Kimball International, Inc. (NASDAQ: KBALB) today reported net sales of $317.4 million and net income of $9.2 million, or $0.24 per Class B diluted share, for the first quarter of fiscal year 2014 which ended September 30, 2013.
Financial Highlights (Amounts in Thousands, Except Per Share Data)
|Three Months Ended|
September 30, 2013
September 30, 2012
|Gross Profit %||19.3||%||19.2||%|
|Selling and Administrative Expenses||$||54,217||$||48,238||12||%|
|Selling and Administrative Expenses %||17.1||%||16.8||%|
|Other General Income||$||(5,022||)||$||0|
|Operating Income %||3.7||%||2.4||%|
|Adjusted Operating Income *||$||7,107||$||6,967||2||%|
|Adjusted Operating Income % *||2.2||%||2.4||%|
|Adjusted Net Income *||$||6,405||$||4,997||28||%|
|Earnings Per Class B Diluted Share||$||0.24||$||0.13||85||%|
|Adjusted Earnings Per Class B Diluted Share *||$||0.17||$||0.13||31||%|
* Items indicated represent Non-GAAP measurements. See "Reconciliation of Non-GAAP Financial Measures" below.
- Consolidated net sales in the first quarter of fiscal year 2014 increased 10% from the prior year first quarter on increased net sales in both the Electronic Manufacturing Services (EMS) segment and the Furniture segment.
- First quarter gross profit as a percent of net sales increased 0.1 of a percentage point from the prior year first quarter. A slight decline in the gross profit percentage in both segments was more than offset by the favorable impact of a sales mix shift towards the Furniture segment which carries a higher margin.
- Consolidated selling and administrative expenses in the first quarter of fiscal year 2014 increased 12% in absolute dollars compared to the prior year. The increased costs were primarily due to higher incentive compensation costs, increased salary costs, higher sales and marketing costs, and higher commissions related to increased sales in the Furniture segment. In addition, the Company classified one of its three aircraft as held for sale during the first quarter of fiscal year 2014 and recorded a $1.2 million pre-tax impairment charge ($0.7 million after-tax impact).
- Other General Income in the first quarter of fiscal year 2014 included $5.0 million of pre-tax income resulting from settlement proceeds related to two antitrust class action lawsuits of which the Company was a member. The class actions alleged the defendant sellers illegally conspired to fix prices of electronic components purchased several years ago by some of our manufacturing facilities in the EMS segment.
- Other Income/Expense for the first quarter of fiscal year 2014 was income of $1.0 million compared to income of $0.3 million in the first quarter of the prior year. The variance in Other Income/Expense was driven in part by foreign exchange movement that impacted the EMS segment.
- The Company's effective tax rate for the first quarter of fiscal year 2014 was 28.0% compared to 31.0% in the prior year first quarter. The current year first quarter effective tax rate was favorably impacted by a $0.5 million adjustment to the Company's deferred tax asset valuation allowance in the EMS segment.
- Operating cash flow for the first quarter of fiscal year 2014 was $16.0 million compared to $9.5 million in the first quarter of the prior year.
- The Company's cash and cash equivalents increased to $109.6 million at September 30, 2013, compared to $103.6 million at June 30, 2013. The Company had no short-term borrowings outstanding at September 30, 2013 or June 30, 2013. Long-term debt including current maturities was $0.3 million at September 30, 2013.
James C. Thyen, President and Chief Executive Officer, stated, "Our operating performance in the Furniture segment in the first quarter reflects increased demand, the effective execution of our strategy, and the commitment of our entire Furniture team to improve results. Our Furniture segment returned to profitability in the first quarter, after recording losses for the second half of last fiscal year. Our focus on accelerating top-line growth in the Furniture segment was evident in the first quarter as the orders received during the quarter increased 18% over the prior year first quarter. Overall, we are pleased with the progress being made in the Furniture segment."