Kimball Electronics(KE)2025-02-06 02:20Financial Data and Key Metrics Changes - Net sales in Q2 totaled 7.4 million or 9.8 million or 193 million, a 4% decrease year-over-year, representing 54% of total company sales [11] - Medical net sales were 81 million, down 20% year-over-year, representing 23% of total company sales [18] Market Data and Key Metrics Changes - North America and Europe experienced double-digit declines, while Asia saw an increase in sales [10] - The automotive business in China showed strong results, with record high production rates [11] Company Strategy and Development Direction - The company is strategically repositioning for growth, focusing on divesting non-core assets and increasing emphasis on the medical CMO [9] - Plans include improved facility utilization and the closing of the Tampa plant [9] - The company aims to elevate its prominence as a CMO by expanding manufacturing capabilities and vertical integration [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a sustained period of declining customer demand and revised expectations for the full fiscal year [10] - The company remains optimistic about future growth opportunities, particularly in the medical vertical [17][42] - Management emphasized the importance of controlling costs and maintaining a strong balance sheet to navigate current challenges [33] Other Important Information - Cash and cash equivalents at the end of Q2 were 29.5 million [29][30] - The company has reduced borrowings by nearly 40% compared to a year ago [8] - A share repurchase program has returned 22.3 million remaining [35] Q&A Session Summary Question: How is the company navigating the tariff situation? - Management is evaluating the impact of tariffs and working with customers to find solutions, including potential shifts in production locations [38][39] Question: What is the current inventory situation? - Inventory has been reduced significantly, and management expects a continued positive trend in inventory reduction over the next six to twelve months [51][56] Question: How is the company tracking its bid and proposal pipeline? - The company is working on disclosing more information regarding its bid pipeline and win rates in the coming quarters [60][61] Question: Is the revised guidance driven by a specific vertical? - The revised guidance reflects broad-based softness across all verticals, although the automotive sector is holding steady due to strength in Asia [84][85] Question: What is the utilization rate in the Jasper facility? - The current utilization rate in the Jasper facility is around 65%, with available capacity for additional customers [80][81]