            6            860
Adjusted Operating Income                                $ 8,883      $ 5,869
                                                                       
                                                         
Net Income excluding Restructuring Charges
                                                         Three Months Ended
                                                         March 31,
Kimball International, Inc.                              2013          2012
Net Income, as reported                                  $ 3,678       $ 2,506
After-tax Restructuring Charges                          29           539
Adjusted Net Income                                      $ 3,707      $ 3,045
                                                                       
Electronic Manufacturing Services Segment
Net Income, as reported                                  $ 6,491       $ 3,303
After-tax Restructuring Charges                          5            519
Adjusted Net Income                                      $ 6,496      $ 3,822
                                                                       
                                                         
Earnings Per Class B Diluted Share excluding
Restructuring Charges
                                                         Three Months Ended
                                                         March 31,
                                                         2013          2012
Earnings per Class B Diluted Share, as reported          $ 0.10        $ 0.07
Impact of Restructuring Charges per Class B              0.00         0.01
Diluted Share
Adjusted Earnings Per Class B Diluted Share              $ 0.10       $ 0.08
                                                                         

Contact:

Kimball International
Martin Vaught, Director of Public Relations, 812-482-1600
martin.vaught@kimball.com
 
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