JASPER, Ind. - Kimball International, Inc. (NASDAQ: KBALB) today reported net sales of $288.2 million and net income of $5.0 million, or $0.13 per Class B diluted share, for the first quarter of fiscal year 2013 which ended September 30, 2012.

Consolidated Overview

Financial Highlights
(Amounts in Thousands, Except Per Share Data)

Three Months Ended
September 30,
2012
September 30,
2011

Percent
Change

Net Sales $ 288,190 $ 270,635 6%
Gross Profit $ 55,205 $ 46,970 18%
Gross Profit % 19.2% 17.4%
Selling and Administrative Expenses $ 48,238 $ 45,968 5%
Selling and Administrative Expense % 16.8% 17.1%
Restructuring Expense $ 60 $ 113 (47%)
Operating Income $ 6,907 $ 889 677%
Operating Income % 2.4% 0.3%
Net Income (Loss) $ 4,961 $ (146) 3,498%
Earnings Per Class B Diluted Share $ 0.13 $ 0.00

Consolidated net sales in the first quarter of fiscal year 2013 increased 6% from the prior year first quarter on increased net sales in the Electronic Manufacturing Services (EMS) segment.

First quarter gross profit as a percent of net sales improved 1.8 percentage points from the prior year first quarter on improved margins in both the EMS segment and the Furniture segment.

Consolidated first quarter selling and administrative expenses increased 5% compared to the prior year due to the adverse impact of the normal revaluation to fair value of the Company's Supplemental Employee Retirement Plan (SERP) liability. The SERP liability revaluation has an exact offsetting benefit in Other Income/Expense where the revaluation of the SERP investment is recorded resulting in no impact to the Company's consolidated net income. Lower sales and marketing costs in the Furniture segment and benefits realized from restructuring activities in the EMS segment were offset by increased profit-based incentive compensation costs.

Other Income/Expense for the first quarter of fiscal year 2013 was income of $0.3 million compared to expense of $1.2 million in the prior year first quarter. The favorable impact of the revaluation of the SERP investment mentioned above was partially offset by foreign currency exchange movement in the EMS segment.

Operating cash flow for the first quarter of fiscal year 2013 was a cash inflow of $9.5 million compared to an operating cash outflow of $6.6 million in the first quarter of the prior year.

The Company's cash and cash equivalents increased to $77.5 million at September 30, 2012, compared to $75.2 million at June 30, 2012. The Company had no short-term borrowings outstanding at September 30, 2012 or June 30, 2012. Long-term debt including current maturities remains at $0.3 million.

James C. Thyen, President and Chief Executive Officer, stated, "The EMS segment continued its positive momentum into the first quarter. Successful efforts by our business development team in expanding our customer base and winning new programs with existing customers contributed to double-digit revenue growth compared to last year. Also since completing our restructuring activities in the first half of last fiscal year, we no longer have the distraction or costs of consolidating operations. We have eliminated that excess capacity and that has positively impacted our bottom line. We are pleased with the progress we are seeing within the EMS segment."

Mr. Thyen concluded, "In the Furniture segment, we continued to experience a decline in sales of office furniture to the federal government in the first quarter resulting in a decline in our overall sales in this segment compared to a year ago. However, our operating income improved despite the overall lower volumes, which is a tribute to the flexibility and foresight of our team to anticipate these changes and adjust operations accordingly."

Electronic Manufacturing Services Segment

Financial Highlights
(Amounts in Thousands)

Three Months Ended
September 30,
2012
September 30,
2011

Percent
Change

Net Sales $ 164,175 $ 142,828 15%
Operating Income (Loss) $ 5,023 $ (2,255) 323%
Operating Income (Loss) % 3.1% (1.6%)
Net Income (Loss) $ 3,283 $ (1,103) 398%

Fiscal year 2013 first quarter net sales in the EMS segment increased 15% compared to the first quarter of the prior year primarily related to double-digit sales growth to customers in the automotive and industrial markets.

Gross profit as a percent of net sales in the EMS segment for the first quarter of fiscal year 2013 improved 3.6 percentage points when compared to the first quarter of the prior year primarily related to higher absorption of fixed costs on the increased sales volumes, benefits realized related to restructuring activities completed in the prior year, and increased operational efficiencies.

Selling and administrative costs in this segment increased 2% in the fiscal year 2013 first quarter when compared to the prior year as benefits realized from restructuring activities were more than offset by increased profit-based incentive compensation costs related to the significant improvement in earnings. As a percent of net sales, selling and administrative costs declined 1.0 percentage point.

Furniture Segment

 

Financial Highlights
(Amounts in Thousands)

Three Months Ended
September 30,
2012
September 30,
2011

Percent
Change

Net Sales $ 124,015 $ 127,807 (3 %)
Operating Income $ 2,803 $ 1,812 55 %
Operating Income % 2.3% 1.4%
Net Income $ 1,668 $ 1,175 42 %

Fiscal year 2013 first quarter net sales in the Furniture segment declined 3% compared to the prior year as increased net sales of hospitality furniture were more than offset by a decline in net sales of office furniture primarily attributable to lower demand from the federal government.

Gross profit as a percent of net sales improved 1.4 percentage points in the Furniture segment in the first quarter of fiscal year 2013 when compared to the prior year as benefits realized from price increases were partially offset by the impact of an unfavorable shift in sales mix to lower margin product.

Selling and administrative costs in the Furniture segment for the first quarter of fiscal year 2013 declined 1% compared to the prior year as lower sales and marketing costs were partially offset by higher profit-based incentive compensation costs.

Source: Kimball International

Have something to say? Share your thoughts with us in the comments below.