Kimball Electronics(KE) - 2023 Q2 - Quarterly Report

Financial Performance - The company reported record quarterly net sales of $436.7 million for the second quarter of fiscal year 2023, a 39$315.3 million in the same quarter of the prior year[95]. - The company experienced a 39% increase in net sales for the six months ended December 31, 2022, totaling $842.6 million compared to$608.0 million in the same period of the previous year[100]. - Sales in the automotive market reached $200.0 million in the second quarter, up 44$139.0 million in the same quarter of fiscal year 2022, driven by program ramp-ups and new product launches[100]. - Sales to customers in the medical market had a double-digit increase in both the second quarter and year-to-date period of fiscal year 2023 compared to the prior fiscal year[104]. - Sales to customers in the industrial market increased by 27% in the second quarter of fiscal year 2023 compared to the same period in fiscal year 2022[104]. - The impact of foreign currency fluctuations was an unfavorable 5% on net sales in the current quarter compared to the same period of fiscal year 2022[100]. Profitability and Margins - The gross profit margin improved to 7.8% in the second quarter of fiscal year 2023, compared to 6.6% in the same quarter of the previous year, reflecting a 64% increase in gross profit[100]. - Gross profit as a percentage of net sales improved in the second quarter and first half of fiscal year 2023 compared to the same periods in fiscal year 2022[102]. - Selling and administrative expenses increased in absolute dollars but declined as a percentage of net sales in the second quarter and first half of fiscal year 2023 compared to the same periods in fiscal year 2022[103]. Balance Sheet and Liquidity - The company maintained a strong balance sheet with a current ratio of 2.0 and a debt-to-equity ratio of 0.6, with shareholders' equity at $481 million as of December 31, 2022[97]. - The current ratio improved to 2.0 at December 31, 2022, up from 1.9 at June 30, 2022[108]. - Open orders increased by 35$1,037 million compared to $771 million in the prior year, indicating strong demand and a growing backlog[100]. - Open orders increased by 35$93.0 million primarily for working capital and capital expenditures supporting expansions[107]. - The company had $264.3 million in borrowings under the primary credit facility at December 31, 2022, compared to$171.4 million at June 30, 2022[121]. - The company sold $225.1 million of accounts receivable without recourse in the six months ended December 31, 2022, compared to$125.3 million in the same period of 2021[125]. - Capital expenditure commitments as of December 31, 2022, were approximately $23 million, primarily for facility expansions in Poland, Mexico, and Thailand[129]. - A new 364-day multi-currency revolving credit facility was entered into on February 3, 2023, allowing for borrowings up to$50 million to support equipment and working capital needs[126]. Future Outlook - The EMS industry is projected to grow at a compound annual growth rate (CAGR) of 5.5% through 2026, indicating a favorable market outlook for the company[91]. - The company expects to complete its Poland facility expansion in early fiscal year 2024, following recent expansions in Thailand and Mexico[128]. Shareholder Returns - The company has a Board-authorized stock repurchase plan allowing for the repurchase of up to $100 million of common stock, with$88.8 million repurchased through December 31, 2022[132].