--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--
Selected Financial Highlights:
First Quarter FY 2023
- Net sales of
$177.8 million , increased 14% year-over-year - Gross margin expanded 220 basis points to 33.5%
- Net income of
$6.6 million ; Adjusted net income of$4.8 million - Diluted EPS of
$0.18 ; Adjusted diluted EPS was$0.13 - Adjusted EBITDA of
$11.5 million , up$6.7 million year-over-year - Backlog of
$180.0 million
Management Commentary
CEO
“Our first quarter results demonstrate the strategic choices that set
“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
Overview
First Quarter Fiscal 2023 Results
Consolidated net sales of
Capital expenditures in the first quarter of 2023 amounted to
| Three Months Ended | ||||||||||
| (Unaudited) | ||||||||||
| (Amounts in Millions) | 2022 | 2021 | % Change | |||||||
| Workplace * | $ | 132.0 | $ | 108.6 | 22 | % | ||||
| Health | 26.1 | 23.0 | 13 | % | ||||||
| Hospitality | 19.7 | 25.0 | (21 | %) | ||||||
| Total |
$ | 177.8 | $ | 156.6 | 14 | % | ||||
| Orders Received by End Market | ||||||||||
| Three Months Ended | ||||||||||
| (Unaudited) | ||||||||||
| (Amounts in Millions) | 2022 | 2021 | % Change | |||||||
| Workplace * | $ | 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
| FY 2023 Guidance Ranges | |||
| Low | High | YoY Growth | |
| Revenue | 15% at midpoint | ||
| Adjusted EBITDA | 47% 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
- adjusted operating income, defined as operating income (loss) excluding restructuring expenses, market valuation adjustments related to our SERP liability, acquisition-related amortization and inventory valuation adjustments, and contingent earn-out gain or loss;
- adjusted operating income percentage, defined as adjusted operating income as a percentage of net sales;
- adjusted net income, defined as net income (loss) excluding restructuring expenses, acquisition-related amortization and inventory valuation adjustments, and contingent earn-out gain or loss;
- adjusted diluted earnings per share, defined as diluted earnings (loss) per share excluding restructuring expenses, acquisition-related amortization and inventory valuation adjustments, and contingent earn-out gain or loss;
- adjusted EBITDA, defined as earnings before interest, statutory income tax impacts for taxable after-tax measures, depreciation, and amortization and excluding restructuring expenses, acquisition-related inventory valuation adjustments, and contingent earn-out gain or loss; and
- adjusted EBITDA percentage, defined as adjusted EBITDA as a percentage of net sales.
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
| Conference Call / Webcast | ||
| Date: | ||
| Time: | ||
| US Toll free Dial-In #: | 1-877-270-2148 | |
| International 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
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,
Financial highlights for the first quarter ended
| Condensed Consolidated Statements of Operations | |||||||||||||
| (Unaudited) | Three Months Ended | ||||||||||||
| (Amounts in Thousands, except per share data) | |||||||||||||
| $ | 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 | 2022 |
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 | |||||
| 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 Flows | Three Months Ended | ||||||
| (Unaudited) | |||||||
| (Amounts in Thousands) | 2022 | 2021 | |||||
| $ | 18,092 | $ | 11,905 | ||||
| (4,946 | ) | (3,592 | ) | ||||
| (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 | |||||||
| 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 | |||||||
| 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 | |||||||
| 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 | |||||||
| 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 | |||||||
| 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), net | Three Months Ended | ||||||
| (Unaudited) | |||||||
| (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:
Telephone 812.482.1600
Source: Kimball International, Inc.